By Jennifer D. Newberger –

On September 6, FDA released a white paper titled “Strengthening Our National System for Medical Device Postmarket Surveillance.”  This paper stems at least in part from the recommendation by the Institute of Medicine for FDA to “develop and implement a comprehensive medical device postmarket surveillance strategy to collect, analyze, and act on medical device postmarket performance information.” 

The paper proposes the following four actions to strengthen the medical device postmarket surveillance system:

1. Establish a unique device identification ("UDI") system and promote its incorporation into electronic health information;
2. Promote the development of national and international device registries for selected products;
3. Modernize adverse event reporting and analysis; and
4. Develop and use new methods for evidence generation, synthesis and appraisal.

UDI.  In July 2012, FDA issued a proposed rule for implementing a UDI system (see our previous post here).  UDIs are intended to enhance postmarket surveillance “by providing a standard and unambiguous way to document device use in [electronic health records], clinical information systems, and claims data sources.”  This information may then be used to assess the benefits and risks of medical devices, and will allow FDA and industry to report and analyze device-related adverse events by ensuring that necessary information is included in the adverse event reports.  The UDIs will also help healthcare professionals track devices through the supply chain to point of care in the event of a recall or medical error.

Development of national and international registries.  The paper states that FDA is not seeking to develop a centralized repository of registry data, but rather is encouraging the development of registries that “contain sufficiently detailed patient, device and procedural data” that are “linked to meaningful clinical outcomes.” 

FDA acknowledges that it is not feasible to have a registry addressing every medical device problem or issue.  It therefore suggests that, rather than designing registries for a particular manufacturer or product, it would be “more cost-effective to pursue nationwide medical device registries focused on certain product areas of high importance.”  This would be determined by issues of public health need, patient exposure, real-world performance, or societal cost.  The paper states that for device areas “where the benefit-risk profiles are well-understood, registries may not be needed.”  To determine the areas for which registries should be developed, FDA will convene registry experts and key stakeholders to discuss how registries might best contribute to postmarket surveillance efforts.

Modernize adverse event reporting and analysis.  The paper states that FDA will be seeking ways to automate adverse event reporting to “facilitate the submission of device-related adverse events and minimize the effort required by the reporter.”  CDRH is currently piloting an automated system, the Adverse Spontaneous Triggered Events Reporting (ASTER) system, to “detect and automatically report select device associated adverse events” to FDA.  FDA hopes that automated reporting will increase the number and quality of adverse events reported.

FDA also plans to take the following steps to improve adverse event reporting:

• Increase the amount of MDRs reported electronically; 
• Develop a mobile application for adverse event reporting; 
• Develop a new system, the FDA Adverse Event Reporting System (FAERS), with “expanded capacity and modern analytic capability for identifying and extracting relevant information in automated fashion”; and
• Explore use of safety signals to systematically prioritize MDRs for evaluation and review.

Develop methods for evidence generation.  The final step identified by FDA for improving postmarket surveillance is the “development of new tools and methods to generate, synthesize, and interpret postmarket information” to “improve the efficiency and quality of decision-making.”  To do so, FDA proposes the following:

• Use of quantitative decision analysis to help evaluate benefits and risks of medical devices;
• Combine medical device performance and clinical outcome data from diverse sources;
• Increase use of automated signal detection; and
• Use safety signals to identify unwanted or unexpected effects associated with a product.

The paper leaves unanswered several important questions, such as how FDA will use the extensive information gained from the expanded postmarket surveillance program, how it will affect premarket requirements, and how would it be used in regulating products that are on the market.

By Kurt R. Karst –   

In the world of Hatch-Waxman, disputes over 180-day generic drug exclusivity have been commonplace for well over a decade now.  Indeed, in 2012 alone there have already been a few lawsuits filed against FDA concerning generic ACTOS and generic PROVIGIL (see, e.g., here and here, and also here for FDA’s recent Motion to Dismiss/Motion for Summary Judgment in the ACTOS litigation), and some citizen petitions of interest . . . and there are still a little less than four months left in the year.  Disputes over brand-name drug exclusivity, such as 5-year New Chemical Entity (“NCE”) and 3-year new clinical investigation exclusivity, were more common in the first decade or so following the 1984 enactment of the Hatch-Waxman Amendments (see, e.g., Glaxo, Inc. v. Heckler, 623 F. Supp. 69 (E.D.N.C. 1985); Abbott Labs, Inc. v. Young, 920 F.2d 984 (D.C. Cir. 1990); Mead Johnson Pharm. Group v. Bowen, 838 F.2d 1332 (D.C. Cir. 1988); Upjohn Co. v. Kessler, 938 F. Supp. 439 (W.D. Mich. 1996); Bristol-Myers Squibb Co. v. Shalala, 91 F.3d 1493 (D.C. Cir. 1996); Zeneca, Inc. v. Shalala, 1999 U.S. Dist. LEXIS 12327 (D. Md. Aug. 11, 1999), aff’d, 213 F.3d 161 (4th Cir. 2000)), but then tailed off . . . . until the relatively recent flurry of lawsuits and FDA exclusivity decisions.  (Disputes over 7-year orphan drug exclusivity have been uncommon since the 1983 Orphan Drug Act, but also seem to be on the rise as well as companies increasingly focus on orphan drug development – see, e.g., here, here, and here).

Although NCE exclusivity disputes have cropped up on and off over the past decade – for example in the context of hyaluronidase and pancreatic enzyme products (see our previous post here) – the recent spate of disputes over NCE exclusivity seems to have started in earnest with the February 2009 lawsuit against FDA over the Agency’s decision to grant NCE exclusivity for VYVANSE (lisdexamfetamine dimesylate) Capsules.  That lawsuit was stalled while FDA considered the exclusivity granted for VYVANSE.  FDA ultimately issued a letter decision affirming the grant of NCE exclusivity.  In that letter decision, FDA articulated a structure-centric interpretation of “active moiety” (rather than an activity-based interpretation) under which a drug is classified as an NCE regardless of which portions of the active ingredient contribute to the overall therapeutic effect of the drug.  The lawsuit against FDA progressed after the Agency issued its VYVANSE letter decision, and both the DC District Court and the DC Circuit Court ruled in FDA’s favor – see Actavis Elizabeth L.L.C. v. FDA, 689 F.Supp. 2d 174 (D.D.C. 2010) and Actavis Elizabeth L.L.C. v. FDA, 625 F.3d 760 (D.C. Cir. 2010).

In connection with FDA’s evaluation of the grant of NCE exclusivity for VYVANSE, the Agency also took a closer look at a previous decision to grant 3-year exclusivity for EMEND (fosaprepitant dimeglumine) for Injection, which is a pro-drug of the previously-approved active ingredient, aprepitant (see our previous post here).  Relying on the structure-centric interpretation of active moiety discussed in the VYVANSE letter decision, the Agency determined in a separate letter decision that fosaprepitant dimeglumine should have been classified at the time of approval as an NCE and awarded 5-year exclusivity instead of 3-year exclusivity.

Also wrapped up in the VYVANSE NCE exclusivity dispute was an issue we posted on in July 2009 concerning GlaxoSmithKline’s (“GSK’s”) corticosteroid drug VERAMYST (fluticasone furoate) Nasal Spray, which FDA approved on April 27, 2007 (NDA No. 022051).  According to documents contained in the VERAMYST Summary Basis of Approval, GSK requested that FDA grant NCE exclusivity for the drug notwithstanding the Agency’s previous approval of drug products containing fluticasone propionate, bececause fluticasone furoate “is a unique molecular entity that exhibits distinctive functional characteristics of clinical significance that are directly attributable to the continuing presence of the furoate ester group at the local site of drug action,” and that “the furoate group remains an integral part of this [NCE] while exerting therapeutic activity at the site of action, and reviewers should appreciate that neither fluticasone furoate nor fluticasone pripionate is ever metabolized to fluticasone.”  In other words, GSK contended that VERAMYST contains a “stable ester” eligible for NCE exclusivity.

Years ago, prior to FDA promulgating regulations implementing the Hatch-Waxman exclusivity provisions, the Agency had on at least one occasion determined that a “stable ester” – i.e., an ester that is stable, both in vitro and in vivo – is an NCE eligible for 5-year exclusivity because the “stable ester” is considered to be the active moiety.  FDA applied this policy in the context of organic nitrates.  Specifically, FDA approved ISMO (isosorbide mononitrate) on December 30, 1991 (NDA No. 019091) and granted NCE exclusivity despite the previous approval of products containing isosorbide dinitrate. 

The exclusivity entry in the Orange Book for the VERAMYST NDA remained blank as FDA mulled over the exclusivity issue.  In a recent letter decision issued more than 5 years after the approval of VERAMYST, however, FDA finally determined that fluticasone furoate is not an NCE and is not entitled to 5-year exclusivity.  In explaining its decision, FDA once again relied on the structure-based interpretation of active moiety discussed in the VYVANSE letter decision.  FDA also rejected GSK’s “stable ester” argument, stating in the May 29, 2012 letter decision:

We also reject the contention that the fact that FDA granted NCE exclusivity to a stable ester in 1991 constitutes “precedent.”  First, that approval occurred before FDA finalized the applicable regulation. Second, as the Agency’s response to the Vyvanse matter demonstrates, FDA has since adhered to its structure-based approach that does not evaluate the activity of a molecule.

On the same day FDA issued its VERAMYST exclusivity letter decision, the Agency made another determination concerning NCE exclusivity.  This time, the drug at issue was Pfizer, Inc.’s (“Pfizer’s”) TORISEL (temsirolimus) Injection, which FDA approved on May 30, 2007 (NDA No. 022088).  As opposed to VERAMYST, where FDA did not make an exclusivity decision and post it in the Orange Book, FDA had previously determined that temsirolimus is an NCE eligible for 5-year exclusivity.  Generic drug manufacturer Sandoz (represented by HP&M) asserted that TORISEL contains a previously approved active moiety because it is an ester of sirolimus, a previously approved active moiety, and argued that FDA erroneously granted NCE exclusivity when the Agency approved TORISEL.  Pfizer disagreed and argued, among other things, that TORISEL is a “stable ester.” 

Ultimately, FDA determined in a May 29, 2012 letter decision that the Agency incorrectly granted NCE exclusivity and rescinded it.  In doing so, FDA once again relied on its VYVANSE decision, and stated:

Pfizer’s focus on Torisel’s alleged unique properties is irrelevant to the Agency’s categorical exclusion of esters from the types of modifications that are considered to result in a different active moiety.  Actavis demanded the same activity-based consideration from FDA with respect to Vyvanse, but the Agency declined, noting that the parties made conflicting claims about the scientific data. After a full and reasoned discussion, FDA affirmed its chemical-structure based interpretation of the applicable statutory and regulatory provisions.  The same considerations that resulted in the rejection of Actavis’s arguments regarding Vyvanse apply with full force here.

On first blush, both the VERAMYST and TORISEL exclusivity decisions, because they were issued after or almost after 5 years from the date of NDA approval, may seem irrelevant.  But on closer examination, there are benefits that accrue to some affected parties from FDA’s decisions.  For example, the FDC Act provides that in the context of an ANDA or 505(b)(2) application submitted to FDA during the so-called “NCE-1” period containing a Paragraph IV certification to a patent listed in the Orange Book for an NCE, and if there is a patent infringement lawsuit, the 30-month litigation stay is extended to 7.5 years after the NCE NDA approval.  A drug product not granted 5-year exclusivity does not get the 30-month stay extension. 

Turning to 3-year exclusivity, 2012 has already seen its share of controversy.  FDA is currently embroiled in lawsuits involving two drugs – SEROQUEL (quetiapine fumarate) Tablets and VANCOCIN (vancomycin HCl) Capsules.

In July, after a court battle with FDA that started around mid-March when AstraZeneca Pharmaceuticals LP (“AstraZeneca”) sought to enjoin FDA from granting final ANDA approvals for generic SEROQUEL following FDA’s denial (without comment) of two citizen petitions AstraZeneca submitted to FDA last year concerning labeling carve-out issues, the U.S. District Court for the District of Columbia granted FDA’s Motion for Summary Judgment and denied AstraZeneca’s Cross-Motion for Summary Judgment (see our previous post here).  At the heart of the case is a dispute over the applicability and scope of 3-year exclusivity based on FDA’s simultaneous approval of supplemental NDAs that contained information on pediatric uses of quetiapine and that made changes to the drug’s labeling to add information regarding “general safety information that is not indication-specific.”  AstraZeneca has appealed the DC District Court’s decision to the DC Circuit (Court of Appeals Docket No. 12-5227).

One particularly enlightening document that has come out of the SEROQUEL litigation is FDA March 27, 2012 letter decision, which lays out FDA’s approach to 3-year exclusivity.  The letter decision discusses the scope of 3-year exclusivity as it relates to the scope of new clinical investigations conducted by the NDA sponsor.  According to FDA, the FDC Act sets up a “logical relationship between the change in the product for which the new clinical investigations were essential to approval of the supplement, and the scope of any resulting three-year exclusivity.” 

Litigation between FDA and ViroPharma Incorporated (“ViroPharma”), the holder of the NDA for VANCOCIN, has been going on for years.  But it was not until the past year that the issue of 3-year exclusivity came into play.  As we’ve previously discussed (here, here, and here), ViroPharma sued FDA after the Agency denied a March 17, 2006 petition for stay of action and approved ANDAs for generic VANCOCIN.  Among other thing, ViroPharma alleged that FDA impermissibly interpreted the FDC Act when the Agency denied the company 3-year exclusivity for an NDA supplement approved in December 2011.  FDA’s rationale for denying exclusivity is discussed in the Agency’s 87-page petition response, as well as in a memorandum prepared by FDA’s newly established CDER Exclusivity Board.

In April, the DC District Court denied ViroPharma’s Motion for Preliminary Injunction on the basis that the company had not demonstrated a likelihood of success on the merits of the exclusivity claim (as well as another claim concerning bioequivalence).  In July, ViroPharma filed a Motion for Summary Judgment urging the court to “depart from the preliminary view of the merits expressed in its earlier order and hold invalid” FDA’s action.  Last week, FDA and the generic drug manufacturer intervenors (one of which is represented by HP&M) filed briefs (here and here) opposing ViroPharma’s motion and requesting that the court dismiss the case (or grant summary judgment). 

By Carmelina G. Allis –

If you are a mobile app developer, be sure to review the FTC’s newly published guidelines on truth-in-advertising and privacy principles, “Marketing Your Mobile App, Get it Right from the Start.”  They apply to you, whether you are a start-up app developer or an established business.

The FTC wants you to tell the truth about anything that your app can do, whether it relates to implied or express statements, or whether these are claims that you make on a website, in an app store, or within the app itself.  The guidelines suggest that app developers follow these “truth-in-advertising” practices:

• Objective claims made in or about your app must be supported by “competent and reliable evidence.”  For example, if you say your app provides a health benefit, you may need competent and reliable “scientific” evidence to support that benefit claim.  The FTC reminds us about the agency’s enforcement action against a developer claiming that its app could treat acne.  The FTC found that the app developer lacked the proper scientific evidence to back up its acne treatment claim (see here).  Of course, applying this standard to specific facts can be tricky.
• Information disclosures must be “clear and conspicuous.”  That is, any disclosure must be stated clearly enough so that users can notice and understand them.  The FTC suggests that app developers not bury important terms and conditions in long licensing agreements or legalistic statements, or behind vague hyperlinks.

Privacy Protection Principles.  The FTC also reminds mobile app developers that they should incorporate into their app privacy protections, which include limiting the information collected, securely storing information, and safely disposing of information.  And the FTC recommends that these practices be implemented from the start of the app development process.

For example, the guidelines suggest that you:

• Design your app such that users are not “unwittingly disclosing information” that they did not mean to share with you.  Get the user’s express agreement on the collection or sharing of personal information.
• Disclose what type of information your app collects from users or their devices and what you will do with that data.
• Offer privacy settings, opt-outs, and other ways that can be used to control the type of personal information collected and how it is used.
• Honor your privacy promises – think about what your privacy policy and settings offer, and live up to those promises!
• Protect kids’ privacy if your app is designed for children.  You may be subject to the requirements under the Children’s Online Privacy Protection Act (COPPA) and the FTC’s COPPA Rule – see here.
• Collect users’ medical, financial, or sensitive information only with their consent – obtain an “affirmative OK” before you collect it.
• Keep sensitive data and information secure.  For example, take reasonable precautions against well-known security risks, limit access to that information, and safely dispose of it when no longer needed.

By Kurt R. Karst –      

In a decision handed down late in the day on Thursday, September 6th, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia dealt a blow to K-V Pharmaceutical Company’s (“KV’s”) efforts to “restore” orphan drug exclusivity for the pre-term birth drug MAKENA (hydroxyprogesterone caproate) Injection, 250 mg/mL, by granting FDA’s Motion to Dismiss a case filed by KV back in early July. 

As we previously reported, 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 hydroxyprogesterone caproate injection, also known as “17P.”  (In a July 5th Minute Order, the court consolidated the Motion for Temporary Restraining Order and Motion for Preliminary Injunction with the merits, and later denied both motions as moot.)  Specifically, KV alleged that the non-enforcement policy FDA adopted with respect to compounded 17P:

• Violates FDC Act § 527(a) “by effectively nullifying Makena’s statutory seven-year period of market exclusivity by giving de facto approval to compounded versions of 17P that are intended for use to treat the same indication for which Makena is designated as an orphan drug and is approved, and that are not customized to meet the medical needs of individual patients who have the condition for which Makena is indicated but for whom Makena is not medically appropriate” (Count I); 

• Is contrary to the express limitations on compounding set forth in FDC Act § 503ª (Count II); 

• Violates FDC Act §§ 505(a) and 301(d), which prohibit the marketing of a new drug without an effective approval, by approving, authorizing, inviting, encouraging, and permitting “the introduction, and delivery for introduction, into interstate commerce of unapproved new drugs” (Count III); and

• Violates FDC Act § 801(a), which requires FDA to refuse importation of any drug that appears to be unapproved in violation of the new drug approval requirements at FDC Act § 505 (Count IV).

(KV also raised a Fifth Amendment Due Process claim as part of Count I; however, it was not raised in KV's Temporary Restraining Order and Preliminary Injunction papers, so Judge Jackson treated it as conceded.)

KV sought “a comprehensive regime of temporary, preliminary, and permanent declaratory and injunctive relief,” including that the court order FDA to withdraw certain public statements made by the Agency concerning the exercise of enforcement discretion action against 17p compounders (and in particular, a pair of March 2011 statements by FDA and the Centers for Medicare & Medicaid Services – here and here), to take enforcement action against 17p compounders, and “to bar entry into the United States, and release into domestic commerce, of any future shipments of foreign-manufactured API for use in compounding non-customized 17P except in certain specified instances.” 

FDA argued that the Complaint should be dismissed, because, among other things, KV’s claims are not justiciable for lack of standing.  And even if KV can establish standing, argued FDA, “FDA’s March 2011 statement is 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.

KV argued in its Opposition to FDA’s Motion to Dismiss that the Agency failed to understand what the case is about.  “It is not about a mere failure to enforce . . . .  This case is about a pair of coordinated public announcements by Defendants, which were intended to, and did, call forth into the market large amounts of unlawful, uncustomized, compounded versions of 17P, which would not have been distributed but for Defendants’ announcements.”  KV also argued that Chaney was not at issue in the case, because the March 2011 statements are a “policy” and the FDC Act provides “law to apply.”  FDA, in the Agency’s Reply Brief, pressed its case that the March 2011 statements fall “squarely within the Chaney presumption against
review.”

After finding that KV alleged sufficient facts to support standing, Judge Jackson addressed the first three counts of KV’s Complaint.  She found them 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:

Here plaintiffs’ claims in Counts I through III fall squarely within the Chaney presumption of unreviewability.  Just as in Chaney, plaintiffs allege ongoing violations of substantive provisions of the FDCA, and they request that the Court order FDA to take investigatory and enforcement action to stop them.  A review of the extensive prayer for relief demonstrates that this case is fundamentally an effort to get the Court to direct and oversee the FDA’s enforcement activities, and that it cannot do. [(Citation omitted)]

Moreover, wrote Judge Jackson, “[t]he language in the March Statement that animates the plaintiffs – that ‘FDA does not intend to take enforcement action against pharmacies’ – does not constitute an announcement of policy that would differentiate this case from Chaney.”

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, Judge Jackson found that the Count failed to state a claim:

At the outset, the Court notes that plaintiffs do not point to any reviewable FDA statement of policy that explicitly or implicitly permits unlawful imports, and the complaint contains no non-conclusory allegation that such a policy exists. . . .  [E]ven if the Court were to accept the conclusory assertions in the complaint as supporting the existence of a reviewable policy, Count IV fails to state a claim under [FDC Act § 801(a)] because the complaint does not allege that the policy is illegal. . . .  [T]he complaint is devoid of the factual allegations needed to support the conclusory assertion in Count IV that the shipments contain a substance that “appears” to violate [FDC Act § 505].  Thus, it fails to state a claim that FDA ever violated [FDC Act § 801(a)].

In early August, KV announced that the company filed for Chapter 11 bankruptcy protection.  Accordng to KV, the company “has been unable to realize the full value of [MAKENA] because of a lack of enforcement of the orphan drug marketing exclusivity . . . .”  KV has also sued state Medicaid agencies in Illinois, Georgia, and South Carolina to cover MAKENA.  In early August, KV won the Georgia case (see here).

By Ricardo Carvajal –

A consumer group, Citizens for Health, submitted a citizen petition (Docket No. FDA-2012-P-0904) to FDA asking the agency to “take action to protect the public from the illegal, mislabeled use of high fructose corn syrup (‘HFCS’) that is above 55 percent fructose” and to require disclosure of the amount of fructose in HFCS.  The petition contends that FDA’s GRAS affirmation regulation for HFCS extends only to HFCS that contains 42% or 55% fructose, and that food producers are unlawfully using HFCS with other fructose concentrations (e.g., 90%).  According to the petition, “it is well recognized that fructose in particular has been epidemiologically and clinically linked with obesity and metabolic syndrome.” 

By Kurt R. Karst –      

As we patiently await FDA’s next annual report to Congress on 505(q) citizen petitions (see our previous posts on FDA’s annual reports here, here, and here) we thought we would take a minute to share with our readers some observations on the recent changes to the law and some interesting strategies we have heard about.

FDC Act § 505(q), which was added to the law with the enactment of the 2007 FDA Amendments Act, provides that FDA shall not delay approval of a pending application as a result of a citizen petition submitted to the Agency pursuant to 21 C.F.R. § 10.30 (citizen petition) or § 10.35 (petition for stay of action), unless FDA “determines, upon reviewing the petition, that a delay is necessary to protect the public health.”  Until July 9, 2012, FDC Act § 505(q) applied in the context of a pending ANDA or 505(b)(2) application and stated that “[FDA] shall take final agency action on a petition not later than 180 days after the date on which the petition is submitted.”  With the enactment of the FDA Safety and Innovation Act (“FDASIA”), however, the 180-day timeframe was reduced to 150 days.  In addition, FDASIA § 1135 amended FDC Act § 505(q) to apply not only to citizen petitions concerning pending ANDAs and 505(b)(2) applications, but also to citizen petitions concerning biosimilar applications submitted to FDA pursuant to PHS Act § 351(k).  FDA may not extend the pre-FDASIA 180-day period or post-FDASIA 150-day period “for any reason,” including consent of the petitioner, and the Agency may summarily deny a petition submitted with the primary purpose of delaying approval of an application.  Petitions subject to FDC Act § 505(q) must include a specific certification, and petition supplements and comments must include a specific verification statement.  The certification and verification statements must disclose when information supporting the petition, supplement, or comment became known to certain parties and must identify the parties in interest.

FDASIA § 1135 (along with another petition provision at FDASIA § 1134 that sets a 270-day deadline for FDA to respond so-called discontinuation petitions submitted pursuant to 21 C.F.R. § 314.161) appears to be intended to realize greater savings from generic drug and biosimilar approvals as a result of quicker FDA decisions on citizen petitions.  As we’ve noted elsewhere, however, FDC Act § 505(q) petition decisions often are not keyed to generic drug and biosimilar approval decisions.  As such, it seems more likely that with a 150-day response timeframe, FDA will issue more non-response petition denials.  That is, decisions FDA issues by the statutory deadline, but that do not substantively address the issues raised in the 505(q) petition.  We may find out soon whether or not this will be the case, as FDA appears to be headed for a 505(q) petition cliff.

Over the years, we have vigilantly followed 505(q) petitions with our FDC Act § 505(q) Citizen Petition Tracker.  According to our data, between May 18, 2012 and July 17, 2012, there were 13 505(q) citizen petitions submitted to FDA.  Five of the petitions were submitted after the enactment of FDASIA.  The confluence of the pre-FDASIA 180-day response timeframe applicable to 8 of the 13 petitions and the post-FDASIA 150-day response timeframe applicable to 5 of the 13 petitions means that responses to all of the 13 petitions are due between November 14 and December 15, 2012.  FDA has its work cut out for it indeed! 

FDC Act § 505(q) is intended to prevent the citizen petition process from being used to delay approval of ANDAs and 505(b)(2) applications (and now PHS Act 351(k) applications for biosimilars).  This appears to have worked.  According to FDA’s third annual report to Congress on 505(q) citizen petitions, “[o]ver the three year period during which we have been reviewing 505(q) petitions, the number of applications that have been delayed due to analysis of the issues raised in the 505(q) petitions is low: 4 ANDAs and no 505(b)(2) applications.”  FDC Act § 505(q) also appears to have spawned new strategies, however, to obtain competitive intelligence. 

A citizen petition is considered a 505(q) petition requiring the certification at FDC Act § 505(q)(1)(H) if, at the time of FDA’s receipt of the petition, a pending ANDA, 505(b)(2) application, or 351(k) application is implicated.  In many cases, it is already known that an application is pending at FDA.  For example, a company may have submitted notice of a Paragraph IV certification to a patent listed in the Orange Book to the NDA holder or patent owner.  In some cases, however, it is not known whether there is an application pending at FDA, because, for example, there are no patents listed in the Orange Book that would give rise to a Paragraph IV certification, or there is an Orange Book listed patent, but it is a method-of-use patent subject to a section viii carve-out statement. 

In an effort to obtain competitive intelligence about the status of an application as pending at FDA, we’ve heard about a couple of strategies – serial petitioning and petitioning without a 505(q) certification.  In the case of serial petitioning, a company may petition FDA and wait out the 150-day response timeframe for a response from FDA.  If that response is an interim response issued pursuant to 21 C.F.R. § 10.30(e)(2) and says something like “FDA has been unable to reach a decision on your petition because it raises complex issues requiring extensive review and analysis by Agency officials,” then it seems clear that at the time the petition was received by FDA a pending application was not implicated.  The petitioner may then submit a new petition raising the same or similar issues in an attempt to find out whether or not anything has changed since the submission of the last petition. 

A company may also submit a petition without a 505(q) certification in an attempt to elicit a quick FDA response.  FDA’s final guidance on 505(q) petitions states the following with respect the FDC Act § 505(q)(1)(H) certification requirement:

If a petitioner has submitted a petition that is missing the required certification but is otherwise within the scope of section 505(q) and the petitioner would like FDA to review the petition, the petitioner should (1) submit a letter withdrawing the deficient petition pursuant to § 10.30(g) and (2) submit a new petition that contains the certification.  In this case, the provisions of section 505(q) governing the treatment of petitions will apply only to the new petition that includes the required certification because we cannot review the deficient petition under section 505(q)(1)(H).  In particular, we consider the 180-day timeframe for FDA to respond to the petition to begin from the date of submission of the new, complete petition and not the original, deficient petition.

Because FDA will not review a petition that is subject to section 505(q) but is missing the required certification, all petitioners raising issues that could delay the approval of a possible ANDA or 505(b)(2) application should include the certification in their petitions to ensure FDA consideration. Although we may contact a petitioner to notify him or her of a missing or deficient certification, we note that it is the responsibility of the petitioner to ensure that its petition complies with the applicable requirements of section 505(q), as well as all other applicable statutory and regulatory requirements.

Based on our docket monitoring, it seems that FDA has, in fact, in the past contacted the petitioner if the 505(q) certification is deficient or missing – and usually pretty soon after a petition is received by the Agency.  If that is true, then it raises the possibility of submitting a petition to FDA without the certification and waiting for FDA to ask that the petition be resubmitted with the certification.  And why would FDA ask?  Because there is a pending application that would be affected by the petition.

By Kurt R. Karst –      

One recent afternoon we returned to our office from a meeting to find the new (2012) nine-volume set of Title 21 of the Code of Federal Regulations (“CFR”) placed on our desk chair.  There’s a special place on our desk reserved for the CFR (and the FDC Act) because we use it on a daily (usually hourly) basis.  So we replaced the old 2011 CFR set with the new 2012 set.  Lo and behold, one bookend moved to the right quite a bit to accommodate the space needed for the new edition – from about 7.5 inches of space to 9.0 inches!  Could the CFR have grown 1.5 inches in just a year?  Well, it turns out that the paper stock used for the 2012 edition is thicker than the 2011 edition paper stock and that’s primarily what resulted in the need to occupy a greater portion of our scarce desktop real estate.  But the experience got us thinking . . . .

How has Title 21 of the CFR – and for that matter, Title 21 of the United States Code – grown over the years?  If we were to conduct such a study,  it would need to be adequately designed, well-controlled, and minimize bias.  In other words, we would need to find a resource that would allow us to compare apples to apples.  It turns out that such a resource is readily available.  The Government Printing Office website has pdf versions of the CFR that date back to 1996, as well as pdf versions of the United States Code that date back to 1994.  And they are similarly formatted so that a good comparison can be done. 

So we went ahead with the study and evaluated the year-over-year change in Title 21 of the CFR from 1999-2012 and the year-over-year change in Title 21 of the United States Code from 1994-2011.  We did not include the 1996-1998 CFRs in our analysis, because those volumes include Part 400 dealing with insulin and antibiotics, and as a result of changes to the law made by the 1997 FDA Modernization Act, were removed from the CFR beginning with the 1999 edition.  Including them would have skewed the results.  The 2012 United States Code is not yet available, but as a result of the recent enactment of the FDA Safety and Innovation Act, the FDC Act will once again grow significantly.

We knew before the study that there would be growth in both the CFR and the FDC Act, but the question we did not know the answer to was: How much growth?  We were a bit surprised by the results once we put the data in tabular format. 

As shown in the tables below, between the period of 1999 and 2012, the CFR grew by a total of 423 pages (10%), although there was a short dieting period between 2003 and 2004.  Between the period of 1994 and 2011, the FDC Act grew by a total of 324 pages (84%).  While most of the CFR volumes had modest growth, volume 8 (medical devices, mammography, radiological health, and tobacco products) and volume 9 (DEA and ONDCP) experienced the greatest growth in pagination (about 100 pages each) 1999 and 2012.  Between 1999 and 2011, which is the shared time period for which we have data, the CFR grew by a total of 398 pages (9.8%) and the FDC Act grew by 238 pages (50%). 

What’s odd, of course, is that our study shows that although there has been significant growth in the FDC Act, the CFR, which implements the law, has not kept up.  Usually, “if you build it, they will come;” that is, the statutory framework will give rise to a crowd of regulations.  But we have a theory for this seemingly odd result: FDA has been issuing far fewer regulations, and instead, has been implementing the law through guidance and other policy documents.  Take a look at the list of guidance documents for FDA’s Center for Drug Evaluation and Research alone.  Just the list of guidances is 48 pages in length!  FDA guidances spanning all centers total hundreds – and probably thousands – of pages.  The guidances are not binding like the statute or regulations, but, well, the way they are sometimes applied by FDA makes it seem as though . . . .  I think you catch our drift.

Are more laws, regulations, guidances, policies, etc. needed?  We’re not making any suggestions one way or the other.  But it sure is interesting to watch FDA’s waistline grow as the Agency ages.

By Ricardo Carvajal –

The Center for Food Safety and the Center for Environmental Health filed suit in the Northern District of California to compel FDA and the Office of Management and Budget (“OMB”) to implement several major provisions of the Food Safety Modernization Act (“FSMA”). Those provisions require rulemaking to establish or provide for:

• Hazard analysis and risk-based preventive controls
• Clarification of activities that subject a farm to facility registration requirements
• Science-based minimum standards for the safe production and harvesting of fresh fruits and vegetables
• Protection against intentional adulteration
• Sanitary transportation of food
• Foreign supplier verification
• Standards for third-party audits

The suit contends that proposed rules to implement several of these provisions have been pending at OMB for 8-9 months – a period of review that exceeds the time allotted under Executive Order 12866 (that Order mandates review of regulations by OMB within specified timeframes, and with certain exceptions).  The suit also challenges FDA’s decision to exercise enforcement discretion for certain provisions that are self-executing (e.g., preventive controls), and characterizes that decision as “a complete failure to follow a Congressional mandate.”
 
Plaintiffs cite the numerous outbreaks that have occurred since the passage of FSMA in support of their allegation that “the agency’s unlawful delay is putting millions of lives at risk from contracting foodborne illness.”  They contend that FDA’s failure to issue the regulations and OMB’s failure to provide timely review “constitutes unlawfully withheld and unreasonably delayed agency action” within the meaning of the Administrative Procedure Act ("APA").  They also contend that FDA’s failure to enforce FSMA’s self-executing provisions constitutes an APA violation.  Plaintiffs ask the court to order FDA to issue the regulations “as soon as reasonably practicable” pursuant to a court-ordered timeline, and to order OMB to approve the regulations and “cease interfering with FDA’s promulgation” of those regulations.  Plaintiffs also ask the court to order FDA to “enforce all self-executing FSMA regulations immediately.”
 
The filing of this lawsuit comes as little surprise given the constituencies that backed passage of FSMA and the delays in the completion of OMB’s review.  APA litigation to compel agency action is typically protracted, so we expect to follow this case for months (if not years) to come.

By Kurt R. Karst –      

It seems that hardly a day goes by without something new happening concerning patent settlement agreements.  They are generally referred to as “pay-for-delay” agreements; however, that’s a bit of a loaded term, and one we try to avoid.  We just refer to them as patent settlement agreements.  Below is a round-up of sorts of the latest and greatest from ongoing litigation.

K-DUR.  This long-running litigation involves a challenge by direct purchasers of K-DUR (potassium chloride) Extended-release Tablets who allege that Merck & Co., Inc. (“Merck”) (formerly Schering-Plough Corporation) restricted competition in violation of the Sherman Act by settling patent infringement lawsuits against potential generic K-DUR entrants, including Upsher-Smith Laboratories (“Upsher-Smith”).  On March 25, 2010, the U.S. District Court for the District of New Jersey adopted a Special Master’s Report and Recommendation that Merck’s Motion for Summary Judgment be granted.  The direct purchasers appealed the decision to the U.S. Court of Appeals for the Third Circuit (see our previous post here). 

In July, the Third Circuit dropped a bombshell when the Court issued its decision.  Although several Circuit Court decisions have used the so-called “scope of the patent test” when considering whether patent settlement agreements violate the antitrust laws, including the Eleventh Circuit in litigation involving the same K-DUR patent settlement agreement (see Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005)), the Third Circuit rejected that approach in favor of a “quick look rule of reason” analysis.  Under the scope of the patent test, “reverse payments are permitted so long as (1) the exclusion does not exceed the patent’s scope, (2) the patent holder’s claim of infringement was not objectively baseless, and (3) the patent was not procured by fraud on the PTO.”  Or, as one scholar has characterized it, “that the total right to exclude includes the partial right to exclude for a period of time pursuant to a payment.”  Under the quick look test, however, “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.” 

Merck and Upsher-Smith promptly filed a Motion to Stay the Third Circuit’s mandate pending the filing of a Petition for Writ of Certiorari in the U.S. Supreme Court.  That motion was denied, and the Court issued the mandate reversing the March 25, 2010 district court decision. 

Now the issue has been placed at the doorstep of the U.S. Supreme Court.  Merck recently filed a Petition for Writ of Certiorari asking the Court to address:

Whether the federal antitrust laws permit a brand-name manufacturer that holds the patent for a drug to enter into a settlement of patent litigation with a prospective generic manufacturer, where the settlement includes a payment from the brand manufacturer to the generic manufacturer but does not exclude competition beyond the scope of the patent.

A similar Petition for Writ of Certiorari from Upsher-Smith will presumably be filed in the near future.

This is not the first time the U.S. Supreme Court has been asked to take up patent settlement agreements.  As we previously reported (here and here), each time the Court has been asked to address patent settlement agreement antitrust issues, it has refused to do so.  But K-DUR might be the case that pushes the Court over the edge.

EFFEXOR XR.  On the heels of the Third Circuit’s K-Dur decision, and perhaps emboldened by that decision, the Federal Trade Commission (“FTC”), which has long opposed patent settlement agreements, sought leave to file an amicus brief in private antitrust litigation before the U.S. District Court for the District of New Jersey concerning Wyeth Pharmaceuticals Inc.’s (“Wyeth’s”) anti-depressant drug EFFEXOR XR (venlafaxine HCl) Extended-release Tablets. 

In a December 2011 Complaint, several direct purchasers allege that Wyeth, acting alone and/or in concert with first generic applicant Teva Pharmaceuticals USA, Inc. (“Teva”) violated Section 2 of the Sherman Act by delaying EFFEXOR XR generic competition. According to the Complaint:

Wyeth’s scheme included (i) fraudulently procuring three patents for extended release formulations of venlafaxine hydrochloride, (ii) wrongfully listing those patents in the FDA Orange Book as covering Effexor XR, (iii) engaging in serial sham litigation to block and delay multiple generic companies, (iv) entering into a horizontal market allocation and price-fixing agreement with generic manufacturer Teva, and (v) negotiating settlements with subsequent generic applicants to preserve and protect its monopoly and market-division agreement with first-filer Teva.

In particular, the direct purchasers note that as part of the settlement agreement, “Wyeth gave Teva an exclusive license to sell a generic version of (instant release) Effexor before the original compound patent for venlafaxine expired.  Wyeth would both forgo marketing its own authorized generic during that period and allow Wyeth’s generic Effexor to come to market early” (emphasis in original).  This sort of arrangement has been referred to as a “No AG” (i.e., no authorized generic) agreement.

As a result of the Third Circuit’s K-Dur decision, and in the context of pending Motions to Dismiss the case filed by Wyeth and Teva, the New Jersey District Court ordered the parties to address the significance of K-Dur.  The direct purchasers contend in a letter submission to the court that K-Dur mandates denial of the Motions to Dismiss, while Wyeth and Teva contend in their submissions (here and here) that even in the wake of K-Dur, the direct purchasers’ Complaint fails to state any plausible claim for relief and should be dismissed.  

The FTC also saw the district court’s Order and decided to chime in.  The Commission sought leave to file an amicus brief 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.  According to the FTC, “[g]iven the proliferation of these non-cash payments, accepting Defendants’ argument that K-Dur is limited to overt cash payments would effectively nullify the Third Circuit’s decision and permit anticompetitive settlements to proceed unchecked.”  Both Wyeth and Teva have vigorously opposed the FTC’s request for leave to file an amicus brief in letter submissions to the district court (see here and here).  That opposition drew a retort from the direct purchasers.

CIPRO.  Another patent settlement case that has been brewing for a while is in California State Court and involves patent settlement agreements between Bayer AG and several generic drug manufacturers with respect to generic versions of Bayer’s antibiotic drug CIPRO (ciprofloxacin HCl). 

As we previously reported, the case, styled as In re Cipro Cases I & II, was initiated in late 2000 and is a proceeding of nine coordinated cases brought by indirect CIPRO purchasers.  In October 2011, the California Court of Appeal, Fourth Appellate District (Division I), ruled that the patent settlement agreements do not violate the Cartwright Act, which is California’s antitrust law and an analogue to Section 1 of the federal Sherman Act.  In December 2011, the indirect purchasers filed a Petition for Review with the California Supreme Court seeking reversal of the appellate court’s decision.  The California Supreme Court granted the petition for review in February 2012. 

With the recent Reply Brief filed by the indirect purchasers, the case has now been fully briefed.  Noting the recent K-Dur decision, the brief goes on to argue that “California law does not permit a patent holder to exclude competition with a naked cash payment so large it casts serious doubt on the patent’s legal ability to exclude.”

NEXIUM.  The latest entrant to patent settlement agreement litigation is a Class Action Complaint filed in the U.S. District Court for the Eastern District of Pennsylvania by the Fraternal Order of Police Miami Lodge 20, Insurance Trust Fund, on behalf of itself and all others similarly situated against AstraZeneca and several generic drug manufacturers.  The drug at issue is the blockbuster proton pump inhibitor NEXIUM (esomeprazole magnesium) Delayed-release Capsules.

Plaintiffs allege, among other things, that AstraZeneca violated Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2) by entering into agreements with the generic drug manufacturers to pay them “substantial sums in exchange for their agreement to delay marketing their less expensive generic versions of Nexium for as many as six years or more, i.e., until May 27, 2014.”  But for the agreements, say Plaintiffs, a generic version of NEXIUM would have been available early as April 14, 2008, when the 30-month stay of FDA approval of Ranbaxy’s ANDA for generic NEXIUM expired.

Interestingly, Plaintiffs assume that Ranbaxy maintains 180-day exclusivity eligibility for generic NEXIUM; however, as we previously noted there has been speculation that Ranbaxy’s ANDA for generic NEXIUM Delayed-release Capsules is one of the unidentified ANDAs in the Consent Decree the United States filed against Ranbaxy earlier this year and for which Ranbaxy agreed to forfeit 180-day exclusivity. 

By Ricardo Carvajal & JP Ellison –

A divided three-judge panel of the D.C. Circuit affirmed U.S. District Judge Richard Leon’s grant of summary judgment to plaintiffs in R.J. Reynolds et al v. FDA et al. (for our previous summary of that decision, see here). In brief, Judge Leon had applied strict scrutiny to FDA’s regulation requiring the display on cigarette packages of graphic warnings intended to dissuade would-be smokers, and concluded that the regulation was not “narrowly tailored to achieve a compelling government interest.”  The D.C. Circuit agreed with the district court’s result, but for reasons different than those expressed in the district court decision. 

Writing for the majority, Circuit Judge Brown began by noting that FDA’s regulation – and indeed the authorizing statute – might not be constitutional even if it could withstand “the applicable level of scrutiny”:

[H]ow much leeway should this Court grant the government when it seeks to compel a product’s manufacturer to convey the state’s subjective – and perhaps ideological – view that consumers should reject this otherwise legal, but disfavored, product? 

Assuming – without deciding – that that “such compulsion is constitutionally permissible,” the majority held the Zauderer standard of scrutiny (typically applied in cases in which consumers could be misled) to be inapplicable because the graphic warnings are not necessary to prevent current cigarette packaging from misleading consumers, and because those warnings “certainly do not impart purely factual, accurate, or uncontroversial information.”  The majority also rejected strict scrutiny – the standard applied by the district court – as inapplicable to cases involving a compelled commercial disclosure.  Instead, the majority applied intermediate scrutiny under Central Hudson and found the regulation unconstitutional under this standard.

The majority noted that “the only explicitly asserted interest in either the Proposed or Final Rule is an interest in reducing smoking rates.”  The majority found that “FDA has not provided a shred of evidence – much less the ‘substantial evidence’ required by the APA – showing that the graphic warnings will ‘directly advance’ its interest in reducing the number of Americans who smoke.  Finally, the majority batted down FDA’s asserted interest in “effectively communicating health information” as “merely a description of the means by which it plans to accomplish its goal of reducing smoking rates, and not an independent interest capable of sustaining the Rule.”  In a dissenting opinion, Circuit Judge Randolph advocated for the application of Zauderer scrutiny, and faulted the majority for “failing to examine both of the government’s stated interests” (i.e., “effectively conveying information about the negative health consequences of smoking to consumers” and “decreasing smoking rates”).

An appeal appears likely.  Shortly after the decision, HHS issued the following statement:

This administration is determined to do everything we can to warn young people about the dangers of smoking, which remain the leading cause of preventable death in America.  The new warning labels in FDA’s rule are an effective tool in our efforts to both educate current smokers, especially young people, about the dangers of smoking; and help stop teenagers from smoking in the first place.

As noted previously, this case appears headed for the Supreme Court.  Assuming the government seeks Supreme Court review, we should know by next year whether the Court intends to address the several unsettled issues raised by this case. 

By Alexander J. Varond –

The Institute of Medicine (“IOM”) recently issued a paper titled “Accelerating the Development of New Drugs and Diagnostics: Maximizing the Impact of the Cures Acceleration Network: Workshop Summary.”

The IOM paper summarizes the “Maximizing the Goals of the Cures Acceleration Network to Accelerate the Development of New Drugs and Diagnostics” workshop led by the Forum on Drug Discovery, Development, and Translation of IOM on June 4-5, 2012, in Washington, DC.  The one-and-a-half day workshop brought together representatives from federal agencies, the private sector, advocacy groups, and academia to discuss an initiative called the Cures Acceleration Network (“CAN”), which was originally authorized in the Patient Protection and Affordable Care Act of 2010 and was later placed in the National Center for Advancing Translational Sciences (“NCATS”) within the National Institutes of Health (“NIH”) in 2012. 

The overall purpose of the workshop and paper was to help inform the community, NCATS, and the Cures Accelerated Network Review Board (“the CAN Board”) about ways to increase CAN’s impact and accelerate and expand the availability of cures and promote human health.

The workshop objectives were to:

• Identify and catalog potential tools, methods, and approaches that hold promise for accelerating translational science;
• Discuss the authorities conferred to CAN and identify strategies for effectively using those authorities;
• Explore promising models for public-private collaborations that could be strengthened or facilitated by activities under CAN; and
• Identify barriers and potential solutions to facilitate coordination of activities under CAN with FDA regulatory review process and timelines.

Background on CAN.  CAN was established in 2010 to award grants and contracts to eligible entities “to accelerate the development of high need cures, including through the development of medical products and behavioral therapies.”  A “high need cure” is defined as a drug, device, or biologic, that, as determined by NIH, “is a priority to diagnose, mitigate, prevent, or treat harm from any disease or condition,” and “for which the incentives of the commercial market are unlikely to result in its adequate or timely development.”

The intended functions of CAN include conducting and supporting “revolutionary advances in basic research;” providing needed resources for entities, such as government agencies, biotechnology companies, or academic research institutions, to develop high need cures; and facilitating FDA’s review of the high need cures funded by CAN.  The goal of CAN’s involvement in FDA review matters is to expedite “the development and approval of countermeasures and products.” 

CAN grants can be made available to any government, private, or non-profit entity for the purpose of, among other things, promoting innovation and helping the recipient to establish protocols that comply with FDA’s standards and permit the recipient to meet regulatory requirements “at all stages of development, manufacturing, review, approval, and safety surveillance of a medical product.”  Awards can be granted in amounts not to exceed $15,000,000 per project per fiscal year.

IOM’s paper repeatedly emphases that although CAN does not yet have the funding to support major projects, it can be a crucial catalyst for innovation within NCATS and industry, generally.  In its first years, the key to the program’s success is finding ways to “catalyze interesting, novel collaborations, get work done faster, and make a real difference in patients’ lives.”

An Overview of the IOM Paper.  Chapter 1 gives a summary of CAN and discusses an overview of the workshop themes.  Chapter 2 provides analysis related to differing approaches to accelerating translational science and reviews several successful drug development projects as case studies.  Chapters 3 and 4 discuss two unique features of CAN: (1) the authority to require funds to be matched one-to-three from other sources (a requirement that can be waived), and (2) the authority to use “other transactional authority” (a more flexible form of contracting that contributes to the ongoing success of Defense Advanced Research Project Agency (“DARPA”) and avoids some traditional government regulations and policies such as Federal Acquisition Regulations (“FAR”), provisions of the Bayh-Dole Act, and NIH peer-review requirements whereby allowing federal agencies to partner with organizations, and particularly large companies, that have concerns about the standard federal contracting process).  Chapter 5 examines how CAN relates to the broader drug development framework.  And the final chapter, Chapter 6, concludes by highlighting several actions CAN should take to create major impacts in the development of cures.

Key Takeaways from the IOM Paper and Workshop.  A central function of CAN is to “facilitate review in the [FDA] for the high need cures funded by CAN.”  One of the ways CAN may be able to help regulatory science and FDA review is to address gaps in regulatory science that could greatly improve product development.  More specifically, CAN could be used to further develop the regulatory science toolbox and create a more efficient pathway to develop and evaluate products.  The paper notes that the workshop participants repeatedly emphasized the catalytic function CAN must play due to its limited initial funding and acknowledged several steps that CAN could enable, including “building precompetitive cross-cutting consortia, developing better evaluative tools and measure, and supporting relevant data gathering and sharing initiatives.”  The following areas were identified as areas where CAN could also potentially help, such as discovering and implementing “new endpoints, new trial designs, better biomarkers to divide diseases into subsets according to prognostic or response predictors, patient-reported outcomes that have credibility, and natural history studies to understand disease course, particularly for rare diseases.” 

The key, after all, is for the program to find “a ‘sweet spot’ where industry is not investing, but promising opportunities exist.”  And to do this CAN must “cut through red tape, create culture change, and create new tools and new processes that will make a demonstrable difference.”

By James R. Phelps –

According to recent reports concerning the widely reported “whistleblower” scandal at FDA’s Center for Devices and Radiological Health (“CDRH”), in 2009, the CDRH dissidents involved in the affair, while still employed at FDA, filed a “secret” Federal False Claims Act suit against 15 medical device manufacturers.  (Under the Federal False Claims Act, defendants are not immediately apprised of the existence of the “whistleblower” suits, which are not made public during the pendency of an investigation by Department of Justice officials, who decide whether the suits are to be prosecuted by the government or the individuals themselves.)  In this kind of suit, called a qui tam action, there are allegations that false claims were made in the delivery of services or products, resulting in damages when the government made payments for their use.  Because CDRH employees brought this suit while working as reviewers at the agency, it must be assumed that data submitted to the FDA form a part of the allegations made in the lawsuit. 

These qui tam suits can make a “whistleblowing” plaintiff very wealthy; the idea is that, while the government will recover penalties for purchases when there have been “false claims,” the “whistleblower” who brings the suit will take a cut of the money recovered.  It appears that the suit filed by the FDA dissidents would, if successful, bring them a rich reward.  According to the unsealed Complaint filed in the U.S. District Court for the District of Colorado back in 2009, “Defendant Manufacturers are each liable to the United States for treble the United States’ damages, and an additional amount of $5,500- $11,000 for each false claim.”  That means quite a potential jackpot for the “whistleblowers.”  Indeed, plaintiffs in successful qui tam lawsuits have often received millions of dollars each for serving as plaintiffs in the lawsuits, and, occasionally, tens of millions of dollars.

There was a time, before Hatch-Waxman, and before FDA began collecting fees for its activities, when FDA personnel were not so close to matters of money.  To be sure, they were aware that the regulated companies were paid for their products and services, but the agency was not so directly involved in the financial aspects of the healthcare business, and FDA personnel had no reason to see themselves as participants in financial matters.  That has certainly changed, and it appears that this may have contributed to an environment in which FDA’s review personnel are being distracted from their primary mission.

Within recent memory, an FDA reviewer was convicted of trading stock based on confidential, FDA-sourced information.  And this reported qui tam lawsuit, filed by FDA personnel working inside the agency’s review process, powerfully signals that data submitted for approvals are not being held confidential, as they should be. 

Although the qui tam lawsuit was dismissed after the government declined to intervene, the fact that it could happen undoubtedly does much to erode confidence that submissions are being handled properly.  If such a suit were to proceed, then confidence in FDA’s ability to manage valuable and confidential information will be greatly compromised.

The lawsuit suggests that FDA’s management might well have had reason to believe that the reviewers who filed the qui tam lawsuit were not respecting the law as regards confidentiality, which could serve as justification to be monitoring their e-mails.  However, under the circumstances, it is incumbent upon FDA to advise the public fully concerning the steps it is taking to preserve the statutory framework, within which submissions are made and evaluated, by protecting confidential information. 

Hat tips to BioCentury (Steve Usdin), Forbes (Jon Entine), and The New York Times (Erc Lichtblau & Scott Shane) who first reported on the qui tam lawsuit.

By John R. Fleder –

We have previously reported about the Federal Trade Commission’s (“FTC”) case against POM Wonderful, the maker of pomegranate juice (here, here, here, and here). In the world of FTC advertising cases, this litigation is certainly “big league” litigation.

On September 27, 2010, the FTC filed an administrative complaint against POM Wonderful LLC (“POM”), its sister corporation and three officers of POM (collectively “Respondents”).  The FTC asserted that the Respondents had violated the FTC Act in connection with years of advertisements.  The Commission asserted that POM’s advertising was false and misleading because it made unsubstantiated disease claims.  The FTC sued POM even though it was undisputed that Respondents had invested considerable resources in clinical studies to try to substantiate the claims made in the advertisements.

At the risk of mixing up sports, one is reminded of what former Washington Redskins owner Edward Bennett Williams said about his then Coach and General Manager, George Allen:  “George was given an unlimited budget and he exceeded it.”  In the POM case, we have no doubt that both sides exceeded any budgets they may have allocated to the case.  The filing of the FTC’s Complaint has led to a titanic struggle between the FTC and the Respondents.  They participated in a hotly-contested hearing before an FTC Administrative Law Judge (“ALJ”) that included testimony from many experts on both sides.  The parties also submitted hundreds and hundreds of pages of briefs.

On May 21, 2012, the ALJ issued an “Initial Decision” that made neither side happy.  He ruled that some, but not all, of the ads challenged by the Commission were unlawful.  He issued a cease and desist order against the Respondents.  However, he rejected two key arguments advocated by the FTC, namely that Respondents must possess two double blinded studies before making certain claims and that they should only be permitted to make certain claims if those claims have been precleared by another federal agency, namely FDA.

Both sides appealed that ruling to the five member Federal Trade Commission.  Further briefing ensued.  Once that briefing had been completed, the regular season ended.  It was on to the playoffs.

The next event was a fascinating hearing held at the FTC in Washington on August 23, 2012, presided over by the five FTC Commissioners, all of whom have been nominated by a President and confirmed by the United States Senate. The hearing had all the atmospherics of an appellate court argument.  The FTC’s hearing room was packed with people anxious to hear what is a rare event—a formal hearing before the FTC where the Commissioners function as judges in an adjudicatory proceeding.

The Commissioners entered the room together, taking their seats on a podium above the litigants.  When the hearing ended, the Commissioners got up from the podium, went down to the area where the litigants were seated and shook their hands.  This is a custom that one sees rarely in court cases.  This writer has only seen it in the United States Court of Appeals for the Fourth Circuit.  However, that courtesy by the Commissioners demonstrated how seriously everyone involved took this proceeding.  Indeed, on a number of occasions Edward Lazarus, POM’s Counsel referred to an FTC Commissioner as “Your Honor.”  These references led to a number of comments by the Commissioners indicating that they appreciated the reference.

The argument lasted almost two hours.  POM’s Counsel argued first.  His first argument was that the advertisements at issue did not make the implied claims that the FTC Staff asserted had been made.  Commissioners Rosch and Brill immediately disagreed, saying that it was clear to them that a number of POM’s advertisements had made implied disease claims.  They indicated that they can examine the ads de novo, meaning that they are not bound to give any deference to the ALJ’s analysis of those advertisements.  They also indicated that they can decide the meaning of the ads without needing to examine extrinsic evidence as to the ads’ meaning.

POM then argued that it is legally entitled to say anything that is true.  This comment elicited an immediate response from Commissioner Rosch, who stated that “no you are not,” if POM is making deceptive claims by implication.

There was a substantial discussion about whether the FTC can require POM to substantiate certain of its ads by requiring two adequate and well-controlled clinical studies, which are referred to in this case as RCTs, short-hand for randomized clinical trials.  POM asserted that the FTC has never required RCTs in any litigated case.  Commissioner Rosch disagreed, stating that the FTC required RCTs many years ago in  Thompson Medical Co., 104 F.T.C. 648, 842-43 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987) (see here).  POM then sought to distinguish that case from the POM situation.

There was a fascinating exchange between Commissioner Brill and POM’s Counsel with regard to the distinction under the FTC Act between foods and drugs.  POM’s position is that its product is an all-natural food product.  Commissioner Brill indicated that the ALJ erred in his discussion of the characterization of POM’s product.  Commissioner Brill stated that a food product can be deemed a drug product under the FTC Act based on an analysis of the product’s “intended use.”  She said that water can be a drug if it is marketed to cure a disease.

POM argued that it had generated and relied on a huge number of studies and experts to support the claims at issue in this case.  POM argued that in a close case, the case law decided under the First Amendment requires that a “jump ball” goes to the Respondents.  None of the Commissioners explicitly agreed with that position.

However, POM’s argument led to a series of questions and statements by Chairman Leibowitz with regard to POM’s numerous unpaid appearances on television.  Chairman Leibowitz first asked if the FTC Act even applies to statements and claims made by a company official when the company has not paid for the television appearance.  He also asked if POM contended that there is an absolute First Amendment protection for the Respondents in those situations.  POM’s position is that there is First Amendment protection.

FTC Counsel Heather Hippsley addressed the First Amendment issue in some detail.  She asserted that, with regard to liability, there is no First Amendment issue in this case.  She stated that because this is an enforcement action involving allegedly deceptive advertisements, the Respondents have no First Amendment protections for their claims.  She also stated that the unpaid-for appearances were preceded by a substantial marketing campaign by POM designed to give itself free advertising by promoting its products on television shows such as one hosted by Martha Stewart.

The Commissioners engaged FTC Counsel in a discussion regarding one aspect of Staff’s appeal, namely whether the FTC should require that POM can only make certain claims if those claims have been approved by FDA.  FTC Counsel relied on prior FTC Consent Orders as precedent for that proposition.  Commissioner Rosch indicated that he is unaware of any prior litigated precedent for that requirement.  FTC Counsel agreed.  Commissioner Rosch expressed grave concern about relying on prior FTC Consent Orders as precedent for this requirement.  Commissioner Ramirez weighed in on this topic asking whether FDA preclearance was too harsh and would violate the First Amendment.  Commissioner Rosch then suggested that it may not be appropriate for the FTC to tie itself too closely to FDA, adding that the FTC had earlier distanced itself from FDA requirements in the Daniel Chapter One case (see here).  FTC Counsel vigorously defended the Staff’s request to have an order entered with this preclearance requirement.  She contended that the content of POM’s advertisements demonstrated that the FTC could not trust POM to decide even when two RCTs would be required to substantiate a claim.

Commissioner Brill asked if someone other than the FDA should be entrusted to preclear POM’s claims.  FTC Counsel responded that if the Commission is unwilling to impose a requirement that POM get FDA preclearance, the Commission should require two RCTs.

So what happens now?  Under the Commission’s rules, we can expect a decision by early December 2012.  If the decision goes against the Respondents, they can challenge the FTC’s ruling in a Court of Appeals.  My guess is that this challenge will be filed in the United States Court of Appeals for the District of Columbia Circuit.  That case will likely be the World Series of FTC advertising cases.

Making accurate predictions about the result of cases is a dicey proposition based on an oral argument.  Nevertheless, many of our readers may be curious as to what I think will happen based on what was said and not said during this oral argument.
My record on making such predictions has been historically poor.  Nevertheless, here is my prediction based on this hearing:

(1) The FTC will issue a decision that will find that all the Respondents generated advertisements that made disease claims as to POM’s products;

(2) The FTC will find that at least some of those advertisements were false and or misleading in violation of the FTC Act;

(3)  The FTC will issue a cease and desist order against all five Respondents;

(4) The FTC will not impose an FDA-preclearance requirement with regard to any POM advertisement;

(5) The FTC will require POM to have 2 RCTs for at least some of the claims that POM may make in the future.  I suspect that the Commission will impose this requirement in a fact-based analysis that will continue to leave open the general question of when the FTC will require RCTs;

(6) The FTC decision will have a detailed analysis of the First Amendment.  I will not venture a guess as to whether the FTC will rule that POM has First Amendment protections for any of the ads they have run or the appearances that POM officials made on television; and

(7) The FTC will issue a fascinating ruling on the lines between food and drugs, including the extent to which a food product can be deemed a drug.

By Kurt R. Karst –      

In a pair of Federal Register notices (here and here) set for publication on August 27, 2012, and in a pair of draft guidance documents released ahead of their announcement in the Federal Register next week (here and here), FDA moves full-bore ahead with efforts to implement the Generic Drug User Fee Amendments of 2012 (“GDUFA”).  GDUFA, which was enacted as part of the FDA Safety and Innovation Act (“FDASIA”) in July 2012 (see our FDASIA summary and analysis here), is set to go into effect on October 1, 2012 – the start of Fiscal Year (“FY”) 2013.  The August 2012 notices and draft guidances cover myriad GDUFA topics, but are primarily intended to notify industry of certain obligations that need to be timely completed so that FDA can get the ball rolling come October 1, 2012.  One notice announces a September 21, 2012 public meeting to discuss GDUFA implementation.

GDUFA establishes four types of user fees that together will generate $299 million in funding for FDA in FY 2013, and adjusted annually thereafter.  Application fees, which account for 30% of total user fee revenue each FY, include an original ANDA fee and a Prior Approval Supplement (“PAS”) fee, which is one half of the ANDA fee, and a Type II Drug Master File (“DMF”) “first reference fee.”  Both the original ANDA fee and the PAS fee together account for 24% of the total revenue amount.  The Type II DMF fee accounts for 6% of total revenue amount.  An application containing information concerning the manufacture of an Active Pharmaceutical Ingredient (“API”)  at a facility by means other than reference to a Type II DMF, must pay, in addition to an application fee, a special “API fee” to be determined by FDA if “a fee in the amount equal to the [Type II DMF] fee . . . has not been previously paid with respect to such information.”  An annual facility fee, which accounts for 70% of total fee revenue each FY, must be paid by both Finished Dosage Form (“FDF”) and API  manufacturers.  FDF facility fees account for 80% of facility fee revenue (56% of the total revenue amount), and API facilities account for 20% of facility fee revenue (14% of the total revenue amount).  There is a fee differential of not less than $15,000 and not more than $30,000 for foreign FDF and API facilities, which is intended to reflect the added costs of foreign inspections conducted by FDA.

GDUFA also establishes a one-time ANDA backlog fee that will be assessed in FY 2013 for ANDAs pending on October 1, 2012.  Under GDUFA, an ANDA that is “pending” on October 1, 2012, is an application “that has not received a tentative approval prior to that date.”  That fee will be calculated by dividing $50 million by the number of ANDAs in the backlog.  FDA began the process of determining what ANDAs will be included in the backlog in June 2012.  In a notice, FDA announced the Agency’s intention to deem to be withdrawn certain incomplete ANDAs as to which the applicant has not communicated with FDA since July 8, 1991 (see our previous post here).

Below is a table we borrowed from one of FDA’s draft guidance documents, and to which we made some modifications, providing a summary of GDUFA user fee requirements.  Additional information on each fee is detailed in the draft guidance titled “Generic Drug: User Fee Amendments of 2012: Questions and Answers.”

With respect to the backlog and facility fees, FDA is seeking information to facilitate the fee calculation.  In the draft guidance document titled “Self-Identification of Generic Drug Facilities, Sites, and Organizations,” FDA lays out the so-called “self-identification process.”  As explained in the draft guidance:

Self-identification is required for two purposes.  First, it is necessary to determine the universe of facilities required to pay user fees.  Second, self-identification is a central component of an effort to promote global supply chain transparency.  The information provided through self-identification will enable quick, accurate, and reliable surveillance of generic drugs and facilitate inspections and compliance.

In a separate Federal Register notice, FDA implores ANDA applicants to promptly withdraw any pending ANDAs to avoid assessment of the backlog fee.  FDA is separately sending out letters to ANDA applicants making the same request.  Written notification must be received by FDA by Friday, September 28, 2012, because October 1, 2012 (when the backlog is solidified) is a Monday; however FDA encourages applicants to submit notification by September 15, 2012.

ANDA applicants should keep in mind that the penalties for failing to pay GDUFA user fees are stiff.  Failure to pay the backlog fee will result in placing the ANDA sponsor on a public arrears list, such that no new ANDAs or supplements will be received (submitted by the applicant or its affiliates).  Failure to pay the Type II DMF fee within 20 calendar days of the due date results in the Type II API DMF not being deemed available for reference, and an affected ANDA will not be received unless the fee has been paid within 20 calendar days of FDA notification of the failure to pay the fee.  Failure to pay the application fee within 20 calendar days of the due date will result in the application not being received by FDA until the fee is paid.  (Keep in mind that ANDA receipt date is particularly important when 180-day generic drug exclusivity is at stake.)  Finally, failure to pay a facility fee within 20 calendar days of the due date will result in the several consequences, including that all FDF or API products manufactured at the facility and all FDFs containing APIs manufactured at the facility will be deemed misbranded.

By Ricardo Carvajal & Diane B. McColl –

Back in April, FDA’s Center for Veterinary Medicine ("CVM") notified industry of its decision to extend the agency’s Memorandum of Understanding ("MOU") with the Association of American Feed Control Officials ("AAFCO") for one year (the MOU was scheduled to expire on September 1, 2012).  As of September 1, 2013, CVM intends to “transition from being the active reviewers of individual Ingredient Definition submissions to serving as a liaison and advisor to the Ingredient Definition Committee.”  However, CVM intends to “stop accepting requests to review new Ingredient Definition submissions” much sooner, specifically as of February 2013.  This means that the window of opportunity to petition for a new or revised Ingredient Definition through AAFCO is now down to six months.

The February deadline is intended to give CVM time to finish pending Ingredient Definitions, and to redirect the “increasing resources needed to address food additive petitions and [GRAS] notices.”  However, a cursory review of CVM’s inventory of GRAS notices reveals that none are pending.  Since CVM started receiving GRAS notices in 2010, a total of 13 notices have been filed.  Of those 13 notices, 3 received no objection letters, 4 received objection letters, and the remaining 6 were withdrawn.  Query whether the low rate of submissions is in part a function of these discouraging statistics.