By John A. Gilbert & Delia A. Stubbs –

Last week, Representative Diana DeGette (D-CO) introduced legislation proposing to amend section 903 of the Controlled Substances Act (“CSA”) to create an exception for state marihuana laws.  Section 903, as currently written, expresses Congress’s intent not to preempt state laws that occupy the same field of regulation as the CSA, unless those laws are in “positive conflict” with the federal law.  21 U.S.C. § 903.  A “positive conflict” is described as one that renders the federal and state law unable to “consistently stand together.”  Id.  H.R. 6606 (the “Respect States’ and Citizens’ Rights Act of 2012”), if passed, would insert language stating that no provision of the CSA “shall be construed as preempting” “any state law that pertains to marihuana.”  H.R. 6606 thus seeks to allow states greater flexibility in passing marihuana laws that are less stringent than the federal law.  (H.R. 6606 would also remove federal preemption of any state law relating to marihuana that prohibits an activity expressly permitted by federal law.)

More importantly, H.R. 6606 serves as a crucial reminder to entities that manufacture, distribute or dispense controlled substances  to look beyond federal law in designing their compliance programs.  Because of the congressional intent expressed in Section 903, principles of federalism do not prohibit states from imposing requirements that are separate or more heightened than those imposed by the CSA. U.S. Const. art VI, Cl. 2; Bldg. & Const. Trades Council of Metro. Dist. v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218, 113 S. Ct. 1190, 122 L. Ed. 2d 565 (1993) (where Congress has not expressed an intent to occupy the entire field in which federal law exists, state laws that are consistent with the federal law are valid).

Indeed, many states have passed laws that are more stringent than the CSA.  For example, some states schedule drugs not otherwise scheduled by the CSA or place drugs in stricter schedules than the CSA. See DEA, Office of Diversion Control, Drug & Evaluation Section, Tramadol (Feb. 2011) (noting that  several states designate Tramadol as a Schedule IV controlled substance despite being considered only a “drug of abuse” by DEA); N.Y. Pub. Health § 3306, N.Y. COMP. CODES R. & REGS. titl. 10, § 80.67 (scheduling anabolic steroids in Schedule II, although only placed in Schedule IV in the CSA, and restricting prescription quantity to 6 months for certain disorders). Other areas where some states have imposed stricter laws regarding controlled substances include dispensing (e.g., limits on supplies) drug sampling and advertising.   Thus, companies should be sure to review state laws and regulations, in addition to the federal CSA, when designing and implementing their corporate compliance program.

By Kurt R. Karst –   

Things are heating up in litigation in the U.S. District Court for the District of New Jersey initiated by Actelion Pharmaceuticals Ltd. and Actelion Clinical Research, Inc. (collectively “Actelion”) in September 2012, which, according to Actelion, “concerns the fundamental right of a business to choose for itself with whom to deal and to whom to supply its products.”  As we prevously reported, Actelion is seeking declaratory relief that the company is under no duty or obligation to supply prospective ANDA applicants Apotex Corp. (“Apotex”) and Roxane Laboratories, Inc. (“Roxane”) with TRACLEER (bosentan) Tablets for purposes of bioequivalence testing and ANDA submission.  Because of the potential of the drug to cause serious side effects,  TRACLEER is approved with a Risk Evaluation and Mitigation Strategies (“REMS”) program with Elements To Assure Safe Use (“ETASU”) that limit distribution of the drug through certain pharmacies, practitioners, and health care settings.  Apotex and Roxane both sent correspondence to Actelion seeking TRACLEER sample for use in bioequivalence testing and threatening antitrust litigation, but Actelion refused to provide drug sample to the companies “maintaining its right to choose with whom it does business” and citing certain REMS compliance issues. Instead of waiting for that antitrust action to be filed, Actelion took a proactive approach and sued Apotex and Roxane, saying, among other things, that “Apotex and Roxane are seeking to force Actelion to supply them with product, turning well-settled law, not to mention basic free-market principles, on their head,” and that “Apotex’s and Roxane’s demands would also require Actelion to violate its regulatory obligations.” 

In recent court filings, both Apotex and Roxane have brought counterclaims alleging illegal and anticompetitive conduct by Actelion.  Apotex’s Counterclaim Complaint alleges that Actelion has abused its monopoly power in violation of Section 2 of the Sherman Act and the New Jersey Antitrust Act “by denying Apotex the ability to purchase Tracleer samples for bioequivalence testing and to submit an ANDA to FDA for a generic bosentan product.”  Apotex seeks declaratory and injunctive relief and treble damages, including that the court compel Actelion “to sell Apotex sufficient quantities of Tracleer at market prices so that Apotex can perform bioequivalence testing.” 

Interestingly, Apotex procured a version of TRACLEER marketed in Canada and asked FDA for the Agency’s views on using that drug product in bioequivalence testing instead of the U.S.-approved and marketed drug product.  FDA commented in correspondence to Apotex that the company’s bioequivalence studies “should be performed using the approved US product as the reference product,” and that “[i]t is not acceptable to use an approved Canadian drug product . . . .”

Roxane’s Counterclaim Complaint alleges violations of, among other things, Sections 1 and 2 of the Sherman Act and the New Jersey Antitrust Act, and seeks declaratory and injunctive relief and treble damages.  Roxane’s Counterclaim Complaint concerns not only TRACLEER, but another drug as well – Actelion’s ZAVESCA (miglustat) Capsules, which FDA approved on July 31, 2003 under NDA No. 021348 for mild to moderate Type I Gaucher disease in adults for whom enzyme replacement therapy is not a therapeutic option.  ZAVESCA is not subject to an ETASU REMS, but rather, is subject to a “restricted distribution” program adopted and implemented by Actelion.  According to Roxane:

Faced with [a] threat to its monopolies, Actelion engaged in a scheme to prevent Roxane from obtaining the FDA-mandated drug samples necessary to develop Roxane’s generic products, by prohibiting distributors to sell to Roxane and by refusing to sell to Roxane itself.  Through its actions, Actelion has unlawfully prevented Roxane from developing generic versions of these drugs.

Roxane requests that the New Jersey court enter a Judgment and Order declaring that Actelion’s conduct is unlawful and “enjoining and restraining Actelion from limiting distribution of Tracleer and Zavesca samples to Roxane through use of its REMS and/or restricted distribution programs or otherwise,” among other relief.

Another generic drug manufacturer, Actavis Elizabeth LLC (“Actavis”), is seeking to enter the case as a intervenor-defendant/counterplaintiff.  According to Actavis’ Motion to Intervene, “Actelion has refused to provide Actavis with any Tracleer samples on the grounds that the [FDC Act] does not require ‘that Actelion relinquish its right to choose with whom it does business.’”  Actavis’ Proposed Counterclaim Complaint, like the Apotex and Roxane Counterclaim Complaints, alleges violations of the Sherman Act and the New Jersey Antitrust Act and seeks declaratory and injunctive relief and treble damages.

With the increasing profile of this lawsuit and the possibility of a game-changing decision (for either Actelion or generic competitors), one must wonder whether or not the Federal Trade Commission (“FTC”) will eventually seek to chime in on the case.  The FTC has reportedly been investigating REMS and its effects on generic competition.  Is a proposed amicus brief being drafted?  We’ll see.  The FTC has been active as of late, with amicus briefs filed in antitrust lawsuits involving patent settlement agreements and “product hopping.”  As a side note, REMS reform was recently included as a policy recommendation in a report (page 24) from the National Coalition on Health Care on curbing health care costs.

By William T. Koustas –

The Federal Trade Commission (“FTC”) has amended its Red Flags Rule (“the Rule”) to comply with the Red Flag Program Clarification Act of 2010 (“Clarification Act”).  As we have previously reported, the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”) directed the FTC to promulgate regulations that required creditors to enact procedures to prevent identity theft.  In 2007, the FTC adopted the Rule, which required creditors to implement these procedures.  However, in April 2009, the FTC issued a document explaining that the Rule applied to various professions, including attorneys and healthcare providers because they bill their clients after services are rendered, thus extending credit. 

This caused many professional organizations, including the American Medical Association and the American Bar Association, to lobby for changes to the Rule or the FACT Act.  In August 2009, the American Bar Association filed a lawsuit against the FTC to enjoin enforcement of the Rule.  In the end, Congress enacted the Clarification Act that amended the definition of the term “creditor” in the FACT Act to exempt attorneys and other professionals who bill their clients for services rendered.

On November 30, 2012, the FTC issued an interim final rule amending the definition of a “creditor” in the Rule to make it consistent with the definition in the Clarification Act.  The interim final rule becomes effective on February 11, 2013. 

Hyman, Phelps & McNamara, P.C., the nation’s largest boutique food and drug regulatory law firm, seeks an associate with three to six years experience in medical device law and regulation to assist with a growing practice.  Strong writing skills are required.  Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Jeffrey N. Wasserstein (jnw@hpm.com).

On December 12th and 13th, the Food & Drug Law Institute (“FDLI”) will hold its annual conference on “Enforcement, Litigation and Compliance.”  This year’s conference will be held at the Westin Georgetown hotel in Washington D.C.  It will include quite a few government presenters on a wide range of enforcement-related topics that relate to the industries regulated by the FDA, FTC, DEA, and other enforcement agencies.  HP&M Director John R. Fleder is one of the speakers. 

See here for a copy of the conference agenda and to register.  FDA Law Blog readers can receive a 15% discount off the conference registration price.  Use promotion code ENF201 to receive the discount.  We encourage people to register for the conference and to attend this two-day session. 

The ability to successfully obtain FDA approval is critical to the success of a medical device.  However, sometimes even the most dedicated efforts fall flat when FDA says “No.”  What then?  What can you do if FDA says it believes there is not an adequate predicate device for your product?  Or if FDA is requiring an overly burdensome clinical study?  Or imposing data requirements that were not applied to your competitor's similar 510(k) six months earlier?

Hyman, Phelps & McNamara, P.C. Director Jeffrey K. Shapiro will be the featured speaker at a webinar scheduled to take place on January 10, 2013 from 11:30AM to 12:30PM (Eastern).  The webinar, titled “When a 510(k) or PMA Goes Off Track – FDA’s Appeals Process,” will cover the appeals processes that are available to medical device companies when FDA takes an adverse action during premarket review of a 510(k) or PMA.  Specifically, Mr. Shapiro will discuss:

• The appeal procedures available when a dispute arises with FDA;
• How to choose the right procedure and formulate a strategy for resolving the dispute;
• Practical tips on how to resolve the dispute as quickly as possible;
• How long an appeal typically might take;
• The impact of the new statutory timing requirements and FDA's draft appeals guidance; and
• How to assess the odds of success.

You can register for the webinar here.  Mr. Shapiro has authored several articles on the medical device appeals process – see here, here, and here – and will be discussing the latest FDA guidance and procedures on the topic.

On December 3, 2012, the United States Court of Appeals for the Second Circuit (which is based in New York City) issued a long-awaited ruling in United States v. Caronia, a case involving off-label promotion.  In a 2-1 82-page decision that involves a vigorous dissent, the Court vacated the criminal conviction of Alfred Caronia, a former sales representative for a pharmaceutical company.  The sales representative was convicted for promoting the drug Xyrem for a use that had not been approved by FDA. 

The Court ruled that “we construe the FDCA as not criminalizing the simple promotion of a drug’s off-label use because such a construction would raise First Amendment concerns.”  The Court concluded that the record  demonstrated that the government had prosecuted Mr. Caronia for “mere off-label promotion.”  Slip Op. at 26.

The Court explained that FDA’s construction of the FDCA legalizes the outcome of off-label use by doctors, but “prohibits the free flow of information that would inform that outcome.”  The Second Circuit concluded that “the government’s prohibition of off-label promotion by pharmaceutical  manufacturers ‘provides only ineffective or remote support for the government’s purpose.’”  Slip Op. at 47.

The Court also ruled that it construes “the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”  In addition the Court ruled “that the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.”  Slip. Op. at 51.

It goes without saying that this is a very significant ruling that will have wide implications for FDA and the companies and individuals regulated by FDA.  Our firm will provide a more detailed analysis of the ruling in the upcoming days. Our previous post on the case is available here.

By Jennifer D. Newberger –

On November 28, 2012, CDRH issued a report titled “Improvements in Device Review,” addressing progress in the Center since issuance of its “Plan of Action” in January 2011.  The report states that since the Plan of Action, “the speed and predictability of device review have improved for the first time in almost a decade, including significant reductions in the time it takes FDA to review applications and the size of application backlogs.”

A brief review of the Plan of Action and reasons for its implementation may be helpful in understanding the genesis of this recently released report.  In response to concerns raised by industry, consumer groups, and CDRH employees, CDRH began an evaluation of its premarket review process in late 2009.  In August 2010, in response to internal reviews and public feedback, CDRH released two reports.  The first identified problems with its premarket review process, and the second addressed CDRH’s use of science in regulatory decision-making.  The main problem identified in the premarket review process was unpredictability, “including uncertainty about the requirements for approval and the likely length of the review process, as well as inconsistencies and mid-stream changes in what information was required to obtain approval.”  CDRH issued its Plan of Action in January 2011 to address those concerns.  It included 36 action items, many focused on the major causes of unpredictability. 

The November 2012 report assesses progress on those items, including:

• More efficient review of lower risk products;
• Increasing reliance on national and international device studies and standards;
• Enhancing reviewer training;
• Providing better, timelier guidance to CDRH staff and industry on requirements for clearance and approval;
• Reducing unnecessary and inconsistent data requests;
• Promoting greater transparency, interaction, and collaboration between FDA and industry during premarket reviews; and
• Improving CDRH’s understanding of new device technologies.

The report also discusses CDRH’s action to support innovation, including the Innovation Pathway, the Entrepreneurs-in-Residence program, and creating incentives for conducting clinical trials in the U.S.

According to the report, some of the specific positive trends resulting from the Plan of Action include:

• The average time it takes to clear a 510(k) began declining in 2011, for the first time since 2005;
• The backlog of 510(k)s pending for more than 90 FDA-days dropped by almost two-thirds from its high in 2010, dropping for the first time since 2005;
• The percentage of 510(k)s for which CDRH requested additional information during the first review cycle has decreased;
• The average time to reach a decision on a PMA has been reduced by approximately one-third since 2010; and
• The percentage of 510(k)s cleared and PMAs approved has increased since 2010.  FDA attributes this to “improvements in the quality of applications and the consistency of review standards.”

While these initial numbers are encouraging, it is understandable if industry remains cautious.  It is a bit too soon to consider these results to be “trends.”  Though some of CDRH’s action items actually went into effect in 2010, before issuance of the Plan of Action, the results described in the report are based on, at most, one and a half years of data:  all of FY2011, and limited information from FY2012.  It will be interesting to see what the data look like in another year.

Industry can, however, take comfort in the number of efforts underway at CDRH to improve the review process.  There is no question that CDRH has issued a large number of draft and final guidance documents in the last two years, many of which should prove very useful to both industry and CDRH in improving the premarket review process.  Additionally, improvements in reviewer training and the increase in informal interactions are positive steps. 

Hopefully, CDRH will not take the initial results as a necessary sign of success, but will instead continue to work towards improving its premarket review process and relationship with industry.

By Kurt R. Karst –    

Last Friday afternoon, Endo Pharmaceuticals Inc. (“Endo”) filed a Complaint and a Motion for Preliminary Injunction in the U.S. District Court for the District of Columbia seeking declaratory and injunctive relief concerning the company’s non-crush-resistant formulation of Opana® ER approved under NDA No. 021610 (identified in Endo’s Complaint as “Original Formulation Opana® ER”).  Endo alleges that FDA violated the FDC Act and the Administrative Procedure Act by failing to make a determination as to whether Original Formulation Opana® ER, which was discontinued from marketing earlier this year, was withdrawn for reasons of safety.  Endo currently markets a crush-resistant version of Opana® ER approved under NDA No. 201655 (identified in Endo’s Complaint as Opana® ER CRF).  Endo is also seeking a preliminary injunction ordering FDA to make a decision by December 31, 2012 on whether Original Formulation Opana® ER was discontinued for safety reasons.  FDA has approved two ANDAs for generic versions of Original Formulation Opana® ER – ANDA No. 079087 (Impax) and ANDA No. 079046 (Actavis) – and the companies are expected to begin marketing their drug products on January 1, 2013.  In the interim, Endo wants a court order directing FDA to withdraw or suspend those approvals.

The lawsuit follows a pair of citizen petitions Endo submitted to FDA in August. The first Citizen Petition (Docket No. FDA-2012-P-0895) requests that FDA determine that Original Formulation Opana® ER was discontinued for reasons of safety and can no longer serve as the basis of approval for an ANDA, that FDA refuse to approve any pending ANDA for a generic version of Original Formulation Opana® ER, and that FDA suspend and withdraw the approval of any ANDA referencing Original Formulation Opana® ER as its basis for approval.  The second Citizen Petition (Docket No. FDA-2012-P-0951), which was recently supplemented, primarily concerns the requirements to obtain approval of an ANDA for a generic version of Opana® ER CRF, but also brings Original Formulation Opana® ER into the mix.

“FDA has not carried out its responsibility under 21 C.F.R. § 314.161(a) to make a determination sua sponte as to whether Endo discontinued Original Formulation Opana® ER for reasons of safety,” alleges Endo.  That regulation requires FDA to determine, prior to approving a pending ANDA that refers to a drug product that is no longer marketed, and “[w]henever a listed drug is voluntarily withdrawn from sale and [ANDAs] that referred to the listed drug have been approved,” whether such discontinuation was for reasons of safety or effectiveness.  In addition, the statute (FDC Act § 505(j)(4)(I)) and FDA’s implementing regulations ( 21 C.F.R. § 314.127) provide that FDA may refuse to approve an ANDA if the Agency determines that the RLD was withdrawn from sale for reasons of safety or effectiveness, and that FDA can suspend and withdraw approval of an ANDA if the Agency determines that the RLD was withdrawn from sale for reasons of safety (FDC Act § 505(j)(6)). 

“FDA has not taken any action in response to either of Endo’s Citizen Petitions or its recent Supplement that sought to prod the agency into fulfilling its statutory and regulatory obligations, triggered by Endo’s May 31, 2012 Notice that it had withdrawn Original Formulation Opana® ER,” says Endo.  Moreover, Endo alleges that FDA has failed to make the legally required discontinuation determination despite

mounting evidence of the public health crisis caused by abuse and misuse of prescription opioid pain relievers; FDA’s awareness that opioid pain relievers that are manufactured without safety features are more susceptible to abuse; FDA’s exhortations to pharmaceutical companies to invest in innovative crush-resistant formulations of opioid pain relievers; Endo’s data demonstrating the safety benefits of Opana® ER CRF over non-crush-resistant versions of the drug; the documented “squeezing-the-balloon effect,” whereby opioid abusers can be expected to quickly learn of and migrate to generic non-crush-resistant formulations, i.e., those pills that may be readily crushed and snorted; and FDA’s knowledge that a non-crush-resistant generic version of Opana® ER is poised to launch on or about January 1, 2013.

The issue of simultaneous marketing of abuse-deterrent brand-name drugs and non-abuse-deterrent generic drugs has been heating up over the past year – not only here in the United States, but, for example, in Canada as well. 

In addition to Opana ER, FDA has received several citizen petitions (Docket Nos. FDA-2011-P-0473, FDA-2010-P-0540, and FDA-2010-P-0526) requesting that the Agency determine whether the abuse-deterrent version of OxyContin (oxycodone hydrochloride) Controlled-Release Tablets was discontiued for safety reasons.  Congress has also expressed interest in the topic with the introduction of the Stop Tampering of Prescription Pills Act of 2012 (“STOPP Act”) in July.  As we previously reported, the STOPP Act would amend the FDC Act to, among other things, establish new requirements for the approval of brand-name and generic drugs that are otherwise available in a tamper-resistant formulation, and deem the discontinuation of a non-abuse-deterrent drug after the approval of an abuse-deterrent to be a discontinuation for safety reasons.

By Kurt R. Karst –      

The Alliance for Safe Biologic Medicines (“ASBM”), a self-described “organization composed of diverse healthcare groups and individuals from patients to physicians, innovative medical biotechnology companies, and others who are working together to ensure patient safety is at the forefront of the biosimilars policy discussion,” urges FDA in a new paper to adopt unique non-proprietary names for all biological products licensed under the Public Health Service Act (“PHS Act”), and in particular biosimilar versions of reference products (even those that are interchangeable).  The paper, titled “It’s All About the Name: What is the Imperative of Adopting Unique Names For Biologic and Biosimilar Therapeutics?,” appeared in the latest edition of the Food and Drug Law Institute’s “Food and Drug Policy Forum,” and is the latest effort by ASBM and its members to advocate for unique biosimilar naming.  Over the past few months, ASBM and several member organizations have sent letters to FDA (see here) saying that it is essential that each biosimilar licensed under PHS Act § 351(k) have a unique name in order for patients and physicians to easily distinguish between medicines and to track and trace adverse events for such products.

The “naming issue” has been around since well before the March 23, 2010 enactment of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created the biosimilars pathway in the U.S.  For example, in an October 2006 Policy Position on Naming of Biotechnology-Derived Therapeutic Proteins submitted to the World Health Organization (“WHO”), several organizations, including PhRMA and BIO, recommended the assignment of distinct International Nonproprietary Names (“INNs”) to each biotechnology-derived therapeutic protein produced by different manufacturers in order to “accommodate the acknowledged complexity of protein medicinal products and best meet the WHO Objectives for INNs to facilitate safe prescription and dispensing of medicines and preserve patient safety.”  (An INN is the official generic name assigned to a pharmaceutical’s active ingredient by the WHO and applies to each product globally.)  Just a month before, FDA had commented (see here, page 9) to the WHO that “INNs for biologicals should not be used to imply product interchangeability in the absence of credible scientific evidence.  Likewise, however, INNs should not be used to differentiate biological products with the same active ingredient(s) when credible scientific data demonstrate that no pharmacologically relevant differences exist.” 

The BPCIA, as enacted, does not specifically address biosimilar product naming.  Although previous biosimilar legislation did address the issue, such as Representative Henry Waxman’s (D-CA) Access to Life-Saving Medicine Act (H.R. 1038) and Senator Judd Gregg’s (R-NH) Affordable Biologics for Consumers Act (S. 1505) (both from 2007), it was ultimately decided that naming provisions should not be included in the final biosimilars bill.  Given that “hole,” and an intensifying interest in a U.S. biosimilars market, the “naming issue” has taken on a life of its own.  Indeed, it was a much discussed issue at FDA’s November 2010 public hearing on the Agency’s implementation of the BPCIA. 

ASBM makes the point in its FDLI Policy Forum paper that:

The need for clear, defined naming considerations and a system to implement an effective tracking and tracing of all biologics – not just biosimilars – stems from the potential of these products to be unexpectedly altered by the manufacturing process, handling, etc., in a manner that could cause unintended harm to patients.  Whether the products that FDA approves will have the same name or a different name than the originator biologic will determine how well products can be traced back to a patient who has an adverse reaction.

With this backdrop, ASBM outlines what it says are key components that FDA must address in the biologics naming space, and makes four recommendations: 

1. All biologics should receive distinct non-proprietary names;

2. The United States Pharmacopeia should work with FDA to adapt the product monograph system to accommodate the unique attributes of structurally-related, but distinct, biologic medicines;

3. The non-proprietary name of a reference product and product/s biosimilar to it should have a common, shared root but have distinct and differentiating suffixes; and

4. Products designated interchangeable should have a distinct name from the reference product for which they are considered interchangeable to facilitate accurate attribution of adverse events.

On the other side of the fence, the Generic Pharmaceutical Association (“GPhA”) has taken the position that “[c]onsistency, patient safety and sound scientific principles necessitate biosimilars having the same INN as their specific reference product,” and that “[t]here is no evidence that a unique INN will improve the effectiveness of pharmacoviligance.”  Moreover, says GPhA, the BPCIA does not require different names for biosimilars and their reference product counterparts, and requiring different names for interchangeable products effectively make such a determination meaningless. 

By Ricardo Carvajal & John R. Fleder –

On November 26th, Commissioner Hamburg issued an order suspending the registration of the Sunland Inc. food manufacturing facility alleged to be at the heart of the ongoing recall of peanut products potentially contaminated with Salmonella.  Until the order is vacated and the registration is reinstated, Sunland may not introduce food from the facility into interstate or intrastate commerce.  This marks the first time that FDA has exercised this authority, which was conferred on the agency by the Food Safety Modernization Act (“FSMA”), enacted on January 4, 2011.

If FDA determines that food manufactured, processed, packed, received, or held by a registered facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, FDA can suspend the registration of the facility that (1) created, caused, or was otherwise responsible for such reasonable probability; or (2) knew of, or had reason to know of, such reasonable probability, and packed, received, or held such food.  The authority to suspend a registration cannot be delegated by the Commissioner.

FDA determined that Sunland’s products have a reasonable probability of causing serious adverse health consequences or death to humans, and that the facility created, caused, or was otherwise responsible for the probability.  FDA relied in part on multiple test results purportedly showing that the products manufactured, processed, packed, and held by the facility “are contaminated with Salmonella, or are at risk for contamination with Salmonella, based on the conditions in [the] facility.”  FDA cited both its own product and environmental test results, and those provided to FDA by the facility.  FDA also questioned the facility’s decision to release certain products into commerce:

Your facility distributed at least a portion of eight (8) lots of peanut and almond butter… after composite testing of those lots revealed the presence of Salmonella. Specifically, when composite testing of a lot was positive for Salmonella, individual containers of product from the positive tested lots were re-tested and portions, or all, of these lots were distributed based on the re-test (non-composite) testing. The initial Salmonella positive composite test results were disregarded. At least one of the batches from a lot with initial positive composite test results… that was ultimately distributed, contained a Pulsed Field Gel Electrophoresis (PFGE) pattern that was indistinguishable from the clinical isolates for the outbreak strain Salmonella Bredeney. When a PFGE pattern of an isolate is indistinguishable from the pattern of another isolate from a common source, it is highly likely that the two isolates are the same strain of Salmonella Bredeney.

Sunland has the opportunity to request an informal hearing on reinstatement of its registration.  The request must be submitted within 3 business days after issuance of the order unless Sunland wants a hearing within 2 business days, in which case the request must be submitted within 1 business day.  The request “must present specific facts showing that there is a genuine and substantial issue of fact that warrants a hearing.”  The order states that “[a] hearing will not be granted on issues of policy or law.”  If the request is granted, the hearing will be conducted under the procedures specified in 21 CFR Part 16.

On its website, Sunland issued a statement suggesting that FDA’s decision caught Sunland by surprise.  In a previously issued statement, Sunland denied having released products “that it knew to be potentially contaminated with harmful microorganisms.”

This suspension action specifically, and more generally the FDA’s FSMA suspension authority, raise an interesting question.  If FDA believes that a food company is involved in a situation the agency believes presents “a reasonable probability of serious adverse health consequences” etc., when will the agency use the suspension authority provided in  FSMA and when will it alternatively seek its more traditional remedy of pursuing judicial relief in the form of a seizure action or an injunction case?  When will it impose an administrative detention?  We are unaware of any FDA guidelines that answer these questions.  Although the suspension authority presents the bureaucratic obstacle of requiring the explicit approval of the FDA Commissioner, it also provides FDA with a swift remedy that does not, in and of itself, require involvement from either the Justice Department or a court.  With that said, a suspended company should have the legal right to challenge a suspension order in court, by seeking a temporary retraining order to block the order  from remaining in effect.  We expect many companies to request the expedited hearing provided by FSMA.  Indeed, we expect many companies to pursue both remedies in cases where a company does not believe that the suspension order is legally or factually justified.

Seizure actions and injunction cases initiated by FDA and DOJ often proceed on a litigation calendar that does include expedited procedures.  There is no doubt that suspension orders issued by FDA will lead to expedited litigation when a company challenges an order.  Hopefully, this fact alone will dictate caution by FDA, as it will need to be prepared to defend its order in the administrative hearing provided in 21 CFR Part 16 and also in emergency court proceedings in a suit filed by the suspended entity.

By Bill Koustas & Alan Kirschenbaum –

In July, we reported that Massachusetts had amended its prescription drug and device marketing law to (among other things) allow pharmaceutical and medical device companies to provide “modest meals and refreshments” as part of an informational presentation to health care practitioners outside of the hospital or medical office setting.  (Note that, in this regard, Massachusetts law is less restrictive than the PhRMA Code on Interactions with Healthcare Professionals, which provides that meals offered in connection with informational presentations made by sales representatives or their immediate managers should be limited to in-office or in-hospital settings.)

On September 19, 2012, the Massachusetts Department of Public Health ("DPH") issued a temporary emergency rule to implement the statutory amendments.  The emergency rule amended DPH regulations in two significant ways.  First, in accordance with the statutory amendment, it removed the prohibition against providing meals to health care practitioners outside of the office or hospital setting, while also requiring pharmaceutical and medical device companies to submit quarterly reports detailing any activities where such meals or refreshments are provided.  Second, in light of the physician payment sunshine provisions of the Affordable Care Act, the emergency rule removed the requirement to annually report other permitted gifts to covered recipients after calendar year 2012.

On November 21, 2012, DPH issued a final rule to replace the earlier emergency rule.  The final rule, which will take effect on December 7, 2012, is similar to the emergency rule, but with a few important modifications.  First, the final rule restores the annual reporting requirement for 2013 and subsequent years to the extent that the required information does not duplicate information that is reported to the federal government under the federal sunshine provisions and that is then reported by the federal government to Massachusetts in annual reports.  Since the federal sunshine provisions cover only remuneration provided to physicians and teaching hospitals, annual reports to Massachusetts will still be required for remuneration provided to other “Covered Recipients” under the Massachusetts law – i.e., hospitals, nursing homes, pharmacists, nurse practitioners, and other practitioners and providers who are authorized to prescribe, dispense, or purchase drugs. 

The final rule retains the quarterly reporting requirement for out-of-office meals and refreshments, but does not specify a reporting deadline.  Presumably, DPH will notify manufacturers about the quarterly report deadline in a future communication.  Interestingly, DPH noted in an explanatory memorandum that much of the information reported in the quarterly reports will likely be covered by the federal sunshine provisions and therefore be preempted, but DPH decided to retain the quarterly reporting requirement regardless.

In issuing the final rule, DPH rejected commenters’ requests to place a monetary cap on what is considered a “modest” meal and to exclude alcoholic beverages.  The definition of “modest meals and refreshments” continues to include both food and drinks without restrictions on alcohol, and the benchmark for “modest” remains what a practitioner “might purchase when dining at his or her own expense,” as judged by local standards.

By Kurt R. Karst –

In a recent Complaint for Declaratory Judgment filed in the U.S. District Court for the Northern District of Illinois (Eastern Division), Apotex Inc. (“Apotex”) is attempting to trigger 180-day exclusivity for generic versions of the hypertension drug BENICAR (olmesartan medoxomil) Tablets, 5 mg 20 mg, and 40 mg, under the failure-to-market 180-day exclusivity forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I). The complaint is the latest in a string of thus far unsuccessful attempts by Apotex to obtain an exclusivity-triggering court decision, including exclusivity for generic versions of LEXAPRO (escitalopram) Tablets and LIPITOR (atorvastatin calcium) Tablets (see here).

BENICAR Tablets, which is approved under NDA No. 021286, is listed in the Orange Book with information on two patents: (1) U.S. Patent No. 5,616,599 (“the ‘599 patent”), which is identified as a drug product, drug substance, and method-of-use patent and the pediatric exclusivity for which expires on October 25, 2016; and (2) U.S. Patent No. 6,878,703 (“the ‘703 patent”), which is identified as a method-of-use patent the pediatric exclusivity for which expires on May 19, 2022.  On July 11, 2006, all claims of the ‘703 patent were disclaimed, and, according to Apotex, the patent expired on April 12, 2009 for failure to pay maintenance fees.  In the February 2010 Orange Book Cumulative Supplement (page A-4), a “delist requested” flag was added to the ‘703 patent entry.  FDA did not remove the ‘703 patent from the Orange Book given the existence of a Paragraph IV certification to the patent.  According to FDA’s List of Paragraph IV Patent Certifications, the first ANDA submitted to FDA containing a Paragraph certification to as to either the ‘599 patent or ‘703 patent was April 25, 2006.

According to Apotex, Mylan Laboratories Ltd. (“Mylan”) (formerly Matrix) was the first company to submit an ANDA for generic BENICAR Tablets containing a Paragraph IV certification, and Mylan’s ANDA contained Paragraph IV certifications with respect to both the ‘599 and ‘703 patents.  Patent infringement litigation was initiated against Mylan with respect to the ‘599 patent but not the ‘703 patent.  Mylan failed in its challenge of the ‘599 patent, and in September 2010, the U.S. Court of Appeals for the Federal Circuit affirmed the validy of the patent.  Mylan’s subsequent appeal to the U.S. Supreme Court also failed (see here).  Thus, Mylan’s Paragraph IV certification to the ‘599 patent converted to a Paragraph III certification, preventing ANDA approval until October 25, 2016 when pediatric exclusivity applicable to the patent expires.  FDA tentatively approved Mylan’s ANDA No. 078276 on March 5, 2008.  On September 16, 2009, FDA tentatively approved a second ANDA – Sandoz’s ANDA No. 090237.  FDA has not yet tentatively approved Apotex’s ANDA No. 204089, which was submitted years after the Mylan ANDA, and contains a Paragraph IV certification to the ‘703 patent.  Patent infringement litigation was not initiated against Apotex with respect to the ‘703 patent.

Under the 180-day exclusivity failure-to-market forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I), there must be two events – or “bookends” – to calculate a “later of” event between items (aa) and (bb).  The first bookend date under item (aa) is the earlier of the date that is:

(AA) 75 days after the date on which the approval of the application of the first applicant is made effective under subparagraph (B)(iii); or

(BB) 30 months after the date of submission of the application of the first applicant

That event has already happened here given the April 25, 2006 date on the List of Paragraph IV Patent Certifications. The other bookend – the (bb) part of the equation – provides that the (bb) date is “the date that is 75 days after the date as of which, as to each of the patents with respect to which the first applicant submitted and lawfully maintained a [Paragraph IV] certification qualifying the first applicant for the 180-day exclusivity period,” one of three events occurs:

(AA) In an infringement action brought against that applicant with respect to the patent or in a declaratory judgment action brought by that applicant with respect to the patent, a court enters a final decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that the patent is invalid or not infringed.

(BB) In an infringement action or a declaratory judgment action described in [FDC Act § 505(j)(5)(D)(i)(I)(bb)(AA)], a court signs a settlement order or consent decree that enters a final judgment that includes a finding that the patent is invalid or not infringed.

(CC) The patent information submitted under [FDC Act § 505(b) or (c)] is withdrawn by the holder of the application approved under subsection (b).

The (AA) and (BB) court decision events under item (bb) can be triggered in patent infringement litigation by “the first applicant or any other applicant (which other applicant has received tentative approval).”  Based on the D.C. Circuit’s March 2, 2010 decision in Teva Pharms USA, Inc. v. Sebelius, a mere patent delisting request is not enough to trigger a forfeiture event under the failure-to-market forfeiture, and in particular under subitem (CC).  Moreover, FDA, in the context of the Teva decision, ruled in a Letter Decision that the Court’s reasoning “appears to preclude a forfeiture of exclusivity on the basis of a patent expiration where the expiration is in the control of the NDA holder,” such as patent expiration for failure topay maintenance fees. 

Given these decisions, a subsequent ANDA sponsor, like Apotex, has limited options to trigger the forfeiture of a first applicant’s 180-day exclusivity eligibility.  Apotex’s Complaint seeks a declaration of non-infringement and a declaration that FDA may approve Apotex’s ANDA No. 204089:

whenever that application is otherwise in condition for approval, without awaiting any further order, judgment, or decree of this Court; that the judgment entered in this case is a judgment reflecting a decision that the patent in suit is not infringed pursuant to 21 U.S.C. § 355 (j)(5)(B)(iii)(I)(aa); and that the thirty-month period referred to in 21 U.S.C. § 355(j)(5)(B)(iii) and any other marketing exclusivity periods to which Plaintiffs might otherwise be entitled (including any pediatric exclusivity) with respect to the ’703 patent are shortened to expire upon the date of entry of judgment in this case . . . .

Given that FDA has not yet tentatively approved Apotex’s ANDA No. 204089, this case, like other declaratory judgment actions before it, raises several questions . . . . and not just about the “case or controversy” requirement under Article III of the U.S. Constitution for a court to have jurisdiction in an ANDA Hatch-Waxman declaratory judgment action.  This case once again raises the question of how FDA might interpret the “which other applicant has received tentative approval” parenthetical at FDC Act § 505(j)(5)(D)(i)(I)(bb).  If a subsequent applicant first obtains a final court decision in its favor and then tentative approval, when does the 75-day period begin?  Is the tentative approval retroactive to the date of the final court decision, or would FDA interpret the statute such that the 75-day period begins on the date on which the subsequent applicant completed the statutory criteria?  Or, might FDA interpret the statute such that the 75-day period does not even begin under such a scenario because a subsequent applicant must have tentative approval at the time there is a final court decision? 

By Kurt R. Karst –      

A Complaint filed earlier this year by Mylan Pharmaceuticals Inc. (“Mylan”) in the U.S. District Court for the Eastern District of Pennsylvania alleging that Warner Chilcott and Mayne violated Sections 1 and 2 of the Sherman Act by engaged in so-called “product hopping” with respect to DORYX  (doxycycline hyclate) caught our attention.  After all, the Complaint opens with the following salvo:

This action is brought as a result of Defendants’ relentless efforts to obstruct and constrain competition through an admittedly “anti-generic strategy.”  Through multiple, concerted, and deliberate anticompetitive tactics commenced as early as 2005, Defendants have harmed [Mylan] and the public by preventing and/or delaying generic competition to Doryx – a delayed-release doxycycline hyclate product prescribed for the treatment of severe acne and other bacterial infections – years earlier.  Defendants have accomplished their anticompetitive goals through the use of various strategies that were intentionally designed to unlawfully interfere with the regulatory process, cause delays in the approval of generic versions of Doryx, and disrupt the market for generic Doryx.  This conduct violates Sections 1 and 2 of the Sherman Act, as Defendants have monopolized and restrained trade in the market for delayed-release doxycycline hyclate products.

We watched as other Plaintiffs – Direct and Indirect Purchasers – joined the case through a consolidation of related cases (see here), and filed the case in our memory bank until such time that something noteworthy (or, in our speak, “blogworthy”) happened.  That day has come. 

Last week, the Federal Trade Commission (“FTC”) filed a Motion seeking leave to file an amicus brief in the case to assist the court in its assessment of whether the Plaintiffs have plausibly alleged exclusionary conduct sufficient to state a claim under Section 2 of the Sherman Act.  In doing so, the FTC also addresses what it says is the “appropriate antitrust framework to apply when assessing allegations that a brand drug reformulation unlawfully delayed or inhibited generic competition.”  But before we get into the case, some background on “product hopping” is necessary.

Back in 2010, FTC Commissioner Rosch defined “product hopping” in a speech (pages 14-17) as the practice of “introducing new patented products with minor or no substantive improvements in the hopes of preventing substitution to lower-priced generics.”  As the FTC explains in its proposed amicus brief, product hopping can work in the following way:

[F]irst, the brand manufacturer makes minor non-therapeutic changes to the brand product, such as a dosage or form change.  Next, prior to generic entry, it removes the original product from the marketplace, or accomplishes this indirectly, such as by recalling supply of the original product or raising the price of the original product by a meaningful amount above the reformulated one.  Such conduct can push patients and physicians to abandon the original product.  In this way, a brand manufacturer can convert existing market demand for the original product to its reformulated product – not because physicians and patients prefer it, but simply because the original product is no longer as available or is more costly.  Once the original version of the brand product is less available or more expensive, physicians will stop writing prescriptions for it.  Because the prescription must contain, among other things, the same dosage and form as the generic for a pharmacist to substitute it for the brand, a product switch will effectively eliminate substitution at the pharmacy counter and thus meaningful generic competition.

(For a discussion of the intersection of patent settlement agreements and product hopping, see Michael A. Carrier’s “A Real-World Analysis of Pharmaceutical Settlements: The Missing Dimension of Product Hopping.”) 

In the case of DORYX, Mylan alleges that Defendants effectuated three successive drug product reformulations to impeded generic competition: first, a conversion from DORYX Capsules to DORYX Tablets; second, from DORYX Tablets in 75 mg and 100 mg strengths to a DORYX Tablets 150 mg strength; and third, from a single-scored version of DORYX Tablets 150 mg to a dual-scored version of DORYX Tablets 150 mg.  (A Warner Chilcott citizen petition related to this third conversion – Docket No. FDA-2011-P-0702 – was denied in February 2012.)  Mylan also alleges that a fourth conversion was in the works – a formulation change of DORYX Tablets 150 mg.  It is these conversions, argues Mylan, that foreclosed the company from competing in the various relevant markets identified in the Complaint and that are anticompetitive.

Warner Chilcott filed a Motion to Dismiss Mylan’s Complaint (and that of the Direct Purchasers) saying that it alleges “nothing more than innovation by Defendants, and the marketing of those innovations once government approvals were obtained,” which is not illegal under the Sherman Act. (Warner Chilcott also filed a Motion to Dismiss the Indirect Purchasers’ Complaint, which has been opposed, and Mayne filed a Motion to Dismiss the Mylan and Direct Purchasers’ Complaints.) According to Warner Chilcott, the DORYX conversions are per se lawful and that product changes (or redesigns or reformulations) can never constitute exclusionary conduct: “such conduct is either competition-enhancing (if the new version represented an improvement), or at worst competition-neutral because one version was replaced by another.” (Italics in original)  As such, argues Warner Chilcott, Plaintiffs’ claims should be dismissed.

Not so, say Mylan and the Direct Purchasers in their Oppositions briefs (here and here).  They cite Abbott Labs. v. Teva Pharms. USA, Inc., 432 F. Supp. 2d 408 (D. Del. 2006), which is referred to as “TriCor,” as articulating the appropriate standard for assessing whether there is a plausible allegation of exclusionary conduct sufficient to state a claim under Section 2 of the Sherman Act.  In TriCor, the Delaware District Court denied a Motion to Dismiss where the brand-name company argued that its product changes were per se lawful.  The court also rejected the suggestion that plaintiffs in that case were required to prove that the “new formulations [of the drug] were absolutely no better than the prior version or that the only purpose of the innovation was to eliminate the complementary product of a rival.” Instead, the district court, citing United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir 2001) (en banc), said that “if plaintiffs show anticompetitive harm from the formulation changes, that harm will be weighed against any benefits presented by defendants.”

The FTC, in its proposed amicus brief, says that drug product redesigns can constitute exclusionary conduct, and that, like the plaintiffs in Tricor, Plaintiffs in the DORYX case have articulated a plausible claim that the DORYX conversions are unlawful under Section 2 of the Sherman Act.  “The allegations that defendants used product reformulations to manipulate the pharmaceutical regulatory system and thereby suppress generic competition are sufficient to state a claim of exclusionary conduct.  Applying a per se legal standard, as Warner Chilcott effectively advances here, would entitle brand pharmaceutical companies, as a matter of law, to manipulate the FDA regulatory process and undermine state and federal laws that encourage generic competition,” writes the FTC.

By Riëtte van Laack –

In April 2012, a California consumer filed a class action lawsuit against The Hershey Company alleging that Defendant’s Special Dark Chocolate Bars, Special Dark Kisses, Special Dark Cocoa and Cocoa were misbranded because they carried impermissible nutrient content claims, including nutrient content claims about antioxidants and “healthy” claims, and unapproved health claims.  Plaintiff’s action under several California laws includes claims for disgorgement, restitution and punitive damages. 

Defendant filed a motion to dismiss arguing that the action was precluded by § 310 of the Federal Food, Drug, and Cosmetic Act (“FDC Act”) (21 U.S.C. § 337(a)), which states that “proceedings for the enforcement, or to restrain violations, of the [FDC Act] shall be in the name of the United States,” thus excluding private enforcement.  However, in an opinion handed down on November 9, the District Court for the Northern District of California rejected this argument because Plaintiff’s action was based on state law provisions that “mirror the relevant sections of the [FDC Act].”

The Court further concluded that Plaintiff’s claims were not preempted because § 403A of the FDC Act expressly allows states to establish requirements for nutritional labeling identical to the FDC Act.  Plaintiff’s action was based on state law provisions that would not require that Defendant undertake food labeling or representations different from the requirements of the FDC Act or FDA regulations.

This decision is yet another reminder that, at least in California, violations of the nutrition labeling requirements of the FDC Act and FDA regulations may result in private actions under state law with far different consequences (including monetary damages) than actions by FDA.