By Ricardo Carvajal –

Totally Wicked-E.Liquid (“TWI”), an importer and distributor of electronic cigarettes, filed suit to prevent FDA from regulating TWI’s electronic cigarettes as drugs, devices, or combination products, and from barring their importation into the U.S.  TWI claims that the nicotine in its product is derived from tobacco, and that the product is therefore subject to regulation as a tobacco product and not as a drug, device, or combination thereof – an issue that the D.C. Circuit Court of Appeals recently decided in industry’s favor.  TWI contends that “FDA’s actions in barring TWI’s imports, in addition to being ultra vires, are thus the very definition of ‘arbitrary and capricious.’”

By Peter M. Jaensch & John A. Gilbert –

Since the passage of the federal Combat Methamphetamine Epidemic Act in 2005 and state legislation adopted in most states around the same time, retail sales of over-the-counter (“OTC”) cold and allergy products containing pseudoephedrine (“PSE”) have been subject to strict controls.    These restrictions include daily and monthly purchase and sale gram limits, logbook requirements and other security measures such as requiring that the products be sold from “behind the counter.”   Two states, however – Oregon and Mississippi – have further restricted sales of these products by requiring they be dispensed only pursuant to a prescription and scheduling them as controlled substances under the states’ controlled substance laws.  Because of the continued concern about diversion of OTC PSE products, a number of states in this legislative season are contemplating taking similar action. 

Last year, Georgia, Illinois, Missouri, and Washington introduced similar bills requiring prescription-only purchases and scheduling the products as controlled substances – most did not emerge from committee review.  This year, in what seems to be a trend towards increased state regulation, the legislatures in Hawaii, Indiana, Kentucky, Tennessee and Virginia also recently introduced bills to schedule these substances and to require prescriptions in order to purchase products containing pseudoephedrine or other methamphetamine precursors.

These bills are similar in that they generally propose to schedule or reschedule all PSE products as controlled substances (e.g., Schedule III), thus requiring that the products only be dispensed pursuant to a prescription.  For example, in Hawaii, a senate bill introduced on January 20, 2011, adds “any material, compound, mixture, or preparation which contains any quantity of [pseudoephedrine]” to the list of substances classified as Schedule III controlled substances, and amends existing laws to eliminate provisions relating to the procedures for OTC sales of pseudoephedrine products.  In Indiana, Senate Bill 474 similarly classifies any “material, compound, mixture, or preparation that contains a quantity of  [ephedrine or pseudoephedrine]” as a Schedule III controlled substance, thus available only by prescription.  The bill was introduced on January 13, 2011, and to date has not been subject to a vote.

Of the new legislation we have reviewed to date, proposed legislation in Kentucky appears to be the most aggressive.  One bill would require that methamphetamine precursors such as ephedrine, pseudoephedrine, or phenylpropanolamine be classified as Schedule IV controlled substances, available only by prescription.  The proposed law would also prohibit any practitioner from dispensing more than 9 grams of such products to any one patient over a 30-day period and limits refills over a 30-day period.  In a competing bill, another Kentucky senator has introduced legislation that would create a registry of individuals convicted of felonies related to illicit use of precursor chemicals or methamphetamine.  Such individuals would be prohibited from purchasing PSE OTC products; however, the current draft of the legislation would exempt individuals who received the product by prescription.  This is similar to the current law in Oklahoma, which also has established a registry to block certain individuals from purchasing PSE.    

In Nevada, a state senator submitted a “Bill Draft Request” calling for a bill that would, “Require[]… products containing ephedrine, pseudoephedrine and phenylpropanolamine to be dispensed by prescription only unless the product is formulated to prevent conversion to methamphetamine.”  The Nevada legislature convened on February 7, 2011, and we are advised that a bill will be forthcoming.

The introduction of these state bills reflects a perception among the states that the current federal and state restrictions are not sufficient to prevent the diversion of PSE cold and allergy products.  It is unclear, however, whether requiring a prescription or scheduling the drug will make a difference in preventing diversion of PSE.  Such action will make it more difficult and costly for individuals to obtain these medicines for legitimate use.  We will continue to follow these and other similar state bills, and report on significant developments including whether there is any federal legislation introduced along these same lines.

By Kurt R. Karst –      

The tome that is the President’s Budget for Fiscal Year 2012 is chock-full of new proposals that, if implemented, would significantly affect both brand-name and generic drug manufacturers. 

What first caught our attention were some statements in an overview of the proposed FY 2012 budget for the Department of Health and Human Services that:

The Administration will accelerate access to more affordable pharmaceuticals that will lead to cost savings for consumers and health programs across the Federal Government.  The President’s Budget includes two proposals to increase availability of generic drugs by providing the Federal Trade Commission [(“FTC”)] authority to stop drug companies from entering into anticompetitive agreements intended to block consumer access to safe and effective generics, and hastening availability of generic biologics while retaining the appropriate incentives for research and development for the innovation of breakthrough products.

Another budget document, titled “Terminations, Reductions, and Savings” provides a little more detail on these proposals.  Both of these issues were topics discussed in President Obama’s 2009 10-year budget proposal.

With respect to patent settlement agreements, which opponents refer to as pay-for-delay agreements, the President’s Budget says that “[t]he Administration proposal would give the [FTC] the authority to prohibit pay-for-delay agreements in order to facilitate access to lower-cost generics.”  This is authority the FTC has craved for years now, and that according to President Obama’s budget proposal would yield savings of $8,790,000,000 between 2012 and 2021.  As we recently reported, in January, Senator Herb Kohl (D-WI), along with several other Senators, introduced S. 27, the Preserve Access to Affordable Generics Act.  The bill, like its predecessor versions introduced, amended, and debated in the 111th Congress, would amend the Federal Trade Commission 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.” 

With respect to the 12-year period of reference product exclusivity created by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), President Obama’s FY 2012 budget says that:

Under current law, innovator brand biologics have 12 years of exclusivity and broad “evergreening” authority, whereby innovator manufacturers are able to make relatively minor changes to the “potency, purity, and safety” of their products to receive an additional 12 years of exclusivity. 

Under the Administration proposal, beginning in 2012, innovator brand biologic manufacturers would have 7 years of exclusivity and would be prohibited from receiving additional exclusivity by “evergreening” their products. 

The Obama Administration estimates that the change in reference product exclusivity  would yield savings of $2,340,000,000 between 2012 and 2021.

The issue of so-called “evergreening,” which is the practice of obtaining additional periods of exclusivity for product modifications, along with the period of reference product exclusivity were hotly debated during consideration of what ultimately became the BPCIA.  According to a December 21, 2010 letter signed by the three principal authors of the BPCIA, evergreening is not a concern because the BPCIA “is clear that no product, under any circumstances, can be granted ‘bonus’ years of data exclusivity for mere improvements on a product.”  The letter goes on to note, however, that “if a ‘next generation’ product is approved by the FDA as a new product (significant changes in safety, purity, or potency) then that new biologic will receive its own 12-year period of data exclusivity.”

The President’s FY 2012 Budget (here beginning on page 227, and here beginning on page 437) also proposes the creation of new user fees. 

The first new fee is the much-ballyhooed generic drug user fee.  Under the President’s proposal, the generic drug user fee charge would be an amount not to exceed $40,122,000 and “would be used to improve review times and reduce the current backlog of applications.”  As we recently reported, the ANDA backlog in FDA’s Office of Generic Drugs (“OGD”) continued to grow unabated in 2010, for a grand total of 2,361 original ANDAs pending at the close of 2010, and with an estimated median approval time of 31 months.  (According to the latest OGD statistics, the ANDA review backlog dipped slightly in January 2011 to 2,356 original ANDAs; however, the number of ANDAs pending more than 180 days continued to grow, from 1,816 ANDAs to 1,836 ANDAs.)

The President’s FY 2012 Budget would also create a new “reinspection fee for medical products” in an amount not to exceed $14,108,000.  According to the proposal, “FDA conducts post-market inspections of manufacturers of human drugs, biologics, animal drugs, and medical devices to assess their compliance with Good Manufacturing Practice and other regulatory requirements. The Budget includes a proposal to enable FDA to assess fees for follow-up reinspections that are required when violations are found during initial inspections.”  President Bush made a similar proposal in his FY 2009 budget request. 

Finally, the Obama Administration’s budget proposal includes a new “international courier user fee” in an amount not to exceed $5,338,000.  According to the budget proposal, “[t]he volume of imports, predominantly medical products, being brought into the United States by international couriers is growing substantially. To ensure the safety of these FDA regulated products through increased surveillance efforts, the Budget includes a new user charge to international couriers.”

Each of the user fee proposals is contingent upon the enactment of authorizing legislation.  Generic drug user fees, along with generic drug labeling preemption, may be among the most talked about topics at the GPhA Annual Conference taking place in Orlando later this week.

By Jeffrey K. Shapiro –

FDA’s Center for Devices and Radiological Health (“CDRH”) has proposed the “Innovation Pathway Program” for breakthrough medical devices.  CDRH says it will review these products in 150 days or less, which the agency claims is nearly half the review time of most premarket approval (“PMA”) applications.  The first product in the program is from the Defense Advanced Research Projects Agency (“DARPA”).  It is a brain-controlled, upper-extremity prosthetic device, which uses a microchip implanted on the surface of the brain to restore near-natural arm, hand, and finger function to patients suffering from spinal cord injury, stroke, or amputation.

Color us skeptical.  Not about the DARPA product.  We’re talking about the Innovation Pathway Program.

First of all, this program even at its best will affect probably just one or two products each year.  In other words, it is a very narrowly focused program.

Second, for many years, CDRH has had an Expedited Review procedure in place to speed approval of “breakthrough technology.”  Even CDRH has admitted it has not very worked well. 

The Innovation Pathway apparently is intended to improve CDRH’s track record with innovative products.  It would work like this:  CDRH will issue an Innovation Pathway Memorandum with a proposed roadmap and timeline for the development, clinical assessment, and regulatory review of the device.  The product would be assigned a case manager and reviewed by the Center Science Council, which is a new oversight body being developed within CDRH.  The Council will consist of senior managers and experienced scientists. 

As with the Expedited Review program, enrollment in the Innovation Pathway Program would not change the scientific or regulatory standards that CDRH uses to review submissions and authorize products for marketing.

As we said, color us skeptical.  The DARPA brain controlled prosthetic obviously has amazing potential, and FDA likely would have rushed it through in any event.  We’ll know if this new program has any value if additional products actually start speeding down the Innovation Pathway.

It already looks like that won’t happen any time soon.  CDRH said it will now seek comments from the public on this pathway before it is used again.  CDRH will host a public meeting on the Innovation Pathway program on March 15, 2011 at FDA’s White Oak campus.

This public outreach suggests the program announcement has been designed around the single DARPA product, and is not ready for prime time.  There will be a delay just to hold a public meeting and then digest the comments and further revise the program.

All of which suggests that it will be quite some time before another product is so lucky as to be allowed to speed down the Innovation Pathway.

We would prefer that CDRH work on significantly reducing the review times for all products, for both innovative and same-old, same-old technology.  That would be an innovation CDRH could be proud of.

By Riëtte van Laack –

Over the past two years, we have noted several joint or coordinated actions by FDA and FTC.  The agencies issued their own warning letters to the same manufacturers at the same time (here and here), and, on several occasions, FDA and FTC issued joint warning letters (here and here).  A recent warning letter by FDA to a dietary supplement company suggests a surprising new joint approach by FDA and FTC.

The February 1, 2011 warning letter to Tennessee Scientific, Inc/Scientific Formulations LLC bears only the signature of the FDA District Director.  However, the letter cites not only violations of FDC Act, but also potential violations of the FTC Act, and cites FTC’s substantiation requirement for advertising claims that a product can prevent, treat, or cure human disease.  Moreover, the letter includes a threat of potential action by FTC.  The letter directs the recipient to respond to these concerns directly to the FTC.  The letter is further evidence (as if any were needed) of the close working relationship that has evolved between the two agencies. 

By Kurt R. Karst –      

Late last year, Impax Laboratories, Inc. (“Impax”) filed a Complaint in the U.S. District Court for the District of New Jersey seeking a judgment with respect to U.S. Patent No. 6,911,217 (“the ‘217 patent”).  The ‘217 patent is one of four patents listed in the Orange Book for Pfizer, Inc.’s (“Pfizer’s”) DETROL LA (tolterodine tartrate) Extended Release Tablets, 4mg and 2mg.  (The other patents are U.S. Patent Nos. 5,382,600 (“the ’600 patent”), 6,630,162 (“the ‘162 patent”), and  6,770,295 (“the ‘295 patent”), which expire on March 25, 2012, November 11, 2019, and August 26, 2019, respectively, but are each subject to a 6-month period of pediatric exclusivity.)  Impax’s Complaint requests that the court rule that the company’s proposed generic version of DETROL LA, which is the subject of ANDA No. 90-235 containing a Paragraph IV certification to each of the four Orange Book-listed patents, does not infringe any claim of the ‘217 patent. 

Impax, which is apparently not a first applicant eligible for 180-day exclusivity – FDA’s Paragraph IV Certification List says that the first ANDA containing a Paragraph IV certification for an Orange Book-listed patent covering DETROL LA was received as of July 30, 2007 – was sued a few years back based on the company’s Paragraph IV certifications to the ‘600, ‘162, and ‘295 patents, but was not sued on the ‘217 patent.  Pfizer subsequently granted Impax a covenant not to sue with respect to the ‘217 patent.  According to Pfizer’s recent Motion to Dismiss the Impax Complaint, which argues for dismissal based on, among other things, a lack of subject matter jurisdiction, another company is the only first applicant eligible for 180-day exclusivity. 

There has been quite a bit of patent infringement litigation over the DETROL LA Orange Book patents involving various ANDA sponsors.  We will not get into that here.  The bottom line is that with its declaratory judgment action, Impax is attempting to create a court decision to trigger 180-day exclusivity under the failure-to-market forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I).  Notably, however, FDA has not tentatively approved any ANDA for a generic version of DETROL LA.  While that does open the door to a possible forfeiture of 180-day exclusivity under FDC Act § 505(j)(5)(D)(i)(IV) for failure to obtain tentative approval within 30 months of ANDA submission, it also raises questions about the circumstances under which a subsequent ANDA sponsor can trigger a first applicant’s 180-day exclusivity.

Under the 180-day exclusivity failure-to-market forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I), there must be two events, or “bookends,” to calculate a “later of” event between items (aa) and (bb).  The first bookend date under item (aa) is the earlier of the date that is:

(AA) 75 days after the date on which the approval of the application of the first applicant is made effective under subparagraph (B)(iii); or

(BB) 30 months after the date of submission of the application of the first applicant

The other bookend – the (bb) part of the equation – provides that the (bb) date is “the date that is 75 days after the date as of which, as to each of the patents with respect to which the first applicant submitted and lawfully maintained a [Paragraph IV] certification qualifying the first applicant for the 180-day exclusivity period,” one of three events occurs:

(AA) In an infringement action brought against that applicant with respect to the patent or in a declaratory judgment action brought by that applicant with respect to the patent, a court enters a final decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that the patent is invalid or not infringed.

(BB) In an infringement action or a declaratory judgment action described in [FDC Act § 505(j)(5)(D)(i)(I)(bb)(AA)], a court signs a settlement order or consent decree that enters a final judgment that includes a finding that the patent is invalid or not infringed.

(CC) The patent information submitted under [FDC Act § 505(b) or (c)] is withdrawn by the holder of the application approved under subsection (b).

The (AA) and (BB) court decision events under item (bb) can be triggered in patent infringement litigation by “the first applicant or any other applicant (which other applicant has received tentative approval)” (emphasis added).  

FDA has not yet, to our knowledge, addressed the “which other applicant has received tentative approval” parenthetical at FDC Act § 505(j)(5)(D)(i)(I)(bb).  What is not clear from the statute is whether the order of events counts.  It seems there are three possibilities with respect to a subsequent applicant who obtains tentative approval:

The first possibility is if a subsequent applicant first obtains tentative approval and then a final court decision in its favor.  Under this scenario, the statute seems clear that the 75-day period under (bb) begins on the date of that final court decision.  The first applicant’s 180-day exclusivity would be forfeited 75 days later (provided there is an (aa) event), unless a first applicant commercially markets before the 75-day date. 

Indeed, this was the case with FDA’s recent approval of Teva’s ANDA No. 77-983 for a generic version of Lilly’s GEMZAR (gemcitabine for injection), 1 gram/Single-use Vial & 200 mg/Single-use Vial.  As a first applicant, Teva qualified for 180-day exclusivity.  Another, subsequent ANDA sponsor, Sun Pharmaceuticals, obtained tentative approval for its ANDA No. 78-433 on March 4, 2008.  Sun was involved in patent infringement litigation with Lilly with respect to a patent on which Teva qualified for 180-day exclusivity.  The district court ruled in Sun’s favor, and Lilly appealed to the U.S. Court of Appeals for the Federal Circuit.  In July 2010, a panel of Federal Circuit judges affirmed the district court decision.  Lilly petitioned the Court for a panel rehearing/rehearing en banc, which the Court denied on November 1, 2010.  On November 12, 2010, the Federal Circuit issued its mandate, and Lilly has reportedly now petitioned the U.S. Supreme Court to review the decision.  FDA considered the date of issuance of the mandate to be a final court decision for purposes of triggering the 75-day clock under FDC Act § 505(j)(5)(D)(i)(I)(bb).  The date that was 75 days after November 12, 2010, and the date a forfeiture of 180-day exclusivity would have occurred was January 26, 2011.  However, FDA approved ANDA No. 77-983 on January 25, 2011 – one day short of the 180-day exclusivity forfeiture date.

A second possibility is if the subsequent applicant first obtains a final court decision in its favor and then tentative approval.  Under this scenario, it is unclear when the 75-day period begins.  FDA could interpret the statute such that the 75-day period is retroactive to the date of the final court decision.  Alternatively, FDA could interpret the statute such that the 75-day period begins on the date on which the subsequent applicant completed the statutory criteria.  That is, the 75-day period would begin on the date the subsequent applicant obtains tentative approval. 

Finally, under a third scenario, a subsequent applicant could, as under the second scenario, first obtain a final court decision in its favor and then tentative approval.  But instead of triggering the 75-day date, FDA could interpret the statute such that the final court decision does not trigger the 75-day period.  Under this interpretation, the order of events is critical.  That is, for the 75-day period to be triggered, a subsequent applicant must have tentative approval at the time there is a final court decision.  If not, then under this interpretation, the a final court decision has no effect and there is not a (bb) bookend event to cause a forfeiture of 180-day exclusivity.    

So how does all of this tie into Impax’s declaratory judgment action concerning DETROL LA?  At this time, FDA has not tentatively approved Impax’s ANDA (or any other ANDA).  Admittedly, a final court decision may be far off, during which time FDA could very well grant tentative approval.  However, with what appears to be a growing  number of declaratory judgment actions to trigger 180-day exclusivity (see, e.g., here and here), the chances also grow that a final court decision could come at a time before FDA has granted tentative ANDA approval.  

By Susan J. Matthees –

Six inmates on death row in three different states sued FDA in the U.S. District Court for the District of Columbia over the importation of thiopental sodium, one of the drugs used by some states to administer a lethal injection.  The plaintiffs are asking for a declaratory judgment that imported thiopental is a misbranded, adulterated, and unapproved new drug and cannot be lawfully imported into the country, and that FDA’s recent actions allowing importation of foreign thiopental are contrary to law, arbitrary, capricious, and/or an abuse of discretion under the Administrative Procedure Act (“APA”).  The plaintiffs also seek a permanent injunction prohibiting FDA from releasing any future shipments of imported thiopental and an order compelling FDA to recover and remove from interstate commerce all shipments of foreign thiopental that have been released into interstate commerce in the last 12 months.

Thiopental, which was developed in the 1930s to induce general anesthesia, was manufactured in the U.S. until 2009.  Because thiopental is not available in the U.S., states using it for administration of the death penalty have been importing the drug from Europe and FDA has allowed that importation.  The complaint states that FDA must deny admission to imported thiopental because it is a misbranded, adulterated, and unapproved new drug.  The plaintiffs allege that imported thiopental is misbranded because it fails to include adequate warnings and other required information on the label, and because it was manufactured in a facility that has not registered with the FDA. The plaintiffs allege that imported thiopental is adulterated because it is not manufactured in accordance with FDA’s GMP regulations and it does not conform to the standard formulation established by the official United States Pharmacopeia. 

The complaint also alleges that FDA’s actions with regard to permitting the importation of thiopental are inconsistent with FDA’s regulations, procedures, and established practice.  As an example, the plaintiffs point to recent cases where states attempted to import foreign drugs from Canada and FDA intervened to prevent such importation.  The plaintiffs also cite several cases that upheld FDA’s decisions not to allow drugs to be imported by states. 

However, FDA has long taken the position that it will exercise enforcement discretion and defer to law enforcement on matters involving pharmaceuticals for lethal injection.  In 1985, the U.S. Supreme Court held in Heckler v. Chaney, 470 U.S. 821 (1985), that FDA does have discretion not to investigate or commence proceedings for violation of FDC Act § 331 (which prohibits introduction into commerce an adulterated or misbranded drug).  Plaintiffs distinguish Heckler from their case on the basis that Heckler does not address FDA’s obligations under FDA Act § 801, which directs FDA to refuse admission of a drug into the U.S. that appears to be adulterated or misbranded.  The plaintiffs also state that Heckler addressed the unapproved use of approved drugs, whereas their case is about the importation of an unapproved, adulterated, and misbranded drug.  Further, the complaint argues that FDA does not have discretion to allow unapproved new drugs to be shipped or sold in the U.S. and that FDA cannot permit the marketing of an unapproved new drug.

By Cassandra A. Soltis –

The Dietary Guidelines for Americans, 2010 (the 2010 Dietary Guidelines), released by the federal government last week, were clearly drafted with the U.S. obesity epidemic in mind.  In addition to encouraging consumers to exercise more and reduce calorie consumption, the guidelines call on consumers to eat more nutrient-dense foods and beverages, reduce sodium intake to less than 2,300 mg (and to 1,500 mg for certain at-risk populations), consume less than 300 mg per day of dietary cholesterol, limit foods containing synthetic sources of trans fats, and reduce the intake of calories from solid fats and added sugars. 

Although the 2010 Dietary Guidelines are intended to help form federal nutrition policy and provide guidance to be used by nutrition educators and health professionals, in effect, they are a signal to food manufacturers regarding the type and quality of food that consumers, whether currently health-conscious or not, may well be seeking. 

Recent federal and state government efforts to address the obesity epidemic have created fertile ground for healthy food product innovation.  For example, the Healthy, Hunger-Free Kids Act of 2010 authorizes USDA to set nutritional standards for foods sold in schools, including vending machines, lunch lines, and school stores.  Combating the problem from a different angle, Alabama’s State Employees’ Health Insurance plan provides a financial incentive to workers taking steps to improve their blood pressure, cholesterol, glucose, or body mass index readings, if their measurements are deemed to put them “at risk.”  Employees can receive a health insurance discount if, for example, they participate in a wellness management program.

Creating palatable healthful foods that meet the criteria of the guidelines undoubtedly presents some food design challenges:  American consumers are known for their love of sugar-laden beverages and high-fat and high-sodium meals.  Nevertheless, consumer education about nutrition, combined with health insurance and other incentives to obtain (and maintain) a healthy weight, seems likely to lead more consumers to seek the types of foods described in the new dietary guidelines.  Food manufacturers that can make nutritious foods without sacrificing taste should benefit.

By Peter M. Jaensch –

In what appears to be yet another example of a consumer fraud class action that cites alleged  violations of the FDC Act and its implementing regulations, on February 1, 2011, Athena Hohenberg filed a class action lawsuit in U.S. District Court for the Southern District of California against Ferrero U.S.A., Inc. (“Ferrero”), the manufacturer of the popular hazelnut and cocoa spread, Nutella®, alleging violations of California law based upon Ferrero’s allegedly false and misleading labeling and advertising of Nutella® as part of a “balanced breakfast.”  The Complaint also cites Ferrero’s use of photographs depicting mothers feeding Nutella® to their healthy-looking children, and statements on the label of the product that Nutella® is “‘[a]n example of a tasty yet balanced breakfast’ in association with a picture showing fresh fruits, whole wheat bread, and orange juice” as examples of false, deceptive, and misleading advertising of Nutella® in light of plaintiff’s allegation that Nutella® “contains about 70% saturated fat and processed sugar by weight” and “the same amount of saturated fat as a Twix Ice Cream bar.” Consequently, plaintiff claims, health-conscious consumers were duped into paying more for Nutella® than they would have been willing to pay had they known its true nutritional value.

In addition to unspecified damages, attorney’s fees, and punitives, Ms. Hohenberg seeks an order from the Court “compelling Ferrero to (1) cease marketing its products using the misleading tactics complained of [in the Complaint], (2) conduct a corrective advertising campaign, (3) restore the amounts by which Ferrero was unjustly enriched, and (4) destroy all misleading and deceptive materials and products.”

By the way, you can have your Nutella® and your ice cream too. CAUTION: Choco-Hazelnut Ice Cream is not a salad.

By Anne K. Walsh –

Eleven months after telling Senator Grassley (in a letter available here) that “[c]riteria now have been developed for consideration in selection of misdemeanor prosecution cases and will be incorporated into the revised policies and procedures that cover appropriate use of misdemeanor prosecutions,” FDA just last week finally released those criteria.  The idea behind such criteria is to increase misdemeanor prosecutions against corporate officials under the Park doctrine. 

As the amount of penalties paid by corporations for violations of the Federal Food, Drug, and Cosmetic Act ("FDCA") has increased, there has been a corresponding increased focus on deterring continued violations by holding individuals responsible.  Under the theory derived from the U.S. Supreme Court case of United States v. Park, 421 U.S. 658 (1975), a progeny of United States v. Dotterweich, 320 U.S. 277 (1943), a corporate official can be convicted of a misdemeanor based solely on his position of responsibility and control to prevent the underlying violation of the FDCA.  There is no requirement that the official acted personally in the wrongdoing, or that he even had knowledge of it.  The Supreme Court determined that the FDCA “imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.”  Park, 421 U.S. at 672.

While we are grateful to finally have a glimpse into the criteria, there are numerous problems with them.  First, the non-binding nature of these criteria provides no guidance or comfort to individuals who are potentially subject to Park liability.  FDA goes to great lengths to state that the criteria “do not create or confer any rights or benefits for or on any person, and do not operate to bind FDA.  Further, the absence of some factors does not mean that a referral is inappropriate where other factors are evidence.”  So the criteria are not really criteria at all.

More significantly, there is nothing groundbreaking or enlightening contained in the criteria.  The seven listed criteria (see here under "Special Procedures and Considerations for Park Doctrine Prosecutions"), in addition to the individual’s position in the company and relationship to the violation, and whether the official had the authority to correct or prevent the violation, include:

(1) whether the violation involves actual or potential harm to the public;
(2) whether the violation is obvious;
(3) whether the violation reflects a pattern of illegal behavior and/or failure to heed prior warnings;
(4) whether the violation is widespread;
(5) whether the violation is serious;
(6) the quality of the legal and factual support for the proposed prosecution; and
(7) whether the proposed prosecution is a prudent use of agency resources.

These criteria are the same as those considered in any decision of whether to proceed criminally, misdemeanor or felony.  They are hardly unique to this incredibly stringent strict liability standard against responsible corporate officials.  Indeed, FDA refuses to provide any examples of “either the categories of persons that may bear a responsible relationship to a violation or the types of conduct that may be viewed as causing or contributing to a violation.” 

Lastly, while it may make FDA feel powerful to articulate principles for prosecution, the true power and authority for proceeding criminally lies with the U.S. Attorneys’ Offices throughout the country and the Department of Justice.  The enforcement discretion ultimately lies with the prosecutors, despite whether the criteria laid out by FDA are satisfied. 

Thanks to our colleagues at Ropes & Gray for being persistent in their FOIA request for the publication of these criteria.  While it is generally helpful to see the factors for criminal prosecution under the Park doctrine published in FDA’s Regulatory Procedures Manual, the public has waited a long time for an obvious statement of factors that the Supreme Court, subsequent case law, and DOJ policy has already made clear.  

ADDITIONAL READING:

• HP&M's FDA and the Park Doctrine Slide Presentation
• FDLI Update article 

By Kurt R. Karst –      

The drama in the decade-old fight 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) has taken yet another turn.  The U.S. Court of Appeals for the Federal Circuit has denied MDCO’s Motion to Dismiss or, in the Alternative, to Bifurcate and Stay in Part APP Pharmaceuticals, LLC’s (“APP’s”) appeal related to Judge Claude M. Hilton’s August 3, 2010 decision. 

Briefly, FDA approved ANGIOMAX at 5:18 PM on Friday, December 15, 2000 under New Drug Application (“NDA”) No. 20-873, 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.  Under 35 U.S.C. § 156(d)(1), the submission of a PTE application must occur “within the sixty-day period beginning on the date the product received permission under the provision of law under which the applicable regulatory review period occurred for commercial marketing or use.”  In his August 3rd decision, Judge Hilton of the U.S. District Court for the Eastern District of Virginia (Alexandria Division) granted MDCO’s Motion for Summary Judgment and ordered the U.S. 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, making December 18, 2000 the operative date for beginning the 60-day period instead of December 15, 2000.  (See our previous post for additional background on the case.)  The PTO proceeded to request that FDA determine the regulatory review period with respect to MDCO’s PTE application for the ‘404 patent, and FDA issued a notice in December 2010 with its determination.  The ‘404 patent is currently listed in FDA’s Orange Book with an August 13, 2011 expiration date, and is subject to a period of pediatric exclusivity that expires on February 13, 2012.
 
On September 1, 2010, APP, which had submitted an amicus brief in the Virginia district court, and is pursuing approval of an Abbreviated NDA, filed an anticipatory Notice of Appeal to the Federal Circuit once the government bowed out of the litigation and decided not to appeal Judge Hilton’s decision to the Federal Circuit.  APP had filed a Motion to Intervene in the district court case in August.  Judge Hilton denied APP’s Motion to Intervene on September 13, 2010 without addressing standing on the basis that APP should have sought intervention earlier, and that allowing intervention at that point would unfairly prejudice MDCO.  So on to the Federal Circuit, where APP proceeded to file an amended Notice of Appeal challenging not only the district court’s September 13th intervention decision, but also the underlying merits decision.

MDCO argued in its motions that the Federal Circuit should either straight out deny APP’s appeal for lack of either prudential standing or Article III standing, or, in the alternative, “bifurcate (1) APP’s appeal of the district court’s September 13, 2010 order, which denied its motion to intervene (the ‘intervention appeal’), and (2) APP’s appeal of the district court’s August 3, 2010 order, which addressed the merits of MDCO’s underlying claims and found in MDCO’s favor (the ‘merits appeal’).”  APP responded that the company does have standing and that MDCO’s request to bifurcate the appeal would be a waste of judicial resources.  MDCO reasserts in its brief reply that APP does not have standing, noting, for example that “APP is not in a position to enter the market even in the absence of the ‘404 patent because it has not even received tentative FDA approval, which is a necessary precondition to lawfully marketing its drug.”

In a 2-page February 2nd Order, the Federal Circuit denied MDCO’s motions, stating that “[t]he court deems it the better course for the parties to put their arguments concerning standing and any other issues in their briefs without directing that briefing be bifurcated.”  We assume that the “any other issues” language in the Order means placing the underlying merits decision on the table.  So here we go again folks with a new chapter in the ANGIOMAX PTE saga.  Stay tuned.

By Kurt R. Karst –     

The ANDA backlog in FDA’s Office of Generic Drugs (“OGD”) continued to grow unabated in 2010.  OGD started out the year with a backlog of 1963 original applications and ended the year up almost 400 applications, for a grand total of 2361 pending original ANDAs.  The backlog has, not surprisingly, affected median ANDA approval times.  As we previously reported, in Fiscal Year 2009, OGD’s median ANDA approval time was 26.70 months.  That was up about 5 months compared to Fiscal Year 2008 when the median was 21.65 months.  At the end of calendar year 2010, we understand that the median ANDA approval time (which includes tentative approval actions) was hovering around 31 months.  That has got to give some folks in industry indigestion, as 180-day exclusivity can be forfeited if an ANDA sponsor fails to obtain tentative ANDA approval within 30 months of application submission.  FDA’s position has been that the Agency’s failure to timely grant tentative approval does not save an ANDA sponsor from forfeiture.

In 2010, we reported that OGD had quietly placed a hold on ANDA prior approval supplement reviews and approval actions until further notice (with some exceptions) to focus instead on original ANDA submissions (and minor amendments).  It is unclear the extent to which that hold reduced the ANDA backlog, but we are happy to report that we have heard that the hold has been lifted and supplement reviews and approval actions are progressing.  

In looking at OGD’s latest statistical figures, what is perhaps most concerning with the ANDA backlog is the tremendous recent growth of original ANDAs pending more than 180 days.  As shown in the table below, OGD started out 2010 with 1154 applications pending more than 180 days, and ended the year with 1816 applications pending more than 180 days.

 
What is so magical about 180 days?  Well, FDC Act § 505(j)(5)(A) states that “[w]ithin one hundred and eighty days of the initial receipt of an [ANDA] or within such additional period as may be agreed upon by the Secretary and the applicant, the Secretary shall approve or disapprove the application.”  Of course, FDA rarely ever meets that statutory requirement.

The tables above and below show that from 1997 to 2009, the number of original ANDAs pending more than 180 days fluctuated from less than 100 ANDAs to about 600 ANDAs.  Beginning in 2009, however, that number began to shoot up month-by-month.

Chemistry Manufacturing, and Controls (“CMC”) Supplements and Labeling Supplements pending more than 180 days have seen a similar rise, as the tables below show; however, FDA has noted that “abrupt changes in the level of pending [CMC] supplements are the result of global submissions to all applications held by a single firm.”

 
Why did things change beginning in 2009?  We don’t know exactly.  As shown below, the number of original ANDAs OGD receives each year (since 2005) has remained relatively stable.  (Interestingly, December is consistently the month in which OGD gets the greatest number of original ANDA submissions.)

Will new OGD leadership, additional funding, or generic drug user fees change the prospects for speedier ANDA reviews?  That remains to be seen. 

After serving as OGD Director for many years, Gary Buehler left FDA last year after being reassigned to the Office of Pharmaceutical Science to take an industry job.  Dr. Keith Webber has served as OGD’s Acting Director since Mr. Buehler’s reassignment.  FDA has been searching for a permanent Director.  We understand that the Agency has vetted several candidates and hopes to announce a permanent OGD Director in March. 

Although the 111th Congress considered omnibus appropriations bills that would have provided FDA (including OGD) with budget increases, ultimately, President Obama signed into law a stop-gap spending bill that kept FDA funded at Fiscal Year 2010 levels until early March.  With the current economic and political environments, it could be difficult to procure additional funding for FDA. 

That leaves us with generic drug user fees.  Last September, FDA held a public meeting to gather stakeholder input on the development of a generic drug user fee program.  FDA is still considering the various user fee proposals set forth by industry.  While folks are hopeful that a generic drug user fee system will provide greater review process predictability, user fees are not a panacea for addressing the ANDA backlog.  It will likely take several years after the implementation of a user fee system to bring the ANDA review queue under control, as new reviewers will have to be hired and trained.

In his recent article appearing in FDLI Update, Hyman, Phelps & McNamara, P.C. Associate Peter M. Jaensch discusses the increasing use of the False Claims Act ("FCA") to privately prosecute what are actually violations of the FDC Act, and examines the allegations underlying the recent GlaxoSmithKline ("GSK") settlement, in which GSK agreed to pay $750 million to resolve claims based on violations of current good manufacturing practices ("cGMP"). He proposes that the GSK case represents a clear case of private enforcement of the FDC Act, and argues that the Government’s willingness to press the FCA suit on the basis of what were plainly cGMP violations was shortsighted and increases the likelihood of conflicting precedents.

By Ricardo Carvajal –

Senator Patrick Leahy (D-VT) reintroduced legislation to strengthen criminal penalties for food safety violators in the form of the Food Safety Accountability Act of 2011.  As with the version of the bill introduced last year, the current version would amend Title 18 of the U.S. Code (Chapter 47 – Fraud and False Statements) to add section 1041 (Misbranded and adulterated food), but there have been significant changes.  First, the scope of violations covered by this year’s version of the bill is broader.  Whereas last year’s version of the bill encompassed violations akin to those referenced in FDC Act § 301(a) and (b), this year’s version references the prohibited acts listed in § 301(a), (b), (c), and (k).  Second, the news isn’t all bad for would-be defendants because this year’s version of the bill raises the bar for prosecutors.  Whereas last year’s version would have penalized those who “knowingly” commit certain violations, this year’s version would require the government to show that certain prohibited acts were committed “knowingly and intentionally to defraud or mislead” and “with conscious or reckless disregard of a risk of death or serious bodily injury.”  One thing that hasn’t changed is the penalty for violations, which would carry a fine and/or imprisonment for not more than 10 years.

By Kurt R. Karst –      

FDA’s Office of Orphan Products Development (“OOPD”) was busy in 2010!  According to recent data obtained by FDA Law Blog, after a banner year in 2009 in which OOPD surpassed the 2,000 orphan drug designation mark and designated a near-record 160 products for orphan (i.e., rare) diseases and conditions, in 2010, the Office saw a record 323 orphan drug designation requests come through the door and granted 192 designations (for a grand total of 2308).  Despite the intense interest in orphan drugs, however, FDA approved only 14 orphan products in 2010, according to data taken from OOPD’s recently updated orphan drug designation database.  That figure is down from 17 approvals in 2009, and from a 1996 high of 25 approvals. 

It is unclear why, exactly, there was such an increase in orphan drug designations and requests in 2010.  One explanation might be OOPD’s public outreach efforts.  The Office has held a series of workshops on orphan drug designation, and just announced another one last week that will take place from February 28 – March 1, 2011 in Claremont, California.  OOPD also created the Rare Disease Repurposing Database (“RDRD”) in 2010.  The RDRD “offers sponsors a new tool finding special opportunities to develop niche therapies that are already well-advanced through development.” 

The tables below illustrate OOPD’s designation and FDA’s orphan drug approval track record since the enactment of the Orphan Drug Act in 1983.

 
And while we’re on the topic of orphan drug education efforts, we’ll put in a plug for North America’s first industry-led orphan drug conference – the World Orphan Drug Congress USA.  The conference will be held in Washington, D.C. from April 12-15.  Hyman, Phelps & McNamara, P.C. is an associate sponsor of the conference.  Additional information on the conference is available here.