By Delia A. Stubbs –
 
The U.S. District Court for the Central District of California issued a ruling last week in an unusual, if not unprecedented, case arising from alleged federal False Claims Act (“FCA”) violations where one drug manufacture has sued its competitor.  In Amphastar Pharm., Inc. v. Aventis Pharma SA, No. 09-0023 (C.D. Cal., Apr. 19,2013), Amphastar, on behalf of the United States, alleged in its amended qui tam complaint that Aventis had “fraudulently inflated the price of enoxaparin” thus overcharging the federal and various state governments in violation of the FCA.  Interestingly, Amphastar’s claims are predicated on allegations that Aventis fraudulently sold Lovenox®, that was “in essence, non-patented enoxaparin,” thereby charging inflated prices.  Id. at 7, n. 9.  In an earlier decision, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s ruling that Aventis engaged in “inequitable conduct” and thus held its patents regarding Lovenox® unenforceable.  Id. at 2, n. 4.

This case garnered our attention due to the fact that the FCA case was brought by Aventis’s competitor.  While qui tam actions against drug manufacturers are by no means rare, those cases are usually brought on behalf of the government by a former employee of the defendant.  This is because plaintiffs in FCA cases are required to plead their complaints “with particularity,” a standard that is difficult to meet in any FCA case, and especially difficult to meet without access to inside information.  See Fed. R. Civ. P. 9(b).  In fact, some jurisdictions require the plaintiff to plead the specific amounts and dates of the alleged fraudulent claims.  See, e.g., United States ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 821 (8th Cir. 2009).

However, the District Court in Amphastar ruled last week that in the 9th Circuit, “pleading representative examples of false claims is one way, but not the only way to meet the Rule 9(b) pleading requirement.”  Amphastar, slip Op. at 6.  It explained that Amphastar met its pleading obligations by alleging:

(1) Aventis held the exclusive right to sell enoxaparin in the United States through its fraudulently obtained patent;

(2) Aventis submitted or caused to be submitted to the United States false claims based upon inflated price due to its falsely obtained market exclusivity;

(3) The Government paid claims submitted by Aventis for enoxaparin at illegally high prices and reimbursed Medicare or Medicare providers for dispensing Defendants’ enoxaparin; and

(4) An identified reliable source of data indicated that between 1993 and 2002, the government purchased 6,298,000 units of Lovenox® from Aventis or its distributor for use at federal facilitates totaling $102,655,000 and that between 2003 until the third quarter of 2012, the government purchased 22,497,000 units of Lovenox® from Aventis or its distributors for use at federal facilities totaling $470,559,000.

Id. at 7.

By Ricardo Carvajal –

The U.S. District Court for the Northern District of California granted summary judgment to the Center for Food Safety and Center for Environmental Health in their lawsuit (see our previous post here) alleging that FDA’s delay in issuing regulations to implement the Food Safety Modernization Act ("FSMA") constitutes action unlawfully delayed or unreasonably withheld, in violation of the Administrative Procedure Act ("APA").  Because FSMA provides specific deadlines for the issuance of implementing regulations, the court concluded that “the failure to comply with those deadlines constitutes a ‘failure to act’ under the APA,” and therefore the court need not analyze whether FDA’s delay is unreasonable.  (Briefs in the case are available here, here, here, and here.)

In deciding what relief to grant, the court recognized that Congress did not intend for FDA to have “total discretion in deciding when to finalize the regulations,” but also noted that “the purpose of ensuring food safety will not be served by the issuance of regulations that are insufficiently considered, based on a timetable that is unconnected to the magnitude of the task set by Congress.”  The court therefore ordered the parties to confer “in the hope that [they] will themselves arrive at a mutually acceptable schedule.”  Curiously, the court admonished that it would “behoove the parties to attempt to cooperate in this endeavor, as any decision by the court will necessarily be arbitrary.”  The parties are to submit a “joint written statement setting forth proposed deadlines” by May 20, 2013.

It may prove challenging for the parties to reach agreement on proposed deadlines for issuing the regulations that isn’t arbitrary, given the intricate relationship between several of the major regulations, the likelihood of extended review by OMB/OIRA, and the near certainty of industry insistence on comment periods commensurate with the complexity of the task at hand. 

By Jennifer D. Newberger –

FDA is proposing to amend the medical device labeling requirements to allow for use of internationally recognized stand-alone symbols explained in an accompanying symbols glossary.  The symbols glossary would include a list of each symbol used in the device labeling and an explanation of the symbol’s meaning.  The permitted symbols would be those recognized by a standards development organization (“SDO”) such as the American National Standards Institute (“ANSI”) and the International Organization for Standardization (“ISO”).  FDA will retain a list on its website of the standardized symbols it recognizes.

Allowing use of these symbols is intended to harmonize medical device labeling with European Union requirements.  Currently, stand-alone symbols are generally not permitted on medical device labeling in the United States; any symbols used must be accompanied by text directly on the label.  In Europe, however, stand-alone symbols are widely used.  According to FDA, the inconsistent requirements result in manufacturers having to revise their label for the U.S. market, which has “created confusion and generated industry complaints that manufacturers have to develop different labels for each market.”

The proposed rule provides the option to continue labeling devices as they have been—symbols with accompanying text—or to use stand-alone symbols explained in an accompanying symbols glossary.  In other words, FDA will not require manufacturers to use stand-alone symbols for devices in the U.S. market if they do not wish to do so.  For global manufacturers, however, the ability to create one label for worldwide distribution (not taking into account necessary language differences) will likely be a welcome relief.

By Ricardo Carvajal –

FDA reportedly intends to extend the comment period on the preventive controls and produce safety proposed rules by an additional 120 days (the comment period was scheduled to expire on May 16).  The extension was requested in a letter by the United Fresh Produce Association and other stakeholders, which noted that the two rules are voluminous and “intersect at many different points.”  Further, the letter notes that FDA “requested comments on over 100 questions,” some of which “require scientific and economic analysis that could take months if not years to synthesize comments around.”  The letter requested an extension of at least 180 days after the issuance of the proposed rules on foreign supplier verification, preventive controls for animal feed, and accreditation of third-party certifiers so that industry has an opportunity to evaluate and comment on all of the proposed rules at the same time.  The three latter rules continue to be under review at OMB, which suggests that their issuance is not imminent.

Earlier in April, FDA requested comment on a draft compliance policy guide ("CPG") on food facility registration.  The CPG states FDA’s policy with respect to initial and biennial registration, as well as suspension of registration.  Comments are due by May 6.

By Riëtte van Laack –

As previously discussed, in 2011, the FTC filed an action against Garden of Life and its owner (collectively “GOL”) asking the District Court to order GOL to show cause why it should not be held in civil contempt.

The case stems from a 2006 settlement the FTC reached with GOL.  The consent decree prohibits disease claims unless such claims are substantiated by competent and reliable scientific evidence.  The FTC alleged that certain advertising claims subsequently made by GOL were not supported by “competent and reliable evidence.”

GOL retained a consulting firm to evaluate scientific evidence for potential advertising claims.  Nevertheless, the FTC’s expert opined that the claims were not substantiated by competent and reliable scientific evidence.  GOL’s expert opined that they were.  The lower court refused to find that GOL violated the consent decree because the dispute was based on a “battle of the experts.”

The Eleventh Circuit on Monday refused to revive most of the FTC’s claims.  Except for one claim concerning certain allegedly false statements GOL had made, the Court affirmed the lower court decision.

The Eleventh Circuit Court of Appeals upheld the lower court's finding that the FTC failed to meet its burden based on conflicting expert testimony.  The consent decree defines “competent and reliable scientific evidence” to mean “tests, analyses, . . . and other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedure generally accepted in the profession to yield accurate and reliable results.”  In its appeal, the FTC argued that the FTC’s expert was the only one qualified to speak to the substantiation of the claims because the FTC’s expert was an expert in the relevant subspecialty whereas GOL’s expert was an expert in pharmacology and medicine in general.  In other words, the FTC sought to narrowly construe the meaning of “professionals in the relevant area.”  The Court, however, was unpersuaded by the FTC’s assertion that GOL's consultant expert was  not qualified to interpret the results of medical studies and held that the lower court’s interpretation that “professionals in the relevant area” means experts in medicine or pharmacology in general rather than specialists in the given medical subspecialty was reasonable.

Although the Court affirmed the lower court’s denial of the FTC’s contempt motion as to the substantiation issue, it remanded the issue of how to handle GOL’s alleged misstatement in its now-withdrawn ads for Grow Bone System.  Apparently, due to a mistake by its consultants, these ads stated that a bone density study had shown double the average increase in density than it actually did.  Because the lower court's order did not address that misstatement, the Court lacked a sufficient record to review the issue, and sent the claim back so the lower court could address it in the first instance.

The FTC’s loss in a contempt proceeding against Lane Labs caused FTC to insert more specific substantiation provisions into its consent decrees.  The current case could have similar consequences.  To reduce the likelihood of similar losses, the FTC could further refine the definition of “competent and reliable evidence” in future consent decrees by seeking to narrow the meaning of “professionals in the relevant area.”

By Jeffrey K. Shapiro & Jennifer D. Newberger –

The medical device appeals process has long been in need of improvement.  See our previous posts here and here.  There are several ways an entity can appeal a decision of the Center for Devices and Radiological Health (“CDRH”), but the most common of these is by “supervisory review,” described in 21 C.F.R. § 10.75.  This allows an appeal to the next level supervisor above the individual who signed the decision.  FDA historically has taken a long time to make its appeal decision, and industry also has had to appeal from cryptic written decisions that made it difficult to understand the basis for the adverse decision.  In December 2011, FDA issued a draft medical device appeals guidance with voluntarily adopted target deadlines for an appeal decision to be communicated within six weeks of submission of the written appeal or appeal meeting.

A few months later, Congress included a device appeals provision, Section 603, in the recently enacted Food and Drug Administration Safety and Innovation Act (“FDASIA”).  This provision imposed a 45 day deadline for FDA to decide an appeal (or 30 days from a requested appeal meeting).  Section 603 also requires FDA to issue a “substantive summary” explaining the basis for the adverse decision.  The latter requirement is intended to assist industry in understanding the basis for adverse decisions. 

We recently contacted knowledgeable officials at CDRH to help us better understand interpretational issues that have arisen around Section 603.  We were also curious as to how FDASIA would affect the draft guidance.  We were told that CDRH intends to issue final updated guidance, which will address FDASIA, perhaps as early as July 2013.  We summarize below what we learned.

1.    FDASIA § 603, enacted as section 517A of the Federal Food, Drug, and Cosmetic Act (“FDC Act”), applies only to appeals of “significant decisions,” but does not define that phrase.  CDRH is currently working on a definition of this term to be provided in the forthcoming updated guidance.  It is our understanding that CDRH’s interpretation may be published in draft, either as a draft addendum to the final guidance or a separate document, providing stakeholders with an opportunity to comment prior to final issuance.

2.    FDC Act § 517A(b)(2) states that a person requesting supervisory review of a significant decision must submit the request for review within 30 days after the date of the decision in dispute.  The guidance will likely reflect CDRH’s interpretation that this provision means a firm that fails to appeal within 30 days loses all right to a supervisory appeal.  The firm could not fall back to the old non FDASIA request for supervisory review under 21 C.F.R. § 10.75, which does not impose a deadline for filing.  Also, CDRH apparently interprets the FDASIA language as not allowing for waivers, placeholders, or “partial submissions.”  They view the 30 day time limit as a “hard cap.”  The bottom line is that a request for supervisory review must be filed in 30 days, in full, or that option will likely be lost forever.  (A disappointed applicant could still invoke other appeal procedures.  For instance, a citizen petition could be filed under 21 C.F.R. § 10.30.  But that is a public proceeding and FDA could take years to respond, making it unrealistic in most cases.)

3.    One might think that the hard 30 day deadline applies only to appeals of significant decisions, which are the focus of the new FDASIA appeal procedure deadlines.  However, CDRH is considering whether to apply it to non significant decisions as well.  (It is unclear to us what the legal basis would be.)  If CDRH does apply the 30 day appeal deadline to non significant decisions, they would probably also honor the response deadlines in FDASIA as a sweetener.  It is also possible that CDRH will allow an appeal of a non significant decision to be submitted within a longer time frame and, unlike the appeal of a significant decision, may allow a stakeholder to request an extension.

4.    FDC Act § 517A(a)(1) requires FDA to provide to the submitter a “substantive summary of the scientific and regulatory rationale” underlying the significant decision.  The summary must include “documentation of significant controversies or differences of opinion and the resolution of such controversies or differences of opinion.”  Presumably, an applicant would seek this information to assist in preparing an appeal of the “significant decision.”  The law, however, does not set a time frame within which a request for a substantive summary must be submitted and does not impose a deadline on FDA as to when it must issue the substantive summary.  CDRH is trying to determine when the substantive summary will be provided, what it will include, and if there is a way to work development of the summary into the reviewers’ workflow to make it easier to provide in a timely manner.  These issues will be addressed in the updated appeals guidance.  We were told, however, that there is no guarantee that the guidance will require CDRH to provide these summaries before the 30 day deadline to appeal the decision.

We will follow up with any additional information as it becomes available.

By Ricardo Carvajal –

Our colleagues at the Drug and Device Law Blog recently blogged on the decision in Wilson v. Frito-Lay North America, Inc., a false advertising case out of the Northern District of California in which the court held that statements on a food company’s website did not constitute labeling even though the labels of some products included a reference to the website.  That piqued our interest because FDA has repeatedly asserted in warning letters (see here, here, and here) and other communications that a website referenced on a product’s label constitutes labeling, on the theory that the website “accompanies” the product within the meaning of FFDCA § 201(m).

The court acknowledged that “statements not actually printed on a label itself can constitute ‘labeling’ for FDCA purposes.”  However, because the website did not explain or supplement the individual products, the court found that the website did not “accompany” the products.  In the court’s view, the mere inclusion of the website address on the products’ label was insufficient to render the website labeling, absent some connection between the products and the language on the website.

Intriguing though this analysis may be, it must be noted that the plaintiffs failed to cite any authority for their assertion that websites constitute labeling.  Query whether the court would have viewed the issue differently if presented with FDA’s perspective.  We may yet find out, as plaintiffs were given leave to amend – if they can point to website language that constitutes labeling.

By Kurt R. Karst –      

The cherry blossoms are finally in full bloom in Washington, D.C., and so too is FDA’s thinking on one non-abuse-deterrent drug.  In a prepublication version of a notice that will be published in the Federal Register on April 18, 2013, FDA has determined that OXYCONTIN (oxycodone hydrochloride controlled-release) Tablets, 10 mg, 15 mg, 20 mg, 30 mg, 40 mg, 60 mg, 80 mg, and 160 mg, approved under NDA No. 020553, have been discontinued for reasons of safety or effectiveness.  The highly anticipated decision was made on the same day that U.S. Patent No. 5,508,042 was set to expire, potentially paving the way for ANDA approvals, and on the same day FDA announced the approval of abuse-deterrent labeling for a reformulated version of OXYCONTIN approved under NDA No. 022272 (presumably in accordance with FDA’s draft guidance on the topic – see here).  The move also comes just a day after resolutions were introduced in the U.S. Senate (S. Res. 97) and House of Representatives (H. Res. 161) expressing the sense that FDA should encourage the use of abuse-deterrent formulations of drugs.  (Congress is currently considering legislation – the Stop Tampering of Prescription Pills Act of 2013 (H.R. 486) (see our previous post here) that would establish new requirements for tamper-resistant drugs.  In addition, several Members of Congress and the National Association of Attorneys General recently urged FDA to adopt standards requiring manufacturers and marketers of generic prescription opioids to develop tamper-resistant versions of such products (see here and here).)

FDA’s decision was made in response to several Citizen Petitions submitted to the Agency over the past 12 years (Docket Nos. FDA-2001-P-0238, FDA-2010-P-0526, FDA-2010-P-0540, and FDA-2011-P-0473), but primarily after FDA approved NDA No. 022272 on April 5, 2010 for a reformulated version of OXYCONTIN with physicochemical properties that are intended to make the drug product more difficult to manipulate for purposes of abuse or misuse.  Just days later, Purdue Pharma, L.P. (“Purdue”), the sponsor of both OXYCONTIN drug products, notified FDA that the company ceased shipment all of the strengths of the original version of OXYCONTIN, and FDA then moved the drug products to the “Discontinued Drug Product List” section of the Orange Book.  Under FDA’s regulations at 21 C.F.R. § 314.161, the Agency must determine whether a listed drug that has been voluntarily withdrawn from sale was withdrawn for safety or effectiveness reasons before approving an ANDA for a generic version of the drug.

According to FDA’s notice concerning original OXYCONTIN:

FDA has conducted an extensive review of data available to the Agency regarding reformulated OxyContin, including in vitro, pharmacokinetic, clinical abuse potential, and postmarketing study data.  The data show that, when compared to original OxyContin, reformulated OxyContin has an increased ability to resist crushing, breaking, and dissolution using a variety of tools and solvents. . . .

FDA has long considered the abuse potential of a drug in numerous regulatory contexts.  Where appropriate, FDA may take into account abuse potential as part of the safety profile of a drug when weighing its benefits and risks.  In this case, FDA has considered the abuse potential as part of the Agency’s determination of whether the original formulation of OxyContin was withdrawn from sale for reasons of safety or effectiveness.  This approach is particularly appropriate here in light of the extensive and well-documented history of OxyContin abuse.

Original OxyContin has the same therapeutic benefits as reformulated OxyContin.  Original OxyContin, however, poses an increased potential for abuse by certain routes of administration, when compared to reformulated OxyContin.  Based on the totality of the data and information available to the Agency at this time, FDA concludes that the benefits of original OxyContin no longer outweigh its risks.

As a result, original OXYCONTIN will be removed from the Orange Book entirely and FDA will not approve any ANDA for a generic version of the drug product. 

FDA’s decision might have been foreshadowed by an April 15th approval of a supplement to NDA No. 022272 for reformulated OXYCONTIN concerning modifications to the approved Risk Evaluation and Mitigation Strategy (“REMS”) for the drug (among other drugs identified in Appendix 1 to the approval letter).  According to the approval letter, FDA approved REMS modifications, including “[r]evision to the REMS document to remove ANDA holders from the Timetable for Submission of Assessments.”  (Additional information on FDA’s REMS for extended-release and long-acting opioids is available here.)

Still pending at FDA is a Citizen Petition (Docket No. FDA-2012-P-0895) Endo Pharmaceuticals Inc. (“Endo”) submitted to FDA last August requesting that the Agency determine that the company’s non-crush-resistant formulation of OPANA ER (oxymorphone HCI) Extended-release Tablets approved under NDA No. 021610 was discontinued for reasons of safety and can no longer serve as the basis of approval for an ANDA, that FDA refuse to approve any pending ANDA for a generic version of Original Formulation OPANA ER, and that FDA suspend and withdraw the approval of any ANDA referencing original formulation OPANA ER as its basis for approval.  An FDA decision on that petition is expected in May.  Last November, Endo sued FDA seeking a preliminary injunction ordering FDA to make a decision on the Citizen Petition by December 31, 2012 (see our previous post here).  On December 19, 2012, the D.C. District Court denied the motion and dismissed the case.

A natural question raised by FDA's decision on original OXYCONTIN is whether it has any read-through to the upcoming FDA decision on Endo's OPANA ER Citizen Petition.  Whether it does (and the extent to which it does) or not will likely be debated at length over the next few weeks.  Within hours of FDA releasing its OXYCONTIN decision, RBC Capital Markets was already commenting that “FDA is likely taking a 'case by case' approach and the risk/benefit for generics of OxyContin may not be the same as for Opana.”

It is unclear whether any ANDA sponsor will challenge FDA’s determination on original OXYCONTIN in court.  If someone does, however, rest assured that we will be on the case.

By Karla L. Palmer & Jeffrey N. Gibbs –  

On April 10, 2013, the Department of Health and Human Services’ Office of Inspector General (“OIG”) released a Memorandum Report titled, “High-Risk Compounded Sterile Preparations and Outsourcing by Hospitals That Use Them.”  The OIG Report provides information about the extent to which acute care hospitals that participate in the Medicare program used sterile compounded preparations (“CSPs”) and purchased them from outside sources such as compounding pharmacies in 2012.  The Report also describes steps that surveyed hospitals took to ensure quality of CSPs.  The timing of the Report’s release squares with FDA’s brief summary of its investigation of sterile compounding pharmacies (see our previous post here) and Congress’ announcement of a second hearing by the House Energy and Commerce Committee addressing the meningitis outbreak that killed more than fifty people and sickened hundreds of others.  That Congressional Hearing occurs today, April 16, 2013 (see here).

298 small to large acute care hospitals responded to the OIG survey.  OIG also interviewed stakeholders including four practicing hospital pharmacies and officials of the trade association that represents hospital pharmacists.  The OIG Report focused on two types of CSPs that hospitals use (based on method of preparation and components): “sterile-to-sterile” and “nonsterile-to-sterile” products.  Sterile-to-sterile products are prepared solely from sterile ingredients, which a pharmacist constitutes, and are considered by the OIG Report to carry a “high risk” of contamination (to confuse matters, Chapter 797 of the U.S. Pharmacopeia, the authoritative national guidance on sterile compounding, refers to drug products prepared with sterile ingredients, under highly antiseptic conditions and in small quantities, as either “medium-risk level” or “low-risk level”).  Nonsterile-to-sterile products are prepared from one or more nonsterile ingredients that must be mixed together and sterilized, are considered to be “highest risk” by the OIG report, and are considered to be “high-risk level” by USP Chapter 797.  The Report notes that contaminated nonsterile-to-sterile products led to the New England Compounding Center (“NECC”) meningitis outbreak.  These products require “extensive safety precautions, including specialized staff training, positive and negative flow sterile rooms, sterile laminar hoods, and daily cleaning and disinfection.”  Report at 2. 

The Report states generally that 92% of surveyed hospitals used sterile-to-sterile CSPs and only 25% used the more risky nonsterile-to-sterile compounded products, but the nonsterile-to-sterile products comprised less than1% of all CSPs used those hospitals.  Hospitals also stated that opioids, steroids, electrolytes, and diuretics were among the most commonly used nonsterile-to-sterile CSPs. They also reported using nonsterile-to-sterile CSPs for intrathecal pain pumps and epidurals.  Commonly used sterile-to-sterile CSPs included antibiotics, opioids, epidurals, oxytocics, a total parenteral nutrition, and cardioplegic solutions.

The Report noted the following:

• Of the hospitals that used higher risk CSPs in 2012, 85% purchased “at least some” of these products from outside sources.

Of the hospitals that used the more risky nonsterile-to-sterile CSPs, 36% of the hospitals prepared these products at an on-site pharmacy; however, the majority of the hospitals used a combination of outsourcing and in-house preparation.  One reason cited for some of the hospitals’ outsourcing these products was because their facility could not meet the more stringent sterile compounding requirements in USP <797>.  Of those hospitals that outsourced nonsterile-to-sterile preparations, 67% purchased CSPs from pharmacies located in another state.  Of those hospitals that purchased sterile-to-sterile CSPs, 77% purchased them from at least one outside pharmacy, and most purchased from pharmacies located out of state.

• Hospitals consider ensuring an adequate supply of CSPs as “very important” when determine whether to outsource CSPs. 

When asked why hospitals obtained  supplies of high risk CSPs from third party pharmacies, several hospitals cited shortages in commercial products “as a very important factor when deciding whether to outsource CSPs,” and that “[o]utsourcing CSPs may be necessary to ensure the availability of products during such shortages.”  One hospital pharmacy director responded that the hospital had outsourced more products in 2012 than in prior years due to increased shortages in commercially available products. 

Almost half (48%) of the hospitals stated that an abrupt shortage of outsourced CSPs would have a “non-life threatening but great impact” on delivery of care in their hospitals.  An additional 11% stated that an abrupt shortage would cause a “life-threatening, major disruption at the hospital.”

Related to the issue of anticipation of product demand and shortages, hospitals also considered CSP stability and the need for CSPs with an extended shelf life (again, protecting against supply disruption from commercial unavailability) as “very important” factors in deciding whether to outsource.  However, many hospitals are constrained by their inability to produce CSP’s in-house; only 56% of those surveyed housed a USP <797> compliant clean room in which such products could be prepared.

• Hospitals took limited steps to ensure the quality of outsourced CSPs, but they also rarely had problems with CSP quality. 

The Report stated that most (83%) of the hospitals that outsourced CSPs required that the pharmacies compound products pursuant to USP <797>, or reviewed quality reports provided by the pharmacies (71%).  Only 22% of the hospitals conducted site visits to pharmacies or reviewed independent quality reports. 

Nevertheless, 42% were “very confident: that the steps taken to ensure quality were adequate; 47% were “somewhat confident” that pharmacies’ quality steps were adequate.  Most hospitals that outsourced CSPs had “no problems” with outside pharmacies, and of those that did have problems, most were related to product availability.  With respect to product contamination, few hospitals reported a problem (11 out of 236); however, the Report noted that any problem with contamination is potentially serious as evidenced by the 2012 meningitis outbreak.  

• Half of all hospitals made changes or planned to make changes to CSP outsourcing practices in response to the meningitis outbreak of 2012.

Over one-half of the surveyed hospitals made changes to CSP outsourcing practices due to the NECC meningitis outbreak.  These changes include decreasing outsourcing, requesting more information from pharmacies, or contracting with different outside pharmacies.  Some hospitals are planning to make changes in their methods for preparing CSPs in house including complying with USP <797>.  The Report notes that USP <797> compliance is difficult and resource intensive; cost and space limitations are “major challenges” for half of surveyed hospitals.  A few of the hospitals stated that USP <797> compliance would require building redesign or additional construction.

The OIG Report shows that hospitals routinely outsource CSPs.  Less than one fourth of the hospitals surveyed outsource the highest risk nonsterile-to-sterile products (these include typically the largest facilities).  Hospitals cite many factors in their decision to outsource CSPs including ensuring adequate supply during shortages and inadequate in-house pharmacy compounding expertise or facilities.  Hospitals are making changes in their procurement and evaluation of CSPs, hospitals “remain confident about the quality of outsourced CSPs.”  Notwithstanding the hospitals’ confidence in the safety of the products they receive from outsourced pharmacies and without offering any solutions, the Report concludes that the fungal meningitis outbreak “raises questions about whether this confidence is well placed and emphasizes the need to stay vigilant about procedures for compounding and outsourcing CSPs.”  At the same time, the Report shows that outsourcing CSPs is currently necessary in light of recurring drug shortages and the constraints hospitals would face if they had to compound themselves to fill the void left by drug shortages.  Thus, as Congress, FDA, state boards of pharmacy, and other stakeholders consider legislative and administrative changes, they need to keep in mind the important role that outsourcing CSPs currently plays in the health care system.

As it does every spring, the Federal Trade Commission (“FTC”) has released its annual report.  The new report, which covers 2012, makes clear that the FTC remains as focused as ever on health-related advertising – especially where advertising allegedly promotes products for weight loss or disease treatment or prevention. 

The annual report includes a summary of significant advertising matters litigated or settled by the FTC’s Bureau of Consumer Protection (“BCP”).  Last year’s summary highlighted three health-related advertising matters: two on weight loss advertising and one on advertising that included disease treatment and prevention claims.  This year’s summary again highlights three health-related matters – again, two matters on weight loss advertising and one on advertising that included disease treatment and prevention claims.  The matters highlighted this year – and in annual reports over the past several years – serve as a reminder not only that weight loss and disease claims remain a high FTC priority, but also that foods and dietary supplements are not the only products that the FTC targets.  The FTC has targeted everything from vacuum cleaners to toning sneakers to smartphone apps and exercise equipment.      

A “Stats and Data” section of the new annual report lists the highest grossing BCP matters for 2012.  The list includes advertising matters, as well as privacy, financial practices, and other consumer protection matters.  As has been the case over the past several years, matters on health-related advertising still rank high.  A settlement over advertising for toning sneakers takes second place for the highest redress amount in 2012 ($40 million), and a settlement over alleged order violations by a weight loss marketer takes third place ($3.7 million). 

In crafting and substantiating health-related claims, it remains crucial to advertisers to consider FTC precedent and guidance.  For satisfying the FTC, the science behind claims must be – in a nutshell – reliable, relevant to the product and claims at issue, and consistent with surrounding science.  The FTC’s Dietary Supplements: An Advertising Guide for Industry serves as a good starting point for background and practical guidance, regardless of the type of product being marketed.  As stated on the FTC Business Center Blog after the $40 million toning sneaker settlement, “Even if supplements aren’t your line, it’s a useful resource for evaluating ad claims.  If it helps, just think of it as An Advertising Guide for [Insert Your Company Name Here].”

By Kurt R. Karst –      

“GADPTRA” – Now there’s an acronym you don’t see very often on this blog.  It stands for the Generic Animal Drug and Patent Term Restoration Act of 1988, Pub. Law No. 98-417, 98 Stat. 1585 (1988), which is the Hatch-Waxman equivalent for generic animal drugs.  Our only specific reference to GADPTRA in the 6+ years we have been blogging was in a June 2011 post concerning the extension of a 30-month litigation stay of approval of an Abbreviated New Animal Drug Application (“ANADA”) submitted by Norbrook Labs. for a generic version of Bayer’s Baytril® 100 (enrofloxacin) Injectable Solution.  Baytril® 100, a fluroquinolone, is covered under New Animal Drug Application (“NADA”) No. 141-068 and is listed in the Green Book (the animal drug equivalent of the Orange Book) with U.S. Patent No. 5,756,506 (“the ‘506 patent”), which expires on June 27, 2015.  The ‘506 patent covers methods of treating bacterial infections by the administration of a single high dose of the drug.  FDA initially approved Baytril® 100 on July 24, 1998 for the treatment of Bovine Respiratory Disease (“BRD”) associated with Pasteurella haemolytica, Pasteurella multocida, and Haemophilus somnus.  Subsequent supplemental NADA approvals have added conditions of use of the product.  Importantly, Baytril® 100 is approved for two different dosing regimens: (1) Single-Dose Therapy (7.5 to 12.5 mg/kg of body weight (3.4 to 5.7 mL/100 lb)); and (2) Multiple-Day Therapy (2.5 to 5.0 mg/kg of body weight (1.1 to 2.3 mL/100 lb)).

Why so much detail about our prior post on Baytril® 100 and GADPRTA?  Because it just so happens that Bayer sued FDA last week in the U.S. District Court for the District of Columbia after the Agency approved Norbrook’s ANADA No. 200-495 for a generic version of Baytril® 100 called Enroflox™ 100.  Bayer alleges in its Complaint that FDA violated the Administrative Procedure Act (“APA”) and the FDC Act, as amended by GADPTRA, when the Agency approved Norbrook’s ANADA No. 200-495.  Bayer also filed a motion seeking a Temporary Restraining Order and Preliminary Injunction.  Bayer asks the court to enter judgment declaring, among other things, that FDA’s approval of ANADA No. 200-495 violates the APA and FDC Act § 512(c)(2)(A)(ii) and that FDA constructively denied a 2006 Bayer Citizen Pettion (more on that below) in violation of the APA.  Bayer asks the court to enter judgment vacating the ANADA approval and enjoining FDA from aproving any ANADA for a generic version of Baytril® 100 not indicated for Single-Dose Therapy of BRD. 

Unfortunately, Bayer’s legal memorandum accompanying the company’s Motion for a Temporary Restraining Order and Preliminary Injunction is under seal, so there’s not a lot for us to go on.  The Complaint does reference, however, a June 2006 Citizen Petition (Docket No. FDA-2006-P-0010, formerly FDA Docket No. 2006P-0249) to which FDA has not yet substantively responded, and says that FDA’s approval of Norbrook’s ANADA No. 200-495 is a constructive denial of the citizen petition in violation of the APA, and that the court should order FDA to “issue a well-reasoned response to Bayer’s Citizen Petition that considers all aspects of the issues raised therein, in advance of approval of any application to market a generic version of Baytril® 100.”  (FDA also failed to issue a substantive response on a second Citizen petition – Docket No. FDA-2009-P-0581 – concerning a 30-month patent litigation stay on ANADA approval, although that petition is not at issue in the case.)

Bayer asks FDA in the company’s 2006 petition to refain from approving ANADAs for generic Baytril® 100 for Multiple-Day Therapy with labeling that omits information on Single-Dose Therapy protected by the ‘506 patent.  According to Bayer, any generic approved for Multiple-Day Therapy only will be promoted and used extralabel for the protected Single-Dose Therapy, which would directly conflict with express provisions of the GADPTRA and FDA regulations and undermine the incentives for discovery and innovation that GADPTRA and patent laws were intended to protect. 

The GADPTRA amended the FDC Act to state, at Section 512(c)(2)(A)(ii), that FDA will approve an ANADA unless, among other things, the Agency finds that “the conditions of use prescribed, recommended, or suggested in the proposed labeling are not reasonably certain to be followed in practice . . . .”  FDA’s regulations prohibit the extralabel use of fluoroquinolones in food-producing animals (21 C.F.R. § 530.41(a)(10)), and, in particular, extralabel use of enrofloxacin in food-producing animals (21 C.F.R. §522.812(d)(2)(iii)).  In addition, FDA published an advisory in September 1998 notifying industry about the prohibition against extralabel use of enrofloxacin (see here).  According to Bayer, “[i]t is reasonable to conclude that any generic approved for the [Multiple-Day Therapy] dosing regimen would likely be used as a [Single-Dose Therapy].”  As such, says Bayer, approving generic Baytril® 100 for Multiple-Day Therapy only would conflict with the statute. 

Last Friday, the D.C. District Court (Judge Rosemary M. Collyer) issued an Order granting in part and denying in part  Bayer’s motion for a Temporary Restraining Order and suspended the approval of Norbrook’s ANADA No. 200-495.  According to press reports, Judge Collyer “blasted the FDA for failing to provide any evidence to the court that it considered Bayer's allegations that Norbrook's Enroflox 100 would unavoidably infringe on its Baytril patent” before approving the ANADA.  A hearing on Bayer’s Motion for a Preliminary Injunction is scheduled for April 25, 2013 at 1:30 PM. 

By Karla L. Palmer & Jeffrey N. Gibbs –

On Thursday, April 11, 2013, FDA published a statement titled, “2013 FDA Pharmacy Inspection Assignment,” addressing the unprecedented recent nationwide wave of aseptic pharmacy inspections.  The Agency states that it had taken critical look at its surveillance and enforcement approach to pharmacies that “produce” sterile drug products.  The objective of FDA’s pharmacy inspection assignment was to determine whether certain pharmacies that produced high-risk sterile drug products in the past “posed a significant threat to public health from poor sterile production practices.”  FDA developed a risk-based model when choosing the 29 pharmacies for the priority inspections.  According to FDA, the risk criteria included consideration of serious adverse event reports, historical inspection data, and reports of product quality problems.  FDA did not disclose from what sources it obtained information on the particular pharmacies at issue and how it applied that information to select the 29 pharmacies that made the inspection list. However, FDA said it targeted for inspection pharmacies that met at least two of three of the risk criteria or had a reported death from their products.   

The FDA’s inspections took place over a seven-week period from February to April 2013.  As of April 11, 2013, FDA completed 29 of 31 inspections (it identified two additional entities associated with the initial priority group that it still needs to inspect).  Ninety percent of the inspections (28 out of 31) were conducted in cooperation with state boards of pharmacy or other state officials, and occurred across 18 different states.  The FDA claims it mobilized “highly-skilled, certified drug investigators who have specialized experience and specific training to evaluate pharmaceutical production and determine a firm’s compliance with sterile production standards.”  FDA states that the inspectors interviewed the pharmacy’s technicians, and collected information on operations, standard operating procedures, and products in order to learn more about the firm’s sterilization methods and drug stability program.  “The inspectors also reviewed the firm’s potency, sterility and endotoxin failures, as well as the firm’s air flow studies (if present).  If warranted, investigators collected samples when they observed an abnormality, such as drug product residues, particulates or discoloration within the production environment or the actual sterile drug product.”  The FDA inspectors evaluated the pharmacies “according to federal standards regarding aseptic practices,” which we assume means federal current good manufacturing practice (“cGMP”) (21 C.F.R. Parts 210 & 211), to which drug manufacturers and not state-regulated compounding pharmacies are held.  Several pharmacies apparently put up some resistance to FDA’s assertion of broad inspection authority.  Some required FDA to obtain administrative warrants or otherwise initially refused FDA access to their facilities.  Either through administrative process or consent, however, the pharmacies ultimately permitted FDA to inspect the facilities.

Of the 29 completed pharmacy inspections, FDA has issued observations (FDA Form 483s) to all but one pharmacy.  FDA notes that select Form 483 observations during the inspections include: “incomplete and/or inadequate drug product batch failure investigations, inappropriate and/or inadequate clothing for sterile processing, lack of appropriate air filtration systems, insufficient microbiological testing,” and other “practices” that FDA believes “create a risked of contamination.”  These observations appear to be based on applying cGMP requirements to compounding pharmacies.  FDA’s report does seem to assume that all observations are accurate and appropriate, even without waiting for responses from the pharmacies.

As “next steps” concerning its enforcement activities against these and other pharmacies, FDA states that it is currently evaluating information obtained during inspections and will exercise its “existing legal authority to protect the public health.”  The FDA notes that, for pharmacies that are operating outside the yet-to-be-defined “bounds of traditional pharmacy compounding and who had significant production issues,” it intends to “take aggressive action, including through enforcement actions.”  However, the Agency does admit that it “may not be able to take enforcement action against firms that meet certain criteria and are operating within the bounds of traditional pharmacy compounding, unless certain provisions of the law are violated, such as producing or distributing a contaminated drug product.”  This acknowledgement of the limits of FDA authority did not preclude FDA from issuing Form 483 notices of observations based on cGMPs. 

The question of FDA’s role in regulating compounding is the focus of increased attention.  Legislation is being considered to give FDA greater authority over compounding pharmacies.  On April 16th, the House Committee on Energy and Commerce will hold a hearing regarding FDA’s handling of NECC.  The release by FDA of its report on new inspections may, perhaps, be cited by FDA at this upcoming hearing to show that FDA is taking an active role in this arena.  

By Kurt R. Karst –      

Earlier this week, the Obama Administration released the President’s Budget for Fiscal Year 2014.  At first blush, FDA appears to have fared rather well, with an additional $821,453,000 in total funding.  Most of the increase, however, is due to new user fee revenue, making the increase a bit of an illusion.  (Highlights of FDA funding are available here.  FDA’s Budget Justification is available here.  A summary of the FDA budget from RAPS is available here.)  In previous budgets (see here), the Obama Administration has proposed a ban on drug patent settlement agreements (an issue that the U.S. Supreme Court is currently considering – see here), as well as shortening the 12-year period of reference product exclusivity for brand-name biological products created by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  We pored over the the Fiscal Year 2014 budget proposal to see if both topics are addressed, and they are. 

According to the Obama Administration (see here at pages 40 and 198), banning drug patent settlement agreements and shaving 5 years off of reference product exclusivity (from 12 years to 7 years) will save U.S. taxpayers $14,280,000,000 between 2014 and 2023:

[B]eginning in 2014, the Budget proposes to increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into anti-competitive deals, known also as “pay for delay” agreements, intended to block consumer access to safe and effective generics.  Such deals can cost consumers billions of dollars because generic drugs are typically priced significantly less than their branded counterparts. The Administration’s proposal will generate $11 billion over 10 years in savings to Federal health programs including Medicare and Medicaid.  The Budget also proposes to accelerate access to affordable generic biologics by modifying the length of exclusivity on brand name biologics.  Beginning in 2014, this proposal would award brand biologic manufacturers seven years of exclusivity, rather than 12 years under current law, and prohibit additional periods of exclusivity for brand biologics due to minor changes in product formulations, a practice often referred to as “evergreening.”  The proposal will result in $3 billion in savings over 10 years to Federal health programs including Medicare and Medicaid.

The FTC also discussed its “vigorous enforcement” of drug patent settlement agreements in its Fiscal Year 2014 Budget Justification document (see here at pages 18 and 30).  Of course, none of the Obama Administration proposals are automatic.  They are contingent upon the enactment of authorizing legislation, which will most certainly run into opposition in Congress. 

Another area in which the issue of 12-year reference product exclusivity for biological products has come up in recent weeks is in the context of Trans-Pacific Partnership (“TPP”) agreement negotiations.  As we previously discussed, the TPP is a free trade agreement being hammered out among the United States – specifically, Acting U.S. Trade Representative (“USTR”) Demetrios Marantis – and several other partners, and is intended to further liberalize the economies of the Asia-Pacific region.  The next round of negotiations is scheduled to take place in Lima, Peru on May 15, 2013. 

The TPP includes a chapter on intellectual property rights.  Over the past few years, there has been a move to align the TPP agreement with the BPCIA’s 12-year reference product exclusivity period.  Last summer, several Members of Congress urged the Obama Administration and the USTR to protect the 12 years of exclusivity that U.S. law provides for biological products (see here, here, and here).  More recently, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) urged Ambassador Marantis in a letter to seek commitments from U.S. trading partners “that reflect the level of protection under U.S. law, for example 12 years of regulatory data protection for biologic pharmaceuticals . . . .”  That might be difficult, however. 

During a recent Senate Finance Committee hearing on the President’s 2013 Trade Agenda, Ambassador Marantis stated in written testimony that “the Administration continues to welcome diverse stakeholder input to shape the development of proposals to promote access to innovative and generic medicines,” but commented in oral testimony that there is “a lot” of opposition from participating countries to a 12-year exclusivity period for biological products.  Moreover, said Ambassador Marantis, the Obama Administration has not yet decided on whether to propose a 12-year exclusivity period.  Indeed, the President’s Fiscal Year 2014 budget proposal would seem to indicate that the Administration supports a 7-year exclusivity period that might very well bleed over into TPP negotiations. 

 By Riëtte van Laack –

On March 28, U.S. District Court Judge Richard Seeborg of the Northern District of California entered summary judgment for the defendants in a 2010 class-action lawsuit which had alleged that defendants misrepresented AriZona Iced Tea beverages containing “man-made” citric acid and high fructose corn syrup (“HFCS”) as “all-natural.” 

Plaintiffs filed an action alleging six California state law claims.  Plaintiffs challenged an “Arizona” brand beverage natural claim arguing that the HFCS and citric acid in the beverage were man-made and therefore artificial.  However, they did not introduce evidence to support their claims.  Judge Seeborg rejected their belated argument that “HFCS is not natural because patents have been issued for the process of producing it” and “that if HFCS were a naturally occurring substance such as ‘a new mineral discovered in the earth or a new plant found in the wild’ it would not be patentable.” The judge considered this argument “merely an extension of [plaintiffs’] rhetoric that HFCS is artificial because it ‘cannot be grown in a garden or field, it cannot be plucked from a tree, and it cannot be found in the oceans or seas of this planet.'” He ruled that such rhetoric is no substitute for evidence.  Similarly, he ruled that to prevail on a claim that a statement is misleading, plaintiffs had to show more than that the statement could be misleading; plaintiffs had to demonstrate by extrinsic evidence that the challenged statement tends to mislead consumers.

While defendants produced evidence to counter the claims of the lawsuit, such as an expert witness report that HFCS and citric acid are natural and declarations from its suppliers that the ingredients are natural, plaintiffs did not introduce conflicting evidence and the Court did not need to address defendants’ evidence. 

The decision should serve as a reminder that in private litigation under state consumer protection acts, plaintiffs cannot merely assert that an ingredient is artificial or that a claim is misleading and demand that the defendant prove them wrong.

 By Kurt R. Karst –       

As food and drug attorneys, we rely on a certain level of FDA transparency to understand why FDA did what it did in a particular case, and to discern what that means for future Agency action (or inaction) in another case.  One way we get the transparency we need is by submitting Freedom of Information Act (“FOIA”) requests to FDA seeking the production of particular documents or records.  Anyone who has submitted a FOIA request to FDA (or to any federal agency for that matter) knows that it can be a long wait to get responsive documents and records from FDA, or any indication of what documents might be produced.  A recent decision from the U.S. Court of Appeals for the District of Columbia Circuit, however, might lead to significant changes in how FDA and other federal agencies process FOIA requests.

The FOIA statute requires the communication of a “determination” within 20 working days of an agency receiving the request (5 U.S.C. § 552(a)(6)(A)(i)), or within 30 working days in “unusual circumstances” (5 U.S.C. § 552(a)(6)(B)(i)).  As a matter of procedure, after receiving a FOIA request, FDA sends a FOIA requester a form acknowledement letter within the statutory timeframe merely saying that the Agency is processing the request.  A long waiting period typically ensues before responsive documents and records are produced and exemptions claimed.  (Current Department of Justice FOIA guidance and policy is available here.)  

Sometimes requesters simply do not want to wait months or years for responsive documents and decide to sue FDA for inaction on a FOIA request.  A common government response to such a lawsuit is a motion to dismiss the action saying that the plaintiff failed to exhaust administrative appeal remedies before filing suit, because the agency communicated its “determination” on the FOIA request, saying that it would, in the futue, produce non-exempt documents and records and claim exceptions over others.  But is such a response really a “determination” under FOIA?  Curiously, the contours of what constitutes a “determination” for exhaistion purposes has not, until recently, been decided by the D.C. Circuit, which has a significant FOIA caseload. 

In an April 2, 2013 decision, involving a FOIA request submitted by the non-profit organization called Citizens for Responsibility and Ethics in Washington (“CREW”) to the Federal Election Commission (“FEC”), the D.C. Circuit reversed a December 2011 decision from the D.C. District Court granting summary judgment to the FEC on the basis that CREW failed to exhaust administrative remedies before filing suit.  In doing so, the D.C. Circuit addressed the important procedural question of what constitutes a “determination” under the FOIA stature within the 20- and 30-day timeframes to trigger the government’s exhaustion argument. 

CREW argued that in order to make a “determination” in response to a FOIA request, an agency must at least “inform the requester of the scope of the documents it will produce and the exemptions it will claim with respect to any withheld documents,” but does not necessarily need to produce the responsive documents.  The FEC took the postition an agency simply needs to express a “future intention” to produce documents and claim exemptions in order to make a “determination” within the statutory timeframe. 

The Court noted that despite the significant amount of FOIA litigation in the Court, the D.C. Circuit has not decided the contours of a “determination” under the statute due, “in part because individual FOIA requesters apparently have not thought it worth the candle to press this point, rather than to work with the agency in an effort to obtain the requested documents.”  The panel of Judges Griffith, Kavanaugh, and Sentelle then ruled for CREW:

We agree with CREW’s reading of the statute.  The statute requires that, within the relevant time period, an agency must determine whether to comply with a request – that is, whether a requester will receive all the documents the requester seeks.  It is not enough that, within the relevant time period, the agency simply decide to later decide.  Therefore, within the relevant time period, the agency must at least inform the requester of the scope of the documents that the agency will produce, as well as the scope of the documents that the agency plans to withhold under any FOIA exemptions.

The Court cited several aspects of the FOIA statute that reinforce its decision that a “determination” must be substantive, rather than merely boilerplate and procedural.  For example, the Court wrote:

The statutory requirement that the agency provide “the reasons” for its “determination” strongly suggests that the reasons are particularized to the “determination” – most obviously, the specific exemptions that may apply to certain withheld records.  The statutory requirement would not make a lot of sense if, as the FEC argues, the agency were merely required to state within 20 working days its future intent to eventually produce documents and claim exemptions.  After all, how could the agency articulate reasons for non-compliance when it had not yet decided whether to comply (that is, whether to produce all of the requested documents)?

Defining the countours of an agency “determination” the Court wrote:

[I]n order to make a “determination” and thereby trigger the administrative exhaustion requirement, the agency must at least: (i) gather and review the documents; (ii) determine and communicate the scope of the documents it intends to produce and withhold, and the reasons for withholding any documents; and (iii) inform the requester that it can appeal whatever portion of the “determination” is adverse.

The upshot of the Court’s ruling – that if an “agency does not adhere to FOIA’s explicit timelines, the ‘penalty’ is that the agency cannot rely on the administrative exhaustion requirement to keep cases from getting into court” – to FOIA requesters is that they are now likely to have increased leverage to quickly negotiate responses with FDA and other federal agencies to keep cases out of court.  Depending on the perceived effects of the decision, it is possible that the government may seek further review or may seek a change to the FOIA statute.  As the D.C. Circuit noted, “[i]t is true that the statute does not allow agencies to keep FOIA requests bottled up for months or years on end while avoiding any judicial oversight.  But Congress made that decision.  If the Executive Branch does not like it or disagrees with Congress’s judgment, it may so inform Congress and seek new legislation.”