By David C. Gibbons –

It is rare that we urge our readers to keep a copy of a court ruling or brief.  A Brief that FDA filed on August 21, 2014 is an exception.  Companies and others should read this brief and keep it close at hand. When someone wants to question FDA’s legal authority to compel a recall, this brief provides the clearest statement of FDA’s limited authority to compel a recall.

We previously described (here and here) the litigation commenced by Hospira, Inc. (“Hospira”) wherein the company filed suit against FDA following the Agency’s approval of generic PRECEDEX (see FDA Dear Dexmedetomidine Hydrochloride Injection NDA Holder/ANDA Applicant Letter (Aug. 18, 2014) (hereinafter “FDA Letter Decision”)).  In summary, Hospira sought, and was granted, a Temporary Restraining Order (“TRO”) that included a stay of FDA’s Letter Decision, rescission of any ANDA approvals predicated upon that Letter Decision, an order that FDA recall any product sold or distributed under such an ANDA approval, and an injunction prohibiting FDA from granting any further or additional approvals predicated upon the Letter Decision.  The court order directing FDA to recall a drug product based on a Hatch-Waxman dispute was unprecedented.

Generally speaking, FDA cannot compel a mandatory recall, except in very limited circumstances as authorized by statute, none of which apply to drugs (see here at § 7-5-3).  FDA can order a recall when the Agency:

• finds there exists a reasonable probability that a device intended for human use would cause serious, adverse health consequences or death (21 U.S.C. § 360h(e)(1)); 
• determines that a batch, lot, or other quantity of a biological product presents an imminent or substantial hazard to the public health (42 U.S.C. § 262(d)(1)); 
• determines that an adulterated or misbranded infant formula presents a risk to human health (21 U.S.C. § 350a(e); see also 21 C.F.R. § 107.200);
• finds there is a reasonable probability that a tobacco product contains a manufacturing or other defect not ordinarily contained in tobacco products on the market that would cause serious, adverse health consequences or death (21 U.S.C. § 387h(c)(1)); or
• determines there is a reasonable probability that an article of food (other than infant formula) is adulterated or misbranded and the use of or exposure to such article will cause serious adverse health consequences or death to humans or animals (21 U.S.C. § 350l(a));

Finally, FDA has the discretion to compel a mandatory recall when it finds that a human cell, tissue, or cellular and tissue-based product is a source of dangerous infection to humans, or does not provide adequate protections against the risks of communicable disease transmission.

Recalls, in situations other than those described above, are voluntary actions by a company expected to conform to FDA policy set forth in its regulations. 

Thus, as we circle back to the Hospira litigation, we arrive at a threshold question: can a court order FDA to order a recall?  The answer from the Defendant-Intervenors as well as FDA in this case is no.  FDA states clearly and succinctly in its Brief: “FDA cannot order recalls.”  The Agency goes on to argue that the recall ordered in the Hospira TRO could not even be requested by FDA because the basis for the recall was a patent dispute and not a matter of product safety or efficacy.  FDA says: “consumers should believe that recalled products present a risk to health or are grossly deceptive. That is decidedly not the case here.”  The Agency admitted that “[i]f a company chooses not to comply with an FDA request to recall, FDA has no mechanism to enforce its request because it does not have statutory authority to order drug recalls.” FDA also argued that the court-ordered recall was not in the public interest because the recall “threaten[ed] to disrupt the consistent regulatory standards for recalls.” Finally, the Agency makes the argument that a recall based, such as this, on a patent issue and not on a product safety or efficacy issue will undermine the perception of future recalls.  To this point, FDA says: “When other future products are recalled, consumers may question whether the recall is related to a legitimate public health concern, or whether it is merely another patent dispute in which safety or efficacy is not at issue. The public interest weighs strongly against” ordering a recall.

The district court held a hearing on August 26, 2014 to decide on a Motion for Reconsideration of the TRO entered on August 19th.  In the end, the court granted the Motion for Reconsideration in part and vacated that part of the TRO that ordered FDA to compel a recall of generic PRECEDEX.

By Riëtte van Laack –

As previously discussed, since at least 2006, the U.S. honey bee industry has been trying to get FDA to adopt a standard of identity for honey.   In 2006, the American Beekeeping Federation and honey industry groups petitioned FDA for a standard (Docket No. FDA-2006-P-0207).  More than five years later, in 2011 and despite continued prodding by different parties, FDA denied this petition.  FDA concluded that no standard of identity was needed.  As evidenced by the draft guidance issued in April 2014, FDA has maintained its position.  In this 2014 draft guidance, the Agency repeated its position that honey is “a thick, sweet, syrupy substance that bees make as food from the nectar of flowers and store in honeycombs.” According to FDA, this definition accurately reflects the common usage of the term honey. 

In the absence of a federal standard of identity, a number of states (including Wisconsin and Florida) have adopted, or proposed to adopt, their own state standards of identity or a definition for honey.  According to comments to the draft guidance, no two state standards or definitions are identical.  Apparently concerned about the potential effect of these state standards and definitions, and FDA’s continued refusal to adopt a federal standard, Congress, in the 2014 Farm Bill, tasked USDA’s Agricultural Marketing Service (“AMS”) with the preparation of a report on the need for a standard of identity for honey (Section 10012 of Public Law No. 113-79).  In its report, AMS is to address whether a federal standard of identity for honey would be in the interest of consumers, the U.S. honey industry, and U.S. agriculture.

As directed by the 2014 Farm Bill, AMS issued a notice seeking comments on the 2006 petition.  Specifically, AMS seeks comments regarding the adoption of deviations from the Codex Standard for Honey, CODEX standard 12–1981, Rev. 2 (2001), as defined in the petitioner’s request and on how a federal standard of identity for honey would benefit consumers, the honey industry, and U.S. agriculture.

At best, the AMS report might persuade FDA to reconsider its position.  Ultimately, it remains for FDA to decide on the adoption of a standard.  Comments are due Sept. 19, 2014.

By Karla L. Palmer –

The U.S. Drug Enforcement Administration (“DEA”) published last Friday a Final Rule rescheduling hydrocodone combination products (“HCPs”) from Schedule III to Schedule II.  We posted about the proposed rescheduling here (NPRM published February 27, 2014).  There was little doubt that DEA would up-schedule HCP’s, especially in light of HHS’s recommendation to do so.  It is disappointing, however, that DEA did not heed the request of industry and provide for more time for the implementation of the heightened security and other requirements.  

The Final Rule comes on the heels of more than a decade of review of the rescheduling issue for HCPs by both the Department of Health and Human Services (“HHS”) and DEA.  Back in 2004, in response to a petition, DEA first submitted a request to HHS for a scientific and medical evaluation, and scheduling recommendation for HCPs pursuant to 21 U.S.C. § 811(b).  In 2008, HHS recommended that HCPs remain controlled in schedule III of the CSA.  In 2009, DEA requested HHS re-evaluate their data and provide another scientific and medical evaluation and scheduling recommendation based on additional data and analysis. 

The 2012 FDA Safety and Innovation Act (“FDASIA”) (summarized here) included a provision requiring review, including public meetings, on rescheduling of HCPs. That statutorily mandated review included the creation of an FDA advisory committee (Drug Safety and Risk Management Advisory Committee), which after two days of public meetings in 2013, and review of 768 comments submitted by patients, patient groups, advocacy groups, and professional societies, voted in favor of rescheduling.  After review of scientific and medical evidence, and other considerations mandated by FDASIA, HHS completed its required eight-factor analysis under 21 C.F.R. § 811(b) and recommended in late 2013 that HCPs be placed in Schedule II.  DEA published its notice of proposed rulemaking in late February 2014.

DEA received 573 comments on the proposed rule; it reports that 52% (or 298 comments) supported (or supported with qualification) rescheduling, and 41% (235 comments) opposed rescheduling (many opposition comments were from pharmacists).  Seven percent of the comments did not take a definitive position.  The lengthy preamble addresses comments received, and the 45-day period for implementation of necessary changes by registrants as a result of the up-scheduling.  Although DEA received comments seeking a longer implementation window, those comments did not deter DEA from sticking with what is perceived by many to be a woefully short transition period.  Specifically, in order to prevent “continued misuse, abuse and diversion,” DEA deems it “necessary to set an effective date for this scheduling action, including security and labeling requirements, with all reasonable haste.  After careful consideration of the risk to the U.S. public health and safety related to the diversion and abuse of HCPs, the DEA believes the 45-day effective date is reasonable.”  Final Rule at 61.  DEA also stated that it may not refuse to reschedule a drug or other substance based on alleged “economic impacts” of the rescheduling.  Furthermore, as to retail pharmacies, DEA noted that they are “not required by the CSA or DEA regulations to place schedule II controlled substances in a vault or safe.”  Specifically, in accordance with 21 CFR § 1301.75(b), pharmacies “may disperse schedule II controlled substances throughout their stock of noncontrolled substances in such a manner as to obstruct the theft or diversion of the controlled substances.”

DEA clarified that the Final Rule affects hydrocodone combination products, which are those substances described in 21 C.F.R. § 1308.13(e)(1)(iii) and (iv).  DEA noted that all other products containing hydrocodone are already controlled under Schedule II.  It specifically pointed out that Zohydro™ ER does not meet the cited definition; it is currently controlled under 21 C.F.R. § 1308.12(b)(1)(vi).  However, excluding Zohydro™, all “pharmaceuticals containing hydrocodone currently on the market in the United States are HCPs and are subject to this rulemaking,” including cough suppressants containing HCPs.   DEA noted that HCPs are the “most frequently prescribed opioid in the United States with nearly 137 million prescriptions” for HCPs dispensed in 2013.  Final Rule at 13.  

As we previously posted, rescheduling HCPs from Schedule III to Schedule II affects the entire drug supply chain – every handler of controlled substances.  (The effects of rescheduling are included in that post).  Rescheduling imposes significantly more stringent regulatory requirements on manufacturers, distributors, pharmacies, physicians, importers and exporters. 

The preamble addresses a multitude of issues raised by the rescheduling, including but not limited to the following:

1.   Authority to Prescribe HCPs as Schedule IIs

Commenters were concerned that prescribing authority differed in states, and now mid-level practitioners and others with no CII prescribing authority in certain states would not be able to prescribe HCPs.  DEA responded that it is outside its authority to decide who has prescribing authority within any particular state.

2.  Transmission Methods of HCP Prescriptions as Schedule IIs

Commenters were concerned about the inability for prescribers to transmit oral and faxed prescriptions for Schedule II HCPs. DEA responded that rescheduling does not hinder legitimate access to HCPs, and that contrary to the concerns of commenters, in the event of an emergency situation as defined in DEA regulations, a practitioner would be able to prescribe, and a pharmacy would be able to dispense, HCPs in accordance with 21 C.F.R. § 1306.11(d).  It noted however, in particular, that a practitioner may not delegate to a nurse, pharmacist, or anyone else, authority to make a medical determination whether to prescribe a particular controlled substances.  Final Rule at 49.  

3.  Quantity and Frequency of Refills

DEA noted that many commenters expressed concern about the limitation on refills on CII prescriptions, that this would required more frequent physician visits, and cause doctors to prescribe large quantities of HCPs per prescription.  DEA responded that, while courts have recognized that prescribing “inordinate” amounts of controlled medications may be a violation of the CSA, neither DEA nor the CSA generally imposes a quantitative minimum or maximum on the amount of medication.  Nevertheless, DEA recognizes that limitations on quantities by states or benefit providers exist, and that registrants must comply with such limitations.  Although the CSA prevents refills of CII prescriptions, DEA stated that practitioners may issue multiple prescriptions covering up to a 90-day period, and that DEA regulations do not require patients to be seen on a monthly basis.  DEA’s regulations, however, should not be construed “as mandating or encouraging” individual practitioners to issue multiple prescriptions or see their physicians only once every 90 days. 

4.   Patient Access

DEA received many comments voicing concerns related to access to HCPs, including fear of criminal prosecution, and impact on availability.  DEA stated that rescheduling should not hinder access to legitimate use of the medication, and that increased criminal sanctions for wrongful use, or use of the CSOS or Form 222 ordering process, should not result in limited availability.   DEA noted it takes approximately 1 hour to complete an order using a Form 222, and approximately 3 minutes to complete an order for CIIs using CSOS.

5.   Impact on Long-Term Care Facilities (“LTCFs”)

Although several comments addressed the detrimental effect that rescheduling will have on access to HCPs for patients in LTCFs, DEA responded that regulations already in place, such as permitting transmission of a prescription through the practitioner’s agent under 21 C.F.R. § 1306.11(f), and permission for partial fills under section 1306.13(b) already accommodate the unique needs of LTCFs.  DEA denied any request for a LTCF exemption based on lack of likelihood of diversion in LTCF settings, instead citing data demonstrating high incidents of diversion and abuse in such settings. 

6.   Impact on Manufacturers and Distributors
 
The most notable issue for the Final Rule for manufacturers and distributors is likely the 45-day implementation window for various HCP security and handling requirements.  For example, manufacturers and distributors must secure schedule II substances in a safe, steel cabinet or vault while schedule III substances may be stored in a less secure controlled substance cage or other enclosure.   DEA stated that, in accordance with the Administrative Procedure Act, most scheduling actions have a 30-day implementation period.  Final Rule at 55.  DEA deems the 45-day period to be a reasonable amount of time for registrants to comply with the requirements, and “was established upon a full consideration of the totality of the circumstances specific to HCPs” — discussed at pages 55- 62 of the Final Rule.

7.   Distribution of C-III Labeled HCPs Post Implementation of the Final Rule

DEA states that manufacturers are required to print on the labeling of each “commercial container of HCPs they distribute the designation of HCPs as “C-II”.  Final Rule at 63.  Furthermore, “it shall be unlawful for commercial containers of HCPs to be distributed without bearing the label properly identifying them ….as C-IIs,” and all labels must comply with the labeling requirements “on or before the effective date established in the final order for the transfer or addition.”  Thus, DEA is specifically requiring that commercial containers of HCPs distributed 45 days from date of publication be labeled as “C-II” and be packaged in accordance with 21C.F.R. part 1302. 

Further, DEA states that a “distribution” after the effective date of the Final Rule requires the use of a DEA Form 222 to transfer the substance.  A registrant may transfer upstream commercial containers of HCPs labeled as “C-III”, with utilization of a Form 222 in accordance with 21 C.F.R. § 1305.03.  DEA notes that, as discussed in the Economic Impact section of the Rule, manufacturers and distributors can make “minor adjustments” during the implementation period to meet the effective date requirement.  And, distributors have the option of returning stock labeled “C-III” to the manufacturer.  DEA declined to exempt manufacturers and distributors from physical security requirements for C-IIs given, among other things, their high potential for diversion and abuse, and recommends that registrants work closely with local DEA offices regarding submission of materials necessary for compliance with DEA security requirements.  Final Rule at 65.

DEA also clarified that regulations pertaining to labeling of commercial containers applies to distributions by distributors and manufacturers.  The DEA does “not regulate the labeling and packaging of commercial containers of controlled substances downstream of distributors.”  Final Rule at 64. 

Despite the fact that HCPs have been prescribed and handled as Schedule III drugs for decades, are the most prescribed narcotic in the United States, and there are significant differences in the regulatory requirements between Schedule II and Schedule III drugs, DEA’s unwillingness to provide more than a 45-day compliance window is both surprising, and disappointing, especially because fighting the prescription drug abuse problem requires a cooperative effort between the medical community, industry and the government.

We understand that this blogpost is just a short synopsis of the entire publication of the Final Rule.  We will publish additional posts in the coming days and weeks to address specific issues that arise as the registrants grapple with the effects – and the tight implementation timeframe – of DEA’s rescheduling decision. 

By Alan M. Kirschenbaum –

Beginning with CY 2011, Section 9008 of the Patient Protection and Affordable Care Act (“ACA”) has imposed an annual fee on manufacturers and importers of “branded prescription drugs.”  The global 2014 fee for all manufacturers and importers is $3 billion, to be shared by covered manufacturers and importers in proportion to their relative sales of branded prescription drugs to government purchasers and payors.  You’ll find a summary of this provision of the ACA here.

On July 28, the IRS issued a final regulation to implement the Section 9008 industry fee.  The definition of “branded prescription drugs,” on which the fee is imposed, is straightforward and tracks the statute:  the term means a prescription drug approved under an NDA, or a prescription biological approved under a BLA.  See 26 C.F.R. § 51.2(c).  Accordingly, generic drugs approved under ANDAs are not subject to the fee.

However, interestingly, the IRS acknowledges in the preamble that certain generic drugs were approved under NDAs prior to the enactment of the Drug Price Competition and Patent Restoration Act of 1984 (Hatch-Waxman Amendments), when the ANDA provisions were added to the statute.  IRS is referring to FDA’s “Paper NDA” policy, described in a July 31, 1978 FDA staff memorandum (and eventually published in the Federal Register at 46 Fed. Reg. 27,396 (May 19, 1981)), under which FDA allowed approval of duplicate versions of brand name drugs that were approved after 1962.  Under this policy, a manufacturer could submit, among other things, published reports of studies as the main supporting documentation of safety and effectiveness.  In other words, Paper NDAs were the functional equivalent of ANDAs before the ANDA provisions were added to the Federal Food, Drug, and Cosmetic Act.  FDA revoked the “paper NDA” policy in 1989 when the Agency proposed regulations implementing the Hatch-Waxman Amendments (54 Fed. Reg. at 28, 890 (July 10, 1989)). 

The IRS is requesting comments on “whether a special rule is appropriate regarding the treatment of generic drugs for which applications were submitted under [NDAs] prior to the 1984 [Hatch-Waxman Amendments],” including comments on how to distinguish such generic products from other drugs approved under pre-1984 NDAs.  The preamble explains that any special rule would be prospective only.  Therefore, at least for 2014, drugs approved under pre-1984 Paper NDAs will be included in the industry fee.

Manufacturers marketing drugs that were approved under pre-Hatch-Waxman Paper NDAs should consider submitting comments advocating a special rule to exclude these drugs from the definition of “branded prescription drug.”  Although the preamble does not specify a deadline for comments, we have been informed by the IRS that comments must be received within 120 days after publication in the Federal Register – i.e., by November 25, 2014.

The Food and Drug Law Institute is sponsoring a conference titled "Food Safety: Latest FSMA Developments & Enforcement Actions in a Changing Business Climate," scheduled for September 9.  The conference will feature a regulatory update by Michael Landa (Director of FDA/CFSAN), an exploration of the seven proposed rules that have been issued to implement FSMA, a case study on recalls that includes Roberta Wagner (Deputy Director for Regulatory Affairs at CFSAN), and a discussion of FDA’s enhanced enforcement authorities that includes Jeffrey Steger (Assistant Director of the Consumer Protection Branch in DOJ’s Civil Division).  To close out the conference, HP&M’s Ricardo Carvajal will moderate a session on the business aspects of food safety.  More information on the agenda and registration is available here.

By Kurt R. Karst –    

The pace of litigation concerning FDA’s approval of generic versions of Hospira, Inc.’s (“Hospira’s”) PRECEDEX (dexmedetomidine HCl) Injection, 100 mcg (base)/mL packaged in 200 mcg(base)/2 mL single-dose vials, has been anything but sedate.  On the morning of August 18, 2014, there was no sign of the controversy that would erupt later that day after FDA issued its long-awaited Letter Decision addressing issues raised in the Agency’s January 15, 2014 “Dear NDA/ANDA Applicant” letter (Docket No. FDA-2014-N-0087) concerning approval of generic PRECEDEX. 

As we reported earlier this week, FDA ruled that ANDA sponsors could omit (i.e., carve out) from their generic drug labeling information protected by U.S. Patent No. 6,716,867 (“the ‘867 patent”).  The ‘867 patent is currently listed in the Orange Book for PRECEDEX with a “U-1472” patent use code defined as: “INTENSIVE CARE UNIT SEDATION, INCLUDING SEDATION OF NON-INTUBATED PATIENTS PRIOR TO AND/OR DURING SURGICAL AND OTHER PROCEDURES.”  (The ‘867 patent was previously listed in the Orange Book with a “U-572” patent use code defined as “INTENSIVE CARE UNIT SEDATION.”)  

Hospira – and ANDA sponsor Sandoz, Inc. (“Sandoz”), which is eligible for a period of 180-day exclusivity based on a Paragraph IV certification to the ‘867 patent – contended that FDA was prohibited from omitting any labeling information related to the ‘867 patent, because the patent, as reflected by the U-1472 patent use code narrative, covers both approved uses for PRECEDEX – i.e., (1) sedation of initially intubated and mechanically ventilated patients during treatment in an intensive care setting, and (2) sedation of non-intubated patients prior to and/or during surgical and other procedures – thereby leaving ANDA sponsors with carved-out labeling without an approved use.  Specifically, Hospira, citing the U.S. Supreme Court’s decision in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670 (2012)), where the Court noted in dicta that “the FDA will not approve an ANDA if the generic’s proposed carve out label overlaps at all with the brand’s use code,” argued in comments to FDA that because the patent use code for the ‘867 patent fully covers the first indication and may overlap with the second indication, an ANDA sponsor whose application contains a “section viii” statement to omit patent-protected information must carve out both the first and the second indications in their entirety, thereby precluding approval of any ANDAs with carved out labeling.  FDA, however, concluded otherwise:

Both the original and the revised use codes are limited to “intensive care unit sedation.”  Although the revised use code includes additional language specifying some of the types of patients that Hospira claims are encompassed within the “intensive care unit sedation” use, i.e., non-intubated ICU patients prior to and/or during surgical and other procedures, it does not broaden the claimed method of use beyond “intensive care unit sedation.” . . .  Nor does the clarified use code and its explicit inclusion of a subset of patients that may undergo procedural sedation somehow expand the patented use to encompass and prevent approval for all patients who seek to use the drug for the separately delineated procedural sedation indication. . . .  FDA previously has determined that it can approve ANDAs for broad, general indications that may partially overlap with a protected method of use, so long as any express references to the protected use are omitted from the labeling.  The procedural indication and related information in the labeling do not impermissibly disclose the use of Precedex for procedures in the ICU (i.e., for the use covered by the use code).  ANDAs therefore may be approved for the second indication, consistent with how FDA has implemented use codes and allowed carve outs in other circumstances.

FDA also approved two ANDAs: (1) ANDA No. 202881 from Mylan Institutional LLC (“Mylan”), which began selling drug product; and (2) ANDA No. 203972 from Par Sterile Products.

In the wee hours of August 19, 2014, Hospira took action against FDA.  The company filed a Complaint and a Motion for Temporary Restraining Order and/or Preliminary Injunction in the U.S. District Court for the District of Maryland seeking from the court a stay of FDA’s Letter Decision, rescission of any ANDA approvals predicated upon that Letter Decision, an order FDA to recall any product sold or distributed under such an ANDA approval, and an injunction prohibiting FDA from granting any further or additional approvals predicated upon the Letter Decision.  According to Hospira, FDA’s Letter Decision that led to the ANDA approvals violates Section 505(j)(2)(A)(viii) of the Federal Food, Drug, and Cosmetic Act (“FDC Act”) concerning ANDA labeling carv-outs, as well as the rulemaking requirements of the Administrative Procedure Act (“APA”):

Instead of complying with statutory and regulatory requirements, FDA adopted an unauthorized procedure (the opening of Docket No. FDA-2014-N-0087) and then relied upon that unauthorized procedure to make a decision which is contrary to law.  Absent injunctive relief, FDA’s unauthorized approach will allow generic versions of Precedex on the market without those generics’ first establishing, as the law requires, that they do not infringe Hospira’s rights under its method-of-use patent, and FDA will have applied a “rule” within the meaning of the [APA] which rule FDA adopted without complying with any of the rulemaking requirements of the Act. . . .

Here, in the face of demonstrable and FDA admitted overlap between the indications included in the generic’s labeling and Hospira’s patent use code, FDA has acted unlawfully in issuing a decision which allows approval of generic versions of Precedex.

In addition, FDA has not adopted a regulation, pursuant to the notice and comment rulemaking requirements of the APA, to modify its prior rule and authorize the agency to approve a generic version in an “overlap case” such as this (assuming, without conceding, that FDA would have statutory authority to adopt such a rule).  In its review and approval of applications for generic versions of Precedex, FDA has unlawfully applied a new substantive rule without FDA’s complying with the rulemaking requirements of the APA.  Because FDA’s past or imminent approvals of generic versions of Precedex rests entirely on this unauthorized, unlawfully adopted new rule, any resulting generic drug approval decisions are invalid.

The Maryland District Court (Judge George Jarros Hazel) scheduled an emergency hearing on Hospira’s Motion for Temporary Restraining Order for Tuesday, August 19, 2014 at 3PM.  Both Mylan and Sandoz entered the case as intervenors, and Sandoz filed a brief in support of Hospira’s Motion for Temporary Restraining Order and/or Preliminary Injunction saying, among other things that FDA’s Letter Decision and ANDA approvals deprives Sandoz of 180-day exclusivity. 

Then came Judge Hazel’s late-night Memorandum Opinion and Order on August 19th.  In granting Hospira’s Motion for Temporary Restraining Order, Judge Hazel ruled that Hospira demonstrated that it is likely to succeed on the merits regarding its contention that FDA violated FDC Act § 505(j)(2)(A)(viii), and with respect to Hospira’s APA claim:

Here, the first indication for Precedex is entirely covered by Plaintiff’s use-code.  As to the second indication, there is, at the very least, some overlap.  Because its use-code statement asserts that its method-of-use patent overlaps with all approved indications, Plaintiff further contends the FDA must reject any ANDA application based upon a section viii statement.  FDA, on the other hand, contends that it can approve ANDAs for broad, general indications that may partially overlap with a protected method of use, so long as any express references to the protected use are omitted from the labeling. Notably, however, Plaintiff’s interpretation has been endorsed by the United States Supreme Court in its recent decision of [Caraco], in which the Court stated (albeit as dicta) that “the FDA will not approve such an ANDA if the generic’s proposed carve-out label overlaps at all with the brand’s use code.”  At this juncture, the Court therefore finds that FDA’s decision was at odds with relevant authority.

Furthermore, to now permit FDA to approve generic versions of Precedex on the basis that it can approve ANDAs for broad, general indications that overlap with a protected method of use would be tantamount to a change of the rules.  Such a change would require FDA to employ the formal rulemaking procedures of the [APA], which it indisputably did not do.  Moreover, even if the Court were to assume for argument’s sake that the governing statute is ambiguous under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S.837 (1984), given the prior understanding of the law by the Supreme Court, the Court cannot find, at this current juncture, FDA’s interpretation to be reasonable.

But Judge Hazel did not stop there.  In his Order, which will continue in full force and effect until September 2, 2014, Judge Hazel not only stayed FDA’s Letter Decision and any future FDA actions under it, as well rescinding ab initio any FDA actions already taken pursuant to that Letter Decision, but he took the highly unusual – and perhaps unprecedented – move in a Hatch-Waxman case of ordering FDA to recall any product sold or distributed under the two ANDA’s approved for generic PRECEDEX.  

If it stands, the court’s decision could have significant implications on Hatch-Waxman law.  For some, it could be the long sought-after (and thus far illusive) Northwest Passage route to avoid some generic drug labeling carve-outs.  Companies may seek to clarify Orange Book method-of-use patent listings – and may petition FDA regarding the same – in efforts to prevent generic drug labeling omissions and to force Paragraph IV patent certification submissions. 

UPDATES:

• On August 20, 2014, the Court issued a paperless Order denying Mylan's Motion to File Response to TRO by 5 pm August 20 2014.  According to the Court, “Mylan and Sandoz have each been permitted to intervene in this matter and the Court gave consideration to their arguments at the motion hearing on the TRO. The Court did not request post-hearing briefing and did not consider the brief filed by Intervenor Sandoz prior to issuing its ruling. Both Mylan and Sandoz will be permitted to submit memoranda pursuant to the scheduling order to be set during today's scheduling call for future motions.”
• On August 20, 2014, Mylan filed a Motion to Stay Paragraph 3 (product recall) & Paragraph 4 (rescission of actions made pursuant to FDA's Letter Decision) of the Court's August 19th Order. 
• On August 20, 2014, the Court issued a paperless Order granting Mylan's Motion to Stay.  According to the Court, “Paragraphs 3 and 4 of the Court's August 19, 2014 [Order] are stayed pending Defendant Mylan's Motion for Reconsideration.”
• Par Sterile Products joins the party after the Court grants the company's Motion to Intervene.
• On August 22, 2014, the Court issued a paperless Notice of Hearing on Mylan's Motion to Reconsider for Tuesday, August 26, 2014 at 9:30 am.
• On August 26, 2014, the Court granted in part and denied in part Mylan's Motion for Reconsideration.  Paragraphs 3 and 4 of the August 19th TRO Order are vacated, and Paragraphs 1 and 2 are amended. 
• On August 29, 2014, Motions for Summary Judgment were filed by FDA (here), Hospira (here), Sandoz, (here), Mylan (here), and Par (here).

By Jennifer D. Newberger –

On August 14, 2014, FDA issued a draft guidance titled, “De Novo Classification Process (Evaluation of Automatic Class III Designation)” (draft guidance). 

The de novo review process, formally known as Evaluation of Automatic Class III Designation, is established by section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act (FDC Act), as amended.  This process was added to the FDC Act by the Food and Drug Administration Modernization Act of 1997 (FDAMA) to address novel devices that lack a predicate device but pose only a low to moderate risk, making them ill suited to the PMA process. 

Under FDAMA, before a device could utilize the de novo process, a device first had to be found not substantially equivalent (NSE) to a predicate device through the 510(k) process, even if the submitter and FDA agreed no appropriate predicate existed.  Due to the burdensome, time consuming nature of the de novo process, it was under utilized.

In September 2011, FDA issued a draft guidance document attempting to streamline the de novo process.  We discussed this draft guidance here.  Under that draft guidance, a person could submit a 510(k) and de novo petition simultaneously, and FDA could begin review of the de novo petition immediately upon issuance of the NSE letter. 

In July 2012, Congress amended section 513(f)(2) through passage of the Food and Drug Administration Safety and Innovation Act (FDASIA).  Under section 607 of FDASIA, a finding of NSE is not required before submitting a de novo petition.  Instead, if a person believes the device is low to moderate risk but no appropriate predicate exists, the person may submit a de novo without previously submitting a 510(k).  With the passage of FDASIA, the draft guidance issued in September 2011 was essentially mooted. 

The latest draft guidance describes the process of submitting a de novo petition under FDASIA, focusing primarily on the information to include in a de novo petition or a request for a Pre-Submission meeting prior to submitting a de novo request.  The information to include in a de novo petition includes the following: 

• a recommendation whether the device should be regulated as Class I or Class II;
• whether the device should be subject to 510(k) requirements;
• if a Class II device subject to 510(k), the petition should include a proposed special controls document, describing the intended use, risks, and risk mitigation strategy for the device;
• supporting protocols and data;
• a summary of benefits and known and potential risks; and 
• risk and mitigation information. 

In addition, the submission must include a “classification summary” demonstrating that the submitter has thoroughly researched legally marketed devices and concluded that no appropriate predicate exists.  To demonstrate that the submitter conducted such a search, the de novo submission should include:

• a description of the databases searched and terms used to establish no predicate exists; 
• regulations, PMAs, and/or product codes that may relate to or are potentially similar to the subject device; and 
• a rationale for why the subject device does not fit within or is different from the identified regulations, PMAs, and/or product codes. 

The draft guidance states that if a submission fails to include this information, it will be put on hold.

While it seems appropriate for a submitter to demonstrate that it has conducted a reasonable search and concluded that no appropriate predicate exists, there is a potential for overly burdensome implementation of these search requirements by FDA.  If FDA places a de novo submission on hold after concluding that insufficient information has been provided, FDA should help guide the submitter in searching for or identifying information FDA believes may be relevant.

The de novo process has long been in need of remediation.  FDASIA provided the basis for that remediation, and the guidance should help industry take advantage of this process.  Hopefully this more streamlined process will allow innovative, moderate risk devices to more easily enter the marketplace.

By Kurt R. Karst –       

We were beginning to wonder whether FDA would ever issue a letter decision addressing the novel issues raised in the Agency’s January 15, 2014 “Dear NDA/ANDA Applicant” letter (Docket No. FDA-2014-N-0087) concerning approval of generic versions of Hospira, Inc.’s (“Hospira’s”) PRECEDEX (dexmedetomidine HCl) Injection, 100 mcg (base)/mL packaged in 200 mcg(base)/2 mL single-dose vials.  The days turned into weeks, and the weeks into months.  But earlier today, FDA finally issued the highly anticipated decision. [UPDATE – Subsequent to posting we learned of a lawsuit filed early on August 19, 2014 challenging the FDA Letter Descision.  Links to the papers in that case are provided below.]  And the decision was probably surprising to many.  Instead of addressing head-on the novel generic drug labeling “carve-in” and patent use code issues FDA initially raised in the Agency’s “Dear NDA/ANDA Applicant” letter – and that were the subject of numerous comments – FDA instead ruled that generic dexmedetomidine is a straight-on labeling carve-out case, similar to that faced by the Agency when it initially considered approving generic versions of PRANDIN (repaglinide) Tablets (prior to the change in patent use code issue that was ultimately ruled on by the U.S. Supreme Court in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670 (2012)).  That treatment of the case is immediately apparent in the second paragraph of FDA’s August 18, 2014 Letter Decision:

Today’s letter reflects FDA’s determinations with respect to permissibility of labeling carve outs for ANDAs referencing Precedex.  For the reasons set forth below, FDA concludes that regardless of whether the original use code or the revised use code applies, the agency can approve an ANDA that submits a “section viii” statement and omits labeling that discloses the protected use (as identified by Hospira).  FDA further concludes that such omissions do not render the drug less safe or effective for the remaining non-protected conditions of use.

For much of the backgound on this case, we refer you to our previous post; however, here are a few key facts to keep in mind:

• PRECEDEX is currently approved in three strengths and for two indications: (1) sedation of initially intubated and mechanically ventilated patients during treatment in an intensive care setting; and (2) sedation of non-intubated patients prior to and/or during surgical and other procedures. 
• FDA’s Orange Book currently lists one unexpired patent for the 100 mcg (base)/mL packaged in 200 mcg(base)/2 mL single-dose vials strength at issue: U.S. Patent No. 6,716,867 (“the ‘867 patent”), which expires on March 31, 2019, but is subject to a period of pediatric exclusivity that expires on October 1, 2019. 
• The ‘867 patent is listed in the Orange Book as a method-of-use patent with a “U-1472” patent use code, which is defined in an Orange Book addendum as: “INTENSIVE CARE UNIT SEDATION, INCLUDING SEDATION OF NON-INTUBATED PATIENTS PRIOR TO AND/OR DURING SURGICAL AND OTHER PROCEDURES.”
• The ‘867 patent was previously listed with a “U-572” patent use code defined as “INTENSIVE CARE UNIT SEDATION.”

The general question FDA initially had to address was whether FDA could, in light of the the original and clarified patent use code narratives, approve an ANDA for a generic version of PRECEDEX containing a “section viii” statement to omit information protected by the ‘867 patent, or whether the omission of such information would preclude a carve-out and ANDA approval.  Or, as FDA explains it in the Agency’s Letter Decision:

Hospira asserts that both its original and its revised use code overlap not only with the first indication for Precedex but also with the second indication for that drug because there is a subset of non-intubated patients that may receive Precedex for procedural sedation (the second indication) in the ICU setting.  Hospira argues that because its use code(s) for the ‘867 patent fully cover the first indication and may overlap with the second indication, an applicant with a section viii statement to the ‘867 patent must carve out both the first and the second indications in their entirety, thereby precluding approval of any ANDAs with carved out labeling.

Among other things, Hospira cited the Caraco decision in which the Court stated: “the FDA will not approve an ANDA if the generic’s proposed carve out label overlaps at all with the brand’s use code.”

After affirming FDA’s authority to determine permissible labeling carve-outs, the Agency, pointing to precedent labeling carve-out decisions involving generic repaglinide (Docket Nos. FDA-2008-P-0343 & FDA-2008-P-0411), tramadol HCl (FDA Docket Nos. 2001P-0495, 2002P-0191, FDA-2002-P-0003), and oxandrolone (Docket No. FDA-2005-P-0368) rejected Hospira’s arguments.  According to FDA:

Both the original and the revised use codes are limited to “intensive care unit sedation.”  Although the revised use code includes additional language specifying some of the types of patients that Hospira claims are encompassed within the “intensive care unit sedation” use, i.e., non-intubated ICU patients prior to and/or during surgical and other procedures, it does not broaden the claimed method of use beyond “intensive care unit sedation.” . . .  Nor does the clarified use code and its explicit inclusion of a subset of patients that may undergo procedural sedation somehow expand the patented use to encompass and prevent approval for all patients who seek to use the drug for the separately delineated procedural sedation indication. . . .  FDA previously has determined that it can approve ANDAs for broad, general indications that may partially overlap with a protected method of use, so long as any express references to the protected use are omitted from the labeling.  The procedural indication and related information in the labeling do not impermissibly disclose the use of Precedex for procedures in the ICU (i.e., for the use covered by the use code).  ANDAs therefore may be approved for the second indication, consistent with how FDA has implemented use codes and allowed carve outs in other circumstances.

And:

Just as FDA concluded that a labeling carve out was proper for repaglinide before Novo broadened its use code to duplicate in its entirety the single approved indication, so, too, here ANDAs for Precedex may carve out the protected information (related to use for ICU sedation), and be approved for procedural sedation despite the fact that use for procedural sedation may at times occur in an intensive care setting.  Use in an intensive care setting is not expressly disclosed in any proposed ANDA labeling.  Hospira’s reliance on a single sentence about a different type of “overlap” at issue in Caraco does not control the outcome here.

From there it was relatively easy for FDA to conclude that “permitting ANDA sponsors to omit information from the labeling related to use for ICU sedation does not render the product less safe or effective for the remaining use of sedation of non-intubated patients prior to and/or during surgical and other procedures,” which is a finding that must be made in labeling carve-out cases pursuant to 21 C.F.R. § 314.127(a)(7).

Whether FDA’s side-stepping of several of the issues the Agency initially raised last January was a deliberate attempt to avoid having to address those thorny issues, or the result of an epiphany that this is, to the Agency at least, a “straight 8 case” is unclear.  Certainly one thing was clear all along: at least one party involved in the dispute would be disappointed with FDA’s result.  Now the question is: how disappointed?

UPDATES:

• Early on August 19, 2014, Hospira filed a Complaint and Motion for Temporary Restraining Order and/or Preliminary Injunction in the U.S. District Court for the District of Maryland to stay FDA's Letter Decision, rescind any ANDA approvals predicated upon that Letter Decision, order FDA to recall any product sold or distributed under such an ANDA approval, and enjoin FDA from granting any further or additional approvals predicated upon the Letter Decision.
• PAPERLESS ORDER (Entered: 08/19/2014)) scheduling an emergency hearing on the Motion for Temporary Restraining Order for Tuesday, August 19, 2014 at 3pm in Courtroom 2C. 
• ORDER directing that the decision of Defendant Food and Drug Administration (FDA), in Docket No. FDA-2014-N-0087 is STAYED; directing that this order is to remain in effect until September 2, 2014.  Temporary Restraining Order Granted.

By Kurt R. Karst –      

The folks in FDA’s Office of Generic Drugs (“OGD”) have been especially busy as of late preparing for the October 1, 2014 implementation of the review and performance metrics agreed to under the Generic Drug User Fee Amendments of 2012 (“GDUFA”).  The Office continues to make personnel changes in preparation for the big event (see here), and has been pumping out policy and guidance documents faster than we can keep up with them.

Earlier this month, OGD issued two important Manual of Policy and Procedures (“MAPPs”) documents for managing the ANDA review queue: (1) MAPP 5200.4, Criteria and Procedures for Managing the Review of Original ANDAs, Amendments and Supplements; and (2) MAPP 5240.3 (Rev. 1), Prioritization of the Review of Original ANDAs, Amendments, and Supplements.  The documents convey OGD’s reworked prioritization schedule for ANDAs in light of GDUFA.  Under the revised policy, ANDAs will be prioritized and considered for expedited review if they meet the specifics of one or more various categories:

1. Submissions containing patent certifications pursuant to 21 CFR 314.94(a)(12), including the following circumstances in which priority review may be granted:
• Potential first generic products for which there are no blocking patents or exclusivities on the reference listed drug may receive expedited review; 
• Submissions that contain a Paragraph IV certification, but become eligible for approval during the review period as a result of no blocking patents or exclusivities (including 180-day exclusivity) and no applicable stays; and 
• Submissions that contain a Paragraph IV certification, that are submitted on the first day that any valid Paragraph IV application for the drug in question is submitted, and that are received as substantially complete.
2. Submissions related to drug shortages
3. Submissions that are subject to special review programs such as the President’s Emergency Plan for AIDS Relief
4. Submissions related to public health emergencies
5. Submissions related to certain government purchasing programs
6. Submissions subject to statutory mandates or other legal requirements
7. Supplements for which expedited review is requested under 21 CFR 314.70(b)(4)

OGD has also been – and will continue to be – busy issuing new guidance documents explaining current policies and procedures in the post-GDUFA world of ANDA review and approval.  In a notice that will be published in the Federal Register later this week, OGD announced a public hearing on GDUFA implementation that will be held on September 17, 2014, from 9 AM to 5 PM.  In the notice, FDA is soliciting comment on five guidance documents, some of which have yet to see the light of day:

• ANDA Submissions – Content and Format of ANDAs
• ANDA Submissions – Refuse to Receive for Lack of Proper Justification of Impurity
  Limits
• ANDA Submissions – Amendments and Easily Correctable Deficiencies Under GDUFA (see our previous post here) 
• ANDA Submissions – Prior Approval Supplements Under GDUFA (see our previous post here)
• Controlled Correspondence Related to Generic Drug Development 

The notice follows a January 2014 notice (see our previous post here) in which FDA announced the establishment of a public docket (Docket No. FDA-2014-N-0032) to receive input and suggestions on ways to improve the quality of ANDAs (original, amendments, and supplements) submitted to OGD and on how to best communicate those suggestions to the generic drug industry.  Thus far, FDA has received only a handful of comments in response to the solicitation.

In addition to canvassing for comments on OGD GDUFA guidances and future policy priorities, the September public hearing will tackle “GDUFA Implementation Related to Generic Drug Exclusivity” and “GDUFA Implementation and Potential First Generics.”  The second topic relates to the two MAPPs discussed above.  According to FDA:

Subsequent to GDUFA’s enactment, FDA has received numerous individual stakeholder comments on what should qualify as a first generic ANDA for the purposes of expedited review.  These comments reflect a range of options, for example, from a broad definition that would prioritize review of all ANDAs for each strength of a Reference Listed Drug submitted for which there is not already an approved ANDA at the time of submission, to a more narrow definition under which only ANDAs that contain a paragraph IV certification and qualify as a “first applicant” under section 505(j)(5)(B)(iv)(II)(bb) of the FD&C Act would be designated as a first generic eligible for expedited review.  In addition, several stakeholders have indicated that depending on the criteria FDA applies, first generic status could or should change over time based on other external factors, for example, withdrawal or rescission of approval of another applicant’s ANDA, or shifts in the patent or exclusivity landscape (for example, an unsuccessful patent challenge).

As such, FDA wants to hear from industry as to what specific criteria should FDA apply to identify an ANDA as a first generic eligible for expedited ANDA review, and whether there are there other topics related to first generics eligible for expedited review that require further consideration.

Moving on to “GDUFA Implementation Related to Generic Drug Exclusivity,” FDA is seeking to get a better handle on the topic that generates the most controversy under Hatch-Waxman and in the generic drug industry: 180-day exclusivity.  The current system FDA follows, under which 180-day exclusivity decisions are typically made at the last possible moment (and that sometimes result in a non-decision decision – e.g., 180-day exclusivity “punts” under the failure-to-obtain-timely-tentative-approval forfieture provision), is not optimal.  It is a drain on industry and FDA resources, and can lead to court fire drills.  So, FDA is considering building a better model, and wants to hear industry input on various questions:

1. Should FDA’s consideration of eligibility for 180-day exclusivity for a specific drug product be a public process, including consideration of whether a first applicant has forfeited its eligibility for exclusivity under section 505(j)(5)(D) of the FD&C Act? If a public process is advisable, would it be so in all instances, or is there a subset of circumstances in which the process should be public?  Also, what administrative mechanisms would best facilitate such a process?
2. Legal challenges to FDA’s decisions on 180-day exclusivity often must be resolved on an expedited basis which can be inconvenient for the parties and the court. What legal or regulatory mechanisms, if any, are available to better facilitate FDA’s determination of and orderly resolution of sponsors’ challenges to 180-day exclusivity determinations?
3. Are there other topics related to 180-day exclusivity on which you would like to comment?
4. Are there topics related to 180-day exclusivity that would benefit from FDA guidance?

Elsewhere, and in the more informal context of FDA’s “From a Clinical Perspective” pubication, the Agency is seeking comment on the five generic drug regulatory science priorities for Fiscal Year  2014: (1) post-market evaluation of generic drugs; (2) equivalence of complex products; (3) equivalence of locally acting products; (4) therapeutic equivalence evaluation and standards; and (5) computational and analytical tools.  Those topics were laid out last year consistent with the GDUFA goals document. 

By Kurt R. Karst –      

For several years now we’ve closely tracked the changes in user fees rates FDA sets each fiscal year under the Prescription Drug User Fee Act (“PDUFA”).  Last year, we added rates set pursuant to the Generic Drug User Fee Amendments of 2012 (“GDUFA”) and the Biosimilar User Fee Act of 2012 (“BsUFA”) (see our previous post here).  This year we’re a little late reporting on the Fiscal Year 2015 (“FY 2015”) rates established by FDA earlier this month . . . but with good cause.  While FDA was busy ascending on some user fee rates and descending on other user fee rates, this blogger was busy doing his own ascending and descending – up to and down from the summit of Mt. Kilimanjaro in Tanzania, Africa.  And while we were at the summit (Uhuru Peak, at 19,341 feet), we staked a claim for Hyman, Phelps & McNamara, P.C.  Here’s proof if you need it:

The FY 2015 PDUFA application user fee rate is set at $2,335,200 for an application requiring “clinical data” (defined here in an FDA guidance document), and one-half of a full application fee ($1,167,600) for an application not requiring “clinical data” and a supplement requiring “clinical data.”  FDA’s Federal Register notice announcing the new rates is available here.  These figures reflect FDA’s estimate of 115.042 fee-paying full application equivalents – an average of the number of full applications that paid fees over the lateset 3 years.  This figure is slightly lower than last year’s estimate of 116.333 fee-paying full application equivalents and explains somewhat the increase in the application fee rate.  Annual establishment and product fees have been set at $569,200 and $110,370, respectively, and are based on estimates of 472 establishments (an increase of 17 compared to FY 2014) and 2,434 products (an increase of 9 compared to FY 2014).    

The FY 2015 PDUFA user fee rates become effective on October 1, 2014 and generally represent a modest change vis-à-vis the FY 2014 user fee rates.  All BsUFA user fees – i.e., the initial and annual biosimilar Biological Product Development (“BPD”) fees, the reactivation fee, and the biosimilar biological product application, establishment, and product fees – are keyed to PDUFA user fees.  The FY 2015 rates have thus been set at $233,520 (initial and annual PBD), $467,040 (reactivation), $2,335,200 (application), $569,200 (establishment), and $110,370 (product).  FDA’s Federal Register notice announcing the new rates is available here. 

The table below shows the changes in PDUFA user fee rates for the latest iteration of the law – PDUFA V.  Hisorical tables for user fee rates changes since the enactment of PDUFA are avilable here. 

GDUFA establishes several types of user fees that together generated $299 million in funding for FDA in FY 2013 (including $50 million from the one-time ANDA backlog fee).  That $299 million base amount is adjusted annually, and in FY 2015 has been set at $312,224,000. (The FY 2014 adjusted base figure was $305,659,000.)  Several of the FY 2015 GDUFA user fee rates FDA announced earlier this month, and which go into effect this October, are peddled back vis-à-vis the FY 2014 user fee rates; however, the Active Pharmaceitical Ingredient (“API”) and Finished Dosage Form (“FDF”) facility fee rates did take a hike up vis-à-vis the FY 2014 user fee rates. 

The original ANDA and PAS fees, which make up 24% of the $312,224,000 (or $74,934,000 rounded to the nearest thousand dollars), are based on a total number of 1,276 fee-paying full application equivalents expected to be received in FY 2015.  Dividing $74,934,000 by the total number of fee-paying full application expedted to be received results in an original ANDA fee of $58,730 and a PAS fee of $29,370 for FY 2015.  The 1,276 fee-paying full application equivalents figure FDA identifies is significantly higher than the 1,148.8 figure used in FY 2014, and therefore, largely explains a drop in the original ANDA and PAS fees.  Interestingly, that figure is an estimate of ANDAs that excludes the massive bolus of applications submitted in June 2014, before FDA’s enhanced ANDA stability requirements went into effect.  That bolus – any any bolus of applications submitted when the GDUFA performance goals go into effect in October 2014 – will be reflected in future user fee figures, and could lead to user fee rate decreases over the following years.

The Drug Master File (“DMF”) fee, which makes up 6% of the $312,224,000 ($18,734,000 rounded to the nearest thousand dollars), is based on an estimate of 701  fee-paying DMFs in FY 2015 – a significant increase over the 583 fee-paying DMFs estimated for FY 2014.  The resulting fee is $26,720 for FY 2015, which is a drop from the $31,460 user fee rate set for FY 2014.

The API and FDF facility fees are based on data submitted by generic drug facilities through the self-identification process.  The FDF facility fee revenue makes up 56% of $312,224,000 ($174,845,000 rounded to the nearest thousand dollars), and the API facility fee makes up 14% of $312,224,000 ($43,711,000 rounded to the nearest thousand dollars).  According to FDA, the total number of FDF facilities identified through self-identification was 681 (271 domestic and 410 foreign), and the total number of API facilities identified through self-identification was 795 (103 domestic and 692 foreign).  These numbers translate into FY 2015 FDF facility fee rates of $247,717 for a domestic facility and $262,717 for a foreign facility, and API facility rates of $41,926 for a domestic facility and $56,926 for a foreign facility.  These are pretty hefty increases compared to the FY 2014 FDF and API facility user fee rates, and are likely explained by the significant decrease in self-identified facilities.  In FY 2014, the number of self-identified facilities used to calculated the facility fee rates was 748 (315 domestic and 433 foreign) FDF facilities, and 903 (128 domestic and 775 foreign) API facilities. 

The table below shows the changes in GDUFA user fee rates for the first iteration of the law.

By Kurt R. Karst –      

The Major Contribution to Patient Care (“MC-to-PC”) basis for demonstrating that an orphan drug is clinical superiority, and is therefore not the “same drug” as a previously approved orphan drug containing the same active moiety, is supposed to be a pretty rare event.  Though still rare, we’ve been seeing greater use of the clinical superiority argument and greater acceptance of MC-to-PC theories by FDA’s Office of Orphan Products Development.  Indeed, it was just last week that we posted on one such case concerning cysteamine bitartrate (PROCYSBI) (see our previous post here).  That precedent added to the three other instances of which we were aware that MC-to-PC theories were accepted by FDA (see our previous post here).  Now another case has come to light. 

MC-to-PC clinical superiority is one of the three bases the sponsor of an orphan drug can use to argue that the company’s drug is different from a previously approved orphan drug, thus making the company’s product eligible for orphan drug designation and orphan drug exclusivity (and, where applicable, the ability to “break” another sponsor’s unexpired orphan drug exclusivity).  Specifically, FDA’s orphan drug regulations provide that a drug is “different” from an approved orphan drug if it is “clinically superior” to the approved orphan drug.  A clinically superior drug is “a drug . . . shown to provide a significant therapeutic advantage over and above that provided by an approved orphan drug (that is otherwise the same drug)” in one of three ways: (1) greater effectiveness as assessed by effect on a clinically meaningful endpoint in adequate and well controlled trials; (2) greater safety in a substantial portion of the target population; or (3) demonstration that the drug makes a MC-to-PC. 

There is only one instance where FDA found a drug to be clinically superiority based on greater effectiveness.  In 2002, FDA determined that Serono’s REBIF (interferon beta-1a) (BLA No. 103780) was clinically superior to Biogen’s AVONEX (interferon beta-1a) (BLA No. 103628) for the treatment of relapsing-remitting multiple sclerosis based on data from a head-to-head clinical trial demonstrating improved efficacy of REBIF over AVONEX in the frequency of multiple sclerosis exacerbations.  To support a claim of clinical superiority based on superior safety, the second product must, as discussed in the preamble to FDA’s 1992 final orphan drug regulations and in FDA’s orphan drug regulations, provide “[g]reater safety in a substantial portion of the target populations.”  Even “a small demonstrated improvement in efficacy or diminution in adverse reactions may be sufficient to allow a finding of clinical superiority.”  There are several (less than 10 that we know of) instances in which greater safety has been OOPD’s basis for designating and orphan drug and granting orphan drug exclusivity. 

To support a MC-to-PC claim of clinical superiority, FDA has acknowledged in the Agency’s regulations that it will do so only in “unusual circumstances.”  In the preamble to FDA’s final 1992 orphan drug regulations, the Agency commented that:

convenient treatment location; duration of treatment; patient comfort; improvements in drug efficiency; advances in the ease and comfort of drug administration; longer periods between doses; and potential for self administration . . . when applicable to severe or life threatening diseases, might sometimes be legitimately considered to bear on whether a drug makes a major contribution to patient care.  However, this determination will have to be made on a case-by-case basis.

As to how much superiority might constitute a “major contribution to patient care,” FDA also remarked:

There is no way to quantify such superiority in a general way.  The amount and kind of superiority needed would vary depending on many factors, including the nature and severity of the disease or condition, the quality of the evidence presented, and diverse other factors. . . .  While comparative trials are, of course, preferred and will usually be required, it is possible that, in some circumstances, a demonstration of a major contribution to patient care can be made without such trials.

The latest MC-to-PC precedent concerns NYMALIZE (nimodipine) Oral Solution, 60 mg/20 mL, which FDA approved pursuant to the FDC Act’s 505(b)(2) NDA procedures on May 10, 2013 under NDA No. 203340 for the improvement of neurological outcome by reducing the incidence and severity of ischemic deficits in adult patients with Subarachnoid Hemorrhage from ruptured intracranial berry aneurysms regardless of their post-ictus neurological condition (i.e., Hunt and Hess Grades I-V).  Previously, FDA had approved – thougth not under the FDC Act’s orphan drug provisions – another nimodipine drug product for the same use as NYMALIZE: Bayer’s NIMOTOP (nimodipine) Capsules (NDA No. 018869; approved on December 28, 1988).

The original sponsor of NYMALIZE had requested orphan drug designation, but did not provide an adequate explanation for clincal superiority, according to OOPD’s review of the orphan drug designation request.  The sponsor implied that there were two advantages to an oral solution dosage form of nimodipine: an oral solution dosage form eliminates the need to extract the capsule contents with a syringe, which could reduce the incidence of accidental intravenous administration, and an oral solution would allow for more precise dosing and would provide another option for patients who may not require nasogastric administration but who have difficulty swallowing oral capsules.  OOPD treated these two arguments as greater safety and MC-to-PC clinical superiority arguments, respectively. 

Ultimately, OOPD consulted the FDA Review Division responsible for review of the NYMALIZE IND and NDA, and asked whether the oral solution dosage form was important, and whether it could be considered clinically superior based on safety or MC-to-PC grounds.  The FDA Review Division’s response paved the way for OOPD’s designation and orphan-exclusive approval.  According to the FDA Review Division:

The oral solution is a very big deal to us in the Neurology Division.  It represents a major safety initiative that we have undertaken to eliminate a rare, but persistent error that may be, and has been, fatal.  We feel it will provide greater safety in a substantial portion of the target population and will provide a major contribution to patient care over the currently available product.  We feel the proposed oral solution represents a major advantage over the current product and anticipate withdrawing the current product from the market following approval of an oral solution.  

Despite the FDA Review Division’s statement on greater safety, OOPD determined that MC-to-PC would be the basis for designation and for granting exclusivity:

In this application, while the sponsor has not provided evidence of greater effectiveness, nor has shown that the product will provide safety in a substantial portion of the target population, rationale has been provided that the oral solution formulation of nimodipine constituters a major contributiojn to patient care given the major safety initiative undertaken by FDA to eliminate this rare but persistent medication error that had resulted in patient death. 

The orphan-exclusive approval of NYMALIZE is a prime example of how a sponsor can make relatively small changes to a previously approved drug, and without much investment from a non-clinical and clinical perspective, to reap significant benefits.  Indeed, the NYMALIZE NDA largely relied on FDA’s previous approval of NIMOTOP for approval.  According to FDA’s review documents, the NYMALIZE 505(b)(2) NDA included no clinical data and was the sponsor was granted a biowaiver.  The application contained only chemistry and manufacturing controls data, as well data from short-term animal toxicity studies.

By Kurt R. Karst –

We thought Eisai Inc.’s (“Eisai”) beef with FDA over New Chemical Entity (“NCE”) exclusivity might resurface at some point . . . and now it has.  Last Friday, Eisai filed a Complaint in the U.S. District Court for the District of Columbia alleging that FDA erroneously triggered periods of 5-year NCE exclusivity for two drug products – BELVIQ (lorcaserin HCl) Tablets (NDA No. 022529; approved on June 27, 2012) and FYCOMPA (perampanel) Tablets (NDA No. 202834; approved on October 22, 2012) – by using the NDA approval dates instead of the dates the products could be legally marketed to calculate the five-year exclusivity terms. 

BELVIQ and FYCOMPA contain controlled substances that required scheduling decisions by the DEA under the Controlled Substances Act (“CSA”) before the drug products could be marketed.  Those decisions did not become effective until June 7, 2013 for BELVIQ and until January 2, 2014 for FYCOMPA.  Eisai unsuccessfully challenged the DEA in Court over the glacial pace of the scheduling decision for FYCOMPA (see our previous post here).  Congress is currently considering legislation to speed up DEA scheduling decisions (see our previous post here).

As we previously reported (here and here), Eisai submitted a Citizen Petition (Docket No. FDA-2013-P-0884) to FDA in 2013 requesting that the Agency conclude that the NCE exclusivity start dates for BELVIQ and FYCOMPA are triggered only when FDA-approved labeling incorporating the final DEA CSA scheduling permits commercial marketing of the drug products, and not on the date of NDA approval.  FDA denied Eisai’s petition requests (as well as those of another petitioner for a different drug) in April 2014.  According to FDA, “[t]he legal and regulatory framework on exclusivity and drug approvals contemplate only a single date of approval for determining when exclusivity begins for an NDA.  For each NDA at issue, that date is the date that FDA completes its review and issues an approval letter.” 

Eisai alleges in its August 8, 2014 Complaint that FDA violated the FDC Act and the Administrative Procedure Act (“APA”) by using the NDA approval dates as the triggering events to start the NCE exclusivity periods, thereby possibly accelerating by a year or more the timing of future generic competition for BELVIQ and FYCOMPA.  According to Eisai:

[C]onsistent with FDA’s regulation—21 C.F.R. §314.108(a)—the governing statute, and clear congressional intent, market exclusivity for BELVIQ® and FYCOMPA® should have been triggered when labeling incorporating the final CSA schedule permitted legal marketing of the products.  FDA’s letters approving the products as safe and effective reinforce this requirement.  FDA’s letters make clear that the products’ labeling would need further revisions once CSA scheduling was complete. . . .  Thus, after CSA scheduling, a revision to the labeling was expressly required before the product could be legally marketed.  Therefore, the date of the approval letters cannot be considered the triggering date for market exclusivity purposes.

Eisai also takes issue with FDA’s alleged different treatment of BELVIQ and FYCOMPA compared to other NCEs and similarly situated products. “FDA is unfairly penalizing Eisai for developing and seeking to commercialize NCEs recommended for CSA scheduling,” says Eisai.  “While BELVIQ® and FYCOMPA® will be deprived of their full five-year market exclusivity periods, sponsors of NCEs that do not require CSA scheduling enjoy full five-year exclusivity periods.”  Moreover, argues Eisai,

FDA’s actions have also resulted in disparate treatment among sponsors of CSA scheduled products themselves.  For example, an examination of NCEs that FDA recommended for scheduling demonstrates that FDA submitted its recommendation to DEA anywhere from 367 days before issuing an approval letter (PROVIGIL®) to as many as 94 days after issuing an approval letter (LYRICA®).  FDA has offered no explanation and no sound policy rationale for this disparate treatment, even though FDA’s wildly varying timeframe for providing DEA with scheduling recommendations can substantially diminish an NCE’s five-year market exclusivity period.

Eisai also says that FDA’s refusal to recognize the dates BELVIQ and FYCOMPA could be legally marketed as the start dates for NCE exclusivity is inconsistent with at least one previous FDA decision concerning RAZADYNE ER (galantamine hydrobromide) Extended-release Capsules, which FDA approved on December 22, 2004 under NDA No. 021615.  According to Eisai:

On June 13, 2006, long after RAZADYNE® ER was commercially launched, FDA decided to reach back and move the date triggering the drug’s exclusivity period to April 1, 2005, because the agency concluded that was the earliest date that RAZADYNE® ER could have been marketed.  FDA then officially changed the trigger date for RAZADYNE® ER’s market exclusivity period from December 22, 2004 to April 1, 2005 in the Orange Book. . . . Despite this clear agency precedent, FDA has refused to take such appropriate actions with regards to BELVIQ® and FYCOMPA®.  And, in doing so, FDA has also failed to provide a reasonable basis for treating BELVIQ® and FYCOMPA® differently.

Finally, Eisai argues that FDA’s denial of the company’s Citizen Petition was arbitrary, capricious, and short of statutory right.  “In denying the Petition, FDA ignored its clear statutory mandate from Congress to ensure that products such as BELVIQ® and FYCOMPA® receive full five-year market exclusivity periods,” writes Eisai, which also lays out in the Complaint several reasons as to how FDA’s decision is improper. 

Eisai requests that the court declare FDA’s decision as to BELVIQ’s and FYCOMPA’s NCE exclusivity periods to be a violation of the APA.  Eisai also wants the court to compel FDA to commence the 5-year exclusivity periods for both drug products on the date each drug’s CSA scheduling was complete and labeling incorporating the scheduling information allowed the products to be launched into interstate commerce (i.e., June 7, 2013 for BELVIQ, and January 2, 2014 for FYCOMPA.)

By James E. Valentine* & James C. Shehan —

On August 5, 2014, FDA announced the availability of its most recent biosimilars guidance entitled, “Reference Product Exclusivity for Biological Products Filed Under Section 351(a) of the PHS Act” (“FDA Draft Guidance”). The Draft Guidance puts some sponsors of BLAs past, present, and future, on notice that FDA wants them to submit certain information for their biologics to be considered for “reference product exclusivity.”  But that’s a burden that sponsors will likely gladly bear, because FDA’s proposed broad interpretation of structural modification, a key term in determining whether a related product differs enough from a sponsor’s structurally related product to merit its own exclusivity, makes more products eligible for exclusivity than is required under the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).

By Riëtte van Laack —

On July 29, 2014, the D.C. Circuit decided that USDA’s Country of Origin Labeling (COOL) regulation passed constitutional muster. Our previous posts regarding this case provide details on the background.  Congress required COOL on many foods, including some meat products, and passed a law defining “country of origin” for meat to be based on where the animal had been born, raised, and slaughtered (or “harvested”).  After a WTO panel found that the first USDA regulations violated the U.S. international obligations, USDA issued an amended regulation requiring more precise information on the location of each production step, and eliminating the option of labeling commingled animals.

Previously, the lower court and the Court of Appeals panel found that USDA’s regulation did not violate free speech protections.  However, the Court of Appeals noted (in a footnote) that the full court hear the case en banc (i.e., all active judges on the court decide the case instead of just three judges) to provide a clear ruling on the issue regarding the reach of Zauderer; i.e., is it limited to mandatory disclosure of purely factual and uncontroversial information appropriate to prevent deception (as AMI argued) or does it also apply to purely factual and uncontroversial disclosures serving other government interests?  

The en banc majority first determined that the issue was mandatory disclosure rather than a ban on certain speech.  Thus, Zauderer rather than Central Hudson provided the appropriate standard.  It next determined that Zauderer was not limited to mandatory disclosures that would prevent deception.  To the extent that other D.C. Circuit decisions might be read as limiting Zauderer to cases in which the governmental interest is preventing deception, these decisions are now overruled. 

Thus, the remaining question was whether the government had a substantial interest in promulgating its COOL regulation.  Referring to USDA statements in the rulemaking process, AMI had characterized the interest at stake as merely satisfying consumers’ “idle curiosity.”  However, the Court did not limit the search for the governmental interest to review of USDA’s statements.  The interests served by the rule were also those advanced by Congress when it adopted the statute, even if USDA failed to assert those interests.  According to the Court, it would be improper to allow “perfectly adequate legislative interests properly stated by congressional proponents” to be “doomed by agency fumbling (whether deliberate or accidental),” because that rule would “allow the executive to torpedo otherwise valid legislation simply by failing to cite . . . the interests on which Congress relied.”  Congress identified the purpose of the statute as “enabling customers to make informed choices based on characteristics of the products they wished to purchase, including United States supervision of the entire production process for health and hygiene.”  The Court also pointed to “the ‘time-tested consensus’ that consumers want to know the geographical origin of potential purchases has material weight in and of itself.”  It concluded that “[t]he context and long history of country-of-origin disclosures to enable consumers to choose American-made products; the demonstrated consumer interest in extending country-of-origin labeling to food products; and the individual health concerns and market impacts that can arise in the event of a food-borne illness outbreak” combined created a substantial interest.

The Court held that the disclosures were “purely factual and uncontroversial information” about the good or service being offered, COOL does not require corporations to carry messages biased against or expressly contrary to the corporation’s views, and the mandatory disclosures do not rule out ordinary advertising methods.  Thus, the government’s interests were sufficient to sustain COOL under the Zauderer standard.

The decision was not unanimous.  Judges Rogers and Kavenaugh wrote concurring opinions and Judges LeCraft Henderson and Brown dissented.  Judge Brown’s dissent (in which Judge LeCraft Henderson joined) is notable in its wording.  She asserted that the decision by the majority looks to “disembowel” court precedent and put “crony capitalism or ideological arm-twisting” ahead of first amendment rights.

Whether COOL requirements for meat will survive, however, ultimately will depend on the WTO decision.  The rumor is that the WTO has ruled on the fair trade challenge filed against COOL by Mexico and Canada and that it does not bode well for USDA.  Moreover, AMI has the option of seeking redress from the U.S. Supreme Court.

By Ricardo Carvajal —

FDA is set to start enforcing its gluten-free labeling rule (for our prior posting on the rule, see here).  To make sure you didn’t miss the onset of the compliance deadline of August 5, FDA issued reminders in the form of a Constituent Update and a blog posting by Deputy Commissioner for Foods and Veterinary Medicine Michael Taylor.  FDA also included a reminder in the most recent edition of CFSAN’s News for Educators, which asserts that “an estimated 5 percent of foods currently labeled ‘gluten-free’ contain 20 ppm or more of gluten.”  That assertion suggests that FDA will have little difficulty identifying potential candidates for its inaugural enforcement activities.

 FDA’s blog posting notes that the gluten-free labeling rule applies to packaged foods, but also states that “restaurants making a gluten-free claim on their menus should be consistent with FDA’s definition” (emphasis ours).  The blog links to a National Restaurant Association web page which suggests that restaurants “must” comply with the rule.  We leave it to others to elaborate on the distinction between “should” and “must.”  For practical purposes, we suspect that plaintiffs’ lawyers won’t perceive much of a difference – a phenomenon that at least some insurance brokers seem to be counting on.