By Andrew J. Hull* - 

On June 22, three major pharmacists associations signed a letter to FDA asking the agency to use its enforcement discretion as pharmacies struggle to create appropriate product-tracing policies and practices before the July 1 compliance deadline under the Drug Supply Chain Security Act (“DSCSA”).  See FDCA § 582(d)(1)(A) (necessitating dispensers to comply with the DSCSA’s product-tracing requirements by July 1, 2015).  In the letter, representatives from the National Community Pharmacists Association (“NCPA”), the American Pharmacists Association (“APhA”), and the National Alliance of State Pharmacy Associations (“NASPA”) claimed that, while their organizations are striving to educate their members on the new law and to help them implement proper policies ahead of the deadline, many pharmacies are still inadequately prepared to comply with the product-tracing requirements.

Specifically, the organizations state that according to a survey of NCPA members, only half of the survey respondents have even been in contact with their wholesale distributors regarding how transaction information would be provided, and many were unaware of services provided by wholesale distributors to maintain and store information.  Additionally, less than 20 percent of respondents were aware of services provided by secondary wholesalers to maintain and store transaction information.

The organizations also expressed concern that the DSCSA does not require secondary wholesalers to provide dispensers with the necessary lot number information in a single document.  Because several secondary distributors have noted their intention to only provide this information on the individual bottles of medication, the organizations claim that pharmacies may be unable to comply with the DSCSA’s record retention requirements.

Referencing FDA’s December 24, 2014 guidance document stating that the agency would not enforce the DSCSA’s product-tracing requirements as they apply to manufacturers, distributors, and repackagers (set to take effect on January 1, 2015) prior to May 1, 2015 (see our previous post here), the organizations request FDA to use similar enforcement discretion by delaying the July 1 deadline for dispensers.  Arguing that such a delay in enforcement is necessary “to forestall potential disruptions in the pharmaceutical supply chain,” the organizations state that their members would continue to make “intense, concerted efforts toward full compliance.”

It will be interesting to see if FDA responds to these concerns even at this late date.  It did so before: FDA’s notification of enforcement discretion of the January 1, 2015 compliance deadline came only 8 days prior on December 24, 2014, right in the middle of the holiday season.  We suspect this decision will be based on whether FDA agrees that the industry still needs more time to implement these standards.  The efforts of these organizations to educate and inform their members should, however, provide FDA with assurance that the industry is taking the DSCSA’s product-tracing requirements seriously.

We will be closely watching to see if FDA releases any notification or guidance as the July 1 deadline approaches.

*Admitted only in Virginia. Work supervised by the Firm while D.C. application pending.

By Kurt R. Karst –      

We try our best to stay on top of the latest lawsuits against FDA, but every once in a while one gets past us without us quickly noticing.  That recently happened when Prometheus Laboratories Inc. (“Prometheus”) filed a Complaint and a Motion for Temporary Restraining Order and/or Preliminary Injunction in the U.S. District Court for the District of Columbia alleging that FDA violated the Administrative Procedure Act (“APA”), the FDC Act, and applicable regulations when the Agency largely denied a May 2013 Citizen Petition (Docket No. FDA-2013-P-0572) submitted by Prometheus concerning a single, shared Risk Evaluation and Mitigation Strategy (“REMS”) for irritable bowel syndrome drug Alosetron Hydrochloride Tablets (see our previous post here), and approved a generic version of the drug with its own REMS.  To our knowledge, it’s the first lawsuit against FDA challenging the Agency’s REMS authority. 

Approved under NDA 021107, Alosetron Hydrochloride Tablets is marketed by Prometheus as LOTRONEX only for women with severe diarrhea-predominant irritable bowel syndrome.  LOTRONEX is approved with a REMS with Elements To Assure Safe Use (“ETASU”) that restricts distribution of the drug.  Under the FDC Act, if a brand-name reference listed drug under an NDA is approved with an ETASU REMS, then a generic version of that drug that is the subject of an ANDA must also have an ETASU REMS.  (For a list of products subject to a REMS, see FDA’s database and our REMS Tracker.)  

Generally, NDA and ANDA sponsors share a single REMS system; however, the statute allows for a deviation from that single, shared system under certain circumstances.  Specifically, FDC Act § 505-1(i)(1)(B) states:

A drug that is the subject of an [ANDA] and the listed drug shall use a single, shared system under [FDC Act § 505-1(f)].  [FDA] may waive the requirement under the preceding sentence for a drug that is the subject of an [ANDA], and permit the applicant to use a different, comparable aspect of the elements to assure safe use, if [FDA] determines that—

(i) the burden of creating a single, shared system outweighs the benefit of a single, system, taking into consideration the impact on health care providers, patients, the applicant for the [ANDA], and the holder of the [RLD]; or

(ii) an aspect of the [ETASU] for the applicable listed drug is claimed by a patent that has not expired or is a method or process that, as a trade secret, is entitled to protection, and the applicant for the [ANDA] certifies that it has sought a license for use of an aspect of the [ETASU] for the applicable listed drug and that it was unable to obtain a license.

Prior to FDA’s consideration of a REMS for Alosetron Hydrochloride Tablets, the Agency granted a waiver from the singe, shared system requirement in only one instance – for Buprenorphine Transmucosal Products for Opioid Dependence.  That changed when FDA approved Roxane Laboratories, Inc.’s (“Roxane’s”) ANDA 200652 on May 4, 2015 for a generic version of LOTRONEX.  Roxane had previously requested a waiver from the single, shared REMS requirement, and FDA granted that waiver request when approving ANDA 200652, but with two conditions:

1.  Your waiver-granted REMS system shall be open to all current and future sponsors of ANDAs or NDAs for alosetron hydrochloride products.

2.  FDA is limiting the grant of the waiver to a term of three years.  If, at the end of the three-year period, Roxane seeks to continue marketing pursuant to the waiver, the Agency will evaluate whether an extension of the waiver is appropriate at that time.

A copy of the ETASU REMS FDA approved with respect to Roxane is available here. 

Prometheus alleged in the company’s lawsuit against FDA that the Agency’s decision to grant a waiver from the single, shared REMS system approved for LOTRONEX violated the law and puts patients as risk.  According to Prometheus:

The statute does not contemplate the attachment of any qualifications or conditions upon the waiver: either a generic drug qualifies for a waiver or it does not. 21 U.S.C. § 355-1(i)(1)(B).  In approving Roxane’s generic version of LOTRONEX®, however, FDA granted a waiver of the statutorily required single, shared REMS that was subject to Roxane meeting two conditions.  Because the statute does not contemplate attaching qualifications or conditions to the waiver, FDA’s conduct is unlawful, arbitrary and capricious and otherwise violates the [APA].  In addition, FDA’s grant of a waiver also was unlawful, arbitrary and capricious because it failed to meet the statutory requirements for a waiver. . . .

By creating two distinct REMS programs, FDA has increased and complicated the compliance obligations imposed on prescribers and pharmacists, which almost certainly will increase the occurrence of prescribing and dispensing errors and undermine the clarity and quality of the communications from prescribers and pharmacists that FDA has determined patients need to assure the safe use of alosetron hydrocholoride. . . .  By approving a separate REMS for the Roxane product, FDA has created a risk of confusion or error that can result in the wrong patient taking alosetron hydrochloride, in patients not taking the drug correctly, and in patients not appropriately responding to the symptoms that can signal a serious adverse event.

FDA and Intervenor-Defendant Roxane alleged in their opposition papers (here and here) that the lawsuit was merely a last-ditch effort by Prometheus to delay generic LOTRONEX competition.  Thus, for example, FDA alleges that:

after dragging its feet for more than three years rather than collaborate with Roxane, Prometheus asks this Court to take immediate and extraordinary action to require FDA to rescind or stay its approval of Roxane’s application, arguing that FDA has acted unlawfully by approving Roxane despite the absence of the single, shared system whose very development Prometheus itself blocked. . . .  Prometheus will face generic competition inevitably, and its pretextual appeals to safety as a means to delay that competition fall flat.  The fact that Prometheus does not like FDA’s decision does not render that decision invalid.  And no amount of gamesmanship by Prometheus can change the fact that the public interest is best served where, as here, the twin goals of increasing availability of lower-cost alternatives and ensuring the safety of marketed drugs are both advanced.

In a May 21, 2015 Minute Order, Judge James E. Boasberg denied Prometheus’ Motion for Temporary Restraining Order (the company’s Motion for a Preliminary Injunction was withdrawn), and set a schedule for Prometheus’ Motion for Summary Judgment, which was expected on June 17, 2015.  But that didn’t happen.   On June 11, 2015, Prometheus filed a Notice of Voluntary Dismissal Without Prejudice dismissing all claims in the action.  And so the case ended before it really began. 

By Jennifer D. Newberger –

To further its efforts to balance risks and benefits with respect to approving medical devices through the premarket approval (PMA) pathway or utilizing the de novo classification process, FDA has now issued a draft guidance, "Factors to Consider When Making Benefit-Risk Determinations for Medical Device Investigational Device Exemptions (IDEs)" (Draft Guidance).  FDA states that a primary purpose of the draft guidance is “to clarify the factors that FDA considers when assessing risks and anticipated benefits for approving IDE studies, and how uncertainty may be offset by a variety of risk mitigation measures which can assure appropriate patient and research participant protections in investigational research settings.”  Draft Guidance, at 5 (emphasis in original).

The draft guidance states three considerations made by FDA in assessing the benefit-risk of an IDE:  1) the stage of development of the device, 2) the maturity of the proposed technology, and 3) the availability of non-clinical testing to complement or replace the need for clinical testing.

FDA acknowledges that “device investigations during different stages of development are generally associated with different types of risk, and different levels of uncertainty.”  Draft Guidance, at 12.  For example, “a greater degree of uncertainty is expected for novel technologies, and at earlier stages of device development, such as first in human or early feasibility trials, while relatively more certainty is expected in traditional feasibility and pivotal trials.”  Id.  The benefit-risk assessment “should focus on whether a proposed study is well-designed to meet its stated objectives as appropriate to the stage of development for the investigated device.”  Id.

FDA also recognized the importance of non-clinical data in potentially obviating or reducing the need for additional clinical testing “to evaluate certain aspects of device design or performance.”  Id.

As with its guidance on benefit-risk determinations for PMAs and de novo submission, the IDE draft guidance addresses the role of patient preference in weighing risks and benefits.  The Draft Guidance notes that patients may consider various risks and benefits in a manner different from their family or physician, and also that some patients may be willing to take on higher risks to achieve a small benefit, while others are risk averse.  FDA says it intends to evaluate these different factors in its review of IDE submissions. 

An important part of assessing the benefits and risks are the mitigations put in place to manage the risks.  Such measures may include building safety features into the device, use of protective measures, and communication of safety information.  The Draft Guidance notes that “the preferred hierarchy of risk mitigation is to first attempt to eliminate the risk, then if this is not possible, to design and implement protective measures, and communicate the residual risk to patients and operators such as by labeling.”  Draft Guidance, at 20.

The Draft Guidance describes FDA’s assessment of the benefits to the study subjects as well as to others.  Key elements include the type of benefit, magnitude of the benefit, probability of the participant experiencing one or more benefits, and duration of the effect.  FDA will also consider the extent to which the “study will yield generalizable knowledge about the disorder or condition being studied.”  Draft Guidance, at 22.

Similar to the benefit-risk considerations for PMAs and de novo classifications, FDA also says it will consider the following:  characterization of the disease, availability of alternatives, subject tolerance for risk and perspective on benefit, uncertainty, and least burdensome study design.

The Draft Guidance concludes with an appendix that describes the benefit-risk information that an IDE sponsor should include in its submission. A second appendix provides hypothetical examples of summary benefit-risk assessments.  It is encouraging that FDA continues to focus on the balance between benefits and risks, recognizes that pre-clinical data can reduce clinical requirements, and recognizes that there may be different considerations for different patient populations. 

By Kurt R. Karst & Josephine M. Torrente – 

An article recently published in The BMJ (formerly known as the British Medical Journal), titled “Comparison of content of FDA letters not approving applications for new drugs and associated public announcements from sponsors: cross sectional study,” and co-authored by several FDAers, drew a lot press (see, e.g., here, here, and here).  The article describes the results of an internal FDA review of 61 Complete Response Letters (“CRLs”) issued between August 11, 2008 and June 27, 2013 (48 for NDAs and 13 for BLAs) attempting to compare the reasons identified in those CRLs for not approving a product with the respective applicants’ public statements regarding the CRL.  The article includes a lot of statistics and little context; for example: 

• NDAs were less likely than BLAs to have a press release associated with a CRL, with a relative risk of 0.79 (95% confidence interval 0.66 to 0.95);  however no information was provided on whether the CRL was a material event to the applicant in more of the BLA cases than the NDA cases.
• Of the 33 CRLs mentioned in both press releases and U.S. Securities and Exchange Commission filings, 7 of the filings (21%) included a statement with more information from the CRL than the press release; however, no information was provided on how many of the CRL applicants were subject to SEC reporting requirements.
• Of 32 CRLs calling for a new clinical trial (for safety or effectiveness), 19 (59%) had “matching” press release statements; “matching” was defined as “[a]ny press release statements that covered the same issues as statements in corresponding [CRLs]”;
• Press releases were not issued for 11 of 61 CRLs (18%) sent between August 2008 and June 2013; however, again, no information was provided on whether the CRL was a material event to the applicant in more of the BLA cases than the NDA cases;
• Press releases did not match CRL statements in 13 instances; and
• Press releases matched 93 of the 687 reasons (14%) FDA stated in a CRL for not approving a product; however, no information was provided on how many of the FDA’s stated reasons were material.

Such a lack of context renders these statistics largely uninformative – but perhaps the article is more focused on advancing FDA’s years-long push to circumvent applicable FOIA exemptions by pressuring industry to make CRLs public.  The authors acknowledge as much near the end of the paper in a section titled “Policy considerations.”  There, the authors state:

Our analysis of the content of press releases indicates that they are incomplete substitutes for the detailed information contained in [CRLs].  Disclosure of [CRLs] would allow the FDA to increase the overall transparency of its regulatory processes, providing greater awareness of the agency’s role in protecting health and combating misperceptions regarding the basis for non-approval of a drug.  It would also allow for broader and more informed public discussion by relevant stakeholders (such as patients, clinicians, researchers, and public health advocates) of the scientific and regulatory reasons for the FDA’s actions.  The need for increased transparency, however, must take into consideration the legal requirement to protect sponsors’ trade secrets and confidential business information.

FDA’s campaign to obtain public release of CRLs spans at least 5 years but appears to be growing in intensity.  Back on May 19, 2010, FDA’s Transparency Task Force, chaired by then-Principal Deputy Commissioner Joshua Sharfstein, issued a report with 21 proposals that would allegedly improve transparency across a variety of FDA activities.  Proposals 13 states:

FDA should disclose the fact that the Agency has issued a refuse-to-file or [CRL] in response to an original NDA, BLA, or an efficacy supplement for an NDA or BLA at the time the refuse-to-file or [CRL] is issued, and should, at the same time, disclose the refuse-to-file or [CRL], which contains the reasons for issuing the letter.

As legal experts noted after the May 2010 release of FDA’s Transparency Task Force report, the Agency’s “application and data disclosure proposals in particular raise serious concerns for many regulated companies which consider product application information to constitute commercially sensitive trade secret information, the disclosure of which could give competitors significant advantages.”  They continued, stating that “[t]he Task Force largely dismisses such concerns by concluding that such information is not competitively useful, and stating that even though FDA regulations have historically shielded application-related information from disclosure, ‘a substantial amount of [such] information…does not fall under FDA’s definition of trade secrets as confidential commercial information.’”   Not competitively useful?  We beg to differ.  We seem to recall a similar position during discussions as to whether or not certain bioequivalence studies intended to support ANDA approval should be reported on ClinicalTrials.gov (see our previous post here).  Some bioequivalence studies are currently reported and their listing and status are regularly monitored for competitive purposes.  CRLs, if they’re made public, would also be used to gain a competitive advantage.

Since May 2010, FDA has made clear its continued interest in the topic of releasing CRLs.  In 2011, FDA released, with the sponsor’s permission, parts of a CRL ahead of an advisory committee meeting, causing a feeding frenzy among some in the press (see here).  The issue popped up again in February 2013 when then-FDA Commissioner Margaret Hamburg briefly indicated during a congressional briefing sponsored by Faster Cures and the Friends of Cancer Research that FDA is working with industry to find a way for it to make CRLs public (see here and here).  

The interest, however, may stem more from Agency frustration at having to remain moot in the face of some applicants’ statements regarding overly conservative or apparently arbitrary Agency action rather than from a public-health-driven concern about transparency, as is apparent both in CDER presentations (see here) and remarkable recent FDA statements skirting the lines established by FOIA (see, e.g., here). While FDA’s frustration is palpable, and maybe even justified in some situations, it’s certainly not sufficient reason to undercut one of the basic tenets of drug development – that interactions with the Agency on an unapproved product (including the very submission of an NDA) are not disclosable by the Agency.

The BMJ authors suggest 3 possible approaches to greater parity between CRLs and press releases:  (1) sponsors could release CRLs themselves; (2) sponsors could issue “more complete press releases; or (3) FDA could release CRLs” – but note that option 3, they note, “would likely require a change in FDA’s regulations.”  Indeed. 

The easier path then would be for FDA to exert pressure on applicants (or their trade groups) to arrive at option 1 – voluntary release of CRLs.  And perhaps The BMJ paper, rather than being an unbiased review of all applicable considerations by experts in FDA matters, SEC disclosures, fiduciary duties and competitive harm, is more of a directed advocacy piece by a hardly unbiased agency.

Beware of caving into the pressure readers!  CDER has already signaled that it will not stop at CRLs but that it wants authority to release meeting minutes next. 

By Jeffrey K. Shapiro –

Last week, Senators Richard Burr and Al Franken introduced legislation aimed at easing the burdens of the Food and Drug Administration’s (FDA) review of devices.  The bill is called “The FDA Device Accountability Act” (FDAA).   A copy of the press release announcing the bill is available here, and a one-page summary of the bill is available here.

The FDAA: (i) extends application of the “least burdensome” requirement to premarket application (PMA) reviews and to all significant decisions, and adds training, review and auditing of FDA’s application of the requirement; (ii) explicitly permits non‑local or centralized IRBs for device clinical trials; and (iii) requires FDA to update its existing regulatory guidance to clarify the criteria for waiving CLIA requirements, specifically certain considerations for in vitro diagnostics.

These reforms are all worthy; however, as discussed below, the first reform relating to the “least burdensome” requirements is unlikely to achieve the hoped‑for results. 

What are the “least burdensome” requirements?  In 1997, the Food and Drug Administration Modernization Act (FDAMA) added two provisions to the Federal Food, Drug, and Cosmetic Act (FDCA).  One provision, relating to 510(k) reviews, was section 513(i)(1)(D).  It states:

Whenever [FDA] requests information to demonstrate that devices with differing technological characteristics are substantially equivalent, [FDA] shall only request information that is necessary to making substantial equivalence determinations.  In making such a request, [FDA] shall consider the least burdensome means of demonstrating substantial equivalence and request information accordingly.

The other related to clinical data.  In connection with “determination meetings” to obtain a written statement of the clinical data required to obtain PMA approval, section 513(a)(3)(D)(ii) states:

Any clinical data, including one or more well-controlled investigations, specified in writing by [FDA] for demonstrating a reasonable assurance of device effectiveness shall be specified as a result of a determination by [FDA] that such data are necessary to establish device effectiveness. [FDA] shall consider, in consultation with the applicant, the least burdensome appropriate means of evaluating device effectiveness that would have a reasonable likelihood of resulting in approval.

After FDAMA was enacted, it turned out that “determination meetings” were rarely held, which means the occasions for FDA to follow the foregoing mandate have also been rare.

FDA’s guidance on “least burdensome” summarizes the agency’s view of these provisions:

A central purpose of the Food and Drug Administration Modernization Act of 1997 (FDAMA) is ‘to ensure the timely availability of safe and effective new products that will benefit the public and to ensure that our Nation continues to lead the world in new product innovation and development.’  [Citation omitted.]  As can be seen in this statement, Congress’ goal was to streamline the regulatory process (i.e., reduce burden) to improve patient access to breakthrough technologies.

But FDA notes a caveat:  

While Congress wanted to reduce unnecessary burdens associated with the premarket clearance and approval processes, Congress did not lower the statutory criteria for demonstrating substantial equivalence or reasonable assurance of safety and effectiveness assurance of safety and effectiveness.

The FDAA bill summary asserts that implementation of the “least burdensome” over the years as been unsatisfactory:  “Unfortunately, these principles have not been consistently applied.”  Section 2 of the FDAA bill would reform the “least burdensome” requirement with the following directions to FDA.

• FDA must train all premarket review staff and supervisors in the “meaning and implementation” of the requirement. 
• FDA’s device ombudsman must conduct an audit of FDA’s implementation of the requirement within six months of the bill’s enactment and the report must be provided to Congress and posted on FDA’s web site.
• FDA must periodically assess the implementation of the requirement, including training.

In addition, the FDAA bill would explicitly extend the “least burdensome” requirement to requests for information during review of a PMA.  It also would require FDA’s summary of a “significant decision” during a premarket review to state how FDA applied the “least burdensome” requirement in reaching the decision.  (The “significant decision” documentation requirement was imposed on FDA in 2012 under the Food and Drug Administration Safety and Innovation Act (FDASIA), § 602.)

We do not disagree with Senators Burr and Franken that the “least burdensome” requirement since 1997 has been applied inconsistently.  Actually, we would go further and say that it has proven toothless.  FDA’s correspondence concerning data requirements typically has boilerplate language stating that the “least burdensome” requirement was “carefully” considered.  Yet, the burdens of device review still seem excessive in many cases, and there is no transparency as to how FDA actually applies the principle in any individual case.

But is the problem really one of “consistency” and “transparency”?  The FDAA bill proposes reforms on that premise.  In our view, these issues do not get to the root cause, which is that the “least burdensome” requirement is inherently subjective.  The fact is, FDA must make safety and effectiveness determinations according to statutory requirements.  The “least burdensome” requirement does not lower the safety and effectiveness requirements.  When FDA requires specific data, it is almost always because premarket review officials within the Office of Device Evaluation (ODE) have concluded that doing so is necessary for the product sponsor to meet the statutory requirements.

The true problem is not a misunderstanding on their part as to how to consistently apply a “least burdensome” requirement.  Rather, in most cases, the dispute is a disagreement between ODE officials and the applicant about how safety or effectiveness should be demonstrated.  So as long as there is no independent check on the judgment of ODE officials, they will generally decide these disputes in their own favor.  And that is what has generally happened since the “least burdensome” requirement was imposed in 1997.

At present, the applicant’s only slim hope is to seek supervisory review within FDA (21 C.F.R. § 10.75) and perhaps convince a supervisor that a less burdensome data requirement is adequate.  Unfortunately, it is only to practical to file such appeals a small percentage of the time, and the odds of success are low.  There is also an inherent conflict of interest in having the supervisor review the employee’s decision, as discussed here.  

Hence, the FDAA bill is correct in recognizing that the “least burdensome” requirement has not achieved its original intent.  However, it is questionable whether this package of reforms will have a meaningful impact.  On the plus side, the FDAA bill does seem likely to provide greater transparency about the rationale for FDA’s decisions when applying the “least burdensome” requirement.  The increased documentation will facilitate the additional requirement for FDA to periodically conduct internal assessments as to how it is doing in implementing the “least burdensome” requirement.  The training requirement will also help teach and remind reviewers about the requirement.  Thus, the FDAA bill should be successful as a consciousness‑raising exercise for the agency.

Nonetheless, at the end of the day, under this bill, FDA will continue to be the judge of its own “least burdensome” decisions.  It would be preferable for an independent entity to adjudicate these disputes, if an entity could be established with the expertise and resources to allow it master the details of each regulatory dispute, similar to what judges are expected to do in court cases.  The entity would also need to have the authority to overturn or reshape ODE’s data requirement determinations.  Otherwise, it seems unlikely that the general tenor of ODE’s decisions will change.

If it is not realistic to establish an independent entity such as this one outside of FDA, perhaps in the judicial or legislative branch, a next‑best alternative would to create a specific office within Device Center with the bureaucratic mission of handling appeals from ODE in an impartial manner.  For example, we put forward an idea long these lines a few years ago, which was basically to create a specialized Office of Appeals for Premarket Submissions (OAPS) (see our previous post here).  This independent entity could handle, among other things, disputes over the application of the “least burdensome” requirement.

The Burr and Franken bill is a worthy reform effort.  It might prove even more effective if it were broadened to attack the root cause of the disappointing results achieved so far with the “least burdensome” requirement.

By Jay W. Cormier, David C. Gibbons & Roger C. Thies – 

Having assisted clients with FDA inspections, 483 responses, and Warning Letter responses associated with cGMP for aseptic fill operations, we can imagine the nightmares many quality and manufacturing personnel would have with the observations in a recently, publicly-issued 483:  

• “Insects were observed in two (2) of five (5) ISO 7 cleanroom ceiling light bays . . . .”
• “Spore-forming organisms . . . were found in two released vials . . . .”
• “Gowning [] failed to fully cover [operators’] face and neck area.”
• “There are no media fill simulations to qualify the aseptic process and [operators].”
• “There is no GMP training program . . . .”
• “No [lyophilizer] sterilization cycle is performed . . . .”
• “Investigation into the sterility failure . . . did not establish a root cause.”
• “Three (3) vials were removed . . . for contamination with glass particles. . . . no root cause [was] identified, and no preventive actions [were] initiated to prevent recurrence.”
• “Container closure integrity testing is not performed for any sterile drug products.”
• “The cleaning and disinfection program for the ISO 5 hoods . . . does not include the use of a sporicidal agent.”
• “The quality unit is not involved in release of drug products . . . .”

 Who might be the recipient of this scathing review?  What profit-centered pharma company could be responsible for this?  In what developing nation could such activities pass as acceptable business practice?  What compounding facility with such a cavalier attitude toward patient safety could do such a thing? 

The answer is none.  All of the above statements – and much, much, oh, so much more – can be read among the 17 detailed observations in the 483 issued to none other than the otherwise-esteemed National Institutes of Health (“NIH”) in Bethesda, Maryland.  

Aseptic fill is a technically complex and resource intensive endeavor.  Manufacturers of sterile products spend extraordinary time and treasure building, testing, and validating their fill lines in carefully monitored and controlled environments.  To keep the drugs we rely on in plentiful supply, extensive training and retraining of personnel and constant vigilance is required.  Every deviation requires investigation.  Due to the patient risks involved with such products, it is not surprising that FDA keeps a close eye on these operations, and, as consumers of these products, we are thankful for that.  

FDA inspected the NIH Pharmaceutical Development Section and Clinical Center Pharmacy for five days between May 19 and May 29, 2015, following a complaint about the facilities.  FDA sent four individuals on the inspection – one compliance officer, two consumer safety officers, and one investigator – Tom Arista from the Baltimore District Office.  The investigation closed on June 2, 2015, and on June 4th, NIH issued a press release disclosing the inspection results and stated that it would voluntarily suspend sterile product manufacturing at its facilities.  

The NIH has said that the facility’s sterile product operations are currently involved in as many as 46 clinical studies – a significant number by any measure.  It is too early to know how many study participants received potentially contaminated product, but, given NIH’s lack of an effective monitoring process in the first instance (at least according to FDA), such information is likely unknowable.  What is known is that FDA says that NIH has no assurance that any of its “sterile” products is free from contamination.  The impact on dozens of taxpayer-funded clinical studies and hundreds of individual patients is unknown.  

Perhaps most of all, the 483 for the NIH facility raises a number of intriguing questions.  Among them are:  

• What is the real story behind the formal inspection and 483? 
• How long has FDA known of NIH’s alleged noncompliance with the basic tenets of aseptic processing and cGMPs?
• Did FDA know that NIH would release the 483 and did FDA consider notifying NIH of the inspection results without issuing a 483? 
• What does FDA expect to do now that it has issued a 483 written in language that, under any other circumstance with a private company, would likely lead to a Warning Letter and perhaps an injunction action or import alert?

The answers to these questions are unknown except perhaps to those at FDA who were involved in the decisions regarding the format, timing, and makeup of the NIH inspection.  We believe, based on the circumstances, that there is a back-story to the issuance of the 483 that has not been made public, and possibly never will.

As mentioned above, NIH has agreed to suspend its operations until the observations can be addressed.  While voluntary compliance is typically a prudent course under these circumstances, it did get us wondering – what could FDA do if NIH, a sister agency within the Department of Health and Human Services, told FDA to go “pound sand”?  

At bottom, we think the answer to this question may be: not much.  While FDA now has, and may in the future, use informal advisory actions to gain cGMP compliance from its sister agency, it is certainly unclear if DOJ and FDA can or will sue NIH.  Indeed, there may be constitutional limitations that may bar litigation by FDA against NIH.  

We begin by reviewing FDA’s authority to conduct the inspection of NIH facilities in the first instance.  FDA’s inspectional authority is found in section 704 of the Federal Food, Drug, and Cosmetic Act (“FD&C Act”).  FDA inspectors are authorized to inspect “any factory, warehouse, or establishment” where drugs are manufactured, packaged, or stored.  FD&C Act § 704(a)(1) (emphasis added).  Upon the conclusion of the inspection, the FDA inspector typically provides a written report of conditions or practices that, in the inspector’s judgment, a drug is or may become adulterated, within the meaning of the FD&C Act, but such report does not constitute a conclusion that a violation has occurred.  FDA Center staff then decides what to do about the inspectional observations. 

The next rung on the FDA enforcement ladder is typically an advisory action, such as a Warning or Untitled Letter.  FDA has stated that its “position is that Warning Letters are issued only for violations of regulatory significance.  Significant violations are those violations that may lead to enforcement action if not promptly and adequately corrected.  A Warning Letter is the agency's principal means of achieving prompt voluntary compliance with the [FD&C Act].”  FDA, Regulatory Procedures Manual (“RPM”), Chapter 4, 2 (July 2012).  (For additional background on Warning and Untitled Letters, see our recent post here.)  We know FDA can issue these advisory notices to traditional pharmaceutical manufacturers, but can they issue such notices to a government agency?  You betcha!  In fact, FDA contemplates this and has developed policy around the issuance of Warning and Untitled Letters to government facilities.  FDA’s RPM states:

Government establishments should be held to the same standards as nongovernment establishments. The public health standards are identical; however, the method used to ensure compliance with these standards may vary. FDA believes that government establishments will achieve and maintain a higher rate of voluntary compliance with FDA regulations compared with nongovernment establishments. Efforts to obtain voluntary compliance should be made and documented before recommending the issuance of a Warning Letter. These efforts may include discussing the violations with the responsible government officials by phone or in a meeting, recommending an Untitled Letter, or requesting a written corrective action plan and periodic progress reports. The government establishment's progress should be monitored and a follow-up inspection should be scheduled, within a reasonable time consistent with the noted violations to confirm correction of the violations.  Id. at 3-4.

But, let’s say a Warning Letter is ineffective or exigent circumstances, such as a threat to public health, exist that warrant more immediate and aggressive enforcement action by FDA.  Against traditional pharmaceutical manufacturers, FDA has, in its armamentarium, civil (e.g., TRO, seizure) and criminal (FD&C Act prosecution) judicial actions that can be initiated by the filing of a complaint in the name of the United States (i.e., by DOJ) in federal district court.  See FD&C Act § 310(a) (all such proceedings for the enforcement, or to restrain violations, of this chapter shall be by and in the name of the United States).  But what about vis-à-vis another government agency?

To that point, the DC Circuit has stated, “judicial resolution of intra-Executive disputes [between traditional Executive branch agencies] is questionable under both Article II and Article III [of the federal Constitution].  . . .  No one plausibly thinks, for example, that a federal court would resolve a dispute between the Department of Justice and, say, the Department of Defense or the Department of State.”  Sec. and Exch. Comm’n v. Fed. Labor Relations Auth., 568 F.3d 990, 997 (D.C. Cir. 2009) (Kavanaugh, J., concurring). 

In our case, where FDA may seek enforcement against NIH, the critical fact is that both FDA and NIH are controlled directly by the Secretary of Health and Human Services, who is in the proper, and best, position to resolve disputes arising between FDA and NIH.

Conclusion.  Setting aside what we think are the very interesting legal implications of FDA inspecting NIH, and despite the political intrigue raised by the inspection and resultant 483, FDA likely won’t be taking the kinds of enforcement action it would take against commercial facilities with similar problems.  Due to NIH’s decision to suspend sterile product manufacturing, sterile drug products from NIH won’t be used in study subjects until the facility has corrected the problems.  We know from our experience that the road through remediation is long and expensive.  This time, unfortunately, the “shareholders” who will be footing the bill, however, are all of us – the US taxpayers.  

As NIH Director, Dr. Francis J. Collins, stated “The fact that patients may have been put in harm’s way because of a failure to follow standard operating procedures in the NIH Clinical Center’s Pharmaceutical Development Section is deeply troubling.”  We couldn’t agree more.

By Kurt R. Karst – 

For months now we’ve been waiting patiently for anything out of the U.S. District Court for the District of Columbia with respect to the case that Veloxis Pharmaceuticals, Inc. (“Veloxis”) initially lodged against FDA in December 2014 (and then re-upped in January 2015) after the Agency tentatively approved the company’s 505(b)(2) NDA 206406 for ENVARSUS XR (tacrolimus extended-release tablets), 0.75 mg, 1 mg, and 4 mg, for prophylaxis of organ rejection in kidney transplant patients, citing a period of 3-year exclusivity expiring on July 19, 2016 for another drug – Astellas Pharma US, Inc.’s (“Astellas’s”) 505(b)(1) NDA 204096 for ASTAGRAF XL (tacrolimus extended-release capsules), 0.5 mg, 1 mg, 5 mg, approved on July 19, 2013 for prophylaxis of organ rejection in adult patients receiving kidney transplants – as the basis for the ENVARSUS XR tentative approval.  You see, almost everything in the court docket was placed under seal, including FDA’s rather lengthy exclusivity determination, putting us and the rest of the world in the dark as to what was going on.  The silence was finally broken late last week when the Judge Reggie B. Walton issued an Order denying Veloxis’ Motion for Summary Judgment, and granting FDA’s Motion to Dismiss, or in the Alternative, Motion for Summary Judgment.  But Judge Walton’s Memorandum Opinion was placed under seal.  That Opinion was released earlier this week. 

We won’t get into all of the nitty-gritty details of the case.  After all, we put up a rather lengthy post shortly after the lawsuit was filed (see here).  In sum, the case has to do with the scope of 3-year new clinical investigation exclusivity and whether or not that exclusivity operates to block the approval of a 505(b)(2) application (referred to by the court as a “second-in-time 505(b)(2) drug”) that does not rely on FDA’s previous approval of a drug with exclusivity (referred to by the court as a “first-in-time 505(b) drug”), but that shares conditions of approval with the exclusivity-bearing first-in-time 505(b) drug. 

As we previously noted, Veloxis alleged that FDA’s decision to deny final approval of ENVARSUS XR in light of the 3-year exclusivity for ASTAGRAF XL is erroneous as a matter of law and a violation of the Administrative Procedure Act (“APA”) for three independent reasons:

First, according to the unambiguous statutory language of the [FDCA], Astagraf XL was never entitled to three-year exclusivity.  For drug products like Astagraf XL, exclusivity is only available if an application for approval was submitted to FDA after October 2008.  Because the initial NDA for Astagraf XL was submitted in 2005, FDA’s grant of exclusivity to Astagraf XL exceeded its statutory authority.

Second, even if Astagraf XL is eligible for three-year exclusivity (and it is not), that exclusivity, as a matter of law, cannot block approval of Envarsus XR because the Envarsus XR NDA did not rely upon any of the studies or data supporting approval of Astagraf XL.

Third, even if the reliance requirement was read out of the FDCA, Envarsus XR still would not be subject to the exclusivity granted Astagraf XL because Envarsus XR does not share conditions of approval with Astagraf XL.  In this regard, FDA arbitrarily and capriciously concluded that the two drugs share the same conditions of approval, ignoring the significant clinical differences between the two drugs and the material differences in the package inserts, and abandoning more than 20 years of its own precedent.

Veloxis later alleged a fourth reason: that FDA erroneously identified an Astellas clinical study in the ASTAGRAF XL NDA – Study 158 – as a “new clinical investigation” pursuant to FDC Act § 505(c)(3)(E)(iii).  Judge Walton refused to consider the argument, however, saying that it “was neither brought to the FDA’s attention prior to this lawsuit nor even alluded to in the plaintiff’s complaint,” and that “[b]ecause [Veloxis] did not give the FDA an opportunity to consider the merits of its arguments. . . , the plaintiff has waived judicial review of the arguments related to it.”

As to Veloxis’ first argument – that FDA should not have granted 3-year exclusivity for ASTAGRAF XL in the first place because it is an “old antibiotic” not subject to changes made to the FDC Act by the 2008 QI Program Supplemental Funding Act of 2008 (“QI Act”) conferring eligibility for exclusivity to new NDAs for “old antibiotics” – Judge Walton was not convinced (as we thought might be the case).  According to Judge Walton:

Under the FDCA, as amended by the QI Act, the Court agrees with the parties that the language is clear that an old antibiotic can be afforded three-year exclusivity to the extent that it was the subject of a new NDA that was submitted after October 8, 2008.   Here, although an Astagraf XL NDA was pending before October 2008, it was eventually withdrawn in 2009 and a new Astagraf XL NDA was submitted in 2012, which contained clinical information absent from the previous Astagraf XL NDA.  Under these circumstances, Astagraf XL is eligible for the FDCA’s three-year exclusivity.

To the extent that Congress did not address the precise conflict presented here, i.e., the FDCA is silent as to the withdrawal and “resubmission” of an old antibiotic NDA that was pending on or before October 2008,7 the FDA’s interpretation of the statute to allow three-year exclusivity for an old antibiotic that is the subject of a withdrawn and resubmitted NDA is reasonable. [(Emphasis in original; internal citations omitted)]

Moving on to what we think is the meat of the case – Veloxis’ second and third arguments – Judge Walton refused to accept Veloxis’ arguments under a Chevron analysis.

As to Veloxis’ “relied upon” argument, Judge Walton said that the plain text of the FDC Act supports FDA.  Here’s the set-up to that conclusion:

The parties’ conflicting interpretations of the term “relied upon” in [FDC Act § 505(c)(3)(E)(iii)] stand in stark contrast to one another.  On the one hand, the plaintiff argues that the term “relied upon” “unambiguously requires” that the three-year exclusivity of a first-in-time 505(b) drug, i.e., the drug that is the subject of a first-in-time 505(b) NDA, can block a second-in-time 505(b)(2) drug from market entry, i.e., the drug that is the subject of a second-in-time 505(b)(2) NDA, only if the second-in-time 505(b)(2) NDA has “relied upon” the first-in-time 505(b) NDA.  Specifically, the plaintiff contends that there must be “an overlap” between the “new clinical investigations” in both NDAs.  On the other hand, the FDA argues that the contested term “does not . . . mean that reliance is required to trigger exclusivity.”  Rather, according to the defendant, the term “is used only to distinguish [between] 505(b)(1) [NDAs] from 505(b)(2) [NDAs],” because it is included in the statutory provision “as part of the lengthier [FDCA] definition of a 505(b)(2) [NDA].”  In other words, “[n]owhere in this provision does . . . [it] say that a[] [second-in-time 505(b)(2) NDA] will be blocked only if the [clinical] studies it ‘relied upon’ were . . . included in the . . . [first-in-time 505(b) NDA].”  [(Emphasis in original; internal citations omitted)]

From there, Judge Walton parsed out the statutory text, saying that although the the FDC Act does not define the term “relied upon,” the statutory provision is clear as to how 3-year exclusivity operates, and that it can be separated into two components: “entitlement to exclusivity and scope of that exclusivity.”  As to the scope component, Judge Walton concluded:

[T]he FDA may not approve a second-in-time NDA that shares “conditions of approval” with the first-in-time 505(b) drug.  Moreover, the FDA is prohibited only from approving a second-in-time NDA that is a 505(b)(2) NDA, as [FDC Act § 355(c)(3)(E)(iii)] does not speak to a second-in-time 505(b)(1) NDA. . . .  Exclusivity under [FDC Act § 355(c)(3)(E)(iii)] is triggered by an overlap in the conditions of approval between the first-in-time 505(b) drug and the second-in-time 505(b)(2) NDA and not an overlap between the “new clinical investigations” supporting the first-in-time 505(b) NDA and second-in-time 505(b)(2) NDA. Indeed, it would frustrate Congress’s intent to incentivize new drug development through, among other means, marketing exclusivities, if a second-in-time 505(b)(2) NDA could escape the reach of the three-year exclusivity by simply relying on a 505(b) NDA different than the first-in-time 505(b) NDA. That result would reduce the incentive of the sponsor of the first-in-time 505(b) NDA to research and develop new drugs.  [(Emphasis in original; internal citations omitted)]

And even if the statute was not clear, and the term “relied upon” is somehow ambiguous, Judge Walton said in a footnote (note 14) that he would still rule for FDA on this issue:

Assuming the term “relied upon” in 21 U.S.C. § 355(c)(3)(E)(iii) is somehow ambiguous, and it became necessary to proceed to the second step of the Chevron analysis, the Court finds that the FDA has reasonably interpreted the term in the context of the statute.  As already explained, the FDA’s interpretation of “relied upon” is incongruous with neither the words of the statute nor the intent of Congress.  Further, the FDA’s interpretation is consistent with its past practices.

Given Judge Walton’s emphasis on “conditions of approval” when considering Veloxis’second argument, it wasn’t difficult to predict what his reasoning would be when evaluating Veloxis’ third argument – that ENVARSUS XR and ASTAGRAF XL do not share the same conditions of approval. 

Although Veloxis and FDA agreed that the scope of 3-year exclusivity for ASTAGRAF XL is limited to the conditions of approval of the drug based on the new clinical investigations conducted (or sponsored) by Astellas in support of NDA 204096, the parties differed on what the relevant conditions of approval are.  According to FDA:

the [three-year] exclusivity for Astagraf XL cover[ed] [the Envarsus XR extended release] dosage form and its once-daily dosing regimen [for de novo patients], both of which were changes from the previously approved tacrolimus drug, Prograf, and were supported by new clinical investigations essential to the approval of Astagraf XL.  Because Envarsus XR is also an [extended release] dosage form of tacrolimus with a once-daily dosing regimen [for de novo patients], [the] FDA determined . . . that Envarsus XR shares Astagraf XL’s exclusivity-protected conditions of approval.

Veloxis argued that despite these shared conditions, myriad other differences differentiated the drugs, making the 3-year exclusivity for ASTAGRAF XL inapplicable to ENVARSUS XR.

Citing the District Court’s decision in AstraZeneca Pharms. LP v. FDA, 872 F. Supp. 2d 60, 80 (D.D.C. 2012) (see our previous posts here and here), Judge Walton wrote:

The scope of Astagraf XL’s three-year exclusivity can only be as broad as the conditions of approval that were based upon the new clinical investigations identified in the Astragraf XL NDA. . . .  The plaintiff makes much of the fact that despite the similarities between Astagraf XL and Envarsus XR—that is, they are both once-daily, extended release tacrolimus formulations— there are many other “clinically meaningful” differences between Astagraf XL and Envarsus XR.  But that is beside the point.  The effect of marketing exclusivity in [FDC Act § 505(c)(3)(E)(iii)] turns on whether a second-in-time 505(b)(2) NDA shares any conditions of approval with the first-in-time 505(b) drug granted exclusivity. [(Emphasis added)]

It’s unclear whether or not Veloxis will appeal Judge Walton’s decision to the U.S. Court of Appeals for the District of Columbia Circuit.  The company might decide to forgo an appeal and choose “door number 2” previously offered by FDA: accept approval of an indication outside the scope of exclusivity granted to Astellas for ASTAGRAF XL (i.e., for prophylaxis of organ rejection for use in conversion patients).  As for the long-term effects of the decision, we’ll see.  Companies are increasingly using the 505(b)(2) NDA route to approval, so this issue is almost certain to come up again. 

By Ricardo Carvajal, Diane B. McColl & Jenifer R. Stach –

FDA issued a declaratory order revoking the GRAS status of partially hydrogenated oils (PHOs), thereby finalizing its November 2013 tentative determination that there is no longer consensus among qualified experts that PHOs are safe for use in human food (see our prior posting here).  The compliance date for the order is June 18, 2018, after which any uses of PHOs in human food that have not been approved by FDA pursuant to its food additive authority would be prohibited. 

For purposes of the order, FDA defines PHOs as “fats and oils that have been hydrogenated, but not to complete or near complete saturation, and with an IV [Iodine Value] greater than 4 as determined by a method that is suitable for this analysis (e.g., ISO 3961 or equivalent).”  Fully hydrogenated oils fall outside the scope of the order.

As noted in the order, “food additive” is defined by section 201(s) of the FD&C Act as any substance the intended use of which results or may reasonably be expected to result in its becoming a component or otherwise affecting the characteristics of any food, if such substance is not GRAS or otherwise excepted from the definition. A substance is GRAS if it is generally recognized, among experts qualified by scientific training and experience to evaluate its safety, as having been adequately shown through scientific procedures (or, in the case of a substance used in food prior to January 1, 1958, through either scientific procedures or experience based on common use in food) to be safe under the conditions of its intended use. 

FDA has defined “safe” as “a reasonable certainty in the minds of competent scientists that the substance is not harmful under the intended conditions of use.”  To establish general recognition of safety, there must evidence of a consensus among qualified experts regarding the safety of the use of a substance.  In concluding that there is no longer consensus regarding the safety of PHOs, FDA is not making a determination regarding the safety of specific uses of PHOs.  Such a determination would be made in the context of the agency’s evaluation of a food additive petition describing in detail specified uses of PHOs, which the order encourages industry to submit.

The final determination responds in part to two pending citizen petitions regarding the safety of PHOs.  One petition was submitted in 2004 by the Center for Science in the Public Interest, and the second citizen petition was submitted in 2009 by Dr. Fred Kummerow, who subsequently sued FDA to compel a response to his petition. It is as yet unclear how FDA’s order will affect that lawsuit.

By John R. Fleder –

When companies and individuals are “asked” (or told by a court) to pay money to FDA/DOJ as part of a resolution of a civil case, the sting of making the payment can be severe.  A question many ask is, “Can we deduct on our federal tax return any monetary payment we make to the government?”  Obviously, a yes answer to that question means in many instances that the IRS would return to the defendant via a tax deduction a share of the money paid out to the government.

Under Section 162(f) of the U.S. Tax Code, no tax deduction is allowed for any fine or similar payment paid to the government for a violation of a law.  Treasury Reg. 1.162-21 has interpreted that statutory provision by defining a “fine or similar penalty” to cover among other things: (1) money paid in a criminal proceeding for commission of a crime; and (2) a civil penalty imposed by federal or state law.   That regulation states that compensatory damages paid to the government are not a fine or penalty.

In FDA cases, there have numerous situations where corporations and others have made monetary payments to the government where the deductibility of the payments is a major issue for the person making the payment.  FDA and DOJ will almost certainly give no guidance to the person regarding whether the payments will be tax deductible.

Last year, the United States Court of Appeals for the First Circuit ruled, in Fresenius Medical Care Holdings, Inc. v. United States, that a company could deduct $127,000,000 paid to resolve a federal False Claims Act case.  The court rejected the government’s position that the company could not deduct the amount of the payment, absent an agreement with the government regarding the deductibility of that amount.  However, until recently, we do not believe that either the IRS or a court has ever publicly issued any ruling on this issue in the context of an FDA case.

As we recently learned from FDA News, that changed when on January 26, 2015, the IRS’s Office of Chief Counsel issued a ruling (released on May 22, 2015) involving an unidentified drug company.  In that matter, the company entered into a cGMP Consent Decree with FDA and DOJ whereby the company agreed to make a payment for what the IRS called was “equitable disgorgement of profits for alleged violations of the FDC Act.”  The IRS concluded that although the evidence of FDA’s “intent” regarding whether the FDA considered the payment to be deductible was ambiguous, the amount paid by the company was indeed tax deductible.  The parties had a provision in the Consent Decree stating that all monetary payments by the company pursuant to the Consent Decree were “not a fine, penalty, forfeiture, or payment in lieu thereof.”  Clearly, the company was trying to establish that the payments would therefore be tax deductible.  The IRS noted that because this language did not explicitly address the tax consequences of payments to be made to the government under the Consent Decree, the language was ambiguous because there was no evidence that the language was “intended to address tax consequences.”  Nevertheless, the IRS did find that the monetary payments in that matter were tax deductible, largely relying on the conclusion that FDA did not intend to punish the taxpayer.

What are companies and individuals to do to maximize the chances that monetary payments will be tax deductible?  When defense counsel are negotiating with FDA and DOJ, tax experts should be consulted so that any final agreement not only contains the most favorable terms possible on FDA issues, but also the most favorable language possible to support the deductibility of any payment under the agreement, consistent with applicable law.

By Kurt R. Karst –      

The folks over at Inside Health Policy brought to our attention a recent article authored by Len M. Nichols, Ph.D., Director and Professor of Health Policy at the George Mason University Center for Health Policy Research & Ethics that we thought FDA Law Blog readers would also find of interest.  The article, titled “What Price Should We Pay for Specialty Drugs?,” discusses an issue near and dear to us: non-patent exclusivity. 

Using as a springboard the recent hullabaloo over the pricing (and profits) generated by SOVALDI (sofosbuvir) Tablets, which FDA approved on December 6, 2013 under NDA 204671 for the treatment of chronic hepatitis C infection, Dr. Nichols puts forth a thesis: “[the] degree of profitability is higher than necessary to induce investors and researchers to develop the next Sovaldi, or specialty drugs in general, and therefore we should seek policy changes that would help re-balance our competing objectives of innovation and affordability.” 

What does that mean exactly?  Folks in the pharmaceutical industry probably aren’t going to like the answer.

According to Dr. Nichols, there’s a policy problem between encouraging innovation and ensuring affordability of drugs.  This particularly true among so-called “specialty drugs,” writes Dr. Nichols, who defines such drugs as “complex to manufacture, can be difficult to administer, may require special patient monitoring, and sometimes have FDA mandated strategies to control and monitor their use.” 

Our policy problem is rooted in the reality that striking the right regulatory balance between encouraging innovation – by granting temporary monopoly pricing power – and ensuring affordability by encouraging post-monopoly competition is, well, very, very hard.  Of late, our policy effort has not been commensurate with the complexity of the problem. . . .

[C]onsumer advocates want prices to be as low as they can be, as soon as they can be, to tilt the balance in [social wefare] toward consumer surplus and away from profit, given that we keep the right kinds of innovation flowing.  Manufacturers, on the other hand, want more of [social wefare] to be captured in profits as long as possible, as that does keep the incentive to invest high.  Public policy is about setting rules and regulations to balance these two competing forces – competition and innovation – to maximize social welfare while being mindful of the distribution of [social wefare] as well.

Industry’s increasing focus on high-profit specialty drugs – as well as orphan drugs – has thrown things out of whack, says Dr. Nichols.  Over the past couple of years, there have been various policy proposals aimed at achieving a “course correction,” including grants, tax credits, and even doing away entirely with exclusivity in favor of a medical innovation proze fund (see our previous posts here and here).  Dr. Nichols has a new proposal to throw in for consideration.

Noting that revoking patent protection is not a practical (or realistic) way to address the problem he lays out, Dr. Nichols says that we should consider revoking non-patent exclusivity if a company proces a drug too high:

What if we changed existing law enough to say this to developers of newly approved specialty drugs: you can price them as you will, this is America, but if you price them high enough, you will forfeit the marketing and/or data exclusivity grants that the FDA is empowered to make – but not your patents from the US Patent Office – and encourage competitors to enter the market with all our regulatory powers and fast track authorities.

How high is too high?  That depends if your company is an “established firm” or a “new firm”:

For the established firm, “too high” is a price that net of production, marketing and current R&D costs will yield a rate of return on sales more than 20% above the cost of market capital for the manufacturer, the rate at which the firm can raise new funds from shareholders, investors and bankers.  This implicitly assumes the amount of R&D they are doing at any given time is an “equilibrium” amount and thus this approach will fund today’s R&D activities even given the expectation that some will not pay off.  Thus, the “regulated” price preserves cash flow for a robust amount of R&D, the major purpose of new cash flow for an established firm. . . . 

New firms with new products who are without a portfolio of products to sell at the moment and a pipeline that is being developed in a kind of equilibrium will need a higher rate of return than this. . . .  I propose allowing the new firm to earn 50% more than their cost of capital upon launch of a new, first in class specialty drug, where the cost of capital includes the cost of servicing and eventually retiring their new product-specific debt.  We should also recognize that new firms need marketing spending to take market share from established treatments, however inferior, so they should have a smaller or zero marketing discount in their rate of return calculation.  This will preserve the incentive for the new firm to develop and market new drugs and to remain independent. 

As more companies focus on the development of specialty and orphan drugs, we’re likely to see greater debate – and more proposals – on how to best achieve balance between encouraging innovation and ensuring drug and biologic affordability.

By Kurt R. Karst –

Sometimes curiosity gets the better of us . . . .  We take some bait and go down a rabbit hole.  That’s what happened last week after FDA published a notice in the Federal Register announcing the Agency’s determination that Ondansetron (ondansetron HCl) Injection, in PL 2408 Plastic Container, 32 mg/50 mL, single IV dose, approved under NDA 021915, was withdrawn from sale for reasons of safety or effectiveness and that FDA will not accept or approve ANDAs for generic versions of the drug.  FDA issued a separate notice formally withdrawing approval of NDA 021915, as well as approval of four ANDAs for Ondansetron HCl and Dextrose in 32 mg single IV doses, all of which are indicated for prevention of nausea and vomiting associated with initial and repeat courses of emetogenic cancer chemotherapy in adult patients.  According to FDA, the 32 mg, single IV dose of Ondansetron HCl should be avoided because of the risk of a QT interval prolongation, which can lead to potentially fatal Torsades de Pointes.

On to the bait. . . . 

When we saw the FDA notices for Ondansetron HCl Injection, our thought was: “There’s something you don’t see every day; FDA withdrawing approval of marketing applications over safety or effectiveness concerns.”  That thought was reinforced by a headline on the Lachman Consultants Blog in a post by Bob Pollock.  So this blogger got to thinking: “How many times has FDA, in fact, issued a notice in in the Federal Register announcing the Agency’s determination that a drug was withdrawn from sale for reasons of safety or effectiveness?”  It turns out that the answer to that question is a little more complicated to come by that we initially thought. 

Down the rabbit hole . . . .

Often – but not always – FDA makes a determination that a drug was discontinued for safety or effectiveness reasons in response to a so-called “discontinuation petition” submitted to the Agency pursuant to 21 C.F.R. § 314.161(b).  FDA may also make such a determination on its own initiative.  FDA is supposed to respond to a discontinuation petition within 270 days of receiving it.  (See our previous post here for an analysis of FDA’s track record on responding to discontinuation petitions.)  If a drug was discontinued for safety or effectiveness reasons, then it is removed from the Orange Book and it cannot serve as a basis for another applicant’s ANDA (or 505(b)(2) application) submission.  If FDA determines that a drug was not discontinued for safety or effectiveness reasons, then it remains in the Orange Book and can continue to serve as a basis for another applicant’s submission.  FDA updates the Orange Book each month a lists titled “FR Notice Determination of Safety or Effectiveness List.” 

When FDA makes a determination on whether or not a drug was discontinued for safety or effectiveness reasons, the Agency typically publishes a notice in the Federal Register with a title along the lines of: “Determination That [Drug] Was [Not] Withdrawn From Sale for Reasons of Safety or Effectiveness.”  Given this styling, we searched the Federal Register database on the Government Publishing Office website, which database goes back to 1994. 

Of the 215 notices we were able to find, only 11 of them – or 5.1% – included a determination that a drug was withdrawn from sale for safety or effectiveness reasons.  Below is a table with a year-by year breakdown, followed by a bullet point list of the 11 safety/effectiveness withdrawal decisions.

• 80 Fed. Reg. 32,962 (June 10, 2015): Determination That Ondansetron (Ondansetron Hydrochloride) Injection, USP in PL 2408 Plastic Container, 32 Milligrams in 50 Milliliters, Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 78 Fed. Reg. 23,273 (Apr. 18, 2013): Determination That the OXYCONTIN (Oxycodone Hydrochloride) Drug Products Covered by New Drug Application 20–553 Were Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 77 Fed. Reg. 41,412 (July 13, 2012): Determination That CHLOROMYCETIN (Chloramphenicol) Capsules, 250 Milligrams, Were Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 76 Fed. Reg. 51,037 (Aug. 17, 2011):  Determination That Halflytely and Bisacodyl Tablets Bowel Prep Kit (Containing Two Bisacodyl Delayed Release Tablets, 5 Milligrams) Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 76 Fed. Reg. 3143 (Jan. 19, 2011): Determination That ALBAMYCIN (Novobiocin Sodium) Capsule, 250 Milligrams, Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 75 Fed. Reg. 24,710 (May 5, 2010): Determination That BREVIBLOC (Esmolol Hydrochloride) Injection, 250 Milligrams/Milliliter, 10-Milliliter Ampule, Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 75 Fed. Reg. 13,292 (Mar. 19, 2010): Determination That HalfLytely and Bisacodyl Tablets Bowel Prep Kit (Containing 4 Bisacodyl Delayed Release Tablets, 5 Milligrams) Was Withdrawn From Sale for Reasons of Safety or Effectiveness
• 75 Fed. Reg. 12,760 (Mar. 17, 2010): Determination That CERNEVIT-12 (Multivitamins for Infusion) Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 73 Fed. Reg. 52,357 (Sept. 9, 2008): Determination That TEQUIN (Gatifloxacin) Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 70 Fed. Reg. 53,019 (Sept. 6, 2005): Determination That Penthrane (Methoxyflurane) Inhalation Liquid, 99.9 Percent, Was Withdrawn From Sale for Reasons of Safety or Effectiveness.
• 64 Fed. Reg. 45,973 (Aug. 23, 1999): Determination That Astemizole 10-Milligram Tablets Were Withdrawn From Sale for Safety Reasons.

As we perused the list of 11 determinations, we immediately noticed that something was missing.  Where were the FDA determinations on Terfenadine (SELDANE and SELDANE-D), Trimethobenzamide HCl (TIGAN), and other old drug products, including drugs evaluated under the Drug Efficacy Study Implementation program?  They’re contained in other Federal Register notices where FDA announces the “Withdrawal of Approval” of a marketing application.  There are about 250 of those notices since 1994 for both human and animal drugs.  The notices typically announce the withdrawal of approval of a marketing application for general reasons – perhaps because a sponsor has failed to do something, or because the sponsor requested or consented to withdrawal of approval.  Some of those decisions are available here, here, here, here, here, here, here, here, and here.

Considering this other tranche of FDA notices and determinations, what’s the total number of human drugs approved under NDAs and ANDAs that FDA has withdrawn for safety or effectiveness reasons?  We don’t have an exact figure, but based on a list of such withdrawals we obtained from FDA a few years ago, and considering some recent withdrawals, we think the total number is somewhere around 600 applications.

By Riëtte van Laack –

The California Organic Products Act (COPA) allows the use of the term “organic” on cosmetics only if they contain at least 70% organic ingredients.  In a consumer class action, plaintiffs alleged that Hain Celestial Group Inc. (Hain) misleadingly labeled two of its product lines as organic whereas the products did not contain at least 70% organic ingredients.

The plaintiffs moved for partial summary judgment with respect to 167 “Disputed Products.” The Court was presented with the question whether these products were indeed cosmetics and thus subject to COPA.  Hain argued that a large number of these products were soaps not cosmetics, because they foam and cleanse.  In addition, Hain argued that a number of products were not subject to COPA because they were a combination of drug and cosmetic and COPA does not reach drug products. 

The Court disagreed.  The Sherman Law defines cosmetic as not including soaps but does not define soap.  Specifically, the Sherman law defines a cosmetic as:

any article, or its components, intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to, the human body, or any part of the human body, for cleansing, beautifying, promoting attractiveness, or altering the appearance.  The term ‘cosmetic’ does not include soap.  [(Emphasis added)] 

Hain argued that soap should be given the common and usual lay person’s meaning, i.e., anything that foams and cleanses.  However, such a broad definition would exclude from the cosmetic definition any personal-care product that is meant for “cleansing.” Yet, the Sherman law definition of cosmetics expressly includes products intended for cleansing.  Moreover, Hain’s broad definition of soap would be inconsistent with FDA’s definition of soap (limiting the term soap to products for which the bulk of the nonvolatile matter in the product consists of an alkali salt of fatty acids and the detergent properties of the article are due to the alkali-fatty acid compounds and labeled, sold, and represented only as soap.  21 C.F.R. § 701.20).  Thus, Hain’s broad definition would create inconsistency between the federal and state law. 

The other issue the Court addressed was whether a product consisting of a combination of a drug and cosmetic is also subject to COPA’s requirements for cosmetics.  Under federal, as well as California law, a cosmetic may be combined with an over-the-counter drug without the cosmetic becoming a drug.  Hain argued that such products were drugs and COPA did not apply.  However, the Court came to a different conclusion.  Federal law and regulations “contemplate that some products will be subject to regulation as both cosmetics and drugs (e.g., 21 C.F.R. § 701.3(d) states that a cosmetic product that is also an over-the-counter drug product, must declare the drug (active) ingredients according to the requirements for over-the-counter drugs, and the cosmetic ingredients according to the requirements for cosmetics.).  Moreover, COPA nor any other state or federal law prohibits the use of the term “organic” on drug products.  Also, the use of the organic claim is voluntary and does not interfere with any federal or state labeling requirements. 

The Court concluded that such “drug-cosmetic combination” products are indeed subject to COPA. Thus, these drug-cosmetic combination products must contain more than 70% organic ingredients before they may be labeled as organic. 

By Ricardo Carvajal –

In an unusually public manner, FDA announced the issuance of an assignment to its field staff to collect official samples of raw food intended for consumption by dogs or cats.  The samples will be analyzed for Salmonella, Listeria monocytogenes, E. coli O157:H7, and non-O157:H7 Shiga toxin-producing E. coli (known as STEC).  According to the assignment, positive findings “may result in a Class I recall, press release, and Reportable Food Registry (RFR) submission.”

The assignment states that an increasing number of dog and cat owners have begun feeding their pets foods marketed as raw – a phenomenon of concern to FDA given reports in the scientific literature of the presence of pathogens in some such foods, and also in stool samples of some animals consuming those foods.  These reports, together with reports of human illness resulting from pathogens transmitted by dogs or cats, indicate to FDA that “feeding raw foods to household pets such as dogs or cats carries a risk to human and animal health.”

Potential risks aside, the agency recognizes that there exists consumer demand for raw pet food, and is therefore making a push to educate consumers about the safe handling of such food.  Perhaps not coincidentally, the CDC recently published a blog posting advising consumers on ways to reduce potential risks associated with feeding raw pet food.  Notwithstanding such efforts to educate consumers, the FDA sampling assignment makes clear that the onus to ensure safety will continue to rest primarily with manufacturers.  

By Jeffrey K. Shapiro –

In 1987, an FDA official testified that 20 hours were spent on average to review a 510(k) submission.  Hearings before the Subcommittee on Health and the Environment of the House Committee on Energy & Commerce, 100th Cong., 1st Sess. (Ser. No. 100-34), p. 384 (1987). 

We have not been able to locate any testimony updating this figure, albeit our search was not exhaustive (we have a day job).  We filed a Freedom of Information Act (FOIA) request for documents with this information and were told by FDA that there were no responsive documents. 

In any event, the 20 hour figure put forward by FDA was relied upon by the U.S. Supreme Court in Medtronic v. Lohr, 518 U.S. 470, 479 (1996) (here).  In that case, the Court was reviewing whether a products liability claim against a medical device cleared in 1982 was preempted under Section 521 of the Federal Food, Drug, and Cosmetic Act (FDCA).  Therefore, at the time, and for purposes of that case, the 20 hour figure was reasonably accurate.

The trouble comes afterward.  Since Medtronic v. Lohr was decided in 1996, by our informal count, the 20-hour figure has been regurgitated in at least 52 federal court opinions down to the present day.  Last year, there were three opinions that reiterated the 20-hour figure.  There has already been another one this year (see here, here, here, and here.)

Anyone associated with filing 510(k) submissions knows that this 20-hour figure is hopelessly outdated.  In the 1980s, a 510(k) tended to be a short document with a narrative comparison of a proposed device to a predicate device and little or no supporting data.  The length and complexity of 510(k) submissions today far exceeds 510(k) submissions in the earlier bygone era.  That is a function of the greater complexity of devices today, the substantial data and information requirements now part of the 510(k) program, and the ongoing exemption of lower risk devices from 510(k) review, thereby biasing the pool of 510(k) submissions toward greater complexity.  We wrote in great detail about the statutory and administrative evolution of the 510(k) program here.  Virtually all of the important changes occurred after 1990.  Just as today’s Honda Accord is much more powerful, feature laden and reliable than one purchased in 1982, so the 510(k) program is much more robust than the one FDA operated in the 1980s.

Just last year, our firm assisted with the preparation of a 510(k) submission that was approximately 8,000 pages.  The review team at FDA did not keel over with fright, even though they doubtless knew that this review would take them a lot longer than 20 hours.  In fact, after a couple of months of review, they asked for a whole lot more information.

A moment’s reflection is all it should take to realize how implausible it is that a federal government program would remain frozen in place for more than 30 years with no changes.  Of course it would metastasize over time, both as to scope and burden.  The 510(k) program is certainly no exception.

The only thing that has remained frozen is the federal judiciary’s description of the 510(k) program.  (In addition to the 20-hour review figure, we also note that many cases repeat descriptions of the 510(k) program taken from journal articles written by law practitioners in the 1980s.)  Our purpose here is not to wade into the merits of applying preemption in medical device products liability cases.  Our point is simply that the federal courts keep reiterating information that is manifestly wrong.  If this information is, even in part, a basis for present day decision-making about preemption in products liability cases, that is a serious embarrassment to the federal courts.

By James E. Valentine* & Jay W. Cormier –

On June 1, 2015, FDA announced the availability of a draft guidance for industry entitled “Established Conditions: Reportable CMC Changes for Approved Drug and Biologic Products.” The draft guidance is intended to address a “lack of clarity” about when chemistry, manufacturing, and controls (CMC) changes must be reported to FDA. 

By way of background, FDA regulations require marketing applications for drugs and biologics to contain a CMC section that describes information such as the composition of the drug product, manufacture of the drug substance, and manufacture of the drug product.  Regulations also require all changes after approval of an application to be managed and executed in conformance with current Good Manufacturing Practices (cGMP).  Only a subset of these changes, however, must be reported to FDA.  Changes must be reported “in each condition established in an approved application beyond the variations already provided for in an application” 21 C.F.R. § 314.70(a)(1)(i) (emphasis added).

Although the substantive elements of the draft guidance are not surprising and are expected to be relatively non-controversial, FDA is interested in clarifying what constitutes a “condition established” for purposes of mandatory reporting to FDA so that sponsors have confidence that other changes do not require reporting.  FDA hopes that such clarification will alleviate confusion that it fears may “discourage continual improvement in product manufacturing processes” or result in unnecessary submissions to FDA. 

Established conditions include the description of the product, the manufacturing process, facilities and equipment, and elements of the associated control strategy, as defined in the marketing application, that assure process performance and quality of an approved product.  The guidance provides “control strategy” elements that are submitted in an application which may be considered established conditions, including:

• Drug substance and drug product manufacturing and testing facilities(including in-process materials);
• Source of and specifications for starting materials for biological products.;
• Process and process parameters and their ranges, including in-process tests and sequence of operations, equipment;
• Specifications, including the tests, analytical procedures and acceptance criteria, including specifications for the drug substance, other components, in-process materials, and the drug product;
• Container closure system, components, and specifications; and
• Maintenance strategy for chemometric and/or multivariate models (e.g., for models that may have a high impact on product quality).

There are other elements of a “control strategy” that are not “conditions established in the marketing application” and, therefore, can be managed through the pharmaceutical quality system without having to be reported.  For example, although a control strategy is generally supported and verified by batch records, development data, characterization data, validation data, and batch analysis data, these elements are generally not considered established conditions.  The draft guidance also provides product manufacturers which section of the Common Technical Document (CTD) contain elements of the CMC information that constitute established conditions.  

The draft guidance provides that applicants should provide a summary of the proposed established conditions in applications (in Module 2, section 2.3 of the CTD, Introduction to the Quality Overall Summary), as well as a brief description or identification of the established condition with a reference to its specific location (in Module 3 of the CTD or with a hyperlink if in eCTD format).  This will allow FDA to assess the proposed established conditions as part of the review process.  For products whose applications did not include a clear delineation of the established conditions, the draft guidance states that FDA will develop a process for obtaining clarification.  To add, modify, or remove an established condition based on information learned during commercial manufacturing, such changes can be made through a manufacturing supplement (if needed) or the next annual report.

Whether the guidance, in draft form or if finalized, will actually increase manufacturing process improvements or reduce FDA’s workload with respect to post-approval supplements is unclear.  As with all draft guidance documents, FDA asks that comments be submitted to FDA so that it can incorporate such comments into its final version.  Comments can be submitted directly to the docket electronically via www.regulations.gov.

*Admitted only in Maryland. Work supervised by the Firm while D.C. application pending.