FDA recently announced that it has submitted the FSMA final rules on produce safety, foreign supplier verification, and third party accreditation to the Federal Register – just in time for the third and fourth installments in the Food and Drug Law Institute’s (FDLI’s) FDA Food Safety Modernization Act (FSMA) webinar series.  On November 18, FDLI will host a webinar on the produce safety rule that will be moderated by HP&M’s Ricardo Carvajal.  A webinar on foreign supplier verification and third party accreditation is scheduled for the following day.  Additional information and registration is available here.  FDA Law Blog readers can use the code FSMA2015 to receive 15% off registration.

By Jeffrey K. Shapiro –

For more than 10 years, FDA has regulated human cells, tissues, and cellular and tissue-based products (“HCT/Ps”) under 21 C.F.R. Part 1271.  Under § 1271.10(a), if four criteria are met, the HCT/P qualifies for regulation exclusively under Part 1271.  This status is advantageous, because an HCT/P regulated exclusively under Part 1271 does not have to undergo premarket review of any kind. 

The four criteria in 21 C.F.R § 1271.10(a) are: (i) minimal manipulation, (ii) homologous use, (iii) not combined with another article (with certain exceptions), and (iv) not having a systemic effect and not dependent upon the metabolic activity of living cells for primary function (with certain exceptions).

Last year, FDA issued three draft guidance documents intended to assist industry in understanding how FDA applies the regulation.  They addressed:

• Recommendations for meeting the minimal manipulation criterion, 21 C.F.R § 1271.10(a)(1).
• FDA’s current thinking as to how the four criteria in 21 C.F.R § 1271.10(a) apply to HCT/Ps produced from adipose tissue.
• Recommendations for meeting the “same surgical procedure” exception from Part 1271, found in 21 C.F.R § 1271.15.

Last week, FDA issued another draft guidance with recommendations for meeting the homologous use criterion in 21 C.F.R § 1271.10(a)(2).  All draft and final guidance documents regarding HCT/Ps can be found on FDA’s web site.

The three guidances listed above were not without controversy, particularly the recommendations relating to minimal manipulation.  Many in industry had urged FDA to hold a public meeting for fuller discussion.

Last week, FDA announced it would do just that, with a public hearing on all of these guidances set for April 13, 2016.  The announcement has full instructions for submitting written comments to the hearing docket and for signing up to attend and/or speak.  The hearing will be held under the Part 15 procedures, which allow both written submissions and oral presentations at the hearing to be entered into the administrative record.

FDA describes the purpose of the hearing as follows:

The purpose of this public hearing is to obtain comments on these four draft guidances. FDA is seeking feedback, both general and specific, from a broad group of stakeholders, including HCT/P manufacturers, tissue establishments, biological and device product manufacturers, health care professionals, clinicians, biomedical researchers, and the public.  For example, FDA would like comments on the scope of each guidance, including the particular topics covered, the particular questions posed, whether there are additional issues for which they seek guidance, and whether FDA's recommendations for each topic are sufficiently clear and consistent within and across documents to provide meaningful guidance to stakeholders.  In addition, FDA welcomes any comments that will enhance the usefulness and clarity of these documents.

In conjunction with the hearing, FDA is also reopening the comment period for all three draft guidances (and allowing comments on the new draft homologous use guidance) until April 29, 2016 – see here, here, and here.

There is no doubt that industry will want to comment on these draft guidances.  Commenters should remember that they may submit to the original dockets as well as the new public hearing docket.  Submissions to the hearing document can be provided up until April 29, 2016.  Some of the most valuable comments may come after the hearing, in response to statements made during the hearing.

In every comment, it will be particularly important to remind FDA that a guidance document is an opportunity to clarify a regulation such as 21 C.F.R. Part 1271, but it is not an appropriate proceeding to rewrite a regulation.  A number of commenters felt that the minimal manipulation draft guidance overstepped this boundary.  Hopefully, the final guidances will stay well within bounds of the regulation.

By Diane B. McColl –

On October 28, 2015, FDA announced that a food additive petition (FAP) submitted by the Grocery Manufacturers Association (GMA) for minor uses of partially hydrogenated vegetable oils (PHOs) was accepted for filing on October 1, 2015 (Docket No. FDA-2015-F-3663).  GMA’s FAP seeks to preserve minor uses of PHOs because they deliver consumer-desired textural characteristics that other oils cannot provide, such as flakiness in doughs, and they function as essential processing aids such as pan release agents so that products do not stick to baking trays and rollers during the manufacturing process (see GMA press release here).  GMA’s FAP covers partially hydrogenated soy, cottonseed, coconut, canola, palm, palm kernel and sunflower oils.  The proposed minor uses include as a carrier for flavors, as a diluent for color additives, as an incidental additive, including as a processing aid, and certain specified uses in defined food categories.  Because the TFA content of PHOs varies widely, maximum TFA limits rather than PHO use levels are assigned to each of the proposed uses.  FDA also requested public comments on the Environmental Assessment that accompanied the FAP.  Comments are due by November 27, 2015. 

By David C. Gibbons & Alan M. Kirschenbaum –

At 3 am on October 30, 2015, the Senate passed H.R. 1314, the Bipartisan Budget Act of 2015 (“BBA”), which had already passed the House on October 28, and is expected to be signed imminently by the President.  Section 602 of the bill amends the Medicaid Drug Rebate Program (“MDRP”) to impose a price increase penalty on generic drugs.

In order to have their drugs reimbursed by the federal government under Medicaid and Medicare Part B, manufacturers are required to enter into a Medicaid rebate agreement with the Department of Health and Human Services (“HHS”) in which the manufacturer agrees to pay rebates to states each quarter on units of the manufacturer’s outpatient drugs that are dispensed to Medicaid beneficiaries.  The base rebate for a single source drug or innovator multiple source drug – i.e., a drug approved under a new drug application – is generally the greater of 23.1% of the Average Manufacturer Price (“AMP”) or AMP minus best price.  For noninnovator multiple source drugs – generally drugs approved under an abbreviated new drug application – the base rebate is 13% of AMP.  42 U.S.C. § 1396r-8(c).  In addition to the base rebate, innovator drugs are subject to an additional rebate if the AMP for a given quarter exceeds the inflation-adjusted baseline AMP, which for most drugs is the AMP for the first full quarter after launch.  Until now, this price increase penalty has applied only to innovator drugs. 

Congress has been concerned about the rise in generic drug prices.  In February 2015, Representative Cummings and Senator Sanders sent a joint letter to the HHS Office of Inspector General (“OIG”) requesting that Office to examine the effect of generic drug price increases on Medicaid and Medicare, and to evaluate the potential savings if the MDRP price increase penalty were to apply to generic as well as brand drugs.  The letter noted that, between July 2, 2013 and June 30, 2014, the price of half of all generic drugs increased and prices of approximately 10% of such drugs doubled in price during that period.  In April, the OIG agreed to conduct such a study, but no report has yet been issued.

Without waiting for the results of the OIG study, Congress has enacted Section 602 of the BBA, requiring manufacturers of noninnovator multiple source drugs (which we will call “generics” here for convenience) to pay an additional rebate under the MDRP, similar to that paid for innovator drugs.  The additional rebate for generics will apply to rebate periods beginning with the first quarter of 2017.  The additional rebate due for generics, as for innovator drugs, is equal to the AMP for the current quarter minus the baseline AMP adjusted for inflation.  The inflation adjustment is calculated as the Consumer Price Index for all Urban Consumers (“CPI-U”) for the month before the reporting quarter divided by the baseline CPI-U.  For generics marketed on or before April 1, 2013, the baseline AMP is the AMP for the third quarter of 2014 and the baseline CPI-U is the CPI-U for September 2014.  For Generics marketed after April 1, 2013, the baseline AMP is the AMP for the fifth full calendar quarter after the drug was first marketed and the baseline CPI-U is the CPI-U for the last month of the baseline AMP quarter. 

Dramatic price increases of both brand and generic drugs have become a front page domestic issue this year, with Congress, state legislatures, and presidential candidates proposing a variety of antidotes.  Besides price increase rebates for generics, these proposals have included permitting CMS to negotiate Medicare Part D drug prices with manufacturers, permitting importation of drugs from Canada, requiring rebates on drugs dispensed to dual eligibles under Medicare Part D, requiring manufacturers to report information on now drug prices are established, and prohibiting pay-for-delay arrangements between brand and generic manufacturers.  These ideas are not new, many of them having appeared for years in legislation and Presidential budget proposals that have not passed.  Section 602 represents the first time that one of these proposals has been enacted, and we fear it is a portent of more to come. 

By David C. Gibbons & Anne K. Walsh –

Background

In a previous post we described the recent challenge by Pacira Pharmaceuticals, Inc. (“Pacira”) to FDA’s authority to restrict a manufacturer’s promotional activities.  See Pacira Pharms., Inc. v. FDA, No. 15-7055 (S.D.N.Y. Sept. 8, 2015).  Pacira’s allegations are based on FDA’s threatened enforcement as communicated in a September 22, 2014 Warning Letter issued to Pacira.  In the latest twist of events, FDA “unpublished,” or withdrew, the underlying Warning Letter.  As of the date of this post, there has been neither official word from FDA nor any indication from Pacira as to FDA’s reasoning behind the withdrawal of the Warning Letter.  But we note that this action is extremely rare and that its occurrence is most likely related to FDA’s litigation position.

A (Very) Brief History of Warning Letter Withdrawals

We were able to confirm only three instances where FDA truly withdrew a previously-issued Warning Letter.  The first instance involved a Warning Letter directed at Van Den Bergh Food Company.  Apparently FDA prepared a Warning Letter but never issued it because the company had corrected the labeling issues FDA cited.  FDA’s Chicago District Office, however, inadvertently sent the Warning Letter to FDA Freedom of Information staff for public “display” (FDA did not begin posting Warning Letters on the internet until 1997).  As a result, FDA had to officially withdraw the Warning Letter in 1995.  Barbara J. Shulman, Consumer Safety Officer, FDA, Letter to FOI Requestors (Apr. 26, 1995).  A year later, FDA withdrew a Warning Letter issued to Laerdal Manufacturing Corporation that cited the manufacturer for GMP violations; these violations had been subject to earlier litigation by the parties, which FDA had lost.  James G. Dickinson, FDA Withdraws Laerdal Warning Letter, Medical Device and Diagnostic Industry Magazine, 1 (Jan. 1, 1996).  Finally, FDA withdrew a Warning Letter issued to device manufacturer, Ophtec, because, according to Ophtec, the alleged violations cited by FDA therein were “factually inaccurate.”  FDA Retracts Warning Letter to Devicemaker, FDAnews Device Daily Bulletin (Jul. 24, 2007). 

There have been other instances where Warning Letters were temporarily withdrawn or withdrawn and subsequently reissued.  For example, a Warning Letter issued to Proctor & Gamble on October 14, 2009 concerning its marketing of Vicks cold and flu over-the-counter medications was withdrawn but reissued approximately two weeks later.  FDA, Press Release, FDA: Proctor & Gamble Unlawfully Marketing Two Vicks Cold and Flu Medicines Containing Vitamin C, (Oct. 30, 2009).  FDA’s press release concerning this incident noted that the October 14 Warning Letter was mistakenly posted on FDA’s website due to a “computer error.”  Id.; see also our previous blog post here. 

Settlement of the Pacira Case May be on the Horizon

Although FDA’s response to Pacira’s Motion for Preliminary Injunction was due on October 26, the court issued a revised Scheduling Order on October 22.  The Order indicated that the parties are in settlement negotiations:  the parties “wish to continue their efforts to reach a consensual resolution” and defer the litigation proceedings by not making mandatory court filings.  To that end, the court agreed to extend to mid-November the due date for FDA’s Opposition to Plaintiff’s Motion for Preliminary Injunction and its Answer to the Complaint.

In light of these settlement negotiations, there are at least two plausible theories as to why FDA withdrew the Pacira’s Warning Letter.  First, should FDA and Pacira settle the matter, withdrawal of the Warning Letter would almost certainly be a condition of settlement.  FDA taking this step now may demonstrate its good faith efforts to negotiate settlement in the matter.  Second, should the case proceed, FDA may challenge the justiciability of Pacira’s equitable relief claims, given that the withdrawal of the Warning Letter suggests the Company faces no immediate threat of harm – an approach FDA attempted in the Amarin case when it tried to moot the litigation via a letter indicating FDA would not object to most of Amarin’s promotional claims at issue (for further information, see our post on Amarin here.)  It is difficult to understand how withdrawal of this Warning Letter would similarly moot this matter, however, given Pacira has already stopped its conduct to the satisfaction of FDA such that it closed out the Warning Letter.

Stay tuned for our next update, which will either report on a settlement, FDA’s response to Pacira, or another extension of the deadline to continue settlement discussions.

By James C. Shehan –

On October 27^th, the FTC submitted comments objecting to the FDA’s draft guidance on Nonproprietary Naming of Biological Products.  In the comments and an accompanying press release, the FTC asserts that the proposal may reduce price competition in biologic drug markets, create unnecessary costs and impede efforts to harmonize names globally.   The FTC therefore asks FDA to reconsider its proposal and suggests alternatives with less impact on competition.

In its draft guidance (see our post here), FDA proposes adding a new, random suffix to the name of every approved biologic.  FDA’s rationale for the proposal is that, with the advent of biosimilars, it will improve pharmacovigilance and prevent inadvertent substitution of non-interchangeable biologics.

In its comments, the FTC proceeds very quickly to its rationale – biologics are expensive, prices are increasing rapidly, and without biosimilars, “patients have no other alternative” (sic).  Biosimilars would reduce prices and increase patient access.   

The FTC analysis has four parts.  First, the agency cites “standard economic logic” for the proposition that perceived product differentiation dampens price competition.  Next, the FTC states the naming proposal may increase product differentiation because “physicians may mistakenly believe that different suffixes indicate clinically meaningful differences between a biologic and its biosimilar.”  In the third part of the analysis, the FTC states that a single European example involving Hospira’s Retacrit epoetin zeta biosimilar “suggests” that biosimilars with distinct nonproprietary names are less commercially successful than those with the same nonproprietary names.  In the fourth part of its analysis, the FTC assets that the FDA proposal will create for pharmacists unnecessary “coding and system inefficiencies” and costs and will undermine global harmonization efforts.

 The first alternative proposed by the FTC is to simply rely on trade names to distinguish products.  In support, the agency cites a Pfizer statement that brand names are cited in about 99 percent of adverse event reports.  The second alternative proposed by the FTC is for healthcare professionals to rely on the FDA Purple Book (see our post here) for information about biologic products, just as they currently use the FDA Orange Book for small molecule drugs.

The FTC position has a few potential holes that may lead FDA to discount it.  For one, the data cited by the FTC to support the proposition that physicians will believe that different suffixes indicate clinically meaningful differences is indirect and limited.  For another, there are alternative explanations for the lesser commercial success of Retacrit epoetin zeta, such as differences between epoetin zeta and epoetin alpha, dates of market entry, and the commercial savvy of different manufacturers.

Possible flaws in the FTC’s proposed alternatives have previously been suggested by parties involved in the biosimilar naming debate.  For example, it has been pointed out that pharmacists primarily consult the Orange Book to learn the therapeutic equivalence ratings of potentially substitutable drugs, whereas the Purple Book does not contain therapeutic equivalence ratings because that concept does not exist for biologics.

Will the FDA give any more weight to the FTC’s comments than to those of other parties?  Stay tuned. 

By Karla L. Palmer –  

FDA announced (here and here) earlier this week the availability of two draft guidances (here and here) for compounders using bulk substances under FDCA Sections 503A and 503B.  FDA also published final guidance for compounders under Section 503A (see our previous post addressing that guidance).  As previously addressed, FDA published the long-awaited proposed bulk substance lists after industry’s submission of two rounds of nominations and comments.  Recall that the Agency required an industry-wide “do-over” of the nomination process after too many substances were submitted (including en bulk submissions of entire pharmaceutical compendia), and with allegedly insufficient clinical information concerning many of the nominations (see our previous posts here and here).

The underlying enabling legislation, the Drug Quality and Security Act, Title I (DQSA) (Pub. L. No. 113-54) requires FDA to publish the list of bulk substances for which there is a “clinical need” that may be used in compounding under 503B.  A similar provision exists in Section 503A, but the statute does not contain an explicit “clinical need” requirement.  The publication of the bulk substances lists (which FDA now terms the “bulks”) is occurring during FDA’s Pharmacy Compounding Advisory Committee (PCAC) (Oct. 26 and 27).  This is the third PCAC meeting this year, at which the PCAC has addressed certain nominated substances (for both the so-called positive and negative lists).  FDA notes in the Section 503B interim guidance that, unlike Section 503A bulks nominations, FDA is not required to consult with the PCAC before publishing its nominations.

One of the conditions necessary for an outsourcing facility to qualify for certain exemptions from the FDCA is that it may not compound drug products using a bulk drug substance unless: (1) it appears on a list established by the Secretary identifying bulk drug substances for which there is a clinical need (see Section 503B(a)(2)(A)(i) or (2) the drug product compounded from such bulk drug substances appears on the drug shortage list in effect under FDCA Section 506E at the time of compounding, distribution, and dispensing (Section 503B(a)(2)(A)(ii)). 

For Section 503A compounders, one of the conditions that must be met to qualify for Section 503A’s exemptions from certain provisions of the FDCA is that it: (1) comply with the standards of an applicable United States Pharmacopeia (USP) or National Formulary (NF) monograph, if a monograph exists, and the USP chapter on pharmacy compounding; (2) if such a monograph does not exist, they are components of approved drugs; or (3) if such a monograph does not exist and the drug substance is not a component of an approved drug, it appears on a list developed by the Secretary. (See Section 503A(b)(1)(A)(i)).

The guidance documents set forth the conditions under which FDA does not intend to take action against an outsourcing facility or licensed pharmacy for compounding a drug product from a bulk drug substance that does not appear on a list of substances that may be used in compounding while FDA develops (or finalizes) the lists.

Set forth below are the details:

Section 503A

Approximately 740 substances were nominated. 

• Approximately 275 substances are already eligible for use in compounding (i.e., components of approved drugs, the subject of a USP/NF monograph), and do not need to appear on the list. 
• At least one (Maalox) is not a bulk substance.
• At least one (sodium hexachloroplatinate (IV) hexahydrate) is a biological product subject to approval pursuant to a BLA.  No biological products subject to BLA approval will be eligible for the 503A bulks list.
• At least two are radiopharmaceuticals (GHRP-2 and GHRP-6), to which Section 503A does not apply, and thus the substances are ineligible. 
• At least four appear on the FDA’s list of drugs withdrawn or removed as unsafe or ineffective (chloroform reagent, cobalt chloride hexahydrate, cobalt gluconate, and phenacetin).
• One substance (an extract of cannabidiol and tetrahydrocannabinol) has no currently accepted medical use and is listed in Schedule I of the CSA; it is not eligible for the bulks list.
• About 390 substances were nominated without sufficient supporting evidence for FDA to evaluate them.
• Remaining nominations contained sufficient supporting information; however, FDA determined some raise safety concerns.

FDA has published on its website (and attached to the guidance) four Section 503A bulks lists:

• 503A List 1 – Bulk Drug Substances Under Evaluation:  Bulk substances that may be eligible for inclusion and were nominated with sufficient information for FDA to evaluate them and do not appear on any other list.
• 503A List 2 – Bulk Drug Substances that Raise Safety Concerns: Nominated with sufficient supporting information; however, because FDA has identified safety concerns, FDA has placed these substances on a list that may not be used in compounding unless and until FDA publishes a final rule authorizing their use under Section 503A.
• Section 503A List 3 – Bulk Drug Substances Nominated Without Adequate Support: May be eligible for inclusion on the list but nominations did not include sufficient supporting information.  These may be renominated with sufficient supporting information.
• Section 503A List 4 – Bulk Drug Substances That May Not Be Used to Compound Drug Products under Section 503A (to be developed):  These bulks were considered for inclusion on the list, but after notice-and-comment rulemaking, FDA determined that they should not be used. 

The guidance describes the FDA’s rulemaking process for the nominated substances, including the balancing of the four factors FDA considers when reviewing substances.

FDA states it does not intend to take enforcement action if: (1) the bulk substance appears on List 1; (2) the substance was “originally manufactured” by an establishment that is registered under Section 510, and is accompanied by a certificate of analysis from the original manufacturer (importantly, note that FDA defines “original manufacturer” as the entity that originally produced the bulk drug substance and not a subsequent packer, repacker, labeler, or distributor); (3) the drug is compounded in compliance with all other sections of Section 503A. 

Section 503B

In response to the requests for nominations, approximately 2,590 unique substances were nominated. 

• Approximately 1,740 are biological products subject to approval pursuant to a BLA.  No biological products subject to BLA approval will be eligible for the 5o3B bulks list.
• At least one (Maalox) is not a bulk substance.  Finished drug products are not eligible for the list. 
• At least four are radiopharmaceuticals (strontium chloride, sodium iodide I-131, GHRP-2 and GHRP-6), to which Section 503B does not apply, and thus the substances are ineligible.  Radiopharmaceutical compounding will be addressed in a separate guidance.
• At least five appear on the FDA’s list of drugs withdrawn or removed as unsafe or ineffective (chloroform reagent, cobalt chloride hexahydrate, cobalt gluconate, and phenacetin, and methapyrilene fumarate).
• One substance (an extract of cannabidiol and tetrahydrocannabinol) has no currently accepted medical use and is listed in Schedule I of the CSA; it is not eligible for the bulks list.
• About 650 substances were nominated without sufficient supporting evidence for FDA to evaluate them.
• Remaining nominations contained sufficient supporting information, and may be eligible for inclusion. 

FDA has published on its website (and attached to the guidance) four Section 503B bulks lists:

• 503B List 1 –Bulk Drug Substances Under Evaluation:  Bulk substances that may be eligible for inclusion and were nominated with sufficient information for FDA to evaluate them and do not appear on any other list.
• 503B List 2 – Bulk Drug Substances that Raise Safety Concerns: Nominated with sufficient supporting information; however, because FDA has identified safety concerns, FDA has placed these substances on a list that may not be used in compounding unless and until FDA publishes a final rule authorizing their use under Section 503B.
• Section 503B List 3 – Bulk Drug Substances Nominated Without Adequate Support: May be eligible for inclusion on the list but nominations did not include sufficient supporting infuriation.  These may be renominated with sufficient supporting information.
• Section 503B List 4 – Bulk Drug Substances That May Not Be Used to Compound Drug Products under Section 503BA (to be developed):  These bulks were considered for including on the list, but after notice-and-comment rulemaking, FDA determined that they should not be used.

As with FDA’s Section 503A bulks guidance, FDA’s guidance set forth the process for developing the lists.  Like Section 503A, it will publish nominations on a rolling basis.  In order to “avoid unnecessary disruption to patient treatment” while FDA considers bulk substances nominated with sufficient support and for which FDA has not identified safety concerns.  

FDA does not intend to take enforcement action for compounding from bulk under Section 503B provided that: (1) The substance appears on List 1; (2) the substance was “originally manufactured” by an establishment that is registered under Section 510, and is accompanied by a certificate of analysis from the original manufacturer; (3) if the bulk substance is the subject of a USP/NF monograph, the substance complies with it; and (4) the drug product is compounded in compliance with all other provisions of Section 503B.

To ensure that the Agency considers any comments on the draft guidance documents before it finalizes them, interested persons must submit comments by December 28, 2015.  Each guidance document contains a one-page chart (Appendix) setting forth a neat summary of FDA’s bulks policies for Sections 503A and 503B, and FDA’s current lists of bulk substances.      

By Kurt R. Karst –

Hatch-Waxman Patent Term Extension (“PTE”) disputes never get old for this blogger.  There’s often some new twist for FDA or the U.S. Patent and Trademark Office (“PTO”) to consider, as shown in a recent PTE denial for a patent concerning the ZILVER PTX Drug Eluting Peripheral Stent (Docket No. FDA-2013-E-0781).  And even when yet another PTE denial based on a product not meeting the first permitted commercial marketing prong of the PTE statute (35 U.S.C. § 156) pops up, as shown in a recent PTE denial for a patent covering ARIDOL (mannitol inhalation powder) (Docket No. FDA-2012-E-0168), this blogger still feels a little giddy before reading the decision.  But what this blogger enjoys most is a good PTE court battle.  That’s what we have in Boehringer Ingelheim Pharma GmbH & Co. KG, et al. v. FDA, et al., Case No. 15-cv-00656-CKK (D.D.C.).  

As we previously reported, in April 2015, Boehringer Ingelheim Pharma GmbH & Co. KG and Boehringer Ingelheim Pharmaceuticals, Inc. (collectively “Boehringer”) filed a Complaint in the U.S. District Court for the District of Columbia alleging that FDA and the PTO unlawfully shorted by about two months a PTE for U.S. Patent No. 6,087,380 (“the ‘380 patent) covering Boehringer’s PRADAXA (dabigatran etexilate) Capsules approved under NDA 022512.  The Complaint was prompted by a December 2014 PTE regulatory review period decision from FDA in which the Agency refused to revise the Agency’s previous determination published in the Federal Register (see our previous post here).   In that May 2012 Notice, FDA commented that:

[Boehringer] claims December 15, 2009, as the date the new drug application (NDA) for PRADAXA (NDA 22-512) was initially submitted.  However, FDA records indicate that NDA 22-512, received December 15, 2009, was incomplete.  FDA refused to file this application and notified the applicant of this fact by letter dated February 12, 2010.  The completed NDA was then submitted on April 19, 2010, which is considered to be the NDA initially submitted date.

Boehringer alleges in its Complaint that FDA violated the Administrative Procedure Act and the Hatch-Waxman Amendments when the Agency unlawfully relied on the NDA “filing” standard instead of an “initially submitted” standard in the Agency’s calculation of PTE for the ‘380 patent. 

Boehringer lays out its case in a Motion for Summary Judgment filed in September.  According to the company:

The agency violated the Hatch-Waxman Act’s plain language that the approval phase begins “on the date the application was initially submitted for the approved product.” 35 U.S.C. § 156(g)(1)(B).  The agency failed to follow its own patent term extension regulation, which makes clear that the approval phase begins when an applicant initially submits an application sufficiently complete to allow review to commence.  And the agency abandoned without reason or explanation the previous position that it had applied to other applicants. [(Emphasis in original)]

Although Boehringer goes through the two-step Chevron analysis in the company’s memorandum, the company says it’s not really necessary, because the inquiry should end at Step One, as the statute is clear:

FDA’s position is fatally inconsistent with the plain text of the Hatch-Waxman Act itself.  The statute does not provide that the approval phase starts when an application is “ready for filing,” “accepted for filing,” “finally submitted,” or “complete.”  The statute mandates that the approval phase commences when an application is “initially submitted.”  35 U.S.C. § 156(g)(1)(B).  “Initial” means “happening or being at the very beginning: FIRST.”  Webster’s II New College Dictionary (1995).  And Congress quite deliberately chose to use the word “submitted” rather than “filed,” making clear that the application need only be submitted by the applicant and need not be cleared for filing by FDA before the review phase starts.  By selecting the words “initially submitted” rather than “ready for filing,” Congress chose to end the testing phase and begin the approval phase based on the action of the sponsor, not the action of the agency.  [(Emphasis in original)]

Moreover, says Boehringer, citing to legislative history (H.R. Rep. No. 98-857, pt. 1 (1984)), Congress directly addressed the issue presented in the dispute during passage of the Hatch-Waxman Amendments:

The term “initially submitted” is used to describe the point in time when the testing phase is considered to be completed and the agency approval phase to have begun.  This term is used instead of the term “file,” because an application is often not considered to be filed, even though agency review has begun, until the agency has determined that no other information is needed and a decision on the application can be made.  For purposes of determining the regulatory review period and its component periods, an application for agency review is considered to be “initially submitted” if the applicant has made a deliberate effort to submit an application containing all information necessary for the agency review to begin.  [(Emphasis added in brief)]

Turning to FDA’s PTE regulations (21 C.F.R. Part 60), Boehringer says that those regulations “make clear that an application need not be ‘ready for filing’ in order to count as ‘initially submitted,’” because those regulation make no reference to “filing.”  “First, the agency has defined the term “marketing application” as an application for human drug products, medical devices, food and color additives, or animal drug products “submitted” under the applicable laws,” and “[s]econd, FDA’s patent term extension regulations define the phrase ‘initially submitted’ as the date upon which a marketing application ‘contains sufficient information to allow FDA to commence review of the application,’” writes Boehringer. 

Boehring also cites a blast from the past as evidence of FDA acting in an arbitrary and capricious manner in this case.  According to Boehringer, there’s a 1985 PTE decision concerning TONOCARD Tablets that does’nt jibe with FDA’s position here concerning PRADAXA:

FDA’s calculation of PRADAXA’s regulatory review period is contrary to the agency’s past precedent with regard to similarly situated applicants.  Previously, FDA has determined that submission of an application starts the approval phase of the regulatory review period even when the agency later determines that the application is not approvable.  See A.R. 5514-16 (Determination of Regulatory Review Period for Purposes of Patent Extension; Tonocard Tablets, 50 Fed. Reg. 19,809, 19,810 (May 9, 1985)).  The facts in that case are strikingly similar to those presented here: The applicant submitted an application on December 19, 1979.  Six months later, FDA declared the initial application to be “nonapprovable.”  The applicant submitted a different application a few years later that was eventually approved.  The agency found that even though the first application had been declared “nonapprovable” and was replaced by a later application, that fact “did not preclude that application’s commencement of the approval phase of the regulatory review period.”  Id.  The agency reasoned that while the December application “was not approvable, it was sufficiently complete to permit agency action to begin.”  Id.  Accordingly, the applicant received day-for-day credit for the intervening months for patent term extension purposes.  Id.

FDA, in the Agency’s Cross-Motion for Summary Judgment (Motion to Dismiss), has a response for each argument proffered by Boehringer.  Citing another court decision on PTEs involving the statute’s “initially submitted” language – Wyeth Holdings Corp. v. Sebelius, 603 F.3d 1291 (Fed. Cir. 2010) (see our previous post here) – FDA paints Boehringer’s case as an attempt by the company to have its cake and eat it too:

Generally, priority review shortens the targeted review time for a drug that may provide a significant improvement over marketed therapies.  Priority review often enables a drug sponsor to market its product sooner than the traditional review process.  But there is a trade-off.  Priority review usually leads to a shorter patent term extension because a shorter approval phase typically reduces the regulatory review period.  Yet here, Boehringer wants it all.  In order to obtain an earlier approval, Boehringer requested and enjoyed the benefits of priority and rolling review (and a shorter approval phase); but in order to obtain a longer patent term extension, Boehringer now seeks a longer approval-phase than the statute provides.  In an earlier lawsuit, similarly challenging FDA’s determination of the date a New Animal Drug Application was “initially submitted” in a case where it had conducted phased review, the Federal Circuit rejected a similar request for an overly generous patent term extension, holding that the statutory term “initial submission” was ambiguous, and that FDA’s interpretation was reasonable.  The same is true here, and this Court should likewise reject Boehringer’s attempt to unduly extend its patent term.  [(Internal citations omitted)]

Because the statute is unclear as to the meaning of “initially submitted,” says FDA citing Wyeth, the Agency’s determination must be considered under Chevron Step Two, where a court determines whther or not an agency interpretation is reasonable.  And FDA says the Agency’s decision is quite reasonable, relying in part on the same House Report relied on by Boehringer:

An “application” for purposes of this provision must be “submitted . . . under”—and thus contain the information required by—the cross-referenced subsection of the FDCA, namely, 21 U.S.C. § 355(b). . . .  An application with inadequate sections that cannot be substantively reviewed is not enough. . . .  In order words, to count as “the application . . . submitted . . . under subsection (b) of section 505 [of the FDCA, codified at 21 U.S.C. § 355(b)],” “the application” must be sufficiently complete and capable of being reviewed. . . .  [A]n “application” is “initially submitted” under 21 U.S.C. § 355(b) when the sponsor has provided FDA with all the elements required by Section 355(b) and the corresponding regulations to make an approval decision.  Indeed, the House Report’s use of the words “all information necessary” rather than “some information necessary” reflects Congress’s intent that the approval phase commence when an application is sufficiently complete to permit FDA’s substantive review of all required components of the application.

FDA continues this line of argument in refuting Boehringer’s interpretation of the PTE statute:

Boehringer wrongly focuses on the words “initially submitted” rather than the phrase “the application . . . for the approved product . . . under . . . [21 U.S.C. § 355(b)]” as the critical statutory language in this case.  The relevant question is what must be “initially submitted.” Determining the date that “the application . . . for the approved product . . . under . . . [21 U.S.C. § 355(b)]” is “initially submitted” requires knowing what constitutes such an “application.”  As explained above, such an “application” must contain the information required by 21 U.S.C. § 355(b) and 21 C.F.R. § 314.50.  Boehringer did not submit clinical data (which is required by FDA regulations) that was sufficiently reviewable until April 19, 2010.  Therefore, Boehringer did not “initially submit[]” a sufficiently complete and reviewable application until April 19, 2010.

Turning to the TONOCARD Tablets PTE precedent cited by Boehringer as evidence of arbitrary and capricious action by FDA, the Agency comes armed with its own precedents beginning in 1994, and says that the Agency’s “position in this case is not new.  On the contrary, the agency has consistently maintained, for over two decades, that the approval phase begins when FDA receives an application that is sufficiently complete to be reviewed.”  The TONOCARD Tablets precedent is “readily distinguishable,” says FDA.  “In the Tonocard Tablet case, the non-approvable decision is not analogous to FDA’s refuse-to-file decision for Pradaxa: the Tonocard application was ‘complete enough’ for FDA to commence review and determine that it was not approvable, while for Pradaxa, the deficient module in the application meant that it was not yet at that stage.”  (Citation omitted)

Responses to the Cross-Motions for Summary Judgment are due by November 24, 2015, and replies are due by December 16, 2015.

By James R. Phelps –

Last Thursday, at the 16th Pharmaceutical Compliance Congress and Best Practices Forum, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division, Benjamin Mizer, reviewed enforcement policies that the Department of Justice will follow.  Appropriate to the forum, he focused on the industries regulated by FDA.  The emphasis he gave to the requirements for settling civil and criminal cases brought against organizations gives sharp focus to the problem of doing business when governed by a law that operates with a malum prohibitum standard of liability, a law that permits findings of criminal guilt without proof of intent or guilty knowledge.

If an organization wishes to settle a criminal or civil case, in order to receive credit for cooperation and therefore a reduced penalty, the DOJ will require that organization “…to identify all individuals involved in the wrongdoing, regardless of the individual’s position or seniority in the company.  This includes providing all relevant facts about the individual’s misconduct.”   Mr. Mizer was clear to say that failure to provide this information means no partial credit will be given; in other words, that would be a failure to cooperate that would be brought to the attention of the court. 

Mr. Mizer said investigations would, for criminal and civil cases, from the outset focus on individuals.

Individuals in FDA-regulated business who stand in what is considered to be a “responsible relation” to a violative activity can be held liable in the absence of intent or actual knowledge of that activity.  In practice, operating under this standard, the DOJ and FDA have charged presidents of companies when the violation occurred at the other end of the country, and plant managers whose plant did the physical production of a product that had a design flaw – unknown to him – caused by faulty engineering designs in another part of the country.  In short, what is a responsible relation depends pretty much on what a prosecutor decides and just about anyone, from top to bottom in the executive suites, who had an association with an activity deemed violative, is at risk.

In the past, DOJ and FDA personnel have said they would only pursue a criminal case when some real wrongdoing was involved.  Of course, the DOJ and FDA personnel leave it to themselves to decide what is the ‘wrongdoing’ that merits prosecution, and they know that, at a trial, the judge will give the jury instruction that criminal intent or knowledge is not necessary for conviction.  So as a practical matter, there is a very slim protection against the effect of the malum prohibitum standard.

The effect of the DOJ policy is, then, that in civil and criminal litigation, to be “cooperative” and avoid being labeled “uncooperative,” an organization must identify an array of potential defendants for the prosecutors to select.  When there is deliberate criminality or palpable negligence, corporations and most organizations are responsible to separate themselves from such people, so identifying the perpetrators could be reasonable.  However, the experience in the FDA-regulated industry is that most of the problems arise when people simply cannot anticipate adverse things that occur because of unforseen issues of design, manufacture, or use of their products; subjecting personnel to risk of criminal prosecution in these circumstances is unfair.

The Supreme Court read the malum prohibitum standard into the Federal Food, Drug, and Cosmetic Act in the 1940s.  The DOJ and FDA have enjoyed the power it gave them, and have successfully defeated any effort by legislation or litigation to ameliorate that standard.  The DOJ policy provides – promotes – a process to give the malum prohibitum standard fuller implication in all cases where there is conflict with the regulated parties.  Personnel in the regulated industry, those who are doing their best to provide health-related products, have reason to be uncomfortable.

Join the Federal Bar Association (FBA) and its Federal Litigation Section on Tuesday, October 27 in Washington, DC for the Annual FBA Federal Litigation Conference! Expert panelists and judges will be discussing hot topics including but not limited to cyber security, electronic evidence, and tips for federal practice. Hyman, Phelps & McNamara’s Karla Palmer will be moderating a panel that will provide insight from in-house counsel.  Other panels will cover the Supreme Court of the United States and insights from federal judges. In addition to a plethora of CLE credit opportunities, the luncheon and receptions provide excellent networking opportunities to meet professionals from across the nation. To register to attend, complete the affiliate registration form and receive $150 off the nonmember rate.

By Kurt R. Karst – 

Last week we posted on one of two bills recently introduced in Congress that continues a trend to push for (or reward) new product development by offering an incentive different from the standard grants of patent and non-patent marketing exclusivities (S. 2055, the Medical Countermeasure Innovation Act of 2015).  We promised we would address the second bill in a post in the coming days.  This post concerns H.R. 3539, the Reinvigorating Antibiotic and Diagnostic Innovation Act of 2015, which was introduced by Representative Charles Boustany (R-LA) in September.  While most recent legislative proposals focus on offering some variation of the current Priority Review Voucher programs (see here and here), H.R. 3539 takes a different tack: tax credits.

Offering tax credits as an incentive to develop products by offsetting clinical trial expenses is not new.  But to our knowledge you have to go back to the early 1980s to find the last time Congress amended the tax code to provide tax credits to FDA-regulated industries.  Specifically, under the Orphan Drug Act of 1983, a tax credit for certain clinical testing expenses for an orphan drug incurred in that taxable year is permitted under the Internal Revenue Code and under the Internal Revenue Service’s implementing regulation at 26 C.F.R. § 1.28.  The tax credit permits a firm paying United States taxes to credit against its federal income tax 50% of “qualified clinical testing expenses” relating to orphan drug development.  To qualify for the credit, the clinical testing must, under 26 U.S.C. § 45C: (1) be conducted under an IND; (2) relate to a drug and indication that has received an orphan drug designation from FDA; (3) occur after FDA designation as an orphan drug and before FDA approval; and (4) be conducted by or on behalf of the taxpayer to whom the orphan drug designation applies.

Expenses eligible for the orphan drug tax credit include both in-house testing expenses, such as wages and non-depreciable supplies, and contract research expenses (i.e., amounts paid to persons other than employees to conduct the research).  Under 26 U.S.C. § 39(a), companies can carryback unused tax credits “to each of the 1 taxable years preceding the unused credit year,” and can carryforward unused tax credits “to each of the 20 taxable years following the unused credit year.”  Although the law sets a baseline that “[n]o tax credit shall be allowed . . . with respect to any clinical testing conducted outside the United States,” there’s an exception when “testing is conducted outside the United States because there is an insufficient testing population in the United States . . . .”  (A regulation – at 26 C.F.R. § 1.28-1(d)(3)(ii)(B) – defines “insufficient testing population” to mean “[t]he testing population in the United States is insufficient if there are not within the United States the number of available and appropriate human subjects needed to produce reliable data from the clinical investigation.”)

This past June, the Biotechnology Industry Organization (“BIO”) and the National Organization for Rare Disorders (“NORD”) released a report touting the success of the orphan drug tax credit program.  We covered that report in a post here.

Why all this background on the orphan drug tax credit?  Because the Reinvigorating Antibiotic and Diagnostic Innovation Act of 2015 borrows heavily from, and is modeled after, the orphan drug tax credit program. . . . but with a significant twist.

H.R. 3539 would amend the Internal Revenue Code to add Sections 45S (“Clinical testing expenses for qualified infectious disease products”) and 45T (“Clinical testing expenses for rapid infectious diseases diagnostic tests”) to provide a tax credit for certain “qualified clinical testing expenses” related to both a “qualified infectious disease product” and a “qualified rapid infectious diseases diagnostic test.”  The bill links the tax credit to the Generating Antibiotic Incentives Now Act, which is codified at FDC Act § 505E and provides for a 5-year exclusivity extension for drugs designated as a qualified infectious disease product. 

H.R. 3539 defines a “qualified infectious disease product” to mean any human drug or biological product that (1) “is intended to treat a serious or life-threatening infection, including those caused by— (i) an antibacterial or antifungal resistant pathogen (including novel or emerging infectious pathogens), or (ii) qualifying pathogens listed by the Secretary of Health and Human Services under [FDC Act § 505E(f)];” and (2) “is intended to treat an infection for which there is an unmet medical need as defined by the Secretary of Health and Human Services.”  The bill also defines a “qualified rapid infectious diseases diagnostic test” to mean “an in-vitro diagnostic (IVD) device that provides results in less than four hours and that is used to identify or detect the presence, concentration, or characteristics of a serious or life-threatening infection, including those caused by (1) an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens or (2) qualifying pathogens listed by the Secretary of Health and Human Services under [FDC Act § 505E(f)].”

A lot of the rules for the orphan drug tax credit program would also apply to the proposed qualified infectious disease tax credit.  For example, foreign clinical testing expenses are excluded from the credit unless there is an insufficient testing population in the United States.  There is also the possibility to carryback and carryforward unused tax credits as with the orphan drug tax credit. 

What makes the proposed qualified infectious disease tax credit unique, however, is the ability to transfer by sale allowable credit.  Specifically, H.R. 3539 provides that “[a]ny taxpayer holding a credit under this section may transfer for valuable consideration unused but otherwise allowable credit for use by” either a “qualified pharmaceutical research taxpayer” or a “qualified diagnostics research taxpayer.”   A “qualified pharmaceutical research taxpayer” is defined in the bill to mean “any domestic corporation the primary mission of which is pharmaceutical research or development.”  A “qualified diagnostics research taxpayer” is defined to mean:

any domestic corporation that derives— 

(A) any gross income from research or development on diagnostic tests used to identify or detect the presence, concentration or characteristics of a serious or life-threatening infectious disease or pathogen; or

(B) any gross income from research or development on qualified infectious disease products within the meaning given to such term in section 505E(g) of the Federal, Food, Drug, and Cosmetic Act; or

(C) more than 50 percent of its gross income from activities related to health care.

A taxpayer that transfers any amount of qualified infectious disease tax credit is required to file notice of such transfer with the Treasury Secretary in accordance with procedures and forms that would be prescribed by the Secretary.

We’re likely to see more initiatives to incentivize product development as Congress ramps up efforts to pass legislation, such as the 21st Century Cures Act, to revamp product development and approval processes.  Indeed, earlier this week, one United States Senator announced his “Medical Innovation Agenda” to streamline FDA approval processes.  The announcement was accompanied by the introduction of two new pieces of legislation: the FDA Regulatory Efficiency Act (S. 2187) and the Rare Device Innovation Act (S. 2188).

By Larry K. Houck –

Ruth Carter, Chief of the Drug Enforcement Administration’s (“DEA”) Office of Liaison and Policy Section, was among the presenters who addressed the 31st Annual Conference of the National Association of State Controlled Substance Authorities (“NASCSA”) this week in Scottsdale, Arizona.  Ms. Carter provided an update on DEA activities and initiatives following the recent leadership changes at the agency and the Office of Diversion Control.  Ms. Carter stated that the agency is considering issuing further clarification of suspicious order requirements, possibly a regulation specifying the format for suspicious order reporting and how registrants must maintain those reports with other required controlled substance records.

In the wake of almost ten years of significant DEA civil and administrative enforcement action related to suspicious orders, it remains to be seen the extent to which such rulemaking will clarify the standard for such reporting or only focus on a reporting format.  Issuance of additional clarification of what DEA requires and expects for suspicious order reporting is overdue and would be most welcome by registrants.

In addition, Ms. Carter stated that DEA may issue a final rule on electronic prescriptions (the agency issued an interim final rule on March 31, 2010) and a proposed rule on transporting controlled substances by ambulance, vessels and ships and athletic team physicians.  Ms. Carter did not provide a timeframe for these actions.  Ms. Carter also noted that DEA will hold two Drug Take-Back events in 2016: one in April and the second in October.  Ms. Carter observed that DEA has established goals to conduct cyclic inspections of nonpractitioners every three to five years.  She also stated that the agency has begun conducting scheduled inspections of retail and hospital pharmacies.  Previously, DEA’s inspections of practitioners (doctors, pharmacies, etc.) was primarily limited to investigations into alleged violations.

By Kurt R. Karst –

Last month we posted on a bill introduced in the U.S. Senate – S. 2041, the Promoting Life-Saving New Therapies for Neonates Act of 2015 – that would amend the FDC Act to add Section 530 to create a transferable “Neonatal Drug Exclusivity Voucher.”  The bill, we noted, continues a recent trend to push for (or reward) new product development by offering an incentive different from the standard grants of patent and non-patent marketing exclusivities (including incentives that merely stack new exclusivity periods upon one another).  A few days after the introduction of S. 2041, two other bills were introduced in Congress that offer alternative rewards for targeted product development.  In today’s post we’ll cover the fist proposal: S. 2055, the Medical Countermeasure Innovation Act of 2015, introduced by Senator Richard Burr (R-NC).  The second bill will be covered in a post in the coming days. 

In addition to making certain changes to the Strategic National Stockpile, clarifying the contracting authority of the Biomedical Advanced Research and Development Authority, and prompting FDA to prioritize finalization of draft guidance on the so-called “Animal Drug Rule,” the Medical Countermeasure Innovation Act of 2015 would, in Section 7, amend the FDC Act to add Section 565A, titled “Priority review to encourage treatments for agents that present national security threats.”

That’s right, another Priority Review Voucher (“PRV”) program is under consideration by Congress!  If enacted, the new PRV program would be added to the Rare Pediatric Disease PRV (“Pediatric PRV”) program (FDC Act § 529) created in 2012 by the FDA Safety and Innovation Act, and to the Tropical Disease PRV (“TD PRV”) program (FDC Act § 524), cretaed in 2007 by the FDA Amendments Act. 

We’ll call the new PRV proposed in S. 2055 the “CBRN Countermeasure PRV,” where the “CBRN” is shorthand for “Chemical, Biological, Radiological and Nuclear.”  The CBRN Countermeasure PRV program is modeled after the current TD PRV and Rare Pediatric Disease PRV programs, but is targeted at the development and approval of products that are the subject of a “material threat medical countermeasure application.”   Such an application is an application for a drug or biological product, no active ingredient of which has been previously approved, that qualifies for 6-month priority review, and that is intended to “prevent, or treat harm from a biological, chemical, radiological, or nuclear agent identified as a material threat under [PHS Act §  319F-2(c)(2)(A)(ii)], or “to mitigate, prevent, or treat harm from a condition that may result in adverse health consequences or death and may be caused by administering a drug, or biological product against such agent.”

Like other PRVs, the CBRN Countermeasure PRV would be transferable, requires notice to FDA before use (in this case only 90 days), and is subject to a special application user fee.  Of course, the ability to transfer (by sale) a PRV is what has made PRVs quite sought after.  So far, FDA has issued 7 PRVs under the TD PRV and Rare Pediatric Disease PRV programs (see here).  One PRV recently sold for an astounding $350 million.

Despite the growing popularity of PRVs, there are PRV detractors (or at least those who have expressed some concern with PRVs).  In a recent interview with folks from The RPM Report, FDA Office of New Drugs Director John Jenkins shared his thoughts about the PRV programs administered by FDA.  When asked whether he thinks PRVs are a good way to incentivize drug development, Dr. Jenkins commented:

The PRV programs require FDA to provide a service (i.e., priority review) that would not otherwise be warranted on the merits for the application for which the voucher is redeemed.  This approach is not consistent with FDA’s usual approach to determine priorities for its public health work based on the merits of the application under review.  In effect, these programs allow sponsors to “purchase” a priority review at the expense of other important public health work in FDA’s portfolio.

Dr. Jenkins also noted during the interview that “[t]he PRV vouchers issued to date have been awarded to drugs that were already being studied in the U.S. or approved in other countries prior to the passage of the PRV legislation.”  This is an observation echoed by Aaron Kesselheim, a Professor of Medicine at Harvard, in a recent article published in The Journal of the American Medical Association.  According to Dr. Kesselheim, there is “little reliable evidence” that the TD PRV program has spurred novel drug development.  “Several more promising approaches exist to promote discovery of new treatments for neglected tropical diseases or other overlooked disease classes,” says Dr. Kesselheim.  “In particular, greater funding of basic science research would help identify novel targets for therapy.”

We imagine that there is also some concern among drug and biological product manufacturers that new PRV programs will dilute the value of a PRV.  It’s a simple issue of supply and demand.  The more PRVs issued and on the market, the less they are likely to sell for. 

Given the criticism of and concerns about PRVs on the one hand, and Congress’s apparent need to create incentives on the other hand, we’ve given some thought to other non-exclusivity incentives Congress might consider as it looks for alternative ways to incentivize drug and biological product development.  Borrowing from this blogger’s vast board game experience (e.g., Risk, Monopoly, and Life), Congress might consider a transferable “Anti-PRV.”  An “Anti-PRV” would allow the holder of such a PRV, awarded for some particular product development achievement, the ability to cancel out another company’s redeemed Pediatric or TD PRV (or a CBRN Countermeasure PRV if it exists).  Or how about the “Standstill Voucher”?  That voucher would provide the holder with the ability to freeze FDA’s review of a competitor’s NDA or BLA review for 6 months.  Or maybe the “Switch-Out PRV,” which would allow the holder of such PRV the ability to take another sponsor’s PRV and leave a competitor with a standard 10-month review.  We could go on and on, but we’ll stop with these three proposals (all said with tongue-in-cheek of course).

By James R. Phelps & Wes Siegner –

“Bad reactions to dietary supplements are sending thousands of Americans to the ER every year, a new study shows.”  That’s the attention-getting lead in a CBS News story dated October 15.  It was based on a study report appearing in the New England Journal of Medicine.  The NEJM study reported results of surveillance data about ‘dietary supplement-related’ adverse events, collected from 63 emergency departments in the United States between 2004 and 2013.  The study casts a wide net to include, among adverse events, unsupervised ingestions by children and incidents where seniors were in the emergency room because of difficulty swallowing their supplements. 

The Council for Responsible Nutrition (CRN) and the Natural Products Association (NPA) responded to criticize the study, challenging the method of data selection and the methodology used.

The authors of the NEJM article are CDC and FDA personnel, and the critics express wonder about why the authors used data from emergency room visits and not the adverse reaction reports for dietary supplements that were given to FDA since 2008; it would seem that these adverse reaction reports are exactly on point.  The critics also note that data concerning products that are not dietary supplements were included among the reports of ‘related’ adverse dietary supplement events, confounding the application of the study’s data to dietary supplements.  The response of CRN and NPA goes on to address and mostly contradict or find a lack of significance for each of the report’s assertions. And the authors of the NEJM article themselves identify weaknesses in the sample size and the statistical information the data can provide. 

There is another question about the study that deserves attention.  The report says “[c]ases were defined as emergency department visits for problems that the treating clinician explicitly attributed to the use of dietary supplements.”  This could and perhaps should be taken to mean that the clinicians actually said the ingested supplement caused the problem.  Elsewhere in the report, however, the authors talk only of ‘supplement-related’ events, and some of the charts identify the events as ‘associated with’ supplements.  There is good reason for this terminology to raise questions.

Years ago, FDA wanted to take a regulatory action with sulfites for use on foods, and claimed that the administrative record demonstrated that sulfites on foods caused – were ‘associated with’ – deaths.  Examination of the record, however, showed that not to be the case.  For example, in one instance ‘associated with’ meant that a fellow had eaten at a Mexican restaurant, ingested sulfite-treated food, and died in a motorcycle crash on his way home.  In that instance and others in that record, the agency incorrectly treated ‘associated with’ to mean ‘caused.’  So it would be good for there to be a clarification, based on the accepted tenets of toxicology, of the meaning of the words ‘related’ and ‘associated with’ in this study – was there an allegation or actual evidence of causation by a dietary supplement of the adverse events or did the personnel who collected and worked with the emergency room documents make that assumption?

The FDA and others, including the NEJM, have long wished for the agency to have the power to deal with dietary supplements as they do with pharmaceuticals, to have the preclearance authority and the other statutory supervisory powers.  Over the years, FDA personnel have consistently remarked upon the dangers they see are created by their lack of such complete authority.  This theme is given extensive and generous treatment in the NEJM study.  The publicity given to the study report, and the statements given by the authors to the press, are unabashed promotions for FDA to be given the controls that the law currently does not give the agency.  In the scheme of things, the dietary supplement industry, absent some heroic effort, cannot expect to be given much attention as it makes its responses.

No matter what the final judgment is for the NEJM study, whether it is sound or truly useful as a basis for social policy, the study has done what was intended, as demonstrated by the call-to-action headline of the CBS story; that is, governmental bodies and the public will be influenced to extend regulatory powers over dietary supplements.  Whether that will be sufficient to achieve the regulators’ goal remains to be seen.

By Kurt R. Karst –

Predicting the future is a tricky business.  Predictions don’t often pan out, even when most or all of the indicators prognosticators use say something will (or will not) happen.  We have a pretty decent track record of guessing how a case might come out or whether FDA will be challenged over a particular decision.  Last week we batted .500 on two previous predictions.

In July, after the U.S. Court of Appeals for the Federal Circuit issued a severely fractured panel opinion in Amgen v. Sandoz concerning various statutory issues under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), we thought the likelihood that the Federal Circuit would grant petitions for rehearing and/or petitions for rehearing en banc (from both Amgen and Sandoz) was pretty high.  After all, we had to chart out the differing Circuit Judge opinions on a couple of the issues at bar (see our previous post here).  Moreover, the implications of the Court’s decision, if not altered, are manifold and may very well set the stage for implementation of the BPCIA’s so-called “patent dance” procedures for quite some time.  Last Friday, however, the Federal Circuit surprised us when the Court issued an Order denying the Amgen and Sandoz petitions for rehearing and rehearing en banc. 

We doubt the Federal Circuit’s Order will be the last word in the case.  So, we’re going to double down now and predict that the U.S. Supreme Court will be asked by Amgen and/or Sandoz to take up an appeal of the Federal Circuit’s decision.  There’s simply too much at stake here for the budding biosimilar industry (and for the future of the BPCIA)  for a party not to take this dispute to the next level.  We’ll know in the coming months if our prediction is correct.  Of course, if neither Sandoz nor Amgen go further (or the issues are otherwise deemed moot in the case), both of the primary issues in the case – whether or not the “patent dance” is mandatory, and when a biosimilar applicant can provide notice of commercial marketing – may still reach the U.S. Supreme Court though a future dispute (perhaps here or here).

We hit the nail on the head with our second prediction when Otsuka Pharmaceutical Development & Commercialization, Inc. and Otsuka Pharmaceuticals Co., Ltd. (collectively “Otsuka”) filed a Complaint in the U.S. District Court for the District of Columbia last week challenging FDA’s October 5, 2015 denial of a Citizen Petition (Docket No. FDA-2015-P-2482) and approval of Alkermes plc’s (“Alkermes”) 505(b)(2) NDA 207533 for ARISTADA (aripiprazole lauroxil) Extended-elease Injectable Suspension in light of unexpired 3-year new clinical investigation applicable to Otsuka’s ABILIFY MAINTENA (aripiprazole) for Extended-release Injectable Suspension, for Intramuscular Injection 300 mg/vial and 400 mg/vial, approved under NDA 202971.  ARISTADA is a prodrug of N-hydroxymethyl aripiprazole (and which N-hydroxymethyl aripiprazole is a prodrug of aripiprazole) that FDA approved for the treatment of schizophrenia (the same use for which ABILIFY is approved).

You can refer back to our previous post for the details on FDA’s (rather lengthy and complex) decision that Otsuka is challenging.  In the end, the dispute concerns the scope of 3-year exclusivity.  Otsuka alleges in its Complaint that FDA violated the FDC Act’s 3-year exclusivity provisions (FDC Act § 505(c)(3)E)(iii) and (iv)), the Agency’s regulation governing 3-year exclusivity (21 C.F.R. § 314.108), and the Administrative Procedure Act (“APA”) in approving ARISTADA.  According to Otsuka:

The FDA decisions challenged in this case undermine a fundamental aspect of the [FDCA]. . . .  Here, FDA disregarded the text and purpose of the exclusivity provisions and, in their place, created a wholly unauthorized new scheme to deny Otsuka exclusivity rights it earned and to approve a so-called new drug that undeniably is not a medical advance; provides no new or additional therapeutic benefit; and, as its own manufacturer has boasted repeatedly, operates in the body exactly as does Otsuka’s drug.  Rather than incentivize innovation and new drug development to benefit public health, FDA’s action punishes the innovator and unlawfully rewards a follow-on copycat company that proposes to bring to market a drug that provides no new or additional public health benefit.  FDA’s decision inverts the intent of the FDCA by denying Otsuka the protection to which it is legally entitled and rewarding what is, at best, an imitative competitor’s facially clever, but substantively meaningless, chemical trick.  Neither law nor sound policy supports this outcome.  FDA’s decision should not stand.

Otsuka asks the D.C. District Court to declare, after expedited proceedings (in a Motion to Expedite), that FDA’s denial of Otsuka’s exclusivity rights and ARISTADA approval violated the APA insofar as such alleged violations are arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law.  Otsuka also asks the court to vacate FDA’s ARISTADA approval and “any FDA decisions or actions underlying or supporting or predicated upon that approval,” and that the court declare that Otsuka’s 3-year exclusivity precludes the Agency from granting approval of the ARISTADA NDA until such exclusivity expires in 2017.  As one would expect, Alkermes promptly filed a Motion to Intervene in the case.