By Kurt R. Karst –

A group of nonprofit organizations has filed a Complaint seeking to compel FDA, by a court-ordered deadline, to withdraw approval for subtherapeutic uses of penicillin and tetracyclines in animal feed and to issue a final response to two Citizen Petitions submitted to the Agency – one on March 9, 1999 (FDA Docket No. 1999P-0485), and another on April 7, 2005 (FDA Docket No. 2005P-0139).  The Complaint, which alse requests declarations that FDA’s failure to withdraw approvals and delay in responding to the Citizen Petitions violate the Administrative Procedure Act (“APA”), was filed by the Natural Resources Defense Council (“NRDC”), the Center for Science in the Public Interest (“CSPI”), the Food Animal Concerns Trust (“FACT”), Public Citizen, and the Union of Concerned Scientists (“UCS”) in the U.S. District Court for the Southern District of New York on May 25, 2011.

The addition of low doses of antibiotics to livestock feed (e.g., chickens, turkeys, swine, cattle, and sheep) to ward off disease and promote growth has been going on for many decades, to the point that, according to the Complaint, “[t]oday, approximately 80 percent of all antibiotics used in the United States are used in livestock.”  FDA first approved the use of penicillin and chlortetracycline as animal feed additives in 1951, and the use of oxytetracycline as early as 1954. 

Not long after these approvals, however, concerns about the long-term use of antibiotics in animals, and antibiotic resistance in particular, were raised.  In the 1970s, FDA convened a task force to look into the issue.  The recommendations from the task force, including that “antibiotics used in human medicine be prohibited from use in animal feed unless they met safety criteria established by FDA,” led FDA to propose (in 1973) the withdrawal of approvals for subtherapeutic uses of antibiotics in animal feed unless data submitted to FDA resolved certain safety concerns.  After evaluating data and information submitted to FDA, the Agency issued Federal Register notices in 1977 with respect to penicillin and certain uses of tetracyclines proposing to withdraw all uses of penicillin and nearly all subtherapeutic uses of tetracyclines in animal feed.  Shortly thereafter, Congress stepped in and requested that FDA conduct further research before taking action on the withdrawal proposals.  This and other intervention by Congress led to the publication of several reports and studies in 1980, 1984, and 1988. 

Activity surrounding the issue of the long-term use of antibiotics in livestock continued in the 1990s with more reports.  In 2003, FDA issued a guidance document – Evaluating the Safety of Antimicrobial New Animal Drugs with Regard to Their Microbiological Effects on Bacteria of Human Health Concern – discussing the Agency’s “recommended approach for assessing the safety of antimicrobial new animal drugs with regard to their microbiological effects on bacteria of human health concern.”  In 2004, “FDA sent letters to several manufacturers of approved animal feed products containing penicillin and tetracyclines, explaining that the administrative record did not contain sufficient information to alleviate FDA’s concerns about ‘the use of these products and their possible role in the emergence and dissemination of antimicrobial resistance,” according to the Complaint.  In 2010, FDA issued a draft guidance document – The Judicious Use of Medically Important Antimicrobial Drugs in Food-Producing Animals – concluding that the “overall weight of evidence available to date supports the conclusion that using medically important antimicrobial drugs for production purposes is not in the interest of protecting and promoting the public health.”

Meanwhile, CSPI, FACT, Public Citizen, and UCS (several of the Plaintiffs named in the May 25, 2011 Complaint) petitioned FDA in 1999 and 2005 requesting that FDA “rescind approvals for subtherapeutic uses in livestock of any antibiotic used in (or related to those used in) human medicine” (1999), and “withdraw approvals for herdwidelflockwide uses of [specific] antibiotics in chicken, swine, and beef cattle for purposes of growth promotion (including weight gain and feed efficiency) and disease prevention and control (except for nonroutine use where a bacterial infection has been diagnosed within a herd or flock)” (2005).  FDA tentatively responded to the petitions – see, e.g., here – but has not yet issued final responses. 

The Plaintiffs allege in their Complaint that FDA, in violation of the APA, failed to comply with the Agency’s statutory duty to withdraw approvals of subtherapeutic uses of penicillin and tetracyclines in animal feed as required by FDC Act § 512(e)(1).  The Plaintiffs further contend that FDA’s failure to timely respond to the 1999 and 2005 Citizen Petitions with a final decision is an unreasonable delay in violation of the APA.  On both claims, the Plaintiffs request a judgment compelling FDA to take action by a court-odered deadline.

By Ricardo Carvajal –

Seaside Farm, Inc., a South Carolina tomato farmer, has sued the federal government under the Federal Tort Claims Act to recoup losses allegedly suffered as the result of the government’s misidentification of fresh tomatoes as the culprit in the outbreak of Salmonella Saintpaul that occurred in May 2008.  Seaside contends in its Complaint that FDA was negligent “in failing to identify any contaminated tomatoes from South Carolina before announcing a nationwide recall,. . .  failing to follow federal standards for laboratory verification and testing of scientifically knowable information,. . .[and] announcing a nationwide tomato recall and then contemporaneously acknowledging that the tomatoes from 41 states were safe,” among other actions.

In May 2008, CDC notified FDA that tomatoes were implicated in an outbreak of Salmonella Saintpaul. FDA initially warned consumers in New Mexico and Texas not to eat certain kinds of tomatoes, then expanded the warning nationwide.  Subsequently, certain kinds of peppers were identified as the likely culprit, and FDA lifted its warning on consumption of tomatoes – but not before the damage was done.  FDA has identified the Salmonella Saintpaul outbreak investigation as “an example of one of the most difficult traceback investigations.”

Although it’s cold comfort to Seaside Farms, new § 423(j) of the FDC Act (added by the FDA Food Safety Modernization Act or FSMA) requires FDA to establish an “incident command operation” for a Class I recall so as “to reduce the potential for miscommunication during recalls or regarding investigations of a food borne illness outbreak associated with a food that is subject to a recall.”  In addition, FSMA§ 206(e) directs the Government Accountability Office to submit a report to Congress that reviews “new or existing mechanisms available to compensate persons for general and specific recall-related costs when a recall is subsequently determined by the relevant agency to have been an error,” and that “considers models for farmer restitution implemented in other nations in cases of erroneous recalls.”

By Riëtte van Laack & Ricardo Carvajal –

As we reported on several occasions (see, e.g., here and here), recent Federal Trade Commission ("FTC") consent orders concerning health-related claims include the requirements that 1) certain claims be approved by FDA under the Nutrition Labeling and Education Act of 1990 ("NLEA") and 2) certain other claims be supported by two well-designed clinical studies to ensure that the claims are adequately substantiated.  Last year, POM Wonderful LLC ("POM") sued FTC claiming that these additional requirements exceeded FTC’s authority and constitute a violation of an advertiser’s First Amendment rights.  FTC promptly followed up with its own complaint against POM.  

Recently, the Alliance for Natural Health USA, Durk Pearson and Sandy Shaw (“Petitioners”) petitioned FTC essentially making the same arguments as POM and asking FTC for rulemaking to eliminate from its consent orders the requirements described above, which the petition characterizes as the “FDA Prior Restraint Requirement” and the “FTC Two Clinical Trial Requirement.”    Petitioners further ask FTC to implement the constitutional mandate that a federal agency refrain from imposing limits on future speech if the agency can identify a qualification for a claim that prevents deception.

Petitioners claim that they would like to market a prune juice product with a claim that it helps “relieve chronic constipation.”  Petitioners do not possess two well-designed clinical trials substantiating this claim and FDA has not approved the claim.  Petitioners assert that the requirements in the FTC consent orders constitute a rule within the meaning of the Administrative Procedure Act that prevents Petitioners from communicating truthful and not misleading information about the health benefits of their product.   

As explained by Petitioners, it has been firmly established by Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999) and its progeny (cases litigated by Petitioners) that the First Amendment protects the right of a party to make a truthful and not misleading claim that characterizes the relationship of a nutrient to a disease – even where that claim is supported by evidence that falls short of significant scientific agreement.  Petitioners argue that the holdings of these cases are equally applicable to FTC’s consent orders.  Petitioners assert that the federal government must allow nutrient-disease risk reduction claims backed by credible but inconclusive evidence to enter the market place, and rely on claim qualification as a less restrictive alternative to prohibition.  Further, the burden is on the government to prove (with empirical evidence) that no claim qualification will eliminate the allegedly misleading aspects of the claim. 

The petition raises questions concerning the constitutionality of FTC’s recent consent decrees and FTC’s approach to substantiation of health-related claims.  FTC’s guidance documents maintain that there is no fixed substantiation standard for such claims.  Yet the consent orders and FTC employees’ statements suggest that there is such a standard, namely at least two adequate and well-controlled human clinical studies – with no provision for the use of disclaimers.  The petition, however, is silent on the limits of constitutional protection when it comes to claims that a product treats (as opposed to reduces the risk of) disease.  Absent drug approval, FDA considers such claims unlawful and not entitled to constitutional protection – and the courts have agreed.  One thing is certain: where and how FTC draws the line between adequate and inadequate substantiation will continue to be a hot topic in 2011.

By Kurt R. Karst –      

The Federal Trade Commission’s (“FTC”) drumbeat of opposition to patent settlement agreements (or what opponents call “pay-for-delay” or “reverse payment” agreements) grew louder last week with the Commission’s submission of an amicus brief with the U.S. Court of Appeals for the Third Circuit in In Re K-Dur Antitrust Litigation, Case Nos. 10-2077, 10-2078, 10-2079.  The FTC requests  that the Court reverse a 2010 ruling from the U.S. District Court for the District of New Jersey in which the court adopted a Special Master’s Report and Recommendation in the long-running patent settlement dispute concerning K-DUR (potassium chloride).  In that case, direct purchasers of K-DUR alleged that Merck & Co., Inc. (“Merck”) (formerly Schering-Plough Corporation) restricted competition in violation of the Sherman Act by settling patent infringement lawsuits against potential generic K-DUR entrants.  Merck filed a motion for summary judgment and the Special Master appointed to preside over the case recommended that the motion be granted. 

The In Re K-Dur Antitrust Litigation followed an FTC action against Schering challenging the same settlements.  In 2005, the U.S. Court of Appeals for the Eleventh Circuit upheld in Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005), a district court dismissal of that case.  In addition to the FTC, amicus briefs were submitted to the Third Circuit by the Department of Justice, Attorneys General from various states, the National Association of Chain Drug Stores, Inc., and the American Antitrust Institute – all decidedly in favor of a reversal of the New Jersey District Court’s decision. 

The FTC says in its amicus brief that the New Jersey District Court’s decision “is problematic in that it conflicts not only with basic antitrust principles, but with patent law and the policies of the Hatch-Waxman Act.”  First, according to the FTC, “[a]greements made by patent holders are subject to antitrust scrutiny, particularly where, as here, they eliminate potential competition by splitting monopoly rents with would-be competitors.”  Second, the FTC says that “[t]he district court’s rule – which allows such agreements as long as the patent infringement claim rises above the level of a ‘sham’ – is especially inappropriate in light of the policies of Hatch-Waxman, in which Congress expressly sought to encourage challenges to weak or narrow patents, and thereby spur early generic entry.”  The District Court’s rule would, according to the FTC, “negate such challenges by allowing a branded company simply to pay generic filers to stay out of the market until the patent expires.  Economic realities make such deals irresistible as long as they are condoned by the courts.”

Instead, the FTC says in its brief that the Third Circuit should adopt a “rule of reason”:

Patent settlement agreements should be assessed under the antitrust rule of reason – a rule that, as recent Supreme Court teachings make clear, is flexible enough both to take into account the patent context and to recognize a presumption of illegality for types of agreements whose likely anticompetitive impact is clear.  Parties may settle patent disputes in a variety of ways, and many settlements – e.g., those in which the parties compromise on an entry date, without payment by the patent holder – pose little competitive problem.  On the other hand, where a settlement includes a substantial payment, that payment must be a quid pro quo for something; if the challenger is offering a commitment to stay out of the market for a specified time, it follows that the payment is to secure exclusion of a potential competitor.  Because such an agreement closely parallels market allocation arrangements universally recognized as unlawful, a presumption of antitrust illegality is justified.  Such a presumption is bolstered by the policies of Hatch-Waxman and by experience that shows the vulnerability of many pharmaceutical patents, the weakest of which will be the most likely to result in exclusion-payment settlements.

The FTC’s amicus brief follows the U.S. Supreme Court’s March 7, 2011 denial of a  Petition for Writ of Certiorari in Louisiana Wholesale Drug Co., Inc., et al. v. Bayer AG, et al., Case No. 10-762, which involved manufacturers of Ciprofloxacin HCl (CIPRO) and whether a particular patent settlement agreement was per se lawful under the Sherman Act.  The Supreme Court was asked to review the case after the U.S. Court of Appeals for the Second Circuit denied without comment in September 2010 a Petition for Rehearing and Rehearing En Banc that a panel of the judges on the Court invited in their April 2010 decision affirming (3-0) a 2005 decision by the U.S. District Court for the Eastern District of New York granting summary judgment for defendants (i.e., Ciprofloxacin HCl manufacturers). 

FTC Commissioner J. Thomas Rosch discussed pending patent settlement challenges during a May 11th speech at the Sixth Annual In-House Counsel Forum on Pharmaceutical Antitrust, and again during a May 18th speech titled “The Intersection of Antitrust and Intellectual Property: The Quest for Certainty in an Uncertain World.”  During the May 11th speech, Commissioner Rosch expressed his pleasure that the Supreme Court denied Certiorari in the Cipro Case, saying “[t]hat is because Justices Sotomayor and Kagan recused themselves from the case.  Challengers to pay-for-delay agreements would likely have a far better chance at the highest court if all nine Justices were available to hear the case.” 

Commissioner Rosch also addressed rumors about a so-called FTC “Plan C” for addressing patent settlement agreements if the Commission is unsuccessful in the courts and in Congress, where retiring Senator Herb Kohl (D-WI) has pending legislation that would effectively ban patent settlement agreements.  Commissioner Rosch commented:

So does the Commission have a “Plan C” if we continue to be unsuccessful before both the judiciary and Congress?  At this point, the answer is no.  But, as I’ve said, one possibility would be for the Commission to exercise its rulemaking authority under Section 6(g) of the FTC Act.  Under this provision, the Commission can “make rules and regulations for the purpose of carrying out” the FTC Act.  It strikes me that the agency could issue a rule that would deem pay-for-delay agreements as inherently suspect.  The Commission would have the initial burden of production demonstrating the existence of a reverse payment settlement.  At that point, the burden of production would shift to the parties to justify the practice.  If they do so, the burden would shift back to the Commission, which would have to show under the full rule of reason that the agreement is anticompetitive.  Because the burden of proof ultimately rests with the Commission, I think this approach would pass muster under the Administrative Procedures Act, which governs Section 6(g) rulemakings.

By Susan J. Matthees –

FDA is extending the deadline for comments to the proposed rule on menu labeling from June 6 to July 5, 2011 (see our previous post here).  FDA states in a notice to be published in the Federal Register on May 24th that the Agency received several requests to extend the deadline.  The requests were for a variety of reasons, including a need to assess the effect of the proposal on industry, a desire for consumer research, and the complexity of the proposed rule.  FDA believes the 30-day extension will provide enough time for interested parties to respond. 

By Alan M. Kirschenbaum –

Today the Office of Pharmacy Affairs (“OPA”) of the Health Resources Services Administration (“HRSA”) published in the Federal Register its first proposed regulation under the 340B Drug Discount Program since the Program was established in 1992.  This Program, authorized under section 340B of the Public Health Service Act, requires manufacturers who execute a Pharmaceutical Pricing Agreement with the government to sell covered outpatient drugs to specified categories of covered entities at a price that does not exceed a statutory ceiling price.  Execution of the agreement is a condition for the federal government to pay for the manufacturer’s covered outpatient drugs under Medicaid and Medicare Part B.  The specified covered entities are several categories of clinics that receive federal grants as well as certain hospitals that serve low income populations.  HRSA has published guidance to implement the 340B Program, but has never before issued a regulation.

The Patient Protection and Affordable Care Act of 2010 ("ACA") made a number of changes to the 340B Program, including the addition of several types of hospitals to the list of eligible covered entities.  Beyond disproportionate share hospitals and children’s hospitals, which were eligible covered entities before the ACA was enacted, the ACA expanded the program to include free-standing cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals.  However, the ACA also contained an exception under which these new types of covered entity hospitals are precluded from obtaining 340B discounts for “a drug designated by the Secretary . . . for a rare disease or condition” – i.e., for a drug designated by the FDA as an orphan drug.  OPA’s proposed rule implements this restriction.

Interpretation of the statutory orphan drug exclusion is not as straightforward as it might seem, because many drugs are designated as orphan for certain indications but are also approved and/or prescribed for other, non-orphan indications.  Should a drug that has an orphan designation for one but not all of its indications be ineligible for 340B discounting, even if a hospital purchases it to use for a non-orphan use?  HRSA has decided no, and proposed an approach under which exclusion depends on the indication for which such a drug is used.  The proposed rule provides that, for the new categories of hospitals, a covered outpatient drug subject to 340B discounts does not include an orphan drug that is “transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated” as an orphan, but an orphan drug that is transferred, prescribed, sold, or otherwise used for a non-orphan indication is subject is 340B pricing.  This use-based approach is apparently HRSA’s attempt to balance the intent of the 340B program to provide low-cost drugs to hospitals serving low-income patients against the Congressional intent not to undermine pricing for drugs used to treat rare diseases.  However, there are several problems with HRSA’s interpretation.

First, it is inconsistent with the statutory language, which excludes a “drug” – not an “indication” – that has obtained an orphan designation from the FDA.  In addition, implementation of this rule would rely on the honor system.  Under the proposal, the responsibility rests with the hospital to ensure that orphan drugs purchased at the 340B price will not be prescribed or used for a non-orphan condition.  See proposed 42 C.F.R. § 10.21(c).  This is to be done by maintaining separate purchasing accounts, improving inventory and auditing capacity, and maintaining auditable records, which must be provided at the request of the government or a manufacturer.  The preamble makes clear that a manufacturer may not condition sales upon receiving prior assurance that the 340B drug will not be used to treat a rare disease or condition.

Reliance on an honor system to implement the orphan drug exclusion might be acceptable if OPA had the resources to conduct compliance audits of covered entities.  However, the OPA is notoriously underfunded and understaffed (an OPA official reported at a conference in March that OPA then had a staff of 15), and is unlikely to implement any routine auditing program in the foreseeable future.  Moreover, the statute does not authorize manufacturers to audit covered entities for compliance with the orphan drug exclusion (though it does authorize manufacturer audits of compliance with other 340B Program requirements).  The proposed regulation does refer to “government-approved manufacturer audits.”  However, such audits are expensive, particularly for orphan drug manufacturers, which tend to be smaller companies.  Even putting aside the cost of an audit, they are unlikely to be undertaken absent evidence of gross over-purchasing, so smaler-scale violations will go undetected. 

There is an alternative that does not rely on an honor system that is unlikely to be enforced.  That is to do as the statute mandates, and exclude “a drug designated [by the FDA] for a rare disease or condition,” even if the drug may have non-orphan indications.  Comments on the proposal must be submitted by July 19, 2011.

By Ricardo Carvajal –

In a report titled “Seafood Safety: FDA Needs to Improve Oversight of Imported Seafood and Better Leverage Limited Resources,” GAO found fault with many aspects of FDA’s imported seafood safety program.  GAO set the stage for its review by noting that more than 80% of seafood consumed in the U.S. is imported, and half of that is the product of aquaculture.  GAO than turned its attention to the use of antibiotics and antifungal agents in aquaculture, and the potential presence of residues in imported fish. 

GAO found FDA’s efforts wanting in comparison with the efforts made by regulatory authorities in other jurisdictions, such as the EU.  In part, GAO found that FDA’s foreign inspections are generally limited to a review of HACCP records, whereas those of the EU include visits to farms and testing laboratories; the EU requires foreign countries to demonstrate the equivalence of their seafood safety system or meet requirements established by agreement, whereas FDA does not;  FDA tests for residues of 16 unapproved drugs, whereas some EU countries test for residues of as many as 50 drugs; and FDA collects a small number of samples for testing (0.1% of imports) in comparison with the number collected by some other EU countries (as much as 4%).  GAO also found that FDA and the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service (NMFS) “have made limited progress in implementing” an MOU executed by the two agencies in 2009, pursuant to which FDA is expected to increase its use NMFS’ inspection resources.

In its comments on the report, FDA (through DHHS) countered that “reading the GAO report may not result  in a full understanding of FDA’s multifaceted and risk-informed seafood safety program.”  Among other things, FDA noted that its testing is considerably more rigorous than that used in other jurisdictions, which in some instances has been shown to yield results of questionable validity.  FDA also noted that it plans to deploy new authorities under the Food Safety Modernization Act to help ensure the safety of imported seafood.  Notably, neither FDA nor GAO address what appears to be a key issue, namely why FDA has approved 5 drugs for use in aquaculture as compared to more than 15 in Japan and more than 30 in the EU.

The GAO report is doubtless welcome news for domestic catfish farmers, who succeeded in their bid to grant jurisdiction over catfish to the USDA via the 2008 Farm Bill, in part due to the purported inadequacies of FDA’s oversight.  The issuance of GAO’s report was touted in a press release by Sen. Thad Cochran (sponsor of the 2008 Farm Bill measure), who took the opportunity to encourage USDA to move forward with its implementing regulation.  Public meetings on that rulemaking are scheduled for May 24 and 26.

Those who prefer a more integrated approach to government regulation of food safety might recall that GAO recently issued a hefty report identifying “opportunities to reduce potential duplication in government programs, save tax dollars, and enhance revenue.”  GAO pointed to the nation’s fragmented food safety system as one such opportunity, and observed the following: 

Although reducing fragmentation in federal food safety oversight is not expected to result in significant cost savings, new costs may be avoided by preventing further fragmentation, as illustrated by the approximately $30 million for fiscal years 2011 and 2012 that USDA officials had said they would have to spend developing and implementing the agency’s new congressionally mandated catfish inspection program.

By John A. Gilbert & Karla L. Palmer –

On May 9, 2011, the Drug Enforcement Administration ("DEA") published a proposed rulemaking addressing the “Consolidation of Seizure and Forfeiture Regulations” to conform with the Civil Asset Forfeiture Reform Act ("CAFRA") of 2000.  When finalized, the rule will consolidate regulations within the Department of Justice governing the seizure and administrative forfeiture of property by the Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF"), the DEA, and Federal Bureau of Investigation ("FBI").  The rule also will update existing regulations so that they are consistent with other authority and current forfeiture practices.  Of particular note, by consolidating the forfeiture regulations, the proposed rule replaces the current DEA forfeiture regulations at 21 C.F.R. Part 1316, subparts E and F, and amends 28 C.F.R. Part 8 (formerly covering FBI forfeiture authority) to consolidate under one regulation the seizure and forfeiture procedures for these three DOJ agencies.

Under the proposed rule, consistent with CAFRA’s statutory requirements, the government must send administrative forfeiture notices within 60 days of seizure (or 90 days of state or local seizures that are adopted by the federal government).  If the agency fails to act, the agency must release property pending compliance with further procedures unless the agency official receives a limited, single 30-day extension.  The notice of administrative forfeiture must set forth the specific deadline for the forfeiture proceedings, which proceedings must be at least 35 days from the mailing of the personal notice and must occur by the date specifically set forth in that notice.  Proposed § 8.9 describes the requirements for both notice by publication (now including internet publication) and personal notice.  In order to contest a forfeiture, interested individuals must file a claim under oath, in no particular form, including a statement of the claimant’s interest in the property. 

The claimant is not required to post a bond, contrary to the past DEA forfeiture regulation.  Once the agency receives a claim, the agency must either return the property or suspend the administrative forfeiture proceeding and transmit the claim to the U.S. Attorney for the commencement of judicial proceedings.  The proposed regulations note that a pending administrative proceeding does not bar the government from seeking forfeiture of the same property in a criminal case.  If the government commences a timely administrative forfeiture proceeding, yet receives no claim concerning the seized property, then the appropriate administrative official can declare the property forfeited.  Id. (proposed) § 8.12.  The deadline for filing a claim is 35 days after receipt of personal notice from the seizing agency.  If the government does not file a complaint to commence forfeiture proceedings within 90 days after seizure, it must return the property.  The claimant has 30 days after service to file a claim, and 20 days after filing a claim to file an answer. 

Of particular note, proposed § 8.14 adds a provision allowing for the pre-forfeiture disposition of seized property when that property is likely to perish, waste, be greatly diminished in value, or when the expense of holding the property is disproportionate to its value.  Although no bond is required to file a claim, a property owner may post a “substitute monetary amount” equal to the value of the seized property, and upon approval of the appropriate official, the property will be released — if the property is not needed as evidence of a violation of law, contraband, and has no “characteristics that particularly suit it for use in illegal activities.”  Id. § 8.14.   

A claimant may be entitled to immediate release of property in instances of hardship pending the completion of forfeiture proceedings, without the need to post any monetary amount.  The grounds for hardship are set forth in proposed § 8.15, and include the following: (1) the claimant has a possessory interest in the property; (2) the claimant has sufficient ties to the community to provide assurance that the property will be available at the time of trial; (3) possession by the government pending final disposition of forfeiture proceedings would cause substantial hardship to the claimant, such as preventing ongoing business, preventing an individual from working or leaving an individual homeless; (4) the hardship outweighs the risk that the property will be damaged or destroyed pending completion of proceedings; and (5) the seized property is not contraband, intended to be used on violation of the law, or particularly suited for use in criminal activities.  The proposed § 8.16 affirms that the government is not liable for attorneys’ fees in administrative forfeiture proceedings, regardless of outcome. 

Subpart B of proposed § 8.17 addresses expedited forfeiture proceedings for property seizures based on violations involving possession of personal use quantities of a controlled substance.  These newly-numbered regulations are in part the same as the regulations that were previously set forth at 21 C.F.R. Part 1316, subpart  F, but for one omission:  The new regulations eliminate the provisions applicable to expedited drug-related conveyance seizures because the underlying statute (CAFRA) provides no statutory basis for such regulations.  Thus, the provisions of former 21 C.F.R. Part 1316 subpart F that will remain in proposed § 8.17 deal with property seized for administrative forfeiture involving controlled substances in personal use quantities, including procedures for obtaining expedited release of seized property and the posting of a bond for that expedited release pending further proceedings.

Part 9 of the proposed rule deals with remission or mitigation of administrative, civil and criminal forfeitures.  The proposed regulation states that the purpose of the regulation is to provide a basis for partial or total remission of forfeiture for those who have an interest in the forfeited property, but did not have knowledge of, and took no part in, the conduct that caused the forfeiture.  Remission and mitigation functions that fall within the jurisdiction of the DEA will now be delegated to the DEA Forfeiture Counsel; the proposed regulations now contain far more detail about filing a petition for remission than the current DEA regulations.  

Public comments must be submitted on or before July 8, 2011.

In his recent article appearing in FDLI Update, Hyman, Phelps & McNamara, P.C. Associate Peter M. Jaensch examines the increasing legislative efforts by states to require prescriptions for products containing methamphetamine precursors (such as pseudoephedrine and ephedrine), and to list them as Controlled Substances.  Mr. Jaensch suggests that such laws would tend to encroach upon the practice of medicine and practitioners' professional judgments, as well as burdening patients and the healthcare system, likely without having significant effect on methamphetamine abuse.

By Kurt R. Karst –      

Last Friday, ISTA Pharmaceuticals, Inc. (“ISTA”) filed a Complaint and a Motion for a Temporary Restraining Order and a Preliminary Injunction in the U.S. District Court for the District of Columbia seeking to vacate FDA’s May 11, 2011 approval of Coastal Pharmaceuticals’ (“Coastal’s”) ANDA No. 201211 for a generic version of ISTA’s ophthalmic nonsteroidal anti-inflammatory drug for use after cataract surgery, XIBROM Ophthalmic Solution, 0.09% (Twice Daily Administration).  The lawsuit comes on the heels of FDA’s May 11, 2011 decision in which the Agency denied ISTA’s March 2011 Citizen Petition and granted in part and denied in part a June 2008 ISTA Citizen Petition, and a Federal Register notice in which FDA determined that XIBROM was not withdrawn from sale for reasons of safety or effectiveness and that the Agency can approve ANDAs for Bromfenac Ophthalmic Solution, 0.09%, if all other legal and regulatory requirements are met.  (ISTA had submitted another Citizen Petition to FDA in between the 2008 and 2011 petitions, but withdrew that petition in March 2011 after ISTA allegedly ceased shipping XIBROM in late February 2011.)

FDA first approved XIBROM under NDA No. 21-664 on March 24, 2005 for twice daily administration.  On October 16, 2010, FDA approved a supplement under NDA No. 21-664 for a new once daily dosing regime of Bromfenac Ophthalmic Solution, 0.09%, marketed by ISTA as BROMDAY, and granted ISTA a period of three-year new clinical investigation exclusivity (identified as “NP,” for “new product,” in the Orange Book) that expires on October 16, 2013.  ISTA subsequently discontinued marketing XIBROM and its approved labeling for twice daily administration.  Meanwhile, Coastal was pursuing approval of its ANDA for a generic version of XIBROM with labeling for the now discontinued twice daily administration.

ISTA’s March 2011 Citizen Petition, the only petition relevant to the lawsuit, requested that FDA refrain from approving (either tentatively or fully) an ANDA for a generic version of Bromfenac Ophthalmic Solution, 0.09%, as a result of the period of 3-year exclusivity FDA granted the company.  According to ISTA, the company’s petition “stressed that a sponsor of an ANDA must include in the application a copy of the reference listed drug’s ‘currently approved labeling,’” pursuant to 21 C.F.R. § 314.94(a)(8)(i), and that “[b]ecause of the labeling change, ‘the currently approved labeling’ for ISTA’s bromfenac ophthalmic solution product is for once-per-day dosing.”  Furthermore, ISTA’s petition “argued that FDA cannot permit an ANDA to omit the once-per-day dosing instructions, because it would have the effect of rendering the drug less safe,” pursuant to 21 C.F.R. § 314.127(a)(11) and § 314.161(a).  FDA promptly denied ISTA’s petition, saying that “(1) we consider Xibrom and Bromday two separate drug products rather than one product with old and new labeling, (2) we do not think the Bromday dosing regimen is less safe than the Xibrom dosing regimen, and (3) we did not require Xibrom to be withdrawn as a condition of the Bromday approval,” and the lawsuit ensued. 

ISTA argues in its court filings that FDA’s approval of Coastal’s ANDA and FDA’s denial of ISTA’s Citizen Petition violated the FDC Act and the Administrative Procedure Act (“APA”), and requests that the court grant declaratory and injunctive relief – i.e., a declaratory judgment that FDA acted unlawfully in approving Coastal’s ANDA and “[a] temporary restraining order and a preliminary injunction directing FDA to vacate approval of Coastal’s ANDA and to block the approval of other ANDAs that fail to reference currently approved labeling.”  Specifically, ISTA argues that “[c]ontrary to the statute and its own regulations, FDA has approved a generic product without requiring the ANDA applicant to provide ‘a copy of the currently approved labeling’ and without requiring the ANDA applicant to utilize ‘the same labeling’ as Xibrom, the reference listed drug.”

FDA, in the Agency’s Opposition Brief, says that ISTA’s lawsuit “represents the latest in a long line of cases in which a manufacturer of a brandname drug product has attempted to block generic competition by challenging the bases for FDA’s approval,” and that just as “[e]ach of these challenges failed,” so should ISTA’s challenge.  According to FDA,

The essence of Ista’s argument is that Xibrom and Bromday are not two products but rather one product with revised labeling, and that FDA’s approval of Coastal’s ANDA, which relied on the “obsolete” Xibrom labeling, was therefore unlawful.  Ista is wrong. Xibrom did not simply replace Bromday, as evidenced by the fact that Bromday was approved on October 16, 2010, and Ista did not remove Xibrom from the market until February 28, 2011, four and a half months later.  In other words, Ista offered both Xibrom and Bromday for sale until 11 weeks ago, and stopped the day before it filed its second citizen petition, in an obvious bid to delay generic competition.  And because the regulations make clear that FDA can approve an ANDA based on a withdrawn innovator drug so long as that drug is not withdrawn for safety or effectiveness reasons, see 21 C.F.R. §§ 314.127(a)(11), 314.161(a), FDA appropriately approved Coastal’s ANDA with reliance on the Xibrom labeling. [(Citations omitted; italics in original)]

Yesterday, Judge Royce C. Lamberth denied ISTA's Temporary Restraining Order.  A status conference in the case has been scheduled for Wednesday, May 18, 2011 at 10:30 AM before Judge Emmet G. Sullivan.

By Kurt R. Karst –      

Last week, the Federal Trade Commission (“FTC”) announced that the Commission’s Bureau of Competition (“Bureau”) sent letters (here, here, and here) to Sanofi-Aventis U.S. LLC, Watson Pharmaceuticals, Inc., and Synthon Holding B.V. notifying them that the Bureau believes the companies violated federal law by failing to inform antitrust authorities about patent agreements involving Sanofi’s insomnia drug AMBIEN CR (zolpidem tartrate) Tablets, but that instead of recommending that the FTC take enforcement action, it would issue advisory letters.  Why?  Because, according to the letters, “[t]he failure to file does not appear to have been a deliberate effort to evade the requirements of the Act, no party appears to have benefitted from the failure to file, and guidance to the industry in the form of this letter may serve an enforcement purpose of its own.”  The announcement comes on the heels of the Commission’s publication of its annual summary of agreements filed with the Commission during Fiscal Year 2010 (see our previous post here).

The “Act” referred to above is the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), and specifically Sections 1111 through 1118.  In particular, MMA § 1112 requires that certain types of agreements executed on or after January 7, 2004 between a brand name drug company and a generic drug applicant be filed with the FTC and the Assistant Attorney General, MMA § 1113 states that “[a]ny filing required under Section 1112 shall be filed with the Assistant Attorney General and the [FTC] not later than 10 business days after the date the agreements are executed,” and MMA § 1115 provides that the failure to timely file applicable agreements may result in a civil penalty of $11,000 for each day that a required filing has not been made.

The agreements at the center of the Bureau’s letters are: (1) a joint stipulation that Sanofi and Watson submitted to a court when seeking dismissal of a pending Hatch-Waxman patent infringement case concerning an ANDA for a generic version of AMBIEN CR;  and (2) a joint motion and stipulated order seeking a stay of Sanofi’s Hatch-Waxman patent infringement suit against Synthon during the pendency of the PTO’s  reexamination of an AMBIEN CR patent.

According to the FTC, the joint stipulation says that Watson converted its Paragraph IV certification to a Paragraph III certification, and further, that if Watson converts its Paragraph III certification back to Paragraph IV, it will notify Sanofi and, if there is a timely filed patent infringement lawsuit, that Sanofi is entitled to a new 30-month stay of ANDA approval.  

Based on this, the Bureau states in its letter that “[o]n its face, the joint stipulation falls within the MMA’s filing requirement,” because “(1) it is an agreement between a brand name drug company and a generic applicant that has submitted a Paragraph IV ANDA; and (2) the agreement concerns the marketing of the ANDA product.”  The Bureau then takes the opportunity to provide guidance on the MMA’s patent settlement agreement filing provisions. 

• “Section 1112 applies where the generic ‘has submitted’ an ANDA containing a Paragraph IV certification. Unlike other provisions in the MMA, Section 1112 does not require that the generic applicant maintain an active Paragraph IV ANDA.  The language of the statute and its use of the present perfect tense, ‘has submitted,’ does not limit Section 1112’s application to generic applicants that maintain their Paragraph IV certification.”
• “[N]othing in the statute requires that the elements of a legally binding contract must be satisfied to trigger the filing requirement. Congress used the term ‘contract’ in other parts of the MMA, but used the term ‘agreement’ in Section 1112, a word whose customary meaning is merely something that two parties consent to. Thus, the language ofthe Act forecloses an argument that a joint stipulation need not be filed absent an exchange of consideration.”
• “[T]he joint stipulation is an agreement ‘regarding the manufacture, marketing, or sale of the generic drug for which the ANDA was submitted.’  MMA §  1112(a)(2)(B).  That is the case notwithstanding that the stipulation was filed pursuant to Federal Rule of Civil Procedure 41(a) to secure a dismissal. . . .  [W]here a joint stipulation is required to secure the action the parties desire, that fact does not preclude the existence of an agreement between the litigants concerning the sale of an ANDA product (which triggers a filing obligation under the MMA).”

With respect to the stipulated order, under which, according to the FTC, “Synthon agreed that during the pendency of the stay it would provide Sanofi with 120-days notice of its intention to begin marketing a generic Ambien CR,” the Bureau says in its letter that:

Here too, the joint stipulation is an “agreement” within the meaning of the MMA, regardless of whether its terms had binding effect without court action and regardless of whether there was an exchange of consideration.  The parties agreed on the terms to propose to the court.  Nothing in the MMA suggests that such an agreement is exempt from the statute.

Moreover, according to the Bureau, “the MMA required the filing of the joint stipulation even if the prior notice obligation had no actual effect on Synthon’s ability to market its ANDA product.”  Why?  Well, according to the Bureau, the statute “makes it clear that the MMA filing requirement is triggered by an agreement ‘regarding’ the manufacture, marketing, or sale of the ANDA product.  The requirement is not limited to agreements that actually restrict such marketing.  Nor does the MMA exempt agreements that the parties believe will have no effect on the sale of the generic drug.”

The Bureau concludes the advisory letters with some general observations and guidance – namely that “companies should look to the language of the statute first and foremost,”  that “Congress did not exempt public agreements from the MMA’s filing requirement, ” and that “[i]n case of doubt about whether filing is required, companies can contact Commission staff for guidance” – and seems to say that this is the shot across the bow when it states: “The Commission is placing this letter on the public record, in part, to serve as a reminder to industry members of their filing obligations under the MMA. We will consider enforcement recommendations, including appropriate penalties, in the future when the MMA filing requirements have not been met.” 

Recently, we were perusing FDA-TRACK (Transparency, Results, Accountability, Credibility, Knowledge-sharing), FDA’s “web-based tool for tracking progress on key activities throughout the agency and making the information available both internally and to external stakeholders and the public,” and the FDA-TRACK Health Care Reform Dashboard in particular, and noticed a “completed” notation for the three milestones listed under “Section 10609 – Labeling Changes”:

1. Draft revisions to the ANDA approval letter so that when necessary, the letter can serve as the notification of a labeling change to the reference listed drug

2. Implement changes to the Document Archiving, Reporting and Regulatory Tracking System (DARRTS) database to allow tracking of post-approval commitments to revise a generic drug’s label

3. Draft a Manual of Policy and Procedures (MaPP) for the Office of Generic Drugs to describe the processes used to ensure Sec. 10609 of the Affordable Care Act is implemented fully

The reference to “Section 10609 – Labeling Changes” is to that section of the Affordable Care Act that amended the FDC Act’s ANDA provisions at section 505(j) – specifically FDC Act § 505(j)(10) – to permit FDA to approve an ANDA notwithstanding certain changes to the Reference Listed Drug (“RLD”) labeling approved within 60 days of anticipated ANDA approval. That is, approval within 60 days before the expiration of a period of patent or non-patent market exclusivity applicable to the RLD or a 30-month stay blocking final ANDA approval.

As we previously reported, the genesis of FDC Act § 505(j)(10) is a bill – the so-called “Generic Loophole Bill,” S. 1778, but officially named the Access to Affordable Medicines Act – introduced by Sen. Jeanne Shaheen (D-NH) in 2009.  When the bill was introduced, Sen. Shaheen said that it was intended to “increase access to lower cost generic drugs by closing a loophole some brand name drug companies exploit that needlessly and unfairly delays the entry of safe, lower-cost generic drugs to the consumer market.”  Introduction of the bill appears to have been related to a change to the labeling of CASODEX (bicalutamide) Tablets.  According to Sen. Shaheen, “consumer access to the generic version of this drug was delayed by more than 3 months due to a last minute pediatric labeling change . . . .”

Although FDA has, according to FDA-TRACK, drafted a MaPP to implement Section 10609, that MaPP has not yet been made public.  We were curious, however, whether FDA has used its new authority under FDC Act § 505(j)(10).  And, in fact, FDA has used it – three times so far that we can tell.  The first two instances are from November 2010 – Donepezil Hydrochloride Tablets, 5 mg and 10 mg (ANDA No. 76-786) and Donepezil Hydrochloride Orally-Disintegrating Tablets, 5 mg and 10 mg (ANDA No. 78-388).  The third instance is from this past April when FDA approved ANDA No. 77-431 for Exemestane Tablets, 25 mg.  In each case, FDA cited FDC Act § 505(j)(10) and a revision to the RLD labeling  within 60 days of the expiration of an Orange Book-listed patent that had already expired.

So, has new FDC Act § 505(j)(10) thus far resulted in speedier generic approvals, or is it just a new checkbox that FDA has to mark when clearing ANDA approvals?  You decide.

By Robert A. Dormer – 

In an August 2009 speech to the Food and Drug Law Institute, FDA Commissioner Margaret A. Hamburg, M.D., emphasized the importance of enforcement (see our previous post here).  Among other actions announced by Dr. Hamburg was a warning letter “close-out” process.  Dr. Hamburg stated that “[i]f the FDA can determine, usually based on a re-inspection, that a firm has fully corrected the violations raised in a warning letter, we will provide to the firm a “close-out” letter indicating that the issues in the warning letter have been successfully addressed.”  Dr. Hamburg stated further that FDA’s website would be updated to inform the public when a company receives a “close-out” letter.  The new warning letter “close-out” process applies to warning letters issued on or after September 1, 2009. 

Because more than a year and one-half has passed since the “close-out” process was implemented, we decided to look at FDA’s webpage to see how the process is working.  Recognizing that warning letters that have been issued recently would not be the subject of “close-out” letters because there would not have been sufficient time for a company to respond to the warning letter and for FDA to conduct a re-inspection to verify corrections, we looked only at the first four months of the warning letter “close-out” process, that is from September 1 through December 31, 2009.  What we found suggests that the “close-out” process is not working.  During the last four months of 2009, FDA issued a total of 241 warning letters.  As of May 9, 2011, only 43 (17.8%) of the warning letters are the subject of “close-out” letters. 

While all warning letters are serious, some of them have potentially more significant consequences than others.  For example, a warning letter about misleading promotional activities can be corrected quickly simply by discontinuing use of the violative promotional materials.  In contrast, warning letters alleging violations of current good manufacturing practices (“CGMPs”) for drugs and the quality system regulation (“QSRs”) in the case of medical devices have immediate and ongoing consequences.  Many CGMP/QSR violations cannot be corrected immediately but require longer term corrective actions to address FDA’s concerns.  Typically, a warning letter will contain a statement to the effect that FDA may withhold approval of requests for export certificates as well as approval of pending applications until the violations have been corrected.  In the case of foreign facilities, FDA is likely to issue an import alert to prevent products being brought into the United States.  Given these consequences, we looked to see whether drug and device companies that received GMP/QSR warning letters fared any better in terms of obtaining “close-out” letters.  There were 32 warning letters from September through December 2009 that are identified on FDA’s warning letter webpage as involving CGMP/QSR violations.  Of these, only 11 have been “closed-out.”  The shortest “close-out” time was approximately four months while the longest “close-out” time was more than 16 months.  Other than the one four-month “close-out” letter, all the other “close-out” GMP/QSR letters took a minimum of eight months from issuance of the warning letter to the “close-out” letter. 

We do not know why after over 18 months two-thirds of the warning letters issued for CGMP/QSR violations remain open.  Given the continuing effect on approvals, receiving a “close-out” letter should be a powerful incentive to industry to correct any violations observed by FDA even if corrective actions will take months to complete.  If a warning letter still remains open after a year and a half, however, it begs the question whether a company has serious regulatory problems that it has been unable to fix or whether FDA is incapable of conducting prompt follow-up inspections to confirm that corrections have been made.  In either event, the warning letter “close-out” process is not working as intended.  Neither industry nor the public is well-served by this uncertainty. 

By Cassandra A. Soltis –

In a May 6, 2011, letter to Dr. Margaret Hamburg, Commissioner of the U.S. Food and Drug Administration (“FDA” or “the Agency”), 10 congressional leaders requested the Agency to “take immediate action” against Brazilian Blowout Solution, Acai Professional Smoothing Solution, and other hair smoothing/straightening products “that have high levels of formaldehyde based on testing information already available.”  This letter follows Representative Earl Blumenauer’s October 5, 2010, letter to Dr. Hamburg, in which Rep. Blumenauer explained that testing by the Oregon Occupational Safety and Health Administration (“Oregon OSHA”) found “significant levels of formaldehyde in bottles of Brazilian Blowout Solution labeled ‘formaldehyde-free’” and requested FDA to investigate the issue. 

The most recent letter to FDA states that Oregon OSHA and the Oregon Health and Science University’s Center for Research on Occupational and Environmental Toxicology “confirmed” that both Brazilian Blowout Solution and Acai Professional Smoothing Solution “contained between 4.85% and 10.6% formaldehyde,” levels well above the 0.2% limit recommended by the Cosmetic Ingredient Review, which is an “industry-funded body tasked with reviewing the safety of ingredients in cosmetics.”  The letter also stated:  “Subsequent air monitoring of salons by federal Occupational Safety and Health Administration (OSHA) led the agency to issue a Hazard Alert warning salons not to use formaldehyde-based hair straighteners, and outlined strict requirements salons must follow if they want to continue their use.”  According to federal OSHA, formaldehyde may be listed on labels as methylene glycol, formalin, methylene oxide, paraform, formic aldehyde, methanal, oxomethane, oxymethylene, or CAS Number 50-00-0. 

In addition to requesting that FDA issue a “voluntary recall” of products containing high levels of formaldehyde, the congressional leaders asked that FDA continue to test hair straighteners for formaldehyde, require warnings on labels for such products that contain formaldehyde, investigate the labeling practices of companies marketing their products as formaldehyde-free, and review whether to ban formaldehyde and formaldehyde-releasing chemicals from hair products, “given the significant health hazard they pose.”

Other than color additives, FDA does not pre-approve cosmetics or cosmetic ingredients.  Although FDA does not have the authority to order a mandatory recall of cosmetics, the Agency can request companies to voluntarily recall products, and if the companies refuse, FDA can issue its own public notice describing the risk and recommending that recipients return the products.  In addition, FDA can take enforcement action, such as a seizure or injunction, if the Agency has evidence that the products are adulterated or misbranded.

Hyman, Phelps & McNamara, P.C., Director Josephine M. Torrente will be moderating a session at the Food and Drug Law Institute’s (“FDLI’s”) upcoming 1-day conference on Risk Evaluation and Mitigation Strategies (“REMS”), which were created under the 2007 FDA Amendments Act.  The FDLI conference, for which Ms. Torrente also served on the planning committee, is titled “Issues and Answers: Advancing Risk Evaluation and Mitigation Strategies and Benefit-Risk Management to the Next Level,” and will feature cutting-edge presentations by FDA and industry experts followed by panel discussions to further explore the implications of the presentations.  The conference will take place on May 19, 2011 at the Westin City Center in Washington, DC. 

Ms. Torrente’s panel session, titled “From Qualitative to Quantitative-Benefit Risk Models and Patient Perspectives,” will consider the pros and cons of the existing qualitative methods and the evolving quantitative models in REMS considerations.  Other panel sessions include “Advances in REMS Risk Communications,” “The State of REMS and Benefit Risk Management,” and “Measuring the Effectives of REMS Tools and Programs to Date.” 

Additional information on the FDLI conference, including registration information, is available on FDLI’s website here.