By Etan J. Yeshua –

New York City's portion cap rule will have its day in court (again) in early June.  The rule, which would have fined food service establishments for each sugary drink sold in a container larger than 16 ounces, was challenged and struck down last week by a New York State Supreme Court judge who concluded that the rule was invalid and ordered the City not to enforce it.  Within 24 hours of the decision, the City filed a notice of its intent to appeal, and the next day the Appellate Division, a mid-level court, agreed to hear the case.  (In New York State, the Supreme Court is a trial-level court; the highest court is the Court of Appeals.)

Judge Milton A. Tingling, who published his decision only a day before the rule was scheduled to take effect, held that the City Board of Health overstepped the bounds of its authority by passing the so-called "soda ban" and that the rule itself was arbitrary and capricious.  In doing so, Judge Tingling reached a number of conclusions about the rule's purpose, its potential effects, the responsibilities of New York City's Board of Health, and the extent to which obesity is a threat to the City.  Some of these conclusions are perhaps more vulnerable on appeal than others, but the City's quick move to appeal the decision suggests that the Mayor's camp believes there is a real possibility that the ruling will be overturned.

Separation of Powers

First, Judge Tingling found that the Board of Health violated the separation of powers doctrine of the New York State Constitution.  Citing Boreali v. Axelrod, 71 N.Y. 2d 1 (1987), in which a smoking ban passed by the Public Health Council (an executive body) was deemed an inappropriate exercise of legislative power, Judge Tingling applied the four-factor Boreali balancing test to determine whether the portion cap rule: 1) was based on concerns "not related to the stated purpose of the regulation,"; 2) was created on a "clean slate" without the benefit of legislative guidance; 3) intruded upon "ongoing legislative debate," and; 4) required the expertise of the body passing the rule.  Only the last of these was weighed in favor of the City, and without much discussion.  The others, however, are sure to be hotly contested by the City on appeal. 

For example, in reaching the conclusion that the rule was based on concerns not related to curbing obesity and chronic disease, Judge Tingling relied on a statement in the City's memorandum of law that acknowledged the economic toll of obesity, including health expenditures such as Medicare and Medicaid funding.  Judge Tingling concluded that "[t]he statement of the financial costs related to the chronic epidemic further evidences a balancing being struck between safeguarding the public's health and economic considerations."  Although he did not fully explain how the interests in curbing obesity and in reducing health care expenditures are at odds, Judge Tingling concluded that "[t]his is impermissible and the court therefore holds the regulation violates the first prong of Boreali."
 
In finding that the rule was created on a "clean slate," as opposed to merely "fill[ing] in the details of a broad legislation," Judge Tingling traced the history of the New York City Charter from 1686 through 2012.  Although he concluded that the Board of Health "has very broad powers under the City Charter dating all the way back to its conception" and that major amendments expanding the Board's power "all occurred under times of increased disease," Judge Tingling was not convinced that, currently, "the City is facing eminent [sic] danger due to disease."  Whether the responsibilities of the Board of Health are limited to acutely communicable diseases, and the extent to which obesity and related chronic diseases pose imminent danger to the City of New York, are issues that will almost certainly be reargued in June before the State Supreme Court.

Arbitrary and Capricious

Even if the City does demonstrate on appeal that promulgating the rule was within the authority of the Board of Health, it would still have to convince the State Supreme Court that, contrary to Judge Tingling's conclusion, the rule is not arbitrary and capricious.  For example, although the City argued that exemptions for certain types of milk and juices were based on the redeeming health benefits of those drinks, Judge Tingling considered these to be "suspect grounds."  Whereas the City argued that the rule was intended to address consumers' "overwhelming [tendency to] gravitate towards the default option" of larger drinks, and to ensure that consumers who are "intent upon consuming more than 16 ounces… make [a] conscious decision to do so," Judge Tingling argued that the lack of any limitations on refills was a loophole that could "defeat, and/or serve to gut the purpose of the Rule." 

Finally, Judge Tingling cited "uneven enforcement even within a particular City block" as evidence of the rule's "arbitrary and capricious consequences."  The City argued that it did not seek to exclude any food establishments and that it would enforce the rule against grocery stores, bodegas, and markets, like 7-Eleven, if the court found that such establishments – which are regulated pursuant to a Memorandum of Understanding with the State – could be subject to the rule.  Judge Tingling, however, cited the lack of "evidence of any prior attempts to coordinate with the [State] on the Portion Cap Rule" and concluded that the rule "is arbitrary and capricious because it applies to some but not all food establishments."  The City similarly argued that preemption by State laws regarding alcohol barred it from applying the rule to alcoholic drinks.

There is not yet any indication that the City is redrafting the rule and/or attempting to get it passed by the City Council, the City's legislative body.  If left to the courts, a final decision from the State Court of Appeals may not come down until after the rule's staunchest advocate, New York City Mayor Michael Bloomberg, has left office.

Meanwhile, in Mississippi…
 
Governor Phil Bryant of Mississippi signed into law yesterday a measure that some state legislators are calling the “anti-Bloomberg bill.”  Senate Bill 2687, now officially law in Mississippi, prohibits local governments from restricting soda size, requiring calorie counts on menus, and banning toys in kids’ meals.  The law prohibits Mississippi towns, cities, and counties from restricting the sale of food “based upon the food’s nutrition information,” thus proscribing not only laws about soda size, but also any restrictions on sugar, salt, or fat content, like the ban on artificial trans fats enacted by the New York City Board of Health in 2006.  Mississippi lawmakers defended the measure saying that it would protect personal choice and prevent a patchwork of inconsistent regulations throughout the state.

In response, Mayor Bloomberg described the Mississippi law as “inconceivable,” remarking that “in the state with the highest rate of obesity, they passed a law that says you can’t do anything about it.”  At a press conference last week, the mayor cited his prior public health initiatives, including the ban on trans fats, and expressed confidence that Judge Tingling’s decision would be overturned: “There are many, many instances where a lower court decision has gone against us and then been reversed.”

By Kurt R. Karst –      

Earlier this week, the U.S. Court of Appeals for the Second Circuit issued a decision that paves the way for the Natural Resources Defense Council (“NRDC”) to pursue its action to compel FDA to finalize the Agency’s review and regulation of topical antimicrobial drug products (e.g., hand soaps) containing triclosan, but not triclocarban, under the Over-the-Counter (“OTC”) Drug Review.  In vacating a January 2011 decision from the U.S. District Court for the Southern District of New York granting FDA’s Motion to Dismiss for lack of standing, the Second Circuit gave new life to some of the merits arguments raised in the NRDC’s Motion for Summary Judgment filed in the district court.  Interestingly, the district court granted FDA’s Motion to Dismiss orally after an 8-minute hearing on the basis that the NRDC lacked standing because its members could avoid their workplace exposure to triclosan by purchasing antimicrobial-free soap for use at work.

As we previously reported, the NRDC alleges in its lawsuit that FDA has unreasonably delayed the publication of a final OTC drug monograph with respect to triclosan and triclocarban in violation of the Administrative Procedure Act.  According to the NRDC, “both recent and older studies associat[e] triclosan and triclocarban with significant health risks,” and as such, immediate action by FDA is needed.  In support of its standing to bring the lawsuit, the NDRC submitted, among other things, the declarations of two members – Ms. Diana Owens, a veterinary technician, and Dr. Megan Schwarzman, a physician – “both of whom fear health harms from their repeated workplace exposure to triclosan and from the development of antibiotic-resistant bacteria through ubiquitous use of both triclosan and triclocarban.”

In tentative final monographs in the OTC Drug Review in 1978 and 1994, FDA designated both triclosan and triclocarban as “Category III” ingredients.  (“Category III” ingredients are excluded from a monograph on the basis that there are insufficient data for FDA to determine their status as generally recognized as safe and effective.)  In May 2003, FDA reopened the administrative record to accept comments and data on OTC healthcare antiseptic drug products, but the Agency has not taken further action on triclosan and triclocarban under the OTC Drug Review to date.  (For the latest FDA update, see here.)  Frustrated with FDA’s glacial pace at completing the OTC Drug review for these ingredients, the NRDC decided to sue FDA to compel Agency action.

FDA challenged the NRDC’s standing to sue in this matter, citing the Second Circuit’s decision in Baur v. Veneman, 352 F.3d 625 (2d Cir. 2003).  FDA argued in its brief that the Court should affirm the district court’s decision because the NRDC failed to establish injury-in-fact (i.e., that there is an actual and sufficiently serious risk of harm to human health from exposure to topical antimicrobial drug products containing triclosan and triclocarban).  Moreover, argued FDA, even if the NRDC did make such a showing, it failed to show involuntary exposure to such products by its members, or that they they suffered a cognizable harm in their efforts to avoid such exposure.

The NDRC argued in its briefs (here and here) that the organization has a clear case for associational standing to bring the lawsuit against FDA, because reasonable apprehension of harm from direct exposure to a chemical, such as triclosan or triclocarban, is a cognizable injury in fact sufficient for standing under Article III of the U.S. Constitution.  The NDRC’s efforts were also supported by several public interest organizations in an amicus brief.  The amici expressed a common concern that “unduly restrictive decisions concerning standing to sue . . . impair the protection of the public against unlawful action by both public officials and private entities.”

After reviewing the New York district court’s grant of summary judgment and its determination of standing de novo, the Second Circuit vacated the district court decision and remanded it for further proceedings.  According to the Court, the NRDC’s evidence is sufficient to satisfy the injury-in-fact requirement to establish standing with respect to triclosan, even though there is scientific uncertainty as to the harmfulness of the ingredient to humans.  Moreover, the injury of triclosan exposure is “fairly traceable” to the alleged delay in FDA’s finalizing its regulation of topical antiseptic antimicrobial ingredients under the OTC Drug Review, and “neither the availability of triclosan-free soap for purchase nor the possibility that NRDC members’ employers might be willing to supply triclosan-free soap prevents NRDC from establishing that the triclosan exposure is fairly traceable to FDA’s alleged unreasonable delay in regulating triclosan.”

Moving on the triclocarban, however, the Court found that the injury-in-fact requirement to establish standing was not met.  The “NRDC provided no evidence that its members were directly exposed to triclocarban. . . . [Rather, the] NRDC argues that its members suffer injury in fact due to FDA’s alleged delay in finalizing its regulation of triclocarban because the proliferation of triclocarban, together with other antimicrobial antiseptic chemicals, may lead to the development of antibiotic-resistant bacteria.”  This, said the Court, is more of a contingent and far-off threatened injury rather than an iminent injury, and does not support standing. 

The Court’s decision could increase congressional interest in the outcome of the case.  Over the past couple of years, Representatives Ed Markey (D-MA) and Louise Slaughter (D-NY) have doggedly pursued an FDA ban on the use of triclosan in consumer products (see here and here).

By Riëtte van Laack –

As we previously reported in January 2013, the Federal Trade Commission (“FTC”) determined that POM Wonderful, LLC’s advertising for its products violated the FTC Act and issued a cease and desist order restraining POM’s future advertising.

On March 8, 2013, POM filed a petition for review of the FTC’s Order in the D.C. Circuit.  Surprisingly, however, POM did not request a stay from FTC and, has not sought a stay from the D.C. Circuit.  Thus, the January 2013 cease and desist order has become effective.

Dispositive motions with regard to POM’s D.C. Circuit lawsuit are due on April 25, 2013.

By Kurt R. Karst –      

Over the past week we’ve been inundated with new items concerning generic drug labeling and whether federal law – the FDC Act and FDA’s implementing regulations – preempts state-law product liability claims (failure-to-warn, design defect, failure-to-conform/update, etc.) against generic drug manufacturers.  This is all happening just as the U.S. Supreme Court is set to hear Oral Argument on Tuesday, March 19th in Mutual Pharmaceutical Co. v. Bartlett (Docket No. 12-142), a design defect generic drug preemption case. 

At the heart of all of this is the U.S. Supreme Court’s decision in PLIVA Inc. v. Mensing, 131 S.Ct. 2567 (2011), in which the Court ruled that FDA’s regulations preventing generic drug manufacturers from changing their labeling except to mirror the label of the brand-name manufacturer preempt state-law failure-to-warn claims against generic drug manufacturers, because it is impossible for generic drug manufacturers to comply with both federal and state duties to warn.  This is in contrast to the Court’s decision in Wyeth v. Levine, 555 U.S. 555 (2009), holding that a state-law tort action against a brand-name drug manufacturer for failure-to-warn is not preempted.

So here’s a run-down of the latest, including where things stand in the Bartlett case . . . .

Demahy v. Schwarz – Petition for Writ of Certiorari

This case has a lengthy history and involves the now familiar drug metoclopramide and allegations that a generic manufacturer’s version of the drug caused tardive dyskinesia in Petitioner Julie Demahy.  It is on its second petition to the U.S. Supreme Court.  In the first go-around (Docket No. 09-1501), the case was consolidated with Mensing, and the Court reversed a January 2010 decision from the U.S. Court of Appeals of the Fifth Circuit affirming a finding from the U.S. District Court for the Eastern District of Louisiana that Ms. Demahy’s state-law failure-to-warn claims are not preempted.  On remand, the Fifth Circuit mandated the district court to enter judgment in favor of the generic drug manufacturers.  In doing so, the Louisiana district court dismissed all of Ms. Demahy’s claims, including her allegations of design defect.  Ms. Demahy filed motions to alter the district court’s judgment and to revive her design defect claims.  Both motions were denied, and Ms. Demahy appealed the denials to the Fifth Circuit Court, which affirmed the district court decision in October 2012, stating that “Demahy’s only remaining claims had been characterized by the district court, this Court, and the Supreme Court as failure-to-warn claims.”  Moreover, said the Fifth Circuit, “even if we were to find that these claims survived [this Court’s] mandate . . . we would still affirm the district court insofar as the claims are, at base, failure-to-warn claims, which would be preempted in light of Mensing.”

In her petition for a writ of certiorari, Ms. Demahy presents the following question to the U.S. Supreme Court: “Are manufacturers of unreasonably dangerous generic drug products shielded from liability for design defect claims by virtue of federal preemption and PLIVA, Inc. v. Mensing?”  According to Ms. Demahy:

There is simply nothing in the district court’s order, or anywhere in the record, substantiating the [Fifth Circuit] court’s conclusion that Demahy’s design defect claims were somehow resolved in the course of the previous appeal.  To the contrary, there had never been any mention of these claims, and the court’s conclusion runs afoul of well-established law.

Moreover, according to Ms. Demahy, the Fifth Circuit court’s “determination that design defect claims are preempted by the duty of sameness at issue in Mensing” conflicts with the U.S. Supreme Court’s decision in Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), in which the Court held that certain state-law tort claims involving medical devices cleared under the premarket notification (i.e., 510(k)) process are not preempted by federal law, and creates a split of authority with the First Circuit Court’s decision in Bartlett.  Even if the Court declines to grant certiorari in this case, Petitioner asks that the Court hold the case until the decision in Bartlett is issued.

Fulgenzi v. PLIVA, Inc. – U.S. Court of Appeals for the Sixth Circuit

The Sixth Circuit Court’s recent decision in Fulgenzi raised the profile of another state-law tort claim against generic drug manufacturers: failure-to-update.  The case, also involving the drug metoclopramide, stems from a decision from the U.S. District Court for the Northern District of Ohio, in which the district court ruled that allegations that a generic drug manufacturer failed to update labeling to conform to the labeling of the reference listed drug is just another failure-to-warn claim preempted by Mensing.  Specifically, a generic drug manufacturer did not include the statement “Therapy should not exceed 12 weeks in duration” after the reference listed drug labeling was updated to include the warning.

On appeal, Plaintiff-Appellant Eleanor Fulgenzi argued that the case presents an issue of first impression that the Sixth Circuit did not adddress in Smith v. Wyeth, Inc., 657 F.3d 420 (6th Cir. 2011), in which the Court did not find an exception to preemption for a state-law warning claim based on failure to comply with FDA regulations.  According to Ms. Fulgenzi, where a generic drug manufacturer could have independently added a warning through FDA’s Changes Being Effected (“CBE”) labeling regulations, a state-law claim based on that manufacturer’s failure to update its labeling through the CBE process to add a warning is not preempted on impossibility grounds.  Generic drug manufacturer PLIVA, Inc. argued that the case falls squarely within the four corners of Mensing and the Sixth Circuit’s Smith decision.  (Copies of the briefs in the case are available here, here, and here.)

The Sixth Circuit, as an initial matter, agreed with Ms. Fulgenzi that this is a case of first impression and that the Court’s Smith decision is not controlling.  “Although the Smith plaintiffs did raise the same arguments that Fulgenzi does here, they were raised only on supplemental briefing and, from the court’s opinion, it does not appear that they were considered.  As a result, we are not controlled by Smith and are faced with a question of first impression,” wrote the Court.  The Court then proceeded to conduct a preemption analysis in accordance with the principles articulated by the U.S. Supreme Court in Wyeth and Mensing.  Under that analysis, the Sixth Circuit found against preemption:

Mensing explains that the key question is “whether the private party could independently” comply with its state duty—without relying on the prior exercise of federal-agency discretion.  Wyeth, by contrast, holds that there is no impossibility as long as the approval comes after the independent action of the private party (especially where denial is speculative and unlikely).  In our case, not only could PLIVA have independently updated its labeling to match that of the branded manufacturer through the CBE process, but it had a federal duty to do so.  As a result, compliance with federal and state duties was not just possible; it was required.  Impossibility preemption is inappropriate in such a case.  It is true that the FDA had the authority to reject PLIVA’s labeling change after the fact.  But this is precisely the “possibility of impossibility” that Wyeth found insufficient to warrant preemption.  Indeed, as PLIVA had a clear federal duty to update its label, it is even less likely here that the FDA would have rejected the change.  This case, therefore, presents an even weaker case for impossibility preemption than Wyeth. [(Internal citations omitted; emphasis in original.)]

Fulgenzi is not the first instance in which a court has ruled against preemption in the faulire-to-update/failure-to-conform context.  Just a week before the Sixth Circuit ruled in Fulgenzi, the U.S. District Court for the Southern District of Texas denied a Motion to Dismiss filed by several generic defendants in yet another metoclopramide product liability case who argued that Mensing requires dismissal of the case.  “Generic Defendants were preempted by federal law from including additional warnings not approved by the FDA; however, they could, and indeed they were required to, ensure that their labeling contained the stronger, FDA-approved warnings for the name-brand drug,” wrote the district court in a March 7th decision.

Mutual Pharmaceutical Co. v. Bartlett – U.S. Supreme Court

The Bartlett case that will be argued in the U.S. Supreme Court this week (Docket No. 12-142) is a design defect generic drug preemption case that has garnered significant attention.  The question presented to the Court is whether the First Circuit Court erred when it ruled that federal law does not preempt state-law design defect claims concerning generic drug products because any conflict between federal and state law can be avoided if the the generic drug manufacturer stops selling its products.  As we previously reported, the First Circuit’s decision, which characterized Wyeth as a general no-preemption rule and Mensing as an exception to that rule, left a lot of jaws on the floor.

Mutual contends in its Surpeme Court brief that the case is controlled by a straightforward application of Mensing.  Bartlett contends, among other things, in her brief that the case differs fundamentally from the “negligence-based failure-to-warn claims” preempted in Mensing. In Mensing, says Bartlett, “state law undisputedly required the manufacturers affirmatively to improve the drug’s label.  Here, however, the only state-law obligation is to compensate consumers for injuries caused by an unreasonably dangerous product.  Nothing in federal law prohibits petitioner from paying compensatory damages to Ms. Bartlett.”  In a recent reply brief, Mutual has characterized this as Bartlett’s abandonment of the First Circuit’s stop-selling theory and simply wrong at every turn.

Many parties have come to Mutual’s defense.  Amicus briefs have been submitted by the Washington Legal Foundation and Allied Educational Foundation, several generic drug manufacturers, the Product Liability Advisory Council, Inc., DRI–The Voice of the Defense Bar, the Chamber of Commerce of the United States of America and PhRMA, and GPhA.

Perhaps the most interesting amicus brief is that of the United States.  The United States, which has been allocated time during Oral Argument, takes the position that Mensing controls the case and that the First Circuit Court’s stop-selling theory cannot be squared with Mensing, “which reflects an implicit judgment that the optio of withdrawing from a market is not sufficient to defeat impossibility preemption in this context.”  That being said, however, the amicus brief includes at footnote 2 an ominous remark: “FDA is considering a regulatory change that would allow generic manufacturers, like brand-name manufacturers, to change their labeling in appropriate circumstances.  If such a regulatory change is adopted, it could eliminate preemption of failure-to-warn claims against generic-drug manufacturers.”  What might that “regulatory change” be?  We don’t know just yet; however, we understand that shortly after Mensing, FDA assembled a taskforce to analyze its regulations in light of the decision.  In addition, as we previously reported, in August 2011 Public Citizen submitted a citizen petition to FDA requesting that the Agency, in response to Mensing, amend its regulations to permit ANDA sponsors to revise their labeling through the CBE and Prior Approval Supplement procedures.  Although possible, it seems unlikely that FDA will propose new regulations or substantively respond to the Public Citizen petition before the Supreme Court hands down its decision in Bartlett.

By James R. Phelps –

George Miller Burditt died on March 13, 2013 following a heart attack.  He was 90 years of age.  With his passing the food and drug bar lost one of its most distinguished members.

People were drawn to George by his friendly, gracious manner.  He inspired trust in his clients and all those having dealings with him. In litigation, he relentlessly represented his clients, but opposing counsel would count him as a friend. 

He worked hard.  There was no 9 to 5 aspect to the work.  He tirelessly extended whatever effort the client’s needs required, and grateful clients saw the results.

George developed his practice as the food and drug bar was itself developing.  He gave much of his time to promote the understanding of food and drug law.  He wrote hundreds of papers and gave hundreds of speeches on the subject.  For 25 years he was general counsel to the Food and Drug Law Institute.  For decades he worked closely with the Association of Food and Drug Officials, providing training and serving on the board of the AFDO Foundation. The Regulatory Affairs Professional Society recognized his contributions with its highest honor.  He taught food and drug law for many years as an adjunct professor at Northwestern University.

Work, however, did not consume the complete man.  He played as hard as he worked, mostly in some kind of competition.  There was basketball in his youth, then tennis in his maturity.  He was a great competitor in cribbage and bridge.  And he loved gin rummy, where he was not as good as he thought he was.

Yet the foregoing was only a part of George’s busy life.

He obtained his undergraduate and law degrees from Harvard University, and he loved the school.  As an alumnus, he stayed engaged and did so much that he was made Grand Marshal one year.  A room in the law school has been named after him.

He was immersed in the civic life of Illinois, serving eight years in the Illinois House of Representatives, and acting at one time as the deputy leader of his party in that house.  He also represented the Republican Party as a candidate for U.S. senator.  In Chicago, he was honored by having a street named after him.

He leaves a large and loving family:  4 children, 11 grandchildren, 6 great-grandchildren (and 2 more on the way!)  His wife Barbara died many years ago; he found a wonderful companionship in his subsequent marriage to Mary Jayne (“MJ”) Mallory.

The last few years of George’s life were made difficult by a fall that resulted in impaired use of his legs.  The wheelchair did not dampen his spirit, however, and he remained as charming and as interested in the world as always.  In the last weeks of his life he was exchanging witty e-mails with old colleagues.

A life lived well.  George Miller Burditt, Requiescat in Pace.

By Alexander Varond –

On March 12, 2013, FDA released a draft version of a revision to the February 2000 final guidance entitled “Formal Dispute Resolution: Appeals Above the Division Level.”  We refer to the draft version as “Revision 1.”  Revision 1 retains the original title and many of the recommendations first published in the February 2000 guidance.
 
The most significant update in Revision 1 is the extent to which FDA emphasizes that new information or analyses should not be submitted as part of a formal dispute resolution request (“FDRR”).  Note, however, that this concept is not a major departure from FDA’s February 2000 guidance; in fact, the key language from that version remains in Revision 1:

Because all FDA decisions on any dispute must be based on information already in the relevant administrative file (§ 10.75(d)), no new information should be submitted as part of a request for reconsideration or appeal.

FDA added considerable language regarding the necessity for sponsors to present any new data or new analyses of data at the division level before incorporating those data or analyses into an FDRR.  The new language includes the following key points:

• “New analyses of data previously reviewed should be considered new information, and therefore should be submitted to the division for review before being submitted as support for an appeal.”

• “In addition, the FDA will not consider an appeal if information that has not been previously reviewed by the division has been submitted in support of the appeal.”

• “[W]hen the FDA [requests] additional clarifying information from the sponsor [as part of an FDRR], this does not mean new information that has not been reviewed by the division . . . .”

In addition, FDA explained that FDRRs will not be reviewed if the appealed issues are also currently under review at the division level.

Less substantive issues addressed by Revision 1 include an explanation of the review timelines for drugs subject to the Generic Drug User Fee Act and CBER-regulated products, updates to the FDRR submission procedure, and a clarification of the review timelines for responding to human drug application FDRRs related to PDUFA products.

By Kurt R. Karst –      

Briefing is underway in K-V Pharmaceutical Company’s (“KV’s”) appeal of a September 2012 decision from the U.S. District Court for the District of Columbia that stymied the company’s efforts to “restore” orphan drug exclusivity for the pre-term birth drug MAKENA (hydroxyprogesterone caproate) Injection, 250 mg/mL, the compounded version of which is known as “17P.”  In its Opening Brief, KV presses its case that FDA’s decision not to take enforcement action against 17P compounders and the Agency’s issuance of a March 30, 2011 press release to that effect (referred to KV in its brief as “FDA’s Statement”) is the equivalent of an order or license reviewable in court, and that FDA caved to political pressure when it decided not to take enforcement action against 17P compounders.   

As we previously reported (here and here), KV filed a Complaint and a Motion for Temporary Restraining Order and Preliminary Injunction alleging that FDA and the Department of Health and Human Services violated myriad provisions of the FDC Act, the Administrative Procedure Act (“APA”) § 706(2), and the Due Process Clause of the Fifth Amendment to the U.S. Constitution by failing to take sufficient enforcement action to stop the unlawful competition with MAKENA by pharmacies that compound 17P.  FDA filed a Motion to Dismiss arguing, among other things, that KV’s claims are not justiciable for lack of standing, and that even if KV can establish standing, certain Agency statements concerning compounded 17P are not subject to judicial review under the APA because FDA’s decisions not to take enforcement action are committed to the agency’s discretion under Heckler v. Chaney, 470 U.S. 821 (1985).  In Chaney, the U.S. Supreme Court held that “an agency’s decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency’s absolute discretion,” and as such, is presumed to be unreviewable under the APA. 

After finding that KV alleged sufficient facts to support standing, the D.C. District Court found KV’s first three Counts concerning orphan drugs (FDC Act § 527(a)), compounding (FDC Act § 503), and new drug approval (FDC Act §§ 505(a) and 301(d)) unreviewable, because APA § 701 “precludes judicial review of final agency action, including refusals to act, when review is precluded by statute or ‘committed to agency discretion by law,” and because Chaney is controlling.  Addressing Count IV of KV’s Compliant alleging that FDA violated FDC Act § 801(a) by permitting foreign-manufactured active pharmaceutical ingredient to be imported into the United States for compounding into 17P, the court found that the Count failed to state a claim.

Interestingly, another D.C.  District Court decision, also on appeal to the D.C. Circuit, Beaty v. FDA, 853 F. Supp. 2d 30 (D.D.C. 2012), appeal docketed sub nom. Cook v. FDA, Nos. 12-5176, 12-5266 (D.C. Cir. May 31, 2012), came out the other way for FDA when the Agency pressed Chaney as a defense.  In that case, the court found that FDA “ignore[d] an administrative directive” when the Agency exercised enforcement discretion with regard to the importation of unapproved sodium thiopental for use by state Departments of Corrections to carry out death sentences by lethal injection.  (See our previous post here.)

KV argues in its Opening Brief that the case falls outside of the Chaney framework for three reasons:

First, FDA’s Statement involves active solicitation of unlawful conduct, not mere non-enforcement.  Second, FDA’s Statement announces a policy applicable to more than 1,000 compounders, not a single-shot decision not to proceed in a particular case involving a particular party or parties.  Third, FDA’s action in making a public statement intended to elicit unlawful conduct that otherwise would not have occurred is an abdication of FDA’s responsibility to administer the FDCA.

Moreover, says KV, even if Chaney applies, “its rebuttable presumption of unreviewability is rebutted here” because the factors identified in the Supreme Court’s decision as supporting enforcement discretion, such as enforcement priorities and quality of evidence, are absent.  “FDA’s Statement does not invoke any of the factors to which enforcement discretion applies.”

By Carmelina G. Allis –

With information technology taking on an increasingly important role in the healthcare system, software app developers are focusing their efforts on developing programs intended to facilitate health, wellness, and disease management.  Some of these apps are developed for and implemented by corporations, hospitals, and providers to promote general health and wellness among their employees or members, or to create a team effort between users, family members, and healthcare providers to establish wellness goals to improve overall health.  Other forms of health and wellness apps are developed for use by the general population for a fee or at no cost, and can be easily accessed via a desktop computer, a smartphone, or an iPad.

These health and wellness apps come in different configurations, and their contents can often be tailored and constructed to meet the needs of the customer.  The apps may help the user establish certain health goals, such as a weight or an exercise objective, and can be configured to track or trend data for review by the user and/or others, such as a doctor, nurse, nutritional advisor, a personal trainer, or friends in a support network.  Other apps can assist users establish wellness plans to manage chronic conditions like asthma, heart disease, Crohn’s disease, or diabetes, by promoting and providing access to activities (e.g., dietary or exercise plan suggestions) and general information.

With the advent of FDA’s regulation of mobile software technology, a legal question that often arises is whether these health and wellness apps are subject to FDA regulation as medical devices.  So how can a software developer recognize whether its health and wellness app is a medical device under the Federal Food, Drug, and Cosmetic Act (“FDC Act”)?
 
Historically, products intended for use for general health and wellness that are intended to help change a person’s lifestyle in healthy way have not been subject to FDA regulation unless they are intended for medical purposes.  A product, such as software, may be subject to FDA regulatory requirements if it meets the definition of a “device” in section 201(h) of the FDC Act.  A “device” is defined as “an instrument, apparatus, implement, machine, contrivance . . . which is . . . intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man,” among other things.  FDC Act § 201(h).  Thus, a software product may be subject to FDA regulation as a “device” if the developer of the software (or the person responsible for its labeling) markets, promotes, labels, or advertises the software for diagnosis, prevention, or treatment of disease or other conditions (e.g., stroke, pregnancy, high blood pressure, migraines).

At present, FDA does not have a comprehensive policy or guidance on the regulation of software devices.  The regulatory status of software devices, however, has been discussed in various FDA documents, such as the agency’s “Draft Guidance for Industry and Food and Drug Administration Staff – Mobile Medical Applications,” which was issued on July 11, 2011 (see our previous post here).  Although the guidance on mobile apps is a draft document subject to revision by FDA and not intended for implementation, it provides a window into the agency’s current thinking on the matter.

According to this draft guidance, it appears that FDA will continue to apply the medical purpose / general health and wellness distinction to mobile apps (and, by logical extension, other software based products).  For example, according to the draft guidance, software apps that have the following functionalities will not be regulated by FDA:

• Mobile apps that are solely used to log, record, track, evaluate, or make decisions or suggestions related to developing or maintaining general health and wellness, if not intended to cure, treat, diagnose, or mitigate a specific disease, disorder, patient state, or any specific, identifiable health condition.
• Mobile apps that are used as dietary tracking logs and appointment reminders, or provide dietary suggestions based on a calorie counter, posture suggestions, exercise suggestions, or similar decision tools that generally relate to a healthy lifestyle and wellness and are not intended to cure, mitigate, diagnose, or treat a disease or condition.

Draft Mobile Medical App Guidance at 11.

The key to avoid regulation is that the software app cannot be intended for medical purposes.  Thus, for example, an app that is intended to be used “to maintain general wellness by supporting a low-sugar or low-carbohydrate diet to maintain a healthy lifestyle” would likely fall under the general health and wellness non-regulated area.  On the other hand, if that same app is intended to be used to help patients “manage their diets to prevent the progression of prediabetes to diabetes and lower the risk of heart disease,” then the product would more likely be subject to FDA regulation as it is intended to treat a condition (i.e., prediabetes) to mitigate or prevent a disease (i.e., diabetes or cardiovascular disease).

Examples of software products intended for use by consumers that the draft guidance says may be subject to “device” regulation include:

• Apps that allow users to input their health information and through the application of formulas, data comparisons, or processing algorithms, issue a diagnosis or treatment recommendation that is specific to that person, such as his or her risk for colon cancer or heart disease, or recommend that the patient take a certain medication or seek a particular treatment.
• Software that is intended to be used to physically or wirelessly connect to and download information from a diagnostic device like a glucose meter to allow the user to display, store, analyze, and/or keep track of his or her medical data values.

Draft Mobile Medical App. Guidance at 14.

In short, if an app is intended to maintain and establish general health and wellness, FDA has said that the product will not likely meet the “device” definition and would therefore not be subject to regulation.  Otherwise, if an app is promoted or intended to be used by a patient or health facilitator as an instrument in the cure, mitigation, diagnosis, or treatment of a disease or condition, the app could be subject to FDA regulation.  Of course, FDA has not finalized its draft mobile app guidance, so things could change.  However, FDA has long kept its distance from devices merely intended to promote health and wellness while subjecting devices intended to prevent or treat disease to regulatory requirements.  It seems unlikely that this well established distinction would be omitted from the final guidance.

By Kurt R. Karst –      

We thought it would only be a matter of time until the Federal Trade Commission (“FTC”) decided to voice its views in a lawsuit filed last September by Actelion Pharmaceuticals Ltd. and Actelion Clinical Research, Inc. (collectively “Actelion”) in the U.S. District Court for the District of New Jersey seeking declaratory relief that Actelion is under no affirmative duty or obligation to supply prospective ANDA applicants with its brand-name drug products TRACLEER (bosentan) Tablets and ZAVESCA (miglustat) Capsules for purposes of bioequivalence testing and ANDA submission.  That  time has come, and just on the heels of the Counterclaim Plaintiffs’ (Apotex Corp., Roxane Laboratories, Inc., and Actavis Elizabeth LLC) opposition to Actelion’s Motion for Judgment on the Pleadings and to Dismiss Antitrust Counterclaims (see our previous post here). 

As we’ve previously noted, the case is the first preemptive lawsuit filed by a brand-name company whose drug products are covered by restricted distribution programs – either under a Risk Evaluation and Mitigation Strategies (“REMS”) program with Elements To Assure Safe Use created by the 2007 FDA Amendments Act, such as with TRACLEER, or under a restricted distribution program adopted and implemented by the brand-name manufacturer, such as with ZAVESCA.  The Counterclaim Plaintiffs allege that Actelion abused its monopoly power in violation of Sections 1 and 2 of the Sherman Act and the New Jersey Antitrust Act for refusing to deal with them and provide product sample for ANDA submission purposes.  Actelion has maintained all along that it is the company’s “right to choose with whom it does business,” that it is a “fundamental right of a business to choose for itself with whom to deal and to whom to supply its products,” and that precedent is on its side.

On March 12th, the FTC announced that it filed an amicus brief in the case.  It requests that the court “carefully consider the unique regulatory framework governing the pharmaceutical industry and the potential ramifications for consumers of prescription drugs when considering Actelion’s Motion for Judgment on the Pleadings and to Dismiss Antitrust Counterclaims.  The allegations in the case, says the FTC, “highlight a troubling phenomenon: the possibility that procedures intended to ensure the safe distribution of certain prescription drugs may be exploited by brand drug companies to thwart generic competition.”  This possibility was previously raised in a June 2009 citizen petition (Docket No. FDA-2009-P-0266) requesting that FDA “establish procedures to facilitate the availability of generic versions of drug products subject to a [REMS] and enforce the FDC Act to prevent companies from using REMS to block or delay generic competition.”  FDA has not substantively responded to the petition.  It was also raised in a lawsuit (see our previous post here) that was ultimately dismissed after a settlement was reached.  If the court adopt’s Actelion’s legal position, write the FTC, it “threatens to undermine the careful balance created by the Hatch-Waxman Act,” “potentially preserve[s] a brand firm’s monopoly indefinitely, and “could prove costly for consumers of prescription drugs.”

Moving on to Actelion’s legal arguments, the FTC says that refusing to sell to generic rivals may, in fact, constitute exclusionary conduct in violation of Section 2 of the Sherman Act, and that restricted distribution agreements are not immune from antitrust scrutiny and may violate Section 1 of the Sherman Act.  Although the FTC does not say whether it thinks there was a violation of the antitrust laws in this case, it does say that the Counterclaim Plaintiffs should have their day in court. Citing the two general principles of antitrust law that Actelion relies on in its motion – “first, that a private firm is ordinarily free to choose with whom it does business; and second, that vertical agreements, such as those between a manufacturer and its distributors, rarely pose any competitive concern” – the FTC says that they are not absolute principles:

Under certain circumstances, potentially including those alleged in the counterclaims here, a monopolist’s refusal to sell to its rivals may violate Section 2 of the Sherman Act, and vertical agreements may violate Section 1. . . .  While the evidence may not ultimately support any of the Sherman Act claims in this case, the FTC respectfully submits that they are not barred as a matter of law.

Now that the FTC has chimed in, the case will likely take on an even higher profile.  Other amicus briefs may already be in the works.

UPDATE:

• The Generic Pharmaceutical Association has also filed an amicus brief in the case.  The brief does not weigh in on the antitrust issues raised in the case, but rather, focuses on the intent of the Hatch-Waxman Amendments.

By Karla L. Palmer –

The National Association of Attorneys General (“NAAG”) today sent a letter to the U.S. Food and Drug Administration’s Margaret Hamburg urging the Agency to adopt standards requiring manufacturers and marketers of generic prescription opioids to develop tamper-resistant versions of such products.  Signed by 48 state and territorial Attorneys Generals, the letter applauds FDA for “expeditiously proposing guidelines establishing clear standards for manufacturers who develop and market tamper- and abuse-resistant opioid products while considering incentives for undertaking the research and development necessary to bring such products to market.”  (See our previous post on FDA's draft guidance on abuse-deterrent opioids.)  It also encourages FDA to assure that generic versions of “such products are designed with similar [tamper-resistant] features.” 

The letter warns that nonmedical users of opioid products are now shifting away from the new tamper-resistant formulations as well as to illegal drugs.  It notes that there is “great concern” in the law enforcement community that many non-tamper-resistant generic products are available for abuse when only a few products have been formulated with tamper-resistant features.  The Attorneys General referred specifically to a concern with the possibility that generic versions of extended-release opioid prescription drugs and other non-tamper-resistant products may reach the market.

The press release announcing the Attorneys General letter states that prescription drug abuse is a significant danger that is reaching “epidemic levels in many states.  It specifically notes that “[o]pioids relieve pain and codeine, hydrocodone (e.g., Vicodin) and oxycodone (e.g., OxyContin, Percocet) fall into this medication class.”

In recent months, FDA has denied without comment several citizen petitions concerning generic versions of drug products approved with formulations intended to be abuse-deterrent.  FDA's denial of one such petition concerning OxyContin has prompted a petition for reconsideration.  In another case concerning oxymorphone (Opana), FDA is scheduled to rule in May on a petition concerning whether a non-abuse-deterrent formulation of the drug was removed from the market for reasons of safety or effectiveness.

By Ricardo Carvajal –

FDA recently denied a citizen petition (Docket No. FDA-2011-P-0484) that asked the agency to take numerous actions with respect to mercury in commercial fish.  In part, the petition asked FDA to establish an action level, regulatory limit, or tolerance of 0.5 ppm  (the current action level is 1.0 ppm) , revise FDA/EPA’s fish consumption advice accordingly, and require posting of that advice at the point-of-sale. 

In its response, FDA reviewed evidence bearing on the adverse effects that allegedly can result from exposure to methylmercury, including neurological effects, coronary heart disease, kidney failure, and genetic damage.  For certain adverse effects, the petition included no evidence to support its assertions, so FDA relied on evidence of which the agency is aware. 

FDA noted that 99.9 percent of adults have been exposed to methylmercury below the Acceptable Daily Intake Level ("ADI"), which includes a 10-fold margin of safety.  FDA has therefore seen no need to enforce the current action level to reduce exposure to methylmercury.  FDA then reviewed relevant case studies, published studies, and information provided in the petition.  FDA concluded that the petition failed to provide sufficient evidence that commercial fish with more than 0.5 ppm of mercury pose a reasonable possibility of  injury to the general population or to susceptible subpopulations (e.g., young children).  In addition, FDA noted that there is substantial evidence that consumption of fish is associated with neurodevelopmental and other benefits, even taking into account potential exposure to methylmercury.

FDA also declined to require posting of the FDA/EPA fish consumption advisory at the point-of-sale because the petition did not provide a basis for a determination that such information is “material” within the meaning of section 201(n) of the Federal Food, Drug, and Cosmetic Act.

Many of us at Hyman, Phelps & McNamara, P.C. will miss a cherished former colleague and worthy opponent: Rick Blumberg, the Deputy Chief Counsel for Litigation at FDA, who died Thursday, March 7th, of complications from a stroke.  He handled litigation for FDA for more than 40 years, and directed it for more than 20 years.  He was plain-spoken and aggressive, but always courteous, usually funny, and quick to respond.

Rick, a relentless and brilliant advocate for FDA, taught us, and many other attorneys in the food and drug bar, as a colleague, a boss, or as an attorney on the other side of negotiations or litigation.  For some of us, as our careers evolved, he was first a colleague, then an opponent, then a fellow speaker at industry panels.  Throughout, with fierce loyalty to the agency he represented, he was deliberate in choosing the words he spoke, articulate in describing his position, and perceptive about – if not always sympathetic to –the needs of regulated industry.  And while we did not always agree with him, there are few who tried to protect the public interest and welfare more than Rick.

He will be missed.

By Carmelina G. Allis –

On February 28, 2013, FDA’s Center for Devices and Radiological Health (“CDRH”) issued what appears to be an unprecedented joint FDA/Federal Trade Commission “untitled letter” in the form of an email (an “untitled email”) to on-line distributors of decorative contact lenses alleging that they have been selling and marketing decorative or cosmetic contact lenses in violation of federal laws, and threatening criminal prosecution if corrective action is not implemented.  Contact lenses (including decorative/color and corrective lenses) are regulated as medical devices pursuant to section 520(n) of the FDC Act.  In general, decorative and cosmetic contact lenses are regulated as Class II prescription devices subject to the 510(k) requirements.

An untitled attachment to the email alleges that the devices are adulterated and misbranded pursuant to the FDC Act because they are being offered for sale in the U.S. without FDA marketing authorization.  It also alleges that the on-line distributors’ sale of contact lenses to consumers without a valid prescription is in violation of the Fairness to Contact Lens Consumers Act, 15 U.S.C. § 7601 et seq., and the Contact Lens Rule, 16 C.F.R. Part 315, both of which are enforced by the FTC.  Violation of the FTC rule may result in significant civil monetary penalties.

According to CDRH’s email, FDA’s Office of Criminal Investigations ("OCI") and FTC reviewed the on-line distributors’ websites and determined that they were offering decorative contact lenses for sale in violation of federal law.  OCI is the office within FDA that conducts and coordinates investigations of suspected criminal violations of the FDC Act and other related statutes, including violations of Title 18 of the United States Code.  The FTC regulates the advertising (as opposed to the labeling) of non-restricted medical devices pursuant to the Federal Trade Commission Act, 15 U.S.C. §§ 52-55.

CDRH’s email to contact lens distributors purports to be an “untitled letter.”  It has been posted on CDRH’s “Promotion and Advertising Untitled Letters” webpage and neither the email nor its attachment says “Warning Letter.”  However, we believe that this email (and attachment) is mischaracterized by FDA as an untitled letter.  It contains language advising that failure to take prompt correction may result in enforcement action, and specifically warns that “[f]irms that fail to take corrective action may also be referred to FDA’s Office of Criminal Investigations for possible criminal prosecution” for violations of the FDC Act and other federal laws.

As described in Chapter 4 of FDA’s Regulatory Procedures Manual ("RPM"), “Warning Letters are issued for violations of regulatory significance.  Significant violations are those violations that may lead to enforcement action if not promptly and adequately corrected.”  In contrast, an untitled letter is generally the initial correspondence between FDA and the regulated industry that “cites violations that do not meet the threshold of regulatory significance for a Warning Letter.  Therefore, the format and content of an Untitled Letter should clearly distinguish it from a Warning Letter.”  RPM, Ch. 4.

Companies should not take lightly language threatening criminal prosecution.  We are not aware of similar language contained in other untitled letters issued by CDRH.  We should also note that statements indicating OCI involvement in an enforcement action are generally not included in device Warning Letters.  This CDRH “untitled email” is certainly an unprecedented approach.

As part of CDRH’s Transparency Initiative, the Center has committed to posting on its website advertising and promotion untitled letters issued as of October 1, 2011.  As of the date of this blog, this notification to on-line distributors of decorative contact lenses is the only letter/email posted.

By Kurt R. Karst –      

Earlier ths week, Apotex Corp., Roxane Laboratories, Inc., and Actavis Elizabeth LLC  (collectively “Counterclaim Plaintiffs”) filed their opposition to Actelion Pharmaceuticals Ltd.’s and Actelion Clinical Research, Inc.’s (collectively “Actelion’s”) Motion for Judgment on the Pleadings and to Dismiss Counterclaims in a lawsuit filed last September in the U.S. District Court for the District of New Jersey seeking declaratory relief that Actelion is under no affirmative duty or obligation to supply prospective ANDA applicants with its brand-name drug products TRACLEER (bosentan) Tablets and ZAVESCA (miglustat) Capsules for purposes of bioequivalence testing and ANDA submission.  As we previously reported (here, here, and here), the case is the first preemptive lawsuit filed by a brand-name company whose drug products are covered by restricted distribution programs – either a Risk Evaluation and Mitigation Strategies program with Elements To Assure Safe Use created by the 2007 FDA Amendments Act, such as TRACLEER, or a restricted distribution program adopted and implemented by the brand-name manufacturer, such as ZAVESCA.  The Counterclaim Plaintiffs have alleged that Actelion abused its monopoly power in violation of Sections 1 and 2 of the Sherman Act and the New Jersey Antitrust Act.

Actelion maintains that it is the company’s “right to choose with whom it does business,” and that this “fundamental right” dooms the Counterclaim Plaintiffs’ antitrust counterclaims and clearly support Actelion’s request for declaratory relief.  Moreover, says Actelion, citing Verizon Communications, Inc. v. Law Offices a/Curtis V. Trinko, LLP, 540 U.S. 398 (2004) for purposes of Sherman Act Section 2, any exceptions to the rule that a unilateral refusal to deal by an alleged monopolist does not give rise to antitrust liability (i.e., where a refusal to do business is contrary to a prior course of dealing, or where a refusal relates to an “essential facility”) do not apply in this case. And, says Actelion, there are alternatives to the ANDA approval route that companies can use, such as the submission of a “full” 505(b)(1) NDA or a 505(b)(2) NDA.

As an initial matter, Counterclaim Plaintiffs allege in their 70-page opposition memorandum that Actelion’s reliance on Trinko to support its case is misplaced.

Actelion’s entire argument rests on its belief that Trinko immunizes a firm from antitrust scrutiny for refusing to deal with its would-be competitors.  Although this interpretation of Trinko is incorrect, Actelion’s argument fails in any event because its refusal to sell Counterclaim Plaintiffs drug samples is merely one component of the larger exclusionary scheme challenged here. . . . [Actelion’s] conduct goes far beyond a typical “refusal to deal” and falls well within the classic definition of unlawful monopolization. . . .  The problem with Actelion’s heavy reliance on Trinko is that it at best only addresses Actelion’s liability for refusing to sell drug samples directly to Counterclaim Plaintiffs.  The Third Circuit [in LePage’s, Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003)], however, has held that the proper inquiry is whether the defendant’s alleged actions “considered together” evidence an overall anticompetitive scheme. (Internal citations omitted)

Applying this Third Circuit standard, say Counterclaim Plaintiffs, the court must deny Actelion’s motion. 

Counterclaim Plaintiffs go on to argue that even if this were a pure “refusal to deal” case, Trinko does not create a bright-line rule to justify Actelion’s requested relief.  For starters, say Counterclaim Plaintiffs, “unlike Trinko, where there was already a scheme of regulation in place to safeguard the public interest . . . no such regulatory scheme exists to serve as ‘an effective steward of the antitrust function’ here.” (Internal citation omitted)  Moreover, both of the Trinko exceptions (i.e., prior course of dealing and essential facilities) are available and applicable here, argue Counterclaim Plaintiffs.

As to Actelion’s argument that, for purposes of applicability of the essential facilities exception, companies can avail themselves of an alternative to the ANDA approval route and seek FDA approval of an NDA, Counterclaim Plaintiffs say that argument is nonsensical.  First, insofar as it means companies submit “full” 505(b)(1) NDAs, the argument undermines the Hatch-Waxman Amendments.  Second, insofar as it means companies submit 505(b)(2) applications for a generic version of the drugs, “Actelion’s claim . . . is simply wrong,” because that route is not available for duplicates of approved brand-name drugs.  Moreover, it bears noting that a 505(b)(2) application for an alternative version of a brand-name drug may require the sponsor to obtain sample of the drug for purposes of conducting bridging studies. 

By Anne K. Walsh –

On March 4, 2013, less than three months after oral argument, the Ninth Circuit issued its ruling in United States v. Harkonen, a closely watched case implicating First Amendment issues in the off-label promotion context.  As we previously reported (here and here), in 2009, a jury had convicted Harkonen of wire fraud for issuing a press release fraudulently describing clinical trial results about the drug Actimmune.  The District Court in the Northern District of California sentenced Harkonen to 3 years probation, 6 months home detention, community service, and a $20,000 fine.  Both parties appealed to the Ninth Circuit.

Harkonen challenged the conviction, arguing that the First Amendment barred his prosecution.  The Ninth Circuit applied a two-part analysis: (1) whether sufficient evidence supports the verdict; and (2) if so, whether the facts as found by the jury establish the core constitutional facts.  The Ninth Circuit emphasized that the First Amendment does not protect fraudulent speech.  Therefore, the court identified the core constitutional issue in Harkonen’s case as whether there was sufficient evidence to support the jury’s finding that the press release was fraudulent.  Deferring to the jury’s findings on the elements of the wire fraud charge, the Ninth Circuit affirmed the wire fraud conviction. 

Interestingly, the Ninth Circuit footnoted that “Harkonen presented the evidence that most firmly supported his case for the first time at sentencing.”  This is likely a reference to expert declarations Harkonen sought to introduce purporting to show a plausible scientific (and thus truthful) basis for the statements contained in the allegedly fraudulent press release.  The Ninth Circuit noted that it was limited to considering evidence that was before the jury, and therefore could not consider the expert declarations first raised at Harkonen’s sentencing.

The Court also rejected Harkonen’s other arguments, one of which relied on a 1902 U.S. Supreme Court case for the proposition that “genuine debates over whether a given treatment caused a particular effect” could not be considered fraudulent.  American School of Magnetic Healing v. McAnnulty, 187 U.S. 94 (1902).  “Harkonen’s request that we reverse his conviction because he was engaging in a genuine scientific debate is hardly different than arguing that he is innocent; genuine debates of any sort are, by definition, not fraudulent.”

On its cross-appeal, the Government argued that the district court had erroneously ruled on the “intended loss” and “vulnerable victim” enhancements in the U.S. Sentencing Guidelines.  Originally the Government had asked for a 10-year prison sentence and a $1 million fine.  The Ninth Circuit did not provide much explanation, but simply stated that the district court made clear its conclusions in imposing a shorter sentence with no imprisonment.

On the heels of the Second Circuit’s decision in United States v. Caronia, some had thought that the Ninth Circuit would provide the requisite circuit split to allow the Supreme Court to take on the First Amendment issue raised in Caronia.  The Harkonen case is distinguishable, however, because the jury convicted Harkonen of wire fraud, which required a finding that the statements Harkonen made were fraudulent.  Therefore, unlike Caronia, the Harkonen case did not present a potential First Amendment defense based on truthful and non-misleading statements about an unapproved use.  For more information about the potential ramifications of Caronia, see the HP&M Webinar.

As for Harkonen, the saga continues.  Not only did he lose this appeal and recently have his state medical license revoked, he now faces potential exclusion from federal health care programs, which would effectively preclude him from working in the pharmaceutical industry during the period of exclusion.