By Anne K. Walsh –

On November 2, 2011, DOJ’s Assistant Attorney General Tony West gave a keynote address at the Twelfth Annual Pharmaceutical Regulatory and Compliance Congress in Washington, DC.  During that speech, he touted DOJ’s “successes” against health care fraud achieved during the last three years he has headed up DOJ’s Civil Division.  In addition to noting the recent Executive Order on drug shortages, described here, he talked about the results of the HEAT task force (a not-so-precise acronym for the Health Care Fraud Prevention and Enforcement Action Team).  He stated that since May 2009, HEAT has opened more health care fraud investigations, charged more criminal health care fraud defendants, and recovered more money (over $8 billion) than ever before.   And there is no indication that the government’s focus is dissipating.

According to West, not only will DOJ continue to target off-label marketing and False Claims Act cases, but it also will look to bring more cases involving counterfeit drugs, drug diversion, kickbacks, and fraud in home health care and nursing homes.  And he claims that in doing so, DOJ intends to reach more aggressive resolutions.  West reiterated DOJ’s threat to use the familiar Park doctrine for holding corporate officials responsible, but also stated that providers, companies, and even physicians, should be held responsible for violations. 

West recognized, however, that there are other ways to combat fraud than merely scaring companies and people with enforcement.  He stressed that there is a need to promote a culture of compliance through deterrence and preventative efforts.  He also identified the need for creative non-monetary resolutions, such as obtaining post-conviction supervision over companies, to allow companies to prevent and detect future violations.   Lastly, he stressed that it is his priority to treat fairly companies that voluntarily disclose their fraud to the government, and cooperate fully during an investigation.  He specifically used as an example of cooperation the timeliness and thoroughness of document production.  West seeks to encourage more of this behavior from companies. 

These are all good strategies to keep in mind when negotiating with this Division. 

By David B. Clissold –

As we previously reported, a group of five tobacco companies (R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, Commonwealth Brands, Inc., Liggett Group LLC, and Santa Fe Natural Tobacco Company, Inc.) filed a complaint against FDA in the U.S. District Court for the District of Columbia challenging the Agency’s June 22, 2011 final rule, promulgated pursuant to the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”), requiring the display of nine color graphic  “health warning” images on cigarette packages and in cigarette advertisements.  The Tobacco Control Act states that the new textual and graphic warnings, among other requirements, will become effective “15 months after the issuance of” FDA’s final rule.

In a memorandum opinion issued on November 7, 2011, Judge Richard Leon of the U.S. District Court for the District of Columbia granted plaintiff’s motion for a preliminary injunction to halt FDA from enforcing the rule until fifteen months after resolution of plaintiff’s claim on the merits.  Judge Leon first determined that the mandatory warnings, as compelled commercial speech, were subject to the “strict scrutiny” level of analysis.  He noted that the warnings were not the type of “purely factual and noncontroversial disclosures” permissible under the Constitution, but were instead designed “to evoke emotion” and intended to “provoke the viewer to quit, or never start, smoking.”  Under the strict scrutiny test, the government must show that the speech is “narrowly tailored” to meet a “compelling government interest.”  Judge Leon wrote:

[T]he sheer size and display requirements for the graphic images are anything but narrowly tailored . . . to achieve the Government’s purpose (whatever it might be). To the contrary, the dimensions alone strongly suggest that the Rule was designed to achieve the very objective articulated by the Secretary of Health and Human Services: to “rebrand[] our cigarette packs,” treating (as the FDA Commissioner announced last year) “every single pack of cigarettes in our country” as a “mini-billboard.” (citing a June 2001 press briefing with Sec. Sebelius, and an FDA Tobacco Strategy Announcement).  A “mini-billboard,” indeed, for its obvious anti-smoking agenda!

In addition, the opinion notes that the Government failed to provide sufficient evidence of a “compelling government interest” since in this case “the Government’s actual purpose is not to inform, but rather to advocate a change in consumer behavior.”  Judge Leon was also persuaded to grant the motion because the plaintiffs would be unable to recover economic damages from FDA, and “the harm flowing from a First Amendment violation is per se irreparable.”

Such harm is not, as defendants conveniently claim, merely “the ordinary costs of complying with regulations.” Defs.’ Opp’n at 39. It is the residual effect of unconstitutionally compelled commercial speech designed to advocate, at a company's expense, a competing policy agenda.  Thus, plaintiffs have demonstrated that they will suffer irreparable harm in the absence of preliminary relief, and this factor also weighs in favor of granting an injunction.

Finally, the government was unable to show that the public or the government would be unduly prejudiced as a result of preliminary injunctive relief.

[W]hen one considers the logical extension of the Government’s defense of its compelled graphic images to possible graphic labels that the Congress and the FDA might wish to someday impose on various food packages (i.e., fast food and snack food items) and alcoholic beverage containers (from beer cans to champagne bottles), it becomes clearer still that the public’s interest in preserving its constitutional protections – and, indeed, the Government’s concomitant interest in not violating the constitutional rights of its citizens – are best served by granting injunctive relief at this preliminary stage.

The government will now try to perfect its arguments, either in opposition to the plaintiffs’ motion for summary judgment (filed on the same day as the motion for preliminary injunction), or at trial.

For the second year in a row, Hyman, Phelps & McNamara, P.C. has been ranked as a “Tier 1” law firm in the area of FDA Law (both nationally and in Washington DC) by the folks over at U.S. News & World Report, who teamed up again with Best Lawyers for the 2011-2012 “Best Law Firms” rankings.  Nearly 11,000 law firms were eligible to be ranked in the second survey conducted by U.S. News & World Report and Best Lawyers.  “Among the topics of evaluation were a firm’s expertise, responsiveness, cost-effectiveness, and civility, and whether it deserved to be recommended for work,” according to U.S. News Staff.

By Kurt R. Karst –      

For a few weeks now we’ve been hearing rumors that once the ball gets rolling in Congress with legislation to reauthorize the various user fee statutes (e.g., the  Prescription Drug User Fee Act and the Medical Device User Fee and Modernization Act) and other statutory provisions (e.g., the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act), along with legislation to create new law (e.g., the Generic Drug User Fee Act), there might be a push to open up and amend the Hatch-Waxman Amendments.  Although the 2003 Medicare Modernization Act made important changes to Hatch-Waxman, and in particular with respect to ANDAs and 180-day exclusivity, the brand-side of the equation concerning 5-year New Chemical Entity (“NCE”) exclusivity, 3-year new clinical investigation exclusivity, and Patent Term Extensions (“PTEs”) has remained largely untouched since 1984.  A new article out this week in Health Affairs might very well be an opening salvo in what could be a battle royal to more broadly open up Hatch-Waxman. 

The article, authored by Duke University professor emeritus of economics Henry G. Grabowski and four other co-authors (Margaret Kyle, Richard Mortimer, Genia Long, and Noam Kirson), is titled “Evolving Brand-Name And Generic Drug Competition May Warrant A Revision Of The Hatch-Waxman Act.”  Professor Grabowski’s research was supported in part by the Pharmaceutical Research and Manufacturers of America.  Professor Grabowski is a familiar face in the drug and biotechnology industries.  He published several papers on biosimilars and exclusivity leading up to the enactment of the Biologics Price Competition and Innovation Act of 2009, which amended the Public Health Service Act to, among other things, create an approval pathway for biosimilar and interchangeable versions of reference products and establish a 12-year exclusivity period for reference products.

The new study analyzes pharmaceutical data from 1995-2008.  According to the authors, the average period of “market exclusivity” (i.e., the time between launch of a brand-name drug and the launch of the first generic) has dipped from 1995-1996 to 2007-2008: “Between 1995 and 2008, the average market exclusivity periods for all new drugs were between 12.4 and 13.7 years.  The average length of exclusivity was 12.4 years in the most recent period in our study (2007-08), compared to 13.5 years in the initial period (1995-96).”  Meanwhile, Paragraph IV patent certification challenges have been on the rise in recent years and are occurring sooner after Reference Listed Drug product launch: “Only 9 percent of new drugs experiencing first generic entry in 1995 also experienced a Paragraph IV challenge at any point, but that share increased to 64 percent for drugs experiencing first generic entry in 2008. . . . For new drugs experiencing first generic entry in 1995 and also experiencing a Paragraph IV challenge, the average time between launch and the first challenge was 18.7 years.  That time fell to 8.2 years in 2008,” according to the authors’ analysis.  Exhibits from the study showing these data are below (used with permission).

So what does this mean in terms of amending Hatch-Waxman?  Well, the study abstract sums it all up:

The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act’s intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs’ patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators.  Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation.  It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.  

2012 is shaping up to be an exciting year, indeed!

ADDITIONAL READING:

• Generic Pharmaceutical Association Press Release

The Food and Drug Law Institute’s (“FLDI”) annual Enforcement, Litigation and Compliance Conference is being held in Washington, DC on December 6-7, 2011.  Hyman, Phelps & McNamara, P.C. Director John R. Fleder is speaking at the conference.  As a result, we were able to secure a discount code for our friends and colleagues.  To receive a 15% discount off registration, use the following promotional code: ENFSP2011.  To register for the event and to view a copy of the conference brochure, see here.

For nearly 10 years, FDLI’s Enforcement, Litigation and Compliance Conference has been a premier industry event in this field, educating  regulatory attorneys and litigators, regulators, compliance experts, consultants and people in academics in enforcement matters relating to the drug, medical device, biologic, diagnostic, food and dietary supplement industries.

Some of the most important developments from the past years will be discussed during this year’s program.  Examples include: the government’s crackdown on medical device firms failing to report adverse events, litigation relating to FDA’s import authority, stepped-up enforcement under the False Claims Act, and the latest on investigations and prosecutions related to the Foreign Corrupt Practices Act and potential SEC inquiries.   FDA Center Compliance Directors will speak on their priorities and resources for 2012.  Attendees will learn how to deal with: visits by government agents to the homes of companies that are under investigation; FDA consent decrees; and other important enforcement-related issues.

By Kurt R. Karst –      

In a decision handed down late last week by the U.S. Court of Appeals for the Tenth Circuit, a three-judge panel affirmed a November 2010 decision from the U.S. District Court for the District of Wyoming granting FDA’s Motion to Dismiss a lawsuit brought by Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) concerning the alleged grandfather status of Cody/Lannett’s marketed unapproved Morphine Sulfate Solution.  The Circuit Court also dismissed as moot Cody/Lannett’s claim of disparate treatment at FDA concerning the same drug submitted under an NDA. 

The Cody/Lannett lawsuit stems from FDA’s March 2009 Warning Letters to Cody and Lannett (among other companies) to stop manufacturing certain unapproved narcotic drugs, including morphine sulfate oral solutions.  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”  In subsequent communications with Cody/Lannett, FDA stated that the Agency would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution until July 24, 2010, which is 180 days after FDA approved Roxane’s NDA for the drug product.  Meanwhile, in late February 2010, Lannett submitted its own NDA (NDA No. 201517) to FDA for Morphine Sulfate Oral Solution, 100 mg per 5 mL (20 mg per mL), which NDA was not granted a 6-month priority review as was Roxane’s NDA. 

Cody/Lannett sued FDA arguing that the Agency should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on the Agency’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act (“APA”) in determining that the product is a “new drug.”  Cody/Lannett raised three issues in the litigation: (1) FDA’s alleged determination that Cody/Lannett’s product is a “new drug;” (2) FDA’s alleged failure to develop an administrative record for its determination that Cody/Lannett’s Morphine Sulfate Oral Solution 20mg/mL product is a “new drug;” and (3) FDA’s alleged disparate treatment of Cody/Lannett’s standard review NDA compared to Roxane’s priority review NDA. 

In a November 16, 2010 decision, District Court Judge Alan Johnson granted FDA’s Motion to Dismiss the case, and ruled that the court “does not have jurisdiction over any of the agency actions [Cody/Lannett] ask this Court to review, as the FDA has yet to complete a final agency action,” and that “[a]ny attempt to review such actions would be premature and contrary to law.”  Following Judge Johnson’s decision, Cody/Lannett appealed the decision to the Tenth Circuit.  On June 23, 2011, FDA approved Lannett’s NDA No. 201517.

Not long after FDA approved NDA No. 201517, the Agency filed a Motion to Dismiss the Tenth Circuit case on mootness grounds, arguing that as a result of the approval of NDA No. 201517, “there is no likelihood that FDA will undertake enforcement action against Cody for marketing unapproved morphine sulfate, which is what Cody sought to prevent when it filed its complaint.”  Cody/Lannett opposed FDA’s motion, arguing that the manufacture and sale of its morphine sulfate under an approved NDA will result in significant administrative and financial burdens (e.g., user fees) – see our previous post here.  Moreover, says Cody/Lannett, “FDA could still pursue enforcement actions with respect to past sales of the Product.”  Thus, the grandfather status of Cody/Lannett’s Morphine Sulfate drug product is not moot and is “still a live issue between the parties.” Likewise, Cody/Lannett argue that their disparate treatment claims are also live and subject to judicial review, because, among other things, they are capable of repetition with other allegedly grandfathered products the companies manufacture and distribute (e.g., oxycodone and topical cocaine) and for which they reportedly plan to seek FDA approval. 

Although the Circuit Court, in affirming in part and dismissing in part the district court decision, agreed that the approval of NDA No. 201517 did not moot Cody/Lannett’s grandfather drug claim, because “[b]y prevailing on its grandfathering claim, Cody could still obtain meaningful relief in the form of freedom from [certain user fee and labeling]  burdens,” the Court refused to reach the merits of Cody/Lannett’s grandfather drug claim.

Mootness aside, we cannot reach the merits of Cody’s grandfathering claim unless the FDA has engaged in “final agency action” under the APA. . . .  Cody’s failure to avail itself of available administrative remedies [(i.e., use of the citizen petition process)] defeats its claim even if we were inclined to hold that the FDA’s action [(i.e., Warning Letters)] were otherwise final. . . .  Given that grandfathering status hinges on the fact-intensive history of the drug’s marketing and use, we do not anticipate that the agency will blindly refuse to consider evidence submitted by Cody.  Accordingly, we decline to consider Cody’s grandfathering claim prior to exhaustion of the company’s administrative remedies. 

And with respect to Cody/Lannett’s claim of disparate treatment by FDA, the Court says that FDA’s approval of NDA No. 201517 mooted the claim, stating that Article III does not permit the Court to issue a retrospective opinion that Cody/Lannett were harmed.  “Nor does Cody’s disparate treatment claim fall under the exception to the mootness doctrine for disputes that are capable of repetition, but evading review.  To fit within that exception, a litigant must show a reasonable expectation that it would be subjected to the same adverse action in the future.”  Although Cody/Lannett say they plan to submit NDAs to FDA for certain allegedly grandfathered drugs, “Cody has not given us reason to expect that the agency will deny Cody’s request for expedited review while granting that of its competitors.  Thus, we conclude that Cody has not carried its burden of demonstrating its claim is capable of repetition, but evading review.”

Whether the Tenth Circuit’s decision marks the end of this long-running dispute remains to be seen.  Cody/Lannett could take further action in court or at FDA. 

By Susan J. Matthees –

The American Council of Independent Laboratories (“ACIL”), the Association of Food Industries, and the Cheese Importers Association of America, Inc. recently petitioned FDA to revoke or partially revoke its Federal Register notice announcing Food Safety Modernization Act (“FSMA”) user fees amounts because the fees were allegedly calculated in a manner contrary to the method specified in the FSMA, do not provide small business burden relief as required by the FSMA, and will be imposed on activities not authorized for fees under the FSMA.

Section 107 of the FSMA gives FDA the authority to collect user fees from, among others, the responsible party for each domestic facility and US agent for each foreign facility subject to reinspection to cover reinspection-related costs, the responsible party for a domestic facility and an importer that does not comply with a recall order, and importers subject to a reinspection to cover reinspection fees.  This summer, FDA announced fee rates that became effective on October 1 (FDA will not invoice until January 1, 2012).  FDA determined the fees by calculating an average hourly rate for an FDA employee.  This hourly rate would be used as the basis to calculate fees for all activities that trigger a fee.  

The petitioners argue that the FSMA requires FDA to calculate a unique amount for each activity that triggers a user fee.  For example, petitioners state that FDA failed to calculate the hourly cost of reinspection-related activities for a facility (including by type or level of reinspection), activities associated with failure to comply with a recall (including recall activities performed by FDA, technical assistance, follow-up effectiveness checks, and public notifications), administrative activities to support the voluntary qualified importer program, and reinspection-related activities associated with food imports.  In particular, the petitioners argue that FDA did not calculate the hourly cost of reinspection-related activities, activities associated with failure to comply with a recall order, administrative activities in support of the voluntary qualified importer program, and reinspection-related activities associated with food imports.  The petitioners ask that FDA revoke the notice in its entirety because of this method of calculating fees.

In the alternative, the petitioners ask that FDA revoke the portions of the notice that relate to the imposition of fees on small businesses.  The FSMA directed FDA to publish in the Federal Register a proposed set of guidelines in consideration of the burden of fee amounts on small businesses by July 4, 2011.  Instead, on August 1, 2011, FDA opened a docket for comments on what burden the fees impose on small businesses and whether and how these burdens should be alleviated.  The docket remains open until November 30, 2011.  The petitioners argue that the FSMA is clear that the FDA must develop guidelines, and FDA’s approach is contrary to the FSMA. 

Finally, the petitioners ask that FDA revoke the portions of the notice that would impose fees on activities related to food imports in the absence of prior identification of noncompliance materially related to a food safety requirement of the FDC Act.  FDC Act § 801 permits FDA to detain an imported food on the appearance of noncompliance.  The FSMA, however, states that with respect to food importers, reimportation fees can be assessed only after an examination “identified noncompliance materially related to a food safety requirement.”  The petitioner argues that as drafted, FDA could assess fees on an importer on the basis of a detention of the food for the appearance of noncompliance, but under the FSMA, the fees can only be assessed if the food is actually shown to be noncompliant. 

By Jennifer D. Newberger –

On October 31, 2011, FDA issued a report titled “Understanding Barriers to Medical Device Quality.”  The report results from an initiative launched by the Center for Devices and Radiological Health (“CDRH”) “to assess and understand gaps in medical device quality.”  The focus of this assessment was on marketed device quality assurance, not pre-market activities, and consisted of information gathered from interviews with internal and external quality experts, a set of blinded industry interviews, a scan of databases, including the Manufacturer and User Facility Device Experience (“MAUDE”) database and the recall database, relevant articles, and conferences, and an outside press search. 

The report states that its assessment “uncovered several key facts about marketed medical devices, as well as potential catalysts for quality improvement.”  In short, the “key facts” discovered by FDA about marketed devices appear to be: (1) the medical device industry has enjoyed “tremendous growth in both revenues and the technical complexity of the products that it produces over the past 10-20 years”; (2) “serious adverse event reports related to medical device use have outpaced industry growth by 8% per annum since 2001”; and (3) quality risk is not evenly distributed, with cardiovascular, IVD, and general hospital/surgical devices accounting for approximately 60% of adverse event reports.  The report states that recalls have also increased, but not as quickly as adverse events.

From the outset, FDA acknowledges some of the limitations in its analysis of MAUDE and recall reports.  Perhaps most importantly, FDA notes that some of the growth in adverse event reporting may be “due to growth in the number of medical devices in use.”  The report later states that FDA “should consider adjusting absolute numbers of adverse events and recalls for ‘device usage,’ or the number of devices on the market.”  Adjusting for the number of devices on the market seems to be an obvious first step in assessing whether there are real safety concerns associated with medical device use.  That the volume of adverse events will increase with the number of medical devices in use makes perfect sense; the question is whether the number of adverse events as a percentage of total device usage has increased.  FDA does not answer that question in its report.

FDA also notes other factors that could contribute to the growth in volume of adverse event reports, including “greater outreach by FDA emphasizing reporting requirements, along with greater manufacturer sensitivity to reporting requirements following notable recalls.”  Regarding the increase in recall reports, FDA states that the increase in recalls could be due to greater FDA “emphasis” on FDA recall reporting requirements.  Although not stated by FDA, this “emphasis” is often in the form of Warning Letters or other enforcement actions, which almost certainly has led to manufacturers erring on the side of reporting MDRs and recalls, even if they don’t believe the event in question meets the regulatory reporting requirements.

All of these factors certainly must be considered when reviewing the MAUDE and recall data, and must be accounted for before drawing any conclusions about the connection between these data and device quality.  Although FDA notes these considerations, it nevertheless implies that the increase in volume of both adverse event and recall reports can mean only one thing—it is reasonable to question the quality of currently marketed medical devices. 

Just as reporting the volume of adverse events and recalls without considering total devices on the market will lead to incorrect conclusions, FDA’s statement that cardiovascular, IVD, and general hospital/surgical devices make up the majority of adverse event reports does not account for the unique circumstances particular to those device types.  For instance, general hospital/surgical devices make up a significant percentage of medical devices on the market, and it therefore stands to reason that the number of adverse events will be higher in that group. 

FDA also states that cardiovascular devices “have increased as a share of total serious adverse event reports even faster than for adverse events overall.”  FDA fails to account for (or even mention) the most obvious aspect of cardiovascular devices that may contribute to this finding: the health condition(s) of patients likely to be using the devices.  Cardiovascular patients are likely to be older and in a more fragile state of health than the general population, and therefore more likely to experience an adverse event—whether or not related to the device itself.  FDA’s findings in this report are based on information obtained from MAUDE, and reports must be submitted to MAUDE if the device “may have caused or contributed” to the death or serious injury—there need not be a definitive determination that the device actually did so.  Given the likelihood that patients using cardiovascular devices may already be unhealthy, it is difficult to state with particularity that the adverse events suffered are reflective of poor quality of the medical devices in question.

In light of its apparent conclusion that the quality of medical devices is sub-par, FDA suggests “opportunities to improve quality assurance and reduce risk across the medical device industry,” including product/process design, supplier management, manufacturing, and post-production activities.  FDA also states that three themes emerged from its interviews with industry: (1) without greater transparency around competitive quality performance, the market rewards rapid product innovation and low cost but not better quality; (2) products and the environments in which they are used are becoming increasingly complex; and (3) there is a misalignment between quality outcomes and pure regulatory compliance.

The interviewees informed FDA that companies are often forced to prioritize compliance over quality, because any failure in compliance is more likely to result in issuance of a Form 483 at an inspection, receipt of a Warning Letter, or other enforcement action.  Industry representatives also told FDA that there is an inconsistent application and interpretation of compliance requirements across investigators and district offices, and “inadequate transparency into how investigators arrived at specific decisions and dealt with specific cases.” 

Not only does industry feel there is inconsistency in application of the regulations, but it believes there is in fact a disincentive for making safety-related quality improvements since FDA often requires an update to, or recall of, the existing device in light of the safety improvement.  This observation has particular relevance in light of FDA’s recent release of its draft guidance describing when changes to a device may necessitate a new 510(k) notification.  The draft guidance, discussed in our previous blog post, specifically stated that a modification to a device to respond to a known risk or failure mode will likely require a new 510(k) notification, and may require a recall.  Industry has now clearly made FDA aware that companies may elect not to make a safety modification to a device for fear FDA will require a recall of the marketed device.  How FDA chooses to respond to this knowledge remains to be seen.

FDA concludes the report on device quality by describing certain steps FDA may take to engage with industry, with a focus on increasing enforcement transparency and clarity.  Two areas of focus include “predictable and reliable benchmarks of quality system compliance and (particularly for smaller companies) guidance on how to reach them” and “updates to the company involved on the status of enforcement cases in process.”  These seem to be reasonable goals.  We can only hope that FDA will work to achieve them.

By Cassandra A. Soltis –

The Institute of Medicine (“IOM”) recently issued its Phase II report on consumer use and understanding of front-of-package (“FOP”) labeling systems for foods, recommending that both the Food and Drug Administration (“FDA”) and the United States Department of Agriculture (“USDA”) “consider a fundamental shift in strategy” by moving “beyond simply informing consumers about nutrition facts.”   What the IOM proposes is very different from the FOP systems currently in use by industry, which generally provide succinct nutrition information prominently on the front packages of foods.  The IOM explained that these nutrient content-based systems “implicitly assume[] that consumers are receiving appropriate nutrition information”; however, what consumers really need is an “interpretive” system that “quickly and easily provides guidance to encourage healthier food choices.”  IOM, Front-of-Package Nutrition Rating Systems and Symbols (2011) (hereinafter IOM Phase II Report), at S-1, 2.

The FOP system recommended by IOM includes the use of only one symbol appearing in a consistent location on all grocery products.  The symbol would display (1) calorie information, using common household measure serving sizes, and (2) zero to three nutritional “points,” with each point corresponding to a food containing a low level of sodium, saturated and trans fats, and added sugars.  IOM Phase II Report, at 7-3, 4.  For example, a food containing an acceptable level of sodium would receive one point but would not receive the other two points if its levels of saturated and trans fats and added sugars were not low enough to meet qualifying limits.

However, some foods may not even be eligible to earn FOP points if they contain saturated fats, sodium, or added sugars in amounts that are “too high” – that is, amounts “inconsistent” with 2010 Dietary Guidelines for Americans (hereinafter Dietary Guidelines).  IOM Phase II Report, at 7-12, 13.  For example, if a food contains added sugars and saturated or trans fats in amounts that qualify for FOP points but contains sodium in an amount that exceeds the Dietary Guidelines recommendation, the food would be excluded from bearing FOP points.  The food would still have to disclose calorie and serving size information.  IOM Phase II Report, at 9-4.

Although IOM’s Phase I report, which examined the use of FOP systems, did not recommend added sugars to be included in FOP systems, the Phase II report does, in part, because the Dietary Guidelines encourage a reduction in calorie intake from added sugars.  IOM Phase II Report, at 1-6.  The IOM also recommends that FOP symbols be integrated with the Nutrition Facts box by placing a check, star, or other indicator near the nutrition component earning the point.  IOM Phase II Report, at 7-4.  Finally, the report stresses that the criteria the IOM used to evaluate foods are not recommendations but are “starting points” for “extensive computer modeling” and that FDA and USDA develop, test, and implement a single standard FOP symbol system.  IOM Phase II Report, at 7-24, 25, 9-3.  Examples of IOM’s FOP symbols can be viewed here.

The apparent divergence between IOM’s recommendations and industry’s current approach could help set the stage for conflict down the road.  FDA has stated that “the agency will consider using its regulatory tools” if “voluntary action by the food industry does not result in a common, ‘gold standard’ approach” to FOP labeling. 

By Jennifer M. Thomas –

President Obama issued an Executive Order earlier this week to address the growing issue of critical drug shortages – the first Executive Order to directly affect FDA operations since 1985.   In a coordinated move, FDA also released its report: "A Review of FDA’s Approach to Medical Product Shortages."

According to FDA and the White House, the number of prescription drug shortages nearly tripled from 2005 to 2010, going from 61 reported shortages in 2005 to 178 shortages in 2010.  Some estimates put the number of drug shortages at 180 for the first ten months of 2011 alone—others suggest that number could be as high as 213.  Among the medicines that have been reported in short supply this year are drugs used to treat childhood leukemia, breast cancer, and colon cancer, as well as anesthetics, and antibiotics.  When a vital medicine is in short supply, doctors are forced to reserve supplies for only patients in the direst need, leaving others to go without or to use a less preferred option if one is available.  Moreover, drug shortages result in exponentially higher drug prices, and may force patients to switch medicines mid-regimen, potentially reducing the effectiveness of treatment. Finally, drug shortages can delay clinical trials for new, experimental treatments if the comparator or “control” group in the experiment is receiving an approved drug in short supply. 

While it is easy to recognize the public health concerns raised by drug shortages, identifying the various causes and solutions has proven to be more difficult.   FDA cites a major reason for drug shortages as “quality/manufacturing issues.”  However, the agency also lists production delays and discontinuation of older less-profitable drugs as reasons for shortages.  Some commenters argue that the increased number of products and raw materials coming from plants in China and India results in uncertain supply, particularly if FDA finds quality issues at such foreign facilities.  Others cite the simple operation of the free market as the cause of shortages—prices for older medications are low until they are in short supply.   But even higher prices triggered by a shortage may not cause manufacturers to make the investments necessary to overcome the practical and regulatory hurdles to increased production. 

The issue has caught Congress’ attention; legislators introduced a rare bipartisan bill in the Senate and House in February and June, 2011, respectively, to try to stymie the growing number of shortages (“Preserving Access to Life-Saving Medications Act of 2011,” S. 296, H.R. 2245).  Importantly, the bill would expand FDA’s authority to require advance notification of drug discontinuations under 21 U.S.C. § 356c to include all drug and biologic manufacturers, and to require those manufacturers to report circumstances that may result in a drug discontinuation or interruption of production—such as a merger, a change in the supply of one or more raw materials, etc.  Among other affirmative requirements, the proposed bill requires FDA to conduct an analysis of drugs that may be vulnerable to a shortage, and to publish the notifications it receives under § 356c online.

The “Preserving Access to Life-Saving Medications Act of 2011” remains pending in committee.  So the White House has attempted to move forward without Congressional action – using an Executive Order to direct FDA to do more to curb drug shortages under the agency’s current statutory authority.  Specifically, the Executive Order directs FDA to:

(1) Use its existing authority under 21 U.S.C. 356c, which requires sole-source drug manufacturers to notify FDA in advance of discontinuances that could lead to shortages of certain critical drugs;

(2) Expedite its regulatory reviews of new drug suppliers, manufacturing sites, and manufacturing changes where such expedited review would help to avoid or mitigate an existing or potential drug shortage; and

(3) Report drug stockpiling and over-charging for scarce drugs to the Department of Justice.

It is unclear whether the provisions of this Executive Order can have any significant independent effect on the frequency of drug shortages.  Currently, § 356c is limited to sole-source manufacturer discontinuations of medically necessary drugs, so FDA can not require advance notification of other manufacturers, in other circumstances besides discontinuation, or about other types of drug products.  Moreover, notification of an impending shortage does not necessarily help the manufacturer that is unable to increase production, sometimes for reasons outside of its control.  FDA would still have to approve new suppliers, manufacturing sites, or changes for drugs vulnerable to shortages, and those actions seem limited more by scarce review resources than by failure to allocate those resources appropriately.  Regardless of the Order’s direct effects, however, it may be the impetus Congress needs to finally take action.

By Kurt R. Karst –      

Earlier this week, the U.S. Senate passed, by a 69-30 vote, H.R. 2112, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012, as part of an omnibus package of three spending measures.  The House and Senate versions of the bill differ,  and those differences will need to be ironed out before FDA is funded for Fiscal Year 2012.  Several Senate amendments to H.R. 2112 were considered and rejected, including Sen. David Vitter’s (R-LA) Amendment No. 769 to permit individuals to reimport drugs from Canada, and Sen. Jim DeMint’s (R-SC) Amendment No. 763 to prevent FDA from using funding to phase out by 2012 OTC epinephrine metered dose inhalers that contain chlorofluorocarbons.  Other amendments were not considered or voted on, including Sen. Lisa Murkowski’s amendment to prevent FDA from using funds to approve genetically engineered fish, and Sen. Jeff Sessions’ amendment to prevent the U.S. Patent and Trademark Office from using funds to implement Section 37 of the Leahy-Smith America Invents Act concerning patent terms extensions (see our previous post here). 

One amendment that passed the Senate gauntlet and that caught our attention is Sen. Richard Burr’s (R-NC) Amendment No. 890, which is intended to “improve the transparency and accountability of the FDA in order to encourage regulatory certainty and innovation on behalf of America's patients.”  The text of the amendment states:

Provided further, That not later than 90 days after the date of enactment of this Act, the Secretary of Health and Human Services shall submit to Congress a report that discloses, with respect to all drugs, devices, and biological products approved, cleared, or licensed under the Federal Food, Drug, and Cosmetic Act or the Public Health Service Act during calendar year 2011, including such drugs, devices, and biological products so approved, cleared, or licensed using funds made available under this Act: (1) the average number of calendar days that elapsed from the date that drug applications (including any supplements) were submitted to such Secretary under section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) until the date that the drugs were approved under such section 505; (2) the average number of calendar days that elapsed from the date that applications for device clearance (including any supplements) under section 510(k) of such Act (21 U.S.C. 360(k)) or for premarket approval (including any supplements) under section 515 of such Act (21 U.S.C. 360e) were submitted to such Secretary until the date that the devices were cleared under such section 510(k) or approved under such section 515; and (3) the average number of calendar days that elapsed from the date that biological license applications (including any supplements) were submitted to such Secretary under section 351 of the Public Health Service Act (42 U.S.C. 262) until the date that the biological products were licensed under such section 351.  [(Emphasis added)]

Sen. Burr, along with Sen. Tom Coburn (R-OK), have long criticized FDA, saying that the Agency‘s “regulatory malaise” harms patients and manufacturers.  That was the message in a commentary piece that appeared in The Washington Times in February 2011, titled “Caution kills – FDA’s go-slow approval approach shortens lives.”  More recently, Sen. Burr criticized FDA for the Agency’s lack of speedy approvals during a July 2011 Health, Education, Labor and Pensions Committee hearing on user fees.   He also threatened to delay the passage of FDA reauthorization bills, like the Prescription Drug User Fee Act (“PDUFA”) and the Medical Device User Fee and Modernization Act (“MDUFMA”), unless the Agency speeds up approval times.  Referring to FDA-Industry PDUFA and MDUFMA negotiations, Sen. Burr commented “I‘m somewhat bewildered that both industries even sat down and talked about this process” given the delays in approval decisions.  Some in Congress have expressed their intent to reauthorize PDUFA and MDUFMA, and to pass a host of other FDA-related measures, such as the Generic Drug User Fee Act, well before the end of Fiscal Year 2012. 

The criticism of FDA’s review processes and approval times is not unique to Congress.  Last month, the National Venture Capital Association’s MedIC Coalition issued a report, titled “Vital Signs: The Threat to Investment in U.S. Medical Innovation and the Imperative of FDA Reform,” fingering FDA as the culprit for decreasing venture capitalist investments in U.S. drug and medical device companies. 

Provided Sen. Burr’s amendment is enacted as part of an FDA appropriations package, the information provided by FDA – within 90 days of enactment and perhaps right in the thick of user fee discussions on Capitol Hill – could provide the Senator with additional fodder to call for changes at FDA. 

The focus of Sen. Burr’s amendment is on the number of calendar days to approval, rather than on the FDA goal dates aspired to under the user fee statutes and performance goals.  For example, under PDUFA IV, FDA’s goal is to review and act on 90% of standard NDAs and BLA within 10 months of submission and within 6 months for a priority submission.  (Similar goals have been proposed for the fifth iteration of PDUFA.)  Once FDA acts on an application, for example, by issuing a complete response letter identifying certain issues that need to be addressed for the Agency to grant final approval, the PDUFA “clock” stops.  It could be months or years until those issues are fully addressed in a resubmission – which triggers a new resubmission goal date – and approval can be granted. 

There is no user fee “clock” for ANDAs – at least not yet.  Nevertheless, the Burr amendment requests information on all applications submitted under FDC Act § 505.  The numbers for ANDAs, once provided by FDA, may pale in comparison to the NDA/BLA numbers.  The current median approval time, which runs from application submission to approval (tentative or final), has been pegged at about 33 months.

Information on the number of calendar days that have elapsed between application submission and approval could give Sen. Burr and other Members of Congress a better sense of the efficiency of the FDA review process and whether it needs to be changed. 

By Kurt R. Karst –      

In a 53-page decision handed down earlier this week by the California Court of Appeal, Fourth Appellate District (Division I), the Court ruled that patent settlement agreements between Bayer AG and several generic drug manufacturers did not violate the Cartwright Act – California’s antitrust law and an analogue to Section 1 of the federal Sherman Act – when Bayer settled patent infringement litigation (concerning U.S. Patent No. 4,670,444, which expired in December 2003) with respect to generic versions of its antibiotic drug CIPRO (cirprofloxacin HCl).  The decision affirmed a 2009 judgment from Judge Richard E. L. Strauss of the Superior Court of California, County of San Diego, in which Judge Strauss granted motions for summary filed by Bayer and several generic drug defendants.  The Court’s decision, which came out within a week of the Federal Trade Commission’s (“FTC’s”) Fiscal Year 2011 report on patent settlement agreements (see our previous post here), is yet another decision in which courts – both state and federal – have struck down antitrust challenges to patent settlement agreements (or to use the FTC’s pejorative, “pay-for-delay” agreements).

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.  The Plaintiffs alleged three causes of action (1) per se violation of the Cartwright Act (Bus. & Prof. Code, § 16720 et seq.); (2) unfair competition in violation of the Unfair Competition Law (“UCL”) (Bus. & Prof. Code, § 17200 et seq.); and (3) the common law tort of monopolization.  We previously reported on Judge Strauss’ opinion and the appeal (see our previous posts here and here) and refer our readers to those posts for background on the case.   

Among other things in their appeal, the indirect CIPRO purchasers argued that Judge Strauss adopted a flawed and highly criticized line of federal authority; namely, the U.S. Court of Appeals for the Second Circuit’s analysis in In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir. 2006), in which the Court supported the proposition “that a reverse-payment settlement between a patent holder and alleged infringer in Hatch-Waxman litigation is legal as long as the settlement does not restrain competition beyond the exclusionary scope of the patent, and there is no showing that the patent was procured by fraud or that the suit for its infringement was objectively baseless.”  Instead, the indirect CIPRO purchasers contended that the CIPRO patent settlement agreements are illegal per se, and that Judge Strauss would have found them so had he not followed the Tamoxifen line of reasoning.  And even if the CIPRO patent settlement agreements  are not unlawful per se, “there is a triable issue of fact as to whether they violate the Cartwright Act under the ‘rule of reason applied in antitrust cases,’” according to the indirect CIPRO purchasers.  The FTC has recently favored the rule of reason in an amicus brief filed with the U.S. Court of Appeals for the Third Circuit in In re K-Dur Antitrust Litigation.

Agreeing with the reasoning of the Tamoxifen Court, as well as other federal courts that have evaluated patent settlement agreements under federal antitrust laws, the California Court of Appeal concluded that such reasoning “applies equally to antitrust claims under the Cartwright Act,” under which the “illegal per se” designation “is reserved for agreements or practices that have a pernicious effect on competition and lack any redeeming virtue” (emphasis in original). 

Considering the important public policies underlying patent law . . . and favoring the settlement of patent litigation . . . and the fact that the Cipro agreements did not restrain competition outside the exclusionary zone of the '444 patent, we cannot view the Cipro agreements as lacking any redeeming virtue.  Accordingly, we conclude they are not unlawful per se.

Moreover, the California Court of Appeal concluded that “the Cipro agreements do not violate the Cartwright Act under [a] rule-of-reason analysis or the analysis the Eleventh Circuit Court of Appeals held to be applicable to settlements of Hatch-Waxman litigation in [Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294 (11th Cir. 2003) and Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005)],” where both the per se and rule of reason analyses were found to be “ill-suited for an antitrust analysis of patent cases because they seek to determine whether the challenged conduct had an anticompetitive effect on the market.”  Instead, the Eleventh Circuit said that “the proper analysis of antitrust liability requires and examination of: (1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects.”  Regardless, the California Court of Appeal found the reasoning of the various federal patent settlement Hatch-Waxman antitrust cases “to be sound and applicable to plaintiffs' cause of action under the Cartwright Act.”  “[U]nless a patent was procured by fraud, or a suit for its enforcement was objectively baseless, a settlement of the enforcement suit does not violate the Cartwright Act if the settlement restrains competition only within the scope of the patent,” according to the Court. 

The California Court of Appeal’s conclusion that Bayer and the generic defendants are not liable under the Cartwright Act for entering into the CIPRO patent settlement “is also dispositive of plaintiffs' causes of action for violation of the UCL and common law monopolization,” because it is based on the same alleged misconduct under the Cartwright Act.  “Conduct that has been determined not to unreasonably restrain competition under statutory antitrust law cannot logically be deemed to unreasonably restrain competition under a common law monopolization theory.”

By Kurt R. Karst – 

The U.S. Patent and Trademark Office (“PTO”) recently indicated in a letter to FDA that U.S. Patent No. RE 41,571 (“the ‘571 patent”), a method-of-use patent listed in the Orange Book covering BUTRANS (buprenorphine) Transdermal System is not eligible for a Patent Term Extension (“PTE”) because the product does not meet the first permitted commercial marketing prong of the PTE statute at 35 U.S.C. § 156(a)(5)(A).  The PTO letter brings this case one step closer to what could ultimately be a showdown in court. 

As we previously reported, the ‘571 patent PTE application was submitted to the PTO in August 2010, following the June 30, 2010 approval of BUTRANS under NDA No. 021306, and just a few months after the U.S. Court of Appeals for the Federal Circuit’s May 10, 2010 decision in Photocure v. Kappos, 603 F.3d 1372 (Fed. Cir. 2010). 

In Photocure, the Federal Circuit interpreted the term “product” in the PTE statute at 35 U.S.C. § 156(a)(5)(A) to mean “active ingredient” rather than “active moiety.”  In reaching its decision in Photocure, the Federal Circuit relied on its 1990 decision in Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392 (Fed. Cir. 1990) (“Glaxo II”) (which affirmed a 1989 district court decision in Glaxo v. Quigg, 706 F. Supp 1224 (E.D. Va. 1989) (“Glaxo I”)) where the Court construed the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active ingredient.”  The Federal Circuit also pointed out that according to the Court’s 1997 decision in Hoechst-Roussel Pharms. Inc. v. Lehman, 109 F.3d 756 (Fed. Cir. 1997), “[f]or purposes of patent term extension, [the] active ingredient must be present in the drug product when administered.”  Photocure also contains dicta to the effect that a patent – in that case, U.S. Patent No. 6,034,267 covering the drug product METVIXIA (methyl aminoevulinate HCl) – is eligible for a PTE not only because methyl aminoevulinate HCL is a different chemical compound from previously approved aminolevulinic acid, but because “it is not disputed that they differ in their biological properties, warranting separate patenting and separate regulatory approval, although their chemical structure is similar.”

FDA has approved several applications for drug products containing buprenorphine, and specifically buprenorphine HCl, a salt of buprenorphine, including BUPRENEX (NDA No. 018401), SUBUTEX (NDA No. 020732), and SUBOXONE (NDA No. 020733).  Nevertheless, the ‘571 patent PTE applicant claims eligibility for a PTE because “[i]n contrast to these three products, the active ingredient for Butrans™ is buprenorphine base, which has never before been approved by the FDA.”  Moreover, says the PTE applicant citing to Photocure, “buprenorphine base was required to undergo full FDA review, and has pharmacological properties that set it apart from buprenorphine hydrochloride.  Accordingly, the ‘571 patent that covers Butrans™ remains eligible for a patent term extension under 35 U.S.C. § 156.”

The PTO initially says in its October 12th letter that “based on a plain reading of the statute, the approval of BUTRANS® does not comply with §156(a)(5)(A).”  “Here, a salt of the active ingredient, buprenorphine hydrochloride, was the first permitted commercial marketing or use of the ‘product’ as that term is defined in § 156(f).”  The PTO then delves into the Photocure decision and the related Hoechst and Glaxo decisions.

Applying the Hoeschet [sic] and Glaxo I analyses here, the active ingredient of BUTRANS® is buprenorphine.  The question to ask is what substance is physically present in the product; here, it is burprenorphine.  The next step is to ask whether any salt or ester of buprenorphine has been previously approved by FDA.  Because a salt of buprenorphine, buprenorphine hydrochloride, has been approved first, before the approval of BUTRANS®, the grant of permission to commercially market or use BUTRANS® is NOT the first permitted commercial marketing or use of the product/active ingredient as required by section 156(a)(5)(A) in light of the approvals of Buprenex, Subutex and Suboxone.  Accordingly, the ‘571 patent is ineligible for extension under the provisions of section 156.

The PTO also addresses the dicta in Photocure that the METVIXIA patent was eligible for a PTE because of different “biological properties, warranting separate patenting and separate regulatory approval.”  According to the PTO, “[w]hile true that the Photocure court discussed different biological properties, nothing in section 156 requires analyzing biological properties to determine eligibility.  Additionally, any 'new drug,' as defined in 21 U.S.C. § 321(P), must undergo separate regulatory approval as per 21 U.S.C. § 355.”  Thus, says the PTO, “[s]ince the additional circumstances discussed by the Photocure court in finding that the approval of Metvixia could support an extension of Photocure’s patent are not statutory requirements, alleging similar circumstances fails to confer eligibility here.” 

The next step is for FDA to respond to the PTO’s letter.  Once that happens and the PTO issues a final determination, the stage will be set for a face-off.

By Ricardo Carvajal – 

NIH and USDA announced a joint workshop on Using Nanotechnology To Improve Nutrition Through Enhanced Bioavailability and Efficacy.  Among the goals of the workshop are to “identify knowledge gaps in the use of nutrients (and bioactive food components) for disease prevention,” and to “catalyze collaborations and stimulate ideas for diet and disease prevention research.”  Note to would-be workshop participants: beware of FDC Act section 201 (g), which defines “drug” to include articles intended to prevent disease, and section 301(ll), which prohibits the addition of a “drug” to food.

The European Commission adopted a recommendation to define “nanomaterials” as “a natural, incidental or manufactured material containing particles, in an unbound state or as an aggregate or as an agglomerate and where, for 50% or more of the particles in the number size distribution, one or more external dimensions is in the size range 1 nm – 100 nm."  According to a press release issued by the EC, “Industry needs a clear coherent regulatory framework in this important economic sector, and consumers deserve accurate information about these substances.”   Thus, the definition is intended to be used “for all regulatory purposes.”  However, the use of other “nano” terms for specific sectors, such as pharmaceuticals, is not precluded.  As we noted in a prior posting, FDA has tentatively adopted a working definition of nanotechnology.  That definition is broader than the EC’s definition, in that it is not as firmly anchored to the 1-100nm criterion.

The National Nanotechnology Initiative updated its Environmental, Health, and Safety ("EHS") Research Strategy, which is intended to help Federal agencies “develop nanotechnology risk assessments that inform risk management and regulatory decisions.”  As an example of EHS research, the document cites research conducted in part by FDA which determined that intact skin serves as a barrier to sunscreens that contain nanomaterials.  FDA reportedly allocated 7.3 million dollars for EHS research in FY 2010, the second year for which FDA has allocated EHS funding.  While FDA continues to develop its nanotechnology-related infrastructure and expertise, the agency is also said to be “leading an effort to inventory regulatory frameworks for nanotechnology in food and medical products.”

By Ricardo Carvajal –
 
FDA updated its guidance on administrative detention of food to reflect the expansion of the agency’s authority under the Food Safety Modernization Act ("FSMA").   As we noted in a prior blog posting, the FSMA made it easier for FDA to administratively detain food; FDA now needs only a reason to believe that a food is adulterated or misbranded.  The agency recently announced its first seizure of a food that was administratively detained under the new standard.

The guidance makes clear that the administrative detention authority extends to dietary supplements.  The guidance further states that the authority extends to food solely in intrastate commerce.  The guidance is effective immediately.