By Jessica A. Ritsick –

This week, the Institute of Medicine (“IOM”) released its report, commissioned by the FDA, “Countering the Problem of Falsified and Substandard Drugs.”  The objective was to gain an understanding of the “global public health implications of falsified, substandard, and counterfeit pharmaceuticals.”  The lengthy report detailed twelve recommendations for international regulatory authorities as steps to combat the proliferation of falsified and substandard drugs throughout the world.  These recommendations, in brief, are:

• Adoption of universal definitions for “substandard,” “falsified ,” and “unregistered” drugs;
• Governmental establishment and strengthening of systems to identify substandard, falsified, and unregistered drugs;
• Creation of “investment vehicles” for manufacturers interested in “upgrading” their systems to international standards;
• Development of plans for procurement agencies to comply with the World Health Organization (“WHO”) Model Quality Assurance System;
• Use of a uniform document format for product registration by regulatory authorities in low- and middle-income countries, and creation of joint inspections, for harmonized procedures and reduced manufacturing costs; 
• Support by the governments in low- and middle-income countries for stronger international manufacturing and quality control standards; 
• Funding for public education campaigns on the dangers of falsified and substandard medicines; 
• Stronger licensing standards for wholesalers and distributors, including establishment of a public licensure database to be maintained by FDA; 
• Congressional authorization and funding of a “mandatory track and trace” system to be implemented by FDA; 
• Fostering, in low- and middle-income countries, environments incentivizing the private sector to supply underserved areas with quality medicines; 
• Funding of a national repository of technology used to detect substandard and falsified medicines; and
• Creation of a “code of practice” for the international problem of substandard medicines.

Substandard, falsified, and unregistered drugs are, as the IOM report acknowledges, a global problem, and there is no single solution to immediately fix the global issues involved, such as poor quality ingredients, lack of regulation, and drug diversion.  The IOM report’s suggestions for less-developed countries, if put into practice, would likely only provide a partial solution to the problem.  At a later date, we may post on the global recommendations provided by the IOM.  For now, we focus on the most noteworthy domestic-related issues raised by the report.

IOM recommended excluding the use of the term “counterfeit.”  There is disagreement in the international regulatory community as to whether “counterfeit” refers broadly to something that is “not what it claims to be,” or whether the narrower, legal definition, which focuses on trademark infringement, is applicable.  The IOM report forgoes the use of the term “counterfeit,” and instead encourages the use of the terms “substandard,” “falsified,” and “unregistered.”  “Substandard” drugs are “those that do not meet the specifications given in the accepted pharmacopeia or in the manufacturer’s dossier.”  However, what is considered “substandard” varies from country-to-country, despite the fact that many countries use standards provided by international pharmacopeias.  “Falsified” drugs are “those drugs that carry a false representation of identity or source or both,” and the report is clear to note that falsified drugs are often also substandard drugs.  Falsified drugs can range from a legitimate product in fake packaging, or a fake product in legitimate packaging.  Lastly, “unregistered” drugs are “those not granted market authorization in a country.”  Unregistered drugs, unsurprisingly, are often substandard and are distributed outside the normal, regulated distribution channels.  These definitions, if adopted domestically and internationally, will help regulatory agencies and industry alike characterize the specific problem when “bad drug” issues arise, and provide more clarity to this global problem.

The IOM also recommends creation of a centralized public database of suspended and revoked wholesale pharmaceutical licenses.  The report recommends that FDA create this national database in collaboration with existing state licensing boards.  While a “one stop shop” for this information could prove beneficial to industry, it is unclear how IOM expects FDA to implement such a large program, especially within IOM’s recommended two-year timeframe.  While Congress could allocate funds for the creation of such a registry, FDA would also require the necessary statutory authority.  While the Prescription Drug Marketing Act (“PDMA”) provides for creation of a state system of wholesale and manufacturer licensure, and tasked FDA with creating licensure guidelines, there is no federal licensure system.  See 21 C.F.R. Part 205.  Further, FDA would have to rely on the states to provide timely data.  Many states already have online resources to perform simple searches to determine whether a company is licensed, and if so, whether there are any violations or issues with that license.  A national database would be beneficial, but there currently does not appear to be a mechanism for FDA to manage this effort.  For example, there is federal funding for state-level prescription drug monitoring programs, but there is no national or FDA-regulated federal program.  Creation of a national wholesaler licensure database, whether or not in collaboration with state licensure boards, does not appear to be a task that FDA has either the resources or current authority to implement.

The IOM report also urges Congress to fund FDA and provide it with authority to create a mandatory track and trace system.  As our readers know, Congress has been kicking around this idea for some time (see here).  So far, however, there has been no real movement on the issue.  FDA has had its eye on a track and trace system for almost 10 years (see here and here).  Industry, too, would likely be receptive to a national “pedigree” system.  However, any sort of track and trace legislation proposed by Congress would likely be met with harsh resistance from industry absent a federal preemption provision.  IOM noted this concern, and the potential problems of a piecemeal approach.  We can only imagine the regulatory quagmire and backlash from industry trying to comply with a federal pedigree, along with myriad state pedigrees.  However, IOM recommends that FDA bring together “all industry stakeholders” to work together on the issue. 

For its part, FDA has already issued a public statement on the IOM report, and stated that it is “transforming from a predominantly domestically focused agency to one that is fully prepared to help ensure product safety and quality within a globalized world.”  How FDA will be able to meet these growing and changing needs, in addition to its many other functions, remains to be seen.  Stronger regulation and quality oversight in other countries can only benefit the quality of products coming into the U.S., and progress towards a global solution to an increasingly global problem would be encouraging. 

By Kurt R. Karst & Frank J. Sasinowski –

The Orphan Drug Act (“ODA”), which President Ronald Reagan signed into law on January 4, 1983, turned 30 years old in January.  The milestone came just days after the death of actor Jack Klugman, who has been credited as being an important driving force behind the passage of the law.  Klugman, the star of “Quincy, M.E.,” testified before Congress on the ODA, and two episodes of the show focused on the issue of rare diseases: “Seldom Silent, Never Heard” (1981) and “Give Me Your Weak” (1982). 

FDA celebrated the ODA’s 30th anniversary with a series of articles and interviews (see here and here).  And the National Organization for Rare Disorders (“NORD”) put out a great spread, including ODA milestones and 2013 events at which the anniversary will be celebrated, including at Rare Disease Day 2013 (February 28, 2013).  Representative Henry Waxman (D-CA), who was instrumental in the passage of the ODA, also commemorated the anniversary and Klugman’s passing (see here).  

We at Hyman, Phelps & McNamara, P.C. are celebrating the ODA’s 30th anniversary as well . . . . and here on the FDA Law Blog in our own special way.  For several years now we have taken stock of the year that was in orphan drug designations and approvals.  For example, in 2011, we noted that 2010 saw a record number of orphan drug designation applications.  Also in 2011, we saw the publication of a landmark report authored by former Chairman of the NORD Board of Directors and HP&M Director, Frank J. Sasinowski, on the flexibility in FDA’s review of potential treatments for patients with rare diseases (see our previous post here), as well as FDA’s publication of a proposed rule intended to clarify regulatory provisions and make minor improvements to address issues that have arisen since the Agency promulgated its orphan drug regulations in December 1992 (see our previous post here).  In 2012, we celebrated a record number of orphan drug approvals and orphan drug designations in 2011.   In 2013, we don’t have any new records to report on reached in 2012; however, there are some near records, showing that interest in orphan drug remains quite high.  And we’ve looked at some new orphan drug metrics based on information available from FDA’s searchable database for Orphan Designated and or Approved Products that we think readers will find interesting.

In 2012, FDA surpassed the 400 orphan drug approval mark, ending up with 25 orphan drug approvals – just one shy of the record 26 orphan drug approvals set in 2011.  Both orphan drug designations and orphan drug designation requests were down in 2012, with 188 orphan drug designations and 264 orphan drug designation requests.  Records for those metrics were set in 2011 and 2010, respectively, as shown in the table below.  Overall, FDA has granted designation to nealy 70% of the requests submitted to the Agency since 1983. 

The new metrics we decided to look at this year, as reflected in the last two columns of the table below, required some significant number crunching based on data from FDA’s database.  The first metric is the number of drugs designated in a particular year that ended up with an approval.  Thus, for example, in 1984, FDA designated 41 products as orphan drugs, and 24 of those designations ended up with an orphan drug approval.  The second metric is perhaps of greater interest.  It shows the number of days – expressed as an average, median, and range – between orphan drug designation and approval for products designated in that particular year.  Overall, it takes an average of about 4 years and a median of about 3 years from designation to approval.  Excluding the zeros in the table below, the quicked designation-to-approval was 2 days (for epirubicin as a component of adjuvant therapy in patients with evidence of axillary node tumor involvement following resection of primary breast cancer), and the longest designation-to-approval was 9,529 days (for factor XIII concentrate (human) for the routine prophylactic treatment of congenital factor XIII deficiency). It should be noted that the figures in the last column include a small percentage – about 2.9% – of products that were approved before designation was granted.  Those anomalies occurred in 1984, 1985, 1987, 1991, 2008, 2010, and 2011, and, in most cases, before the ODA was amended to require that a company request designation before submission of a marketing application for the orphan drug.  Instead of counting those days in the negative, we counted them towards the overall figures. 

Outside of the 2012 statistics, it is also worth noting that 2012 saw significant litigation involving the ODA, as well as the first ever rescission of orphan drug exclusivity – for  Octapharma USA, Inc.’s WILATE (von Willebrand Factor/Coagulation Factor VIII Complex (Human)) for von Willebrand disease (see our previous post here).  The first piece of litigation was brought against FDA by K-V Pharmaceutical Company to “restore” orphan drug exclusivity for the pre-term birth drug MAKENA (hydroxyprogesterone caproate) Injection.  As we previously reported, the case was dismissed in the DC District Court, but is on appeal to the DC Circuit (Case No. 12-5349).  The second piece of litigation was brought against FDA by Depomed, Inc., which, as we previously reported, filed a Complaint in the DC District Court challenging FDA’s denial of orphan drug exclusivity for GRALISE (gabapentin) Tablets.   In January, Depomed filed a Motion for Summary Judgment.  Last week, FDA filed a Motion to Dismiss/Motion for Summary Judgment in the case.

By Riëtte van Laack –

On February 11, FDA issued its response to a December 2009 citizen petition (Docket No. FDA-2009-P-0587-0013) requesting that FDA issue an order confirming that certain prescription prenatal vitamins containing 1-4 mg folic acid, either alone or in combination with other vitamins and mineral, are generally recognized as safe and effective (“GRAS/E”) prescription drug products and therefore may be marketed without an approved new drug application (“NDA”) or abbreviated NDA (“ANDA”) (see our previous post here).

As explained in FDA’s response, in a 2004 report to Congress, FDA had determined that prescription drug products have certain characteristics that make them unsuitable for marketing under a monograph system similar to the system used for certain over-the-counter drug products.  In a footnote, the Agency clarifies why the one exception to this rule, the Rx monograph for prescription radioactive drugs for basic research, 21 C.F.R. § 361.1, is not an applicable precedent.

Citing case law supporting that the term “new drug” refers to the entire drug product, i.e., the active ingredient (s) and excipients, the Agency concludes that to determine GRAS/E status for the prescription prenatal vitamin products, each product must be shown safe and effective in adequate and well-controlled clinical studies.  GRAS/E status of one drug product cannot be used to support GRAS/E status of another drug product with the same active ingredient.  Moreover, GRAS/E status must be supported by at least the same quality and quantity of scientific evidence as is required for approval of an NDA.

The impact of this denial likely will be small.  FDA on various occasions and in different contexts has affirmed that folic-acid containing prenatal vitamins are safe and effective.  Although the Agency has confirmed that prenatal vitamins marketed as prescription drugs are not exempt from its Compliance Policy Guide (see our previous post here), the Agency has not taken action against the marketing of these products as unapproved prescription drugs.

FDA’s denial leaves the regulation of prenatal vitamins essentially where it has been for over 20 years – is a state of confusion.  The products are safe and effective, and are essential from a public health standpoint, but should they be marketed as unapproved drugs, medical foods, or dietary supplements?  There are examples of prenatal products on the market in each category, and an argument can be made is support of all three.  It is likely that this confusion will remain, as this appears to be a very low priority issue for FDA, given the lack of safety concerns and the need for prenatal vitamins.  Therefore, with some restrictions as to ingredients and claims, companies marketing these products should be able to continue to choose the category that best fits their marketing strategy.

By Kurt R. Karst –       

A rather interesting and unexpected (to most) ANDA approval popped up on FDA’s website late last week.  On February 6, 2013, FDA approved Macleods Pharmaceuticals Limited’s (“Macleods’”) ANDA No. 202467 for a generic version of ACTOS (pioglitazone HCl) Tablets, 15 mg, 30 mg, and 45 mg.  What’s interesting is that Macleods is not a first-filer eligible for 180-day exclusivity, and the exclusivity periods for each strength, which were triggered last August, are not over until later this week.  Macleods was able to obtain FDA approval to market its drug product by virtue of a selective waiver of a first-filer’s exclusivity.  According to FDA’s ANDA approval letter:

With respect to 180-day generic drug exclusivity, we note that Ranbaxy Laboratories Limited (Ranbaxy) was a first ANDA applicant to submit a substantially complete ANDA with a paragraph IV certification to the listed patents.  Therefore, Ranbaxy is eligible for 180-day exclusivity for Pioglitazone Tablets USP, 15 mg, 30 mg, and 45 mg. Ranbaxy’s exclusivity was triggered on August 17, 2012, when it commenced marketing an authorized generic of all three strengths of Pioglitazone Tablets, USP.  In a letter dated January 15, 2012, [REDACTED] informed the agency that, with respect to Macleod’s ANDA 202467, [REDACTED] was selectively waiving its rights to 180-day exclusivity effective on February 6, 2012.

(Although the name of the waiving company is redacted in the approval letter, Ranbaxy is the logical choice.) 

As we previously reported (here and here), FDA is embroiled in litigation over 180-day exclusivity for generic ACTOS, which is governed by the version of the statute in effect prior to the December 2003 enactment of the Medicare Modernization Act (“MMA”) when 180-day exclusivity was patent-by-patent.  In October 2012, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia ruled against FDA in a challenge brought by Watson Laboratories, Inc. (“Watson”), and ordered FDA (for the first time ever) to approve the company’s ANDA No. 076798.  FDA had previously determined that Watson was not eligible for 180-day exclusivity, but that two other companies – Mylan (ANDA No. 076801) and Ranbaxy (ANDA No. 076800) – were eligible for shared exclusivity.  Both FDA and Mylan have appealed the district court decision to the U.S. Court of Appeals for the District of Columbia Circuit, where briefing is well underway but a date for Oral Argument has not yet been scheduled.  (Copies of FDA’s briefs in the case are available here and here; Mylan’s briefs are available here and here; and Watson’s brief is available here.)  As we previously noted, Judge Jackson’s decision, if it stands, seems to have effects on post-MMA 180-day exclusivity insofar as her decision means that a patent amendment to an ANDA does not count for 180-day exclusivity purposes.  Indeed, FDA has made the same connection in its briefing in the case (see here at pages 36-38).

The Macleods ANDA approval also raises an interesting post-MMA issue, and one that we have speculated on before: selective waiver of 180-day exclusivity post-MMA where there are multiple first applicants who might share 180-day exclusivity.  There is still no precedent for this scenario.  Back in June 2010 we commented that “[b]eing a first applicant means that you are the member of an exclusive club.  So to allow a non-member to share in the benefits of club membership, it seems possible that FDA would require all first applicants (whether 1 or 10) to agree in writing that a subsequent applicant should be accorded the benefits of club membership.” 

The Macleods ANDA approval, which, we repeat, concerns pre-MMA exclusivity shared among multiple first filers, might nevertheless inform how FDA might address the issue post-MMA.  In this case, FDA clearly did not seek consent from other first filers concerning Ranbaxy’s selective waiver of 180-day exclusivity.  After some digging, we found two other pre-MMA shared exclusivity cases – one concerning Metformin HCl Extended-release Tablets (see here), and another concerning Topirimate Sprinkle Capsules (see here).  Similar to the selective waiver for Pioglitazone HCl Tablets, there is no indication that consent was sought or obtained in either of those cases.  If FDA ultimately does address the issue of a post-MMA selective waiver of exclusivity shared among multiple first filers and requires consent among all first applicants (or perhaps all eligible first applicants), then the Agency will likely have to explain why the post-MMA world differs from the pre-MMA world in this respect and how the three above-referenced pre-MMA decisions would be differ in a post-MMA world.

By Kurt R. Karst –  

Two recent citizen petitions submitted to FDA – one from Gilead Sciences, Inc. (“Gilead”) under Docket No. FDA-2013-P-0058, and another from Ferring Pharmaceuticals, Inc. (“Ferring”) under Docket No. FDA-2013-P-0119 – take issue with FDA’s long-standing position that in order for a fixed-dose combination drug to be eligible for 5-year New Chemical Entity (“NCE”) exclusivity, each of the active moieties in the drug product must be new (i.e., not previously approved).  Although there are myriad instances throughout Hatch-Waxman history in which FDA has applied this principle – either to grant or deny NCE exclusivity for a combination drug – the Gilead and Ferring petitions appear to be the first instances in which companies have publicly challenged FDA’s application of the FDC Act in this respect.  Both petitions advance some rather interesting legal and policy arguments in favor of NCE exclusivity, and, provided FDA denies both petitions, arguments that may be raised again in litigation with FDA.

Before we touch on the Gilead and Ferring petitions, we need to first provide the lay of the land.  The statutory 5-year NCE exclusivity provision at FDC Act § 505(j)(5)(F)(ii) applicable to ANDAs states in relevant part:

If an application submitted under [FDC Act § 505(b)] for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application under [FDC Act § 505(b)], is approved after the date of the enactment of this subsection, no application may be submitted under this subsection which refers to the drug for which the [FDC Act § 505(b)] application was submitted before the expiration of five years from the date of the approval of the application under [FDC Act § 505(b)], except that such an application may be submitted under this subsection after the expiration of four years from the date of the approval of the [FDC Act § 505(b)] application if it contains a [Paragraph IV certification].

(There is a slightly different corresponding provision at FDC Act § 505(c)(3)(E)(ii) applicable to 505(b)(2) applications.) 

FDA’s regulation at 21 C.F.R. § 314.108(b)(2) implements the statutory 5-year NCE exclusivity provisions and states, in relevant part, that:

If a drug product that contains a [NCE] was approved after September 24, 1984, in an application submitted under [FDC Act § 505(b)], no person may submit a 505(b)(2) application or [ANDA] under [FDC Act § 505(j)] for a drug product that contains the same active moiety as in the [NCE] for a period of 5 years from the date of approval of the first approved [NDA], except that the 505(b)(2) application or [ANDA] may be submitted after 4 years if it contains a [Paragraph IV] certification . . . . 

Thus, the regulation precludes FDA from accepting ANDAs and 505(b)(2) applications for drugs that contain the same active moiety as in a previously approved NCE.  If a drug
product contains any previously approved active moiety (i.e., it is not compsed of all NCEs), then FDA has historically denied NCE exclusivity and granted 3-year exclusivity, provided the statutory requirements are met.  This means that order counts, and that to obtain NCE exclusivity for a combination drug containing new and old actives, the NCE component must be approved first, followed by the combination drug.  In that case, NCE exclusivity granted with respect to the single entity approval would apply to the combination drug under FDA’s so-called “umbrella policy.”  See 54 Fed. Reg. 28,872, 28,897 (July 10, 1989) (“[W]hen exclusivity attaches to an active moiety or to an innovative change in an already approved drug, the submission or effective date of approval of ANDA’s and 505(b)(2) applications for a drug with that active moiety or innovative change will be delayed until the innovator’s exclusivity has expired, whether or not FDA has approved subsequent versions of the drugs entitled to exclusivity, and regardless of the specific listed drug product to which the ANDA or 505(b)(2) application refers.”).

Another FDA regulation, 21 CFR § 314.108(a), defines the term “new chemical entity” to mean “a drug that contains no active moiety that has been approved by FDA in any other application submitted under [FDC Act § 505(b)].”  The term “active moiety” is defined in the same regulation to mean:

the molecule or ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt (including a salt with hydrogen or coordination bonds), or other noncovalent derivative (such as a complex, chelate, or clathrate) of the molecule, responsible for the physiological or pharmacological action of the drug substance.

As we previously discussed, FDA has articulated a structure-centric interpretation of “active moiety” (rather than an activity-based interpretation) under which a drug is classified as an NCE regardless of which portions of the active ingredient contribute to the overall therapeutic effect of the drug.  This form over function approach means that relatively small changes to a molecule, such as deuterium analogues of various approved compounds (see here, here, and here), may qualify for NCE exclusivity, while more significant changes that improve the activity of a drug, but that do not change the molecule that is the active moiety, would not result in NCE exclusivity.  Although FDA’s structure-centric interpretation of “active moiety” is not per se at issue in the Gilead and Ferring petitions, the form over function approach that that interpretation embodies is at issue.  

Gilead’s petition concerns STRIBILD (elvitegravir, cobicistat, emtricitabine, tenofovir disoproxil fumarate) Tablets, which FDA approved on August 27, 2012 under NDA No. 203100 for the treatment of HIV.  FDA’s Orange Book does not yet reflect an exclusivity determination by the Agency; however, the Gilead petition presumes that if the Agency follows past practice, then NCE exclusivity will be denied on the basis that two of the components in STRIBILD, namely emtricitabine and tenofovir disoproxil fumarate, were previously approved.  The elvitegravir and cobicistat components are NCEs. 

According to Gilead:

FDA’s historical interpretation is not binding. . . . [A] new interpretation of the exclusivity provisions applicable to new active moieties in [fixed-dose combinations] should be adopted and can immediately be put into practice.  A new interpretation is fully justified under the statute; is consistent with the agency’s regulations; and is necessary to keep pace with advances in medical science.

And what is that new interpretation?  Gilead says that the FDC Act is subject to multiple interpretations, but that “the best reading of the statute – and the one that best reflects the agency’s rulemaking choices – is that for a 505(b) application that contains a fixed dose combination of drugs, the exclusivity must be analyzed and granted as to each drug that is the subject of the application” (emphasis added).  That is, NCE exclusivity should be evaluated on a drug component-by-drug component drug basis.  Why?  Because it naturally fits with FDA’s regulations and supports Congressional intent to reward the development of new active moieties, says Gilead. 

FDA’s historical approach, writes Gilead, leads to illogical and arbitrary results, such as forcing sponsors to first obtain approval of the NCE (if that is even possible), followed by the combination drug.  Moreover, “rigid application of FDA’s historical interpretation to [fixed dose combinations] also creates inconsistent exclusivity determinations with respect to cross-labeled drug combinations,” such as PREZISTA (darunavir ethanolate), which is an NCE that must be co-administered with ritonavir.  In addition, Gilead points to recent legislation, such as the 2007 FDA Amendments Act, and administrative changes to the NDA review process that support a change in statutory interpretation.

Ferring’s petition concerns PREPOPIK (sodium picosulfate, magnesium oxide and citric acid) for Oral Solution, 10 mg sodium picosulfate/sachet, a colong cleansing drug that FDA approved on July 16, 2012 under NDA No. 202535.  Although the sodium picosulfate component is new, FDA has previously approved drug products containing magnesium oxide and citric acid.  As opposed to STRIBILD, FDA has already make an exclusivity determination with respect to PREPOPIK, granting Ferring 3-year exclusivity instead of 5-year NCE exclusivity.  Another difference is that the sodium picosulfate NCE component in PREPOPIK is not suitable for development as a single-entity drug product, because, according to Ferring, “FDA’s reviews concluded that conducting clinical trials for a single ingredient sodium picosulfate drug would be unethical.”

Ferring advances several arguments in favor of FDA granting NCE exclusivity, including:

(1)  that the intent of the Hatch-Waxman Amendments is to reward sponsors that develop and obtain approval of NCEs, and the denial of NCE exclusivity for PREPOPIK is inconsistent with the legislative history of the law;

(2)  that the need to reduce unnecessary and duplicative research (and avoid unethical research), as evidenced in FDA’s interpretation of FDC Act § 505(b)(2) and policy concerning hybrid New Animal Drug Applications, is consistent with an award of NCE exclusivity for PREPOPIK;

(3)  that FDA’s application of NCE exclusivity to other combination drugs under the Agency’s “umbrella policy” (noted above) shows “that FDA does, in effect, grant five-year exclusivity protection to drugs that are combinations that contain previously approved active ingredients, so long as the single active ingredient drug containing the novel active ingredient is approved first;” and

(4)  that FDA’s so-called “Animal Efficacy Rule,” 21 C.F.R. § 314.610 (drugs), § 601.91 (biologics), under which FDA can rely on evidence from animal studies to provide substantial evidence of effectiveness when it is unethical or unfeasible to conduct human efficacy studies to obtain approval of a countermeasure product, supports “the position that FDA takes public health objectives into consideration when interpreting statutory language.”  Accordingly, says Ferring, because the company “was ethically barred from conducting a study of single ingredient sodium picosulfate without including the other ingredients magnesium oxide and anhydrous,” “FDA should treat Ferring’s situation similar to those cases where FDA approved a drug product and granted exclusivity based on animal studies.”  In each of those cases, FDA presumably granted 3-year exclusivity on the basis of the human safety studies conducted by the NDA sponsor.  See, e.g., FDA Exclusivity Summary for CYANOKIT (hydroxocobalamin for injection), NDA No. 022041 (here).  Under the Animal Efficacy Rule, evaluation of the product for safety in humans is still required and cannot be addressed by animal studies alone.

It is unclear when FDA might respond to both the Gilead and Ferring petitions; however, FDA may be forced to make decisions if a company submits an ANDA in the near future, and before what would otherwise be the “NCE-1” date (i.e., four years after the NCE NDA approval).

On January 31, 2013, Hyman, Phelps & McNamara, P.C. presented a webinar addressing the real-world implications from the Second Circuit decision in United States v. Caronia.  Panelists addressed the potential impacts to the pharmaceutical, devices, dietary supplements, and tobacco industries.
 
HP&M was quite pleased that hundreds of sites participated in the webinar.  The audio link is now available (here), and the slides can be downloaded from the HP&M website (here).

By Ricardo Carvajal –

FDA announced a somewhat unusual consent decree for permanent injunction in which a manufacturer of fruit and juice products agreed to retain a labeling expert (among other experts) to ensure compliance with applicable FDA regulations.  In part, the government alleged that the juice products were misbranded because they were labeled as “natural” and “100% natural” even though they contained “chemical additives such as sodium benzoate, and artificial colorants Yellow #5 and Red #40.”  The product labels were further alleged to bear impermissible nutrient content claims.  The government also alleged that the products were adulterated due to failure to comply with cGMP and HACCP requirements.  These were alleged to be repeat violations.

Under the terms of the consent decree, the manufacturer and its president (Defendants) are permanently enjoined from marketing food “unless and until… Defendants retain, at Defendants’ expense, an independent person or persons (the “Labeling Expert”)… who by reason of background, experience, education, and training is qualified to review Defendants’ labeling and ensure that all such labels are in compliance with the applicable FDA regulations.”  The Labeling Expert must review all of the labels and submit a written report to the Defendants and FDA.  The Defendants must also retain sanitation and HACCP experts. 

By Alan M. Kirschenbaum & Jennifer D. Newberger –

Sixteen months past its statutory deadline, CMS issued last Friday a pre-publication version of its final regulation implementing the physician payment transparency provisions of the Patient Protection and Affordable Care Act.  The rule is scheduled for publication in the Federal Register on February 8.  However, not to lose any more time, Hyman, Phelps & McNamara has prepared a memorandum summarizing the final rule, which is available here.

Transparency reporting will impose a major burden on drug and device manufacturers.  CMS estimates that the infrastructure and labor costs for manufacturers and GPOs to implement the requirements will total over $205 million in the first year alone.  Having said that, CMS (with help from OMB) did make significant changes to its December 2011 proposed regulation, which somewhat narrow the scope of the rule.  Among the more notable changes are the following (page references are to our summary memorandum):

• Manufacturers will not be required to begin tracking payments until August 1, 2013, and the first report (for the remainder of 2013) will be due by March 31, 2014.  (39)

• The definition of an “applicable manufacturer” subject to reporting has been narrowed by excluding companies that have no physical presence or activities in the U.S. (3), and hospitals, hospital pharmacies, and compounding pharmacies that prepare drugs or devices for their own patients (4).

• Compared with the proposed rule, the reporting burden is reduced for companies that only manufacture drugs or devices under contract (6-7); those whose gross revenue from covered products is less than ten percent of total gross revenue (7-8); those that assist corporate affiliates with manufacturing, marketing, promotion, sale, or distribution (8); and those with operating divisions that do not manufacture covered products (8).

• Payments for continuing medical education programs that are accredited by the ACCME or other specified accrediting organization need not be reported, as long as the manufacturer neither pays faculty directly nor suggests or recommends faculty members.  (16)

• CMS has changed the rules on reporting meals provided to physicians in a group setting, so that meals will not be attributed to physicians who do not eat the meal, as originally proposed (16). 

• The proposed regulation’s confusing and duplicative methodology for reporting research payments has been replaced by a simpler system under which a research payment (regardless whether direct or indirect) is reported only once, along with information on the recipient institution and the principal investigator(s).  (17-18)

• Manufacturers will not be charged with knowledge of the identities of physicians paid by third parties to participate in blinded market research studies.  (22)

The rule and preamble contain numerous other changes and clarifications, which are outlined in our memorandum.  

Lest our readers become discouraged by the burden of transparency reporting and the complexity of the rule, we leave you with this quote from Sherlock Holmes in “His Last Bow,” by Arthur Conan Doyle:

There's an east wind coming all the same … It will be cold and bitter, Watson, and a good many of us may wither before its blast.  But it's God's own wind none the less, and a cleaner, better, stronger land will lie in the sunshine when the storm has cleared.

By Kurt R. Karst –      

As if on cue after our post yesterday concerning briefing in FTC v. Watson Pharmaceuticals, Inc. (Docket No. 12-416), where the U.S. Supreme Court will consider whether drug patent settlement agreements (aka “reverse payment agreements” or “pay-for-delay agreements”) are generally per se lawful, or presumptively anticompetitive and unlawful under federal competition laws, and ending with a reference to potential legislation on the horizon, Senator Amy Klobuchar (D-MN), along with Sens. Chuck Grassley (R-IA), Dick Durbin (D-IL) and Al Franken (D-MN), introduced S. 214, the Preserve Access to Affordable Generics Act.  The bill is the latest iteration of the the Preserve Access to Affordable Generics Act, which was championed by now-retired Sen. Herb Kohl (D-WI) in the 112th Congress (as S. 27) and in the 111th Congress (as S. 369), along with the current sponsors of S. 214. 

After reviewing the bill line-by-line, that old saying about the definition of insanity came to mind.  (You know, that insanity is doing the same thing over and over again and expecting different results.)  Other than updating some facts and figures in the findings section of the bill, and removing an effective date provision that appeared in the version of the bill introduced in the 112th Congress, S. 214 is a mirror image of S. 27.  So our summary of the bill is essentially the same as it was back then (see here).

S. 214 would amend the Federal Trade Commission Act (“FTC Act”) to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 28] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product” – at least insofar as ANDAs are concerned.  (The bill does not address patent settlement agreements in the context of 505(b)(2) applications, some of which may be nearly a duplicate of the brand-name listed drug relied on for approval.)   Such agreements, if challenged, would be presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”  In addition, “[e]ach person, partnership or corporation that violates or assists in the violation of [new Sec. 28] shall forfeit and pay to the United States a civil penalty of not more than 3 times the gross revenue of the NDA holder from sales of the drug product that is the subject of the patent infringement claim for the period of the violation, starting with the date of the agreement.”  Also, an agreement that violates new Sec. 28 would result in a forfeiture of 180-day exclusivity eligibility.

The omission of an effective date provision in S. 214 is a bit troubling.  Without it, and provided the bill becomes law, the FTC could potentially take action against companies that entered into drug patent settlement agreements long ago. 

Because S. 214 is effectively the same bill as introduced last session, it does not address any of the “substantive concerns” voiced by some Republicans and Democrats back in 2010 (see here and here).  For example, the bill does not address concerns that it gives “excessive power over such settlements to the FTC – a power that the FTC has shown itself in the past to be unable to exercise in a responsible or economically rational manner – and that the bill would do serious violence to the Hatch-Waxman process for the market entry of generic drugs.” 

And because S. 214 has not substantively changed, it seems unlikely that prior criticism of the bill’s legal presumption rule will change.  For example, back in February 2010 in a report on S. 369 (see here, pages 18-24), Sens. Orrin Hatch (R-UT), Jon Kyl (R-AZ), John Cornyn (R-TX), and Tom Coburn (R-OK) commented:

the bill would amount to a de facto per se ban on covered settlements and would entail all of the evils attendant to a per se ban . . . .  For a legal-presumption rule to work, however, the parties must be afforded a forum in which they can quickly and fairly test whether they have overcome the presumption and whether the agreement is valid.  Unfortunately, under the reported bill, settlements would be made presumptively unlawful, but the bill does not create a process for quickly resolving whether the agreement is unlawful.  The issue would not be resolved until the FTC brings an action to challenge the settlement, which could be years after the settlement was entered into.  Moreover, the current bill requires the brand and generic companies to rebut the presumption that the agreement is unlawful by clear and convincing evidence.  This is a heavy burden that is not appropriate for commercial litigation and that tilts the scales in a lawsuit sharply in the government’s favor. . . .  By effectively preventing the parties from settling, it is likely that this bill will discourage generic drug companies from bringing challenges to brand companies’ patents in the first place—and as a result, the bill will ultimately reduce competition and raise prices for drugs that are currently subject to invalid or low-quality patents.

Whether the 113th Congress will be the charm for drug patent settlement legislation is anyone’s guess.  Much depends on how the U.S. Supreme Court ultimately rules in the ANDROGEL case.  And as the Supreme Court mulls over the issue, it it quite possible that alternatives to the Preserve Access to Affordable Generics Act will be introduced in Congress.  In addition to the Preserve Access to Affordable Generics Act, the 112th Congress saw the introduction of the Protecting Consumer Access to Generic Drugs Act of 2012 and the Fair And Immediate Release of Generic Drugs Act, or the “FAIR GENERxICS Act,” which we reported on here and here, and that propose different ways of addressing the issue of drug patent settlement agreements.  

By Kurt R. Karst –

Excitement is building (and will soon reach fever pitch) over the U.S. Supreme Court’s March 25, 2012 Oral Argument in Federal Trade Commission v. Watson Pharmaceuticals, Inc. (Docket No. 12-416) concerning whether drug patent settlement agreements (aka “reverse payment agreements” or “pay-for-delay agreements”) are generally per se lawful, or presumptively anticompetitive and unlawful under federal competition laws.  As we previously reported, the Supreme Court agreed to hear the case after the U.S. Court of Appeals for the Eleventh Circuit affirmed, in April 2012, a February 2010 decision by the U.S. District Court for the Northern District of Georgia largely dismissing multidistrict litigation brought by the FTC (and certain private plaintiffs) challenging certain drug patent settlement agreements in which Solvay Pharmaceuticals, Inc. (“Solvay”) allegedly paid some generic drug companies to delay generic competition to Solvay’s drug product ANDROGEL (testosterone gel).  The Eleventh Circuit, following the Court’s previous holdings in Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294, 1296 (11th Cir. 2003), Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005), and Andrx Pharmaceuticals, Inc. v. Elan Corp., 421 F.3d 1227 (11th Cir. 2005), held that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.”  This “scope of the patent test” is different from the so-called “quick look rule of reason” analysis advocated by the FTC in its opening brief in the ANDROGEL case.  As the U.S. Court of Appeals for the Third Circuit explained in In Re: K-DUR Antitrust Litigation in rejecting the “scope of the patent test” and applying the “quick look” rule, under the “quick look” rule “the finder of fact must treat any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market as prima facie evidence of an unreasonable restraint of trade, which could be rebutted by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.”  (Two petitions to the U.S. Supreme Court appealing the Third Circuit’s ruling are still pending – Docket Nos. 12-245 and 12-265.) 

Several amicus briefs have been submitted to the U.S. Supeme Court from various parties in support of the FTC’s position.  A brief rundown of each amicus brief is provided below.

AARP/AMA/ NLARx/ U.S. PIRG.  In a joint brief, AARP, the American Medical Association (“AMA”), the National Legislative Association for Prescription Drug Prices (“NLARx”), and the federation of state Public Interest Research Groups, U.S. PIRG, argue that if left to stand, the Eleventh Circuit’s ANDROGEL decision “will have a devastating impact on American consumers.”  According to the groups, the Eleventh Circuit’s decision defeats the protections of the Hatch-Waxman Amendments and undermines the enforcement of the Sherman Act, will result in increased use of drug patent settlement agreements to prevent competition and that harms consumers, and will not protect incentives to innovate as some have argued.  Last November, the AMA came out in support of federal legislation to “end the practice of pay for delay in prescription medicine.”

Knowledge Ecology International (“KEI”).  KEI, which is an international non-profit, non-governmental organization focused on the management of “knowledge resources” in the context of social justice, argues in its amicus brief that if the Eleventh Circuit’s decision stands, then it is “likely to
permit pharmaceutical companies to preserve improper monopolies over weak patents and greatly delay the entry of generics into the market, thereby adversely impacting patients.”  Instead, says KEI, the Supreme Court should adopt the Third Circuit’s “quick look rule of reason” analysis with respect to the antitrust scrutiny applied to drug patent settlement agreements.

Direct Purchasers.  A groups of companies consisting of the Louisiana Wholesale Drug
Company, Inc., CVS Pharmacy, Inc., Rite Aid Corporation, Walgreen Co., Eckerd Corporation, The Kroger Co., Safeway Inc., Albertson’s, Inc., Hy-Vee, Inc., and Maxi Drug, Inc. provide in their amicus brief a series of cases involving several drug products that they contend show the threat drug patent settlement agreements pose to competition in the pharmaceutical market.  According to them, these case show the inadequacies of the Eleventh Circuit’s decision, which “virtually impels horizontal competitors to join together to split monopoly profits that would otherwise be competed away to the benefit of consumers.”  Applying a “quick look rule of reason” analysis, however, “would substantially encourage competition,” because “the parties would be free to reach an alternative no-payment settlement with an earlier entry date or litigate to a conclusion that would lead to earlier generic entry or establish the brand’s right to exclude.”

American Antitrust Institute (“AAI”)/Academics.  AAI, a self-described “independent and non-profit education, research, and advocacy organization devoted to advancing the role of competition in the economy, protecting consumers, and sustaining the vitality of the antitrust laws,” and a long list of academics, including professors of economics, business, innovation, antitrust law, and intellectual property law, argue in their amicus brief that the Eleventh Circuit’s decision is flawed and threatens to undermine competition in the drug industry and the Hatch-Waxman Amendments by unnaturally delaying generic drug competition.  According to the amici, the goal of 180-day exclusivity under the Hatch-Waxman Amendments “was to encourage generic manufacturers to challenge weak patents and enter the market earlier with cheaper drugs.  But this carefully crafted scheme has been upended by brands’ payments of millions of dollars to generics to abandon their patent challenges and delay entering the market.”  That is, 180-day exclusivity “has been twisted from an incentive for generics to challenge patents to a barrier to entry preventing challenge.”  Applying a “quick look” analysis is the way to go when evaluating drug patent settlement agreements under the antitrust laws, say amici. 

State Attorneys General.  The Attorneys General from 36 states, the District of Columbia, and the Commonwealth of Puerto Rico say in their amicus brief that they have a “strong interest in vindicating the [FTC’s] position” that drug patent settlement agreements presumptively violate the federal antitrust laws, because they “cause direct and substantial economic harm to the States and their residents by increasing drug prices and restricting consumer choice.”  Citing to the Third Circuit’s K-Dur decision, the Attorneys General write that:

Drug patent settlement agreements under which a brand-name manufacturer extends financial consideration to a generic challenger, and the challenger agrees to delay entry into the market, carry an overwhelming tendency to perpetuate monopolies improperly, beyond any point justified by the strength of the patents held by the brand-name manufacturers.  Consequently, this Court should adopt a presumption that pay-for-delay drug patent settlements are anticompetitive and unlawful.  Such a settlement should be treated as an unreasonable restraint of trade, unless the settling parties can show that the agreement has procompetitive benefits or that the payment does not represent an inducement to delay entry.

A similar group of state Attorneys General filed a brief in support of the FTC’s Petition for Writ of Certiorari in the ANDROGEL case.

America’s Health Insurance Plans (“AHIP”).  In a rather brief amicus brief, AHIP, the national association representing the health insurance industry, says that drug patent settlement agreements that delay generic competition are “insidious” and are “economically damaging . . . artifices” that must be torn down. 

Public Patent Foundation (“PUBPAT”).  PUBPAT is a non-profit legal services organization affiliated with the Benjamin N. Cardozo School of Law that “represents the public interest in ensuring that only valid patents remain in force so that full and fair competition can take place without the impediment of improperly granted patents.”  Based on that description, you know exactly where they are headed in their amicus brief.  But as opposed to other amicus briefs, PUBPAT takes a different route to end up with the conclusion that drug patent settlement agreements are presumptively anticompetitive and unlawful.  PUBPAT takes issue with the Patent and Trademark Office:

People unfamiliar with the patent system, including specifically the Court of Appeals in this case, tend to give patents entirely too much credit.  Rather than being rock-solid undeniable fortresses of legal dominance over the claimed subject matter, patents today are nothing more than some overly worked patent examiner’s decision to allow claims requested by an applicant.  They result from a Patent Office with perverse incentives to grant, rather than deny, applications and, in reality, give their owner nothing more than, at best, a fifty-fifty chance of having any exclusionary power at all.  In fact, in the vast majority of pharmaceutical patent cases, 70% or more, the generic challenger wins.

As such, the Court of Appeals’ assumption that a given patent has a potential exclusionary power equal to its full term is factually meritless and legally unsustainable.  The Court of Appeals also erred by failing to recognize the substantial pro-competitive benefits of legal challenges to patents, and in particular the judiciary’s critical role in checking patent quality and patent scope, which this Court has repeatedly recognized.  In short, earnest patent litigation is pro-competitive, as are legitimate settlements thereof that recognize the relative strengths and weaknesses of the parties’ respective positions. However, settlements with transparent bribes for challengers to take a dive cannot be reconciled with any sound public policy or legal precedent.

Some shades of PUBPAT’s criticisms are reflected in an opinion piece noted at the end of this post.

National Association of Chain Drug Stores (“NACDS”).  NACDS, which represents various traditional drug stores, supermarkets, and mass merchants with pharmacies, is well known in the drug patent settlement agreement space, having filed 9 amicus briefs in 6 appellate cases and in the U.S. Supreme Court.  In their latest amicus brief, NACDS once again rails against drug patent settlement agreements.  In doing so, NACDS seeks to refute the suggestion by some courts that exclusion payments are a “natural byproduct” of the Hatch-Waxman Amendments.  Rather, says NACDS, they are a “subversion” of the Hatch-Waxman Amendments.

Representative Henry A. Waxman (D-CA).  In arguing for reversal of the Eleventh Circuit’s decision, Rep. Waxman seeks to provide in his amicus brief additional color on the policies underlying his namesake law and later amendments to it, such as the 2003 Medicare Modernization Act.  Quoting from the K-Dur decision, Rep. Waxman says:

The policy chosen by the Eleventh Circuit, however much it may benefit brand-name manufacturers who wish to preserve their monopoly profits and generic manufacturers who seek a slice of those profits, “is bad policy from the perspective of the consumer, precisely the constituency Congress was seeking to protect.”  Judicial policy preferences “should not displace countervailing public policy objectives or, in this case, Congress’s determination—which is evident from the structure of the Hatch–Waxman Act and the statements in the legislative record—that litigated patent challenges are necessary to protect consumers from unjustified monopolies by name brand drug manufacturers.”  The predictable result of the policy that the Eleventh Circuit has substituted for that of Congress will be less competition and higher drug prices for all Americans.

Apotex, Inc.  Generic drug manufacturer Apotex has been a staunch advocate of legislation to address drug patent settlement agreements, including legislation that brings 180-day exclusivity into the fray (see here).  Apotex’s amicus brief, therefore, argues for heightened antitrust scrutiny of drug patent settlement agreements.  That is, Apotex argues for a reversal of the Eleventh Circuit’s adoption of the “scope of the patent test.”  In doing so, Apotex seeks to bring to the Supreme Court’s attention what the company says are “several errors in a critical assumption underlying the scope-of-the-patent test.”  In particular, says Apotex, is the erroneous assumption that non-settling generic drug manufacturers will come forward to challenge weak drug patents:

Non-settling generic manufacturers do not have the same incentives to challenge a patent in the face of a settlement agreement between a brand-name manufacturer and the initial generic challenger.  In fact, non-settling generic manufacturers are actively discouraged from continuing to maintain their own challenges to the patent at issue.  Moreover, in many situations, the underlying economics would allow brand-name manufacturers to essentially “buy off” all possible challengers.

As a result, . . . the scope-of-the-patent does not properly “recognize and reflect the distinctive economic and legal setting of the regulated industry to which it applies.”  This misapprehension of the economic and legal landscape further demonstrates why this Court should reject the scope-of- the-patent test in favor of the “quick look,” truncated rule-of-reason analysis adopted by the Third Circuit in K-Dur. [(Emphasis in original)]

That’s it for the amicus briefs filed thus far in the ANDROGEL case.  However, we also want to point out a rather interesting opinion piece that appeared in Politico late last week authored by Alfred Engelberg.  Mr. Engelberg, who is a trustee of the Brookings Institution and the founder of the Engelberg Center for Health Care Reform at Brookings, was also patent counsel to the Generic Pharmaceutical Industry Association and acted as the organization’s principal representative on patent matters during Hatch-Waxman negotiations.  He has written extensively about the law (see, e.g., here). 

According to Mr. Engelberg, the U.S. Supreme Court is unlikely to rule for the FTC in the ANDROGEL case.  Nevertheless, says Mr. Engelberg, Congress should act to amend Hatch-Waxman and the patent laws to deal with the unforeseen consequence of reverse payments.  The economic realities that existed in 1984 don’t exist today, says Mr. Engelberg:  

In 1984, when Hatch-Waxman was enacted, the generic drug industry consisted of small, financially unstable companies that lacked the ability to pay damages for patent infringement and preliminary injunctions preventing such infringement were rarely granted by the courts.  The automatic 30-month injunction and the 180-day generic exclusivity rules were enacted as a reasonable response to these economic realities to protect pharmaceutical patent owners. . . .

Today, the generic drug industry is dominated by large public companies that are as fully capable of measuring the risks and rewards of challenging a patent as other industries.  If the special patent provisions of Hatch-Waxman did not exist, one or more generic manufacturers would enter the market as soon as their product was approved by the FDA notwithstanding the existence of a poor quality patent that was acting as a scarecrow to competition.  That risk would be rewarded because the generic manufacturer would immediately begin earning the profits the 180-day market exclusivity was intended to produce and the public would get the immediate benefit of a lower drug price.  If the patent actually has merit, the courts will protect the patent owner by awarding an injunction against future infringement and compensation for lost profits from past infringement.  But low-quality patents would no longer provide an automatic delay in competition, and the first generic challenger would enjoy no advantage over other generic manufacturers willing to take the same patent risk.  In these circumstances, reverse payments would no longer make economic sense.  And, in the long run, pharmaceutical companies are not likely to waste time and money attempting to enforce worthless patents that have no power to prevent market entry.

In addition to fixing the flaws in the Hatch-Waxman Act, Congress must act to strengthen a patent system that issues far too many low-quality pharmaceutical patents.

If the U.S. Supreme Court does ultimately rule against the FTC in the ANDROGEL case, there may, in fact, be a flurry of legislative activity.  Indeed, within hours of the FTC issuing its Fiscal Year 2012 Patent Settlement Report (see our previous post here), Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) issued a press release saying that they plan to renew efforts to end drug patent settlement agreements. 

By Kurt R. Karst –      

We don’t like loose ends – especially loose ends in the Hatch-Waxman world!  Last June, we posted on FDA’s decisions to require sponsors of ANDAs for generic versions of ADDERALL XR (dextroamphetamine mixed salts of a single-entity amphetamine product) Extended-release Capsules to demonstrate bioequivalence using certain partial AUC metrics (see here), and to approve Actavis’ ANDA No. 077302.  As we noted back then, ADDERALL XR is listed in FDA’s Orange Book with four unexpired patents – U.S. Patent Nos. 6,322,819 (“the ‘819 patent), 6,605,300 (“the ‘300 patent”), RE41,148 (“the ‘148 patent”), and RE42,096 (“the ‘096 patent”) – that are all scheduled to expire on October 21, 2018, but that are each subject to a period of pediatric exclusivity that expires on April 21, 2019.  The ‘148 patent is a reissue of the ‘300 patent, and the ‘096 patent is a reissue of the ‘819 patent.  The lack of any mention of 180-day exclusivity in the approval letter for ANDA No. 077302 perplexed us.  We concluded our post with the following comments:

Still unclear is how FDA resolved another round of 180-day generic drug marketing exclusivity for generic ADDERALL XR.  180-day exclusivity for generic ADDERALL XR is governed by the pre-Medicare Modernization Act version of the FDC Act where exclusivity is patent-by-patent and product-by-product.  Exclusivity with respect to the ‘819 and the ‘300 patents (for all strengths) was apparently triggered for another ANDA sponsor with the marketing of an authorized generic (see here).  In April 2010, Actavis submitted a citizen petition (Docket No. FDA-2010-P-0188) to FDA requesting the Agency’s determination that Actavis is entitled to 180-day exclusivity with respect to the ‘148 patent.  We understand that the petition was withdrawn.  [(In fact, it was – see here.)] (The ‘096 patent, which issued on February 1, 2011, first appeared in the February 2011 Orange Book Cumulative Supplement, and presumably triggered a certification from sponsors with pending ANDAs.)

After digging around a bit, we think we now have an answer as to why FDA did not grant 180-day exclusivity with rspect to the ‘148 and ‘096 reissue patents: FDA considers a reissue patent, which corrects an error in an issued patent (see 35 U.S.C. § 251), and its repective parent patent to be the same patent, such that there are not separate periods of 180-day exclusivity wth respect to both the parent and reissue patents.  That is, it is an either/or proposition: either there is a 180-day exclusivity period associated with the parent patent, or a 180-day exclusivity period associated with the reissue patent, but not two exclusivity periods. 

FDA’s policy with respect to the availability of a second round of 180-day exclusivity for “the same” patent – parent and reissue – appears to precede the Agency’s approval of ANDA No. 077302 for ADDERALL XR.  Exactly when FDA decided this issue is unclear; however, we’ve been able to trace the policy back to the September 26, 2008 approval of Mylan’s ANDA No. 077858 for a generic version of ULTRACET (tramadol HCl and acetaminophen) Tablets, 37.5 mg/325 mg.  In that case, Mylan appears to have been the first company to have submitted a Paragraph IV certification to U.S. Patent No. RE39,221 (“the ‘221 patent”), which is a reissue of U.S. Patent No. 5,336,691 (“the ‘691 patent”).  Previously, on April 21, 2005, FDA approved Kali’s ANDA No. 076475 for generic ULTRACET Tablets, 37.5 mg/325 mg.  Kali’s ANDA included a Paragraph IV certification to the ‘691 patent – the only patent listed in the Orange Book at that time for ULTRACET Tablets – and FDA granted Kali 180-day exclusivity with respect to that patent.  FDA did not, however, grant Mylan 180-day exclusivity with respect to its Paragraph IV certification to the ‘221 reissue patent.  Neither Actavis nor Mylan challenged FDA’s decision not to grant 180-day excluivity vis-à-vis the reissue patents.

The disposition of 180-day exclusivity for ULTRACET Tablets, 37.5 mg/325 mg, and the ‘691 and ‘221 patents may very well have been a case of first impression at FDA.  We’re not aware of another, earlier case in which the issue of granting a second period of 180-day exclusivity involving a reissue patent arose.  But the ULTRACET case does seem to represent a departure from earlier 180-day exclusivity decisions involving parent and reissue patents.  Take, for example, FDA’s April 5, 2002 approval of Barr’s ANDA No. 075863 for KARIVA Tablets [Desogestrel/Ethinyl Estradiol and Ethinyl Estradiol Tablets, 0.15 mg/0.02 mg and 0.01 mg, respectively, (28-day regimen)], which is a generic version of MIRCETTE Tablets (28-day cycle).  At the time of approval of ANDA No. 075863, two patents were listed in the Orange Book for MIRCETTE: U.S. Patent Nos. 4,921,843 (“the ‘843 patent”) and RE35,724 (“the ‘724 patent”).  Barr’s ANDA included Paragraph IV certifications to both the ‘843 patent and the ‘724 patent, which is a reissue of the ‘843 patent, thereby qualifying the company for 180-day exclusivity on both patents.  According to FDA’s ANDA approval letter:

[Barr] was the first ANDA applicant to submit a substantially complete ANDA containing Paragraph IV Certifications to the listed patents.  Therefore, upon this approval, [Barr] is eligible for the remainder of the 180-day generic drug market exclusivity as provided for under the [Hatch-Waxman Amendments] in Section 505(j)(5)(B)(iv) of the Act.  This 180-day exclusivity commenced on December 6, 2001, the date of the district court ruling, and will end 180 days thereafter. 

Although the wording of the ANDA approval is not entirely clear, it certainly suggests that Barr’s 180-day exclusivity was based on its Paragraph IV certifications to both the the ‘843 and ‘724 patents, and not one or the other.  That is, there was likely a separate 180-day exclusivity period for each patent, but those periods ran concurrently.  

Although we won’t get into the merits of FDA’s decision that a reissue patent and its parent patent are “the same” patent for 180-day exclusivity purposes, the question that naturally arises is whether it matters now, or whether it is merely a footnote in the Hatch-Waxman history books – a vestigial remnant of a (nearly) bygone pre-MMA 180-day exclusivity era.  The answer to that question seems to hing on the parenthetical “nearly” in the preceding sentence. 

The FDA policy seems to only matter in the pre-MMA context, where 180-day exclusivity is patent-by-patent, thereby giving rise to the possibility of multiple rounds of 180-day exclusivity for the same drug product based on Paragraph IV certifications to different patents.  There aren’t a lot of drug products remaining that are subject to the pre-MMA rules on 180-day exclusivity – maybe less than a handful.  If, however, one of those remaining drugs involves a reissue patent and its parent patent and an ANDA landscape akin to the landscape for generic ADDERALL XR and ULTRACET, then the possibilty remains that FDA could be challenged if the Agency does not grant a second round of 180-day exclusivity.  We have a suspicion that the issue is still alive for at least one pre-MMA drug.

For drug products subject to the post-MMA rules on 180-day exclusivity, FDA’s parent/reissue same patent policy does not seem to matter.  Why?  180-day exclusivity post-MMA is drug product-by-drug product (with some patent-by-patent undertones), such that only a first applicant that certifies to any patent listed in the Orange Book for that drug product is eligible for exclusivity.  Thus, the post-MMA statute does not give rise to multiple periods of 180-day exclusivity for the same drug product.  That being said, insofar as FDA’s policy could be interpreted to mean that a reissue patent, although listed in the Orange Book, is not really a patent at all, one could imagine a complex (and perhaps outrageous) post-MMA scenario in which it might come into play. 

By Ricardo Carvajal –

FDA announced that it will host a series of public meetings on the recently issued proposed rules on preventive controls for human food and standards for produce safety.  Fact sheets on the proposed rules are available here and here.  The first meeting will take place February 28 and March 1 in Washington, DC, to be followed by additional meetings in Chicago, IL, and Portland, OR (dates have yet to be announced). The purpose of the meetings is “to inform the public about the rulemaking process, including how to submit comments, data, and other information to the rulemaking docket; to respond to questions about the proposed rules; and to provide an opportunity for interested persons to make oral presentations.” 

Requests to present orally at the first meeting should be submitted by February 8, and oral presentations will be limited to three minutes.  The deadline for advance registration is February 20 (electronic registration is available here).  Given the level of interest in the rules, those who wish to attend the meeting are advised to register early.  For those who can’t attend, FDA will make a video recording of the meeting available on its website.

By JP Ellison –

Earlier this month, the U.S. Sentencing Commission (the “Commission”) issued a Notice of Proposed Amendments to the U.S. Sentencing Guidelines, which are used by federal courts to determine sentences for criminal violations.   

The Notice contains several proposals that may be of interest to blog readers.  This blog post focuses on the Commission’s proposal regarding the appropriate base level offense for a person who is convicted of  knowingly and intentionally adulterating a drug under a newly enacted provision of the FDC Act.  As you may recall from HPM’s earlier detailed analysis, section 716 of the Food and Drug Administration Safety and Innovation Act, Public Law 112-144 (July 9, 2012), added a new subsection to section 303(b) (21 U.S.C. § 333(b)) of the FDC Act which reads as follows:

(7) Notwithstanding subsection (a)(2), any person that knowingly and intentionally adulterates a drug such that the drug is adulterated  under subsection (a)(1), (b), (c), or (d) of section 501 and has a  reasonable probability of causing serious adverse health  consequences or death to humans or animals shall be imprisoned for not more than 20 years or fined not more than $1,000,000, or both.

Effectively, this means that the maximum criminal penalties associated with this conduct are much steeper than for violations of most other sections of the FDC Act.  By way of background, section 303 of the FDC Act lists the penalties for violations of section 301 of the FDC Act.  Section 303(a)(1)  imposes misdemeanor liability for section 301 violations, and section 303(a)(2) imposes felony liability for second convictions under section 301 and violations of section 301 done with the intent to defraud and mislead.  The statutory maximum prison term for misdemeanor liability under (a)(1) is one year in prison ,for felony liability under (a)(2), it is three years.  Section 303(b), generally sets forth the penalties for other violations of the FDC Act, most of which have a statutory maximum of ten years.  Thus, the twenty year statutory maximum for a term of imprisonment under section 303(b)(7) presumably reflects Congress’ view of the relative seriousness of this offense.

For most FDC Act violations, the base offense level is governed by § 2N2.1 or § 2B1.1, the latter applying to the more high profile FDC Act criminal cases in which fraud is proven.  Section 2N2.1 sets a base offense level of 6, which yields a recommended sentence of zero to six months in prison.  Section 2B1.1 also sets a base offense level of 6, but provides for significant increases, largely driven by the extent of the fraud, that could increase the offense adding many years to the recommended sentence.  

The Commission now proposes to set the base offense level for the new crime set forth by FDASIA. On one very simplistic level, the Commission is asking whether a person convicted of knowingly and intentionally adulterating a drug when that drug has a reasonable probability of causing serious adverse health consequences should, as the result of a base offense level, face approximately 1-2 years in jail, or 4-6 years.  Both base offense levels are well below the 20 year statutory maximum, but the Guidelines allow for adjustments and departures that can significantly increase the recommended sentence.

As explained in the Notice, the Commission has “present[ed] two options for addressing the offense under section 333(b)(7).  Option 1 establishes a new alternative base offense level of level 14 in § 2N2.1 for cases in which the defendant is convicted under section 333(b)(7).  Option 2 amends Appendix A (Statutory Index) to reference offenses under section 333(b)(7) to § 2N1.1 (Tampering or Attempting to Tamper Involving Risk of Death or Bodily Injury).”  Under §2N1.1 the base offense level is 25.  The recommended Guidelines Manual range for a base offense level of 14 is 15-21 months; for a base offense level of 25 it is 57-71 months.

The underlying new statutory provision, as well as the proposed Guidelines raise issues too numerous to discuss fully, but several issues merit brief mention.  First, as to applicability, most readers of the blog may conclude that they need not be concerned with section 303(b)(7) or the corresponding Guideline because they would never “knowingly and intentionally adulterate[] a drug.”  In that regard it is worth noting that typical criminal jury instructions on what constitutes knowing and intentional conduct often sweep more broadly than the common understanding of those terms.  See, for example, these model criminal jury instructions from the Third U.S. Circuit Court of Appeals.

Second, organizations should be mindful of section 303(b)(7), as its maximum fine may be relevant to charging and sentencing issues regarding them.  In most notable FDC Act criminal cases, the alternative fine provision of 18 U.S.C. §3571(d) has determined the amount of the fine imposed on organizations because the “twice the gross gain or twice the gross loss” measure has typically dwarfed the maximum fines under 303(a), and generally exceeded the organizational fines under section 3571(c)..  While neither 2N2.1 nor 2N1.1 is an applicable offense Guideline for the Organizational Guideline fine provisions, and thus the basic fine framework will not change regardless of which proposal the Commission adopts, the $1M maximum fine under 303(b)(7) may, in some instance, be the “greatest of” the potential bases for a fine.

Third, for both organizations and individuals, section 303(b)(7) would seem to offer the government a potentially powerful new charge that it could bring, and threaten to bring.  The cross-reference for determining adulteration under section 303(b)(7) is to 501(a)(1), (b), (c), or (d),and Warning Letters asserting violations of these provisions are numerous.  See, e.g., here, here, and here. 

Moreover, it is not hard to imagine the government taking an expansive view of the circumstances under which alleged adulteration “has a reasonable probability of causing serious adverse health consequences.”  Thus, at least in the first instance, the circumstances under which a section 303(b)(7)charge may be leveled would seem to be the subject of significant prosecutorial discretion, and prosecutors may seek to leverage the significantly increased penalties of this section to extract favorable pleas  These considerations would seem to argue against a base offense level that stacks the deck too heavily in the government’s favor.

The appropriate sentence in any case is intensively fact-specific, and the Guidelines Manual allows for adjustments and departures based on those facts.  That said, the Commission’s proposal seems to present the question of whether this new offense is more like a traditional FDC Act violation, or more like a consumer products tampering violation, which is almost certainly “knowing and intentional” in the lay sense of those words.  Regardless of one’s views, the comment period for the Notice remains open until March 19, 2013.  The Notice also states that the Commission plans to hold a public hearing.  

By Delia A. Stubbs –

Last Friday, January 25, 2012, after two days of discussion and deliberation, an FDA Advisory Committee voted 19 to 10 in favor of rescheduling combination hydrocodone from its current placement in Schedule III to Schedule II.

The decision was informed by presentations from various perspectives, including high ranking government officials from FDA and DEA, professional societies, practitioners, industry representatives, and family members who lost loved ones to prescription drug abuse.  What began as a conversation about abuse-ratios (FDA and DEA had competing views), soon developed into a conference about prescription drug abuse generally; the practical impact of rescheduling on prescribing practices, patient access, drug distribution, opioid abuse and misuse; and alternatives to rescheduling that  would equally or more effectively reduce hydrocodone misuse and abuse.

Industry representatives argued that up-scheduling hydrocodone would impose huge costs on pharmacies, distributors, and patients with no discernible reduction on abuse and diversion.  While some committee members gave little weight to these increased costs, they also shared a concern about the change’s overall effectiveness, noting the widespread abuse of opioids currently placed in Schedule II.  Patient representatives remarked that rescheduling would increase patient (and payer) costs and impede patient access because Schedule II controlled substances, versus Schedule III controlled substances, may not be refilled.  Thus, patients who currently see their physicians twice-a-year would be required to do so as often as once a month.  To avoid the need for monthly visits, they explained, prescribers may react by increasing prescription volume, which, in turn, raises the risks of abuse and diversion, by increasing the number of pills available inside the home.

Advocating for the change from Schedule III to II, DEA Deputy Assistant Administrator, Joseph Rannazzisi, argued that tightening security and control of combination hydrocodone products by pharmacies and distributors, and increasing DEA’s enforcement tools, would reduce abuse and diversion of combination hydrocodone.  See DEA Slides, here.  He argued that many individuals start abusing combination hydrocodone due to its ease of availability, build a tolerance, and consequently move on to stronger opioids such as oxycodone and heroin.  However, he recognized that, “I am not going to be able to provide you with clear evidence [that rescheduling will work to reduce prescription opioid abuse] because there is no clear evidence until the drug actually gets rescheduled.”  In response to patient access concerns, he asked, “Is it really that bad to have to see a patient every 3 months?,” and identified a rule DEA promulgated in 2008 that allows prescribers to issue up to three post-dated 30-day prescriptions for the same Schedule II substance at one time.  He recognized, however, that many prescribers do not avail themselves of the rule.

The Committee discussed other activities that might address misuse and diversion of hydrocodone, including interoperable Prescription Drug Monitoring Programs, drug disposal initiatives, provider and patient education, and Risk Evaluation and Mitigation Strategies (“REMS”).  One Committee member who voted in favor of rescheduling stated that placing hydrocodone combination products in Schedule II is the best way to educate providers on the drug’s abuse potential.

Overall, in recommending rescheduling, many Committee members were persuaded by evidence showing combination hydrocodone acts similar to other Schedule II controlled substances, such as morphine and oxycodone.  Sharon Walsh, Ph.D., from the Center on Drug and Alcohol Research, University of Kentucky, presented evidence from human studies showing no significant difference between combination hydrocodone and combination oxycodone drugs on pupil diameter and drug “likeability.”  See S. Walsh Slides, here.  When asked by committee members for her opinion as to whether there was a meaningful difference in those drugs’ abuse potential, she opined that the drugs’ abuse potential was indeed the same.  Many Committee members later referenced Ms. Walsh’s presentation when casting their vote in favor of rescheduling.

The Advisory Committee’s recommendation is not binding on FDA and there is no statutory time-limit on when FDA must respond to DEA’s request for a scheduling recommendation.  Because there is a pending petition before DEA to reschedule these drugs, when FDA provides its recommendation to DEA, DEA will then likely proceed with a notice and comment rulemaking proposing to reschedule the drug.  

Hyman, Phelps & McNamara, P.C. ("HP&M") will hold a complimentary webinar on Thursday, January 31, 2013, from 12:00 – 2:00 PM (Eastern) on the Second Circuit's recent and long-awaited decision in United States v. Caronia.  This webinar is not just another summary of the Second Circuit's decision. Nor is it merely high-level positing about the future of off-label promotion prosecutions, such as here and here. This webinar will provide practical tips to address the real-world implications to companies from this significant decision. The impacts go beyond just the pharmaceutical marketing industry – the marketing of devices, dietary supplements, and tobacco products likely will be affected.  Hear from experts who evaluate and advise FDA-regulated industries about relevant business considerations that are impacted by Caronia. Participants will gain an understanding of:

• The Caronia decision and other First Amendment court rulings involving FDA and what the government is likely to do as a result of the Caronia decision;
• Views from people familiar with how the FDA Centers (including CDER, CDRH, CFSAN, and CTP) will modify enforcement and other decisions as a result of Caronia;
• Strategies for promotional review committees to use; and
• Defenses to current and future off-label marketing and government reimbursement cases.

There will be an opportunity to submit questions during the webinar. Responses to any questions that are not addressed will be available on the HP&M firm website after the webinar.

You can register for the conference here.  Please contact Lisa Harrington at lharrington@hpm.com with any registration questions.