By Riëtte van Laack & Ricardo Carvajal - 

By Alexander J. Varond & Josephine M. Torrente –

On March 17, 2015 FDA approved Cholbam (cholic acid) for pediatric and adult patients with bile acid synthesis disorders due to single enzyme defects, and for patients with peroxisomal disorders.  In approving Cholbam, FDA also issued the third rare pediatric disease priority review voucher (“Pediatric Voucher”), triggering the Pediatric Voucher program’s 1-year sunset clause in Section 529(b)(5) of the FD&C Act. 

Recall that a Pediatric Voucher is a voucher issued to the sponsor of a “rare pediatric disease product application” that entitles the holder of such voucher to priority review (instead of a longer standard review) of a single NDA or BLA after the date of approval of the rare pediatric disease product application.  A qualifying rare pediatric disease product application is an NDA or BLA for a drug or biologic intended to prevent or treat a rare pediatric disease.  Such drug or biologic may not contain any active ingredient (including any ester or salt of the active ingredient) previously approved in any drug or biologic application.  The application must also be deemed eligible for priority review and rely on clinical data derived from studies examining a pediatric population and dosages of the drug intended for that population.  A sponsor cannot seek an adult indication as part of a rare pediatric disease application.

FDA defines a “rare pediatric disease” similar to that as a “rare disease,” but in pediatric patients.  That is, a “rare pediatric disease” is a disease that affects fewer than 200,000 individuals primarily aged from birth to 18 years in the U.S.  The definition also extends to diseases that affect more than 200,000 individuals primarily aged from birth to 18 years in the U.S. but for which no drug or biologic treatments are available because a company cannot reasonably expect to recover the costs of developing and marketing such products.  We blogged about FDA’s recently released Draft Guidance on the Pediatric Voucher program here.

Specifically, Section 529(b)(5) states:

TERMINATION OF AUTHORITY.—The Secretary may not award any priority review vouchers under paragraph (1) after the last day of the 1-year period that begins on the date that the Secretary awards the third rare pediatric disease priority voucher under this section.

Because the sunset clause was triggered on March 17, 2015, FDA will not issue Pediatric Vouchers to drugs approved after March 16, 2016.  We note that, depending on FDA’s calculations, March 17, 2016 may actually be the applicable date.

The triggering of the sunset clause also means that the General Accountability Office will be required to submit a report to Congress on the program within a year.  Independent of GAO’s report, the triggering of the sunset clause will certainly attract attention from Congress.  It may spur legislation to reauthorize the program, either as stand-alone legislation or as part of the 21st Century Cures legislation currently being discussed.  We discussed the 21st Century Cures legislation here, here, here, and here.

As a recap:

• BioMarin received the first Pediatric Voucher on February 14, 2014 for Vimizim (elosulfase alfa) for Mucopolysaccharidosis Type IVA (Morquio A syndrome).  We blogged about it here.

• United Therapeutics received the second Pediatric Voucher on March 10, 2015 for Unituxin (dinutuximab) for the treatment of pediatric patients with high-risk neuroblastoma who achieve at least a partial response to prior first-line multiagent, multimodality therapy.  We blogged about it here.

Other Priority Review Voucher Developments

It is at least somewhat ironic that–as the Pediatric Voucher program begins to wind down (unless it is reauthorized)–only 3 months ago, the tropical disease priority review voucher (“Tropical Disease Voucher”) program received a major boost.  This boost happened on December 16, 2014 when President Obama signed the Adding Ebola to the FDA Priority Review Voucher Program Act (“Adding Ebola Act”). We previously discussed the Tropical Disease Voucher program here and here.

The Adding Ebola Act added Filoviruses, including Ebola, to the list of tropical diseases eligible for Tropical Disease Vouchers.  It also brought several of the Tropical Disease Voucher program’s features in line with the newer Pediatric Voucher program.  These changes are listed below:

Perhaps the most important change made in the Adding Ebola Act was that FDA is now able to add diseases to the list of eligible diseases by order, rather than rulemaking.  This makes it substantially easier for FDA to respond to emergencies and add diseases that have long been discussed as being good candidates for addition to the list (e.g., Chagas disease).

By Allyson B. Mullen –

On March 17, 2015, CDRH released the final guidance entitled “Reprocessing Medical Devices in Health Care Settings:  Validation Methods and Labeling.”  The draft guidance was issued in May 2011 and is now being finalized on the heels of highly publicized outbreaks of hospital acquired infections associated with Endoscopic Retrograde Cholangiopancreatography (ERCP) Duodenoscopes.  In a safety alert from last month, FDA indicated that “the complex design of duodenoscopes . . . causes challenges for cleaning and high-level disinfection [such that] effective cleaning of all areas of the duodenoscope may not be possible.”  Finalizing this guidance is one of the steps FDA is taking in order “to reduce the risk of infection from reprocessed reusable devices.”   

This guidance applies to those devices that are intended to be reprocessed (cleaned, disinfected and/or sterilized) in health care facilities or by patients prior to first use and/or prior to subsequent uses.  This guidance does not apply to, among other things, reprocessing of single use devices.  Also, the guidance notes that this guidance does not apply to any processes intending to remove or inactivate transmissible spongiform encephalopathy (TSE) agents because as of the date of this guidance, CDRH has not approved or cleared medical devices for this specific intended use.

This guidance provides helpful recommendations for manufacturers manufacturing devices within the scope of the guidance.  We discuss a few of the more interesting points in the guidance below.

Focus on Labeling Comprehension.  The guidance provides a great deal of detail around labeling content.  However, the guidance makes it clear that the reprocessing instructions in the labeling must not only meet the content requirements, but users must be able to understand and follow the instructions.  The guidance recommends that manufacturers consider using standardized reprocessing instructions (format, methods, cycles) to make the process easier for users to follow.  The guidance goes on to indicate that for devices subject to design controls, the manufacturer should validate the reprocessing instructions.  This testing is essentially described as a human factors study for the reprocessing instructions.  The manufacturer should perform a study with actual users performing actual or simulated reprocessing of the device following the draft reprocessing instructions and solicit feedback regarding the instructions.  This appears to be a new requirement for reprocessed devices.  It is unclear if this information will be reviewed as part of the premarket submissions for reprocessed devices or reviewed as part of the design history file during inspections.  Either way, it will be interesting to see how CDRH implements and enforces this aspect of the guidance.

Validation Guidance.  The guidance also provides numerous recommendations for manufacturers to follow when validating its reprocessing methods.  None of these recommendations appear to be new, and manufacturers in this space are likely already familiar with them.  For example, cleaning should be validated under worst case conditions, artificial soils should be clinically meaningful, and validation process parameters use the shortest time, lowest temperature and weakest dilutions.  This guidance should serve as a good resource when drafting reprocessing validation protocols to ensure that all factors have been appropriately considered.

Premarket Submission Content.  All premarket submissions need to contain adequate labeling describing the reprocessing instructions.  In addition, the guidance states that PMAs, HDEs, De Novos and IDES will all need to contain protocols and full test reports demonstrating that the reprocessing instructions have been validated.  As noted above, it is unclear if this means that the reprocessing cycle described in the instructions has been validated or that the instructions themselves have been validated through the human-factor like test discussed above.

With regard to 510(k) submissions, most reprocessed device 510(k)s will not need to include protocols and full test reports demonstrating that the reprocessing instructions have been validated.  This approach is consistent with the 510(k) Refuse-To-Accept Checklist (the RTA Checklist), which states that only a summary of the sterilization validation is needed, if a device is end-user sterilized.  The guidance goes on to note that CDRH may request such data during the 510(k) review process.

For a subset of 510(k) devices (those identified in Appendix E of the guidance), CDRH has determined that the risks of microbial transmission and infection are high enough to warrant requesting protocols and full test reports demonstrating that the reprocessing instructions have been validated in the 510(k) submissions.  The list of devices in Appendix E generally include various types of scopes and accessories that are inherently difficult to clean because of their design (e.g., they include lumens, channels and/or hinges).  This list is not surprising given the recent activities that prompted finalization of this guidance.

Moreover, we understand that it has been industry practice to include this information as part of 510(k) submissions for a number of the devices listed in Appendix E to date.  Therefore, we do not expect this requirement to come as a surprise to industry.  However, since this new requirement appears to conflict with the current RTA Checklist, we are curious to see if it will prompt FDA to update its checklist.

In sum, the final guidance document provides a consolidated list of the labeling, validation and premarket submission information for reprocessed reusable devices. 

By Kurt R. Karst –      

Hopes for a victory were running high among folks in the blossoming biosimilars industry after Judge Richard Seeborg of the U.S. District Court for the Northern District of California indicated at a hearing last Friday (March 13th) that he wasn’t inclined to grant a Motion for a Preliminary Injunction filed by Amgen Inc. (“Amgen”) in litigation with Sandoz Inc. (“Sandoz”) over a biosimilar version of Amgen’s NEUPOGEN (filgrastim) and concerning the applicability and interpretation of various provisions of the the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  FDA approved Sandoz’s Section 351(k) biosimilar application – the first – under BLA 125553 as ZARXIO (filgrastim-sndz) (a placeholder non-proprietary name) on March 6, 2015 and promptly added it to the Purple Book.  ZARXIO is not yet marketed because of the pending litigation in California; however, in a court filing last month, Sandoz said that company “will not launch its biosimilar filgrastim product in the United States until the earlier of April 10, 2015, or a ruling in Sandoz’s favor on Amgen’s Motion [for a Preliminary Injunction].”  Well, that ruling has now come out.  And Sandoz scored a total knockout!  In a 19-page decision, Judge Seeborg denied Amgen’s Motion for a Preliminary Injunction, as well as an earlier filed Motion for Judgment on the Pleadings or, in the Alternative, Motion for Partial Summary Judgment.  Judge Seeborg also granted certain patent-related counterclaims filed by Sandoz.  Although an appeal – perhaps along with a request for emergency relief in the form of an injunction – seems likely, the victory scored by Sandoz, if upheld, could forever alter the biosimilars landscape in the U.S. by affirming that the complex patent resolution procedures under the BPCIA (which some might say are a disincentive to seeking approval of a highly similar biosimilar or interchangeable biosimilar biological product) are not the only game in town. 

The March 19th decision stems from a Complaint Amgen lodged last October alleging that Sandoz unlawfully refused to follow certain procedures created by the BPCIA (see our previous posts here and here).  In particular, Amgen alleged that Sandoz unlawfully opted out of the information and patent exchange procedures (i.e., the “patent dance”) at PHS Act § 351(l)(2)-(8), and that despite Sandoz’s assertions that the company already provided 180-day notice of commercial marketing to Amgen required under PHS Act § 351(l)(8)(A), such notice cannot be provided until at least FDA approval of a Section 351(k) application.  In making these allegations, Amgen asserted several causes of action, including unfair competition under Cal. Bus. & Prof. Code § 17200 et seq., conversion, and infringement of U.S. Patent No. 6,162,427 (“the ‘427 patent”) covering a method of using NEUPOGEN to treat a disease requiring peripheral stem cell transplantation in a patient in need of such treatment.  Sandoz filed various counterclaims, including seeking declarations that the ‘427 patent is invalid and not infringed by Sandoz.  Amgen later argued that the ‘427 patent counterclaims are barred because PHS Act § 351(l)(9)(C) mandates that only Amgen (and not Sandoz) may file a declaratory judgment action at this stage in the process. 

The dispute spilled over to FDA in the form of a Citizen Petition (Docket No. FDA-2014-P-1771), in which Amgen asks FDA to adopt policies and procedures to require biosimilar applicants – before their applications are accepted for review by FDA – to certify to the Agency that they will comply with PHS Act § 351(l)(2)(A) by providing the reference product sponsor with a copy of the Section 351(k) application “and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application” within 20 days after FDA informs the biosimilar applicant that its 351(k) application has been accepted for review (see our previous post here).  FDA has not yet ruled on that petition. 

In his March 19th decision, Judge Seeborg, ruling on the mandatory or discretionary nature of the patent dance provisions, said that although the BPCIA repeatedly uses the word “shall” to describe the parties’ obligations under the disclosure and negotiation  procedures, Sandoz’s interpretation of the statute as permissive is more persuasive.  According to Judge Seeborg:

While Amgen correctly notes that subsection (l) uses the word “may” in certain paragraphs, thereby suggesting that the use of “shall” in others implies an action is required, several countervailing factors reflect otherwise.  First, that an action “shall” be taken does not imply it is mandatory in all contexts.  It is fair to read subsection (l) to demand that, if both parties wish to take advantage of its disclosure procedures, then they “shall” follow the prescribed procedures; in other words, these procedures are “required” where the parties elect to take advantage of their benefits, and may be taken away when parties “fail.”

That compliance allows an applicant to enjoy a temporary safe harbor from litigation and, potentially, to resolve or narrow patent disputes outside court proceedings, bolsters this reading.  Subparagraphs (l)(9)(B) and (C) contemplate the scenario in which an applicant does not comply at all with disclosure procedures, or fails to follow through after having begun the process.  They allow the reference product sponsor to commence patent litigation immediately in either instance—removing (or precluding) availability to the applicant of a litigation safe harbor.  Congress took the additional step in the BPCIA to amend 35 U.S.C. § 271(e) to add that an applicant’s failure to disclose information regarding a potentially infringed patent under subsection (l)’s requirements is immediately actionable, making it clear that such a dispute is ripe for adjudication. . . . 

Further, while Amgen contends persuasively that use of subsection (l)’s procedures can serve important public interests, including potential reduction of patent litigation and protection for innovators, nowhere does the statute evidence Congressional intent to enhance innovators’ substantive rights.  In contrast to numerous other federal civil statutes which offer a claim for relief and specify remedies, here Congress did more than remain silent—it expressly directed reference product sponsors to commence patent infringement litigation in the event of an applicant’s non-compliance.  Even in subsection (l) itself, subparagraph (l)(8)(B) is clear in providing the remedy of a preliminary injunction for failure to give the 180-day notice required in (l)(8)(A).  It is therefore evident that Congress intended merely to encourage use of the statute’s dispute resolution process in favor of litigation, where practicable, with the carrot of a safe harbor for applicants who otherwise would remain vulnerable to suit.  The statute contains no stick to force compliance in all instances, and Amgen does not identify any basis to impute one.

Furthermore, wrote Judge Seeborg, the decision not to comply with the information exchange and patent dance procedures reflects how the BPCIA’s overall scheme operates in a way to promote prompt resolution of patent disputes.  “An applicant who values expedience over risk mitigation may believe that the disclosure and negotiation process would introduce needless communications and delay,” wrote Judge Seeborg.  “Such an applicant may have good reason to believe that no unexpired relevant patents relate to its biosimilar, and that it is likely to prevail if challenged with an infringement suit.”  As such, a Section 351(k) applicant “may, in such an instance, opt to forego its ability to bring certain types of declaratory actions and receive information about potentially relevant patents from the reference product sponsor, and instead commence litigation immediately.” 

With respect to the 180-day notice provision at PHS Act § 351(l)(8)(A), which states that a Section 351(k) applicant “shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k),” Judge Seeborg also handed Sandoz a victory.  Amgen argued that the word “licensed” in the provision means that a Section 351(k) applicant cannot provide notice until FDA approves a Section 351(k) application.  Accepting this interpretation would, of course, result in a de facto 6-month period of marketing exclusivity.  In his decision, Judge Seeborg found Amgen’s interpretation unworkable and problematic:

[T]he more persuasive interpretation accounts for the fact that FDA approval must precede market entry.  It would be nonsensical for subparagraph (l)(8)(A) to refer to a biosimilar as the subject of a subsection (k) application because upon its “first commercial marketing” a biosimilar must, in all instances, be a “licensed” product. “Before” modifies “first commercial marketing”; “licensed” refers only to “biological product”—not the appropriate time for notice.

Even more problematic with Amgen’s reading is the impact it would have on the overall statutory scheme.  Because the FDA cannot license a biosimilar until twelve years after approval of a reference product, Amgen’s reading would tack an unconditional extra six months of market exclusivity onto the twelve years reference product sponsors already enjoy under 42 U.S.C. § 262(k)(7)(A).  Had Congress intended to make the exclusivity period twelve and one-half years, it could not have chosen a more convoluted method of doing so.  Moreover, Congress presumably could have been far more explicit had it intended for infringement suits to commence only once a biosimilar receives FDA approval.  It was, therefore, not wrongful for Sandoz to give Amgen its 180 days’ notice prior to first commercial marketing pursuant to subparagraph (l)(8)(A) in July 2014, in advance of receiving FDA approval.

As a result of his decisions on the patent dance and notice provisions, Judge Seeborg dismissed with prejudice Amgen’s state-law unfair competition and conversion claims. 

Moving on to Sandoz’s counterclaims for non-infringement and invalidity of the ‘427 patent and Amgen’s contention that PHS Act § 351(l)(9)(C) bars those counterclaims, Judge Seeborg turned to the statutory text, which states that where a Section 351(k)  applicant has not provided its biosimilar application and manufacturing process information to the reference product sponsor, “the reference product sponsor, but not the subsection (k) applicant, may bring an action under section 2201 of title 28, United States Code, for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.”  Noting that “[a]sserting a counterclaim is not the equivalent of commencing a lawsuit,” Judge Seeborg ruled that Sandoz’s ‘427 patent counterclaims are not barred by the BPCIA:

The BPCIA addresses only an applicant’s ability to “bring an action,” not to assert a counterclaim if placed in a position to defend against an infringement suit.  Furthermore, as Sandoz’s counterclaims arise from the same transaction or occurrence that is the subject of Amgen’s claim—the validity and relevance of Amgen’s ’427 patent—they are compulsory, and would be waived if not asserted.  Barring such claims in particular raises “real due process concerns.”

Given his decision concerning each of the issues above, Judge Seeborg saw no basis to grant Amgen’s request for a preliminary injunction, and wrote that the path seems to be  clear for Sandoz to begin marketing ZARXIO:

As the twelve-year exclusivity period for Neupogen long ago expired, there exists no substantive bar to market entry for Sandoz’s biosimilar filgrastim—and, consequently, no basis on which Amgen is entitled to injunctive relief or other remedies for disadvantages it may suffer due to market competition from Sandoz.

Judge Seeborg’s decision might also help clear the path for marketing another biosimilar biological product (provided it clears the FDA approval hurdle): Celltrion, Inc.’s and Hospira, Inc.’s biosimilar version of Janssen Biotech, Inc.’s (“Janssen’s”) REMICADE (infliximab).  Earlier this month, Janssen filed a Complaint in the U.S. District Court for the District of Massachusetts alleging, among other things, that Celltrion and Hospira unlawfully circumvented the patent dance procedures and provided ineffective notice of commercial marketing.

By Ricardo Carvajal & JP Ellison - 

On March 9, the Supreme Court handed down a decision in Perez v. Mortgage Bankers Association that does away with what we’ll refer to in this posting as the Paralyzed Veterans doctrine, after an appellate court decision by that same name.  The Paralyzed Veterans doctrine was established by the D.C. Circuit in 1997 in the Paralyzed Veterans case and reiterated repeatedly in D.C. Circuit decisions regarding agency rules.  Because so many administrative law cases are litigated in Washington, D.C., the Paralyzed Veterans doctrine was, until recently, the law of the land.  That doctrine held that an agency must use notice-and-comment procedures as required under the Administrative Procedure Act (APA) when the agency wishes to significantly change its previous interpretation of a regulation, even if the original regulation was not one for which notice-and-comment rulemaking was required.  The Supreme Court was unanimous in holding that the doctrine is not consistent with the APA:

The Paralyzed Veterans doctrine is contrary to the clear text of the APA’s rulemaking provisions, and it improperly imposes on agencies an obligation beyond the “maximum procedural requirements” specified in the APA.

*          *          *

The text of the APA answers the question presented.  Section 4 of the APA provides that “notice of proposed rule making shall be published in the Federal Register.”  When such notice is required by the APA, “the agency shall give interested persons an opportunity to participate in the rule making.”  But § 4 further states that unless “notice or hearing is required by statute,” the Act’s notice-and-comment requirement “does not apply…to interpretive rules.”  This exemption of interpretive rules from the notice-and-comment process is categorical, and it is fatal to the rule announced in Paralyzed Veterans.

*          *          *

Because an agency is not required to use notice-and-comment procedures to issue an initial interpretive rule, it is also not required to use those procedures when it amends or repeals that interpretive rule.

(Emphasis added; citations omitted.) 

With respect to how FDA conducts business, it would seem that the Perez decision is unlikely to have an immediate, significant impact.  FDA’s issuance of guidance documents is governed by the agency’s Good Guidance Practices regulation, which generally requires notice-and-comment for guidance documents of significance.  Nonetheless, it would be surprising if FDA isn’t giving careful thought to how the Perez decision might be helpful in defense of existing and future challenges to changes in the agency’s interpretations of its regulations.

For those lamenting the demise of the Paralyzed Veterans doctrine, there’s a potential salve in the concurring opinions of Justices Alito, Scalia, and Thomas, who signal an inclination to reconsider Auer v. Robbins, in which the Court held that an agency’s interpretation of its own ambiguous regulations is entitled to deference (a holding that relies on the Court’s pre-APA decision in Bowles v. Seminole Rock & Sand Co.).  It’s not readily apparent that an additional two Justices are similarly inclined.  Nonetheless, we expect that it won’t be long before counsel in an appropriate case takes up the invitation to put Auer in play.

By John A. Gilbert –

On March 16th, the U.S. House of Representatives passed by voice vote H.R. 639, the Improving Regulatory Transparency for New Medical Therapies Act, which would amend the Federal Food, Drug & Cosmetic Act (FD&C Act) and the Controlled Substances Act (CSA) to expedite scheduling of new chemical entities (“NCE”).  As reported in related blog postings (here, here, and here), this legislation is intended to address issues where the marketing of certain drugs approved by the Food and Drug Administration (FDA) have been delayed while waiting for Drug Enforcement Administration (DEA) scheduling action.  

The final version of H.R. 639 that passed is significantly different than the version introduced on February 2, 2015.  The final version amends not only the CSA, but also the FD&C Act and patent term extension laws.  In doing so, this legislation more directly addresses the crux of the issue, ensuring that companies do not lose patent or non-patent exclusivity on newly approved drugs because of drug scheduling delays.  If enacted, the bill would presumably moot pending litigation Eisai initiated against FDA concerning the triggering of NCE exclusivity for a controlled substance (see our previous post here).

H.R. 639 amends the FD&C Act in cases where HHS has recommended scheduling under the CSA by timing the effective date of FDA approval, conditional approval or indexing, as appropriate, for a drug, biological product, or animal drug to the DEA’s issuing of the interim final rule scheduling the product.  The bill also amends the CSA to require DEA to issue an interim final rule controlling a drug no later than 90 days after either: (1) when DEA has received the HHS scientific and medical evaluation and recommendation (commonly known as the “Eight Factor Analysis”) or (2) DEA is notified by HHS of the approval of the drug, biological product or animal drug.  The bill requires DEA to make the interim final rule effective immediately without having to show good cause. 

H.R. 639 also amends the patent term extension statute (35 U.S.C. § 156) by defining the “covered date” for products recommended for scheduling as the later of either approval by FDA or the issuing of the interim final rule scheduling the drug by DEA.

Finally, H.R. 639 promotes research and development of NCE’s or any drug by expediting registration for manufacturers of clinical trial material.   Generally, neither the CSA nor DEA regulations place a deadline on DEA to decide on any application for a DEA registration (e.g., manufacturer, distributor, pharmacy, etc.).  However, in the case of a Schedule I or II drug, this legislation would require DEA to publish a notice of application for such a manufacturer registration within 90 days of receipt and then issue the registration or a show cause to deny the registration, within 90 days of the close of the comment period.  In the case of manufacturer registration for use of a Schedule III-V drug in a clinical trial, the DEA must grant the registration or issue a show cause denying the application within 180 days after receipt of such application.  It is worth noting that the difference in these approval procedures is because the CSA otherwise requires that applications for bulk manufacturers of a Schedule I or II controlled substances must be published in the Federal Register.

By Kurt R. Karst –      

Nothing lasts forever in our mortal world, though some things try to come close: Wonka’s Everlasting Gobstoppers, The NeverEnding Story, Doctor Who, the Energizer Bunny . . . . and perhaps one day in the not too distant future, the Everlasting Patent will be added to the list.  What’s that you say?  A patent term is only 20 years from the filing date of the earliest U.S. application to which priority is claimed (excluding provisional applications).  While that’s generally true (minus any extensions, for example, a patent term extension under Title II of the Hatch-Waxman Amendments), there’s a provision buried in the nearly 400-page discussion draft of the 21st Century Cures Act that was released earlier this year (see our previous post here) that seems to create the possibility of essentially limitless term extensions for a patent (as a helpful reader pointed out to us). 

The provision at issue is in Section 1222 (titled “Capturing Lost Opportunities and Creating New Cures for Patients”) of Subtitle M (titled “Dormant Therapies”).  It states:

(C) EXTENSION OF PATENTS.—

    (i) IN GENERAL.—Unless the Director has notified the Secretary of a determination under subparagraph (B)(ii) [(concerning failure to provide documentation of waiver of patent rights)], for each patent identified in a submission pursuant to subparagraph (B)(i) [(concerning the listing of patents that may be reasonably construed to provide protection for the medicine)], and for each patent issuing based upon an application for patent so identified, the Director shall, within the 3-month period beginning on the date of the submission, extend the patent to expire at the end of the protection period for the dormant therapy, if the patent would otherwise expire before the end of the protection period.  If the Director has so notified the Secretary under subparagraph (B)(ii), the Director shall extend one such patent, selected by the sponsor, for the period that would have been applicable had an application for extension been filed under section 156 of title 35, United States Code, with respect to such patent.

    (ii) APPLICATION OF CERTAIN PROVISIONS.—During the period of an extension under clause (i)—

    (I) the rights under the patent shall be limited in the manner provided under section 156(b) of title 35, United States Code; and

    (II) the terms “product” and “approved product” in such section 156(b) shall be deemed to include forms of the active moiety of the dormant therapy and highly similar active moieties that might be approved or licensed by the Secretary based upon an application filed under section 505(b)(2) or 505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)(2), (j)) or under section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)) that references or otherwise relies upon the dormant therapy.

(D) INTERIM PATENT EXTENSIONS.—Notwithstanding any provision of title 35, United States Code, with respect to any patent listed (or patent issuing on an application listed) under subsection (b)(1) that would otherwise expire before the sponsor could make a submission under subparagraph (B), the Director, upon application of the patentee, shall grant to the patentee an interim extension of such patent, subject to the limitations in section 156(d)(5)(F) of such title 35, for such period as may be necessary to permit the sponsor to submit the listing under subparagraph (B) and, if the patent is therein listed, to extend the patent as provided under subparagraph (C).  The Director may require, for any patent extended under this subparagraph, that the sponsor of the dormant therapy to which the patent relates provide periodic certifications that development of the dormant therapy is continuing.  The Director may terminate any interim extension for which a required certification has not been made.

(E) NOTICE OF EXTENSION.—For each patent that is extended under this paragraph, the Director shall publish a notice of such extension and issue a certificate of extension described in section 156(e)(1) of title 35, United States Code.

(F) NOTICE OF WAIVER.—For each patent identified in a submission under subparagraph (B)(i), and each patent issuing based upon an application for patent so identified, that expires after the end of the protection period for the dormant therapy, the Director shall publish a notice that the patent is subject to the limited waiver of the right to enforce described in subsection (c)(1).

As we previously noted, Subtitle M is modeled after the Dormant Therapies Act of 2014 (S. 3004), which Senator Orrin Hatch (R-UT) introduced in December 2014.  A press release from Senator Hatch last year noted that the Dormant Therapies Act “will remove the ‘ticking patent clock’ conundrum that forces companies to prioritize research based on which compounds can be brought quickly to market.”  The Dormant Therapies Act is a redo of the Modernizing Our Drug & Diagnostics Evaluation and Regulatory Network Cures Act (“MODDERN Cures Act”), which was introduced in 2013 (H.R. 3116) and 2011 (H.R. 3497). 

Subtitle M would create a new guaranteed 15-year “protection period” for certain drug and biological products designated and approved as “dormant therapies” – that is, a “medicine [that] is being investigated or is intended to be investigated for an indication to address one or more unmet medical needs,” among other designation requirements.  Specifically, during the 15-year “protection period,” FDA would be prohibited from approving an ANDA, 505(b)(2) application, or 505(b)(1) NDA for a drug product containing the same active moiety as in the dormant therapy, and would be prohibited from licensing a Section 351(k) biosimilar or a Section 351(a) BLA for a biological product containing an “active moiety that is highly similar” to that of the dormant therapy, unless, in the case of a 505(b)(1) NDA or Section 351(a) BLA, “the information provided to support approval of such application is comparable in scope and extent . . . to the information provided to support approval of the application for the qualifying medicine . . . .”  That’s pretty significant protection; however, as part of the deal, companies must agree to waive certain patent rights.  But they get other patent rights as noted in the provisions quoted above. 

The removal of the “ticking patent clock” for dormant therapies Sentaor Hatch referred to in a press release may be more than what some in industry were expecting, but exactly what it says, leading to a patent that could go on, and on, and on.  Here’s how that would work under one reading of the proposed statutory text . . . . 

The choice and nature of the patent selected for extension is not limited to a patent on a new dormant therapy use of the drug or biologic.  The proposed statutory text could allow for extension of any patent reasonably related to the drug or biologic that has not expired (or that is the subject of an interim patent term extension) selected from a list of all patents on the product by the applicant.  That patent, once selected, would run until the expiration of the “protection period.”  That’s just 15 years, right?  But hold on . . . .

What if a sponsor obtains multiple dormant therapy designations and approvals for the same drug or biologic or a related product to which the same patent is reasonably related?  It certainly seems possible that the sponsor could select the same patent over and over again for extension.  This would result in cascading protection periods for a single patent – as well as “for each patent issuing based upon an application for patent so identified” –  that extend for decades, thus creating the everlasting patent.  Of course, the “fix” to this issue is to prohibit the same patent from being selected more than once.  But such a limitation is not in the proposed text.  Perhaps that issue will be addressed in version 2.0 of the 21st Century Cures Act, which is rumored to be in the works. 

Update:

We received a comment from one blog reader we thought deserved posting and that provides an alternative view of the proposed statutory change.  Enjoy.

A post in this blog dated 13 March 2015 entitled The Everlasting Patent: Is it Hiding in Plain Sight in the 21st Century Cures Act? offers an opinion on the 21st Century Cures Act discussion draft that the provisions of Sections 1221-1223 of Subtitle L (titled “Dormant Therapies”) could lead to “evergreening” of patents.  Specifically, the blog opined that multiple extensions of the same patent under this Act could lead to multiple exclusivity extensions for the same dormant therapy.  In fact, under the Act a dormant therapy can benefit from one and only one protection period which is measured from the first day of the first approved indication for a therapy and cannot be further extended.  As a result of this and other limitations in the Act, any such “evergreening” is impossible.  Unlike the “everlasting gobstopper” to which these provisions were referred in the earlier post, an applicant looking for exclusivity beyond the protection period will be met with Gene Wilder’s famous line from the same movie, “you get nothing, you lose, good day sir!”

Two particular provisions in this Act that ensure this result are:

• Section 1221(6)(A) measures the “protection period” from the date that FDA “first approves” the dormant therapy (DT) for “any indication”.  Similar to the “first licensure” limitation in the exclusivity provisions of the BPCIA, the exclusivity and patent extension resulting from any subsequent dormant therapy designation that an applicant attempts to apply to a previously-designated dormant therapy – or a dormant therapy with the same active moiety – could not possibly extend the overall 15 year period, because subsequent extensions for the same therapy or moiety would always relate back to the first approval date for any indication.
• In the case the same patent were ever to be extended a second time because a second DT were approved based upon a different active moiety, the Hatch-Waxman limitations on the enforcement of the patent during each of the extended patent terms would apply.  This is set out in section 4(e)(2)(C)(ii) of Section 1222.  The most critical limitation on extended terms is in 35 U.S.C. § 156(b)(1)(B), which would operate to limit a second extension to the uses approved on or after the FDA approval of the second DT, “in the case of a patent which claims a product, [the extension is] limited to any use approved for the product … on or after the expiration of the regulatory review period upon which the extension of the patent was based.”  The second extension of the patent would not afford rights to enforce the patent against the earlier-approved DT. 

Thus, for multiple extensions of the same patent under this Act, each such extension is exclusively forward-looking never covering a previously approved use for a drug or biologic.

In a new Legal Backgrounder published by the Washington Legal Foundation, Hyman, Phelps & McNamara, P.C.’s James P. Ellison, Anne K. Walsh, and Andrew J. Hull* write a “Warning Letter” to FDA-regulated drug establishments regarding FDA’s inspection practices.  We have written on FDA’s inspection authority in the past (see here and here), and this article addresses FDA’s aggressive position on that inspection authority. 

FDA’s position was most recently set forth in FDA’s Guidance for Industry: Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug Inspection (2014), published to interpret section 707 of the 2012 Food and Drug Administration Safety and Innovation Act (“FDASIA”).  This section states that a drug stored in an FDA-regulated facility is deemed adulterated under the Federal Food, Drug, and Cosmetic Act (“FDCA”) when the facility “delays, denies, or limits an inspection, or refuses to permit entry or inspection.”  As such, FDA’s interpretation of its lawful inspection activities could have draconian effects on those who are unprepared for the positions that FDA may assert during an inspection.

For instance, the authors analyze the agency’s questionable position that facilities must allow FDA inspectors to take photographs as part of an inspection.  The authors argue that this and other FDA inspection practices may well fall outside the inspection authority granted to FDA by Congress.

The authors conclude the article by writing:

Because of unresolved questions regarding FDA’s inspection authority and aggressive inspection practices, a company must be aware of the agency’s expectations during an inspection.  Without forethought and internal policies in place specifically contemplating the issues discussed in [the article], a company runs the risk of being caught off-guard by an inspector’s requests and possibly providing FDA with evidence beyond FDA’s inspection authority.  A company could be handing FDA evidence and information to which it would not otherwise be entitled, absent a subpoena, warrant, or other lawful process. 

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

By Jay W. Cormier & Alan M. Kirschenbaum –

The stage is set for yet another court ruling in the battle between the Health Resources and Services Administration (HRSA) and the Pharmaceutical Research and Manufacturers of America (PhRMA) over HRSA’s implementation of the 340B Orphan Drug Rule.  As we have related in prior posts (the most recent being here), HRSA asserts that the statutory orphan drug exclusion from the 340B drug discount program, under which certain 340B covered entities are not eligible for 340B pricing for orphan drugs, only applies to orphan drugs when used for the orphan-designated indications but not when used for other indications.  This position was first incorporated into a regulation issued pursuant to notice-and-comment rulemaking.  PhRMA successfully sued in the U.S. District Court for the District of Columbia, obtaining a ruling that HRSA was not authorized by statute to issue regulations in this area.  So, HRSA promulgated a second rule, which was virtually identical to the first, except that HRSA labeled it an “interpretive” rule.  PhRMA challenged the latter rule in the same proceeding, but the  Court agreed with HRSA that the second rule was a separate matter that required a new lawsuit.  PhRMA brought the new lawsuit last October. 

Both sides have now filed motions for summary judgment.  HRSA has argued that the court lacks jurisdiction to review the interpretive because it is not a final agency action.  According to HRSA, the new rule does not confer any rights or obligations, nor do legal consequences result from it.  HRSA states that no enforcement action can be taken under the new rule.  Rather, any legal action against a manufacturer for charging excessive prices for orphan drugs prescribed for non-orphan indications will flow from the statutory provisions rather than the new regulation.  HRSA claims that voluntary compliance with the new HRSA rule by a large number of orphan drug manufacturers “does not transform the interpretive rule into a binding rule.”

In its Opposition filed on February 25, PhRMA argues that the new rule, like any executive regulation, confers legal obligations on orphan drug manufacturers, and plainly sets forth HRSA’s interpretation of the statutory orphan drug exclusion — an interpretation that will be the basis for enforcement actions.  PhRMA further points out that, lest there be any doubt with respect to HRSA’s intention to enforce the new rule, the agency has sent letters to over 50 manufacturers ordering them to comply with the new rule and threatening enforcement for non-compliance, and has posted on its website a list a list of manufacturers who are allegedly noncompliant.

Hopefully, the Court will be persuaded that the rule is reviewable, and the merits of HRSA’s interpretation of the orphan drug exclusion will finally be adjudicated.  If not, manufacturers of orphan drugs with additional non-orphan indications will be faced with the unusual prospect of an agency taking action to enforce an interpretation that it insists is not legally binding.

By Alexander J. Varond –

Evidence from recent approvals of breakthrough therapy-designated products suggests that, for some time now, FDA has been operating under accelerated review timelines for certain drugs with breakthrough therapy designation.  Recently, FDA confirmed this and stated that it has been informally instituting a policy to expedite the review of certain breakthrough therapy-designated applications for the past several months.  FDA’s informal policy has now found its way into a Manual of Policies and Procedures entitled “Good Review Practice: Review of Marketing Applications for Breakthrough Therapy-Designated Drugs and Biologics That Are Receiving an Expedited Review.” 

Put simply, FDA’s MAPP establishes an “expedited review” pathway for certain breakthrough therapy-designated drugs.  Under this pathway, FDA review teams are instructed to plan to act at least one month prior to the Prescription Drug User Fee Act (PDUFA) goal date. 

FDA’s MAPP states that breakthrough therapy-designated drugs eligible for “expedited review” should have the following characteristics:

• Preliminary review of results from clinical trials must indicate that the drug has demonstrated substantial improvement over existing therapies;
• The marketing application must be designated as a priority review; and
• The review team must have determined that a first cycle approval is likely.

As background, Section 902 of Food and Drug Administration Safety and Innovation Act (FDASIA) provides that

[FDA should] expedite the development and review of [a breakthrough therapy-designated] drug if the drug is intended, alone or in combination with 1 or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on 1 or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

While FDA’s May 2014 guidance entitled, “Expedited Programs for Serious Conditions – Drugs and Biologics,” which we blogged about here, provided several clues regarding how the development of breakthrough designated drugs might be expedited, the method by which FDA would expedite the “review” of applications was not clear.  FDA’s new MAPP, therefore, is intended to provide clarity on this topic.

FDA was careful to state that not all breakthrough therapy-designated drugs will receive expedited review.  Instead, decisions are made on a case-by-case basis.  The MAPP details examples of factors that FDA will weigh when considering whether to designate an application for expedited review:

• Resources to expedite the review are not available because of competing public health priorities (e.g., anthrax, Ebola, influenza);
• An advisory committee meeting is needed for reasons such as clinical trial results or safety issues;
• An unanticipated safety issue is identified that requires a risk evaluation and mitigation strategy (REMS) with elements to ensure safe use; or
• Manufacturing issues are identified.

The MAPP describes the timing and process for these expedited reviews and notes that expedited review does not change PDUFA review performance goals.  The MAPP also explains that CDER review teams can determine that an expedited review is no longer appropriate and change the review to the default priority review timeline.  If this happens, FDA will communicate its decision to the sponsor within three days.  Instances in which the CDER review team may determine that an expedited review is no longer appropriate include, if:

• Unexpected application deficiencies are found;
• The marketing application is of poor quality;
• The sponsor fails to engage in collaborative communications (e.g., failure to respond to information requests);
• There is a need to hold an advisory committee meeting;
• Unanticipated review issues arise; or
• The review team experiences an unexpected shift in work priorities or team staffing.

FDA has frequently exceeded its PDUFA goal dates for breakthrough therapy-designated applications.  One notable example came on December 22, 2014 when FDA approved Opdivo (nivolumab), a therapy for melanoma,‎ three months ahead of its PDUFA date. 

Additional examples show that even breakthrough therapy designations granted mid-review have helped to speed FDA’s review of those applications.  Roche’s idiopathic fibrosis (IPF) drug, Esbriet (pirfenidone), and Boehringer Ingelheim’s IPF drug, Ofev (nintedanib), are two examples:

• Esbriet’s resubmission was submitted on May 23, 2014, was granted breakthrough therapy designation on July 17, 2014, and was approved on October 15, 2014, ahead of its November 23, 2014 PDUFA goal date. 
• Ofev’s application was submitted on July 2, 2014, granted breakthrough therapy designation on July 15, 2014, and was approved on October 15, 2014, ahead of its January 2, 2015 PDUFA goal date.

Notably, FDA’s previously released MAPP entitled, “Good Review Practice: Management of Breakthrough Therapy-Designated Drugs and Biologics” is still applicable and covers FDA’s actions from time of designation until marketing application has been submitted.

By Josephine M. Torrente & James E. Valentine* – 

On March 9, 2015, FDA announced the availability of draft guidance which allows the use of electronic informed consent (“electronic IC”) in FDA-regulated clinical investigations of medical products (and the use of electronic assent in pediatric studies).  Electronic IC can employ one or more forms of electronic media, including “text, graphics, audio, video, podcasts and interactive Web sites, biological recognition devices, and card readers.”  In addition, electronic IC may use interactive computer-based technology, such as “diagrams, images, graphics, video technology and narration,” which may include questions at the end of each section to assess the subject’s understanding.  These electronic IC materials can be used either at the clinical investigator’s site or remotely.  This effort harmonizes FDA regulatory requirements with Health and Human Services’ Office of Human Research Protections (see, e.g., OHRP policy allowing electronic signatures to document informed consent).

This guidance comes in response to the clinical research community’s interest in using electronic media to provide information usually contained within the informed consent document, evaluating the subject’s comprehension of the information presented, and documenting the consent of the subject.  Research studies are growing in complexity and duration, which leads to informed consent documents that are increasingly long and more difficult to understand.  Electronic IC may be helpful in providing subjects with information about study procedures in a way that is easy to understand and is communicated in a standardized way—and could even better assess and document comprehension. 

Additionally, electronic IC may allow for rapid notification of amendments pertaining to the informed consent that may affect a subject’s willingness to continue to participate, as well as promote timely entry of documentation of informed consent. 

The draft guidance expands on FDA’s regulations that state “informed consent shall be documented by the use of a written consent form approved by the IRB and signed and dated by the subject…at the time of consent” (21 C.F.R. 50.27(a)). FDA explains that informed consent is “mistakenly viewed as synonymous with obtaining a hand-written signature” and explains that there can be electronic documentation of informed consent as well.   Still, electronic IC must comply with FDA requirements for electronic records/electronic signatures, informed consent, and institutional review boards (“IRBs”) which are set forth in 21 C.F.R. Parts 11, 50, and 56, respectively.  Many of these requirements are reiterated in the draft guidance (e.g., requisite elements of informed consent, providing the subject a copy of the informed consent, IRB review, recordkeeping). 

The draft guidance lays out a number of key considerations for utilizing electronic IC, including:

• ensuring interactive electronic IC programs are easy to navigate and appropriate for the intended audience, taking into account age, language, and comprehension level;
• if remote, obtaining documentation to ensure responses cannot be altered and ensuring the person signing the informed consent is the subject;
• if remote, providing an opportunity to ask questions and receive answers prior to signing the electronic IC, as well as throughout the trial (which can be done using electronic messaging, telephone calls, videoconferencing, or a live chat);
• ensuring the transmission of significant new findings to the subjects;
• considering whether to use a method of obtaining electronic signatures;
• providing a signed consent form with date stamp to subjects (e.g., by email)
• disclosing risks of electronic transmission (e.g., e-copy could be hacked from email or personal electronic device, e-copies delivered by email may not be able to be permanently deleted);
• protecting confidentiality through use of restricted access computerized systems; and
• including procedures to ensure archival of electronic documents and all versions of the electronic IC, as well as having an audit trail capability to capture details of changes.

The specifics of any individual electronic IC are left to the review by an IRB.  FDA recommends investigators discuss plans with the IRB prior to finalizing the development of the electronic IC to ensure the IRB agrees with providing informed consent in an electronic format.  

Comments on the FDA Draft Guidance can be submitted to FDA until May 7, 2015, here.

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

By Kurt R. Karst –      

That’s right folks, another Golden Ticket has been awarded!  On March 10, 2015, FDA approved BLA 125516 for United Therapeutics Corporation’s (“UTC’s”) Unituxin (dinutuximab) in combination with granulocyte-macrophage colony-stimulating factor, interleukin-2 and 13-cis-retinoic acid, for the treatment of pediatric patients with high-risk neuroblastoma who achieve at least a partial response to prior first-line multiagent, multimodality therapy.  With that approval, FDA granted UTC a Rare Pediatric Disease Priority Review Voucher (“Pediatric PRV”), which entitles the voucher holder to priority review (instead of a longer standard review) of a single NDA or BLA after the date of approval of the rare pediatric disease product application.  (A copy of UTC’s press release is available here.)

As we noted when FDA granted the first Pediatric PRV back in February 2014 – to BioMarin Pharmaceutical Inc. for VIMIZIM (elosulfase alfa) Injection – the Pediatric PRV was created by Section 908 of the 2012 FDA Safety and Innovation Act (“FDASIA”) (codified at FDC Act § 529), and is intended to encourage the development of treatments for rare pediatric diseases.  The program was inspired by the existing Tropical Disease PRV (“TD-PRV”) program set forth at FDC Act § 524, as added by the 2007 FDA Amendments Act of 2007; however, the TD-PRV differs from the Pediatric PRV program in several respects.  Last November, FDA issued draft guidance explaining the Agency’s implementation of the statutory Pediatric PRV provisions (see our previous post here). 

Significantly, the Pediatric PRV program has a sunset clause.  Under the statute (FDC Act § 52(b)(5)), no further vouchers can be awarded “after the last day of the one-year period that begins on the date” that the third voucher is granted.  So the next Golden Ticket granted by FDA will trigger the sunset provision.   But Congress may renew the Pediatric PRV program after this trial run as a part of the next omnibus FDA bill.    

For now, the big question is what will will UTC do with the Pediatric PRV.  PRVs are, after all, transferable and may be sold.  In July 2014, Sanofi and Regeneron paid BioMarin $67.5 million for its Pediatric PRV.  Late in 2014, Gilead Sciences, Inc. nearly doubled that figure when it paid Knight Therapeutics Inc. $125 million for its Tropical Disease PRV.  Another Tropical Disease PRV FDA granted with the 2012 approval of SIRTURO (bedaquiline) for tuberculosis has reportedly gone unused. 

By Karla L. Palmer –

On March 4, 2015, the U.S. General Accountability Office (GAO) released a lengthy and detailed report, titled “Better Management of the Quota Process for Controlled Substances Needed; Coordination between DEA and FDA Should Be Improved,” addressing controlled substance shortages potentially resulting from DEA and FDA’s management and coordination of the quota process.  

The Report stems from a 2012 request from Senate Judiciary Committee members Charles Grassley (R-IA) and Sheldon Whitehouse (D-RI).  The Senators raised questions about shortages of controlled substances and asked GAO to examine the effect of such shortages on patients.  They also tasked GAO with a review of DEA’s administration of the quota process to understand its potential effects on shortages of drugs containing controlled substances, particularly those used by the emergency medical system.  

To prevent diversion of controlled substances, as established by the Controlled Substances Act (CSA) and its implementing regulations, DEA sets quotas that limit the amount of certain substances that are available in the United States.  However, the Report notes that shortages of controlled substances increased significantly in recent years; specifically, of the 168 shortages reported from January 2001 through June 2013, nearly 70 percent began after 2007, and lasted for about a year.   Many shortages involved generic pain relievers and drugs where there was only one manufacturer.

The Report reviews data from 2001-2013, and examines the following: (1) shortage trends; (2) effect on patients and providers; (3) DEA’s administration of the quota process; and, (4) coordination between DEA and FDA to prevent and mitigate shortages.  To prepare the Report, GAO reviewed relevant documents; the statutory and regulatory scheme; and interviewed officials from DEA, FDA, organizations representing patients and providers, and drug manufacturers.

GAO makes the several recommendations for executive action including the following: (1) DEA should take five actions to improve its management of the quota process; (2) DEA and FDA should quickly update their existing Memorandum of Understanding (MOU) that has not been revised since the 1970s; and, (3) DEA and FDA should better coordinate on steps moving forward.  

The Report generally concludes that DEA is not well prepared to “expeditiously respond to future shortages.”  After describing in detail the regulatory timelines that DEA must meet to issue quotas (see 9-14), the Report states DEA has “not met its required time frames for establishing quotas for more than a decade.”  (47)  DEA also lacks “sufficient internal controls to ensure the reliability of the data it uses to establish quotas,” which GAO found “led to errors in its data system.”  (47)  Moreover, the Report notes that DEA does not monitor the data it collects and has no established performance measures related to either setting quotas in a timely manner or ensuring an adequate and uninterrupted supply of controlled substances for legitimate medical use.  And, DEA’s “lack of written policies and procedures for a complex process poses a risk to the continuity of its future operations.” (42)  Below is a brief description of GAO’s seven recommendations. 

1.  The DEA Administrator should establish controls, including periodic data checks, to ensure that the Year End Reporting and Quota Management System (YERS/QMS) data, which is the official record of the quota process, accurately reflects both manufacturers' quota submissions and DEA's decisions.  For example, in a review of YERS data from 2011 and 2012, GAO estimates that “44 percent of the records in 2011 and 10 percent of the records in 2012, each of which corresponds to one quota application and DEA decision letter, contained at least one data field with incorrect data, such as incorrect dates or amounts of quota requested or authorized.”  (30-38)  In particular, DEA does not have adequate controls to ensure the reliability of the YERS/QMS system used to track manufacturers’ quota applications and record its decisions. DEA officials told GAO, “there are no systematic quality checks to ensure that the data in YERS/QMS are accurate, such as electronic checks for data outliers or manual comparisons of YERS/QMS data to source documents (i.e., manufacturers’ quota applications and corresponding DEA decision letters) to identify inconsistent information.”  (36)  The GAO found that DEA’s lacking systematic data checks is “inconsistent with federal standards for internal control, which calls for agencies to have appropriate control activities in place, such as periodic data checks, to ensure that the data used by the agency for decision making are accurate.”  (36) 

2.  The DEA Administrator should establish performance measures for DEA related to quotas and ensuring an adequate and uninterrupted supply of controlled substances for legitimate medical use.  In the absence of such performance measures, DEA does not have key information for program managers to make decisions about program resources, and the agency cannot effectively demonstrate program results.  Federal standards state that performance measures are “an important management tool and that such measures provide critical information to managers about agency performance and program outcomes.”  (40)   DEA officials counter that performance measures related to establishing quotas or ensuring an adequate and uninterrupted supply of controlled substances would be “inappropriate because of the complexity of individual quota applications and the difficulty of projecting the number of quota applications for future years.  (39)  Nonetheless, GAO notes that performance measures related to quotas, including percentage of applications that require follow-up by DEA, are a critical internal control, “without which DEA cannot determine if its process for establishing quotas is having the desired outcome.”  (39)  Without such measures, the agency cannot make decisions about resources or demonstrate results.

3.  The DEA Administrator should monitor and analyze YERS/QMS data to assess administration of the quota process.  DEA told GAO that it does not monitor or analyze available data from YERS/QMS to assess its administration of the quota process, “which federal standards for internal control state is an important component of managing a program.”  DEA officials said that the agency does not monitor or analyze these data; DEA does not use YERS/QMS to produce aggregate information “on timeliness or other performance metrics and the agency has no plans to do so as of October 2014.”  (Emphasis added; 40.)  The Report notes, however, that absent such analysis, DEA cannot evaluate its responses to manufacturers’ quota applications or understand the nature of its workload.

4.  The DEA Administrator should establish internal policies for processing quota applications and setting aggregate, annual, and supplemental quotas to ensure that staff conduct these activities consistently and in accordance with the CSA and the agency's regulations.  The Report points out that DEA has not met its required time frames provided in regulations for establishing aggregate production quotas (APQ), or annual bulk manufacturing or procurement quotas for Schedule II substances  for 14 years (i.e., since at least 2001)  (30-33).  Manufacturers claim DEA’s untimeliness has contributed to drug shortages.  DEA officials acknowledged that the agency has failed to meet regulatory time frames for proposing and establishing quotas.  DEA officials cite “inadequate staffing” in the Quota Unit as the reason, and that its quota workload has increased in complexity since the CSA’s enactment. 

Interestingly, although DEA acknowledges it failed to adhere to required quota time frames for over a decade, it disagrees that quotas can cause shortages.  DEA authorizes quotas at the basic class level for a substance–such as amphetamine or morphine–not for specific drug products.  And, DEA has “no control over what specific drug products manufacturers actually produce with the quota authorized.”  (35)  For example, if DEA authorized 10,000 grams of morphine to a manufacturer, the manufacturer—and not DEA— decides how to authorize the quota among its products that contain different formulations, dosage forms, and concentrations.  (35)  

GAO concluded that it cannot confirm whether DEA’s lack of timeliness in establishing annual and supplemental quotas has caused or exacerbated shortages.  But, by not responding to annual applications in accordance with the time frames required by its regulations or the CSA, and by not acting promptly on supplemental applications, “DEA may hinder manufacturers’ ability to manufacture drugs that contain schedule II controlled substances that may help prevent or resolve a shortage.”  (35)

DEA responded, among other things, that it has already established procurement policies and procedures.  However, GAO notes that DEA “did not provide documentation of such policies and procedures despite repeated requests.”  (57)

5.  The DEA Administrator should expeditiously establish formal policies and procedures to facilitate coordination with FDA as directed by the Food and Drug Administration Safety and Innovation Act (FDASIA), including a specific time frame in which DEA will be expected to respond to FDA requests to expedite shortage-related quota applications.  FDASIA requires DEA and FDA to coordinate where additional quota may be needed to address a shortage of a drug containing controlled substances, but the Report notes several barriers to effective collaboration between the agencies, including DEA’s lack of trust concerning whether FDA’s website accurately reports and reflects shortages, whether certain controlled substances are interchangeable (such as extended and immediate release formulations of ADHD medications), and significant disagreement on what constitutes a shortage of controlled substances.  The agencies also lack compatible “policies, procedures, and other means to operate across agency boundaries, including mutually agreed upon time frames for DEA to respond if FDA notifies DEA of a shortage caused by quota.”  (44-45)  

6.  FDA and DEA should promptly update the MOU between the two agencies to address sharing of information between the agencies.  DEA and FDA have had MOUs in place since the 1970s, but they do not address drug shortages.  The agencies have been working for two years on a new MOU.  The new MOU is expected to establish procedures for sharing of certain proprietary information that they are currently prohibited from sharing.   

7.  Related to No. 6, either in an MOU or separate document, DEA and FDA should outline types of information they will share and the time frames for doing so in response to a potential or existing drug shortage.  Although FDA/HHS agreed with GAO’s applicable recommendations, DEA neither agreed nor disagreed; instead, and not surprisingly, DEA “raised multiple objections” to the Report.  Those objections may be found at pages 49-58, and at Appendix V (December 29, 2014 response from Joseph Rannazzisi, Deputy Assistant Administrator, Office of Diversion Control, DEA).

Also of note: Senators Chuck Grassley and Dianne Feinstein (leaders of the Caucus on International Narcotics Control) have announced a hearing on the quota system used to manage controlled substances in light the Report.  

By Karla L. Palmer –
 
On Monday, March 9th FDA published a notice in the Federal Register establishing a public docket to receive information, recommendations, and comments on matters related to the regulation of compounding of human drug products under FDCA sections 503A and 503B.  The docket is intended for “general comments related to human drug compounding” that are “not specific to documents or issues that are the subject of other dockets.”  To the extent that a comment relates a matter for which there is a specific docket – such as nominations for FDA’s so called positive and negative lists of bulk substances to be used in compounding, FDA’s draft standard MOU for interstate shipping of compounds under Section 503A, or comments on FDA’s several compounding draft guidance documents – FDA instructs interested parties to submit comments to that specific docket.   A complete list of the human drug compounding policy documents issued by the Agency for public comment can be found here.

FDA will continue to seek public comment on specific guidance documents and issues as they arise; nevertheless, the Agency believes it would be “useful to have a docket available for submissions of any information related to human drug compounding that may be unrelated to the specific issues and documents published for public comment.”  FDA states that interested parties have expressed interest in providing comments and information to FDA on a variety of issues that are not related to the specific regulations, guidance documents or other Federal Register notices that FDA has published on compounding to date. FDA established the general docket so stakeholders can share information, research, and ideas on any matters not specific to the documents or issues on which FDA has already sought public comment in other dockets.

FDA notes that comments should not be submitted to the general docket if they have already been submitted to specific dockets.   Specifically, “such submissions are duplicative and not helpful to the Agency.”  If comments on particular documents or issues are submitted to the general docket rather than the docket for the particular document or issue, FDA states that the comment might not be considered as the specific documents are being considered and finalized.  In addition, FDA will not respond to questions or requests submitted to the general docket but will “consider any information submitted in its work to implement the law.” 

The general public docket does not have a date by which comments must be received; FDA instead states that comments may be submitted at any time.  Comments should be identified by Docket No. [FDA-2015-N-0030], and may be submitted electronically at http://www.regulations.gov, or in hard copy to:  Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

By Ricardo Carvajal - 

That’s the question raised by a recently issued Government Accountability Office (GAO) report that takes FDA to task not just for lagging behind the foreign inspection targets established by FSMA, but also for not conducting “an analysis to determine whether the number of inspections in the FSMA mandate or the lower number of inspections it is conducting is sufficient to ensure comparable safety of imported and domestic food.”  It’s a curious fault to find, given that the foreign inspection targets in FSMA were understood to be an arbitrary, unfunded mandate from the moment the ink dried on the President’s signature of the bill into law.  The chart below (drawn from the GAO report) says it all:

FSMA called for a doubling of foreign inspections every year, starting from a baseline of 600 in the first year following enactment.  FDA is already well behind those targets, having completed just 28% of the number of inspections mandated for 2014.  The reason?  In a word, money.  Meeting the 2014 target would have required FDA to divert to foreign inspections nearly all of the FSMA implementation funding it received for that year.  The divergence between what the law directs FDA to do and what the agency has funding to accomplish will only grow more pronounced in the next two years.

For its part, FDA sees value in maintaining foreign offices and conducting foreign inspections.  However, it’s clear from FDA’s comments on the GAO report that the agency knows where its real leverage lies – with full implementation of the Foreign Supplier Verification Program (FSVP), Voluntary Qualified Importer Program (VQIP), and third-party audit provisions of FSMA.  Properly implemented, those provisions could act as a force multiplier that would dwarf even the lofty targets built into FSMA.  Small wonder that the agency offers a tepid acceptance of GAO’s inscrutable recommendation:

FDA concurs with this recommendation, pending the necessary resources to conduct the analysis, as part of a larger post-FSMA strategy to improve the safety of imported food.

(Emphasis ours.)  In other words, let’s implement FSMA first, and then revisit the issue – by which point it may well be moot.