By Kurt R. Karst –      

There’s a lot of parlance (legal and scientific) bandied about in the food and drug world, and perhaps nowhere more so than in the world of Hatch-Waxman.  Things can get confusing.  Take, for example, the term “Reference Listed Drug,” or “RLD.” 

FDA’s regulation at 21 C.F.R. § 314.3(b) defines the term “reference listed drug” to mean “the listed drug identified by FDA as the drug product upon which an applicant relies in seeking approval of its abbreviated application.”  (A “listed drug” is defined in the same regulation to mean, in part, “a new drug product that has an effective approval under section 505(c) of the act for safety and effectiveness or under section 505(j) of the act. . . .”). 

Fast forward through the Code of Federal Regulations to FDA’s ANDA content and format regulations, which require, among other things, that an ANDA sponsor identify a basis for submission.  Specifically, 21 C.F.R. § 314.94(a)(3) says that an ANDA “must refer to a listed drug.  Ordinarily, that listed drug will be the drug product selected by the agency as the reference standard for conducting bioequivalence testing” (emphasis added).  That “reference standard” is identified in the paper version of the Orange Book with a “+”.  (The electronic version of the Orange Book does not use “+”.  Instead, it has a column titled “RLD” where each drug product listing is set to either “Yes” or “No.”) 

Now on to the Preface to the Orange Book, which states the following in a section titled “Reference Listed Drug (RLD)”:

A reference listed drug (21 CFR 314.94(a)(3)) means the listed drug identified by FDA as the drug product upon which an applicant relies in seeking approval of its ANDA.

FDA has identified in the Prescription Drug Product and OTC Drug Product Lists those reference listed drugs to which the in vivo bioequivalence (reference standard) and, in some instances, the in vitro bioequivalence of the applicant's product is compared.  By designating a single reference listed drug as the standard to which all generic versions must be shown to be bioequivalent, FDA hopes to avoid possible significant variations among generic drugs and their brand name counterpart.  Such variations could result if generic drugs were compared to different reference listed drugs. 

Unfortunately, none of these references clearly delineate what we’ll call the “big RLD” and the “little rld.”  Instead, they tend to mosh them together. 

So . . . . When someone uses the term “reference listed drug,” is that person referring, generally, to a drug approved under an NDA (i.e., the “big RLD”), or to the particular reference standard identified in FDA’s Orange Book with a “+” (i.e., the “little rld”)?  Not understanding the difference between the “big RLD” and the “little rld” can lead to faulty decisions and costly mistakes – at least insofar as decisions to submit ANDAs are concerned.  

Here’s an example to illustrate this point . . . .  FDA approves an NDA for a drug with multiple strengths but delays making a decision on which particular strength is the reference standard (i.e., which strength should get the “+” in the Orange Book).  Generic Company No. 1 takes a “big RLD” approach.  It believes that all that is needed as a basis for ANDA submission is a drug approved under an NDA.  It does not wait for FDA to identify a reference standard and instead conducts bioequivalence testing on all of the approved strengths and submits its ANDA with a Paragraph IV certification to an Orange Book-listed patent.  Generic Company No. 2 takes a “little RLD” approach.  It thinks that FDA must first add the “+” in the Orange Book for a particular strength, becuase without it there is not a basis for ANDA submission.  As such, it waits for FDA to identify a specific reference standard, then conducts bioequivalence testing and submits an ANDA with a Paragraph IV certification to an Orange Book-listed patent. 

Which company, Company No. 1 or Company No. 2, was smarter?  Answer: Company No. 1, which in this scenario would have submitted the first ANDA to FDA containing a Paragraph IV certification making that company eligible for a period of 180-day marketing exclusivity.  Why?  Because Company No. 1 correctly understood that all that is needed as a basis for ANDA submission is an approved NDA drug to reference (along with, of course, bioequivalence data and information).  FDA does not need to identify a particular reference standard before accepting an application. 

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By Riëtte van Laack –

The U.S. Government Accountability Office ("GAO") released a report on FDA’s  food recall process prepared in response to a congressional directive in the Food Safety Modernization Act ("FSMA"), which provided FDA with mandatory recall authority for foods.  In evaluating FDA’s implementation, the GAO considered how other government entities with recall authority, such as the Consumer Product Safety Commission, handle recalls and advise the public.

Since FSMA was enacted in 2011 and therefore FDA’s mandatory recall authority is relatively new, there is no information about an actual mandatory recall of food.  Moreover, although FDA has had mandatory recall authority for other product categories such as medical devices, the Agency has rarely used that authority.  Nevertheless, GAO developed some recommendations for FDA to more effectively implement and strengthen its new mandatory recall authority.  Specifically, GAO recommends that FDA:

• publish its currently internal document describing the steps it takes to order a food recall;
• document its process for ordering food recalls in regulations or guidance, including the process of weighing whether a recall is warranted and whether the standard of proof for a mandatory recall is met;
• define categories of ordered recalls in FDA’s central recall database;
• determine and implement ways to improve the sharing of information among databases that contain recall information.

GAO also examined the challenges FDA faces in advising the public about food recalls or outbreaks of foodborne illness.  GAO acknowledged that FDA faces a number of communication challenges when advising the public about food recalls or outbreaks of foodborne illness, ranging from balancing technical accuracy with timeliness of communications, to coordinating messages with other agencies and meeting the needs of diverse public audiences.   For example, a delay in communication can result in more illnesses and deaths, but a premature communication can trigger major financial losses for the food industry and deter the consumption of certain healthful foods.  GAO further recognized that FDA has taken steps to begin meeting these challenges, but concluded that FDA has yet to fully address recommendations from the GAO and others to fashion a comprehensive food recall communication policy and related implementation plans.  

GAO recommends that FDA implement recommendations from others to address FDA communication challenges when advising the public about food recalls and outbreaks. Specifically, GAO recommends that FDA:

• develop a policy for communications during emerging events;
• implement a coordinated plan for crisis communication; and
• consult with USDA on USDA’s experiences in advising consumers about recalls and determine whether those experiences may be helpful for FDA.

Although a significant part of the report is devoted to a discussion of possible options to compensate the food industry for erroneously ordered recalls, the report does not include a specific recommendation for a mechanism.

By Ricardo Carvajal –

According to an informal policy, FDA considers the use of the term “natural” in food labeling to mean that nothing artificial or synthetic (including colors regardless of source) is included in, or has been added to, the product that would not normally be expected to be there.  Cases dealing with this policy typically focus only on whether the food contains an artificial or synthetic substance, and do not address the italicized element.  So we couldn’t help but notice when a California district court delved into the issue in a recent opinion that keeps alive a class action against Dreyer’s Grand Ice Cream (“DGIC”).

In relevant part, the court refused to dismiss state law claims essentially alleging that Haagen-Dazs ice cream was falsely advertised as “All Natural Ice Cream” despite the fact that it contained cocoa alkalized with potassium carbonate, a substance alleged to be artificial or synthetic.  Among other things, DGIC argued that, “because potassium carbonate is commonly used as an alkanizing agent. . . nothing artificial or synthetic has been used in its ice cream.”  The court found this argument problematic:

[E]ven if potassium carbonate is commonly used, that does not necessarily imply normally expected; a reasonable consumer may not have the same knowledge as, e.g., a commercial manufacturer.

Thus, at least in this court’s eyes, the presence of an artificial or synthetic substance is compatible with a “natural” claim only if one can demonstrate that consumers normally expect the substance to be present.  Awareness of the presence of the substance among manufacturers is irrelevant. 

By Jamie K. Wolszon –

FDA published in the July 31, 2012 Federal Register a notice announcing the Fiscal Year (“FY”) 2013 rates pursuant to the third iteration of the Medical Device User Fee Act (“MDUFA III”), which was recently enacted as part of the FDA Safety and Innovation Act (“FDASIA”), Pub. L. No. 112-144, 126 Stat. 993 (2012) (see our summary).  The notice includes the fee for establishment registrations, which FDASIA broadened to include many more establishments than in the past.

The device user fee schedule establishes the Premarket Approval (“PMA”) Application fee as the baseline fee, with other fees tied to that fee.  For instance, MDUFA III sets 510(k) fee amounts at 2% of PMA fees.  The fee for a PMA in FY 2013 will be $248,000.  This baseline also applies to BLAs (for devices regulated by CBER), Product Development Protocols (“PDPs”) (which are essentially never submitted), a premarket report (seeking permission from FDA to market a reprocessed version of a class III single-use device) and a BLA efficacy supplement.

The notice also sets out the fees for PMA supplements, notices, and reporting.  The fee for a panel-track supplement will be $186,000.  The fee for a 180-day supplement will be $37,200.  The fee for a real-time supplement will be $17,360.  The fee for a 30-day notice will be $3,968.  The annual fee for periodic reporting on a class III device will be $8,680.

The fee for a 510(k) premarket notification submission will be $4,960, while the fee for a 513(g) request for classification information will be $3,348.

The fee for annual establishment registration is $2,575.  FDASIA significantly expanded the scope of establishments subject to the annual establishment registration.  Prior to enactment of MDUFMA III, only three types of establishments were subject to registration fees: (1) manufacturers; (2) single-use device reprocessors; and (3) specifications developers. MDUFA III broadened the fee to apply to any establishment that is “engaged in the manufacture, preparation, propagation, compounding, or processing of a device.”

The fees are outlined in Table 1 of the Federal Register notice, and go into effect on October 1, 2012.  They are generally modest increases to the fees for FY 2012.

MDUFA III also includes a provision permitting FDA to waive medical device fees, or reduce applicable fees, if it is in the interest of public health.  The Federal Register notice does not discuss how FDA intends to apply that new discretion. On the drug side, FDA has published a guidance that discusses, among other waivers and reductions, waivers and reductions to prescription human drug user fees necessary to protect the public health. 

By Kurt R. Karst –      

Ever since the U.S. Court of Appeals for the First Circuit issued its opinion in May 2012 in Bartlett v. Mutual Pharmaceutical Co., ___ F.3d ___, 2012 WL 1522004 (1st Cir. May 2, 2012) denying Mutual Pharmaceutical Company’s (“Mutual’s”) appeal of a decision from the U.S. District Court for the District of New Hampshire in which the district court denied Mutual’s Motion for Judgment as a Matter of Law – see Bartlett v. Mutual Pharm. Co., 760 F. Supp. 2d 220 (D.N.H. 2011) – concerning design defect and generic drug preemption, there’s been a lot of speculation that Mutual would petition the U.S. Supreme Court to review the case.  That day has come with Mutual’s July 31st Petition for Writ of Certiorari.

The Bartlett case has a long history in federal court beginning with a September 2009 pre-Mensing decision (see our previous post here), and then, after a couple of additional district court decisions, ending (until now) with the First Circuit’s post-Mensing decision.  Our Mensing reference, of course, refers to the U.S. Supreme Court’s June 23, 2011, 5-4 landmark decision in PLIVA Inc. v. Mensing, 131 S.Ct. 2567 (2011), in which the Court ruled that FDA’s regulations preventing generic drug manufacturers from changing their labeling except to mirror the label of the brand-name manufacturer (whose drug product is approved under an NDA) preempt state-law failure-to-warn claims against generic drug manufacturers, because generic drug manufacturers are unable to comply with both federal and state duties to warn.  This is in contrast to the Court’s March 4, 2009 decision in Wyeth v. Levine, 555 U.S. 555 (2009), holding that a state-law tort action against a brand-name drug manufacturer for failure-to-warn is not preempted.  Since the Supreme Court issued its Mensing decision, scores of court decisions have dismissed litigation against generic drug manufacturers on Mensing grounds, including some Circuit Court decisions.  The Drug and Device Law Blog maintains a Generic Drug Preemption Scorecard of the decisions.

The drug at issue in Bartlett is Sulindac Tablets, a non-steroidal anti-inflammatory drug. Mutual markets the drug under an ANDA FDA approved in 1991 (ANDA No. 072051).  (Mutual’s product is an AB-rated version of Merck’s CLINORIL (sulindac) Tablets, which FDA approved in September 1978 under NDA No. 017911.)  The Bartletts (Respondents) claim that Mrs. Bartlett suffered serious injuries after taking Mutual’s Sulindac Tablets and raised myriad state-law tort claims.  Those claims were ultimately winnowed down to a state-law design defect claim that proceeded to trial.  (Specfically, the claim that “sulindac’s risks outweighed its benefits making it unreasonably dangerous to consumers, despite the [FDA] having never withdrawn its statutory ‘safe and effective’ designation that the original manufacturer had secured and on which Mutual was entitled to piggyback,” which goes to the very core of the generic drug system established under the Hatch-Waxman Amendments.)  A jury eventually awarded Respondent over $21 million in damages, and the district court denied various post-trial motions filed by Mutual, including Mutual’s renewed preemption defense based on the Supreme Court’s Mensing decision. 

Mutual appealed to the First Circuit, which affirmed the district court in a decision that our friends over at the Drug and Device Law Blog characterized as an “essentially absurd result.”  In reaching its decision, the First Circuit first turned not to Mensing, but to Wyeth, saying that although Wyeth, which did not involve a design defect claim, “was technically limited to failure-to-warn claims, its logic applies to design defect claims as well.”  Moreover, according to the Court, Mensing merely “carved out an exception to Wyeth, finding that the FDCA preempts failure-to-warn claims against generic drug manufacturers . . . [because] the generic maker cannot alter the labeling.”  That is, the Supreme Court “adopted a general no-preemption rule in Wyeth. . . .”  Based on this thinking, the First Circuit concluded that to avoid state tort law liability a company could simply stop making its generic drug product. 

Setting the case up for a request for Supreme Court review, the First Circuit commented that “it is up to the Supreme Court to decide whether [Mensing’s] exception is to be enlarged to include design defect claims. . . .  Given the widespread use of generic drugs and the developing split in the lower courts . . . , this issue needs a decisive answer from the only court that can supply it.”  And maybe that will happen with Mutual’s Petition for Writ of Certiorari, which presents the following question for the Supreme Court: 

Whether the First Circuit erred when it created a circuit split and held—in clear conflict with this Court’s decisions in PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011); Riegel v. Medtronic, Inc., 552 U.S. 312 (2008); and Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)—that federal law does not preempt state law design-defect claims targeting generic pharmaceutical products because the conceded conflict between such claims and the federal laws governing generic pharmaceutical design allegedly can be avoided if the makers of generic pharmaceuticals simply stop making their products.

By Riëtte van Laack –

The Animal Drug User Fee Amendments of 2008 (“ADUFA”) directs FDA to prepare and publish annual summaries of antimicrobial animal drugs sold or distributed for use in food-producing animals.  The data are derived from information submitted by sponsors of antimicrobial new animal drugs who each year must submit to FDA a report regarding, among other things, their distribution data for antimicrobial animal drugs distributed domestically and exported for use in food-producing animals. 

A 2011 GAO report suggests that this information is insufficient to support a meaningful analysis of the possible relationship between antimicrobial resistance and the use of medically important antibiotics in food-producing animals, however.

On July 27, 2012, FDA published an Advance Notice of Proposed Rulemaking requesting comments as to how the Agency might be able to obtain more detailed information about the use of antimicrobial animal drugs when the drugs are used in numerous species, including non-food producing animals.  Specifically, the Agency invites comments on:

• Whether and how it should amend its regulations to obtain additional accurate sales and distribution information for each food producing species on the label; 
• How it can best compile and present the annual summary information, while still protecting confidential business information as directed by the law; and
• Options, within FDA’s authority, for obtaining additional data and information about the extent of antimicrobial drug use in food-producing animals to further support the analysis of the relationship between antimicrobial resistance and the use of medically important antibiotics in food-producing animals.

Comments are due September 25, 2012.

By Riëtte van Laack –

The Patient Protection and Affordable Care Act of 2010, in part, amended the FDC Act by adding Section 403(q)(H) requiring restaurants and similar retail food establishments (“SRFEs”) that are part of a chain with 20 or more locations to provide calorie and other nutrition information for standard menu items. 

Last year, FDA issued proposed rules (here and here) implementing the new legal requirements.  The new law and FDA’s proposed regulations have generated many comments and questions.  Major issues with the proposed regulation include the meaning of “menu” and the related requirement to provide nutritional information in establishments where consumers are not usually physically present when ordering items, the application of the law to grocery stores which may sell store-prepared food items, and the listing of calories for multi-serving foods, e.g., for an entire pizza rather than per slice (see our previous post here).

On July 24, Rep. John Carter (R-TX) introduced the Common Sense Nutrition Disclosure Act of 2012 (H.R. 6174) to amend the menu labeling provisions.  The amendment would allow delivery and take-out restaurants to post calorie (and other nutritional) information on the establishment's website rather than in their establishments and allow the listing of calories for multi-serving foods per serving or per common unit in which the food is usually divided.  In addition, the Bill includes a provision that providing various alternatives for disclosing nutrient content of standard menu items that come in different flavors, varieties or combinations.  As amended, the FDC Act would allow presentation of nutritional information for such products in ranges, averages, individual labeling of flavors or components, labeling of one preset standard build, or other methods as determined by FDA. 

H.R. 6174 also redefines the “reasonable basis” for a restaurant’s or SRFE’s nutrient disclosures to allow for variation in nutrient content related to variations in serving size, inadvertent human error in formulation of menu items, and variation in ingredients.  The bill further defines “restaurant or SRFE” as a retail food establishment that derives more than 50 percent of its total revenue from the sale of food, thereby resolving the uncertainty about what establishments are subject to the new requirements.

By Jennifer D. Newberger –

The Medical Device User Fee Amendments of 2012 ("MDUFA III") require FDA to “publish guidance outlining electronic copy of submissions ("e-Copy") and objective criteria for revised ‘refuse to accept/refuse to file’ checklists.”  On July 30, 2012, FDA issued a draft guidance in response to this commitment, titled “Acceptance and Filing Review for Premarket Approval Applications (PMAs).” 

The draft guidance is intended to provide FDA staff with a “clear, consistent approach to making acceptance and filing decisions on original PMA applications and panel-track PMA supplements.”  Though similar to the PMA filing checklist and guidance document issued in 2003, the draft guidance makes three modifications:  1) it divides the filing criteria into two distinct sets of criteria, acceptance criteria and filing criteria; 2) it encourages applicants to provide one electronic copy of the PMA in place of one of the six hard copies of the PMA application, and; 3) it includes manufacturing information as one of the sections required for a PMA to be considered complete.

Dividing the filing criteria into two checklists allows reviewers to reach an earlier decision about whether the PMA is sufficiently complete to allow the review to proceed.  Within 15 calendar days of receipt of the PMA, the reviewer must consider the preliminary questions (e.g., is the product a device, is appropriately reviewed under the PMA pathway) and determine whether the acceptance criteria have been met.  These criteria include all organizational and administrative elements, or a rationale for why certain elements are not included.  If the application contains all required elements, FDA should inform the applicant in writing that the application has been accepted.  If FDA fails to complete the acceptance review within 15 days, the application is considered accepted.

If the reviewer determines certain elements are missing, he should obtain concurrence from his supervisor, and then issue a letter to the applicant identifying the missing elements.  If the applicant provides the missing information, FDA will again have 15 days to review the acceptance elements.

Once FDA accepts the application, it reviews the application for the elements contained in the filing checklist to “determine the basic adequacy of the technical elements of the PMA.”  To be filed, the application must be “sufficiently complete to permit a substantive review.”  FDA has 45 calendar days from date of receipt of the PMA within which to complete the filing review.

The draft guidance includes two checklists, one for acceptance criteria and one for filing criteria.  When compiling a PMA, these checklists can assist sponsors in assuring that the PMA includes all the information required by FDA, which in turn can help FDA accept and file the PMA in a more timely manner. 

By Kurt R. Karst –      

In two Federal Register notices (here and here) scheduled for publication on August 1st, FDA will announce the Fiscal Year (“FY”) 2013 user fee rates pursuant to the fifth iteration of the Prescription Drug User Fee Act (“PDUFA”) and pursuant to the first iteration of the Biosimilar User Fee Act (“BsUFA”).  (In separate notices, FDA will announce – or has already announced – the FY 2013 user fee rates for animal drugs, animal generic drugs, medical devices, and fees under the Food Safety Modernization Act domestic for foreign facility reinspections, recall, and importer reinspection.)  Later this year, FDA should announce the FY 2013 user fee rates established pursuant to the Generic Drug User Fee Amendments (“GDUFA”).  Among other things, the FDA Safety and Innovation Act (“FDASIA”), Pub. L. No. 112-144, 126 Stat. 993 (2012) (see our summary here), reauthorized and amended several several existing user fee statutes that were scheduled to sunset and established new user fee statutes for generic drugs (GDUFA) and biosimilars (BsUFA).

The FY 2013 PDUFA application user fee rate is set at $1,958,800 for an application requiring “clinical data,” and one-half of a full application fee ($979,400) for an application not requiring “clinical data” and a supplement requiring “clinical data.”  (The term “clinical data” for PDUFA user fee purposes is explained in an FDA guidance document available here.)  These figures reflect FDA’s estimate of 122.3 fee-paying full application equivalents – an average of the number of full applications that paid fees over the lateset 3 years.  Annual establishment and product fees have been set at $526,500 and $98,380, respectively, and are based on estimates of 455 establishments and 2,435 products. 

The FY 2013 fees go into effect on October 1, 2012 and represent a modest change vis-à-vis FY 2012 user fee rates.  All BsUFA user fees – i.e., the initial and annual biosimilar biological product development fees, the reactivation fee, and the biosimilar biological product application, establishment, and product fees – are keyed to PDUFA user fees.

As we have done in past years, we provide tables (below) showing the increase/decrease in PDUFA user fee rates since the previous FY for each fee type (and in this case for each of the five FYs under PDUFA IV).  The first set of tables should be used with the table from our previous post, which tracks user fees rates since the inception of PDUFA.  The next set of tables illustrate the historical trend for each PDUFA user fee.

By Karla L. Palmer & Larry K. Houck –

The Drug Enforcement Administration (“DEA”) published a Final Rule on July 30th (77 Fed. Reg. 44,456 (July 30, 2012) placing prostanozol and methasterone into Schedule III of the federal Controlled Substances Act (“CSA”) as anabolic steroids.  DEA’s administrative scheduling of prostanozol and methasterone, along with their salts, esters and ethers, becomes effective August 29, 2012.

According to the CSA, DEA schedules drugs according to statutory procedures set forth in 21 U.S.C. § 811, which mandates a detailed, eight factor scheduling analysis set forth in 21 U.S.C. § 811(b).  In the case of anabolic steroids, however, the DEA uses another, simpler process drawn from the Anabolic Steroid Control Act of 1990.  The 1990 act establishes and regulates anabolic steroids as Schedule III controlled substances.  It also provides that any “new” anabolic steroids are not scheduled according to the multi-step procedures set forth in 21 U.S.C. § 811.  Instead, new anabolic steroids are classified through the administrative rulemaking process if the product meets the “regulatory definition of an anabolic steroid” set forth in 21 C.F.R. § 1300.01.  Congress defined “anabolic steroid” in the Anabolic Steroid Control Act of 2004, which classifies a drug or a hormonal substance as an anabolic steroid if that substance meets four criteria: (A) The substance is chemically related to testosterone; (B) the substance is pharmacologically related to testosterone; (C) the substance is not an estrogen, progestin, or corticosteroid; and, (D) the substance is not dehydroepiandrosterone ("DHEA").  Any substance that meets the foregoing criteria “is considered an anabolic steroid and must be listed as a Schedule III controlled substance.” 

DEA concluded that prostanozol and methasterone are chemically-and pharmacologically-related to testosterone; are not an estrogen, progestin or a corticosteroid; and are not DHEA.  Because DEA determined that prostanozol and methasterone met the criteria for anabolic steroids under 21 U.S.C. § 802(41)(A), DEA had no discretion other than to place the substances in Schedule III of the CSA. 

DEA stated that the U.S. Food and Drug Administration (“FDA”) issued a Warning Letter in response to adverse health effects associated with methasterone in March 2006.  DEA further noted that FDA later issued a warning in July 2009 concerning bodybuilding products containing steroid or steroid-like substances including a product containing the THP ether derivative of prostanozol.  DEA also stated that there are no approved medical uses at present for the two substances, and no one can dispense them pursuant to a prescription until such time as a manufacturer applies to FDA and obtains appropriate approvals for products containing such substances.  DEA published its Notice of Proposed Rulemaking for classification of these anabolic steroids on November 23, 2011 (76 Fed. Reg. 72355 (Nov. 23, 2011). 

DEA’s placement of prostanozol and methasterone in Schedule III subjects manufacturers, distributors, dispensers such as pharmacies and physicians, importers, exporters, and anyone in possession to the applicable provisions of the CSA and its implementing regulations, including administrative, civil and criminal sanctions.  DEA registration, recordkeeping and reporting, labeling and packaging, importation and exportation, security and disposal requirements for handlers of prostanozol and methasterone take effect on August 29, 2012.

The scheduling of prostanozol and methasterone is the second major action involving the federal control of anabolic steroids in less than a week.  On July 25, 2012, the Designer Anabolic Steroid Control Act of 2012 (S. 3431) was introduced in the Senate and reported here on July 26, 2012.  The Act would significantly increase DEA control over anabolic steroids as well as expressly adding twenty-seven additional anabolic steroids to schedule III.

By Wes Siegner –

The article “‘Medical Foods’ and Supplements for Brain Health Advance” that recently appeared in The Wall Street Journal provides important insights into a growing industry that is focused on offering a wider range of healthcare options.  However, the article contains common misconceptions about these products and the increasingly important role that they play in public health.

The article opens with the common misstatement that medical foods “aren't regulated by the Food and Drug Administration” and further demeans the category by implying that the data supporting efficacy is insufficient.   In fact, FDA regulates these products to assure that they are safe and manufactured in compliance with detailed “good manufacturing practice” regulations, and both the FTC and FDA regulate the claims for these products to assure that they are truthful and supported by competent and reliable scientific evidence.

The regulatory scheme for these products is appropriately less stringent than for drugs because the products, by their nature, are safe and therefore require less government oversight to permit more innovation and consumer choice.  Congress has appropriately authorized FDA to remove medical food and dietary supplement products from the market that are exceptions to the “inherently safe” rule and that do not meet FDA’s “good manufacturing practice” regulations.  As the article states, these products are not intended to cure diseases.  Such claims would make the product a “drug” requiring premarket approval.  The consequences of making illegal drug claims and violating the requirements intended to assure product safety can be severe, including criminal prosecution.

The article also misrepresents the amount and type of data that are required to support disease management claims for medical foods, stating that lab tests on cells are often the only basis cited.  While it is true that clinical testing of drugs is appropriately more stringent than for medical foods or dietary supplements, this does not mean that the claims for these products can be supported without clinical testing.  Disease management claims for medical foods are closely policed and, if found lacking in clinical support, are likely to be challenged by a wide range of groups, including the FDA, the FTC, the NAD (an industry self-regulatory arm of the BBB), state attorneys general, and plaintiffs' class action lawyers.  The potential penalties for failure to substantiate claims with well-controlled human studies include large financial penalties and prosecution. 

The level of FDA regulation of these products, as with other FDA-regulated products like drugs and devices, is based on a balance of risks and benefits to the public health.  Where the risks are low because the products are inherently safe, as with foods and dietary supplements, it is a waste of government resources and an unnecessary barrier to innovation to require premarket approval, as is required for most drugs.  The article’s discussion of medical foods for Alzheimer's illustrates how the more limited regulation for medical foods and dietary supplements opens the door to innovation and the development of important products that act as adjuncts to other treatments, thus providing a greater range of less expensive healthcare options to many patients who are affected by serious diseases.

By Karla L. Palmer & Larry K. Houck –

Drug Enforcement Administration (“DEA”) Administrator Michele M. Leonhart, accompanied by officials from Internal Revenue Service Criminal Investigations (Richard Weber), Immigration and Customs Office of Homeland Security (James Chaparro), and U.S. Postal Inspections, held a press conference yesterday announcing the results of “Operation Log Jam.”  This large-scale, synthetic drug enforcement operation that occurred on July 26, 2012, is the first nationwide federal, state and local multi-agency enforcement action against the synthetic drug industry.  Administrator Leonhart stated that the synthetic designer drug industry was responsible for producing and selling synthetic cathinones, which produce stimulant/hallucinogenic effects and are marketed as “bath salts” or “plant food,” and synthetic cannabinoids, which are easily available, more potent than marijuana and are marketed as “herbal incense,” “K2” and “Spice.”  The DEA’s press release is available here.

Administrator Leonhart explained that the takedown was a joint operation of DEA and ICE, with assistance from the Internal Revenue Service Criminal Investigations, U.S. Postal Inspection Service, U.S. Customs and Border Protection, FBI, Food and Drug Administration’s Office of Criminal Investigations, and “countless state and local law enforcement members in more than 109 cities.”  The operation also “targeted every level of the synthetic designer drug industry, including retailers, wholesalers, and manufacturers.”  Leonhart reported that the nationwide action resulted in the arrest of ninety individuals and the seizure of more than $36 million in cash.  The Administrator stated that the operation seized more than 4.8 million packets of synthetic cannabinoids (and products to produce another 13.6 million synthetic cannabinoid products), as well as 167,000 packets of synthetic cathinones (and products to produce an additional 392,000 cathinone products).

DEA explained in the accompanying press release that the products, sold in retail outlets, head shops and over the Internet, have become popular among teenagers and young adults.

Congress recently enacted the Synthetic Drug Abuse Prevention Act of 2012 as part of the Food and Drug Administration Safety and Innovation Act, which places twenty-six synthetic cathinones and synthetic cannabinoids into schedule I of the Federal Controlled Substances Act (“CSA”) (see our summary here).  Schedule I controlled substances have a high potential for abuse and no recognized medical use in the United States.  DEA had used its emergency scheduling authority to temporarily control those substances in schedule I to avoid an imminent hazard to the public health.

DEA acknowledged that several of the substances seized in Operation Log Jam are not, however, substances that are specifically prohibited by the CSA.  Leonhart noted that the Controlled Substance Analogue Enforcement Act of 1986 “specifically exists to combat these new and emerging designer drugs.”  The 1986 Act allows for the treatment of certain drugs and substances as controlled substances if they are chemically and pharmacologically similar to schedule I or II controlled substances; thus prosecutions could occur pursuant to the 1986 Act.  Ms. Leonhart stated that prosecutions might also occur under more strict state laws.  Of the joint effort, Leonhart added that “together with our federal, state, and local law enforcement partners, we are committed to targeting these new and emerging drugs with every scientific, legislative and investigative tool at our disposal.”

By John R. Fleder –

On July 27, 2012, the United States Court of Appeals for the D.C. Circuit issued its long-awaited ruling in Friedman v. Sebelius, No. 11-5028.  The case involves a challenge to a decision by the Secretary of Health and Human Services (“HHS”) to exclude three former executives of Purdue Frederick Company (“Purdue”) from participating in federal health care programs.  Although the D.C. Circuit affirmed HHS’s legal theories for excluding the Purdue executives, the Court remanded the case to the district court, ruling that HHS’s decision to exclude the three executives for twelve years was arbitrary and capricious.

The Court’s Opinion was authored by Judge Douglas H. Ginsburg.  Chief Judge David B. Sentelle concurred in part, dissented in part and dissented from the judgment.  Judge Stephen F. Williams concurred in part, dissented in part but concurred in the judgment.  Our prior blog posts on this case can be found here and here.

Michael Friedman, Paul Goldenheim, and Howard Udell (“the Purdue Executives”) were senior corporate officers at Purdue when the company marketed OxyContin.  In 2007, Purdue pleaded guilty to felony violations of the FDC Act involving the alleged misbranding of drugs.  The company was placed on probation, fined $500,000 and required to pay another $600 million, part of which was for restitution.  In contrast, the Purdue Executives each pleaded guilty to a misdemeanor violation of the FDC Act for failing to prevent Purdue’s alleged fraudulent marketing of OxyContin.  Each of the Purdue Executives was sentenced to do community service, fined $5000, placed on probation, and forced to disgorge compensation they had received at Purdue.

The felony provision of the FDC Act requires that a person (including a corporation) can be found guilty if that person acts with the intent to defraud or mislead.  In contrast, the misdemeanor provision of the FDC Act does not require any such intent.  Rather, an individual can be prosecuted under the “Park Doctrine” if that person was in a responsible position of authority to have prevented the FDC Act violation from occurring.  The Court’s Opinion states that the Purdue Executives admitted that they had the authority to prevent Purdue’s FDC Act violations from occurring, or could have promptly corrected misrepresentations that some other Purdue employees had made regarding OxyContin.  However, the Purdue Executives did not admit (nor did the Government allege) that they had intended to violate the FDC Act or had engaged in any type of fraudulent conduct.

The Purdue Executives quickly learned that their troubles with the government had not ended.  A few months after the convictions, HHS’s Office of the Inspector General (“OIG”) “determined” that the Purdue Executives should be excluded from participating in federal health care programs for 20 years.  The Purdue executives appealed this decision to an HHS Administrative Law Judge (“ALJ”), and then to HHS’s Departmental Appeals Board (DAB).  During the pendency of the appeal, the OIG reduced the exclusion period to 15 years because the Purdue Executives had assisted law enforcement authorities to combat abuse of OxyContin.  Thereafter, the ALJ affirmed the 15 year exclusion periods as being within a reasonable range.  However, the DAB reduced the exclusion periods to 12 years for a number of reasons.

The Purdue Executives sought review of the DAB’s decision in federal district court in Washington D.C.  That court upheld HHS’s exclusion decisions, including the length of the exclusions.  The Purdue Executives then appealed the District Court’s ruling to the D.C. Circuit.  They challenged the HHS decision in terms of whether there was any statutory basis for exclusion, and alternatively, the length of the exclusion.

HHS relied on 42 U.S.C. § 1320a-7(b)(1)(A) as the basis to exclude the Purdue Executives.  That provision provides in pertinent part that an individual can be excluded from participating in any federal health care program if that individual has been convicted “of a criminal offense consisting of a misdemeanor relating to fraud.”

The Purdue Executives did not deny that they had been convicted of a misdemeanor.  However, their principal argument on appeal was that their convictions were not “relating to fraud.”  Remember that they had pleaded guilty to a misdemeanor offense under the FDC Act which did not require any proof that they had engaged in fraud.  The Purdue Executives argued that because the violations to which they pleaded guilty were just “strict liability” offenses, the nexus to fraud was not present for purposes of the exclusion statute.  They claimed that for that exclusion provision to apply, the misdemeanor offense needed the core elements of fraud including scienter, something obviously missing from a misdemeanor charge and conviction under the FDC Act.

The Court posed the issue as being whether a “misdemeanor relating to fraud” refers to a generic criminal offense on one hand or to the facts underlying a particular defendant’s conviction.  The Court concluded that HHS’s decision to use a defendant circumstance-specific approach, rather than a generic approach, was correct.  In other words, HHS can exclude an individual under this provision based on a conviction which was for conduct factually related to fraud, even though the offense  to which the person pleaded guilty did not require a showing of fraud.

The Court ruled that the Purdue Executives’ “convictions under the responsible corporate officer doctrine were manifestly ‘related to’ a fraud.”  Slip Op. at 18.  It explained:

Finally, the Appellants and their amici argue, because the Secretary’s interpretation permits her to impose “career- ending disabilities” upon someone whose criminal conviction required no mens rea, it raises a serious question of validity under the Due Process Clause of the Fifth Amendment to the Constitution of the United States . . . . Section 1320a-7(b)(1), however, is not a criminal statute and, although exclusion may indeed have serious consequences, we do not think excluding an individual under 42 U.S.C. § 1320a-7(b) on the basis of his conviction for a strict liability offense raises any significant concern with due process. Exclusion effectively prohibits one from working for a government contractor or supplier. Surely the Government constitutionally may refuse to deal further with senior corporate officers who could have but failed to prevent a fraud against the Government on their watch. . . . [W]e hold section 1320a¬7(b)(1)(A) authorizes the Secretary to exclude from participation in Federal health care programs an individual convicted of a misdemeanor if the conduct underlying that conviction is factually related to fraud. The Appellants do not dispute they are excludable under this circumstance-specific approach: Their convictions for misdemeanor misbranding were predicated upon the company they led having pleaded guilty to fraudulently misbranding a drug and they admitted having “responsibility and authority either to prevent in the first instance or to promptly correct” that fraud; they did neither.

Next, the Court examined whether HHS acted arbitrarily and capriciously in excluding the Purdue Executives for 12 years.  They challenged the exclusion periods on a number of grounds, including that HHS had failed to justify the decisions as being consistent with exclusion decisions in other cases.  The Court did not find that prior HHS exclusion decisions were irrelevant to the length of exclusion that should be imposed on the Purdue Executives.

Using the arbitrary and capricious standard, the Court examined the length of prior HHS exclusion decisions.  HHS had cited a number of prior HHS exclusion rulings of individuals where the period exceeded ten years.  The Court found those decisions to be distinguishable.  Because these decisions involved mandatory exclusion, not permissive exclusion, as relevant here, or because the HHS cited cases involving either a felony conviction or a conviction for Medicare fraud involving imprisonment, the Court could not locate any analogous precedent.  The Court found that HHS had never excluded anyone for more than 10 years under the provision at issue in this case.  As a result, the Court remanded the case to allow HHS to justify its 12-year exclusion decision.

Judge Sentelle agreed with the Court’s analysis regarding whether the Purdue Executives were subject to exclusion.  However, he would have affirmed the 12 year exclusion period and not required a remand.  Judge Williams did not agree that HHS had justified the decision to exclude the Purdue Executives.  He would have remanded the case to HHS to require a better explanation of why the Purdue executives were even subject to exclusion.

The Purdue Executives can seek rehearing of the case before the same three judges and/or seek rehearing en banc by the entire D.C. Circuit.  They may also seek Supreme Court review of this decision.  Alternatively, they could just await a further decision by HHS regarding the length of the exclusion, and challenge that decision in court.

The decision certainly is not welcome news to the Purdue Executives and many others who have been tracking this case closely.  Exclusion is a government remedy that can threaten the livelihood of people in the health care industry.  This decision, if it stands, will add another weapon in the government’s enforcement arsenal, even when the government does not charge an executive with engaging in fraudulent conduct, let alone prove that such conduct occurred.

A very difficult issue posed by this decision relates to a person’s decision to plead, or not plead, guilty to a crime as a result of an FDA investigation.  It was traditionally thought that a misdemeanor plea to a violation of the FDC Act under the Park Doctrine would result in a small fine, no jail time, and perhaps a period of probation.  That would be all!

Today, this is no longer true.  A defendant pleading guilty to a Park offense is more likely to go to jail than was true in the 1970s and 1980s, even though the person is not charged with, and does not admit to, intending to violate the law, let alone committing fraud.  See our blog posting in the Synthes case here.  In addition, the Friedman case shows that an individual can be subject to exclusion by HHS.  Not to be forgotten is FDA’s separate authority to debar someone, particularly for offenses relating to drugs.  For a recent blog entry regarding FDA debarments, look here.

Thus, what is a person threatened with criminal charges under the FDC Act to do?  Going to trial is costly and the outcome is uncertain.  However, the Friedman case shows that a decision to plead guilty leads to an eventual outcome that is equally uncertain.  A court may or may not accept a guilty plea.  Although, a person negotiating a plea may seek to reach a global resolution, is that possible in the debarment/exclusion area?  Whom does the individual bargain with on this issue?  DOJ? HHS? FDA? How about the VA and the Defense Department, which have their own debarment/exclusion authorities when federal funds are involved?

Reaching a plea bargain that brings certainty to whether an individual will be debarred or excluded may well be difficult if not impossible.  Assuming someone considering pleading guilty is not ready to retire, this uncertainty alone may lead to more individuals simply saying “no” to plea bargains and taking a case to trial.

By Douglas B. Farquhar – 

In a rare request for a court to review FDA’s failure to clear a medical device for market distribution, arguments have been finalized, briefs have been filed, and oral argument has been scheduled for September 21, 2012.

The case, filed in the U.S. Court of Appeals for the D.C. Circuit (appeal no. 11-1268),  relates to two medical devices for which Cytori Therapeutics, Inc., of San Diego, California, sought clearance.  The first device is called the Celution 700/LAB device, which Cytori’s brief describes as, in layman’s terms, “a liposuction device which allows a physician to access a patient’s stem cells from the body fat in which the cells are stored, and then to study those cells in a clinical laboratory.”  Cytori argues in its brief and in its reply brief that it first became aware of the reason FDA refused to clear the device when FDA filed in court the administrative record on FDA’s decision, and that FDA is apparently concerned that the device will be used to process stromal (or stem) cells to be transfused back into the donor’s body.  In other words, while the indications for the device’s use listed in the labeling are for analytical use, FDA voiced a concern that the device would be put to therapeutic use.   Cytori argues that it is wrong for FDA to refuse to clear a device because of potential off-label uses.

The second device is called the StemSource 900/MB.  Cytori says in its opening brief that “the two devices have similar physical attributes,” but that Cytori “submitted them separately to the FDA to be approved for different intended uses and indications.”  Cytori further states that, while “the 700/LAB device was submitted to be approved for laboratory use, the 900/MB Processor System was submitted for use in banking/cryopreservation.”  Cytori admits in its brief that the StemSource 900/MB was intended to be used to remove and process stem cells at the point of care (in other words, the patient’s bedside) for potential reinsertion in the donor’s body.  But Cytori argues that FDA inaccurately declined clearance because Cytori requested a Class 1 classification for the device, that FDA believed that the Class 1 classification was inappropriate for bedside use, and, as Cytori puts it, “whether a device is used in the operating room has nothing to do with whether it may be classified as Class I.”

Cytori claims that FDA’s refusal to clear the devices for distribution in the United States is thus arbitrary and capricious.

The parties agree that the standard for market clearance (under what is commonly referred to as the “510(k) process” after the relevant statutory section of the Federal Food, Drug, and Cosmetic Act) is whether the devices are “substantially equivalent” to “a legally marketed predicate device” (generally, a previously approved or cleared device).  A detailed discussion of the arguments advanced by Cytori and FDA is beyond the scope of this blogpost (and, to the uninitiated, would likely be soporific).

But FDA counters in its brief that the StemSource/900 MB device is not “substantially equivalent” to the predicate devices, because the Cytori proposed device is intended to process cells from adipose (or fatty) tissue, whereas the predicate devices are intended to process cells from “cord blood” (that is, blood from an umbilical cord or placenta).  One of the FDA brief’s sentences encapsulates its arguments thusly: “Fat is not blood.”

Likewise, FDA argues that the devices cited by Cytori as predicates for the Celution 700/Lab System are not predicates, because they were not cleared for processing stem cells derived from adipose tissue.  FDA also argues that an enzyme Cytori proposed to process the cells is a "new technology that raises new questions of safety.”

FDA earlier asked the court to dismiss Cytori’s petition seeking review of FDA’s decisions by the appellate court, but a panel of the court denied the motion late last year and required the parties to address, in their main briefs, whether the court has jurisdiction to review the matter.  FDA argues that the appellate court has primary jurisdiction to review only a decision to clear a device (not a refusal to clear a device); Cytori, of course, disagrees.

The decision issued in this case (generally, in cases of this complexity, two to ten months after the argument) could well determine two important issues: first, whether the Court of Appeals has primary jurisdiction to review an FDA decision not to clear a device for distribution (or whether the issue must first be presented to a U.S. District Court); and, second, if the court decides to issue a decision on the substance of the case, how thoroughly an appellate court will scrutinize the manner in which FDA applies the substantial equivalence criteria to a proposed medical device.

By Larry K. Houck –
 
Senators Orrin Hatch (R-UT) and Sheldon Whitehorse (D-RI) introduced legislation on July 25, 2012, that would amend the definition of “anabolic steroid” under the Federal Controlled Substances Act (“CSA”) and expressly add twenty-seven additional anabolic steroids to schedule III.  The proposed “Designer Anabolic Steroid Control Act of 2012” (S. 3431) (“2012 Act”) would significantly increase Drug Enforcement Administration (“DEA”) control over drugs and substances that meet anabolic steroid criteria.  If enacted, the 2012 Act would be the third major federal legislative action impacting anabolic steroids since 1990.  Congress passed the Anabolic Steroid Control Acts of 1990 and 2004 that placed certain anabolic steroids into schedule III of the CSA, expanding DEA’s authority to regulate such substances. 
 
Passage of the 2012 Act would similarly add twenty-seven anabolic steroids, their salts and esters, to schedule III of the CSA.  Placement of anabolic steroids in schedule III subjects manufacturers, distributors, dispensers such as pharmacies and physicians, importers, exporters, and anyone in possession of the scheduled anabolic steroids to the applicable provisions of the CSA and its implementing regulations that establish registration, recordkeeping/reporting and security requirements as well as administrative, civil and criminal sanctions.
 
The 2012 Act would expand the definition of anabolic steroids to include a drug or hormonal substance (other than estrogens, progestins, corticosteroids and dehydroepiandrosterone) “derived from, or has a chemical structure substantially similar to” anabolic steroids listed under the CSA if:  the drug or substance has been created or manufactured with the intent of producing a drug or other substance that promotes muscle growth or causes a pharmacological effect similar to that of testosterone; or the drug or substance has been, or is intended to be marketed or otherwise promoted in a manner suggesting that consumption will promote muscle growth or any pharmacological effect similar to that of testosterone.  The 2012 Act would exclude herbs and other botanicals, “a concentrate, metabolite, or extract of, or a constituent isolated directly from” herbs or botanicals that are dietary ingredients for purposes of the Federal Food, Drug and Cosmetic Act. 
 
The 2012 Act would also authorize DEA to issue a temporary order for up to two years (that could be extended six additional months) adding a drug or other substance to the list of anabolic steroids in schedule III if it finds that the drug or substance satisfies the Act’s criteria as an anabolic steroid.  Adding the drug or substance to the list of anabolic steroids “will assist in preventing the unlawful importation, manufacture, distribution, or dispensing of such drug or other substance.”  The Act would also consider a drug or other substance not temporarily or permanently listed as an anabolic steroid in any criminal, civil or administrative proceeding arising under the CSA that satisfies the anabolic steroid criteria.  This could occur if, for example, such product was promoted for muscle growth.  The Act would also require anabolic steroids and products containing anabolic steroids to bear a label identifying such contents.  Lastly, the Act would also subject violators to specific civil and/or criminal penalties including up to $500,000 per violation and imprisonment of up to ten years.
 
DEA Deputy Assistant Administrator Joseph Rannazzisi, stated in testimony before the Senate Judiciary Committee Subcommittee on Crime and Drugs, “[t]he use of anabolic steroids or dietary supplements that contain anabolic steroids or designer steroids, in high doses that boost, alter or derive from testosterone may trigger numerous adverse health effects in the human body including liver toxicity, baldness, uncontrolled rage and heart attacks.” 
 
The Council for Responsible Nutrition and American Herbal Products Association have issued statements endorsing the measure (here and here).
 
The 2012 Act has been referred to the Senate Committee on the Judiciary.