By Delia A. Stubbs & Alan M. Kirschenbaum –

Yesterday the OIG issued a Special Fraud Alert on physician owned distributorships, or PODs.  The OIG describes these entities as “physician owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician owners in procedures the physician owners perform on their own patients at hospitals or ambulatory surgery centers.”  Although the Fraud Alert primarily addresses PODs of implantable medical devices, the OIG clarified that the principles set forth in the Fraud Alert “would apply when evaluating arrangements involving other types of physician-owned entities.”

Mincing no words, the Fraud Alert twice describes PODs as “inherently suspect under the antikickback statute.”  That law makes it a crime to willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, referrals of items or services reimbursable by a Federal health care program.  42 U.S.C. § 1320a-7b(b).  The OIG explains that “financial incentives PODs offer to their physician-owners may induce physicians both to perform more procedures (or more extensive procedures) than are medically necessary and to use the device the PODs sell in lieu of other, potentially more clinically appropriate, devices.”  This is especially true for implantable medical devices, the OIG states, because the choice of brand and type of the device may be made or strongly influenced by the physician.  The Fraud Alert describes certain attributes of suspect PODS, such as distributions based on the actual or expected volume of devices used by a physician owner, or physician owners conditioning referrals to hospitals on the latter’s purchase of the POD’s devices.  Heightened scrutiny is triggered by disproportionately high rates of return, or physicians’ changing their medical practices (e.g., performing more surgeries) after investing in a POD. 

This is not the first time the OIG has focused on PODS.  In a 2006 public letter, the OIG noted “an apparent proliferation of physician investments in medical device and distribution entities, including group purchasing organizations,” and stated that OIG guidance on joint ventures (which includes a safe harbor regulation on investment interests) would apply to such entities. 

In June 2011, the minority staff of the Senate Finance Committee issued a report on PODS, followed the same month by a letter to the OIG from the Committee expressing concern about potential federal health care program abuse by PODs and requesting the OIG to conduct an inquiry into these organizations.  The OIG’s FY 2012 and 2013 Work Plans refer to such a report in preparation, but none has been forthcoming yet.

It bears mention that, under a recent rule issued by the Centers for Medicare & Medicaid Services (CMS) to implement the physician payment transparency (“sunshine”) provisions of the Affordable Care Act, “applicable group purchasing organizations” (GPOs) will be required to report their physician ownership and investment interests, as well as the payments they distribute to their physician owners and investors.  PODs that meet the rule’s definition of applicable GPOs will have to meet these reporting requirements.  Moreover, CMS takes the questionable position in the preamble that distributors who take title to federally reimbursable medical products are “applicable manufacturers” subject to sunshine reporting requirements.  See 78 Fed. Reg. 9458, 9461 (Feb. 8, 2013).  (Our memorandum summarizing this regulation is available here.)  Under this interpretation, even PODs that are not GPOs will be required to report their physician ownership and investment interests as well as the payments they distribute to their physician owners and investors.  With this new transparency, public and government focus on PODs is unlikely to wane.

Somewhat later than anticipated, the Federal Trade Commission (“FTC”) has published a revised version of its guide, .Com Disclosures.  The FTC released the original guide 13 years ago, when mobile phones had not yet met the internet and social media barely existed.  In the new version of the guide, updated recommendations and new examples focus on how to craft disclosures given the smaller screen sizes of smartphones as compared to computers and the character and space limitations of most social media (e.g., the 140-character limit for Twitter tweets).

Clear & Conspicuous Requirement.  Under the FTC Act, if a disclosure is necessary to prevent a claim from being deceptive, then the disclosure must be “clear and conspicuous.”  The revised guide, like the 2000 version, continues to emphasize that advertisers should consider the following factors in determining whether an online disclosure is clear and conspicuous:

• Placement of the disclosure and how proximate it is to the claim being qualified;
• Prominence of the disclosure (e.g., the size of the disclosure in a visual ad; the volume of the disclosure in an audio ad);
• Whether the disclosure is unavoidable;
• Whether other elements in the ad distract from the disclosure;
• Whether the disclosure needs to be repeated; and
• Whether the language of the disclosure is understandable.

Scrolling.  The revised guide spends a considerable amount of time discussing the situation where reading a disclosure on a computer, smartphone, or other device may require scrolling.  The revised guide states, “When advertisers are putting disclosures in a place where consumers might have to scroll in order to view them, they should use text or visual cues to encourage consumers to scroll and avoid formats that discourage scrolling.” 

The guide provides a laundry list of what the FTC considers to be inadequate cues to scroll.  The guide, for instance, recommends against using “vague statements, such as ‘details below’”; using only scroll bars on the edge of the screen to indicate that scrolling is required; and leaving large swaths of blank space above a disclosure. 

The FTC, in general, recommends either “[o]ptimizing websites for mobile devices” or placing website disclosures in vertical alignment with the claim being qualified.  The FTC’s rationale is that consumers “who have to zoom in to read a claim on a small screen” may be unlikely to scroll right or left in order to view a disclosure.

Hyperlinking. Regardless of where a hyperlink might appear – for instance, on an advertiser’s website or in an endorser’s social media post – the revised guide recommends considering the following factors:

• The placement and prominence of the hyperlink; 
• Whether the label of the hyperlink is appropriately descriptive and “give[s] consumers a reason to click on it”;
• Whether the actual disclosure provided via hyperlink is understandable; and
• Whether hyperlinks throughout a website (or other piece of online advertising) are consistent in style and presentation.

The FTC cautions that some disclosures, such as “cost information” and “certain health information,” should not normally be provided through a hyperlink.  The guide allows for some wiggle room, however, and states that if details are “too complex” to describe on the same page, a hyperlink might be appropriate if it clearly conveys the nature of the disclosure. 

A new example seeks to demonstrate an appropriate hyperlinked disclosure.  A one-page online ad for the “Frost-A-Tron” electric cooler includes a “Satisfaction Guaranteed” claim.  Directly below that claim, there is a hyperlink labeled, “Restocking fee applies to all returns.”  The hyperlink then leads to a fee schedule providing different dollar amounts that will apply depending on how soon after purchase a consumer returns the Frost-A-Tron.

Pop-Ups.  Regarding pop-ups or other “high tech” interstitial methods of delivering information, the revised guides recommend considering:

• Whether the various browsers or devices that a consumer might use will support the pop-up or other method of delivery;
• Whether blocking software will prevent proper display; and
• Whether consumers might be inclined to ignore the disclosure given the particular delivery method.

The FTC suggests that advertisers might overcome the problem of consumers ignoring a disclosure if the consumer is forced to actively choose and click “yes” or “no” in order to proceed.

No Exceptions.  A common theme throughout the revised guide is that if limited space or technology constraints prevent a disclosure from being clear and conspicuous, then the particular claim, advertisement, or medium should not be used.  The guide states, “If a disclosure is necessary to prevent an advertisement from being deceptive, unfair, or otherwise violative of a Commission rule, and if it is not possible to make the disclosure clear and conspicuous, then either the claim [that is being qualified] should be modified so that the disclosure is not necessary or the ad should not be disseminated.”

Where space is especially limited, such as in tweets or banner ads, the FTC recommends closely considering factors such as whether a disclosure will be retained with republishing (e.g., re-tweeting) and whether abbreviated disclosures will be understood by consumers.  A new example indicates that the FTC believes that “Ad” at the beginning of a tweet will usually be adequate to indicate that a message is sponsored, but that the abbreviated disclosure, “#spon,” will not.

What’s Next.  Although not legally binding, the new version of .Com Disclosures represents a snap shot of how FTC Staff will likely apply the law moving forward in reviewing online disclosures and pursuing enforcement action.  As it typically does after releasing new guidance, the FTC will likely seek to test its interpretations.  The FTC may target low-hanging fruit or it may seek to make its point with big fish.  In recent years, the FTC has actively and deliberately targeted a greater number of well-known, national brands.  All advertisers under FTC jurisdiction are well-advised to review their use of online disclosures sooner rather than later. 

Even though the new guide is not binding on the Food and Drug Administration (“FDA”), it is instructive to FDA-regulated entities considering the use of social media and other new media in structuring their digital advertisements.   

By Riëtte van Laack –

On March 18, 2013, the Government Accountability Office ("GAO") released a report addressing FDA’s use of Adverse Event Reports ("AERs") in overseeing dietary supplements.  Specifically, GAO examined (1) the  number and source and the types of dietary supplements identified in adverse event reports (AERs) to FDA; (2) actions FDA has taken to help ensure that firms are complying with the AER requirements of the 2006 Dietary Supplement and Nonprescription Drug Consumer Protection Act; (3) the extent to which FDA is using AERs to initiate and support its consumer protection actions; and (4) the extent to which FDA has implemented GAO’s 2009 recommendations for enhancing FDA oversight of dietary supplements.

Since 2008, the supplement industry has submitted mandatory AERs pursuant to the 2006 Act.  From 2008 through 2011, FDA received more than 6,307 AERs related to dietary supplements.  The majority (71%) of these AERs were submitted by the dietary supplement industry.  The number of voluntary AERs stayed constant at about 461 per year.  However, the number of mandatory reports, i.e., serious AERs submitted by the industry, increased over time.  This increase likely is the result of increased compliance with the 2006 Act.

In addition to AERs submitted to FDA, GAO reviewed data collected by poison centers.  GAO’s analysis suggests that, from 2008 to 2010, poison centers received more AERs linked to dietary supplements than did FDA for that same period.  Based on these data, GAO suggests that FDA explore possibilities to obtain access to poison center data. 

GAO also recommends that FDA facilitate submission of AERS by providing industry with the means to electronically submit AERs and to provide public access to the AERs (currently, AERs for dietary supplements are not publicly available and require a FOIA request). 

GAO identified a limited number of enforcement actions, including three warning letters, 15 import refusals and one injunction involving compliance with the 2006 Act.  These actions concerned a failure to comply with the requirement to provide a domestic address or phone number to report AERs or a failure by the company to submit AERs it received.  

FDA generally agreed with GAO’s recommendations.  In its response to the report, FDA indicated that a final guidance clarifying when liquid products may be marketed as dietary supplement or conventional foods is currently undergoing Agency review.  In addition, FDA plans to develop a second draft NDI guidance (the first draft guidance yielded more than 7000 comments).  FDA did not provide a time frame for completion of this revised draft NDI guidance.

In response to GAO’s suggestion that FDA may be able to expand use of AERs in enforcement, FDA clarifies that most AERs do not result in enforcement because FDA receives a relatively small number of AERs, and it is difficult to determine causality between the product and the health problem based on the limited information in these AERs. 

In response to the report, Sen. Durbin (D-Ill.) stated that he plans to reintroduce his Dietary Supplement Labeling Act, which he previously introduced in 2011 (see our previous post here).

By Delia A. Stubbs –

On Thursday, March 21, 2013, Representatives Harold “Hal” Rogers (R. Ky.), who is the co-founder and co-chairman of the Congressional Caucus on Prescription Drug Abuse, and Stephen Lynch (D. Mass) introduced the Stop Oxy Act of 2013 (H.R. 1366).   The legislation seeks to direct the Commissioner of the FDA to modify the existing and future approval of any drug containing controlled-release oxycodone hydrochloride under section 505 of the FDCA (21 U.S.C. § 355) to limit such approval to the relief of “severe-only” instead of “moderate-to-severe” pain. 

The Stop Oxy Act arrives on the heels of a recent citizen petition (Docket No. FDA-2012-P-0818) filed by the Physicians for Responsible Opioid Prescribing (“PROP”) urging FDA to modify the labeling for opioid analgesics.  Specifically, similar to the legislation, the PROP petition requests that FDA “strike the term ‘moderate’ from the indication for non-cancer pain.”  It further requests that FDA “add a maximum daily dose equivalent to 100 milligrams of morphine for non-cancer pain;” and “add a maximum duration of 90-days for continuous daily” use for non-cancer pain.  While some states do place quantity or duration limits on prescriptions for certain controlled substances, currently there are no similar federal limits.  The PROP petition asserts that such changes are necessary because, among other reasons, long-term safety and effectiveness of managing chronic non-cancer pain with opioids “has not been established.”  Furthermore, the petition notes that recent surveys found high rates of addiction in chronic non-cancer pain patients receiving chronic opioid treatment; and chronic opioid treatment “at high doses is associated with increased risk of overdose death, emergency room visits, and fractures in the elderly.”  Interestingly, the House bill excludes the PROP petition’s “non-cancer” limitation, and, thus, seeks to restrict the approved use of controlled release oxycodone hydrochloride to “severe-only pain” in all patient populations.

By Jeffrey K. Shapiro –

The U.S. Court of Appeals for the D.C. Circuit (appeal no. 11-1268) issued a decision last Friday backing up FDA’s denial of 510(k) clearance to two of Cytori’s products, the Celution 700 and the StemSource 900, which are intended to harvest cells from adipose (fat) tissue.  Cytori argued that the “not substantially equivalent” (NSE) determination was arbitrary and capricious under the Administrative Procedure Act (APA).  The appeals court rejected this argument.

We discussed the Cytori case in detail when it was argued almost eight months ago – see here. 

The first issue the appeals court decided was whether an NSE determination is the type of decision that can obtain direct review in the Court of Appeals without first going through the trial court.  The court answered “yes” because it is an “order” under the APA’s definition, and there is a provision in the Food, Drug, and Cosmetic Act (FDCA) allowing direct review by an appellate court of FDA’s orders.

The second issue decided was whether FDA’s NSE determination was arbitrary and capricious.  Cytori argued its devices are substantially equivalent to devices already cleared for harvesting cells from blood and bone marrow.  FDA concluded that these two intended uses (harvesting cells from fat versus blood) are different, precluding a finding of substantial equivalence.  In addition, FDA also concluded that the enzyme used to separate cells out of fat tissue posed new safety questions, again defeating substantial equivalence.  Cytori had provided data from 12 donors to show equivalence.  FDA found that this study was too small.

The appeals court did not do much heavy lifting.  It simply deferred to FDA’s “scientific” determination that removing cells from fat is too different from blood, that the enzyme raises new safety questions, and that the 12 donor study was insufficient to establish equivalent safety.  QED.

Said the court (p. 10):  “A court is ill equipped to second guess that kind of agency scientific judgment under the guise of the APA’s arbitrary and capricious standard.” 

Hence, the court expends very little effort in even describing the scientific analysis and reasoning underlying FDA’s judgment.  The court seemed to have essentially reviewed the administrative record to ensure that FDA had provided a reasonable sounding explanation.

This decision is a reminder why there have been so few challenges to FDA’s NSE determinations.  The courts are so deferential under the arbitrary and capricious standard that is very hard to win a case like this one.

By Kurt R. Karst –      

Excitement is running high in the pharmacetical world with just hours to go before the U.S. Supreme Court hears oral argument on Monday, March 25, 2013 in Federal Trade Commission v. Actavis (Docket No. 12-416) concerning whether drug patent settlement agreements (aka “reverse payment agreements” or “pay-for-delay agreements”) to resolve litigation brought pursuant to the Hatch-Waxman Amendments are generally per se lawful, or presumptively anticompetitive and unlawful under federal competition laws.  The Court finally agreed to hear a case concerning drug patent settlement agreements after years of refusing to do so.  Congress will also be closely watching the case, with two bills already pending that would severely dampen interest in in such agreements – S. 214, the Preserve Access to Affordable Generics Act (see our previous post here), and S. 504, the FAIR Generics Act (see our previous post on the same bill introduced in 2011) – and a March 22nd amendment (SA 628) to the continuing budget resolution that would discourage settlements.  Oral argument in Actavis comes less than a week after the Supreme Court heard Mutual Pharmaceutical Co. v. Bartlett (Docket No. 12-142) (see our previous post here), which is another case raising issues under the Hatch-Waxman Amendments and concerns generic drug labeling and whether federal law preempts state-law product liability claims against generic drug manufacturers.  (A copy of the oral argument transcript in Bartlett is available here.) 

The Supreme Court agreed to hear the case after the U.S. Court of Appeals for the Eleventh Circuit affirmed a 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. 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 several cases, 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.” 

Respondents in the case argue in their briefs (here, here, and here) that the so-called “scope of the patent test” used by Eleventh Circuit correctly reflects patent and antitrust precedent.  That test is different from the so-called “quick look rule of reason” analysis advocated by the FTC.  As the U.S. Court of Appeals for the Third Circuit explained in In Re: K-DUR Antitrust Litigation (which is also on appeal to the Supreme Court – Docket Nos. 12-245 and 12-265) when it rejected the “scope of the patent test” and applied 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.” 

A few weeks ago we did a run-down of the amicus briefs submitted in support of the FTC (see here).  An even greater number of amici have come out in support of Respondents in the case:

• National Association of Manufacturers
• Generic Manufacturers Upsher-Smith Laboratories, Inc., et al. 
• Enavail, LLC 
• Generic Pharmaceutical Association
• Bayer AG and Bayer Corp.
• Shire PLC
• New York Intellectual Property Law Association
• Merck & Co., Inc.
• Pharmaceutical Research and Manufacturers of America
• Antitrust Economists
• Law Professors Gregory Dolin, Kent Bernard, et al.
• American Intellectual Property Law Association 
• Mediation and Negotiation Professionals
• David W. Opderbeck and Erik Lillquist
• Health and Economics Professors
• Washington Legal Foundation
• Intellectual Property Owners Association

Although the various amici address the case from different perspectives and have related, albeit different, interests, they all agree that Supreme Court precedent supports the scope of the patent test, and that the “quick look” rule would reduce patent challenges, decrease competition, and harm consumers.

The FTC, in its reply brief filed last week, got in the last word on the case, saying that the “quick look” rule best identifies and condems collusive behavior that eviscerates the brand-generic competitive relationship, and best respects the balance between innovation and competition Congress envisioned when it passed the Hatch-Waxman Amendments.  Conversely, says the FTC, the scope of the patent test would immunize and encourage collusive behavior.

There is already speculation circulating as to how the Supreme Court might rule in the case (see here).  The Court is expected to come to a decision in the coming months.  Until then, Supreme Court tea leave readers will scritinize every word uttered on March 25th for a clue as to the outcome. 

By Karla L. Palmer –

Senators Joe Manchin (D-W.Va.) and Mark Kirk (R-IL), along with Representatives Vern Buchanan (R-FL) and Edward Markey (D-MA) introduced on March 20, 2012 bipartisan, bicameral legislation to combat prescription drug abuse by attempting to tighten restrictions on what they characterize as some of the most powerful, addictive narcotics on the market.  Titled the “Safe Prescribing Act of 2013,” the legislation will reschedule hydrocodone combination product painkillers, such as Vicodin and Lortab, from Schedule III to Schedule II controlled substances.  The press release, listing all 44 co-sponsors of the bill (29 Republicans, 15 Democrats), claims that this rescheduling will accurately reflect the drugs’ high potential for addiction and abuse. Quoting Dr. Andrew Kolodny, President of Physicians for Responsible Opioid Prescribing, the press release further states, “[t]his legislation will correct an error made over 40 years ago when the Controlled Substances Act (“CSA”) incorrectly classified hydrocodone combination products. There is clear and convincing medical evidence that hydrocodone has the same abuse liability as the Schedule II opioids.”

Although there have been grumblings of potential rescheduling since as long ago as 1999, rescheduling hydrocodone products has gained momentum in the past year or so on several fronts due to increased reports of abuse and diversion, FDASIA’s requirement of a public hearing on the issue, and FDA’s 363-page briefing memorandum setting forth its scientific and medical evaluation of hydrocodone products, which report was requested by DEA.  The latest legislative push also comes on the heels of Senator Manchin’s bi-partisan letter to FDA’s Commissioner Margaret Hamburg urging the Agency immediately to reschedule hydrocodone products to Schedule II.  At the end January of this year, the FDA also held a Drug Safety and Risk Management (“DSaRM”) Advisory Committee meeting where, after two days of discussion and deliberation, the Committee voted 19-10 in favor of rescheduling combination hydrocodone products from their current placement in Schedule III to Schedule II.  (See our prior posts addressing these subjects here, here, and here.)  As stated in these prior blogposts, rescheduling hydrocodone products from Schedule III to Schedule II would affect popular hydrocodone combination products such as Vicodin, Lortab, Lorcet, Norco, Hycodan and Vicoprofen.  (However, bulk and single entity hydrocodone products have been classified in schedule II since the passage of the CSA in 1970).
Rescheduling hydrocodone products would also impact every legitimate controlled substance handler including patients who rely on the products for pain relief.  Rescheduling would subject manufacturers, distributors, dispensers such as pharmacies and physicians, importers and exporters to more stringent regulatory requirements.  For example, among other restrictions, Schedule II substances can only be transferred between registrants via a triplicate, sequentially-numbered DEA Form 222 Official Order Form or its electronic equivalent while registrants need only document transfers of schedule III-V drugs with invoices, packing slips or other records.  Prescriptions for Schedule II substances, with limited exceptions, must be written, and pharmacies must have the original prescriptions in-hand before dispensing.  Prescriptions for Schedule III-V may be in a written, oral or faxed format.  Pharmacists cannot refill Schedule II prescriptions; but they can, if authorized to do so, refill Schedule III-V prescriptions up to five times within a six month period.  Manufacturers and distributors must secure Schedule II substances in a safe, steel cabinet or vault while schedule III-V substances may be stored in a less secure controlled substance cage or other enclosure.

As to controlled substance manufacturers and distributors of hydrocodone products,  unlike the prior Manchin bill introduced in April 2012, the proposed legislation calls for the amendment of 21 C.F.R § 1301.72 (relating to the physical security controls for non-practitioners, narcotic treatment programs and compounders for narcotic treatment programs, and storage areas for controlled substances), to allow, for a three-year period following enactment, manufacturers and distributors to store hydrocodone combination products in accordance with the physical security requirements for schedule III, IV and V controlled substances.  The proposed legislation is silent on whether other controlled substance handlers (such as pharmacies) would have to comply with more restrictive handling, storage and security requirements if hydrocodone is rescheduled to schedule II. 

The proposed legislation also requires that, within eighteen months after enactment the Comptroller General shall submit to Congress a GAO report addressing the reclassification of hydrocodone products under the Act.  The report must include an assessment of the degree to which the reclassification  of hydrocodone products “impacts the ability of patients with legitimate medical needs, particularly those in rural areas and nursing home facilities, to access adequate pain management;” and recommendations necessary to address issues, if any relating to patient access to adequate pain management.” 

Notably, legislative scheduling hydrocodone is typically a less cumbersome and quicker process than DEA’s rescheduling via the administrative rulemaking procedures set forth in 21 U.S.C. §§  811, 812.  That administrative process requires a notice and comment period and requires DEA to engage in an eight factor analysis in making a determination on whether to control or reschedule a drug.  These factors include:  (1) the drug’s actual or relative potential for abuse; (2) scientific evidence of its pharmacological effect, if known; (3) the state of current scientific knowledge regarding the drug or other substance; (4) its history or current pattern of abuse; (5) the scope, duration, and significance of abuse; (6) what, if any, risk there is to the public health; (7) its psychic or physiological dependence liability; and (8) whether the substance is an immediate precursor of a substance already controlled under this title.  21 U.S.C. § 811.

By Etan J. Yeshua –

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

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

Separation of Powers

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

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

Arbitrary and Capricious

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

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

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

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

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

By Kurt R. Karst –      

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

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

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

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

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

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

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

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

By Riëtte van Laack –

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

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

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

By Kurt R. Karst –      

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

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

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

Demahy v. Schwarz – Petition for Writ of Certiorari

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By James R. Phelps –

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

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

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

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

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

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

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

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

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

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

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

By Alexander Varond –

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

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

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

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

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

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

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

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

By Kurt R. Karst –      

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

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

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

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

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

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

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

By Carmelina G. Allis –

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

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

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

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

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

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

Draft Mobile Medical App Guidance at 11.

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

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

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

Draft Mobile Medical App. Guidance at 14.

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