By Ricardo Carvajal –

At FDA’s public meeting on the food import safety provisions of the Food Safety Modernization Act ("FSMA") (see our prior blog posting here), the challenges posed by implementation of those provisions started to take shape.  Presentations by agency personnel, industry representatives, and consumer advocates highlighted the following issues (among many more):

    ◦    limited agency funding and personnel
    ◦    tight statutory deadlines
    ◦    ambiguous statutory terms
    ◦    integration of, or harmonization with, existing standards
    ◦    addressing reliability of third-party audits
    ◦    potential adverse effects on small and medium size businesses
    ◦    impact on competitiveness and efficiency

There was genuine enthusiasm for the possibility that certain aspects of the law, such as the Voluntary Qualified Importer Program, could help smooth the importation process for some importers.  However, there was also concern that the Foreign Supplier Verification Program requirements could prove unduly burdensome for others.  Much will depend on how the agency resolves perhaps the most fundamental issue of all – who qualifies as an importer?

You can read the Deputy Commissioner for Foods' take on the new paradigm for importers here.

By Riëtte van Laack –

Approximately three years ago, the Federal Trade Commission ("FTC") filed a complaint against Daniel Chapter One and James Fijio (“DCO”) for the advertising of four dietary supplements as cures for various cancers.  The FTC ruled that DCO’s claims were deceptive and ordered that DCO discontinue its marketing practices and notify its customer that the FTC had determined that DCO’s claims for the dietary supplements were deceptive.  Nevertheless, DCO allegedly continued to advertise its dietary supplements as cancer cures. 

In August 2010, the Department of Justice ("DOJ"), on behalf of the FTC, filed a complaint seeking civil penalties (up to $ 16,000 per violation), consumer redress, and a preliminary and permanent injunction in the U.S. District Court for the District of Columbia.  However, because at the time of filing DCO’s appeal of the FTC ruling was pending, the new action was stayed.  Since the Court of Appeals upheld the FTC ruling (see our previous post here), the stay has been lifted.  On March 11, 2011, DOJ resumed its efforts against DCO by moving forward with the action mentioned above.  Meanwhile, DCO has indicated that it intends to petition the U.S. Supreme Court.

By Kurt R. Karst –      

Late last week, Par Pharmaceutical, Inc. (“Par”) filed a Complaint in the U.S. District Court for the Eastern District of Pennsylvania seeking a declaration that two recently issued patents – U.S. Patent Nos. 7,858,122 (“the ‘122 patent”) and 7,863,316 (“the ‘316 patent”) (both titled “Extended Release Formulation of Levetiracetam”) – are invalid.  Par’s declaratory judgment action appears to be geared to obtain a final court decision that would trigger a forfeiture of 180-day exclusivity eligibility under the FDC Act’s so-called failure-to-market forfeiture provisions at § 505(j)(5)(D)(i)(I) for the first applicant to have submitted an ANDA for a generic version of KEPPRA XR (levetiracetam) Extended-Release Tablets containing a Paragraph IV certification.

FDA approved KEPPRA XR under NDA No. 22-285 on September 12, 2008 and granted the NDA sponsor a period of 3-year new dosage form exclusivity that expires on September 12, 2011.  At that time, U.S. Patent No. 4,943,639 (“the ‘639 patent”), which had already expired, but was subject to a period of pediatric exclusivity set to expire on January 14, 2009, was listed in the Orange Book.  (The ‘639 patent was also listed in the Orange Book for the immediate-release version of levetiracetam, KEPPRA, under NDA No. 21-872.)  Because no generic sponsor submitted an ANDA to FDA for a generic version of KEPRA XR containing a Paragraph IV certification to the ‘639 patent, 180-day exclusivity remained available with respect to a later-listed patent. 

On December 28, 2010, the U.S. Patent and Trademark Office issued the ‘122 patent; however, the patent was not submitted to FDA for Orange Book listing until January 7, 2011 (but it is still considered timely listed).  (The listing appears to have given rise to a discussion of so-called “anticipatory Paragraph IV certifications” on the popular Linked-In Hatch-Waxman ANDA Litigation Forum managed by Steve Auten.)  Upon Orange Book listing, FDA showed the ‘122 patent with a period of pediatric exclusivity (in the printed annual edition of the Orange Book), but the Agency later determined that to be erroneous (as shown in the current electronic version of the Orange Book).  Curiously, the ‘316 patent, which was issued on January 4, 2011, and which, as noted above, has the same title as the ‘122 patent, was not submitted to FDA for Orange Book listing.  Why?  Your guess is as good as our guess.  Anyhow, the timely Orange Book listing of the ‘122 patent created the possibility of 180-day marketing exclusivity for the first generic applicant(s) to submit a Paragraph IV certification – either in an original ANDA, or, more likely, as an amendment to a pending ANDA.  Clearly, someone decided to do so (and was probably submitting anticipatory Paragraph IV certifications since the ‘122 patent issued), as FDA’s Paragraph IV Certification List was recently updated to show a Paragraph IV submission date of January 7, 2011.  (It is unclear at this time who is a first applicant.  In addition to Par’s pending ANDA, FDA tentatively approved Torrent’s ANDA No. 91-338 on November 17, 2010.)

Par, which almost certainly has a pending ANDA for generic KEPPRA XR (based on statements in the company’s March 23rd Complaint), appears to have missed the patent certification boat.  Instead of amending its ANDA to include a Paragraph IV certification and simultaneously providing notice when the ‘122 patent was listed in the Orange Book on January 7, 2011, Par apparently amended its ANDA and provided notice of its Paragraph IV certification to the ‘122 patent to the NDA holder/patent owner on January 10th and 13th, according to the company’s Complaint.  But there might be another way for Par to skin this cat.  By obtaining a final court decision that the ‘122 patent is invalid (via the company's declaratory judgment action brought after the NDA holder/patent owner failed to sue for patent infringement within the statutory 45-day period), and provided Par has tentative ANDA approval, which the company says in the Complaint it expects to receive within 30 months of ANDA submission, Par could trigger a bookend event under the (bb) failure-to-market forfeiture provisions. 

We recently discussed the bookend events under the FDC Act’s failure-to-market 180-day exclusivity forfeiture provisions and some of the potential interpretations and outcomes based on tentative approval timing.  Par’s KEPPRA XR declaratory judgment Complaint is yet another example of what appears to be a growing number of declaratory judgment actions to trigger the forfeiture of 180-day exclusivity eligibility. 

Hyman, Phelps & McNamara's Jeffrey N. Wasserstein (co-founder of the FDA Law Blog) will be moderating a panel on social media and therapeutic products at the FDLI Annual Meeting, April 5-6, 2011, at the Ronald Reagan International Trade Center, in Washington, DC.  The panel will discuss current and future regulatory issues with using social media tools to market therapeutic products. With expected guidance coming this year from FDA, now is the time to become current with the issues. Companies with therapeutic products should also look to the Federal Trade Commission ("FTC") for guidance and potential enforcement actions.  Speakers include Glenn Byrd, MBA, RAC, of MedImmune, LLC (formerly of CBER's Advertising and Promotional Labeling Branch), Stacey Ferguson, an attorney with the Federal Trade Commission, Division of Advertising Practices, Bureau of Consumer Protection, and Jeffrey Senger, former Deputy Chief Counsel and Acting Chief Counsel of FDA, now at Sidley Austin LLP.  The full conference agenda and sign-up information can be found at: http://www.fdli.org/conf/annual/11/agenda.html.

By Alan M. Kirschenbaum –

Today drug and device manufacturers and other stakeholders had an opportunity to provide comments to CMS during an Open Door Forum teleconference on how the physician payment sunshine provisions of the Patient Protection and Affordable Care Act ("ACA") should be implemented.  As explained in our memo summarizing the drug and device provisions of the ACA, section 6002 of that statute requires each manufacturer of a covered drug, device, biological, or medical supply that is operating in the U.S. or its territories or  possessions annually to electronically report information on payments or other transfers of value made during the prior year to physicians and teaching hospitals.  The first report must be submitted by March 31, 2013 for payments made in calendar year 2012. 

CMS officials were in self-described listening mode during the Open Door Forum, and did not provide any guidance or answer any questions on how the law will be implemented, other than to say that the agency will initiate notice and comment rulemaking with a proposed regulation later this year.  The purpose of the session was to enable CMS to be more focused in its initial proposal.  CMS sought comments during the call on several pre-published questions, which fell into three general categories.

The first category of questions asked whether CMS should require disclosure of additional forms of payment and additional specific categories of payments beyond those specified in the statute.  The unanimous consensus of participants on the call, which included representatives from PhRMA, BIO, and AdvaMed, was that no new requirements should be added, but CMS should instead focus on establishing clear rules for disclosure of the 14 categories of payments already required by statute.  Participants emphasized the need for narrow and detailed definitions of reportable categories in order to ensure uniformity of reporting, prevent double counting of payments, and avoid confusion on how to report payments that conceivably might fall into multiple categories.  Examples were given of travel expenses paid to researchers to attend an investigator meeting, which might be considered payments for either research or travel, or payments to members of a data safety monitoring board, which might be viewed as either research payments or consulting fees.

The second category of CMS questions focused on usability of the reported data by the public.  Industry trade association representatives all emphasized that the published data reports must be accompanied by background material explaining the vital role of industry-physician interactions in contributing to the design and development of products, the conduct of research, the training and education of practitioners in products and their uses, and other facets of appropriate product use.

Thirdly, CMS asked questions concerning the format of submissions and the process for corrections.  Participants recommended the spreadsheet submission format currently used by states, with CMS specifying the reporting template.  Several participants urged that manufacturers should have a mechanism for checking CMS’ reports on their payments before the reports are posted on the CMS web site, and at any time after they are posted.

Manufacturers and other stakeholders may submit feedback on CMS’s questions by sending an email to physiciansunshine@cms.hhs.gov by April 7.  Manufacturers will have an opportunity to comment on CMS’ proposed rule when it is issued, but early input at this stage will help ensure that the proposed regulation is clear, appropriately detailed, and balanced.

By Nisha P. Shah & Alan M. Kirschenbaum –

In an unusual step, the State of California’s Department of Insurance intervened in a qui tam lawsuit brought against Bristol-Myers Squibb (“BMS”) by three former employees, including a former member of the L.A. Lakers.  In The People ex rel. Wilson v. Bristol-Myers Squibb, Inc., the employees claim that BMS paid kickbacks to physicians and pharmacists to increase prescriptions and dispensing of the company’s drugs.  The complaint alleges that BMS caused the submission to private insurers of fraudulent claims that were induced by payments of these kickbacks, in violation of the state’s Penal Code and Insurance Code.

BMS allegedly paid kickbacks to physicians who were high prescribers of the company’s drugs as well as physicians on formulary committees and physician practice groups.  Kickbacks described in the complaint included gifts, liquor, gift cards, entertainment and sporting event tickets, participation in two L.A. Lakers “Dream Camps”, high-end dinners, trips to resorts, and cash payments disguised as grants and fees for preceptorships, consulting, advisory boards, and speaker bureaus.  BMS also allegedly provided gift cards and meals to pharmacists to induce them to fill prescriptions with BMS products rather than generic equivalents.  The plaintiffs and the Department of Insurance are seeking monetary penalties and the disgorgement of millions of dollars in profits stemming from the kickbacks, plus treble damages.   

Kickback allegations against pharmaceutical companies have become commonplace in recent years, but the cases have generally been brought under antikickback and false claims laws applicable to federal and state health care programs.  What is unusual here is that the claims are brought under state insurance fraud laws with the participation of the state Insurance Commissioner, and they are based on allegations that private insurance plans – not government programs – have been defrauded.  According to the complaint, BMS caused false claims to be submitted to insurance policies in violation of Cal. Penal Code Section 550.  The plaintiffs also make creative use of California’s runners and cappers statute, Cal. Ins. Code § 1871.7, which prohibits the knowing employment of “runners, cappers, steerers … to procure clients or patients … to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.”  BMS allegedly violated this law by “employing” physicians by paying them kickbacks in order to “procure clients or patients . . . to obtain services or benefits” under an insurance contract, and by employing sales representatives to give kickbacks to physicians to generate prescriptions that would be paid by private insurers.  We may see other states follow California’s lead in using state insurance laws – especially those authorizing whistleblower suits – as a prosecutorial weapon against drug manufacturers.

By JP Ellison –

The criminal prosecution of Lauren Stevens, the former in-house counsel for GSK, took another twist yesterday when Judge Titus dismissed her indictment without prejudice.  We have previously reported on this prosecution here and here.  Judge Titus found that the prosecutors' explanation to the grand jurors of the "advice of counsel" defense was erroneous because the government instructed the grand jurors that advice of counsel was an affirmative defense to be raised at trial.  The court said that instruction was erroneous because the advice of counsel defense can negate the intent that must exist for the crimes charged, and thus goes to the question of whether there is probable cause for the charges, a determination that the grand jury must make.  The court further ruled that the incorrect instruction raised "grave doubts that the indictment was free from the substantial influence" of  the error, which required dismissal of the indictment.  Because the court did not find prosecutorial misconduct, the dismissal was without prejudice.

It is not clear what effect this ruling will have on the prosecution.  The government's options include, but are not limited to, appealing from the district court's decision; or as the district court allowed, presenting evidence to a new grand jury instructing that grand jury  on the advice of counsel defense in accordance with the court's opinion.

Have you been looking for that one, comprehensive publication that covers intellectual property and patent law issues in the pharmaceutical, biotechnology and chemical industries from around the world’s key jurisdictions?  Well, it’s finally here – or will be in the next month or so when the Oxford University Press (“OUP”) publishes its 2-volume, 2,536-page “Pharmaceutical, Biotechnology and Chemical Inventions – World Protection and Exploitation.” 

The publication, which has been a massive undertaking and in the works for a couple of years, is edited by Duncan Bucknell, the founder and CEO of Think IP Strategy, a global intellectual property strategy firm.  Hyman, Phelps & McNamara, P.C.’s Robert A. Dormer and Kurt R. Karst contributed to the publication, providing the United States aspect on various product approval and patent and exclusivity issues.  A list of all contributors is provided below.  Quite a world class-group!

Here’s a synopsis of the publication provided by OUP:

This book highlights the special issues arising in obtaining, commercialising, enforcing or attacking intellectual property rights (including protection of regulatory data) in the pharmaceutical, biotechnology and chemical industries across the world's key jurisdictions. It is unique in presenting topic matter horizontally by subject to facilitate comparison between country practices. The first two chapters give a general introduction to the differences between the jurisdictions and an overview of some of the key concepts in patent law. The remainder of the book is dedicated to a detailed analysis of the major legal issues arising in these areas of technology. Each component chapter has a comparative introduction, looking at the variances in the laws of different domains, followed by side-by-side analysis of the relevant regimes, including tables and flow-charts which summarise and explain the key legal concepts. The jurisdictions covered are the United States, Europe (UK, Germany, Netherlands, France and Italy), Japan, Canada, Australia, India and China.

OUP has kindly granted FDA Law Blog readers a 20% discount.  To claim your discount, just click here (or call OUP at +44 (0) 1536 741727) and use the code “ALBUCK10.”  (Note: This offer is only available on orders placed directly with OUP and is not available through any other supplier.)

Contributors:
Pravin Anand, Anund and Anund, India
John Bateman, Kenyon & Kenyon, USA
Susan Beaubien, Moffat & Co, Macera & Jarzyna LLP, Canada
Theo Bodewig, Humboldt University, Germany (Consultant Editor)
Simon Cohen, Taylor Wessing, UK
Wayne Condon, Griffith Hack, Australia
Marina Couste, Howrey LLP, France
Robert A. Dormer, Hyman, Phelps & McNamara, P.C., United States
Atsushi Hakoda, Nakamura & Partners, Japan
Juany Huang, Panawell and Partners LLC, China
Reuben E. Jacob, R. G. C. Jenkins, UK
Fabrizio Jacobacci, Studio Legale Jacobacci & Associati, Italy
Kurt R. Karst, Hyman, Phelps & McNamara, P.C., United States
Klaus Kupka, Taylor Wessing, Germany
David C. Musker, R. G. C. Jenkins, UK
Cyra Nargolwalla, Cabinet Plasseraud, France
Nina Resinek, Taylor Wessing, Germany
Toshio Takizawa, Nakamura & Partners, Japan
Koichi Tsujii, Nakamura & Partners, Japan
Klaus Schweitzer, Plate Schweitzer Zounek, Patentanwaelte, Germany
Deborah Somerville, Kenyon & Kenyon, USA
Paul Steinhauser, Arnold Siedsma, Netherlands
Nigel Stoate, Taylor Wessing, UK
Rosie Stramandinoli, Griffith Hack, Australia
Otto Swens, Steinhauser Hoogenraad, Advocaten, The Netherlands
Andreas Walkenhorst, Tergau & Pohl Patentanwälte, Germany
William Yang Panawell & Partners LLC, China
Federico Zanardi Landi, Studio Legale Jacobacci & Associati, Italy

By Ricardo Carvajal –

The Supreme Court affirmed a 9th Circuit Court of Appeals decision that allows a securities fraud class action to go forward against Matrixx Initiatives, Inc. ("Matrixx") for allegedly violating § 10(b) of the Securities Exchange Act and Exchange Commission Rule 10b-5.  As we discussed in a prior posting, the Court granted certiorari last June on the question of “[w]hether a plaintiff can state a claim under § 10(b) of the Securities Exchange Act and SEC Rule 10b-5 based on a pharmaceutical company's nondisclosure of adverse event reports even though the reports are not alleged to be statistically significant.”  By a vote of 9-0, the answer to that question is “yes.”

The Court concluded that “the materiality of adverse event reports cannot be reduced to a bright-line rule.  Although in many cases reasonable investors would not consider reports of adverse events to be material information, respondents have alleged facts plausibly suggesting that reasonable investors would have viewed [the reports at issue] as material.”  The Court noted that there are many instances in which medical experts and FDA infer a causal link between adverse events and a drug in the absence of statistically significant data, and that “it stands to reason that in certain cases reasonable investors would as well.” 

The Court adhered to its prior holding in Basic Inc. v. Levinson, 485 U.S. 224 (1988) that the “materiality requirement is satisfied when there is ‘a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available.’” The Court emphasized that Basic’s “total mix” standard is not satisfied by the “mere existence” of adverse event reports.  “Something more is needed, but that something more is not limited to statistical significance, and can come from ‘the source, content, and context of the reports.’”

With respect to the element of scienter, the Court concluded that “Matrixx’s proposed bright-line rule requiring an allegation of statistical significance to establish a strong inference of scienter is just as flawed as its approach to materiality.”  Considering respondents’ allegations collectively, the Court concluded that there is a “‘cogent and compelling’ inference that Matrixx elected not to disclose the reports of adverse events not because it believed they were meaningless but because it understood their likely effect on the market.”

By Ricardo Carvajal –

Last week FDA published a Q&A that explains steps the agency is taking to ensure that foods imported from Japan are safe.  Currently FDA does not believe there is any risk to the U.S. food supply, but is continuing to gather information and monitor the situation so as to detect any potential risks.  In response, Rep. DeLauro wrote a letter to Commissioner Hamburg asking the agency to explain the basis for some of the statements in the Q&A, and urging radiological testing of all food imported from Japan. 

This week, FDA followed up on its Q&A by issuing an Import Alert that targets specified products from certain prefectures in Japan based on the potential for contamination with radionuclides.  FDA has a compliance policy guide that provides guidance levels for radionuclides in domestic and imported foods. FDA also has a guidance document that provides recommendations for state and local agencies to help them respond to incidents of contamination with radionuclides. Both documents incorporate information learned in the wake of the Chernobyl accident.

FDA's Q&A also addresses the availability of FDA-approved drugs for radiation exposure.  FDA warns consumers against “internet sites and other retail outlets promoting products making false claims to prevent or treat effects of radiation or products that are not FDA-approved.”  Recent history suggests that some of those retail outlets may be the target of warning letters issued by FDA, and perhaps the Federal Trade Commission.

By Larry K. Houck –

Early March on Capitol Hill has seen a flurry of legislation designed to combat a number of perceived controlled substance problems, including opioid treatment, pain management, drugs marketed to kids and pill mills.

Prescription Drug Abuse Prevention and Treatment Act of 2011

Senator Jay Rockefeller (D-WV) introduced the ambitious “Prescription Drug Abuse Prevention and Treatment Act of 2011” that would amend the Controlled Substances Act (“CSA”) in several ways.  S. 507 would require health care practitioners to complete 16 hours of specialized pain management training before they could register to prescribe or dispense methadone and other opioids, then complete at least 16 hours of training every three years.  The bill would also award grants to states and non-profit groups for educating consumers about methadone and opioid abuse. 

The bill would require establishment of a Controlled Substances Clinical Standards Commission comprised of representatives from responsible federal agencies.  The Commission would develop guidelines for “appropriate and safe dosing” for methadone including recommendations for maximum daily doses, abuse reduction, initiation of methadone pain management for prescribing practitioners, and education for patients and practitioners for maintenance therapy and pain management.  The bill requires the Commission to establish methadone dosing guidelines for pain management and opioid treatment programs within two years after enactment of the bill with updating at least every three years thereafter. 

In addition, the bill would restrict dispensing or prescribing methadone 40 mg. diskettes consistent with the Drug Enforcement Administration’s (“DEA’s”) policy.  DEA previously sent letters to manufacturers getting them to agree to restrict distribution of 40 mg. methadone dispersible tablets to authorized opioid detoxification and maintenance treatment programs and hospitals.

Lastly, the bill provides for $25 million per year to fund interoperable prescription drug monitoring programs in each state through the National All Schedules Prescription Electronic Reporting program.

Saving Kids from Dangerous Drugs Act of 2011

Senators Diane Feinstein (D-CA) and Chuck Grassley (R-IA) introduced legislation aimed at fighting drug misuse and abuse by minors by enhancing penalties for those who add flavorings to controlled substances or otherwise market them to children.  S. 513, known as the “Saving Kids from Dangerous Drugs Act of 2011,” would increase penalties for adults who knowingly manufacture schedule I or II drugs that are combined with a beverage or candy product, that are marketed or packaged to appear similar to a beverage or candy product or that are modified by a flavoring or coloring to distribute or sell it to minors.  Individuals who alter a drug in such a manner would be subject to up to 10 years imprisonment for a first offense and up to 20 years imprisonment in addition to the penalty for the underlying offense.  Increased penalties would not apply to a drug that has been approved by FDA if its contents, marketing and packaging has not been altered from the approved form or if it has been altered by a practitioner for a legitimate medical purpose in the usual course of professional practice.

Pharmacies have at times added child-friendly flavors to prescription drugs to make them more palatable to pediatric patients.  We assume that the “practitioner” exemption would apply to pharmacists acting in this manner. 

Pill Mill Crackdown Act of 2011

A third bill introduced in the House would double prison sentences and triple fines for “pill mill” operators.  “Pill mills” are clinics, doctors’ offices or pharmacies that dispense or prescribe powerful opioids for other than legitimate medical purposes or in an inappropriate manner.  (Under 21 C.F.R. § 1306.04(a), for a controlled substance prescription to be effective, it must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice).  The “Pill Mill Crackdown Act of 2011,” was introduced by Representative Vern Buchanan (R-FL) and co-sponsored by 29 members, including 15 Florida members.  Last month DEA and other federal, state and local law enforcement officers made 22 arrests and seized over $2.2 million in cash at pain clinics in South Florida.

H.R. 1065 would also potentially have the most far-reaching impact on current controlled substance requirements by rescheduling hydrocodone combination products including Vicodin, Lorcet, Lortabs and Norco from schedule III to the more restrictive schedule II.  Prescriptions for schedule II drugs, except in limited circumstances, must be written and cannot be refilled; schedule III drug prescriptions may be written, telephoned or faxed and can be refilled up to five times within six months.  Schedule II drug transfers require DEA Official Order Forms and registrants must implement heightened security.  DEA has observed that hydrocodone is the most frequently prescribed opiate in the U.S. and that diversion and abuse of the drug has been escalating.  As of October 2009, the agency was reviewing a petition to reschedule hydrocodone combination products to schedule II.

The three bills have been referred to committee:  S. 507 to the Committee on Health, Education, Labor and Pensions, S. 513 to the Committee on the Judiciary, and H.R. 1065 to the Energy and Commerce Committee. 

Hyman, Phelps & McNamara, P.C. (“HP&M”) and VirginiaTech are pleased to announce the availability of the first two DVD’s of the VERSUS series that is being sponsored by VirginiaTech.  They provide an overview of the processes a prescription drug must follow to be FDA-approved and the pervasive regulatory requirements that apply after FDA’s approval.  These DVDs feature HP&M attorneys with decades of experience in dealing with FDA regarding these important topics.  The subjects that are discussed include: 

• An Overview of FDA’s Regulation of Rx Drugs – From Research to Your Medicine Cabinet – Are Your Prescription Drugs Safe and Effective?  The DVD features commentary from HP&M’s Roger C. Thies.
• An Overview of Generic Drug Regulation in the United States – The Continuing Struggle to Reduce the Cost of Rx Drugs and Stimulate the Development of New Therapies.  The DVD Features commentary from HP&M’s Robert A. Dormer, and contains additional discussion on the Biologics Price Competition and Innovation Act and the Family Smoking Prevention and Tobacco Control Act

The DVDs are suitable for a variety of educational and work related purposes, and can be ordered and purchased directly from VirginiaTech’s Center for Applied Health Sciences.  An order form can be obtained by contacting Angela Correa at 540-231-2075, by e-mail to versus@vt.edu, by a facsimile to (540) 231-9293, or by snail mail, using the address below.

Virginia Tech Center for Applied Health Sciences
Attention: Angela Correa
123 Duckpond Drive, mailcode 0418
Blacksburg, Virginia 24061

By Kurt R. Karst –      

Last week, Senator Robert Casey (D-PA), along with co-sponsors Sens. Scott Brown (R-MA), Sherrod Brown (D-OH), Al Franken (D-MN), and Johnny Isakson (R-GA), formally introduced S. 606, the Creating Hope Act of 2011.  The bill, which, according to Sen. Casey “has broad support among the medical community, patient advocates and biopharmaceutical companies,” such as the Pablove Foundation, Kids v Cancer, and the National Organization for Rare Disorders, “would strengthen a cost-neutral FDA program giving biopharmaceutical companies an incentive to develop treatments for rare diseases that are often less profitable than treatments for more common medical conditions.”  Specifically, the bill  would amend FDC Act § 524 to change the transferable Priority Review Voucher (“PRV”) program created by the 2007 FDA Amendments Act (the so-called “treat and trade” program), and would amend the PRV program to extend it to applications for a “rare pediatric disease.”

The Creating Hope Act of 2011 is substantially similar to the 2010 version of the bill, S. 3697, which was introduced by now-retired Sen. Sam Brownback (R-KS) and was co-sponsored by Sens. Sherrod Brown (D-OH) and Al Franken (D-MN).  We previously reported on the Creating Hope Act of 2010 here, and we refer you to that post for a summary of the bill. 

Although the 2011 version of the Creating Hope Act makes some minor revisions to the 2010 version, the most important change appears to be the conditions under which FDA may refuse to issue a PRV upon the approval of a rare pediatric disease product application – the so-called “good faith intent to market determination.”  Under both the 2010 and 2011 bills, FDA may consider several factors in determining whether to refuse to issue a PRV, including “the history of such sponsor of producing rare pediatric disease products for which such sponsor received a [PRV], orphan drugs for which the sponsor received exclusivity under [FDC Act § 527], or pediatric drugs for which the sponsor received an additional 6 months of exclusivity under [FDC act § 505A].”  (Neither version of the bill takes into account the new pediatric exclusivity provisions for biological products under new PHS Act § 351(m).)  Added to the 2011 version of the bill is the requirement that FDA issue guidance before making a good faith intent to market determination.  Specifically, the bill states that “[i]f the Secretary requires sponsors seeking a [PRV] to demonstrate a good faith intent to market the rare pediatric disease product in the United States, the Secretary shall first issue a guidance document setting forth the required evidentiary support necessary to demonstrate such a good faith intent.”

The Creating Hope Act of 2011 is one of several bills that will likely be introduced in the 112th Congress that is intended to incentivize the development of new products.  In a few weeks, Representative Phil Gingrey (R-GA), who is a member of the Rare Disease Caucus, will reportedly reintroduce the Generating Antibiotic Incentives Now Act (“the GAIN Act”).  The last iteration of the GAIN Act – H.R. 6331 – was introduced in 2010 and proposed to extend by five years the exclusivity period for a drug or biological product that is a qualified infectious disease product.

By Michelle L. Butler & Kurt R. Karst –

FDA recently published in the Federal Register notice of a long-awaited revision to its draft interim guidance on user fee waivers, reductions, and refunds.  See 76 Fed. Reg. 13629 (Mar. 14, 2011); FDA, Draft Guidance for Industry, User Fee Waivers, Reductions, and Refunds for Drug and Biological Products (Mar. 2011, rev. 1).  This is the first update to FDA’s guidance on this topic since the Agency published interim guidance in July 1993 after the enactment of the original Prescription Drug User Fee Act (“PDUFA”).  In the time since the interim guidance was published, a number of amendments to the statutory provisions relating to user fee waivers, reductions, and refunds have been enacted.  For example, the statutory exemptions from user fees for orphan drugs have been added, the small business statutory ground for a waiver has been revised, and the statutory ground for a waiver based on inequitable treatment between a 505(b)(1) applicant and a 505(b)(2) applicant has been removed.  With publication of the 2011 draft guidance, FDA is presenting formally many of the standards the Agency has used in practice over the years between the enactment of PDUFA I and PDUFA IV.

The statute provides for waivers of, reductions in, exemptions from, and refunds of user fees for a variety reasons.  See 21 U.S.C. §§ 379h(d)(1), 379h(k), 379h(a)(1)(F)-(G).  Generally, application fees, establishment fees, and product fees all may be the subject of a request for waiver, reduction, or refund, provided an applicant makes a timely request to FDA as discussed below.

The new guidance discusses categories of waivers and reductions (e.g., necessary to protect the public health, presents a barrier to innovation, and small business), types of exemptions and refunds (orphan designated products, state or federal government entity, and no substantial work), and the process for submitting requests for waivers, reduction, and refunds. 

Waivers and reductions based on the fees-exceed-the-costs statutory ground are subject to separate guidance.  We note that while the fees-exceed-the-costs mechanism is not often used (because many applicants are continually submitting applications to FDA and the Agency’s costs usually exceed the fees paid), it has been successfully used by companies with a small number of FDA submissions approved several years ago that are still subject to annual user fees.  For these companies, FDA’s costs remain static while the total amount of fees paid by the company continues to grow, eventually leading to an overage that could used as a basis for a fee waiver or reduction request.

As an initial matter, the guidance describes the process by which FDA sets user fee target revenues each year.  Guidance, at 2.  The guidance states that target revenues are independent of the number of waivers or reductions in fees that are granted.  However, the guidance states that the more waivers or reductions that are granted, the more fees must be increased the following year so that the annual statutory revenue targets can be met.  Id.  This could explain why FDA has seemingly set the bar high in determining that applicants meet the criteria for requests for waivers or reductions, particularly in the more subjective categories of protecting the public health and presenting a barrier to innovation. 

Public Health Waiver/Reduction.  The statute provides for a waiver or reduction in user fees “if such waiver or reduction is necessary to protect the public health.”  21 U.S.C. § 379h(d)(1)(A).  The guidance breaks this down into two components:  (1) whether the product protects the public health; and (2) whether the applicant can show that “a waiver or reduction is necessary to continue an activity that protects the public health.”  Guidance, at 5 (emphasis in original). 

With regard to whether a product protects the public health, the guidance lays out for the first time the questions FDA will ask itself in determining whether an applicant’s drug product protects the public health.  Among those questions are the following:

• Is it or does it have the potential to provide a significant improvement compared to other marketed products, including other dosage forms or routes of administration?
• Are there treatment alternatives?  The guidance indicates that the existence of alternatives would weigh against a finding that it is necessary to protect the public health.
• Is it a priority drug?  Has it been granted fast track status?  Has it been determined to be a new molecular entity?  The guidance states that affirmative answers to these questions generally indicate that a product does protect the public health.
• Is it intended for the treatment of a serious or life-threatening condition?
• Does it address or have the potential to address unmet medical needs?
• Is it designated as an orphan drug?

Id. 

With regard to whether a waiver or reduction is necessary to continue the activity that protects the public health, the guidance states that FDA believes that a financial test is appropriate.  FDA will consider the financial resources of the applicant and its affiliates.  Id. at 7.  Citing to legislative history of the original PDUFA legislation, the guidance states that FDA will consider the “limited resources” of an applicant.  Id. at 8.  In doing so, the guidance states that FDA will consider the total annual revenue of an applicant and its affiliates.  The Agency does not intend to deduct marketing costs or consider lack of profitability in as evidence of limited resources.  FDA may also consider available financial assets, including net proceeds, cash, and total assets, as well as the results of recent issuances of stock and recently raised capital.  The guidance states that FDA ordinarily expects to use a $20 million marker in determining whether an entity and its affiliates has limited resources for this purpose.  Id.  (Note that the 1993 interim guidance articulated a benchmark of $10 million for purposes of determining whether an applicant has limited financial resources – the new guidance addresses the reasoning behind the change to a benchmark of $20 million.  Id. at 9.)  The guidance also states that consideration of the financial resources of applicants that are State or Federal government entities will be handled differently and lays out those considerations.  See id. at 8-9.

FDA has applied this financial conditions analysis to both the public health waiver ground discussed above and the barrier to innovation waiver ground discussed below.

Barrier to Innovation Waiver/Reduction.  The statute provides for a waiver or reduction in user fees if “the assessment of the fee would present a significant barrier to innovation because of limited resources available to such person or other circumstances.”  21 U.S.C. § 379h(d)(1)(B).  The guidance breaks this down into two components as well:  (1) whether the product or other products under development by the applicant are innovative; and (2) whether the applicant can show that “the fee(s) would be a significant barrier to the applicant’s ability to develop, manufacture, or market innovative products or to pursue innovative technology.”  Guidance, at 6 (emphasis in original). 

As with the public health ground for waivers or reductions, the guidance lays out for the first time the questions FDA will ask itself in determining whether an applicant’s drug product or other products being developed by the company are innovative.  Id. at 7.  Among those questions are the following:

• Does the drug product or technology demonstrate advanced “breakthrough” research, new, progressive methods, and/or forward thinking, and/or forward thinking in the treatment or diagnosis of disease, or does it have the potential to be at the forefront of new medical technology?
• Does the drug product or technology introduce a unique or superior method for diagnosing, treating, or preventing a disease, or for affecting the structure or function of the body?
• Is the drug product designated as a priority drug, has it been granted fast track status, or has it been determined to be a new molecular entity?
• Has the applicant received a Federal grant for innovation?  The guidance identifies two examples that may qualify as innovative: the National Institutes of Health’s Small Business Innovative Research Program and National Institute of Standards and Technology’s Advanced Technology Program.

Id.

With regard to determining whether a fee presents a significant barrier to an applicant’s ability to develop, manufacture, or market innovative products, the guidance states that FDA will conduct the financial resources analysis of the applicant and its affiliates described above.

Small Business Waiver/Reduction.  The statute provides for a waiver or reduction in user fees if “the applicant involved is a small business submitting its first human drug application to the Secretary for review.”  21 U.S.C. § 379h(d)(1)(D).  A small business is defined as “an entity that has fewer than 500 employees, including employees of affiliates, and that does not have a drug product that has been approved under a human drug application and introduced or delivered for introduction into interstate commerce.”  Id. § 379h(d)(4)(A) (emphasis added).  The term “affiliate” is defined in the statute to mean “a business entity that has a relationship with a second business entity if, directly or indirectly – (A) one business entity controls, or has the power to control, the other business entity; or (B) a third party controls, or has power to control, both of the business entities.”  Id. § 379g(11).  The small business ground for waiver or reduction applies only to the application fee and only to the first application a small business or its affiliate submits.  Id. § 379h(d)(4)(B).  Thereafter, the small business pays application and supplemental application fees just as an entity that is not a small business does, though it is possible that a small business could subsequently be granted a waiver or reduction based on one of the other grounds, assuming it meets the criteria for those other grounds.

FDA works with the Small Business Administration (“SBA”) to determine the size of an applicant and its affiliates, and the new guidance describes this process.  Guidance, at 10.  When an applicant requests a small business waiver from FDA, the Agency asks SBA to determine what companies are affiliated with the applicant and the number of employees for the applicant and its affiliates.  SBA will send the applicant a request for information, and SBA will make a determination in accordance with SBA regulations.  Id.  If the information requested by SBA is not provided, SBA will find that the applicant is other than small, and the request for a small business waiver will be denied.  Once SBA has identified and confirmed the affiliates of the applicant and determined whether the applicant is a small business, FDA will evaluate whether the applicant meets the other criteria for the small business waiver (e.g., that the application is the first human drug application submitted by the applicant or its affiliates).  Id. 

We note that the guidance is silent on a matter that was the subject of fairly recent litigation – that is, whether FDA can take into account former affiliates in determining whether the application is the first human drug application submitted by the applicant.  We previously posted on this issue, which was presented in Winston Labs, Inc. v. Sebelius, No. 1-09-cv-04572 (N.D. Ill. 2009)  Despite the decision by the Court that the statutory definition of affiliate includes only current affiliates and not past affiliates as argued by FDA, the Agency appears to be trying to advance the position it took in Winston in negotiations for PDUFA V – see here and here.  

In addition, the guidance provides some answers to what are likely frequently asked questions about the small business waiver.  See Guidance, at 10-11.  First, an applicant that has been granted a small business waiver should submit its human drug application within one year after the date of the SBA determination, as the circumstances pertaining to a small business waiver may change over time.  Second, as discussed above, an applicant is eligible for a small business waiver only for the first human drug application it or its affiliate submits – if a human drug application is submitted and withdrawn or refused for filing, the applicant or affiliate is ineligible for another small business waiver.  If, however, an applicant does not submit the application for which it was granted a waiver, the applicant may qualify again for a small business waiver.  Third, although there is no specific provision for a waiver or reduction of product and establishment fees for small businesses, a small business may nonetheless qualify for waiver or reduction of those fees under the other statutory grounds for waivers or reductions (e.g., public health, barrier to innovation).

Orphan Drug Exemption.  A human drug application or supplement for a drug that is designated as an orphan drug is not subject to the application fee unless the application also includes an indication for a non-orphan indication.  21 U.S.C. § 379h(a)(1)(F).  The guidance explains that if the application or supplement qualifies for an orphan exemption, the applicant does not need to send FDA a written request for the exemption; rather, the applicant should notify FDA that it is claiming orphan exemption when it completes and submits the User Fee Coversheet that accompanies the application.  Guidance, at 12. 

With regard to product and establishment fees, as added to the statute by PDUFA IV, a drug that is designated as an orphan drug is exempt from such fees, provided the drug meets the public health requirements relating to requests for waivers of product and establishment fees and the applicant’s gross worldwide revenue did not exceed $50 million in the previous year.  21 U.S.C. § 379h(k)(1).

State or Federal Government Entity Exemption.  An application submitted by a State or Federal government entity for a drug that is not distributed commercially is not considered a human drug application under the statute and is therefore not subject to application, product, and establishment user fees.  21 U.S.C. § 379g(1)(B).  The guidance states that for purposes of this exemption, distributed commercially means “any distribution in exchange for reimbursement, goods, or services, whether or not the amount of the charge covers the full costs associated with the product.  Any recovery by the applicant of all or part of the costs of manufacture or distribution of a product makes the distribution commercial.”  Guidance, at 12.

Process for Submitting Requests for Waivers, Reductions, and Refunds.  The guidance discusses the timing for submitting requests for waivers, reductions, and refunds, as well as the content and format of such requests.  Guidance, at 13-16. 

With regard to timing of requests, the statute requires that any such request must be made in writing “not later than 180 days after such fee is due.”  21 U.S.C. § 379h(i).  For applications (which are not considered complete unless the application fee has been paid), if an applicant wishes to avoid paying the fee and then seeking a refund, the guidance recommends submitting the waiver or reduction request approximately three to four months before submission of the application.  Guidance, at 13.  The guidance also states that FDA discourages applicants from submitting application fee waiver or reduction requests more than four months in advance of submission of the application because the circumstances supporting the waiver request may change.  Id. at 14.  For waivers or reductions of product and establishment fees, the guidance also recommends submission of requests three to four months before the fee is due (i.e., between June 1 and July 1 as the fees are due October 1).  Id.  The guidance indicates that if applicants submit waiver or reduction requests in these time frames, “under normal circumstances and depending on available resources,” FDA will try to complete its evaluation of the requests before the application is submitted or before the product and establishment fees are due.  Id. at 13-14.

As noted, the guidance also provides recommendations for the contents of each waiver or reduction request.  Id. at 14-16.  The guidance does not provide a timeframe for responding to a waiver or reduction request other than to say that “[t]he Agency will respond to requests for waivers and reductions in a timely fashion based on available resources and collection time for additional information.”  Id. at 17.

The guidance also discusses the process and timing for requests for reconsideration and appeals.  Id.  The guidance recommends that any requests for reconsideration be made within 30 days of an FDA decision on the underlying waiver or reduction request, and that any appeals be made within 30 days of the decision on the request for reconsideration.  Id.

By Riëtte van Laack –

On March 4, 2011, FDA issued a warning letter to Goetze’s Candy Co. Inc., because the addition of calcium to Goetze’s Caramel Cream Chocolate goes against FDA’s food fortification policy, 21 C.F.R. § 104.20.   Goetze marketed its product with the (impermissible) nutrient content claim “fortified with calcium.”

Although this is not the first time FDA cited its fortification policy in a warning letter, it is the first time in recent memory that the targeted product is candy.  Previous warning letters citing the fortification policy focused on carbonated beverages.  Candy and carbonated beverages are the snack foods specifically mentioned in FDA’s fortification policy.  Thus, this warning letter does not provide insight into what other types of fortified snack foods might violate FDA’s fortification policy.