By Ricardo Carvajal –

In tandem with its approval of genetically engineered (GE) salmon (see our previous post here), FDA issued two guidance documents on labeling of GE foods – a final guidance document applicable to foods derived from GE plants, and a draft guidance document specific to GE salmon.  The guidance documents are very similar in content, so it seems fair to speculate that the issuance of the final guidance for GE plant foods was prompted by the need to issue a draft guidance that addressed labeling of the newly approved GE salmon.  The latter is novel in the sense that it accompanies FDA’s first approval of a food derived from a GE animal.  However, the positions articulated in both guidance documents are hardly novel; rather, they echo positions staked out in the draft guidance on labeling of GE foods that FDA issued in 2001. 

In the GE plant foods final guidance, FDA continues to:

• Adhere to the view that bioengineered foods do not “differ from other foods in any meaningful or uniform way, or that, as a class, foods developed by the new techniques present any different or greater safety concern than foods developed by traditional plant breeding.”  By implication, labeling of GE foods as such cannot be required on those bases. 

• Frown on the use of the terms “genetically modified” and “GMO” on the grounds that the terms are less scientifically accurate than alternate terms such as “genetically engineered” or “bioengineered.”  However, the agency makes clear that it does not intend to take enforcement action when the term “GMO” is used in claims that a food was or was not produced through genetic engineering, provided that the claim is true “and the labeling is not otherwise false or misleading.” 

• Recommend against the use of the claim “GMO-free” due to the difficulties of substantiating that claim – difficulties that are addressed in the guidance in some detail.  Instead, FDA recommends that manufacturers use the process-oriented claims favored by the agency.

• Disfavor the incorporation of descriptors regarding bioengineering into a food’s common or usual name, on the ground that such descriptors constitute impermissible intervening material

FDA also continues to address voluntary labeling of foods that are derived from GE plants.  However, that discussion now follows the discussion of labeling of foods that are not derived from GE plants – perhaps a tacit recognition of greater interest in the latter than may have been anticipated in 2001. 

Not surprisingly, FDA’s guidance is silent on the question of whether GE foods can properly be labeled as “natural” – a question on which FDA recently asked for comment (see our previous post here).  However, coming on the heels of that request for comment, the issuance of the GE labeling guidance documents serves as an additional indication that FDA is ready and willing to engage on labeling issues that fall under its jurisdiction – an important development in and of itself.

By Anne K. Walsh & John R. Fleder –

As we reported in September, DOJ’s Deputy Attorney General Sally Quillian Yates released a seven-page memorandum announcing DOJ’s reinforced efforts to bring cases against individuals. She anticipated that DOJ would revise the U.S. Attorney’s Manual (USAM) to implement these principles. On November 16, 2015, again via a speech by Ms. Yates, this time before a group of bankers, DOJ announced the issuance of the revisions to the USAM.

For those who do not have prosecutor backgrounds, as Ms. Yates explained, the USAM is “one of the most important documents within the Justice Department community.” It sets forth guidance on how decisions are made within DOJ, and is used to detail DOJ policy and principles.

The Yates memorandum is mostly cut and pasted into various sections of the USAM, either revising existing sections (e.g., in the “Principles of Federal Prosecution of Business Organizations”) or creating wholly new sections (e.g., addressing the pursuit of claims against individuals in civil litigation). Highlights include the following:

• Section 1-12.000 has been updated to specifically identify the Yates “policy statement” emphasizing the importance of parallel civil and criminal investigations seeking to hold individuals accountable. It requires that coordination occur unless there are circumstances where the secrecy of an investigation is “paramount to the success of the investigation” or if compliance with the policy is “impractical.” This section cautions government lawyers, however, to avoid allegations of improper release of grand jury material or abuse of civil process.

• Section 4-3.100 is a new section that sets forth the same six factors Ms. Yates outlined in her original memo, that must be considered before resolving a case with a corporation. (Curiously these points are reordered from the original memo.) Like section 1.12.000, this section also advises the use of caution in sharing evidence in parallel proceedings that was obtained via the grand jury process or Civil Investigative Demands.

• Section 9-28.000 includes sections that have been newly drafted, revised, or simply renumbered. The policy underlying the Yates memo is interspersed throughout. The most significant change is the bifurcation of one of the nine factors used to determine whether to charge a corporation, into two separate factors: one focused on the company’s timely and voluntary disclosure, and the second on its cooperation. This change is intended to recognize the significant value of, and encourage, prompt voluntary disclosure by a company.

Ms. Yates announced in her more recent speech that DOJ was adding new “internal reporting and approval requirements” designed to ensure consistency within DOJ and to track how the policies are implemented. Although there may be other requirements, the USAM now prohibits a prosecutor from closing an investigation without bringing civil or criminal charges against individuals without the express approval of the U.S. Attorney or Assistant Attorney General who handled the investigation. Although declination memoranda are not atypical, this mandatory requirement to prepare and obtain approval of declination will almost certainly impact the decision-making and workload of government prosecutors.

Our firm has already seen evidence from conversations with prosecutors that they are taking the Yates memorandum to heart. Government investigations of companies will be getting much more complicated as companies and their counsel will need to carefully weigh the impact of their interactions with prosecutors on potential cases that may be brought against the company’s current and former officials. Whether to get individuals separate counsel will be just one of many thorny issues that companies will need to address when they learn of a government investigation.

The government enforcement world is getting more and more complicated every day.

By Jay W. Cormier –

At long last, yesterday FDA approved AquaBounty’s AquAdvantage Salmon. The approval includes a number of related actions from FDA. As part of the approval, and as required by the National Environmental Policy Act (NEPA), FDA issued a Finding of No Significant Impact (FONSI). FDA responded to two citizen petitions that requested that FDA include the salmon as a banned food (see our detailed post on those petitions here) and requested that FDA issue an environmental impact statement regarding the production of the AquAdvantage Salmon. 

FDA also issued two new guidance documents (here and here) that detail FDA’s current thinking regarding the voluntary labeling of foods with respect to the presence of genetically engineered plants and genetically engineered salmon. We will be issuing a separate blog post on the food labeling guidance documents.

FDA’s actions today will not be the end of the already 20 years of scrutiny of the genetically engineered salmon. Lawsuits will likely be filed against FDA; legislation will likely be introduced both in Congress and in various state legislatures; a public media campaign against what critics have dubbed “frankenfish” is only just beginning. 

As we previously discussed, AquAdvantage Salmon is a genetically engineered Atlantic salmon that has had a single copy of a transgene inserted into its DNA. Atlantic salmon typically take around 4 years of farming (Atlantic salmon are protected as an endangered species, so fishing and sale of wild Atlantic salmon is illegal) to reach market size. During that time, the salmon only grow during specific times of the year, yet they require adequate food, clean water, and space to swim throughout the entire year. The AquAdvantage Salmon, however, are engineered to grow all year; they do not grow any larger than their non-engineered counterparts – they just reach their size sooner.

As with all FDA animal drug approvals, the sponsor must demonstrate, and FDA must conclude, a number of specific items. Under the FD&C Act, the product must be safe for its intended use under the conditions of use specified in its application; the product must be effective, which is to say that it must meet a specific claim presented by the sponsor; the product must be produced in such a way that ensures product identity, quality, purity, and potency; and if the product is intended to be administered to a food-producing animal, the product and its residues, when used according to any conditions of use (such as a withdrawal period), must be safe to consume as a part of the food products derived from the animal. Under the National Environmental Policy Act (NEPA), FDA is required to consider the potential environmental impacts associated with use of the product. 

The most significant portions of the AquAdvantage Salmon approval are the extensive and multiply-redundant conditions of confinement that serve to limit the approved conditions of use. As FDA bluntly states in the approval letter, “[d]eviations from these commitments and requirements will result in the article being considered an unsafe new animal drug under section 512(a) of the FD&C Act and, therefore, an adulterated drug under section 501(a)(5) of the FD&C Act.” The conditions of use and sponsor commitments are spelled out in seven pages in an appendix to the approval letter. These commitments specify the facilities where the fish can be grown, the physical containment conditions used, the breeding process that provides biological containment measures such as an all-female population of reproductively incompetent fish, and the method for shipping fish between the two AquaBounty facilities. Each of these commitments individually, and more importantly, in toto, are intended to address concerns regarding the potential for these salmon to co-mingle with the endangered species that is wild Atlantic salmon.

Collectively, these commitments allowed FDA to conduct its environmental assessment (EA) under NEPA and conclude with a finding of no significant impact on the human environment (what is referred to by our favorite Happy Days related government acronym – a FONSI). The EA and FONSI can be found here and here. 

From a food safety perspective, FDA concluded that the data and information that AquaBounty submitted supported a finding that the filets from AquAdvantage Salmon are as safe to consume as filets from non-genetically engineered salmon. (see FDA’s summary of its review, which can be found here).  As noted above, we will have a subsequent post that discusses FDA’s conclusions regarding the labeling of the AquAdvantage filets and other foods that are derived from biotechnology (i.e., genetically engineered plants). 

With respect to the two citizen petitions before FDA regarding the AquAdvantage Salmon, FDA denied each (here and here).  They denied one that asked for additional environmental considerations, concluding that the EA and FONSI for the application presented a substantial basis for the conclusions contained in each. FDA also denied the second citizen petition that asked that the filets be a banned food due to safety concerns because FDA concluded, among other things, that the human food safety review that is part of the new animal drug approval process demonstrated that the petitioner’s concerns are unfounded.

As similar groups have done when USDA has deregulated certain genetically engineered plant varieties, we expect that various interest groups will file suit against FDA, mounting various challenges under NEPA and the Administrative Procedures Act. Given the hundreds of pages of materials released by FDA supporting the approval and FONSI for AquAdvantage Salmon (a virtually unprecedented disclosure at the time of approval for an animal drug), FDA has anticipated these legal challenges and has attempted to mount a preemptive defense.

Whether legal challenges are successful in federal court, however, may be irrelevant if challenges succeed in the court of public opinion.  Already, as reported in other news articles (e.g., here), Whole Foods, Trader Joe’s, Target and Kroger have all said they are not planning to sell AquAdvantage Salmon.

We will continue to watch these developments closely and will keep you in formed. In the meantime, stay tuned for Part 2 of this issue, covering the voluntary food labeling policy.

This January, the American Conference Institute (“ACI”) will hold a forum to discuss the rapidly evolving legal and regulatory space for promotion of drugs and devices.  The two-day meeting (with an opportunity for an extra half-day mock PRC) will be held in Philadelphia, Pennsylvania beginning January 11, 2016.  A copy of the full agenda can be obtained here.  The conference will include presentations from several high-level government prosecutors, and will address topics from pre-approval marketing pieces, to post-approval off-label promotion, and ways to manage risk and respond to government authorities.  Hyman, Phelps & McNamara, P.C.’s Anne K. Walsh will speak on specific considerations affecting medical device promotion. 

ACI has agreed to offer a significant discount to FDA Law Blog readers.  Use the discount code D25-825-2271459 to get 25% off the conference rate.  We look forward to seeing you in Philly.

By Riëtte van Laack –

In 2013, FDA issued a final rule defining criteria for the term gluten-free for purposes of food labeling. The rule was “incomplete” because it did not address how to test fermented, hydrolyzed and distilled foods for compliance with the rule. In 2013, no scientifically valid test for gluten in those types of food was available. FDA stated that it would issue a proposal for compliance testing of those foods at a later date.  That time has come.   

In a proposed rule published earlier this week, FDA proposes to base the compliance for fermented and hydrolyzed foods, not on testing of the final product, but on records concerning the foods before they are fermented or hydrolyzed. Manufacturers must have records assuring that the food, before fermentation or hydrolysis, is gluten-free as that term is defined in the regulation, and assuring that during the manufacturer of the product no contamination with gluten occurs.  Records would need to be retained for two years after the introduction or the delivery for introduction of the food into interstate commerce and must be available to FDA for examination and copying during an inspection upon request.

For distilled foods, FDA proposes to test for the presence of protein and protein fragments. Because distillation is intended to separate volatile components from non-volatile components, the distilled product should not contain protein or protein fragments. Because gluten is a type of protein, the absence of protein and protein fragments would equate to gluten free.

FDA invites comments on the proposed rule and on a number of issues discussed in the preamble, e.g., evidence that fermentation or hydrolytic processes sufficiently break down gluten into peptides that are harmless to persons with celiac disease and how to address foods that are concentrated or dried after fermentation or hydrolysis.

Comments are due by February 16, 2016

By Kurt R. Karst – 

In case you were under the impression that FDA’s interest in unapproved drug issues and the Agency’s broader Unapproved Drugs Initiative has been waning, or that the extent of FDA’s interest has merely been in sending out Warning Letters to companies promoting their unapproved products on the internet for drug uses (see here, here, and here for example), think again.  Certain actions FDA took last week serve as a good reminder that the Agency remains as interested as ever in addressing marketed unapproved drugs.    

On November 12, 2015, a Complaint for Injunctive Relief was filed in the U.S. District Court for the Middle District of Florida to enjoin and restrain James R. Hill (doing business as Viruxo LLC) from introducing into interstate commerce any unapproved drug, among other requested relief.  The Complaint was filed after the company allegedly failed to stop marketing its over-the-counter product Viruxo Immune Support as a “natural herpes medicine.”  FDA and the Federal Trade Commission (“FTC”) sent a joint Warning Letter to Viruxo on April 28, 2011 alleging that the company’s product violates both the FDC act and the FTC Act.  Both agencies asked Viruxo to “take prompt action to correct the violations described above and prevent their future recurrence,” and warned the company that “[f]ailure to do so may result in enforcement action without further notice.”  The government carried out with its threat after the company allegedly said it would remove any offending information and claims from its marketing materials, but didn’t.  (The Viruxo case is one of the many actions the Department of Justice, FTC, and FDA formally announced on November 17th, 2015 against various companies marketing allegedly violative products.)

Moving on to the glacially paced Drug Efficacy Study Implementation (“DESI”) program, which came about as a result of the enactment of the 1962 Drug Efficacy Amendments, FDA announed last Friday in a pre-publication version of a Federal Register notice published earlier this week that the Agency has finally resolved hearing requests regarding Nitroglycerin Transdermal Systems under DESI proceeding 1786 (Docket No. FDA-1977-N-0356).  That DESI proceeding was kicked off in February 1972 when FDA announced in a notice the Agency’s evaluation of reports received from the National Academy of Science/National Research Council regarding certain single-entity coronary vasodilators for indications relating to the management, prophylaxis, and treatment of angina attacks.  Several years ago, the couple remaining companies that had marketed Nitroglycerin Transdermal Systems requested that FDA withdraw marketing approvals and informed the Agency that they were no longer interested in pursuing a hearing with FDA.  Now any company that wants to put an unapproved Nitroglycerin Transdermal System into interstate commerce is on notice from FDA: “Firms should be aware that, after [November 16, 2015], FDA intends to take enforcement action without further notice against any firm that manufactures or ships in interstate commerce any unapproved product covered by this notice.”

Finally, there’s FDA’s decision on the so-called “grandfather” status of Cocaine HCl.  In a November 12, 2015 response to a February 2012 Citizen Petition (Docket No. FDA-2012-P-0189) submitted on behalf of Lannett Company, Inc. and Cody Laboratories, Inc. (collectively “Lannett”), FDA denied Lannett’s requests that FDA affirm the grandfather status of Cocaine HCl under the 1938 grandfather clause of the FDC Act and that the drug product is not subject to the statute’s approval requirements.  According to the National Drug Code Directory, Lannett has marketed four Cocaine HCl Topical Solution drug products without approval since December 1, 2008.  The company previously announced that it was pursuing FDA approval of its Cocaine HCl drug products as an anesthetic prior to a diagnostic procedure or surgery on or through accessible mucous membranes of the nasal cavities.  A Lannett-sponsored clinical study is currently recruiting subjects.   

Lannett’s petition also requested that FDA affirm the grandfather status of Oxycodone HCl.  FDA denied that portion of the Citizen Petition in a July 2012 response (see our previous post here), stating:

We are denying the requests in your petition pertaining to oxycodone HCl on two principal grounds.  First, we reject your implicit contention that oxycodone HCl products as a class are “grandfathered” under the 1938 grandfather clause.  Furthermore, the evidence provided with your petition is inadequate to demonstrate that Lannett’s Oxycodone HCl Product meets the requirements of the 1938 grandfather clause.

In the November 2015 response, FDA essentially did a “find-and replace” with the drug name from the earlier response, stating:

We are denying the requests in your petition pertaining to cocaine HCl on two principal grounds.  First, we reject your implicit contention that cocaine HCl products as a class are “grandfathered” under the 1938 grandfather clause.  Furthermore, the evidence provided with your petition is inadequate to demonstrate that Lannett’s cocaine HCl Products meets the requirements of the 1938 grandfather clause.

Although FDA’s petition decision is largely a repeat of the Agency’s previous decision with respect to Oxycodone HCl, it’s worth a read if just to provide a refresher on how narrowly FDA interprets the 1938 grandfather clause. 

The latest issue of the Food and Drug Law Institute’s “Update” magazine features an article written by Hyman, Phelps & McNamara, P.C. attorneys John A. Gilbert, Jr. and Andrew J. Hull.  The article, titled “A Matter of Substantial Discretion: A Recent Rift Between DEA and Its ALJs Could Significantly Impact Registrants,” explores the issue of DEA’s deference to the factual findings and credibility determinations of its ALJs and how a recent trend by DEA to rely less on ALJ findings could significantly impact registrants. 

By Ricardo Carvajal - 

FDA released pre-publication versions of the three final rules on foreign supplier verification program (FSVP), accredited third-party certification, and produce safety.   As with the recently issued rules on CGMPs and preventive controls for human and animal food (see our previous post here), FDA issued a variety of supporting materials.  For the FSVP rule, these include a fact sheet and a flow chart to help determine applicability.  For the third-party certification rule, FDA issued a fact sheet; the agency had previously issued draft guidance on model accreditation standards.  For the produce safety rule, FDA issued a fact sheet and a flow chart to help determine applicability, as well as the agency’s Final Environmental Impact Statement, and the Final Qualitative Assessment of Risk to Public Health From On Farm Contamination of Produce.  FDA also scheduled webinars to explain significant provisions of these three rules.

Compliance with the FSVP rule generally will be required 18 months after publication of the rule, but different compliance dates may apply in the case of (1) importation of food from a supplier subject to the preventive controls or produce safety rules and their staggered compliance dates, or (2) an importer that is subject to the supply-chain program requirements in the preventive controls final rules.  The implementation date for the third-party certification program remains uncertain because it hinges on the publication of a final guidance on Model Accreditation Standards and a final user fee rule.

The compliance dates for the produce safety rule are staggered according to business size and are explained in FDA’s fact sheet.  For larger businesses, the compliance date is two years after the effective date of the final rule (or one year in the case of covered activities involving sprouts), with a two-year extension for certain aspects of water quality standards and related provisions.  Small and very small businesses will be given an additional one and two years, respectively.  However, there are separate compliance dates for modified requirements for farms that are eligible for a qualified exemption.

The publication of these three rules leaves just two of the seven major rules pending, namely sanitary transportation (expected in March 2016) and intentional contamination (expected in May 2016).  Although publication of the rules is a significant milestone, the agency’s accompanying press release recognizes that much remains to be done – and reiterates a pitch for adequate funding to enable full implementation. 

By David B. Clissold –

On November 10, 2015, FDA announced that for the first time it has authorized the marketing of new tobacco products through the premarket tobacco application (PMTA) pathway.  The FDA press release describes marketing orders for eight Swedish Match North America, Inc. snus smokeless tobacco products marketed under the “General” brand name.  The PMTAs were apparently all submitted on March 11, 2015, as reflected in multipage “Decision Summaries” for each posted by FDA.

As we previously discussed, under the Family Smoking Prevention and Tobacco Control Act of 2009, if a tobacco product is not found to be “substantially equivalent” (SE) to a tobacco product on the market as of February 15, 2007, and is not exempt from an SE determination, then it is a “new tobacco product” subject to premarket review by FDA.  Among other things, a PMTA must include:

• full reports of investigations of health risks posed by the tobacco product, which FDA interprets to mean both favorable and unfavorable studies regardless of whether the studies were conducted in the U.S. or abroad, and regardless of whether they complied with human subject protection guidelines;
• a “full statement of all components, ingredients, additives, and properties, and of the principle or principles of operation” of the product; and 
• a “full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and, where relevant, packing and installation a full description” of the product.

A PMTA must also include “information sufficient to enable FDA to make a finding that the marketing of a new tobacco product is ‘appropriate for the protection of the public health’” within the meaning of FDC Act § 910(c)(4).

According to the FDA press release, “[t]he PMTA decisions for these products reflect evidence showing that these products, marketed as described in the manufacturer’s application, would result in a low likelihood of new initiation, delayed cessation or relapse . . . [and] that these products would likely provide less toxic options if current adult smokeless tobacco users used them exclusively.”  However, the press release emphasizes that the company may not claim that the products are “FDA approved,” and that the company must receive a separate modified risk tobacco product (MRTP) authorization in order to make any claims of reduced exposure or reduced risk.  Swedish Match North America, Inc. has submitted MRTP applications to make such claims for at least some products bearing the “General” brand name, and these MRTP applications were reviewed by the Tobacco Product Scientific Advisory Committee in April of 2015.  According to FDA’s website, those MRTP applications are still under FDA review.

Each PMTA “Marketing Order” identifies certain regulatory obligations that accompany the marketing of the new tobacco product.  These obligations include recordkeeping, adverse event reporting, and annual reporting requirements.  The annual reports must include, among other things, sales and distribution information including total dollar amounts broken down by census region and retail outlet, as well as “data on current product users” broken down by age, gender, and race/ethnicity.  This information will “help FDA determine whether continued marketing of [the] tobacco product is appropriate for the protection of the public health or whether there are or may be grounds for withdrawing or temporarily suspending” the PMTA order.

By Anne K. Walsh & John R. Fleder –

It has been just over a month since the Department of Justice, via the “Yates Memorandum,” reemphasized its commitment to pursue individuals when dealing with corporate misconduct, reported here.  Ever since then, FDA-regulated industry has been awaiting the fallout from this pronouncement.  According to media reports, the first major drug and medical device corporate settlement post-Yates (involving a $390 million payout by Novartis AG) will not apparently include any penalties against individuals.  A recent case out of Boston, however, has many speculating that it is the first application of this “new” DOJ policy.  

That case, reported here, resulted in a guilty plea requiring a $125 million payment by Warner Chilcott for allegations mostly related to kickback activities.  It is notable in the context of this blog post because the government’s investigation also generated a criminal indictment against the former President of the company, and criminal charges filed against three other former company employees, and a doctor who allegedly received kickbacks.  Charging the president of a company is serious business, and if the government intended to send a message to industry, that message has been received loud and clear.

None of the Warner Chilcott individuals was charged with a violation of the FDC Act, despite the low threshold for a strict liability misdemeanor under the Act.  The focus of the criminal charges against the individuals stemmed from allegations of kickbacks or health care fraud.  The charging document against the company, however, did include allegations related to marketing activities subject to FDA’s jurisdiction.  The government charged that the company made unsubstantiated superiority claims about its drug, Actonel, which were not supported by clinical evidence.  It is unclear what type of clinical evidence was available or whether it would withstand First Amendment scrutiny given recent litigation on this issue.

This is hardly the first time a president of a company has been charged with felony violations involving FDA-regulated conduct.  The CEO of InterMune was indicted and ultimately convicted after trial for fraud in connection with reporting clinical trial results.  Similarly, the president of Synthes Inc. was charged and pled to charges related to a clinical investigation of its medical device.

Of course, under the “Responsible Corporate Officer” Doctrine, the government also can bring misdemeanor charges against company executives in FDA-regulated industries even when there is no indication that the charged executive knew about the alleged wrongdoing.  The leading cases imposing Responsible Corporate Officer liability against individuals under the FDC Act involved the presidents of Buffalo Pharmacal Company (United States v. Dotterweich) and Acme Markets (United States v. Park).  

From the government’s statements in the case, it is impossible to tell whether the cases against the Warner Chilcott individuals were a fall-out from the Yates Memorandum, or whether they had long been in the works and the outcomes set well before DOJ’s statement a month before.  Of course, the Yates Memorandum was developed over months.  Thus, it is certainly possible that the decision to prosecute these individuals was based on the policy determinations already developed by DOJ leading up to issuance of the Yates Memorandum.

A close review of the plea agreement entered into between the company and the government also shows extensive language detailing the scope of cooperation required from the company.  This type of cooperation is in line with what Deputy Attorney General Yates outlined in her Memorandum, including “completely and truthfully disclosing all non-privileged information” about activities of “present and former officers, directors, employees and agents of Warner Chilcott,” and providing “active assistance” in connection with the criminal prosecution against these present or former individuals.  These requirements for cooperation credit are not novel in plea agreements, and thus unlikely to have been commanded by the Yates’ directive.  What will be telling is whether these provisions become standard or expanded in future resolutions.

By John A. Gilbert, Jr. & Larry K. Houck –

Yes, with passage of the State Marihuana (sic) and Regulatory Tolerance (“SMART”) Enforcement Act.  The bill, H.R. 3746, introduced by Representative Suzan DelBene (D-WA), would authorize the Attorney General to waive the marijuana provisions of the federal Controlled Substances Act (“CSA”) in states that have legalized marijuana for medical or recreational use.  Congresswoman DelBene explained, “My bill will fix the conflict between state and federal law by giving the U.S. Attorney General authority to waive the Controlled Substances Act for states that are effectively regulating marijuana themselves, such as Washington.”  If passed, the bill would protect medical marijuana patients, recreational marijuana users and marijuana-related businesses in states that have legalized marijuana from federal prosecution.

Although a number of states have passed laws legalizing marijuana for medical or recreational use, federal law prohibits the possession, cultivation or distribution of marijuana and prohibits operating a business for these purposes.  The bill would formalize a process by which states could certify that they have implemented regulatory schemes sufficient for adherence to the federal enforcement priorities set forth in Department of Justice (“DOJ”) guidance issued in August 2013, and again in February and March 2014.  The DOJ guidance observed that its agencies are unlikely to take action against a marijuana business operating in compliance with state law if it does not implicate one of the eight enumerated enforcement priorities where states “have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana, [whose] conduct in compliance with those laws and regulations is less likely to threaten the federal priorities.”

The SMART Enforcement Act would provide a mechanism for states that have legalized marijuana to request a waiver from the Attorney General by certifying that they have or will implement a regulatory regime sufficient to protect the following federal priorities:

• Preventing distribution of marijuana to minors;
• Preventing revenue from the sale of marijuana to criminal enterprises, gangs and cartels;
• Preventing diversion of marijuana from states where it is legal under state law in some form to other states;
• Preventing state-authorized marijuana activity from being used as a cover or pretext for trafficking of other illegal drugs or other illegal activity;
• Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
• Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
• Preventing growing marijuana on public lands and the public safety and environment dangers posed by marijuana production on public lands; and
• Preventing marijuana possession or use on federal property.

Although not a federal priority, the Act would also require states to certify that their regulatory scheme prevent the distribution of tainted marijuana.

For their parts, states must agree to study and report annually to the Attorney General about marijuana legalization and youth marijuana use, rates of driving while intoxicated, marijuana diversion to other states and the prevalence of drug-related organized crime activity.

The Attorney General would have 90 days following receipt of a request to issue a finding that the state has met the regulatory conditions for a waiver or explain why the state has failed to do so.  Failure of the Attorney General to issue a finding within 90 days would equate to the state meeting the conditions.  A waiver would remain in effect for three years, and a state could submit a request for subsequent three year periods.  The Attorney General may continuously review marijuana activities within a state that has a waiver, and after providing notice and an opportunity to correct any failure, could revoke a waiver upon finding that the state no longer meets the conditions.

The SMART Enforcement Act would assure patients, recreational users and businesses in states that have legalized marijuana and obtained a waiver from the Attorney General, that DOJ will not take enforcement action against them for marijuana activities compliant with state law.  By the same token, the process would assure the Attorney General that states have implemented, or will implement, a regulatory scheme sufficient to minimize the risk of violation of enforcement priorities, allowing DOJ to focus its resources in other areas.  The Act would also authorize the Attorney General to revoke state waivers when necessary.

The bill was introduced and referred to the Judiciary and Energy and Commerce Committees on October 9, 2015, and referred for committee consideration to the Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on November 3, 2015.

By Ricardo Carvajal –

FDA is publishing a Federal Register notice asking for information and comments on the use of the term “natural” in human food labeling, “including when, if ever, the use of the term is false or misleading.”  The notice purports to be based partly on the agency’s receipt of three citizen petitions asking for a regulatory definition, and a fourth asking that the term be prohibited.  The notice also acknowledges requests from several Federal courts for an administrative determination on use of the term “natural” for foods containing bioengineered ingredients – requests that the agency thus far has denied (see our previous post here).

The publication of the notice comes as somewhat of a surprise, given that the agency had indicated little interest in revisiting its longstanding policy on “natural.”  However, recent developments – including deepening controversy over the labeling of bioengineered foods and whether such foods qualify as “natural” – may have prompted a reassessment of the merits of expending agency resources on the issue.  In addition to the requests for an administrative determination noted above, FDA received a citizen petition from the Grocery Manufacturers Association asking in part for the issuance of a regulation authorizing “natural” claims on bioengineered foods.  Although not mentioned in FDA’s notice, Vermont’s new GMO labeling law will prohibit such claims on foods marketed in that state, assuming the law withstands judicial challenge.  Accordingly, one of the sixteen issues on which FDA requests comment is whether agricultural practices such as genetic engineering should be factored into any revised definition of “natural.”

We anticipate that issues not raised in FDA’s notice will be raised in comments to the docket.  For example, as we noted in a prior posting, USDA has issued draft guidance (see here and here) on the determination of whether a substance is natural or synthetic for purposes of organic food labeling – a distinction that has been cited in litigation challenging the use of “natural” claims.  Stakeholders would thus be well advised to monitor FDA’s docket, which is expected to go live on November 12.

By Alan M. Kirschenbaum –

The October 30, 2015 Texas Register contained a proposed regulation published by the Health and Human Services Commission (HHSC) that would repeal a burdensome price reporting requirement for drug manufacturers.  In order to have a drug included on the Texas fee-for-service Medicaid formulary, manufacturers must submit to the Texas Vendor Drug Program a Certification of Information form containing, among other things, information on prices (or price ranges) to specified customer categories.  Since March 2013, Texas regulations have required that, if the initially reported price range changes, a manufacturer must submit an update consisting of the revised price range plus a calculated weighted average price.  Texas has used these reported prices to establish Medicaid ingredient cost reimbursement rates for pharmacies.  The weighted average price calculation for Texas differs from that of the average prices reported to the Medicaid Drug Rebate Program, Medicare Part B, and the Department of Veterans Affairs (which in turn differ from each other), and has therefore added to drug manufacturers’ already substantial price reporting burden.

Under the proposed regulation, manufacturers would no longer be required to submit price updates, unless requested by HHSC.  (See proposed TAC 354.1921(a)(c)(1))  That is because Texas will no longer be using manufacturer-reported prices to establish Medicaid ingredient cost reimbursement, but will instead use the National Average Drug Acquisition Cost (NADAC) published monthly by CMS based on actual pharmacy invoice surveys.  (See TAC 355.8541(a)(1))  The preamble explains (at page 7506) that, if no NADAC is published for a drug, HHSC will use WAC minus a percentage.

HHSC will hold a public hearing on this proposed regulation on November 23, and comments on the proposal may be submitted through November 30.  The regulations would become effective in the spring of 2016.

By Kurt R. Karst – 

There are several important dates in the history of the Orange Book – FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations – some of which are the result of advancements in technology, and some of which occur (curiously) around the end of October (and a couple on Halloween specifically).  For example: 

• May 31, 1978:  This is the date that is probably most often associated with the conception of the Orange Book.  It was on May 31, 1978 that FDA Commissioner Donald Kennedy, Ph.D., sent a letter to state officials informing them of FDA’s plans to develop a “master list to provide a guidance and information that could be utilized by each state in meeting its own responsibilities under the particulars of its drug product selection law.” 
• June 30, 1978:  On this date, FDA announced the availability of an “interim list” named the Approved Drug Products List. 
• January 12, 1979:  This is the date that is probably most often associated with the birth of the Orange Book (though it was not orange at that time).  It was on this date that a publication titled Approved Drug Products with Proposed Therapeutic Equivalence Evaluations was first made publicly available by FDA.  
• October 31, 1980 (Halloween):  FDA published a final rule and made available the inaugural edition of the Approved Drug Products with Therapeutic Equivalence Evaluations and the first cumulative supplement of the publication. 
• September 24, 1984:  This is the date of enactment of the Hatch-Waxman Amendments, which amended the FDC Act to add Section 505(j)(6) (later moved to Section 505(j)(7)) requiring FDA to publish and make publicly available a list of approved drug products, including patent information. 
• October 31, 1997 (Halloween):  This is the date on which an electronic Orange Book search function was added to FDA’s website.  (Beginning in 1998, current patent listings for approved drug products could be obtained from the electronic Orange Book through a search by active ingredient, proprietary name, application holder, or application number.  Since February 2005 (25th edition), FDA has provided daily electronic Orange Book product updates, and made the volume available in a downloadable PDF format.) 
• October 24, 2008:  This is the date on which patent information was first listed in the Orange Book covering an old antibiotic drug product.  The drug was MOXATAG (amoxicillin extended-release) Tablets, and the patents were U.S. Patent Nos. 6,544,555, 6,669,948, and 6,723,341.  Patents for antibiotics were made listable with the October 8, 2008 enactment of Section 4 – “Incentives For The Development Of, And Access To, Certain Antibiotics” – of the “QI Program Supplemental Funding Act of 2008” (Pub. L. No. 110-379) (see our previous post here). 

We now have a new date to add to the list: November 9, 2015.  This is the date on which FDA released an app for the Orange Book (for both iOS and Android devices), called the Orange Book Express (or “OB Express” as it comes up in the Apple App Store).  (We understand that the app was slated for release on Friday, October 30, 2015, but a couple of last minute changes delayed things by several days.) 

We spent some time exploring the new Orange Book app.  It’s a pretty impressive piece of technology, and one that we expect to use quite often.  The format is easy to view and to understand!

The app's home screen (pictured below) allows users to search by Active Ingredient, Proprietary Name, Applicant Holder, Application Number, and Patent Number.  Search results are displayed with tabs showing listings in the Prescription Drug Product List, the Over-the-Counter Drug Product List, and the Discontinued Drug Product List sections of the Orange Book.  Each drug product listing links to the same patent and exclusivity information appearing in the paper and electronic versions of the Orange Book, and includes links defining patent use codes and exclusivity codes.  You can even email FDA's Division of Drug Information directly from the app with questions.  Also, built-in links on the app home page take you to lists of Newly Added Patents, Patent Delistings, and FDA's Orange Book website.   

The OB Express App is a must-have for anyone practicing in the Hatch-Waxman space.  You can bet the new app is on this blogger's iPhone home page.  (Now how long will it take FDA to develop an app for the Purple Book?)

By Riëtte van Laack –

As we previously reported, POM Wonderful (“POM”) petitioned the U.S. Court of Appeals for the D.C. Circuit for en banc review of that Court’s earlier decision which had largely upheld the FTC’s cease and desist order issued against POM.  That petition was denied.  Now, POM has filed a Petition for a Writ of Certiorari to the U.S. Supreme Court to review the D.C. Circuit’s decision.  As in the request for the en banc review, POM asks the Supreme Court to address the question of whether the Court of Appeals should have deferred to the FTC on the question of whether certain speech is not protected by the First Amendment, or alternatively, whether the Court of Appeals should have done a de novo review on that issue.

At issue are seventeen advertisements which, according to POM, the FTC incorrectly determined are misleading.  POM claims that the ads were not misleading because they included qualifying language.  However, the FTC decided that, despite the qualifying language, the ads were misleading to a “significant minority” of consumers; this significant minority allegedly would interpret the ads as unqualified claims that there is conclusive evidence that POM’s products cure or prevent cardiovascular disease and prostate cancer.  POM disputes the FTC determination and argues that the First Amendment entitles POM to de novo review of the FTC’s determination that they do.

POM discusses four reasons for granting the writ:

1. The D.C. Circuit’s determination conflicts with Supreme Court precedent holding that “factual” determinations by lower tribunals that concern the protected character of the speech at issue are reviewed de novo.
2. There is a circuit split on the question presented.
3. The issue is important and precedent setting and the Court should not allow “a major precedent setting . . . speech restriction to go into effect without” review.  According to POM, “if the D.C. Circuit’s grant of enormous deference to the FTC in this case remains in place, the agencies’ settlement leverage will derail most future vehicles before they leave the station.”
4. The POM case is rare because it concerns thirty six different ads viewed differently by the ALJ, the Commission, and indeed dissenting Commissioner Ohlhausen.   According to POM, the case “will allow this Court to demonstrate the importance and application of the standard of review in a concrete setting that will clarify future cases.”

After all the litigation involving these parties involving many issues raised by POM, it is noteworthy that POM is not challenging the entirety of the FTC’s Cease and Desist Order.  Instead, POM acknowledges in its petition to the Supreme Court that even if the Court rules in favor of POM, that ruling would not be outcome determinative in terms of the FTC Order as a whole.  Thus, regardless of what happens at the Supreme Court, POM will be subject to at least a major part of the FTC’s Order.  However, POM asserts that Supreme Court review of which ads are false or misleading is relevant for POM because it will determine the scope of the FTC’s Order.  If the seventeen additional ads are found not false or misleading, as POM claims, POM may continue to use them.  Before the Supreme Court decides whether to hear the case, the FTC will have the opportunity to file its opposition.