By Kurt R. Karst –  

Politico recently published an opinion piece authored by Federal Trade Commission (“FTC”) Chairman Jon Leibowitz, who is up for reappointment for a second term on the Commission, in which he stated he wanted to throw in his “two cents” on how Congress (and specifically the Joint Select Committee on Deficit Reduction – a.k.a. the “Super Committee”) can work to reduce the deficit “by billions of dollars, put billions more back in consumers’ pockets and cut health care costs for businesses that create new jobs – all without any new taxes or cuts in government programs.”  How?  Yes, you guessed it – by curbing patent settlement agreements (or what opponents refer to as “pay-for-delay” or “reverse payment” agreements).  The opinion piece came out shortly after the FTC the announced the release of its annual summary of agreements filed with the Commission during Fiscal Year 2011 saying that “pharmaceutical companies continued a recent anticompetitive trend of paying potential generic rivals to delay the introduction of lower-cost prescription drug alternatives for American consumers.”  (See our previous post here.)

The Congressional Budget Office (“CBO”) recently estimated that the enactment of the Preserve Access to Affordable Generics Act (S. 27) “would reduce unified budget deficits by approximately $1.4 billion over the 2012-2016 period and by nearly $4.8 billion over the 2012-2021 period.”  In January 2010, the CBO initially estimated that an essentially identical version of the Preserve Access to Affordable Generics Act considered by the last Congress (S. 369) “would reduce unified budget deficits by approximately $0.8 billion over the 2010-2014 period and by roughly $2.0 billion over the 2010-2019 period.”   That estimate was updated to reflect the passage of the Affordable Care Act.

Chairman Leibowitz’s Politico piece drew sharp criticism from another FTC Commissioner, J. Thomas Rosch.  In a response published by Politico, Commissioner Rosch stated that he does not think the Preserve Access to Affordable Generics Act should be tacked onto any piece of legislation, but rather, should stand or fall on its own merits.  Moreover, “[a]ny projected savings [from the legislation] are inherently speculative,” wrote Commissioner Rosch. 

Commissioner Rosch also took the opportunity to once again express his disagreement with the “clear and convincing” evidence standard in the Preserve Access to Affordable Generics Act.  The bill would, among other things, amend the FTC Act to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 28] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product.”  Such agreements, if challenged, would be presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”  According to Commissioner Rosch, “[t]his heightened standard of proof has not been required in other types of settlements.  Indeed, the parties arguably should bear only the burden of producing some evidence justifying their settlement, and the commission arguably should always bear the burden of proving that the settlement is anticompetitive.”  His comments echo those he made during a speech earlier this year at the Sixth Annual In-House Counsel Forum on Pharmaceutical Antitrust, and that are shared by some Members of Congress (see our previous post here).

Hyman, Phelps & McNamara, PC, the nation’s largest boutique food and drug regulatory law firm, is seeking a recent law school graduate or junior attorney with prior experience in the pharmaceutical or biotech industries in either clinical or regulatory affairs.  Excellent academic credentials and strong writing skills are required.  Scientific or technical background would be desirable.  Compensation is competitive and commensurate with experience.  HPM is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Jeffrey N. Wasserstein (jnw@hpm.com). 

By Kurt R. Karst –   

On November 15th, the U.S. Court of Appeals for the Federal Circuit will hear oral argument in Medicines Co. V. Kappos et al., Case No. 2010-1534, perhaps starting (or ending) another chapter in the saga over a Patent Term Extension (“PTE”) for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering The Medicines Company’s (“MDCO’s”) ANGIOMAX (bivalirudin).

As we previously reported, Section 37 of the Leahy-Smith America Invents Act (“AIA”) (Pub. Law No. 112-029), titled “Calculation of 60-Day Period for Application of Patent Term Extension” and referred to by some as “The Dog Ate My Homework Act” or the “Medco fix,” amended the PTE statute at 35 U.S.C. § 156(d), and was intended to legislatively resolve MDCO’s PTE battle.  Section 37 effectively codify Judge Claude M. Hilton’s August 3, 2010 decision in The Medicines Company v. Kappos, 731 F. Supp. 2d 470 (E.D. Va. 2010), in which Judge Hilton ordered the Patent and Trademark Office (“PTO”) to consider timely filed MDCO’s PTE application for the ‘404 patent under a next business day interpretation of the PTE statute.  (As folks might recall, FDA approved ANGIOMAX at 5:18 PM on Friday, December 15, 2000, and MDCO submitted its PTE application to the PTO on February 14, 2001 – 62 days after NDA approval, including the December 15, 2000 date of approval.)

We previously reported that shortly after the enactment of the AIA, MDCO sent a letter to the U.S. Court of Appeals for the Federal Circuit notifying the Court of the enactment of Section 37 and asserting that it resolves the merits of the ongoing ‘404 patent PTE litigation with ANDA sponsor APP Pharmaceuticals, LLC (“APP”).  APP vigorously disagreed that Section 37 resolved the case, however, and argued that Section 37 cannot constitutionally be applied and that Section 37 does not take effect for one year after the AIA‘s enactment (i.e., September 16, 2012).  The Federal Circuit ordered MDCO and APP to simultaneously file supplemental briefs addressing the effect of Section 37 of the AIA on the disposition of the case.  Those briefs were filed last month – along with the brief from a surprise intervenor – and the arguments they contain will be the focus of the November 15th oral argument.

APP argues in its briefs (here and here) that there are two reasons why AIA Section 37 does not save MDCO’s PTE request for the ‘404 patent, but rather confirms that the PTE application was untimely, and that as such, the Federal Circuit should reverse Judge Hilton’s decision and deem the ‘404 patent to have expired as of March 23, 2010:

(1) Section 37 will not go into effect until [September 16, 2012].  That is what Section 35 – the AIA’s default effective-date provision – plainly provides.  While Section 37 defines the set of PTE applications to which it will apply once it takes effect, nothing in Section 37 alters the September 16, 2012 effective date. Section 37’s silence is in stark contrast to AIA provisions not covered by Section 35’s default provision, all of which expressly indicate that they are changing the effective date.

(2) [R]egardless of when Section 37 takes effect, it could not constitutionally be applied to MDCO’s PTE.  Because MDCO’s PTE request was untimely when made, [the ‘404] patent expired [on March 23, 2010].  Under the Patent Act, any term extension granted by the PTO as a result of MDCO’s untimely request is invalid and void.  Because Congress did not enact the AIA until well over a year after the ’404 patent expired, Section 37 could not revive the patent.  The Constitution’s Copyright and Patent Clause prohibits Congress providing patent protection for subject matter that already has passed into the public domain.

MDCO, of course, has a slightly different take in its briefs (here and here) on the interpretation and applicability of the AIA and Section 37.  MDCO argues that AIA Section 37 codifies Judge Hilton’s next business day interpretation of the PTE statute and confirms that the ‘404 patent PTE application was timely.  “Section 37 expressly directs that it ‘shall apply’ to any PTE application – like MDCO’s – that ‘is pending on’ or ‘as to which a decision regarding the application is subject to judicial review on’ the ‘date of the enactment of this Act.’”  APP’s contention that AIA Section 37 does not govern the case before the Federal Circuit “ignores the provision’s plain text – not to mention its history and purpose – and asks the Court to adopt an interpretation that defies common sense,” says MDCO.  Equally insubstantial, argues MDO, is APP’s constitutional Claim: “APP’s argument turns on the untenable fiction that the [‘404 patent] entered the public domain even though it never expired.  Even if the patent had expired, moreover, APP’s argument would still be foreclosed by Supreme Court precedent” (italics in original).

Although the Government long ago bowed out of the case, it has entered as an intervenor and submitted a brief to defend the constitutionality of AIA Section 37.  First, says the Government, “Section 37’s next-business-day rule for computing the time for extension applications applies to any application that is ‘pending on,’ or as to which ‘a decision regarding the application is subject to judicial review on,’ the date of the AIA’s enactment,” and the PTE application for the ‘404 patent was “pending on” the date of the AIA’s enactment, because the PTO, “having lost in district court, was engaged in calculating the correct length of MDCO’s extension.”  Moreover, says the government “‘a decision regarding the application’ was ‘subject to judicial review” on the date of enactment (and still is).”  “Congress’s explicit direction to apply the next-business-day rule to pending applications, and to decisions subject to judicial review, places section 37 outside the ambit of the general effective-date provision in section 35, which applies ‘[e]xcept as otherwise provided in this Act.’”

With respect to the constitutionality of AIA Section 37, the Government maintains that “[n]othing in the Patent Clause of Article I precludes Congress from making section 37’s next-business-day rule applicable to MDCO’s pending extension request. . . .  [B]y virtue of interim extensions, MDCO’s ’404 patent has never expired, and MDCO’s drug has never entered the public domain.”  Regardless, says the Government, “the application of section 37 to this case does nothing more than give MDCO the same patent term that it would have been entitled to by filing a timely application.” 

While the Government contends that “[t]he existence of general legislative power to extend the term of patents after their expiration is confirmed by Supreme Court precedent and historical practice going back over 200 years,” and that “the constitutionality of section 37 is already clear,” the Government nevertheless suggests that the Federal Circuit may defer resolution of the Patent Clause challenge pending the Supreme Court’s decision in Golan v. Holder, Case No. 10-545, which was argued on October 5, 2011, and which presents a related issue of whether the Copyright Clause of the United States Constitution (Article I, § 8, cl. 8) prohibits Congress from taking works out of the public domain. 

What surprise twist might happen next in a more than decade-long PTE battle that has been full of surprises?  Will there be another attempt to change the PTE law or perhaps prevent the PTO from using funds to implement AIA Section 37?  Stay tuned. 

By Ricardo Carvajal –

FDA issued a press release announcing the issuance of more than 1,200 warning letters to tobacco retailers alleged to have violated the agency’s Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents.  Common alleged violations include the sale of cigarettes or smokeless tobacco to a minor, and failure to verify a purchaser’s date of birth by means of photographic identification.  The results of FDA’s compliance checks can be accessed online in a database that is searchable by retailer name and geographic location, among other parameters.  The press release also notes that FDA has begun inspecting tobacco product manufacturing facilities.

By Kurt R. Karst –      

The U.S. District Court for the District of New Jersey recently granted a Motion to Dismiss filed by Pfizer, Inc. (“Pfizer”) in an action brought by Impax Laboratories, Inc. (“Impax”) in an apparent attempt to trigger a forfeiture of 180-day exclusivity under the failure-to-market provisions at FDC Act § 505(j)(5)(D)(i)(I) for the first applicant to have submitted an ANDA to FDA with a Paragraph IV patent certification for a generic version of Pfizer’s DETROL LA (tolterodine tartrate) Extended Release Tablets, 4mg and 2mg.  In reaching its decision, the district court found the Federal Circuit’s rationale articulated in Janssen Pharaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353 (Fed. Cir. 2008), concerning declaratory judgment jurisdiction to be controlling, rather than the Federal Circuit’s decision in Caraco Pharm. Labs. Ltd. v. Forest Labs., Inc., 527 F.3d 1278 (Fed. Cir. 2008), given the existence of a stipulation to be bound by a final court decision on patent validity or non-infringement.

As we previously reported, DETROL LA is listed in the Orange Book with four patents: U.S. Patent Nos. 6,911,217 (“the ‘217 patent”), 5,382,600 (“the ’600 patent”), 6,630,162 (“the ‘162 patent”), and  6,770,295 (“the ‘295 patent”), which expire on Aug 26, 2019, March 25, 2012, November 11, 2019, and August 26, 2019, respectively, but are each subject to a 6-month period of pediatric exclusivity.  Impax was sued a few years back based on the company’s Paragraph IV certifications to the ‘600, ‘162, and ‘295 patents contained in ANDA No. 90-235, but was not sued with respect to its Paragraph IV certification to the ‘217 patent.  Pfizer subsequently granted Impax a covenant not to sue with respect to the ‘217 patent, and Impax stipulated to be bound by any decision regarding the validity or non-infringement of the ‘600 patent rendered in another action involving the first applicant. 

Like Impax, the first ANDA sponsor submitted an ANDA with Paragraph IV certifications to all four DETROL LA patents and was sued on all but the ‘217 patent.  The ‘600, ‘162, and ‘295 patents were the subject of a consent judgment of ingringement entered into between Pfizer and the first applicant in July 2011 and a settlement agreement, seemingly leaving the ‘217 patent – the subject of Impax’s declaratory judgment complaint – as the only patent on which to hang a claim of 180-day exclusivity. 

Impax argued that the company has two separate injuries upon which to maintain declaratory judgment jurisdiction: (1) ANDA approval delay resulting from the first ANDA applicant’s eligibility for 180-day exclusivity; and (2) patent uncertainty arising from the absence of a judicial declaration regarding the validity of the ‘217 patent.  Pfizer countered, arguing that Impax suffers no approval delay injury attributable to the ‘217 patent, because Impax voluntarily decided to forego its challenge to Pfizer’s ‘600 patent, thereby deferring approval of its ANDA until September 25, 2012, at the earliest, when pediatric exclusivity on the ‘600 patent is set to expire, and that Impax suffers no patent uncertainty injury, given the irrevocable covenant not to sue on the ‘217 patent.

Noting that “Janssen stands for the proposition that a stipulation to be bound will divest a federal court of declaratory judgment jurisdiction, as such stipulation is not fairly traceable to the Defendant’s actions and will prevent a judgment in Plaintiff’s favor from redressing the injury alleged,” the district court said that the Federal Circuit’s Janssen decision is controlling in the case “by virtue of [Impax’s] stipulation to be bound.”  The stipulation, “presents yet another obstacle to FDA approval, preventing Plaintiff from obtaining FDA approval until the expiration or finding of invalidity of the stipulated to patent.”  As such, the district court granted Pfizer’s Motion to Dismiss, noting that “a favorable judgment in Impax’s favor would not clear the path to FDA approval and does not provide the basis for declaratory judgment jurisdiction.” 

By Riëtte van Laack –

Last week, Rep. Dan Burton (R-IN) introduced the “Dietary Supplement Protection Act of 2011.”  Referencing the exemplary safety record of dietary supplements, the bill proposes to amend section 413(d) of the Federal Food, Drug, and Cosmetic Act (“FDC Act”) to significantly increase the number of “grandfathered” dietary ingredients.  Currently, section 413(d) defines a new dietary ingredient (NDI) as “a dietary ingredient that was not marketed in the United States before October 15, 1994 and does not include any dietary ingredient which was marketed in the United States before October 15, 1994.”  The amendment would move this date from October 15, 1994 to January 1, 2007.

As we previously reported, FDA’s recently issued draft guidance on NDIs suggests that, to qualify for grandfathered status, a manufacturer must possess both proof of prior marketing and proof that the current manufacturing method for the dietary ingredient is identical to the method used before the grandfather date.  This standard could be difficult to meet for many dietary ingredients due to the lack of information on manufacturing methods used before the grandfather date.  Moving the date for grandfather status to January 1, 2007, would reduce the number of dietary ingredients for which the manufacturing method may have changed, and reduce the chance that industry no longer possesses information about the manufacturing method for a grandfathered dietary ingredient.

Rep. Burton’s bill does not address any other issues raised by FDA’s draft guidance, e.g., FDA’s interpretation of what constitutes “chemical alteration” and the meaning of “presence in the food supply” as those terms are used in section 413(a)(1).

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.