By Kurt R. Karst –      

Although we’re not patent attorneys, we’re smart enough to know that the September 16, 2011 enactment of the Leahy-Smith America Invents Act (“AIA”) signaled a sea change in the patent world.  Indeed, the effects of the AIA were immediately felt in our FDA-regulated space – and specifically, the Hatch-Waxman space – with an AIA provision resulting in a patent term extension that effectively ended a decade-old dispute (see our previous post here).  Then we started to see signs that the AIA’s Inter Partes Review (“IPR”) provisions – an administrative patent challenge proceeding at the U.S. Patent and Trademark Office (“PTO”) before the Patent Trial and Appeal Board (“PTAB”) that serves as a parallel or alternative to district court litigation to adjudicate patentability of issued patents – might be of some utility to generic drug manufacturers (see our previous post here).  Indeed, just last week we saw what has been billed as the first IPR decision involving pharmaceutical-related patents (see here).  Now, we’ve just witnessed the first intersection of the AIA’s Covered Business Methods (“CBM”) petition review provisions and the Hatch-Waxman Amendments.  Earlier this week, generic drug manufacturers Amneal Pharmaceuticals, LLC, Par Pharmaceutical, Inc., and Roxane Laboratories, Inc. submitted a Petition to the PTAB challenging U.S. Patent No. 7,895,059 (“the ‘059 patent”), which is listed in the Orange Book for XYREM (sodium oxybate), and is titled “Sensitive drug distribution system and method.”  The challenge comes just about halfway through the lifespan of the AIA’s CBM provisions, which sunset on September 16, 2020. 

So what’s a “covered business methods patent” and how can the AIA’s CBM provisions be at all relevant to Hatch-Waxman?  (Hint: It involves Orange Book-listed patents covering a Risk Evaluation and Mitigation Strategies (“REMS”), though you might have already guessed that based on the ‘059 patent description above.) 

The AIA defines a CBM patent as any “patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”  The CBM petition challenge process allows a party charged with infringement of a patent (which occurs nearly each day under Hatch-Waxman) to challenge that CBM patent through a petition process before the PTAB.  (The PTO’s webpage on the AIA’s CBM provisions is available here.)  “CBM was largely imagined as a proceeding for the ¬financial services industry,” according to one of our patent law cheat sheets put out by Sterne Kessler Goldstein & Fox PLLC, which firm (H. Keeto Sabharwal, Dennies Varughese, and Deborah Sterling) also filed the recent CBM challenge to the ‘059 patent.  “In light of some Supreme Court decisions, notably In re Bilski, Congress determined certain ¬financial services patents need a special proceeding to test patentability.”  

But ¬financial services industry patents are a far cry from pharmaceutical industry patents . . . . aren’t they?  The answer, by way of the recent challenge from Amneal, Par, and Roxane, seems to be “usually yes,” but in some cases – at least where there are patents covering a REMS – “sometimes no.”  That’s right, we’re talking about an argument that Orange Book-listed REMS patents fall under the CBM patent definition.  According to the Petition, which seeks cancellation of all 16 claims of the ‘059 patent:

The challenged claims simply recite methods for centralized distribution of retail goods, specifically drugs, through a central pharmacy that encompasses steps such as interfacing with financial businesses, such as insurance companies, in order to secure payment for the prescription, rendering them incidental to a financial product or service.  And these claims are directed to methods and not any technological invention.  The claims’ recitation of a generic computer processor does not change this conclusion.  Moreover, the claimed distribution methods are not novel or nonobvious and do not solve a technological problem with any technological solution.  CBM review is, therefore, appropriate.

Citing the U.S. Supreme Court’s 2012 decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1297 (2012), and the very recent decision in Alice Corp. v. CLS Bank Int’l, No. 13-298, 573 U.S. (2014), the Petitioners argue that the ‘059 patent claims “are merely drawn to abstract ideas, and nothing more, artfully drafted in an effort designed to monopolize the abstract idea itself.”  These are the type of claims the Supreme Court warned against, say Petitioners. 

The filing of the Petition is now a new front in a larger battle over REMS and generic competition issues.  It follows recent FDA citizen petition decisions (here and here) and antitrust litigation that recently (and once again) brought the Federal Trade Commission into the fray (here and here). 

By Ricardo Carvajal –

As widely reported in the press, several food industry trade associations sued the state of Vermont to overturn its recently enacted law requiring that a food “entirely or partially produced with genetic engineering” be labeled with the “clear and conspicuous words ‘produced with genetic engineering’” – with certain exceptions that we won’t delve into here.  That requirement is based in part on legislative findings that “genetically engineered foods potentially pose risks to health, safety, agriculture, and the environment.”  The requirement is intended to help consumers “make informed decisions regarding the potential health effects of the food they purchase and consume and by which, if they choose, persons may avoid potential health risks of food produced from genetic engineering.”

An allegation central to the complaint is that Vermont’s labeling requirement violates the First Amendment because it “compels manufacturers to use their labels to convey an opinion with which they disagree, namely, that consumers should assign significance to the fact that a product contains an ingredient derived from a genetically engineered plant.”  Indeed, as noted above, the law is premised in part on a finding that genetically engineered foods pose potential health and safety risks to which consumers must be alerted so that they can choose to avoid those risks.  The complaint notes that more than twenty years’ worth of federal government reviews have reached contrary conclusions – a contradiction that would seem to lie at the heart of the law’s potential vulnerability.

Setting aside the fact that Vermont’s perspective on the risks posed by genetically engineered foods is at odds with that of the federal government, Vermont’s perspective highlights a conundrum faced by opponents of genetic engineering: the more they emphasize the purported risks presented by genetically engineered foods as a means of justifying labeling requirements, the more the speech that they seek to compel takes on the character of a warning.  In that regard, we were reminded of recent litigation successfully challenging FDA’s regulation requiring graphic warnings for cigarettes (see here).  Obviously, those graphic warnings were qualitatively different from the words “produced with genetic engineering.”  However, from a manufacturer’s perspective, the intended underlying message is similar – in essence, “don’t buy this product.” 

Under what circumstances can the government constitutionally compel a manufacturer to convey such a message?  In the cigarette warning case, the DC Circuit put the question thusly:

[H]ow much leeway should this Court grant the government when it seeks to compel a product’s manufacturer to convey the state’s subjective – and perhaps ideological – view that consumers should reject this otherwise legal, but disfavored, product?

The court was able to side-step that question because FDA’s regulation did not survive the court’s Central Hudson analysis.  We’ll see if a permutation of that question resurfaces as the litigation over Vermont’s law moves forward.

By Kurt R. Karst –      

The so-called “drug lag” – i.e., the difference (or perceived difference some might say) in drug availability between the United States and other countries – was one of myriad reasons some folks back in the early 1990s thought it was necessary to enact the Prescription Drug User Fee Act (“PDUFA”) (see here).  After all, if sponsors paid user fees to FDA, the Agency could hire additional personnel and commit to speedier reviews, thus resulting in faster drug approvals – especially vis-à-vis foreign regulatory counterparts, and the European Union in particular. 

In 2012, as Congress was considering the fifth iteration of PDUFA, FDA declared the “drug lag” reversed.  Specifically, in testimony (here at pages 22-25) before the Committee on Energy and Commerce Subcommittee on Health, FDA Commissioner Margaret A. Hamburg, M.D. stated:

Since the enactment of PDUFA, FDA has steadily increased the speed of Americans’ access to important new drugs compared to the European Union (EU) and the world as a whole.  Of the 35 innovative drugs approved in FY 2011, 24 (almost 70 percent) were approved by FDA before any other regulatory agency in the world, including the European Medicines Agency.  Of 57 novel drugs approved by both FDA and the EU between 2006 and 2010, 43 (75 percent) were approved first in the United States.

Accompanying Dr. Hamburg’s testimony was the nifty table below showing that since the late 1990s, the U.S. has regularly led the world in the first introduction of new active drug substances (i.e., novel chemical or biological substances not previously approved to treat any disease).  

U.S. Share of New Active Substances (NAS) First Launched on the World Market

A bipartisan bill introduced last week by Representatives Steve Stivers (R-OH) and Tim Ryan (D-OH), however, implies that the “drug lag” – as well as a “medical device lag” – is alive and well.  Actually, it’s not really an implication, as remarks from Reps. Stivers and Ryan say there’s a lag: “Unfortunately, the United States FDA’s red tape causes delays of up to several years in approval for life-saving and life-changing medical treatments,” and “There are too many examples around the country of illness outbreaks that can be successfully treated with medications that have been approved by the EU and are delayed in the FDA approval process.”  

The answer – or, at least an answer – to the lag say the legislators is H.R. 4918, the Speeding Access to Already Approved Pharmaceuticals Act of 2014.  The two-page bill would peg FDA action to approval of a “pharmaceutical” in the European Union.  (The bill defines a “pharmaceutical” to mean a drug, a biological product, and a medical device.)  The meat of the bill is in a few lines on page two:

(g) EU-APPROVED PHARMACEUTICALS.—

(1) EXPEDITED REVIEW.—Beginning not later than 90 days after a new pharmaceutical is approved for marketing in the European Union, the Secretary shall, at the request of the sponsor of the pharmaceutical, facilitate the development and expedite the review of such new pharmaceutical under section 505 or 515 of this Act or section 351 of the Public Health Service Act, as appropriate.

A particular concern underlying the introduction of the Speeding Access to Already Approved Pharmaceuticals Act of 2014 seems to revolve around new sunscreen ingredients.  According to a press release from Rep. Stivers:

Currently it can take more than a decade for a product to get approved by the FDA.  For example since 2002, eight companies have submitted new and innovative ingredients for sunscreen, but all are still languishing in the FDA’s approval process. 

There are only three FDA-approved sunscreen ingredients available in the U.S which effectively guard against the sun’s UVA rays. Europe, on the other hand, has approved seven sunscreen ingredients that help protect against these harmful UVA rays.

Interest in speeding the approval of new sunscreens has been a hot topic.  As we previously reported, legislation was introduced in the Senate and House of Representatives in March 2014 – the “Sunscreen Innovation Act,” S. 2141 and H.R. 4250 – that would amend the law to include a process for the review of potential sunscreen active ingredients.  H.R. 4250 is advancing quickly through the legislative process.  Last Friday, the Energy and Commerce Committee approved the bill and it will now move on to the House floor. 

We haven’t asked anyone from FDA what they think of the Speeding Access to Already Approved Pharmaceuticals Act of 2014 (and even if we did, we’d likely get a “no comment”), but we suspect that the Agency would not take a shine to taking direction from Europe.  

By Jennifer D. Newberger –

Recognizing that even regulating certain software products as Class I medical devices is more regulation than necessary, FDA released a Draft Guidance document titled, “Medical Device Data Systems [MDDS], Medical Image Storage Devices, and Medical Image Communication Devices.”  This Draft Guidance essentially eliminates all regulatory obligations associated with those devices:  “[FDA] does not intend to enforce compliance with the regulatory controls that apply to MDDS, medical image storage devices, and medical image communications devices, due to the low risk they pose to patients and the importance they play in advancing digital health.”  Draft Guidance, at 4.  The regulatory controls no longer applicable to these types of devices include not only compliance with the quality system regulation (QSR), but also registration and listing and medical device reporting (MDR).  Though the Draft Guidance does not use the phrase “enforcement discretion,” it makes clear that FDA will in fact be exercising enforcement discretion with respect to these products.  This means that, while FDA considers these products to be medical devices, it will no longer regulate them as such.

The Draft Guidance notes that while these devices are exempt from premarket review, there are certain limitations to the exemption.  For example, 21 C.F.R. § 880.9(c) states that if an exempt device is used for assessing the risk of cardiovascular diseases or for use in diabetes management, the device is no longer exempt and must be submitted for premarket review.  The Draft Guidance eliminates these limitations to the exemption, and states that, “to the extent that these limitations apply, FDA does not intend to enforce compliance with regulatory controls for MDDS intended to be used in a system for assessing the risk of cardiovascular diseases (21 CFR 880.9(c)(4)) or for use in diabetes management (21 CFR 880.9(c)(5)).”  Draft Guidance, at 7.  This means that a manufacturer may market an MDDS, medical image storage device, or medical image communications device for assessing the risk of cardiovascular diseases or for use in diabetes management, and that device would not be subject to premarket review or any other regulatory controls.

Finally, the Draft Guidance proposes changes to the Mobile Medical Applications Guidance (Mobile Apps Guidance) released on September 25, 2013 (see our previous post here).  The changes are intended to reflect FDA’s position that it will be exercising enforcement discretion over these products.  For example, the Mobile Apps Guidance, as released, included an app that displays, stores, or transmits patient-specific medical device data as one that would be regulated by FDA.  The Draft Guidance proposes elimination of this example.  The revisions to the Mobile Apps Guidance would also make clear that apps subject to FDA’s enforcement discretion include those that assess the risk of cardiovascular diseases or are intended to be used in diabetes management.

By eliminating the regulatory obligations of these low-risk products, FDA seems to be acknowledging that it cannot reasonably regulate all, or even a majority, of marketed software products, and its resources must be dedicated to those that present a potentially higher risk to patients.  Software that does not analyze data or make patient-specific recommendations, but merely presents, retrieves, and displays data is not among those higher-risk products.  It is refreshing to see FDA take this risk-based approach, and hopefully it will continue to do so as it contemplates regulation of additional software products, such as clinical decision support software.

By Larry K. Houck –

Deputy Assistant Administrator Joseph Rannazzisi, Office of Diversion Control, Drug Enforcement Administration (“DEA”), told the House of Representatives Energy and Commerce’s Subcommittee on Oversight and Investigations on April 29, 2014 that his agency “has steadily increased the frequency of compliance inspections” of manufacturers, distributors, pharmacies, importers, exporters and narcotic treatment programs.  Statement of Joseph T. Rannazzisi, Deputy Administrator, Office of Diversion Control, Drug Enforcement Administration, Before the Subcommittee on Oversight and Investigations Committee on Energy and Commerce, U.S. House of Representatives, “Examining the Growing Problems of Prescription Drug and Heroin Abuse,” Apr. 29, 2014.  We can attest that Mr. Rannzzisi’s assertion is not only accurate, but understated.  The current DEA cyclic inspections are more frequent and more in-depth as well.

Many aspects of DEA inspections are beyond registrants’ control, but there are certain actions that registrants can and should take to prepare for and manage the inevitable DEA inspection.  This article offers practical guidance on some of those actions. 

Non-practitioner registrants (manufacturers, distributors, importers, exporters and narcotic treatment programs) can expect to be inspected about once every three years, and Drug Addiction Treatment Act (“DATA”)-waived practitioners approximately once every five years.  (DATA-waived practitioners are physicians administering, dispensing, and prescribing specific FDA-approved controlled substances for narcotic treatment.  DEA-registered physicians who apply and are qualified pursuant to DATA are issued a waiver, and are then able to conduct maintenance and detoxification treatment using specifically approved schedule III, IV, or V narcotic medications for either 30 or 100 patients at any one time.)  Registrants must understand that although the diversion investigators who conduct the inspections are within DEA’s Office of Diversion Control, the regulatory arm governing legitimate controlled substance handlers, the focus of the Agency, and thus of the investigators, is primarily law enforcement.  Diversion investigators typically prepare for the inspections by reviewing previous inspection reports and Automation of Reports and Consolidated Orders System (“ARCOS”) data (to the extent available).  Investigators will also consider areas of prior non-compliance during the current inspection to ensure that registrants have remedied past deficiencies.

A.  Scope

The federal Controlled Substances Act (“CSA”) authorizes DEA to inspect “controlled premises,” which the CSA defines as places where registrants “may lawfully hold, manufacture, distribute, dispense, administer, or otherwise dispose of controlled substances or listed chemicals or where records relating to those activities are maintained.”  21 U.S.C. § 880(a)(2).  They can inspect and copy required records and reports; inspect finished and unfinished drugs, equipment, containers, labeling, processes and controls.  Investigators may inventory controlled substances on-hand and take samples.  They are not authorized to inspect financial data, sales data other than shipment data, or pricing data unless the registrant provides written consent.

B.  Procedures 

Diversion investigators arrive unannounced.  They must present their DEA credentials and a written notice of their inspection authority.  At least two investigators must be present, but inspection teams may include DEA special agents or officers from other federal or state agencies.  The investigators ask the responsible employee for informed consent by having them sign a Notice of Inspection (“DEA Form-82”).  Registrants may withhold consent or, if given, may withdraw consent at any time.  Withholding or withdrawing consent will require the investigators to obtain an administrative inspection warrant or search warrant from a federal magistrate.

The investigators explain the purpose and scope of the inspection.  Their questions may include inquiries about the officers and employees who have access to controlled substances.  They may walk through the facility upon arrival looking for obvious violations.

C.  Accountability Audit

Registrants must account for all of the controlled substances that they receive and handle; therefore, the investigators likely will conduct an accountability audit of a number of controlled substances, usually at least two drugs in each schedule for a six-month time period, at a minimum.  The investigators begin with a physical count conducted by the registrant — usually a biennial inventory — as the starting point for the audit. 

The accountability audit allows the investigators to determine whether a registrant has maintained complete and accurate records, and thus maintained effective controls against diversion.  The accountability audit will indicate any variance in the quantity of controlled substances that the registrant can account for versus what it should be able to account for during the time period.  The investigators try to balance the controlled substances on-hand at the beginning of the audit period plus receipts against dispositions and quantities on-hand at the end of the period.  Ideally the audit balances, but a negative variance can indicate incomplete or inaccurate records, or a loss.  A positive variance can indicate recordkeeping errors.  There is no “acceptable” discrepancy range for DEA purposes.  Registrants should regularly conduct internal audits to disclose any discrepancies and detect any possible losses without the presence of DEA investigators.

D.  Records and Reports

Diversion investigators also inspect and review required controlled substance records and reports to ensure that they are complete, accurate and available dating back the required two year period.  Registrants with automated records can offer to generate a report of receipt and disposition transactions for the audit period.  Each transaction on the automated report should correspond to a particular Official Order Form (“DEA-222”), invoice, packing slip or other primary record.  Investigators will typically compare and verify a number of transactions on the report with the primary records.  The investigators review DEA-222s to ensure that they have been maintained, are properly executed, complete and accurate, and that orders were filled within sixty days of the date the customer completed them.  Investigators review the registrant’s Powers of Attorney to ensure that individuals executing DEA-222s are properly authorized to do so.  Investigators also review invoices and packing slips to ensure that the registrant has maintained them as required and that those also are complete and accurate.  Investigators verify random transactions with the firm’s vendors and customers to ensure that the transactions occurred and the records are accurate. 

E.  Security

Registrants must provide effective controls to guard against theft and diversion of controlled substances, and must employ specified security (set forth in applicable DEA regulations) depending on their business activity and the type and quantities of controlled substances they handle.  The investigators inspect the overall security system and individual components thereof to ensure that all components meet specifications and are operational.  The investigators test the alarm system by activating a number of sensors.

Diversion investigators may provide some feedback at the end of an on-site inspection.  They likely cannot provide their final conclusions, but can recommend what the registrant can do to comply with the CSA and its implementing regulations.  Registrants may not receive formal notice of the inspection results, audit results and DEA’s intended enforcement action, such as a Letter of Admonition, informal or formal hearing, civil penalty, or administrative action, for a number of months or longer.

F.  Preparing for and Managing Cyclic Inspections

Registrants should consider implementing the following in preparing for and managing cyclic inspections:

1. Designate a primary employee to manage controlled substance operations, and a back-up employee and team to assist him or her.
2. Maintain, review and regularly update controlled substance policies and procedures to ensure that they comply with DEA requirements.
3. Draft detailed policies and procedures mandating how the registrant should manage DEA inspections.
4. Conduct periodic mock DEA inspections comprising an accountability audit, and record, report and security reviews by a third-party who is not responsible for daily controlled substance operations.  The inspections ensure compliance and instill confidence in employees during actual DEA inspections.  Random or periodic audits help discover internal thefts or losses.
5. Maintain an updated list of names, home addresses, dates of birth and social security numbers of officers and responsible employees to provide to investigators.
6. File required controlled substance records and reports daily in one location.  Review the file weekly to ensure records are current, complete and accurate.  Maintain required records and reports for at least two years unless required to be maintained by state law for a longer period of time.
7. Maintain controlled substances in secure areas at all times except during processing, packaging, labelling or conveying to the secure loading area.  Return controlled substances to secure areas at the end of the workday pursuant to company policies addressing the handling of controlled substances.
8. Ensure that controlled substances awaiting return or destruction are properly secured and documented.
9. Be diligent about establishing, maintaining and documenting new and current customer due diligence and suspicious order monitoring and reporting.  Ensure that policies and procedures are up to date and frequently revisited.
10. Change locks or key card access, and update lists of employees who have authorized access to the warehouse, cage and vault after relevant personnel changes.
11. Inspect security system components often.  Repair broken or inoperable components immediately.  Maintain documents and materials related to the security system and its components for future reference.
12. Upon commencement of an inspection, the responsible employee should greet the investigators immediately.  Review each investigator’s credentials and obtain their business cards.  Determine whether the inspection is a routine cyclic inspection or if there is another specific reason for the inspection.  Review the Notice of Inspection presented by the investigators.
13. Take detailed notes of all observations, suggestions and recommendations made by the investigators.  If the employee cannot take contemporaneous notes, they should write them down immediately afterwards.
14. Ask the investigators questions about any aspect of the inspection and audit.  Employees should answer the questions asked, and respond when they know the correct information.  They should not speculate.
15. Do not overlook the drugs in the morgue awaiting destruction or return.
16. Understand the methodology the investigators use to conduct their accountability audit.  Conduct an internal simultaneous audit of the investigators’ audit.
17. Make sure that the investigators understand the recordkeeping system that the company uses.
18. Apprise investigators of limitations of automated transaction reports.  Advise them if such reports are not primary records.
19. Photocopy all records the investigators take, make copies of, review or specifically raise questions about during the investigation.
20. If the investigators take drugs or original records off-site, obtain a DEA receipt (“DEA Form 12”) listing each item.
21. Inform the investigators immediately if they do not have accurate counts and inventories of all the drugs they are auditing, or if they are missing relevant records or reports.
22. Request a final discussion or exit interview with the investigators.  Designate an employee to take detailed notes. 
23. Provide unavailable information and records or reports requested by the investigators as soon as possible if appropriate to do so.

G.  Conclusion

DEA diversion investigators take the lead as to how they conduct cyclic inspections, but registrants can and should proactively prepare for and manage the inspection and audit elements within their control.  Implementing the recommendations provided here will help registrants prepare for and manage the inspection and audit process.

By Kurt R. Karst –      

Interest in and efforts to address shortfalls in the inclusion of women in clinical trials and clinical research, and differences in the sexes in drug development are not new.  There’s the National Institutes of Health (“NIH”) Revitalization Act of 1993, which directed the NIH to establish guidelines for inclusion of women and minorities in clinical research, as well as FDA’s 1993 “Guideline for the Study and Evaluation of Gender Differences in the Clinical Evaluation of Drugs.”  Less than a decade later, the U.S. Government Accountability Office (“GAO”) issued two reports – in May 2000 (“NIH Has Increased Its Efforts to Include Women in Research”) and August 2001 (“Women Sufficiently Represented in New Drug Testing, but FDA Oversight Needs Improvement”) – addressing the issues.  But a 60 Minutes report last February highlighting how the drug AMBIEN (zolpidem) metabolizes differently in males and females reignited interest in the topic. 

Shortly after the 60 Minutes piece aired, the NIH announced that it will change its policies to ensure that female animals and cells are included in research and sex differences analyzed, and members of Congress penned letters to FDA and the GAO (here and here) seeking further information.  These moves were  promptly applauded (here and here) by the Society for Women’s Health Research, which has also held a congressional briefing on the need for sex- and gender-based research.  Other organizations have also recently pressed for sex-specific clinical research (see, e.g., here). 

Then the U.S. Senate in its Fiscal Year 2015 FDA Appropriations Bill & Report (see our previous post here) directed FDA to look closer at gender differences in clinical research:

Inclusion in Clinical Trials– Research has shown that gender differences, as well as differences based on age, race, or other factors, may contribute to differences in the safety and efficacy of drugs, biologics, and devices.  The Committee directs FDA to encourages diverse participation, including women, racial and ethnic minorities, and the elderly, to help assure that clinical trials are representative of those individuals who ultimately will use these medical products, and that the products will be safe and effective for people in these demographic subgroups.  The Committee urges the FDA to issue the Action Plan required by section 907 of the Food and Drug Administration Safety and Innovation Act [(“FDASIA”)] and provide a timeline for implementation of the actions FDA will take, in cooperation with industry stakeholders, to ensure that women, minorities, and others are appropriately represented in clinical research, that meaningful subgroup analyses of clinical trials are conducted, and that subgroup specific clinical trial results are made publically available in an accessible and timely manner.

By way of background, FDASIA 907 requires FDA to publish an action plan on the Agency’s website with recommendations on improving the completeness and quality of data analyses on demographic subgroups, including such data in labeling, and making such data available to patients and providers.  FDASIA 907 also required FDA to issue a report describing the participation of demographic subgroups (sex, age, race, and ethnicity) in clinical studies submitted to FDA in marketing applications.  FDA issued that report in August 2013 (available here).

Now, two members of Congress are ratcheting up debate on the “sex matters” issue.  Earlier this week, Representatives Jim Cooper (D-TN) and Cynthia Lummis (R-WY) announced the introduction of H.R. 4879, the “Research for All Act of 2014.”  The bill would require FDA to “review and develop policies, as appropriate, to ensure that the design and size of clinical trials for products granted expedited approval pursuant to [FDC Act § 506] are sufficient to determine the safety and effectiveness of such products for men and women using subgroup analysis.”  Indeed, the bill would amend FDC Act § 506 (“Fast Track Products”) to add a new subsection, titled “Expedited Review of Drugs and Biological Products To Provide Safer or More Effective Treatment for Males or Females,” under which a drug sponsor could request that FDA designate a product intended to avoid serious adverse events or to treat a serious or life-threatening disease or condition “as an expedited product to provide safer or more effective treatment for males or females.”  Such a designation would provide early and frequent communication with FDA, as well as so-called rolling review of marketing applications.

The Research for All Act of 2014, which was introduced on the same day that some lawmakers sent a letter to NIH requesting that it make demographic data public for all clinical trials, would also amend the PHS Act to require that basis research involving cells, tissues or animals to include both male and female cells, tissues, or animals; update guidelines for clinical and basic research to reflect the growing understanding that sex differences matter, and to ensure better enforcement of those guidelines by NIH, among other things; and require the GAO to update the May 2000 and August 2001 reports mentioned above.

The Research for All Act of 2014 is one of a growing number of FDA and drug-related bills pending in Congress (see our FDA Legislation Tracker).  Although it is unlikely that most of them will be enacted by the time the 113th Congress ends, we may see some of them crop up again as folks seek to lay the groundwork for the next iteration of UFA (User Fee Act) reauthorization.

By Kurt R. Karst –     

After years of relative quiet, the Orange Book list of exclusivity terms has gotten quite a workout over the past year with the addition of several new terms to account for new non-patent marketing exclusivities.  First there was the addition of “NCE*” exclusivity, defined as “NEW CHEMICAL ENTITY (AN ENANTIOMER OF PREVIOUSLY APPROVED RACEMIC MIXTURE. SEE SECTION 505(U) OF THE FEDERAL FOOD AND DRUG COSMETIC ACT),” that FDA created after the approval of NDA No. 204168 for FETZIMA (levomilnacipran) Extended-release Capsules, 20 mg, 40 mg, 80 mg and 120 mg (see our previous post here).  Then there was the addition of “RTO*” and “RTO**” exclusivities, defined as “OTC USE FOR WOMEN AGES 15 AND 16” and “OTC USE FOR WOMEN 14 AND BELOW,” respectively, that FDA created to account for various supplemental approvals under NDA No. 021998 for PLAN B One-Step (levonorgestrel) Tablets, 1.5 mg (see our previous post here).  Now that FDA has approved the first drug product designated as a Qualified Infectious Disease Product (“QIDP”), the Agency has once again added to the Orange Book list of exclusivity terms.  The term “GAIN” was added to the Orange Book Cumulative Supplement last week in relation to NDA No. 021883 for DALVANCE (dalbavancin HCl) Lyophilized Powder for Injection, 500 mg.  FDA approved DALVANCE on May 23, 2014 in the treatment of acute bacterial skin and skin structure infections.  With a period of NCE exclusivity that expires on May 23, 2019, but that is extended under the Generating Antibiotic Incentives Now Act (“GAIN Act”) by an additional 5 years to May 23, 2024, the GAIN exclusivity FDA granted for DALVANCE is the latest expiring period of non-patent exclusivity ever listed in the Orange Book (not to mention the longest period of exclusivity that FDA has granted for a drug product in decades – see FDC Act § 505(j)(5)(F)(i)). 

The GAIN Act was enacted as Title VIII of the 2012 FDA Safety and Innovation Act (“FDASIA”) and is intended to encourage the development of antibacterial and antifungal drug products that treat pathogens that cause serious and life-threatening infections.  The GAIN Act builds on provisions included in the 2007 FDA Amendments Act intended to improve antibiotic access and innovation, and addresses
issues raised since the enactment of FDAAA (see here).  (Legislation currently pending in Congress – the Antibiotic Development to Advance Patient Treatment Act of 2013, or “ADAPT Act” – is viewed as successor legislation to the GAIN Act that would further promote antibiotic drug development and approval (see our previous post here)).  After holding a public meeting in December 2012, FDA proposed a list of qualifying pathogens in June 2013, and finalized that list earlier this month.  In addition to the exclusivity bonus, QIDP-designated products are also eligible for designation as a fast-track product and for priority review consideration.

With respect to marketing exclusivity, the GAIN Act amended the FDC Act to add Section 505E, which, among other things, grants an additional 5 years of marketing exclusivity upon the approval of an NDA for a drug product designated by FDA as a QIDP.  Thus, for a QIDP, the periods of 5-year NCE exclusivity (FDC Act §§ 505(c)(3)(E)(ii) and (j)(5)(F)(ii))), 3-year new clinical investigation exclusivity (FDC Act §§ 505(c)(3)(E)(iii)-(iv) and 505(j)(5)(F)(iii)-(iv)), and 7-year orphan drug exclusivity (FDC Act § 527) become 10 years, 8 years, and 12 years, respectively.  (Pediatric exclusivity granted pursuant to FDC Act § 505A would extend the various exclusivity periods by 6 months.)  In addition, for a QIDP with NCE exclusivity, the period during which an ANDA containing a Paragraph IV certification to an Orange Book-listed patent on the QIDP cannot be submitted is extended from 4 years after QIDP NDA approval to 9 years after approval.  Curiously, the GAIN Act does not specifically extend the 30-month stay period under FDC Act §§ 505(c)(3)(E)(ii) and (j)(5)(F)(ii)) from 7.5 years after NCE NDA approval to 12.5 years after QIDP NCE NDA approval.  In contrast, the statute's pediatric exclusivity provisions at FDC Act § 505A do specifically extend that period by 6 months.

There are some limitations on GAIN exclusivity.  The statute limits the exclusivity extension such that it does not apply to the approval of:

1. a supplement to an application under [FDC Act § 505(b)] for any [QIDP] for which [a GAIN] extension . . . is in effect or has expired;
2. a subsequent application filed with respect to a product approved under [FDC Act § 505] for a change that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or
3. a product that does not meet the definition of a [QIDP] under [FDC Act § 505E(g)] based upon its approved uses.

The exclusivity record attained with the approval of DALVANCE might not last too long.  Future GAIN Act approvals are on the horizon (see here).  In addition, Congress is debating the creation of new and longer exclusivity periods (see here), such as under the Modernizing Our Drug & Diagnostics Evaluation and Regulatory Network Cures Act of 2013, or “MODDERN Cures Act of 2013” (see here and here).

GTCbio recently announced that it will be holding the 4th Annual CNS Diseases World Summit from September 18-19, 2014 in San Francisco, California.  The summit consists of two individual conferences that will run in parallel: (1) the 7th CNS Partnering & Deal-Making conference; and (2) the 8th Neurodegenerative Conditions Research & Development conference.   

Sessions and panel discussions for the 7th CNS Partnering & Deal-Making conference include:

• New Approaches to Funding in the CNS
• Private/Public Partnerships in Neuroscience Research
• Joint Session with co-located Neurodegenerative Conditions Research & Development Conference: Rare CNS Diseases
• Partnering & Licensing in the CNS
• Up & Coming Trends and Other Considerations in Neuroscience
• Investment Opportunities with Venture Capital
• Private/Public Partnerships to Advance Research
• Regulatory Considerations and Challenges in the CNS
• New Partnership Structures in CNS R&D

Sessions for the 8th Neurodegenerative Conditions Research & Development conference include:

• Novel Therapeutic Targets and Approaches in Alzheimer's Disease
• Drug Mechanisms and Treatments in Parkinson’s Disease
• New Approaches and Treatments in Neurodegenerative and Neuropsychiatric Conditions
• Joint Session with CNS Partnering & Deal-Making Conference: Rare CNS Diseases
• Biomarkers: Translation from Discovery to Clinical

Hyman, Phelps & McNamara, P.C’s David B. Clissold is scheduled to present at the conference.  As such, we’re able to offer FDA Law Blog readers a special 25% discount off of the regular price.  To obtain the discount, please use colleague code HPMCNS25 when registering for the conference. 

By Jeffrey N. Wasserstein –

As we previously noted, waiting for FDA to issue social media guidances was a little like Waiting for Godot. 

Well, Godot has returned and FDA finally released two long awaited draft guidances relating to social media, one relating to the presentation of risk information and one relating to correcting misinformation.  These are so overdue, that if they were library books, FDA would have had its library card revoked years ago.  FDA initially promised these in 2010.

If I were to tweet a summary of FDA’s recently released draft guidance titled “Guidance for Industry: Internet/Social Media Platforms with Character Space Limitations – Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices” (the “Risk Guidance”) it would be a very brief tweet, well within the maximum 140 characters: “FDA to industry: Nothing’s changed #stuckin20thcentury”.   The Risk Guidance can best be summed up by FDA’s statement:

Regardless of character space constraints that may be present on certain Internet/social media platforms, if a firm chooses to make a product benefit claim, the firm should also incorporate risk information within the same character-space-limited communication. The firm should also provide a mechanism to allow direct access to a more complete discussion of the risks associated with its product.  (Risk Guidance at 5).

In other words, each tweet or sponsored link needs to incorporate whatever claims the company wishes to make (which must be accurate and non-misleading) as well as risk information (including all risk concepts from a boxed warning, all risks known to be fatal or life-threatening, and all contraindications from the approved product labeling.)   Each tweet would also need to include a hyperlink that links to a more complete discussion of risk information.  Note that the link cannot lead to a promotional webpage or even the product labeling, but rather must lead to a page that is (hopelessly) “devoted exclusively to the communication of risk information about the product.”  (Risk Guidance at 10).  FDA encourages companies to use links that make it clear that it leads to risk information, although it will not object to URL shorteners, such as tinyurl or bit.ly.  FDA does permit additional links to be provided, such as to the product homepage or PI, assuming there’s enough room.

Ok, so that’s fine, right?  Still plenty of room to make promotional claims?  Not so fast, sport.  Additionally, FDA requires companies to include both the proprietary and established names for drugs within the tweet or sponsored link.  Then, on the hyperlink to the risk information mentioned above, the communication should include both the brand and established name, as well as at least one dosage form and quantitative ingredient information in conjunction with the brand and established names.  In a nod to teenagers everywhere, FDA acknowledged that commonly recognized linguistic symbols may be substituted for words, such as “&” for “and”, as well as abbreviations, such as HCl for hydrochloride.  However, FDA did not address the use of emoticons or LOL and OMG.  😉

FDA’s example of a permissible tweet is “NoFocus (rememberine HCl) for mild to moderate memory loss-May cause seizures in patients with a seizure disorder www.nofocus.com/risk”.  (Risk Guidance at 14).  Six characters to spare!  And this is a drug that has very few risks, apparently.  Similarly, for an example of a Google sponsored link, three of the six links in the ad that lead to specific parts of the promotional website deal with risk and safety information.  The real takeaway from this Draft Guidance comes early on, when FDA states:  “If an accurate and balanced presentation of both risks and benefits of a specific product is not possible within the constraints of the platform, then the firm should reconsider using that platform for the intended promotional message (other than for permitted reminder promotion).”

Leaving the snark aside (temporarily, we still have another draft guidance to get through!), what FDA is saying is that each space-limited communication needs to adhere to the rules relating to promotional labeling.  This is no real surprise.  While those of us who watch the issue closely would have liked to have seen some out of the box thinking and creativity, this draft guidance is consistent with advice that most regulatory attorneys and consultants have given (see Wasserstein, The Regulation of Social Media: Whither FDA? at 7-9 in Using Social Media in FDA-Regulated Industries:  The Essential Guide (FDLI 2010).  The Risk Guidance doesn’t open any doors, but it might make companies that have drug or medical device products with relatively simple risk profiles more comfortable in tweeting very basic product related tweets.  Alternatively, the benefits claims can be broken up into multiple tweets, provided each is accompanied by the appropriate balancing information, product names, and hyperlinks.

Turning now to the draft guidance titled “Guidance for Industry:  Internet/Social Media Platforms: Correcting Independent Third-Party Misinformation About Prescription Drugs and Medical Devices” (we’ll call this one the “Misinformation Guidance”), we encounter a little more flexibility from FDA.  In the Misinformation Guidance, FDA makes clear that companies do not have obligations to correct misinformation created by third parties, often called User Generated Content, or UGC.  However, if a company voluntarily corrects misinformation in a truthful and not misleading manner, FDA will not object if the corrective information does not satisfy other regulatory requirements regarding labeling and advertising.  (Misinformation Guidance at 3).  In other words, if a firm corrects misinformation about the indication or efficacy, but does not include any safety or risk information, FDA will not take regulatory or enforcement action.

The first question addressed is whether the draft guidance applies to the correction of misinformation.  FDA makes clear that the draft guidance does not apply to corrections of misinformation made by the company itself or to UGC on a company-moderated and controlled discussion group, such as where the company removes or edits negative posts about its products and adds positive commentary.  The company, by doing so, has exerted control over the UGC.  However, FDA clarified that companies are not responsible for correcting misinformation found in UGC about their products when the UGC is truly independent of the firm.  When FDA made a similar statement in a prior draft guidance relating to submission to FDA of real time social media interactions, we noted that “this does not address the issue of whether a regulated company would need to correct misinformation or off label discussions placed on site or platform controlled by the company.”  Either we are more widely read by FDA than we thought, or FDA had already been thinking along the same lines, so that issue has now been laid to rest.

So, what can companies do to correct misinformation in a way that need not comply with promotional labeling and advertising regulatory requirements?  In brief, they should address the misinformation and not use it as a springboard to engage in promotional messaging.  The correction should be posted in the same area or forum or should reference the area where the misinformation is found.  Companies can either post directly (if permitted) or notify the site owner of the misinformation.  In all cases, the company should disclose that the person making the communication is a company employee.  Although risk and other information about the product isn’t required to be included in the correction if not relevant, the approved PI should be included either via PDF or a link to the approved labeling.  The correction should be limited to the scope of the misinformation.

Companies have often been reluctant to monitor third party sites lest they be held responsible for all the content on the site.  FDA stated that if the company is correcting misinformation in part of the forum or site, it should identify the section of the forum or site it is addressing and correct all the misinformation (both positive and negative) within that section.  The company is not responsible for the site other than the clearly defined portion it identifies.  (Misinformation Guidance at 7). 

Another concern companies previously had was that once it tried to correct misinformation, would they be responsible for continuing to monitor the site?  (I’ve heard that stated by FDA’ers at public meetings in the past.)  The Misinformation Guidance makes clear that FDA does not expect companies to continue to monitor the website or forum.  (Misinformation Guidance at 8).

Finally, FDA does not expect companies to submit corrections of misinformation to FDA, but does recommend that companies keep records in case FDA has questions.  The records should include the content of the misinformation, where it appeared, the date it appeared, what corrective information was provided and when the corrective information was provided.

Companies have 90 days from the date of publication of in the Federal Register to provide comments to the draft guidances (written or electronic submissions are both permitted, but not tweets).  So, if you don’t have any exciting summer plans, this summer might be a good time to submit comments on these draft guidances!  

By James E. Valentine –

On June 11, 2014, a panel before the House Energy and Commerce Committee’s Subcommittee on Health hosted its second hearing on the 21st Century Cures Initiative.  The Subcommittee sought input on whether current economic and regulatory incentives are sufficient to encourage robust investment in the research and development of innovative medical products, particularly for those patients with unmet medical needs.  The Subcommittee has cited that only 500 of 7,000 known diseases have effective treatments, and legislators are interested in closing this “innovation gap.”  While there was agreement with respect to the unmet medical need by patients, there was little consensus among hearing witnesses as to how to appropriately incentivize medical product development.

The primary policy recommendation presented at the hearing was the Modernizing Our Drug & Diagnostics Evaluation and Regulatory Network Cures Act of 2013, or MODDERN Cures Act of 2013 (H.R. 3116) (“Cures Act”), raised by Marc Boutin, Executive Vice President and Chief Operating Officer of the National Health Council.  As described by Mr. Boutin, current legal and market failures have led to a category of products for diseases that meet FDA’s definition of unmet medical need, but have insufficient patent protection.  This class of products is referred to as “dormant therapies.”  The Cures Act would provide designated therapies, if approved, 15 years of marketing exclusivity.  Mr. Boutin argued that because incentives for rare disease development under the Orphan Drug Act have been largely successful, more common diseases, such ALS and Alzheimer’s disease, would be prime candidates for dormant therapy development.

Dr. Samuel Gandy, on behalf of Dr. Kenneth Davis, President and CEO of Mt. Sinai Health System, seconded Mr. Boutin’s call for additional statutory exclusivity.  He proposed as an alternative that Congress create categories of exclusivity for specific areas with unmet medical need.  Citing the need for drugs to reduce the rate of disease progression in Alzheimer’s disease, Dr. Gandy recommended additional exclusivity for oral drugs for this indication.

Other witnesses were not optimistic about a statutory exclusivity program, such as the Cures Act, being able to foster innovation in drug development.  Dr. Steven Miller, Senior Vice President and Chief Medical Officer for Express Scripts Holding Company, stated that the burden of increased costs created by a wide range of products qualifying for long term exclusivity would fall to health plans and employers.  This concern was echoed by members of Congress who were concerned with creating monopolies in a time where the rising costs of health care are already creating barriers for access.  Dr. Miller presented the concern that statutory exclusivity would pervert the commercial market and actually inhibit innovation, while artificially restricting competition.  He even went on to suggest that the tax code ought to support the burden of additional exclusivity as a public good, rather than putting it solely on the backs of payers of health care.

There was also concern about the breadth of the statutory inclusion criteria for a “dormant therapy” designation under the Cures Act.  Mr. C. Scott Hemphill, a Professor of Law at the Columbia University Law School, argued that, under FDA’s definition of an “unmet medical need,” many products that would otherwise have sufficient market forces, and would otherwise be approved by the Agency, would prevent generic competition.  He instead recommended a narrowly tailored approach, like that of the Hatch-Waxman Act and Orphan Drug Act. 
 
Both Dr. Miller and Mr. Hemphill advocated for a targeted statutory exclusivity program that would reward truly innovative products.   Alternatively, Dr. Fred Ledley, Professor of Natural and Applied Sciences at Bentley University and Management Director of the Center for Integration of Science and Industry, expressed that, because innovation in medical product development is directly tied to innovation in basic science, a patent protection-based approach would support new discoveries.  Dr. Ledley did concede that statutory exclusivity could be useful when there is an unmet medical need based on true market failures.

There was consensus among the witnesses with respect to the need for greater certainty and consistency across in the application of regulatory standards, including in the use of expedited approval pathways from one review division to the next.  Expedited programs, such as breakthrough therapy and accelerated approval, were recognized as useful regulatory mechanisms to expedite the drug development process.  While not a direct incentive, if successful, these programs result in approvals with greater length of patent protection remaining. 

Each witness’s written testimony, as well as a transcript and recording of the hearing, can be found here.  See our previous post on HP&M Director Frank Sasinowski’s testimony at the first 21st Century Cures hearing on PCAST Report on Drug Innovation.

By Allyson B. Mullen –

As part of the Medical Device User Fee Act of 2012 ("MDUFA III") Commitment Letter, FDA and the medical device industry agreed to participate in a comprehensive outside assessment of the medical device review process.  The assessment was performed by Booz Allen Hamilton ("Booz Allen").  On December 11, 2013, Booz Allen released its initial report with the following priority recommendations:

• Develop criteria and establish mechanisms to improve consistency in decision making throughout the review process;
• Provide mandatory full staff training for the three primary IT systems that support MDUFA III reviews;
• Identify metrics and incorporate methods to better assess review process training satisfaction, learning, and staff behavior changes; and
• Adopt a holistic, multi-pronged approach to address five quality component areas to standardize process lifecycle management activities and improve consistency of reviews.

See our earlier post here.
 
On June 11, 2014, Booz Allen issued its final report and CDRH issued its Plan of Action ("the Plan").  The final report makes 11 recommendations, including, among other things, that CDRH conduct a retrospective review of withdrawn premarket submissions to identify the cause of the withdrawal.  The report cites a fifty percent increase in 510(k) withdrawals from fiscal year 2012 to fiscal year 2013.

While the final report issues 11 recommendations, several with subparts, the CDRH Plan focused on the four priority recommendations from Booz Allen’s December 2013 report.  It is unclear whether CDRH will update the Plan to address the remaining recommendations in the final report.

The CDRH Plan of Action, which reads somewhat like a FDA Form 483 response by a device manufacturer, outlines actions with respect to each of the four priority recommendations.  With regard to the first recommendation, “develop criteria and establish mechanisms to improve consistency in decision making throughout the review process,” the Plan indicates that CDRH will inventory and perform a gap assessment of its existing processes, procedures, policies and metrics relating to premarket applications (510(k)s, PMAs, 510(k) requests for Additional Information, PMA Major Deficiencies, and IDE approval decisions).   Once complete, CDRH plans to identify lessons learned and best practices for decision making from other organizations and then develop new premarket application review processes, procedures, and policies with the intent of streamlining the process.  One hopes that these new processes, procedures, and policies will speed up the review process.  However, at least one recent attempt to improve the quality of 510(k)s has, in some cases, slowed down the process with a rigid and formalistic process (see our earlier post here).  Although unaddressed in the CDRH Plan, the Booz Allen final report acknowledges that the greater than 50% refusal rate during the first round of RTA reviews for 510(k)s is problematic for the overall review process, and optimization of the RTA process is one of the 11 recommendations in the final report. 

As to the second recommendation, “provide mandatory full staff training for the three primary IT systems that support MDUFA III reviews,” the Plan indicates that after completing a review of the current IT systems, CDRH will incorporate training on these systems into the CDRH Reviewer Certification Program (RCP).  Following this implementation, CDRH plans to create a group of experts on the systems, which presumably will be available to reviewers in need of assistance.  In a second stage of this part of the Plan, CDRH intends to broaden its efforts in reviewing and identifying gaps with regard to training on other IT processes.

The Plan for the third recommendation, “identify metrics and incorporate methods to better assess review process training satisfaction, learning, and staff behavior changes,” is short and simple.  CDRH will research best practices for training evaluation, determine evaluation requirements for premarket training, develop metrics and evaluation plan, and implement the same. 

The portion of the Plan for the final recommendation, “adopt a holistic, multi-pronged approach to address five quality component areas to standardize process lifecycle management activities and improve consistency of reviews,” is by far the most significant, in both length and potential impact to the effectiveness of the CDRH premarket review process.  There are four parts of this section of the Plan: (1) Senior Management, Corrective and Preventative Action and Continuous Process Improvement; (2) Resource Management; (3) Document Management; and (4) System Evaluation.  Sections 1 and 3 address the need to assess and identify gaps in current processes related to the relevant areas, and revise and implement new processes related to the same.  The Resource Management Section indicates that these recommendations are addressed in other areas of the Plan.  Finally, the System Evaluation section indicates that CDRH will review and evaluate the processes for monitoring review of 510(k) sub-processes. 

While there no hard deadlines for any of the actions set out in the Plan, in a blog post from Jeffrey Shuren, Director of CDRH, he said that the immediate actions related to the four priority recommendations, outlined both above and in the Plan, will be complete by the end of 2016.  Jeffrey Shuren, FDA Voice, Report: CDRH on Track to Improve Device Submission Review Process, June 11, 2014.

No timeline was given for the remaining actions in the Plan, which Dr. Shuren described as covering “longer-term actions to further enhance the efficiency of [CDRH’s] processes beyond what [Booz Allen] recommended.”  We look forward to seeing the implementation of all of the actions in the Plan and hope there is a positive affect on device premarket reviews.

Hyman, Phelps & McNamara, P.C. (HP&M) is seeking a junior associate.  The ideal candidate will have two to three years experience dealing with regulatory issues relating to food and drug law at the U.S. Food and Drug Administration (FDA), a law firm, or an FDA-regulated company.  Candidates must have excellent academic credentials and strong communication and writing skills.  Candidates should send their curriculum vitae, transcript, and a writing sample to Jeffrey N. Wasserstein (jwasserstein@hpm.com).  HP&M is an equal opportunity employer. 

By Ricardo Carvajal –

In a prior posting, we reported on a lawsuit  brought by Jensen Farms (Jensen) against its auditor Primus Labs (Primus) alleging that Primus had been negligent in the conduct of its audit – negligence that allegedly contributed to the 2011 outbreak of listeriosis associated with cantaloupes produced by Jensen.  Related litigation initiated by victims of the outbreak has begun winding its way through courts in multiple states, and early decisions in those cases suggest that food companies may want to start giving careful consideration to their conduct and use of audits – be they first, second, or third party audits – and how the results of those audits could come back to haunt them in the event of an outbreak.

As a refresher, we begin with a brief recap of events leading up to the 2011 outbreak.  In May 2011, Jensen made changes to its processing, purportedly based in part on recommendations made by Bio Food Safety, a Primus contractee.  Those changes purportedly resulted in the discontinuance of a chlorine wash.   A subsequent audit by Bio Food Safety did not identify the lack of a chlorine wash as a deficiency, and yielded a score of 96%.  Around that time, an outbreak was unfolding that would eventually claim an estimated 33 lives and result in 147 hospitalizations.  Epidemiological and traceback investigations conducted in the wake of the outbreak led FDA to Jensen in September of that year, and the subsequent investigation resulted in a criminal prosecution and misdemeanor plea (see our previous post here).

Perhaps predictably, Jensen sued Primus for negligence.  Also, victims of the outbreak sued Jensen, Primus, Bio Food Safety, and Frontera Produce (the distributor of the cantaloupes), alleging wrongful death based on negligence.  That litigation is proceeding in multiple states, including Colorado, Louisiana, and Oklahoma.  A threshold question in those cases is whether an auditor owes a duty to consumers (as opposed to owing a duty only to the company being audited).  Early decisions are split on that question.  One court granted defendants’ motion to dismiss, holding that a third party auditor of an agricultural producer does not owe a duty to consumers, as that would stretch concepts of foreseeability and duty too far.  The court found that Primus supplied its audit report to Jensen alone, and there was no evidence of plaintiff’s reliance on the audit report.  Further the court found that there was no contract or regulatory requirement that imposed a duty to undergo an audit, and that there was no factual basis indicating what the audit was intended to accomplish.   However, a different court denied defendants’ motion to dismiss, holding that consumer injuries are within the scope of an auditor’s duties, and that a negligent audit can foreseeably result in contamination before products enter commerce.  That court found that Jensen would not have distributed the cantaloupes if it had failed the audit.

Although preliminary in nature, these decisions suggest that the underlying purpose of an audit could have significant implications for any potential liability that could arise from the conduct of that audit.  That could be a noteworthy development, given the potential use of audits to meet obligations arising under the preventive controls and supplier verification provisions of the Food Safety Modernization Act (FSMA).  Although it is too soon to know whether or how audit requirements will be incorporated into the final rules implementing those provisions, the Primus litigation suggests that it’s not too soon to be thinking about the purpose of an audit, and whether or how that purpose should be captured in contracts or other documents.  It’s also worth considering how the results of an audit might be relied on by the audited company and other parties that might have a stake in the outcome of the audit.  These thorny issues could get even thornier as FSMA implementation proceeds.

By Jennifer M. Thomas –

In another confirmation of the Lanham Act’s reach following on the heels of the Lexmark decision, the U.S. Supreme Court ruled today that POM Wonderful LLC’s (“POM’s”) Lanham Act suit against Coca-Cola Co. (“Coke”) over juice product labeling is not precluded by the FDC Act (Docket No. 12-761).  We previously posted here, here, and here about the case, and about the positions of various amici curiae – including the U.S. Solicitor General – on the proper interaction between the FDC Act and Lanham Act. 

Stated briefly, the issue in this case was whether POM’s Lanham Act false and misleading advertising claims challenging the labeling of Coke’s Minute Maid Blueberry Pomegranate juice product were barred by the FDC Act and FDA regulations governing the labeling of juices.  POM argued, among other things, that Coca-Cola’s prominent placement of the words “Pomegranate” and “Blueberry” on the product label, as well as a vignette depicting pomegranates and blueberries among the other fruits that contributed (much more substantially) to the product composition, was false and misleading. 

Before getting into the details of this short and sweet Supreme Court opinion, it is worth noting a few limitations on its scope.  Importantly, the Court in POM expressly denies any intended impact on issues of federal-state preemption under the FDC Act:

[T]his is not a pre-emption case.  In pre-emption cases, the question is whether state law is pre-empted by a federal statute, or in some instances, a federal agency action. . . .   This case, however, concerns the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute.  So the state-federal balance does not frame the inquiry.

Slip. Op. at 7.  Further, the opinion appears to be restricted to Lanham Act claims regarding products for which FDA does not approve or actually mandate the labeling:  “FDA does not preapprove food and beverage labels under its regulations . . . [and] does not necessarily pursue enforcement measures regarding all objectionable labels.”  Id. at 11.  Time will tell if the principles expressed here are subsequently applied to FDA-regulated products more broadly.

The Court took a nuts-and-bolts approach to evaluating the intersection of the FDC and Lanham Acts, starting from the plain language of both Acts.  It first determined that neither statute evidenced an express legislative intent to preclude operation of the Lanham Act with respect to the labeling of FDA-regulated products, a point which it considered particularly salient given the fact that the acts have “coexisted since . . . 1946 [and] . . . [i]f Congress had concluded, in light of experience, that Lanham Act suits could interfere with the FDCA, it might well have enacted a provision addressing the issue during these 70 years.”  Slip. Op. at 9.  Moreover, the Court found further evidence of legislative intent not to preclude Lanham Act claims in the fact that Congress did choose to preempt state law labeling claims but failed to even mention potentially competing federal laws in that preemption provision.  Id. at 10.  Finally, the Court described the Lanham Act and FDC Act essentially as good buddies — complementing each other with respect to both coverage and remedies, each compensating for the potential failings of the other, and together creating “synergies among multiple methods of regulation.”  Id. at 12. 

The Court was most emphatically not swayed by the Government’s view, expressed in an amicus brief, that Lanham Act claims should be precluded only “to the extent the FDCA or FDA regulations specifically require or authorize the challenged aspects of [the] label.”  Id. at 15 (quoting Brief for United States as Amicus Curiae 11).  In fact, the Court rejected the premise on which the Government’s position was based, namely that the FDC Act and implementing regulations “are at least in some circumstances a ceiling on the regulation of food and beverage labeling,” because it viewed that position as conflicting with legislative intent that the Lanham Act and FDC Act “complement each other with respect to food and beverage labeling.”  Id.  The Court appeared to take umbrage at the Government’s presumption that private parties could be precluded “from availing themselves of a well-established federal remedy because an agency enacted regulations that touch on similar subject matter but do not purport to displace that remedy or even implement the statute that is its source.”  Id. at 17.

By Kurt R. Karst –      

Although this blogger didn’t catch the episodes of The Six Million Dollar Man that originally aired in the mid-1970s, I did see them once they were syndicated.   As I remember it, the opening theme and narration to the popular television show starring Lee Majors as Steve Austin was gripping – at least to a young child in the early 1980s.  (The same can be said for the opening theme and narration to The Incredible Hulk television series starring Bill Bixby as Dr. David Banner and Lou Ferrigno as the Hulk.)   The premise of The Six Million Dollar Man is that after a terrible crash, austronaut Steve Austin had to be rebuilt with bionic implants to assist a government organization fight crime (and even Bigfoot).  As the opening narration states:  “Steve Austin, astronaut.  A man barely alive.  Gentlemen, we can rebuild him.  We have the technology.  We have the capability to build the world’s first bionic man.  Steve Austin will be that man.  Better than he was before. Better, stronger, faster.”

The opening narration to The Six Million Dollar Man played on a mind loop while this blogger read FDA’s recent guidance offering to ANDA sponsors: “ANDA Submissions — Content and Format of Abbreviated New Drug Applications.”  The guidance, which is accompanied by a webcast providing an overview of the document, is part of a broader initiative by FDA and the Office of Generic Drugs (“OGD”) to rebuild the generic drug program in the U.S.  It also comes as folks gear up for the full implementation of the Generic Drug User Fee Amendments (“GDUFA”) later this year.  The draft guidance complements other OGD efforts aimed at improving ANDA quality, incuding guidance on enhanced refuse-to-receive standards, the establishment of a public docket (Docket No. FDA-2014-N-0032) to receive input and suggestions on ways to improve ANDA quality and on how to best communicate those suggestions to the generic drug industry (see our previous post here), and other offerings on OGD’s website.

The ANDA quality guidance doesn’t break any new ground.  Of course, that’s not what it is intended to do.  Rather, the value of the draft guidance is that it consolidates a lot (but not all) of OGD’s best advice and cross references to other policy documents on point in one organized document for easy reference and clarity.  As FDA states in the notice announcing the draft guidance:

The guidance document is intended to assist applicants in preparing complete and high-quality original [ANDAs] for submission to FDA under the [FDC Act].  The guidance summarizes the statutory and regulatory requirements for ANDAs, references existing guidance documents, and incorporates additional recommendations on the content and format of ANDA submissions.  This guidance describes the Common Technical Document format for human pharmaceutical product applications and specifies the information to be submitted in each section of the application.

The focus on quality is important if, in this post-GDUFA world, there are to be significant numbers of first-cycle approvals.  Under the GDUFA Performance Goals and Procedures, FDA agreed to review and act on 60% of original ANDA submissions within 15 months from the date of submission for the year 3 cohort (Fiscal Year 2015); 75% of original ANDA submissions within 15 months from the date of submission for the year 4 cohort (Fiscal Year 2016); and 90% of original ANDA submissions within 10 months from the date of submission for the year 5 cohort (Fiscal Year 2017).  Acting on an application includes issuance of a complete response letter, an approval letter, a tentative approval letter, or a refuse-to-receive action. 

Higher quality ANDAs should minimize the number of complete response letters and refuse-to-receive actions, and increase the number of tentative and final approvals.  Clearly, we’re not yet at that point.  According to the most recent GDUFA statistics published by FDA, the number of complete responses and refuse-to-receive actions significantly outnumber the number of tentative and final approvals.

We doubt that the generic drug industry will tolerate such statistics as we move deeper into GDUFA – and begin thinking about GDUFA II – however, we recognize that GDUFA is a two-way street.  FDA has to have a better, stronger, and faster generic drug program under GDUFA, but help make that happen, the generic drug industry needs to submit applications of the highest quality.