By Jennifer D. Newberger –

The Government Accountability Office (“GAO”) recently issued a report titled, “Medical Devices: FDA Should Expand Its Consideration of Information Security for Certain Types of Devices.”  The report was intended to examine how FDA protects active implantable devices against information security risks that could affect their safety and effectiveness.  Though the report did not specifically state that its findings should be applied only to PMA devices, GAO evaluated only devices approved through the PMA process.

In the report, GAO:  1) identified the potential security risks associated with active implantable medical devices, 2) determined the extent to which FDA considered potential security threats in its premarket review, and 3) determined what postmarket controls FDA has in place to monitor potential security issues. 

While it is important to consider the potential breaches that could affect safety and effectiveness of these devices, it is also important to recognize that the likelihood of such breaches occurring—particularly intentional breaches—may be quite low.  GAO itself recognizes this in the report, which states that while “researchers recently demonstrated the potential for incidents resulting from intentional threats in two devices—an implantable cardioverter defibrillator and an insulin pump—no such actual incidents are known to have occurred.” 

The review focused on the devices shown by researchers to be vulnerable to security threats—implantable defibrillators and insulin pumps.  GAO looked both at FDA’s premarket and postmarket activities related to identification of potential information security risks. 

GAO identified eight key information security control areas to consider for medical devices:  software testing, verification, and validation; risk assessments; risk management; access control; vulnerability and patch management; technical audit and accountability; security-incident response; and contingency planning.  It also looked at key potential unintentional and intentional threats to the active implantable medical devices.  The unintentional threats are defective software and firmware and interference caused by electromagnetic signals in the environment. 

Key intentional threats include unauthorized access, malware, and denial-of-service attack.  Experts interviewed by GAO agreed that unintentional threats, particularly electromagnetic interference, are less concerning than intentional threats, because manufacturers are aware of these potential threats and have addressed them in their submissions.

GAO also looked at the potential security risks for active implantable devices:  unauthorized change of device settings; unauthorized change to or disabling of therapies; loss or disclosure of sensitive data; and device malfunction.  GAO noted that “there have been no documented information security incidents resulting from the exploitation of vulnerabilities in these types of medical devices by intentional threats in real-world settings.”  The possibility for such exploitation is known primarily due to testing in controlled settings, and manufacturers have noted that these demonstrations of possible exploitation “should not overshadow the clinical benefits offered by medical devices.”

GAO found that, in its premarket review of the devices evaluated, FDA considered information security risks from unintentional threats, but not from intentional threats.  Specifically, FDA considered risks in the following areas:  software testing, verification, and validation; risk assessments; access control; and contingency planning.  The report states that FDA did “not demonstrate that it had considered the potential benefits of mitigation strategies to protect devices against information security risks from certain unintentional or intentional threats in light of the appropriate level of acceptable risk for medical devices with known vulnerabilities.” 

Of course, since no intentional threats are known to have occurred, and FDA already reviews devices for protection against certain unintentional threats (such as electromagnetic interference), there does not seem to be any evidence to conclude that these devices, as currently manufactured and marketed, present an unacceptable level of risk.  Perhaps for this reason, FDA responded to GAO’s inquiries by noting that, during the review process, FDA focuses “on the most relevant risks that could result in harm to patients.”  FDA considers these risks to be clinical, rather than information security, risks.  FDA did acknowledge, however, that information security risks resulting from intentional threats “could occur.”  It will therefore “consider information security risks resulting from intentional threats when reviewing manufacturers’ submissions for new devices.”

GAO also looked at what FDA could do in the postmarket environment to be more cognizant of possible information security threats.  FDA stated that, while it could use postmarket surveillance studies to focus on information security risks, it has no intention to do so, since those studies are intended to address clinical issues.  GAO also stated that FDA could require manufacturers to include in their PMA annual reports any information related to potential information security risks. 

Based on its review, GAO is recommending FDA “develop and implement a more comprehensive plan to assist the agency in enhancing its review and surveillance of medical devices as technology evolves, and that will incorporate the multiple aspects of information security.”  GAO recommends the plan include, at a minimum, the following four actions:  1) increase FDA’s “focus on manufacturers’ identification of potential unintentional and intentional threats, vulnerabilities, the resulting information security risks, and strategies to mitigate these risks during its PMA review process”; 2) “utilize available resources, including those from other entities, such as other federal agencies”;  3) “leverage its postmarket efforts to identify and investigate information security problems”; and 4) “establish specific milestones for completing this review and implementing these changes.”

Given that the risks presented in this report have not yet materialized, and CDRH is in the midst of addressing a variety of issues associated with its review process, the issues discussed in the report may not be high on CDRH’s priority list.

By Jeffrey K. Shapiro & Jessica A. Ritsick –

ISO 13485 (2003) is an internationally recognized management system for the design and manufacture of medical devices.  Most device manufacturers have quality systems intended to comply with ISO 13485.  FDA has finally implemented a 2007 statutory requirement to allow firms to leverage their ISO compliance to potentially delay an inspection for compliance with FDA’s QSR (Quality System Regulation, 21 C.F.R. Part 820).

To be more specific: on June 5, 2012, FDA launched the “Medical Device ISO 13485:2003 Voluntary Audit Report Submission Pilot Program,” implementing Section 228 of the Food and Drug Administration Amendments Act of 2007 (“FDAAA”) – see here and here.  Under Section 228, FDA shall “[f]or the purpose of setting risk-based inspectional priorities . . . accept voluntary submissions of reports of audits assessing conformance with appropriate quality system standards set by the International Organization for Standardization (ISO).”

So how does the program work?  A device manufacturer must have been audited under Global Harmonization Task Force (“GHTF”) members Canada, Australia, Japan, or the EU’s ISO system.  If so, the firm can voluntarily submit—within 90 days of its issuance, via FDA’s e submitter system—the ISO 13485 audit report to FDA, along with all ISO 13485 audit reports issued in the preceding two years, the establishment’s ISO certificate, and any communications from the most recent audit report.  The audit report is required to conform with Canada’s GD211 guidance for quality management system audit reports.

FDA will review the submission to determine whether “there is minimal probability . . . that the establishment will produce nonconforming and/or defective finished devices.”  If the answer is yes, FDA will use the audit as part of its risk assessment to determine whether the establishment can be removed from routine annual field inspection for one year from the last day of the ISO 13485 audit, such that the establishment’s bi annual inspection would be postponed for a year. 

As might be expected, voluntary submission of an ISO 13485 audit does not preclude FDA from conducting “for-cause” or preapproval inspections. 

It remains to be seen whether many companies will take advantage of this program.  Frankly, the benefit seems modest, especially since FDA routinely fails to inspect many companies in the required biannual time frame in any event.    

By Alexander J. Varond –

On September 25, 2012, the President’s Council of Advisors on Science and Technology (“PCAST”) released a report entitled “Report to the President on Propelling Innovation in Drug Discovery, Development, and Evaluation.”  PCAST is a commission of leading scientists and engineers who directly advise the President and make policy recommendations on matters of science and technology.  Its most recent report aims at doubling the number of new drugs approved annually, while increasing drug safety over the next 10-15 years.

HP&M’s own Frank Sasinowski was recognized as a key contributor at PCAST’s release of this major new report this week and is cited as a PCAST Drug Innovation Invited Expert on page xvii of the report.

The President personally asked PCAST to investigate and report on ways to propel this kind of innovation in this country for two reasons:  first, to better address the suffering of Americans in need of healing therapies; and second, to increase America’s competitiveness in that both we have a positive trade balance in pharmaceuticals and also, research on new medicines is a prime source of jobs here in our pharmaceutical industry and in universities across America.  (Note: The President’s only other personal charge to PCAST was on the avian flu crises early in his Administration.)

PCAST engaged a wide range of stakeholders over the past 12 months to identify reasons why the pace of new therapeutic development has not kept up with the huge growth in scientific knowledge, despite substantial increases in R&D budgets.  The report set a somber background by explaining that ninety-six percent of orphan diseases lack effective therapies, the costs of illness in the aging US population will reach staggering amounts (e.g., Alzheimer’s disease may eventually exceed $1 trillion per year in the absence of new therapies), the innovative ecosystem for public health is under significant stress, and R&D productivity is substantially declining.

Two key challenges affecting the ecosystem for innovative medicines are:

1. How to accelerate the translation of biological insights into new medicines, including predicting the efficacy and toxicity of candidate drugs to more rapidly identify drugs that are not viable and validating human proteins as “druggable” targets to accelerate development of candidate medicines; and

2. How to address inefficiencies in clinical trials since most clinical trials are currently organized de novo, each time incurring substantial costs that could be reduced by creating efficient trial networks and trial designs.

The report also identifies areas where economic incentives for certain areas of drug development may be insufficient to promote efficient investment in innovation (e.g., antibiotics and complex diseases).  It offers suggestions such as developing tools to create incentives such as vouchers for priority review, new exclusivity periods, and targeted tax credits.

Eight specific recommendations were made:

1. Support federal initiatives to accelerate therapeutic development such as the National Center for Advancing Translational Sciences and the Reagan-Udall Foundation.

2. Catalyze the creation of broad-based partnership to accelerate therapeutics by filling key knowledge gaps in drug discovery and development, improving clinical trial capabilities, and clarifying the development pathway for innovative medicines by gathering community input on FDA guidance documents.

3. Expand the use of FDA’s existing authorities for accelerated approval while more fully enforcing requirements for post-approval confirmatory studies.

4. Create a new, optional pathway for initial approval of drugs shown to be safe and effective in a specific subgroup of patients (e.g., FDA could allow the approval a drug for patients with morbid obesity while taking steps to minimize the likelihood that the drug is prescribed off-label to mildly obese patients).  This pathway would allow drug sponsors to seek indications for narrow “Special Medical Use” populations which would strongly signal to prescribers and payors that the population that should be prescribed the drug is limited.

5. Explore approaches for adaptive approval via pilot projects under existing pathways to generate evidence across the life-cycle of a drug from pre-marketing through the post-marketing phase.  However, PCAST recommends against prematurely creating these pathways through legislation.

6. Improve FDA’s tools for monitoring and communication of clinical benefits and risks, including post-marketing surveillance and FDA’s Sentinel System.

7. Reform management practices at FDA including adding the use of pre-market review leaders to oversee each drug candidate application from its investigational stage through final marketing decision.

8. Study current and potential economic incentives to promote innovation in drug development.

While the advisory report outlines a number of ambitious goals for the drug discovery and development ecosystem, it gave few details of what new laws or regulations might be implemented.  For that, we must wait and see on how key stakeholders respond, that is, FDA, industry, academia, the investment community, and patient organizations.

By Kurt R. Karst –       

Public turmoil over FDA decisions involving orphan drug exclusivity has been relatively rare in recent years.  That has changed over the past several months.  First there was the lawsuit brough against FDA by K-V Pharmaceutical Company to “restore” orphan drug exclusivity for the pre-term birth drug MAKENA (hydroxyprogesterone caproate) Injection (see our previous post here).  Then there was FDA’s decision – the first ever – to rescind Octapharma USA, Inc.’s orphan drug exclusivity for WILATE (von Willebrand Factor/Coagulation Factor VIII Complex (Human)) (see our previous post here).  And earlier this week, Depomed, Inc. (“Depomed”) filed a Complaint in the U.S. District Court for the District of Columbia challenging FDA’s denial of orphan drug exclusivity for GRALISE (gabapentin) Tablets.

FDA designated GRALISE as an orphan drug in November 2010 for the management of postherpetic neuralgia (“PHN”), and approved the drug product on January 28, 2011 under NDA No. 022544 for the designated indication.  Despite having designated GRALISE as an orphan drug for the approved indication, however, FDA did not grant orphan drug exclusivity.  Why?  Because of issues surrounding what constitutes an “orphan drug” and under what circumstances “clinical superiority” must be shown.

FDA’s orphan drug regulations at 21 C.F.R. § 316.20(a) state that “a sponsor of a drug that is otherwise the same drug as an already approved orphan drug may seek and obtain orphan-drug designation for the subsequent drug for the same rare disease or condition if it can present a plausible hypothesis that its drug may be clinically superior to the first drug” (emphasis added).  Over the years, there has been some confusion as to how FDA interprets the term “orphan drug” in this regulation. 

The term “orphan drug” is specifically defined at 21 C.F.R. § 316.3(b)(10) to mean “a drug intended for use in a rare disease or condition as defined in section 526 of the act.”  But does this mean that an “orphan drug” is any previously approved drug for a rare disease or condition, regardless of whether or not it was designated and approved as an orphan drug?  “Yes,” according to FDA.  In the preamble to FDA’s 2011 proposed orphan drug regulations (see our previous post here), which the Agency says are “intended to clarify regulatory provisions and make minor improvements to address issues that have arisen since” they were promulgated in December 1992, FDA states that “[i]n the absence of a clinical superiority hypothesis, the Agency does not interpret the orphan-drug regulations to permit orphan designation of a drug that is otherwise the same as a drug that is already approved for the orphan use, either where the approved drug received orphan-drug exclusive approval (even after such drug's exclusivity period has run out) or where the approved drug was not previously designated as an orphan drug and thus did not receive orphan exclusive approval” (emphasis added).

FDA’s orphan drug regulations define a “clinically superior” drug as “a drug . . . shown to provide a significant therapeutic advantage over and above that provided by an approved orphan drug (that is otherwise the same drug)” in one of three ways: (1) greater effectiveness as assessed by effect on a clinically meaningful endpoint in adequate and well controlled trials; (2) greater safety in a substantial portion of the target population; or (3) demonstration that the drug makes a major contribution to patient care.  As FDA explains in the recent petition response concerning WILATE orphan drug exclusivity (as well in the preamble to the Agency’s 2011 proposed rule), where clinical superiority is concerned, the standard for obtaining designation is different from the standard for obtaining exclusivity:

Though the sponsor of a subsequent orphan drug must set forth a plausible hypothesis of clinical superiority over the previously approved drug at the designation stage, such a sponsor faces a higher standard at the time of approval.  At approval, the sponsor of a drug which was designated on the basis of a plausible hypothesis of clinical superiority must demonstrate that its drug is clinically superior to the previously approved drug.  Should the sponsor fail to do so, then the subsequent drug will be considered to be the same drug as the previously approved drug, and will not be able to gain marketing approval if the previously approved drug’s orphan-drug exclusive approval period is still running.  Once this exclusivity has expired, the subsequent drug may be approved . . . , but it will not be eligible for orphan-drug exclusivity because the same drug has already been approved for the same orphan indication.

In the case of GRALISE, FDA required a plausible hypothesis of clinical superiority because the Agency previously approved gabapentin for the management of PHN.  Specifically, FDA approved NEURONTIN (gabapentin) for the management of PHN many years ago, but FDA never designated and approved NEURONTIN as an orphan drug.  Nevertheless, FDA considers NEURONTIN an “orphan drug,” and therefore, according to FDA, a company seeking orphan drug designation for its gabapentin product for the management of PHN must meet the Agency’s “clinical superiority” requirements to obtain designation and orphan drug exclusivity.

The information supporting a plausible hypothesis of clinical superiority (greater safety) was provided to FDA and the Agency designated GRALISE as an orphan drug.  According to Depomed, however:

Contrary to the plain language of the Orphan Drug Act and FDA’s regulations, the letter communicating the grant of orphan-drug designation asserted that the approval of Gralise to manage PHN would not automatically lead to orphan-drug exclusivity.  The letter stated that, “should [Depomed] obtain marketing approval for this product, [Depomed] will have to prove clinical superiority . . . in order to obtain seven years of marketing exclusivity.”

Depomed’s Complaint, which seeks declaratory and injunctive relief, alleges that FDA is violating the Administrative Procedure Act by refusing to grant orphan drug exclusivity for GRALISE.  Instead of recognizing orphan drug exclusivity for GRALISE, FDA “placed additional hurdles between Gralise and orphan-drug exclusivity by attempting to impose requirements that are found nowhere in the statute and that exist in regulation only for circumstances not present here,” alleges Depomed.  Depomed previously communicated concerns with FDA’s interpretation of the Orphan Drug Act in comments submitted to the docket established for FDA’s 2011 proposed rule (Docket No. FDA–2011–N–0583).

By JP Ellison –

Traditionally, challenges to a Drug Enforcement Administration (“DEA”) immediate suspension order (“ISO”) have been litigated, in the first instance, in federal district courts.  This is true even when the physician, pharmacy, distributor, wholesaler or other DEA registrant has taken a “belt and suspenders” approach and filed challenges in both the district court and court of appeals.  In those “dual filing” scenarios, the district court has generally scheduled a temporary restraining order and/or preliminary injunction hearing and addressed the merits before a court of appeals waded into the issue.  The parties, once engaged at the district court level have litigated the issues there, and have sought meaningful relief from a court of appeals—if at all—only on appeal of the district court’s decision.

On August 31, 2012, the D.C. Circuit asked for supplemental briefing on the question of whether Controlled Substance Act permitted the traditional practice of judicial review of ISOs in the district court.  Specifically, the court pointed to its prior decision in Doe v. DEA, 484 F.3d 561 (D.C. Cir. 2007).  While the Doe case did not involve an ISO, the court’s reasoning in that case suggested that the court might have difficulty with an argument that an ISO was “final” for purposes of review under the Administrative Procedure Act (“APA”), but not final under the CSA, which vests jurisdiction for all “final determinations” solely in the courts of appeal.  See 21 U.S.C. § 877.

The parties’ September 7th supplemental briefs took diverging views on the question.  The government took the position (see here) that review of an ISO in the district court was proper.  At oral argument, the government further refined its argument, noting that under the APA, judicial review is available for both “[a]gency action made reviewable by statute and final agency action.”  5 U.S.C. §704.  The government noted that section 824(d) plainly authorized judicial review of the ISO and suggested that review in the district court could lie under the “reviewable by statute” prong of section 704 of the APA.  The appellants argued (see here) that the CSA dictated that the courts of appeals have exclusive jurisdiction.  

At oral argument on September 12th (before Judges Tatel, Henderson and Williams), the comments of Judge Williams, who seemed the most interested in the jurisdictional issue, suggested that he saw practical advantages to jurisdiction lying in the district court, but viewed the statutory language as potentially constraining the courts ability to conclude that the district courts had jurisdiction.

We will continue to follow this issue to see whether the circuit court’s decision—which we would expect later this year—provides litigants with guidance on whether a party facing an ISO should file in the district court or the court of appeals.  In the interim, as DEA continues to issue ISOs, those served with an ISO will remain in search of  (“ISO”) the right court in which to bring a challenge.

By Jennifer M. Thomas & Anne K. Walsh –  

Yesterday, in a big win for industry, District Court Judge Rosemary Collyer granted French company PREVOR’s Motion for Summary Judgment in a case challenging FDA’s decision to regulate PREVOR’s Diphoterine® Skin Wash (“DSW”) product as a drug.  The original Complaint was discussed in an earlier blog post here, and the briefs for all parties are available here, here, here, and here.  PREVOR was represented by Hyman, Phelps & McNamara, P.C. (attorneys Jeffrey N. Gibbs, John R. Fleder, Jennifer M. Thomas, and Anne K. Walsh).  Kudos also to the amici curiae, including the Washington Legal Foundation, Alcoa, and Archer-Daniels-Midland Company.  The case has been closely followed by industry because it involves a new FDA interpretation of the laws concerning combination product classification, as set out in an FDA classification ruling specifically applicable to PREVOR’s product and in two hotly debated draft guidance documents, available here and here (Docket No. FDA-2011-D-0429).

DSW is a “first response” method to help prevent and minimize chemical burn injuries due to accidental chemical exposures, and has long been marketed as a medical device in Europe, Canada, Brazil, and Australia.  FDA’s Office of Combination Products (“OCP”), however, classified DSW as a drug-device combination product with a drug primary mode of action, and determined that it should be regulated by the Center for Drug Evaluation and Research.  The Agency’s Office of Special Medical Programs (“OSMP”) confirmed that classification.  The D.C. District Court disagreed, and determined that both OCP and OSMP employed a new standard (“at least in part” or “even in part”) in reaching its decision.

In her 18-page opinion, Judge Collyer concluded that FDA acted arbitrarily and capriciously.  Specifically, the Court found that FDA had failed to provide a reasoned basis for its classification decision, stating that its “ipse dixit cannot substitute for the ‘qualitative analysis’ or ‘scientific information’ on which FDA says it acted.”  Instead of scientific analysis, the Court opined, FDA substituted “extraordinarily expansive language” in making its classification decision.  And it did so, without offering “more than its say-so.” 

The Court rejected FDA’s contention that the standard it applied was not new, citing the June 2011 guidance documents as evidence, and noting that the agency “fails to cite a single prior instance in which it has applied an ‘even in part’ standard.”  The Court also adopted PREVOR’s comparison to similar products treated as devices, and characterized FDA’s attempt to distinguish those products as “a most ephemeral distinction.”  

The Court questioned “[w]hether FDA would come to the same conclusions without resort to its extra-statutory interpretations.”  It vacated FDA’s decision to designate DSW as a drug-device combination product with a drug primary mode of action, and remanded the case to FDA to make a determination in compliance with its Opinion.  

By Jennifer D. Newberger –

On Thursday, September 20, the Food and Drug Law Institute (“FDLI”) and the Drug Information Association (“DIA”) co-sponsored a program titled “Unwrapping FDA’s UFA Package:  What’s Inside the Statute – What’s Next?”  The program discussed many aspects of the recently passed Food and Drug Administration Safety and Innovation Act (“FDASIA”) (see our summary here), from user fees to substantive changes in the pre- and post-market regulation of drugs and devices.

Some highlights of the device sessions include the following:

Benefit-Risk Determinations.  Though FDASIA does not explicitly require FDA to make benefit-risk determinations in the premarket review of medical devices, CDRH representatives indicated that they intend to do so.  In fact, one representative stated that benefit-risk and increased user participation in the review process are two of the most exciting FDASIA provisions, and that it is important to look not only at clinical data, but also at patient data about the willingness to tolerate certain risks.  She stated that CDRH is already conducting a pilot study in which patients are being surveyed about the risks they are willing to accept for surgical procedures to address obesity.  She also noted that CDRH will be initiating a Patient Preference Project with a meeting in the spring about how best to gather the patient perspective in device reviews.

De Novo Process.  As expected, FDA and industry are both pleased with the changes FDASIA made to the de novo process.  One CDRH representative noted that, while the changes provide an opportunity to be more efficient with de novo devices, there are no user fees for de novo applications.  Thus, it will be important to CDRH to examine whether devices actually qualify for the de novo process and do not have predicates to which they could claim substantial equivalence.  Whether companies would actually seek de novo status to avoid a 510(k) user fee is somewhat doubtful.

Appeals.  FDASIA implemented timeframes for appealing “significant decisions” but did not specify what actions constitute significant decisions.  A CDRH representative at the meeting indicated that CDRH will be issuing a guidance document describing the activities that it considers to be “significant decisions.” CDRH indicated that NSE letters, not approvable decisions, and IDE denials will be among the significant decisions appealable within the FDASIA-specified timeframes.  CDRH stated that letters such as requests for additional information will likely not be considered “significant decisions.”  This means that, while an AI request could continue to be appealed under 21 C.F.R. § 10.75, the process will not have to abide by the timeframes in the new law.

Another issue discussed regarding appeals is when a requester would receive the summary of the decision as mandated by FDASIA.  Since FDASIA requires the sponsor to file an appeal within 30 days of the “significant decision,” it will be important to receive the summary information as soon as possible to incorporate into the appeal.  Based on statements at the meeting, CDRH has not yet determined when it will provide the summary information in response to a request.  It stated that it will “probably” be provided in time to use in the appeal, but appeals historically have been based on the letter itself, and CDRH would expect the same to be true moving forward.  Unfortunately, the denial letters often do not provide much useful information describing the reason for the denial, so sponsors will undoubtedly be looking to receive that summary information to support their appeal and better understand the grounds for the adverse decision.

CDRH stated a concern with the new timeframes, namely, that they will encourage sponsors to appeal decisions rather than working them out informally with the review division.  This concern is unlikely to materialize, since most sponsors would rather resolve issues informally than incur the delay and costs associated with an appeal. 

Device Modifications.  A moderator asked CDRH about the practical effect of the 2011 draft guidance on when to submit a new 510(k) for modifications to a cleared device.  He pointed out that, just because Congress told FDA to do away with that draft guidance and use the 1997 guidance, the 2011 draft gives insight into FDA’s thinking about these issues.  See our earlier blog post on the 2011 draft guidance here.   In response, CDRH said that, from an agency perspective, the 1997 guidance is still in effect, and that if FDA takes action, it will be based on the 1997 guidance.

Reclassification.  The reclassification provision in FDASIA required reclassification through order, rather than regulation; this change was intended to expedite reclassifications.  At the same time, FDASIA said all reclassifications need to go before a panel.  CDRH’s perspective is that, as a result, it could now take longer to downclassify certain devices.  The industry representative on the panel acknowledged that in urging Congress to require a panel prior to reclassification, industry was concerned about upclassification, and perhaps had not considered the impact on downclassifying devices. 

CDRH also seemed unsure about how the new law will affect the progress made to date on reclassifying some of the Class III devices for which FDA has not yet called for PMAs.  CDRH indicated that progress would likely be stalled, and panels would need to be called.  It is not clear whether the law was intended to have this type of retroactive effect.

IDEs.  CDRH has already made certain changes to its IDE template to align with FDASIA’s requirement not to deny IDEs just because CDRH believes they may not support a clearance or approval.  CDRH stated that it wants to incentivize manufacturers to “design the right study,” but it has not yet decided what that incentive will be.  It is contemplating two separate paths, one for sponsors who want to start a study even if it is not ideal from FDA’s perspective, and one for sponsors who will work with FDA to design a study that FDA will “endorse.”  This may involve the creation of a pre-decisional IDE pathway, different from a pre-submission meeting because the pre-decisional meeting will look at data, whereas pre-submission meetings are intended to provide feedback on product development.  Presumably CDRH will be issuing guidance on its new approach to IDEs and clinical trials in the reasonably near future.

By Ricardo Carvajal –

A federal district court dismissed a class action that took issue with a number of allegedly false and misleading claims made on the label of Benecol, a butter/margarine alternative.  The claims at issue include “each serving contains .85g of plant stanol esters,” “proven to reduce cholesterol,” and “no trans fat.” 

Plaintiff contended that the amount of plant stanol esters in the product is insufficient, given that FDA’s health claim regulation for plant sterol/stanol esters and cholesterol requires that a food contain at least 1.7g of plant stanol esters to be eligible for the claim.  However, the court noted that FDA  issued a letter in 2003 permitting use of the claim in relation to products that contain lesser amounts of phytosterols (at least 400 mg per serving), and that FDA had engaged in rulemaking to amend the regulation.   The court observed that “Federal agency action short of formal notice and comment rulemaking can preempt state law.”  Based in part on the compliance of Benecol’s claim with FDA’s 2003 letter, the court found in favor of preemption.

Plaintiff also challenged defendant’s cholesterol-lowering claim on the ground that there were no studies supporting a conclusion that Benecol “as formulated” had the claimed effect.  The court noted that the health claim regulation does not require evidence that products have the claimed effect “as formulated.”  Rather, the regulation establishes “the minimum amount of plant stanol esters that a product must contain” to be eligible for the health claim.  Because plaintiff attempted to impose a requirement different from that imposed under federal law, the court again found in favor of preemption.

Finally, the court found plaintiff’s challenge to defendant’s “no trans fat” claim preempted because “FDA regulations explicitly define the term ‘0 Grams of Trans Fat’” to include levels of less than 0.5 g per serving.  The court concluded that drawing a distinction between “0 grams of trans fat” and “no trans fat” was unreasonable, that the terms were “functionally equivalent,” and that no consumer confusion would result from the use of both claims on the same package.

By Riëtte van Laack –

Earlier this month, FDA announced the publication of a draft level 1 Compliance Policy Guide (“CPG”) titled “Labeling and Marketing of Nutritional Products Intended for Use to Diagnose, Cure, Mitigate, Treat or Prevent Disease in Dogs and Cats.” 

The CPG in clear terms sets out FDA’s enforcement policy for cat and dog products that are intended for use as drug and to provide nutrients in support of a pet’s total daily nutrient requirements.  Unless (conditionally) approved or subject to an index listing, these products are unapproved new drugs.

FDA will give priority of enforcement to products that: (1) are marketed as alternatives to approved animal drugs; (2) contain unapproved food additives that do not conform to a definition by the Association of American Feed Control Officials (“AAFCO”); (3) include on the label claims or symbols that imply a disease claim; and (4) are available to the general public without any involvement of a licensed veterinarian.

To qualify as a product with a low likelihood of enforcement action by FDA, nine requirements concerning the manufacturer, the label, and the labeling and marketing of the product must be met.  Amongst others, the manufacturer must be registered as a food facility, the product label must not include indications for a disease claim (which includes obesity claims), the product be available only through a licensed veterinarian or under the supervision of a licensed veterinarian, and the dissemination of labeling and promotional materials must be limited so it will available to veterinary professionals only.

To ensure consideration by the Agency, comments should be submitted by November 9, 2012.

By Kurt R. Karst –      

Legislation allowing FDA to collect several user fees under the Generic Drug User Fee Amendments of 2012 (“GDUFA”) is expected to be introduced this week (and perhaps voted on by both the U.S. House of Representatives and the U.S. Senate).  A draft of the FDA User Fee Corrections Act of 2012 appeared on a website maintained by the Office of the Clerk of the House earlier this week and would amend the FDC Act to address certain issues raised by language included in GDUFA.

Over the past month or so, there has been growing concern that come October 1, 2012 when GDUFA goes into effect, FDA will be unable to collect several GDUFA user fees because of the failure by Congress to pass an FDA Appropriations Act for Fiscal Year (“FY”) 2013.  This concern was exacerbated when the Continuing Appropriations Resolution, 2013 (H.J. RES. 117) was passed by the House last week making continuing appropriations for FDA in FY 2013 at FY 2012 levels and without any provisions concerning the collection of user fees provided for under the FDA Safety and Innovation Act (“FDASIA”).  In addition to creating a generic human drug user fee program, FDASIA also created a user fee program for biosimilars – the Biosimilars User Fee Act of 2012 – and renewed other existing user fee programs for drugs and medical devices (i.e., PDUFA and MDUFA).  The FDA User Fee Corrections Act of 2012 is not intended to address other user fee statutes, which may be addressed in future legislation. 

GDUFA, which is codified at FDC Act § 744A and § 744B, includes several provisions stating that the Type II Drug Master File (“DMF”) fee (FDC Act § 744B(a)(2)(E)), the Original ANDA and Prior Approval Supplement fees (FDC Act § 744B(a)(3)(C)), and the Finished Dosage Form and Active Pharmaceutical Ingredient fees (FDC Act § 744B(a)(4)(D)) are due by the later of two dates, including 30 calendar days after the enactment of an appropriations act providing for the collection and obligation of GDUFA user fees.  (There are also other provisions concerning the crediting and availabilty of GDUFA user fees – i.e., FDC Act § 744B(i)(2)(C) – that mention an appropriations act).  Take, for example, the statutory language applicable to the Type II DMF user fee, which states:

(ii) Limitation. – No fee shall be due under subparagraph (A) for a fiscal year until the later of –

(I) 30 calendar days after publication of the notice provided for in clause (i) or (ii) of subparagraph (C), as applicable; or

(II) 30 calendar days after the date of enactment of an appropriations Act providing for the collection and obligation of fees under this section.

Of course, if an appropriations act (or a continuing resolution for appropriations) is not enacted providing for the collection and obligation of GDUFA user fees, then the “later of” date will remain open. 

The FDA User Fee Corrections Act of 2012 – acronymized as FDAUFCA and pronounced “fuh-doof-ka,” or perhaps more aptly “fuh-doh-f-ka” (with a Homer Simpson-esque emphasis on “doh”) – is intended to correct this problem by directing that the appropriations act language be disregarded.  For example, the bill says the following with respect to the provision concerning Type II DMF user fees: 

Notwithstanding section 744B(a)(2)(E)(ii) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 379j–42(a)(2)(E)(ii)), the fee authorized under section 744B(a)(2) of such Act for fiscal year 2013 shall be due 30 calendar days after publication of the notice provided for in section 744B(a)(2)(C)(i) of such Act.

The bill includes similar language for the application and facility fee provisions in GDUFA.  The one-time ANDA backlog fee does not appear to be affected by the lack of an FY 2013 appropriations act.  Under the statute (FDC Act § 744B(a)(1)(D)), that fee “shall be due no later than 30 calendar days” after FDA publishes a notice in the Federal Register announcing the fee amount.  The notice must be published by October 31, 2012.

FDA is moving full steam ahead with GDUFA implementation.  In August, FDA published draft guidances on myriad GDUFA topics and that are primarily intended to notify industry of certain obligations that need to be timely completed (see our previous post here).  On September 21, 2012, FDA will hold a public meeting to discuss GDUFA implementation.

UPDATE:

• H.R. 6433 (The FDA User Fee Corrections Act of 2012) was introduced in and passed by the House without objection on September 19, 2012.

By Kurt R. Karst & JP Ellison –     

The U.S. Solicitor General filed a brief last week urging the U.S. Supreme Court not to grant a Petition for Writ of Certiorari filed earlier this year by a group of ear candle advocates after the U.S. Court of Appeals for the District of Columbia Circuit affirmed in a January 2012 decision the U.S. District Court for the District of Columbia’s March 2011 decision granting FDA’s Motion to Dismiss an April 2010 lawsuit brought by the ear candlers (see our previous posts here, here, and here).  The case, Holistic Candlers and Consumers Association v. FDA, is assigned Supreme Court Docket No. 11-1454.  According to Petitioners, a decision by the Supreme Court to grant the Petition for Writ of Certiorari “will clarify how far an agency can pressure citizens before its position becomes unequivocal or final.”

The case stems from FDA’s decision to issue about 15 Warning Letters to companies marketing ear candles, an alternative medicine practice that advocates claim improves general health and well-being (see more here).  FDA stated in the February 2010 Warning Letters – see, e.g., here and here – that ear candles are unapproved medical devices and requested that the companies cease marketing and distributing their products.  (At about the same time, FDA also warned consumers and otolaryngological healthcare professionals not to use ear candles “because they can cause serious injuries.”)  Several ear candle advocates objected to FDA’s statement that holistic candles are medical devices and sued the Agency alleging violations of their First, Ninth, Tenth, and Fourteenth Amendment rights, and seeking injunctive relief staying FDA’s determination that their ear candles are unapproved medical devices, as well as declaratory relief voiding FDA’s determination.  FDA moved to dismiss the case on several grounds, including lack of standing, lack of ripeness, and failure to exhaust administrative remedies. 

The D.C. District Court granted FDA’s Motion to Dismiss on various grounds, including that the Warning Letters are not final agency action subject to judicial review under the Administrative Procedure Act (“APA”), and that the holistic candlers’ efforts to obtain injunctive and declaratory relief “is nothing more than a pre-enforcement challenge foreclosed by” the U.S. Supreme Court’s decision in Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594 (1950), and is therefore not ripe.  The D.C. Circuit affirmed the district court decision, explaining that the Warning Letters are not final agency action because “they neither mark the consummation of the agency’s decisionmaking process nor determine the [Petitioners’] legal rights or obligations.”  Citing FDA’s Regulatory Procedures Manual, the Court noted that FDA Warning Letters are merely “informal and advisory” and that FDA did not commit to take action in the Warning Letters, but rather, “would await [Petitioners’] responses before taking any final regulatory action.”

Both the holistic candler advocates and FDA present similar, but noticeably different, versions of the question posed to the Supreme Court.  Compare Petitioners’ “[w]hether the U.S. Court of Appeals erred in ruling that the [Petitioners’] claim is unripe for review” and “[w]hether an agency’s warning letters, subsequent statements, and previous enforcement actions constitute ‘final agency action’ subject to judicial review under the [APA]” to the Government’s “[w]hether warning letters sent by the [FDA]—which identify possible violations of federal law and ask for corrective action from the recipients, but have no legal consequences—constitute ‘final agency action’ subject to judicial review under the [APA].”  According to Petitioners, the D.C. Circuit’s decision rules against the Supreme Court’s decisions in Sackett v. EPA, 132 S.Ct. 1367 (2012), Bennett v. Spear, 520 U.S. 154 (1997), and Abbott Labs v. Gardner, 387 U.S. 136 (1967), and, “if allowed to stand, allows federal agencies to inform citizens that they are acting in violation of the law and subject to enforcement should the agency initiate the action while ignoring citizens’ requests to challenge the factual findings of that agency and be protected from postponed judicial review.”   FDA, in its opposition brief, says that the D.C. Circuit correctly decided that the Agency’s Warning Letters do not satisy either of the Bennett finality criteria, that Abbott Labs is only relevant where there is final agency action, and that this case it not at all similar to Sackett, in which the Supreme Court, in a unanimous decision, ruled that an EPA compliance order was final agency action reviewable in federal court under the APA. 

Petitioners’ reliance on Sackett caught our attention.  As we noted in a post just days after the Supreme Court ruled in Sackett, “[w]e don’t think it will take long for an FDA regulated entity to cite Sackett as the basis of challenging an FDA Warning Letter, or other agency enforcement action that the agency claims is not final.”  And it did not take long at all for our prediction to become reality.  According to FDA, however:

FDA warning letters do not manifest the same “hallmarks of APA finality” as the EPA compliance order in Sackett.  Unlike that order, FDA warning letters trigger no legal consequences and are subject to further agency “evaluat[ion]” based on the recipient’s response.  Such letters do not trigger any enlarged exposure to penalties for noncompliance with the FDCA, nor does their issuance preclude further agency consideration or review.  Rather, the letters state FDA’s position on the facts available to it, encourage voluntary compliance with the FDCA, and alert the recipient of possible enforcement action by the FDA.  If and when an enforcement action is brought, the agency’s claim is not that the recipient has “violated” the warning letter, but rather that it has violated the underlying requirements of the FDCA. [(Internal citations omitted)]

Although FDA’s Warning Letters to the ear candlers do not include language about real-world consequences, many Warning Letters do.  For example, there have been Warning Letters stating: “Federal agencies may be advised of the issuance of warning letters pertaining to devices so they may take this information into account when considering the award of contracts,” “PMA applications for Class III devices to which the Quality System regulation violations are reasonably related will not be approved until the violations have been corrected, and “Requests for Certificates to Foreign Governments will not be granted until the violations related to the subject devices have been corrected.”  Whether such Warning Letters can be sufficiently final to allow judicial review under Sackett remains to be seen.  In a case in which a Warning Letter contains language akin to that in the previous sentence (especially where FDA uses “will” instead of “may”), the government could have a more difficult time arguing that the Warning Letter is not “final” for some purposes and that it has no effect.

REMINDER:  You can follow us on Twitter @fdalawblog

By Kurt R. Karst –      

In our recent post, “Hot Ticket Item – Patent Settlement Agreement Challenges,” we provided a round-up of the latest and greatest from ongoing litigation concerning patent settlement agreements (or “pay-for-delay” agreements if you prefer that term – we don’t).  It’s only been about three weeks since that post, but a lot more has already happened to warrant another update.  And it all relates back – in some way, shape, or form – to the July 16, 2012 decision by the U.S. Court of Appeals for the Third Circuit in In Re: K-DUR Antitrust Litigation.  In that case, the Court rejected the so-called “scope of the patent test” when considering whether patent settlement agreements violate the antitrust laws, and instead applied a “quick look rule of reason” analysis under which “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.”

For starters, we forgot to mention in our last post that just two days after the Third Circuit issued its K-Dur decision, and one day after the Federal Trade Commission (“FTC”) filed the decision as a supplemental authority in litigation before the U.S. Court of Appeals for the Eleventh Circuit involving ANDROGEL (testosterone gel), the Eleventh Circuit denied the FTC’s Petition for Rehearing en banc.  The petition requested en banc review of an April 2012 decision in which a panel of judges from the Eleventh Circuit affirmed a February 2010 decision by the U.S. District Court for the Northern District of Georgia largely dismissing multidistrict litigation brought by the FTC (and others not involved in the appeal) challenging certain patent settlement agreements in which Solvay Pharmaceuticals, Inc. allegedly paid some generic drug companies to delay generic competition to ANDROGEL (see our previous post here).  The FTC had argued that the April 2012 panel decision “puts the law of this Circuit into conflict with principles underlying antitrust law that prohibit a potential competitor from agreeing not to enter a market,” and therefore merits rehearing en banc.

Of course, the big news since our last post is a second Petition for Writ of Certiorari asking the U.S. Supreme Court to take up the Third Circuit’s K-Dur decision.  Both  Merck & Co., Inc. (“Merck”) and Upsher-Smith Laboratories (“Upsher-Smith”) are Appellants in the Third Circuit case.  Curiously, Merck filed the first Petition for Writ of Certiorari (Supreme Court Docket No. 12-245) without a simultaneous Petition from Upsher-Smith.  Upsher-Smith’s Petition (Supreme Court Docket No. 12-265) was filed several days later and presents the Court with the following question: “Whether the Third Circuit erred by holding, contrary to the Second, Eleventh, and Federal Circuits, that an agreement settling patent litigation that does not restrict competition outside the scope of the exclusionary right granted by the patent itself may presumptively violate the antitrust laws.”  Upsher-Smith argues for the Court to take up the case, saying that the Third Circuit’s decision creates a clear circuit split and “guts the exclusionary right conferred by the patent laws . . . .”  Moreover, writes Upsher-Smith, the Third Circuit’s decision fails to understand that patent settlement agreements like the one at issue in the case “are a natural by-product” of Hatch-Waxman. 

As a result of the possibility that the Supreme Court might grant the Merck and Upsher-Smith Petitions for Writ of Certiorari and finally take up Hatch-Waxman patent settlement agreements, one court has already stayed litigation.  The U.S. District Court for the Eastern District of Pennsylvania recently issued an Order staying litigation over generic PROVIGIL (modafinil) agreements.  The U.S. District Court for the District of New Jersey is still considering a Motion to Stay litigation over EFFEXOR XR (venlafaxine HCl) Extended-release Tablets and a “No AG” (i.e., no authorized generic) agreement.  The FTC filed an amicus brief in that case stating that a No-AG agreement is a “convenient method” for brand-name drug companies to pay generic patent challengers to delay their entry into the market, and that the Third Circuit’s K-Dur decision should not be limited to overt cash payments.

Moving over to the scholarship front, Michael A. Carrier, a professor at the Rutgers University School of Law – Camden, has written an article for the Stanford Technology Law Review, titled “Why the ‘Scope of the Patent’ Test Cannot Solve the Drug Patent Settlement Problem.”  According to Professor Carrier, there are three primary problems with the “scope of the patent” test: “First, the version used today has shed any potential nuance in morphing into a test granting automatic legality.  Second, the test is based on the crucial assumption that the relevant patent is valid.  Third, it cannot address the issue of infringement.”  As the title of his piece suggests, Professor Carrier does not believe the “scope of the patent” test is appropriate for analyzing complex issues presented by Hatch-Waxman patent settlement agreements:

The scope test applied by courts today cannot resolve the issue of whether drug patent settlements violate the antitrust laws.  The test has ventured far beyond its initial version employed for the narrow purpose of punishing conduct reaching products clearly outside the scope of the patent.

The simplistic version used today is employed to give automatic immunity to conduct that might – or might not – be justified.  The test assumes issues of validity and infringement that cannot possibly be determined from the mere issuance of the patent.  With all potential nuance stripped out of the scope test, courts today are relegated to the role of traffic cops shooing agreements through an antitrust light always flashing green.

All of the litigation over and interest in Hatch-Waxman patent settlement agreements is not unexpected.  As a recent 2012 Patent Litigation Study from PricewaterhouseCoopers LLP shows, in recent years the chances at winning a patent infringement lawsuit are not much greater than 50%.  Perhaps that’s why “the majority of ANDA litigations continue to end in settlement.”  

By Ricardo Carvajal –

A federal court has ruled that the express preemption provisions added to the Federal Food, Drug, and Cosmetic Act (“the Act”) by the Nutrition Labeling and Education Act (“NLEA”) do not preempt Florida’s standard of identity for honey.  Plaintiffs in the case, Guerrero v. Target Corp., Case No. 1:12-cv-21115-JIC, alleged that defendant misled consumers by selling honey from which “all traces of naturally occurring pollen” have been removed.  Florida’s standard of identity for honey provides that “no pollen… may be removed except where unavoidable in the removal of foreign matter.”  Plaintiffs claim that pollen in honey provides certain health benefits, and facilitates identifying the honey’s geographic origin.

Defendant moved for dismissal of the complaint in part on the ground that section 403A of the Act expressly preempts plaintffs’ claim.  Defendant contended that its product was properly labeled with “honey” as its common or usual name, as required by section 403(i)(1) of the Act.  Because section 403A preempts any requirement for the labeling of food that is not identical to the requirement of section 403(i)(1), defendant argued that plaintiffs’ claim was preempted. 

The court disagreed, noting that Congress has “only expressly preempted standards of identity which conflict with established federal standards,” and that there is no federal standard of identity for honey.  The court further concluded that, “if a state has prescribed a standard of identity for a food product, the provisions of [section 403(i)(1)] are not triggered.”

Because plaintiffs failed to provide specific details to support their claim that defendant’s honey does not contain pollen, the complaint was dismissed.  However, plaintiffs have leave to amend their complaint to state the factual basis for their claim. 

By Riëtte van Laack –

Earlier this week, the Federal Trade Commission (“FTC”) announced the settlement of a $3.7 million civil penalty case against Jason Pharmaceuticals (“Jason”), a subsidiary of Medifast Inc., for allegedly violating a 1992 FTC Order regarding weight loss claims.  According to the complaint, filed in the United States District Court for the District of Columbia this week by the Department of Justice, the government claims that since at least November 2009, Jason violated the FTC’s 1992 Order by making unsubstantiated weight loss claims, primarily through consumer endorsements. 

According to the FTC, the defendant’s testimonials conveyed the unsubstantiated message that the Medifast program resulted in a weight loss of 2 to 5 pounds per week with an overall loss of 30 lbs.  According to the FTC, the disproportionate general disclaimer, “results will vary,” was insufficient to change the net impression to consumers that the testimonials were representative of what a consumer would achieve.

Interestingly, the settlement agreement, in the form of a court-issued Consent Decree, specifies that the company must have at least one (not two) adequate well-controlled clinical study of a “low calorie meal replacement program . . . designed to lower the user’s total caloric intake” that follows “acceptable designs and protocols” or a protocol “satisfying all of the criteria” specified in Appendix A to the Consent Decree.  Appendix A describes in detail the protocol development and the execution of the study.  For representations regarding weight loss, the clinical study must cover a period of at least 16 weeks, whereas studies to support any claims related to weight maintenance must cover a period of 52 weeks or more.  For other health and safety claims, the standard is “competent and reliable scientific evidence.”  

An obvious question is to what extent the Jason standard of one study will apply to claims for other weight loss products that are not based on reduced calorie intake.  The answer to this question remains to be seen.  Without more information, it is impossible to know if the Consent Decree reflects FTC’s new substantiation standard for weight loss claims.

Also of interest is the Decree’s definition of what constitutes “advertising,” particularly in light of the recent dispute between the FTC and POM Wonderful about whether statements by POM executives during unpaid appearances in TV talk shows qualifies as advertisements.  It will also be interesting to see if the FTC decides the POM Wonderful case by requiring one, rather than two, study, and whether the FTC in that case will specify the details of the requirements of a clinical study, as the FTC did in the Jason case. 

By Kurt R. Karst –      

While Congress and The White House debate whether user fees paid pursuant to various UFAs – User Fee Acts – will be sequestered under the terms of the Budget Control Act (see here), FDA continues to move forward with planning for Fiscal Year (“FY”) 2013.  In a notice that will be published in the Federal Register on Thursday, September 13th, FDA announces the FY 2013 user fee rate for redeeming a tropical disease Priority Review Voucher (“PRV”).  And the rate established by FDA might be a surprise to some, given the tendendcy of user fee rates to increase each FY.  Using a new formula, FDA has come up with a fee of just $3,559,000.  That’s a pretty big change from both FYs 2011 and 2012 when the redemption fee was set at $4,582,000 and $5,280,000, respectively, even when factoring in the additional required application fee payment of $1,958,800 in FY 2013, $1,841,500 in FY 2012, and $1,542,000 in FY 2011.  

As we’ve previously reported (here and here), PRVs were established by § 1102 of the 2007 FDA Amendments Act, which created  FDC Act § 524.  Under the statute, sponsors of certain new drugs and biologics for “tropical diseases” that have received priority review may receive a PRV entitling the holder to a 6-month priority FDA review of another application that would otherwise be reviewed under FDA’s standard 10-month review clock.  There are, however, some restrictions.  FDC Act § 524 allows for only a single actual transfer of a PRV from the original recipient to another sponsor.  In addition, there is a one-year advance notice period that must be provided to FDA before using a PRV (see FDA’s Draft PRV guidance here).  Legislation is pending in Congress (i.e., the Creating Hope Act of 2011) that would remove some PRV restrictions, but it seems unlikely that Congress will act on the bill this year.  (Congress did create, as part of the 2012 FDA Safety and Innovation Act, a new rare pediatric disease PRV program under FDC act § 529.  That PRV program was inspired by the tropical disease PRV program, but the two programs differ in several respects – see our summary here at pages 54-56.)

FDA has granted only a single tropical disease PRV – in connection with the April 2009 approval of Novartis’ NDA No. 022268 for COARTEM (artemether; lumefantrine) for the treatment of acute, uncomplicated malaria infections in adults and children weighing at least five kilograms (see our previous post here).  Novartis redeemed the PRV in connection with the submission of an application for ILARIS (canakinumab) for the treatment of gouty arthritis attacks in certain patients (see our previous post here). 

The fact that a tropical disease PRV is transferable has led to speculation that a market can be created for them.  But that market has not yet formed.  This may be due to the fact that only a single voucher has been granted and it was used by the grantee, but there are also other reasons.  There are the restrictions noted above, as well as a high user fee redemption rate set in past years.  These factors may have dampened interest in the PRV program.  Indeed, an article published last month, titled “The Impact of the US Priority Review Voucher on Private-Sector Investment in Global Health Research and Development,” says that while “there is some recognized value of the PRV . . . the industry perception of the voucher has not normalized and is still clouded by significant uncertainty.”  One reason, according to the article, is that companies view the PRV redemption fee “as demonstrating a lack of support from the FDA for the voucher program.”

With that in mind, we go back to FDA’s notice of the FY 2013 tropical disease PRV redemtion fee.  According to FDA’s notice:

The priority review voucher fee is intended to cover the incremental costs for FDA to do a priority review on a product that would otherwise get a standard review.  The formula used in past years to calculate the priority review user fee was based on the full average cost of a priority review.  After reviewing more recent data and experience with the program, FDA has revised the formula to better approximate the current and ongoing incremental FDA resource costs for a priority review.  The new formula will provide the Agency with the added resources to conduct a priority review while still ensuring a robust priority review voucher program that is consistent with the Agency’s public health goal of encouraging the development of new drug and biological products.

With that preface, FDA jumps into the new formula for calculating the tropical disease PRV redemption rate for FY 2013.  FDA uses FY 2011 standard costs of $5,092,000 for a new molecular entity NDA and $11,203,000 for a BLA for a total of $295,342,000 in FY 2011 (10 BLAs and 36 NDAs).  (A table of FDA’s standard costs for previous FYs is available here).  FDA then uses a formula to separate the costs of a priority and standard review application, which results in the incremental cost of conducting a priority review rather than a standard review of $3,489,000.  After some adjustments for certain costs, the tropical disease PRV redemption user fee figure ends up being $3,559,000 (rounded to the nearest thousand dollars). 

Whether this significant reduction in the tropical disease PRV redemption user fee rate compared to previous years will result in greater interest in the PRV program remains to be seen.  Some may certainly view it as a step in the right direction.