In the Spring of 2021, the Health Resources and Services Administration (HRSA) threatened six drug companies with billions of dollars in penalties for not providing 340B discounts to covered entities that sell drugs through vast networks of contract pharmacies (more background on earlier posts).

The drug makers argued that their statutory obligation to provide discounts did not extend to multiple contract pharmacies, who they said often abused the system. HRSA argued that it unambiguously did, and the companies sued. Six district courts presided over these decisions. The outcomes were almost evenly split.

Three of these cases were in the third circuit. AstraZeneca won in the District of Delaware, while Sanofi Aventis and Novo Nordisk lost at the District of New Jersey. Both courts found the statute to be ambiguous, but only the Delaware court vacated HRSA’s penalties; the New Jersey court remanded the issue to HRSA.

Last week, a panel of three judges at the Third Circuit who reviewed these three cases decided in favor of the drug manufacturers. Writing for the court, Judge Bibas said that, while neither Chevron deference nor Skidmore deference applied (because the agency lacks rulemaking authority here), the agency was “entitled to respect”—but only if it had the “power to persuade.” The court decided that it did not, and gave three reasons for its decision.

First, the statute requires manufacturers to offer 340B prices to covered entities but is silent about delivery.  However, according to the court, this silence does not give HHS the authority to read into the statute a requirement to deliver to wherever and whomever the covered entities demand. Second, the court found that neighboring statutory provisions contemplated the drug companies contracting with vendors or commercial entities to distribute discounted drugs. This suggests that Congress’s silence on the issue in the 340B statute was likely intentional. Finally, the court found that legislative history did not necessarily support the government’s view—the most relevant language did not end up in the final statute, and that omission could have supported either party.

The court also reviewed HRSA’s dispute resolution rule and a majority of the judges upheld it. The court refused to give separate legal significance to the fact that HRSA withdrew the proposed rule in 2017 and found a 30-day notice period before the final rule was sufficient under the Administrative Procedures Act.

A lot is at stake here. The 340B program is growing rapidly, and contract pharmacies have been key to that growth. In 2019, covered entities reportedly bought $30 billion worth of prescription drugs (see here; this ballooned to $44 billion in 2021). Compare that to $151 billion for Medicaid, Medicare Part B, and Medicare Part D combined (see here). There is a high likelihood that this case will end up at the Supreme Court, especially if the other cases create a circuit split.

Amongst the many provisions that Congress included in the recent Food and Drug Omnibus Reform Act (“FDORA”) were two subtle changes – one change to the Federal Food, Drug, & Cosmetic Act’s (“FD&C Act”) requirements for advancing an investigational new drug into clinical trials and another change to the Public Health Service Act’s (“PHS Act”) (as amended by the Biologics Price Competition and Innovation Act of 2009) requirements for developing a biosimilar biological product. (For more on FDORA’s other provisions, see HPM’s complete summary here).  Since 1962, the FD&C Act has authorized FDA to require that sponsors of clinical trials submit data from “preclinical tests (including tests on animals)” in order to demonstrate that their drug is safe enough to advance to testing in humans.  FDORA’s change to that key phrase (“preclinical tests…”) has been touted by some as anything but subtle and that it represents a monumental shift in what FDA is empowered to require of sponsors. While this hype may be warranted in some respects—a 60-year old legal provision has now been amended to acknowledge that the science of drug development is advancing—the change is mostly symbolic and is likely to take many years before we see it have a measurable impact.  In effect, the revisions to the FD&C Act and the PHS Act are designed to encourage the use of alternatives to animal testing not eliminate animal testing in drug development.

As noted above, Section 3209 of FDORA amends the statutory language regarding the criteria to obtain an IND.  Previously, the law stated that FDA could condition the opening of an IND upon the submission of reports of “preclinical tests (including tests on animals) . . . adequate to justify the proposed clinical testing.”  21 U.S.C. § 355(i)(1)(A).  FDORA replaces the term “preclinical tests (including tests on animals)” with a newly defined term “nonclinical tests.”  FDORA § 3209(a)(1).  The law defines this term to mean “a test conducted in vitro, in silico, or in chemico, or a nonhuman in vivo test that occurs before or during the clinical trial phase of the investigation of the safety and effectiveness of a drug.”  FDORA § 3209(a)(2).  The definition goes on to list potential options for such tests: cell-based assays, organ chips and microphysiological systems, computer modeling, other nonhuman or human biology-based test methods such as bioprinting, as well as animal tests.

As to biosimilars, FDORA amends the statutory language regarding criteria for the demonstration of biosimilarity for a 351(k) biologic.  Previously, the law stated that the demonstration of biosimilarity could be based on data derived from:

(aa) analytical studies that demonstrate that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components;

(bb) animal studies (including the assessment of toxicity); and

(cc) a clinical study or studies (including the assessment of immunogenicity and pharmacokinetics or pharmacodynamics) that are sufficient to demonstrate safety, purity and potency in 1 or more appropriate conditions of use for which the reference product is licensed and intended to be used and for which licensure is sought for the biological product.

42 U.S.C. § 262(k)(2)(A)(i)(I).

FDORA replaces the language in (bb) regarding animal studies with “an assessment of toxicity (which may rely on, or consist of, a study or studies described in item (aa) or (cc).”  FDORA § 3209(b).

While these changes to the IND and the biosimilarity provisions represent real changes to the words governing FDA’s authority under the FD&C Act, we think it is worth asking just how measurable and immediate an impact they will have on day-to-day decision-making of the FDA and its review staff.   The pre-existing statutory language did not require animal testing. Rather, the provisions did, and still do, leave it up to FDA’s discretion what methods and tests are most appropriate under the circumstances.  In both contexts, FDORA amends the language to more explicitly allow for alternatives to animal testing but does not mandate the acceptance of any of these alternatives.

In our experience, FDA is inherently an empirically driven body of scientists, physicians, and policy-makers. It will likely take time to supplant decades of reliance upon existing animal testing methods used to investigate drug pharmacology and toxicology. Alternative methods will require significant research investment to demonstrate their utility for a particular context of use and inform regulatory decision-making.

However, there are signs that FDA is receptive from a policy perspective to alternative methods.  The 2017 Predictive Toxicology Roadmap laid out some of the FDA’s thinking around the need for new toxicology methods driven in part by a desire to find alternatives to animal testing.  In 2019, FDA formed an agency-wide Alternative Methods Working Group indicating that it viewed the applicable scope of alternative methods to go beyond just toxicology research.  More recently still, FDA requested $5 million in its FY 2023 budget request to support the New Alternatives Method Program to “replace, reduce and refine animal testing (the 3Rs), and improve predictivity of nonclinical testing.”  As FDA notes in its budget request, “FDA cannot develop and implement alternative methods alone, so through this initiative FDA will expand qualification processes, provide clear guidelines to external stakeholders developing alternative methods, and fill information gaps with applied research to advance new policy and guidance development.”

Ultimately, regardless of any changes made by FDORA, it will be up to the science surrounding new alternative methods, and FDA’s acceptance of the evidence base to support them, to demonstrate the suitability of these alternative tests as replacements for animal testing. In our experience, FDA review divisions will engage with sponsors about their plans to implement novel methods in their development programs but have yet to let them replace traditional animal testing in a measurable way. To us, some of the hype regarding the changes FDORA made to the law regarding animal testing may be overselling the law’s impact. Meaningful change in this arena will require the investment of time and resources to achieve the scientific advancement it promises.

FDA has not been shy about its distaste for the Catalyst decision; the Agency has published on its website the litany of problems that arise from it and has sent emails and letters to stakeholders essentially urging them to contact Congress to address the decision.  Indeed, FDA was pushing Congress heavily to legislatively overturn the Catalyst case but ultimately failed to get the provision included in either the User Fee package or FDORA.  So what’s FDA to do when it can’t get the courts or Congress to support its position?  Ignore the decision!  FDA announced in the Federal Register on January 24 that, regardless of the Catalyst decision, the Agency “intends to continue to apply its regulations tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved . . .” with the exception of the specific product at issue in the Catalyst case.

In brief, the Eleventh Circuit held in Catalyst that the term “same disease or condition” in the Orphan Drug Exclusivity provisions relates back to the entire disease or condition designated in the Orphan Drug Designation provisions rather than the indication ultimately approved, as FDA had been interpreting the scope of Orphan Drug Exclusivity.  This means that Orphan Drug Exclusivity for an approved designated drug would block the “same drug” for the same disease or condition rather than just the specific indication.  In the case at issue, FDA had approved Catalyst’s Firdapse (amifampridine) with Orphan Drug Exclusivity for the treatment of Lambert-Eaton Myasthenic Syndrome (“LEMS”) but subsequently approved another manufacturer’s amifampridine product for pediatric LEMS during the pendency of the Firdapse exclusivity period.  Catalyst sued, arguing that its Orphan Drug Exclusivity protected the use of amifampridine in the entire LEMS population—adults or pediatrics—under the statute, and the Eleventh Circuit agreed, concluding that the phrase “same disease or condition” in the Orphan Drug Exclusivity statute “unambiguously foreclosed FDA’s interpretation of the provision” as limiting Orphan Drug Exclusivity to the approved indication.  At the Court’s direction, FDA withdrew approval of the amifampridine product for use in pediatric patients but made it quite clear that it did not agree with the Eleventh Circuit’s decision.

The Notice in the Federal Register serves to “address the uncertainty created by the circuit court’s decision in Catalyst.”  For clarity therefore the Agency announced that is has decided to “continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.”  Even though the Court’s reading of the “unambiguous” statute was quite clear, FDA explained that its decision is appropriate based on the Agency’s reading of the statute—notwithstanding the fact that FDA’s reading of the statute conflicts with the Eleventh Circuit.  So even though the Eleventh Circuit expressly found otherwise, FDA maintains that:

the statutory text does not unambiguously require that orphan-drug exclusivity extend to the entire disease or condition for which a drug received orphan-drug designation if the drug is only approved for some uses within that disease or condition. Further, FDA believes that its statutory interpretation embodied in its regulations best advances the Orphan Drug Act’s purposes, appropriately balancing the need to incentivize the development of drugs for rare diseases and conditions with the need to provide patient access to orphan drugs.

FDA implicitly has told the Eleventh Circuit that the Agency’s interpretation of the Orphan Drug Act trumps the Court’s.

FDA’s announcement in the Federal Register that the Agency will not apply the Eleventh Circuit’s decision beyond amifampridine essentially takes the position that the decision has no precedential value in the view of the Agency.  In other words, FDA is going to technically comply with the Eleventh Circuit decision with respect to amiframpridine but will otherwise pretend that the Eleventh Circuit’s interpretation of the Orphan Drug Exclusivity provisions never happened.  Specifically, FDA said that “the Court ordered FDA to set aside its approval of Jacobus’s drug, and FDA has set aside that approval.”  That’s all the decision called for, and that’s all the Agency intends to do—in FDA’s eyes, it’s done everything the Court asked.

Regardless of the merits of FDA’s position on the Orphan Drug Act provisions, it’s open defiance of the Eleventh Circuit’s interpretation of the Orphan Drug Act is certainly a bold strategy.  But of course it’s not unprecedented.  FDA did the very same thing when the D.C. Circuit held that the plain language of the exclusivity provisions of the Orphan Drug Act requires FDA to recognize Orphan Drug Exclusivity for any drug that FDA has designated and to grant marketing approval without demanding proof of clinical superiority.   There, FDA announced a “Clarification of Policy” that that decision—the Depomed decision—applied only to the drug at issue (Gralise) and that the Agency “intends to continue to apply its existing regulations . . . to require the sponsor of a designated drug that is the ‘same’ as a previously approved drug to demonstrate that its drug is ‘clinically superior’ to that drug upon approval in order for the subsequently approved drug to be eligible for orphan-drug exclusivity.”  In the same way that FDA “doubled-down” on its pre-Depomed approach, it’s doing the same here.

FDA’s Depomed “Clarification of Policy” led to additional lawsuits from Eagle and United Therapeutics challenging FDA’s demand for proof of clinical superiority, effectively requiring the Agency to relitigate the issue until Congress eventually enacted a legislative fix, and we expect the same will happen here.  Obviously, a broader scope of Orphan Drug Exclusivity is a huge boon to an orphan drug sponsor, so it stands to reason that a recipient of Orphan Drug Exclusivity would want to ensure the broadest scope possible and would fight to secure it.  FDA likely anticipates such a lawsuit too, and for that reason, is likely to continue lobbying Congress for a legislative fix.  But until then, we will sit down with some popcorn and watch the orphan drug lawsuits unfold.

In early 1984, a year after President Reagan signed the Orphan Drug Act into law, the FDA was not seeing the anticipated avalanche of requests for orphan drug designation.  At that time, new Federal laws on drugs were far and few between.  FDR signed the 1938 law that required that drugs be safe & JFK signed the 1962 law that required that drugs also prove they have a benefit.  So when patients led by Abbey Meyer and Marjorie Guthrie (Woody Guthrie’s widow) had championed the 1983 law to create incentives for developing drugs for those with rare conditions, the FDA was excited at this once-in-a-generation new law as this was FDA’s 3ed major drug law in nearly half a century.  FDA created a new office directly under the Commissioner and promoted FDA’s drug center director, Dr. Marion Finkel, to lead this new Office of Orphan Products Development.

Now in early 1984, after a year of anticipation, nearly nothing was happening, but for a handful of therapies that had been in development and were the poster children for the “patients’ campaign” that had led to the new law.

The Deputy Commissioner of FDA, Dr. Mark Novitch, went to Phil Paquin, leader of drug policy which then was in the Office of Compliance in the Center for Drugs and Biologics (yes, a single Center at that time) and asked Phil to try to figure out why the new law was not seeing the expected kind of activity.

Phil called a very new regulatory counsel (my title) into his office and asked me to tackle this.  Realizing that this was a huge opportunity and I was green and that Phil’s office had many seasoned & excellent regulatory counsel like Steve Unger (who led the IND Rewrite & later became FDA Ombudsman) and Mike McGrane (who led the NDA Rewrite, revising the entire set of regulations on NDAs that is now Part 314 of Title 21 of the Code of Federal Regulations), I replied that someone with more seniority and experience may be better equipped for this assignment.  Phil however insisted that he wanted me to take this on & by myself.

I read the provisions of the new law and saw two provisions that seemed to be possible stumbling blocks that could be frustrating uptake of the new law: (1) a provision required that to be designated an orphan drug, a sponsor had to prove that it could not recoup its research & development costs during the 7 years of market exclusivity— essentially a government provided monopoly on marketing; and (2) another requirement for being designated was that the drug could not be capable of being patented.  (I suspect that this may have been included because some may have argued that if there was patent protection for an orphan drug, there would be no need for the 7 years of orphan drug exclusivity).   Well, while my reading of the new law revealed these as two possible barriers to industry embracing the new law, yet what to do about these?

First, I was surprised to learn that FDA had economists, and the senior economist, Rus Scarato, was happy to help me craft language to guide sponsors who were unsure how to prove that economically they would be incapable of recouping R&D costs over a 7 year period of monopoly marketing.  (Later I was asked to draft the regulations to implement the new law , which is another story and which was accomplished only with the adroit collaboration with a colleague, Emery “Rico” Sturniolo.  See 21 C.F.R. § 316.21(c) for the language explaining how to verify that R&D costs could not be recovered by US sales.)

Second, FDA did not and still does not have any patent law expertise in-house but our sister agency, NIH, did and does, and so I worked with NIH patent counsel to come up with a sample affidavit that a corporation’s patent counsel could provide to FDA that would affirm that the drug in question could not qualify for a US patent.  Of course, no patent counsel “worth their salt” would ever WANT to make a statement against their interest that they were incapable of coming up with any possible way to show that this drug’s use in treating a rare condition was indeed “new” and “not obvious”.

Armed with this as my view of the two possible reasons the new law had not taken off as FDA had expected, and armed also with my two possible solutions, neither of which seemed to be wholly satisfying to industry (for what company wants to open its “books” to the government on all of its costs & projected revenues and what patent counsel wants to give a statement to the government that it can not figure out any way to argue for a patent on some aspect of a drug’s use for a rare disease), I went to see Dr. Finkel in her office.

I sat down on the opposite side of her large wooden desk, across the table from this soft-spoken person who was regarded by everyone as one of the best leaders and thinkers inside FDA and explained to her that I thought I had figured out why companies were not beating a path to her office and also come up with possible solutions.   Dr Finkel listened and after hearing me out, she picked up her black, rotary dial phone on her desk, called someone, and what I heard next was: “Henry, we think we have some issues with your new law but we also think we have solutions.” And she handed me the phone without explaining who she was talking to.  The person on the other end was Congressman Henry Waxman, the “author” of the Orphan Drug Act.  I explained again the two possible issues or impediments and two possible yet unsatisfactory solutions, that were nevertheless my best attempts at fixes to each problem.

Abbey Meyers, Rep. Henry Waxman, Senator Nancy Kassebaum, and Dr. Finkel then came up with much better solutions than mine!!!  Thanks GOODNESS!  They came up with the 1984 and the 1985 amendments to the Orphan Drug Act which removed the requirement that to be an orphan drug one could not be patentable and which created a simple 200,000 persons diagnosed with the rare condition as the alternative criterion for qualifying to be an orphan drug.  (The economic pathway was not eliminated but left as an alternative that has almost never been used…perhaps fodder for one of many, nearly countless possible follow-up stories to this first one!).

The singular lesson that I draw from my initial baptism into the field, as well as from my 40 years of working to address the suffering of our sisters and brothers with rare conditions, is this: There is an incredible “Power of One!”

All my experience is this field tells me over and over again how much each one of us can do.  Each person is incredibly powerful in this arena.  Dr. Novitch, Dr. Finkel, Mr. Paquin, Mr. Sturniolo, Mr. Scarato, NIH patent counsel….these public health service servants of all Americans.  Abbey Meyers, Marjorie Guthrie, Rep. Henry Waxman, Sen. Nancy Kassenbaum….patient advocates and those in Congress (both members and their staffs) who marched and worked to create this new law and make it work.   Untold numbers of researchers in academia and in industry.  Investors who back this kind of longshot research when many others would say “smart money” should go where the biggest markets are.  Individuals who’s lives were changed by a family member, usually a child, who just happened to be unlucky in the spin of the genetic roulette wheel, and who left everything else and devoted their careers to helping their child and all others similarly affected, heroes to me like Martine Rothblatt of United Therapeutics, John Crowley of Amicus and Matt Wilsey of Grace Science and that list could go on and on and on.

My lessons learned from four decades is this: You too are whoever you are and Whatever your position….Know that you too have incredible abilities to effect real change by doing what you can.  Know that.  Act on that.  IT is REAL!  Onward, onward, ever onward!

A recent analysis of statistics on FDA’s website, prepared for a presentation at a good manufacturing practices (GMP) conference in San Diego next week, shows a dramatic increase in the percentage of FDA drug manufacturing facility inspections that result in an “Official Action Indicated” classification.  This means that if your drug manufacturing facility is inspected, it is nearly twice as likely as before that FDA will follow up with regulatory or enforcement action, which can include Warning Letters, freezes on drug approval applications or on issuing export certifications, requests for a recall, seizures, or requests for consent decrees.

The analysis was prepared for Pharma Conference’s conference on February 8 and 9 in San Diego (“Current Hot GMP Topics”), linked here, where Hyman, Phelps & McNamara, P.C., Director Doug Farquhar will be presenting on three areas: enforcement areas of primary concern, the conduct of internal investigations, and contacting FDA about inspections.  Other speakers at the conference include Alonza Cruse, the Director of the Office of Pharmaceutical Quality Operations within FDA’s Office of Regulatory Affairs; several prominent drug manufacturing consultants with significant FDA experience; and attorney Jennifer Bragg, an attorney formerly at FDA and now a nationally recognized lawyer advising FDA-regulated companies facing government investigations and related enforcement challenges.

Mr. Farquhar will be presenting the results of research on FDA’s inspection database which he and HPM Legal Assistant Aisha Evans conducted.  The analysis shows, predictably, that FDA inspections of drug manufacturing facilities dropped precipitously during the first two years of COVID, but are gradually ramping up again, consistent with FDA’s predictions (see August 2022 blogpost linked here).  The chart below shows the number of inspections per fiscal year (FY) (which runs from October 1 through September 30).  FDA, Inspections Database (last visited Jan. 29, 2023).

*Legal Assistant/Paralegal

(Caution: Links in the first paragraph are a wild musical ride.  Click at your own risk)

For those of you that review Rx ad/promo materials, it’s a familiar scenario:  Marketing has come to the Legal Department with significant concerns about competitor activities – consumers are being misled.  Legal has already drafted a cease and desist letter on the matter (to which the competitor has essentially said “pound sand”), and Legal has also drafted and submitted a trade complaint to FDA that has not produced any action to speak of.  Despite Marketing’s insistence, the company does not really have an appetite to take on the costs and risks associated with protracted litigation (which may not even provide the requested relief).

Enter the National Advertising Division (NAD).  NAD, a part of the Better Business Bureau’s National Programs, is an independent non-profit organization that oversees several industry self-regulatory programs for advertising and privacy practices.  Since 1971, NAD has assessed the truthfulness and accuracy of advertising claims, with inquiries initiated by consumers, competitors, trade associations, or NAD itself.  If NAD determines that a claim is false, inaccurate, or lacks adequate substantiation, NAD generally recommends that the advertiser revise or discontinue the claim.   If the advertiser does not agree to do so, or refuses to participate in NAD’s review process, then NAD refers the case to a regulatory agency (typically the FTC).

Given NAD’s historical association with consumer products, we were surprised to see its announcement of a recent decision regarding claims Novartis made for its breast cancer drug, Kisqali (ribociclib).   We were not alone; the trade press also picked up the unusual decision.  NAD’s inquiry, brought about by a complaint from Eli Lilly (which markets a competitive drug, Verzenio (abemaciclib)), evaluated both express and implied claims made by Novartis to healthcare professionals and consumers that patients with HR+/HER2- metastatic breast cancer will live longer taking Kisqali than with other available treatments, including Verzenio.   NAD found that while claims in healthcare professional facing advertising had a reasonable basis, similar claims in consumer-facing materials constituted inappropriate comparative superiority messaging.  NAD’s final decision articulated that, “The degree of sophistication of the target audience is a factor in determining the reasonable message conveyed by the advertising.”

Laura Brett, Vice President and New York Office Leader at BBB National Programs confirmed that NAD has always been able to review prescription pharmaceutical claims, even if it has been underutilized in doing so.  While not commenting on any pending cases, Ms. Brett confirmed that the Lilly/Novartis case is one of the firsts for NAD and NAD welcomes the opportunity to review more of these types of challenges.

The NAD process may “scratch the itch” for companies seeking lower cost options that produce results.  Every case opened by NAD concludes with a decision.  And those decisions accomplish a number of important objectives – including publicizing noncompliance.   NAD offers three tracks for reviews, with a “Fast-Track SWIFT” option delivering decisions in 20 business days; a Standard Track that typically takes 4-6 months, and a Complex Track where timing to decision is determined by the parties.   Each track comes with a not-quite-inconsequential filing fee that covers some of the administrative costs associated with the advertising review process.  Given the drop in OPDP enforcement letters, NAD may represent a new venue for industry looking to challenge competitor Rx drug DTC advertising claims.

Last month, Congress took a big step towards improving clinical trial diversity by requiring sponsors of most drug and device clinical studies to submit a diversity action plan when they submit key trial documents to the Food and Drug Administration (FDA).  This requirement, enacted under section 3601 of Food and Drug Omnibus Reform Act (FDORA), will apply to clinical trials that commence enrollment 180 days after FDA finalizes guidance on the topic.

FDA’s Past Efforts on Clinical Trial Diversity

In 2013, at Congress’ behest under the Food and Drug Administration Safety and Innovation Act (FDASIA) section 907, FDA published a report on the demographic makeup of research subjects that participated in the pivotal clinical trials of recently approved medical products (see our earlier post on FDASIA section 907). The report reviewed clinical trials for seventy-two drugs, biologics and Class III devices that were approved by the agency in 2011 for whether those trials collected and reported research subject demographics data, whether they analyzed research outcomes by demographic subgroups, and the extent to which traditionally underrepresented demographic subgroups were included in those trials.  The report bore out what many in the industry and academia already knew—while some sponsors were able to recruit subjects that reflected the distribution of the disease in the population in terms of age and sex, participation by racial minorities and other socially disadvantaged subgroups was lacking.

Since that report, FDA has undertaken numerous initiatives to encourage diversity in clinical trials.  In 2014, FDA released the “FDA Action Plan to Enhance the Collection and Availability of Demographic Subgroup Data.” FDA declared 2016 the “Year of Clinical Trials Diversity” and that year, issued two guidance documents, one for drug and one for device studies, to standardize collection and reporting of race and ethnicity data in submissions for clinical trials (see our blog post on the final device-related guidance here). The following year, Congress enacted the FDA Reauthorization Act of 2017 (FDARA), which required FDA to publish guidance to enhance diversity in clinical trials.  This guidance was finalized in 2020.

The COVID-19 pandemic temporarily halted many clinical trials and left an indelible mark on clinical trial recruitment.  The challenges of the pandemic may have affected participation by underrepresented participants even more than other groups.  For example, it is unclear if the use of telehealth services and remote monitoring increased access to clinical trials for the elderly and disadvantaged.  Even COVID-19 trials were reported to be insufficiently diverse, despite the fact that racial and ethnic minorities were disproportionately affected by the disease.

More recently, in April 2022, the agency issued draft guidance recommending sponsors to develop Diversity Action Plans to improve the enrollment of racial and ethnic populations in clinical trials. Now, FDORA makes these plans mandatory for most drug and device studies.

Clinical Trial Diversity Under FDORA

FDORA adds subsection 505(z) to the Food, Drug, and Cosmetic Act (FDC Act).  This subsection requires sponsors of any phase 3 or other pivotal drug study (other than bioavailability or bioequivalence studies) to submit diversity action plans by the time they submit the study protocol.  Another new subsection 520(g)(9) similarly requires sponsors of device trials to submit diversity action plans.  Devices that require an Investigational Device Exemption (IDE) application must submit a diversity action plan with that application, whereas sponsors of device trials that do not require an IDE will need to submit a diversity action plan when they submit their 510(k), requests for classification, or premarket approval application.

FDORA specifically exempts submissions made under the expanded access provisions of the FDC Act from having to submit diversity action plans.  The requirements also do not apply to a discrete set of device studies exempted from IDE requirements under 21 C.F.R. § 812.2(c).  These include pre-amendment devices, cleared devices used on label, certain diagnostic devices, custom devices, veterinary use devices, devices for research with laboratory animals, and certain devices undergoing consumer preference testing or modification testing.

FDA can waive the requirement to submit a diversity action plan on its own initiative or at the request of a sponsor.  To grant a waiver, FDA must determine that the prevalence or incidence of the disease or condition being studied makes it impracticable to conduct a clinical trial in accordance with a diversity action plan, or that a waiver is necessary to protect public health during a public health emergency.  If a sponsor requests a waiver, FDA must grant or deny a waiver within 60 days of receiving such a request.

The Format and Content of Diversity Action Plans

Section 3602 of FDORA requires FDA to issue or update guidance on the format and content of diversity action plans within twelve months of its enactment (i.e., by the end of 2023).  The Act provides a lot of detail in what the guidance—and in turn, diversity action plans— should cover.  Many of these details track what FDA already recommends in the April 2022 draft guidance.  Diversity action plans should contain (1) the sponsor’s goals for clinical study enrollment, disaggregated by age group, sex, and racial and ethnic characteristics; (2) the rationale for these enrollment goals, including information about the disease or condition and its prevalence or incidence among various demographics; and (3) how the sponsor intends to meet such goals, including demographic-specific outreach and enrollment strategies, inclusion and exclusion practices, and diversity training for study personnel.

FDORA also requires the guidance to cover issues regarding FDA’s criteria in assessing sponsor waiver requests, public posting requirement of key information from diversity plans, the process to submit diversity action plan updates and modifications, reporting a trial’s progress towards its recruitment goals, and notifying FDA of a sponsor’s inability to reach those recruitment goals. FDORA requires FDA to finalize such guidance within 9 months of the closing of the comment period for the draft guidance.

Public Workshop and Congressional Reports

FDORA requires FDA to convene public workshops and solicit comments on increasing the enrollment of historically underrepresented populations in clinical studies and encouraging clinical study diversity, and publish a report on the recommendations raised in the workshop.  Finally, FDA must submit an annual report to Congress summarizing the Agency’s aggregated experience with sponsors’ diversity action plans beginning not later than early 2025.

More about FDORA

Please see out blog post here to obtain a copy of HPM’s detailed Summary and Analysis of all the provisions of FDORA.

On December 29, 2022, the President signed into law the Food and Drug Omnibus Reform Act of 2022 (“FDORA”) as part of the Consolidated Appropriations Act, 2023, Pub. L. No. 117-328 (2022).  FDORA primarily amends the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act.  The law enacts significant changes that will have considerable short- and long- term effects on the regulated industry and the FDA.

FDORA includes six subtitles, Subtitle A- Reauthorizations, Subtitle B- Drugs and Biologics, Subtitle C- Medical Devices, Subtitle D- Infant Formula, Subtitle E- Cosmetics and Subtitle F- Cross-Cutting Provisions.

As we have done in the past for significant laws amending the operative food and drug statutes, Hyman, Phelps & McNamara, P.C. has prepared a detailed Summary and Analysis of FDORA.  The memorandum summarizes each section of FDORA and analyzes the new law’s potential effects on the FDA-regulated industry.

Last week, the Centers for Medicare & Medicaid Services (CMS) released a memorandum on how it intends to implement the Medicare Drug Price Negotiation Program, passed under the Inflation Reduction Act (IRA) (see our blog post and slide deck on IRA).  The memorandum also introduced the Program’s spanking new logo.

The memorandum outlines CMS’s priorities and timeline for the Initial Price Applicability Year 2026. Recall that CMS is required to negotiate and publish the 2016 maximum fair price for 10 high expenditure, single source Part D drugs by September 1, 2024.

The memorandum is part of CMS’s efforts to engage with the public on the implementation of the Negotiation Program. These efforts also include national stakeholder calls, quarterly strategic meetings, and monthly technical calls with CMS staff. The memorandum sheds light on CMS’s most urgent priorities to implement the Negotiation Program. The Agency invites public comments at IRARebateandNegotiation@cms.hhs.gov.

Upcoming CMS Guidance

CMS provides a list of topics on which it plans to issue guidance.  The Agency has promised it will provide comment periods for each guidance. The topics focus on issues relevant in the first three years of the Negotiation Program—2026 to 2028. They are:

1. Terms and conditions of the manufacturer agreement, including each party’s responsibilities.
2. Approach for considering (1) the manufacturer-reported data elements and (2) evidence about alternative treatments.
3. Process for the offer and counteroffer exchange between the Secretary and manufacturers.
4. Content of an explanation for the maximum fair price (MFP).
5. Method for applying the MFP across different dosage forms and strengths of a selected drug.
6. Dispute resolution process for specific issues that are not exempt from judicial review.
7. Processes for compliance monitoring and imposition of civil monetary penalties for violations.

Information collection requests discussed below

CMS plans to propose three new information collection requests (ICR) to gather data in key areas related to the Negotiation Program. CMS will be asking for this data as early as this summer:

1. Eligibility for Small Biotech Exception: To evaluate manufacturer eligibility for the small biotech exception, CMS reviews Medicare expenditure data for the manufacturer’s products. All persons treated as a single employer under the Internal Revenue Code will be treated as one manufacturer. CMS plans to collect information about how manufacturers aggregate as single employers to evaluate them for the exception. Businesses that reasonably believe they qualify for the exception will be asked to submit their data in the summer of 2023.
2. Data for Negotiation Factors: The IRA requires CMS to consider several factors when negotiating the MFP. CMS will request information such as research and development costs, and whether federal grants subsidized those costs; production and distribution costs; existence of patents or exclusivity; and market data, revenue and sales volume data. This ICR will also collect voluntary data related to evidence about alternative treatments, including, among other things, comparative effectiveness of the drug and its therapeutic alternatives. CMS is proposing that all data submissions will be due by October 2, 2023.
3. Offer and Counteroffer Data Exchange: CMS and manufacturers will exchange offers and counteroffers during negotiation (February to August of 2024 for 2026 prices). This ICR will outline the information that manufacturers must provide in any counteroffers.

Finally, the memorandum has a handy timeline of the key dates associated with the Initial Price Applicability Year 2026.

A joint eSTAR pilot (which we previewed in November) between FDA and Health Canada has now been launched. This pilot program will test the use of a single eSTAR application submitted to both regulatory bodies.

For those unfamiliar or needing a refresher, eSTAR is an interactive PDF template that:

• allows for form construction and autofill,
• complements internal review templates used at CDRH,
• harmonizes with the Non-In Vitro Diagnostic Device Market Authorization Table of Contents used by the International Medical Devices Regulators Forum (IMDRF),
• integrates with resources such as guidance documents and databases,
• guides construction for each section of the submission, and
• checks for incomplete sections.

To participate, device sponsors must send an email to both eSubPilot@fda.hhs.gov and meddevices-instrumentsmed@hc-sc.gc.ca with the subject line “Request for participation in eSTAR Pilot.”  The request email should include basic information, such as applicant name and device trade name, as well as the FDA primary product code, Global Medical Device Nomenclature (GMDN) and Preferred Name Code (PNC) of the device. Additionally, the request should include a statement that the same medical device under eSTAR will be submitted to FDA and Health Canada within 6 months of acceptance of the pilot program:

• For FDA, specify if it is a 510(k), De Novo, or pre-market approval (PMA) original, 180-day, real-time or panel track supplement to FDA; and
• For Health Canada, specify if it represents a new or significant change amendment Class III or IV submission to Health Canada.

Responses from FDA and Health Canada to interested sponsors are expected within 3 business days of the email request. Nine participants will be selected to use the non-In Vitro Diagnostic eSTAR.

Sponsors with combination products, in vitro diagnostic devices, CBER-led products, or FDA dual 510(k)/CLIA waiver application are ineligible for participation in the pilot program.

This pilot program is one example of how CDRH is implementing policies and programs that promote international regulatory alignment. If a device sponsor is actively pursuing marketing authorization in the US and Canada, this has the potential to save time on preparing two separate applications.

It is worth noting that user fees must still be paid to FDA and Health Canada, and review timelines remain the same as they do for non-pilot submissions.

While the initial information provided in eSTAR to FDA and Health Canada is identical, responses to any requests for additional information must be handled separately for FDA and Health Canada. For FDA, the Application Sub-Type must be revised in eSTAR to reflect a response to a request for additional information. For Health Canada, responses should be submitted per instructions from the regulatory body. It remains to be seen how aligned the final scope of the marketing authorizations will be and how much regulatory burden is actually reduced.

On Dec. 20, 2022, FTC announced the publication of its Health Products Compliance Guidance (“new Guidance”). FTC staff  prepared the new Guidance to update and replace Dietary Supplements:  An Advertising Guide for Industry, issued in 1998 (“1998 Guidance”).  The new Guidance provides the first update in 25 years on FTC’s thinking regarding substantiation and disclosures for health-related claims.

An accompanying blog post touts the new Guidance as potentially “one of the most important documents you’ll read in 2022.” We are inclined to agree, given that the new Guidance applies to all products making health-related claims, including food, over-the-counter drugs, homeopathic products, health equipment, diagnostic tests, and health-related apps.

The FTC maintains that the legal fundamentals of its guidance on substantiation remain unchanged, but a close reading indicates otherwise.  For example, the substantiation standard remains competent and reliable evidence.  However, the 1998 Guidance was equivocal with respect to the number or type of studies required to substantiate advertising claims.  It focused on the totality of the evidence and considered all types of evidence, including animal, in vitro, and epidemiological evidence.  While recognizing that well-controlled human clinical studies are the “most reliable,” the 1998 Guidance did not claim that such studies are the only form of acceptable substantiation, and acknowledged that animal and in vitro studies could be acceptable in some circumstances.  In contrast, the new Guidance states that “[a]s a general matter, substantiation of health-related benefits will need to be in the form of randomized, controlled human clinical testing (RCTs) to meet the competent and reliable scientific standard. . . . Animal and in vitro studies may provide useful supporting or background information, but, without confirmation by human RCTs, they aren’t sufficient to substantiate health-related claims.”

As an additional example, the 1998 Guidance stated that the FTC would accept epidemiologic evidence when supported by other evidence, such as research explaining the biological mechanism underlying the claimed effect.  In contrast, the new Guidance suggests that FTC only will accept “high-quality” epidemiologic evidence in “limited cases where (1) it is considered an acceptable substitute for RCTs by experts in the field; and (2) RCTs aren’t otherwise feasible.”

The new Guidance includes 23 new examples (among a total of 53) of FTC’s thinking applied to advertising of supplements and other products, such as a children’s nutrition drink, an infant formula, nasal strips, and a smartphone app for treating acne.

The new Guidance also provides more detail on “clear and conspicuous disclosure,” noting that disclosures must be unavoidable.  Hyperlink disclosures do not meet the clear and conspicuous standard because they are avoidable. The new Guidance emphasizes the need for disclosures made both visually and audibly when claims are made in both formats, and also addresses specific groups of targeted consumers. For example, “[w]hen an endorsement targets a specific audience, such as older adults or children, the effectiveness of the disclosure will be judged from the perspective of a member of that group.”

The FTC’s new Guidance does not have the force and effect of law. Rather, it is “intended to help advertisers comply with the basic tenets of FTC law,” and as stated in FTC’s blog post, “it offers practical perspectives from FTC staff.” The FTC did not seek public comment prior to issuing the new Guidance.

In October, when pardoning those federally convicted of cannabis possession, President Joe Biden directed the Secretary of Health and Human Services (“HHS”) and the Attorney General “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.”  See President Biden Gives the Green Light for Significant Marijuana Reform, October 10, 2022.  The enactment of the Medical Marijuana and Cannabidiol Research Expansion Act (“the Act”) into law (Public Law 117-215) last month is a step in that direction.  The legislation passed in the House by a 325 to 95 vote last July and by Voice Vote in the Senate in mid-November.  President Biden signed the law on December 2nd.

As Congressman Earl Blumenauer (D-Oregon), founder and co-chair of the Congressional Cannabis Caucus and a sponsor of the bill observed, “Research is foundational for the path forward on cannabis policy. Research is essential to better understand the therapeutic benefits of cannabis that have the potential to help millions of Americans struggling with chronic pain, PTSD, multiple sclerosis, anxiety disorders and more.”  Earl Blumenauer, Press Release, Dec. 2, 2022.

We discuss the statute’s major provisions summarized below.

A.  Federal Research

As discussed in more detail below, the Act facilitates research of cannabis and its derivatives including cannabidiol (“CBD”), extracts, preparations and compounds, and the development of approved medications.  However, its most significant and enduring impact on federal cannabis regulation may be the mandate that HHS assess the compound’s therapeutic potential.  Within a year, HHS in coordination with the National Institutes of Health (“NIH”) must report to the Caucus on International Narcotics Control and responsible congressional committees on:

1. The potential therapeutic effects of cannabis on serious medical conditions including intractable epilepsy; and
2. The potential effects of cannabis, including the increase of delta-9-tetrahydrocannabinol (“THC”) levels on the human body, adolescent brains and the cognitive abilities to operate motor vehicles or heavy equipment.

The report must also discuss the barriers associated with conducting research with cannabis and CBD in states that have legalized their use, how barriers might be overcome and whether public-private partnerships or federal-state partnerships can or should provide researchers with additional cannabis and CBD strains.  HHS, in addition, must, “[t]o the extent practicable, the Secretary of Health and Human Services, either directly or through awarding grants, contacts [sic] , or cooperative agreements, shall expand and coordinate the activities of the NIH and other relevant federal agencies to better determine the effects of cannabis outlined in the report.”

To date 39 states and the District of Columbia have legalized cannabis for medical use (and 21 for adult recreational use), mainly through ballot initiatives.  The Act requires that HHS provide a scientific analysis on whether cannabis and its derivatives are safe and effective treatments for different medical ailments and their other effects on the human body.  A positive finding in this regard is critical to any potential that cannabis would be approved for medical use under federal law.

B.  Doctor-Patient Relationship

Also of great importance is the Act’s authorizing state-licensed physicians to advise patients or their legal guardians of the potential harms and benefits of cannabis derivatives as a medical treatment.  As a federally-controlled schedule I substance, cannabis by definition has no currently accepted medical use in treatment in the U.S.  21 U.S.C. § 812(b)(1)(B).  The Act is silent as to whether those physicians must hold a Drug Enforcement Administration (“DEA”) registration but significantly does not authorize physicians to administer, dispense nor prescribe cannabis.  There is no explicit federal prohibition against DEA-registered physicians advising patients on cannabis as a medical treatment, but to do so could subject a physician to DEA scrutiny.

C.  Adequate and Uninterrupted Supply of Cannabis

The Act places the onus on DEA to ensure an adequate, uninterrupted supply of cannabis for research.  The Act requires DEA, in consultation with HHS, to assess annually whether an adequate and uninterrupted supply, down to specific strains, exists and to establish sufficient quotas to ensure an uninterrupted supply.  Should DEA and HHS determine cannabis, even specific strains, to be inadequate or interrupted, DEA must report to Congress within 60 days on:

• The contributing factors;
  • Expected impacts on approved ongoing research protocols; and
  • Specific steps the agency will take to restore an adequate, uninterrupted supply.

It is unclear whether DEA, FDA or both will make the determination whether a shortage exists.

D.  Cannabis Researcher Registrations

1.  Application Process

The Act mandates that DEA streamline and accelerate registration application procedures for cannabis researchers and manufacturers of cannabis for research.  DEA must register practitioners to conduct cannabis research if (i) their protocol has been approved by HHS or NIH, and (ii) they have effective procedures to safeguard the compound in the quantities they seek to use in research against diversion.  DEA may deny an application if it determines the registration would be inconsistent with the public interest by considering:

• Recommendations of the appropriate state licensing board or professional disciplinary authority;
• The applicant’s experience in dispensing or conducting research with controlled substances;
• The applicant’s conviction record under federal or state laws relating to the manufacture, distribution or dispensing of controlled substances;
• Compliance with applicable state, federal or local laws relating to controlled substances; and
• Such other conduct which may threaten the public health and safety. 21 U.S.C. § 823(g)(1).

With respect to timing, DEA must issue a registration or request supplemental information within 60 days after receiving a complete application.  DEA then has 30 days after receiving supplemental information to issue or deny a registration.  DEA must provide a written explanation of the basis for denying a registration.  The Act authorizes DEA to deny registrations only if approved protocols lack adequate security.

2.  Research Protocols

As a reminder, the Controlled Substances Act (“CSA”) and DEA regulations require that research with cannabis and other schedule I drugs can only be conducted with a protocol approved by DEA and FDA.  21 C.F.R. §§ 1301.13(e), 1301.18, 1301.32.  The Act allows researchers to amend or supplement their research protocol without notifying DEA if there is no change to cannabis quantity or type, its source, or to its storage, tracking or administration.  If a researcher wishes to change those research elements, they must notify DEA via registered mail or electronically within 30 days before implementation.  Researchers may proceed if DEA does not explicitly object within 30 days, and the agency can only object if additional security is required.

If a change of cannabis quantity does not impact other factors, researchers must notify DEA by registered mail or electronically and the agency must respond within 3 days.  Notifications are deemed approved unless DEA explicitly objects within 10 days if it finds that a change in quantity impacts the cannabis source or how it is stored, tracked, administered or requires additional security measures.

Although the Act limits DEA’s authority over cannabis research protocols, it does not limit HHS’ authority, including over changes in the method of administration, dosing and the number of individuals involved in research

DEA must promulgate regulations implementing these application process changes within one year.

3.  Security

Researchers must store cannabis in a securely locked, substantially constructed cabinet.  21 C.F.R. § 1301.75(a).  The Act restricts DEA from mandating more stringent security requirements for cannabis researchers than those imposed on other schedule I and II researchers.

E.  Cannabis Manufacturer Registration for Research

As with cannabis researcher registrations, the Act requires DEA to approve an application for a cannabis manufacturer registration or request supplemental information within 60 days after receiving complete applications.  Manufacturer applications are complete when the applicant has demonstrated that they:

• Have satisfied requirements designated in the Federal Register notice;
• Have satisfied statutory and regulatory requirements;
• Will transfer or sell cannabis only to DEA-registered researchers for preclinical research or clinical investigation pursuant to a New Drug Exemption;
• Will transfer or sell cannabis only with prior, written DEA consent;
• Has completed the application and review process for bulk manufacture of schedule I
  substances;
• Has established and begun a process for storing and handling schedule I substances including inventory control and security; and
• Is licensed by each state in which it will conduct operations.

Also like researcher applications, DEA must approve or deny issuing a registration within 30 days after receiving requested supplemental information and must provide written explanation of the basis of a denial.

F.  Commercial Production and Distribution of FDA-Approved Cannabis Drugs

Consistent with the Controlled Substances Act, DEA cannot deny a manufacturer registration solely on the basis that the applicants wants to manufacture an FDA-approved product containing cannabis.

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Other cannabis-related bills that were not acted upon in the waning days of the 117th Congress include the Secure and Fair Enforcement Banking Act of 2021 (“SAFE Banking Act”), Veterans Equal Access Act, the Preparing Regulators Effectively for a Post-Prohibition Adult-Use Regulated Environment Act of 2022 (“PREPARE Act”) and the Veterans Medical Marijuana Safe Harbor Act.

As we turn into the New Year, we offer a few items of interest in digital and telehealth regulation, enforcement, and compliance that may provide some helpful guideposts for stakeholders.

In 2022, the chief regulating entities—FDA, FTC, and DOJ—all continued to forge policies to help bridge the rapidly moving waters between traditional regulatory concerns about safety and effectiveness on one side and cybersecurity, data privacy, and identity integrity on the other. To date, regulatory enforcement litigation focused on actual or imminent patient harm has taken a backseat to cybersecurity as FDA continues to update and implement its oversight framework. But a compromised device is a threat to patient safety, so that timeline could change in the event of an adverse event that imperils consumer health. Until that happens, interested parties in this space continue to face many of the same cybersecurity threats as other data-tech entities.

In mid-November, FDA collaborated with the MITRE Corporation to publish an update to the Medical Device Cybersecurity Regional Incident Preparedness and Response Playbook. The Playbook is a guide for healthcare delivery organizations to respond to cybersecurity incidents that threaten device function and, potentially, patient safety. It emphasizes building partnerships with local health and law enforcement authorities, so organizations can mitigate any breaches, especially those that can potentially cripple smaller, less resourced providers.

Among other things, the Playbook encourages preparedness, provides some considerations for impacts and downtime, and adds a resource appendix to give users more tools and resources. It is another effort from CDRH’s Digital Health Center of Excellence to provide structure and guidance to participants across the connected device playing field, including both delivery organizations as well as manufacturers. CDRH is building an extensive library of similar reports and white papers as it prepares its final guidance for medical device cybersecurity, scheduled to come out next Fall.

Combination products are sharing the digital moment with those classified solely as medical devices. Combination products might be part drug, part device, or part software or hardware. Those different pieces create a complex regulatory puzzle, and cybersecurity failings in them can quickly descend into the same depths of functionality and threats to patient safety.

Remarks at the November AFDO/RAPS Combination Products Summit highlight the complexities of connected combination products. The current Team Lead for Injection Devices in CDRH’s Division of Drug Delivery and General Hospital Devices and Human Factors noted that depending on the product, the pre-market path for a connected combination product might require an IND, IDE, or a determination that it is a medical device data system, which are not regulated as devices. Post-market, combination products potentially face the same enforcement scrutiny as single-entity medical devices. FDA counsels that, as is the case with any other electronic device, seemingly small, routine steps like software maintenance and updates are ways companies can address possible vulnerabilities that could lead to adverse events.

FDA has shown a willingness to intervene in this space. One example is the Warning Letter FDA sent to Medtronic in late 2021 concerning a vulnerability in insulin infusion pumps. Another is the June 2022 Letter to Health Care Providers about a cybersecurity vulnerability affecting Illumina medical devices for clinical diagnostic use in sequencing a person’s DNA or testing for various genetic conditions.

Digital providers and manufacturers not only have the concerns of the FDA to consider, but those of the FTC as well. Where evidence supports, the FTC views data security breaches as violations of the FTC Act as unfair and deceptive advertising practices. The theory here is that if digital device makers tell customers their data is safe, but in fact it is not, and if a breach occurs, those makers may face liability.

This was a topic at the December Food and Drug Law Institute conference on Current Developments in Digital Health Technology and Regulation. Speakers from both the FTC’s Division of Privacy and Identity Protection and DOJ’s Consumer Protection Branch expressed a continued willingness to bring suits against firms that fall short in their data integrity efforts, citing cases against SkyMed and Flo Health as examples of their work that also touch upon FDCA concerns. Another takeaway from this conference was that CDRH received high marks from commentators across many panels about both the quality and quantity of the Agency’s efforts to develop and align regulatory expectations in this area.

Healthcare delivery organizations are facing increasing pressure from cyberattacks due to the sector’s profitability and the increasing number of accessible endpoints that advancing technology provide. Thus, cybersecurity is tightly intertwined with safety and effectiveness, and government regulators seem willing to invest in the resources to detect cybersecurity problems that affect the regulatory landscape. Moving forward, it seems likely that those issues will become even more prominent during both the pre-market process as well as in post-market monitoring and use to guard against data breaches and adverse events. More updates will follow here as trends develop in 2023.

A win for patient access!   Prescription drug and medical device Pre-Approval Information Exchange (PIE) now has specific legal protection allowing for sponsors to proactively communicate to payors certain information about products in development to help expedite patient access upon product approval.

The PIE Act, otherwise known as section 3630, “Facilitating Exchange of Product Information Prior to Approval” of H.R. 2617, the “Consolidated Appropriations Act, 2023,” was signed into law by President Biden on December 29.   The provision amends the Federal Food, Drug, and Cosmetic Act section 502 to provide explicit protection for conveying certain information about products in development to payors, including unapproved uses of approved products.

While pre-approval payor communications are not entirely new, the legal protection now afforded to them will help (hopefully) expedite the creation and reviews of such communications that, have to date, been often fraught with internal company debate.  As background, 21 C.F.R. §312.7 explicitly prohibits the “promotion” of investigational drugs:

A sponsor or investigator, or any person acting on behalf of a sponsor or investigator, shall not represent in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation or otherwise promote the drug.  This provision is not intended to restrict full exchange of scientific information concerning the drug, including dissemination of scientific findings in scientific or lay media.  Rather, its intent is to restrict promotional claims of safety or effectiveness of the drug for a use for which it is under investigation and to preclude commercialization of the drug before it is approved for commercial distribution.

While the focus of the regulation seems to be a sponsor’s suggestion that its investigational drug is safe or effective, the language of the regulation more broadly states that a sponsor shall not “otherwise promote the drug” and that its intent is “to preclude commercialization of the drug before it is approved.”  Industry has grappled with interpreting this regulation – what is promotion? what is commercialization? We know that, in the context of payor communications, the Office of Prescription Drug Promotion (and before it, the Division of Drug Marketing, Advertising and Communications – DDMAC) has long considered the provision of healthcare economic information about drugs to payors to be “promotional,” requiring this content to be submitted to FDA on Form 2253 as promotional labeling.

When FDA published its draft guidance on payor communications in 2017, it seemed revolutionary – introducing the concept of pre-approval information exchange for wholly unapproved products. Upon finalization of the guidance a year and a half later in June 2018 (which gave those who follow ad/promo guidance documents whiplash given the number of still-in-draft guidances) FDA expanded its enforcement discretion to include communications about unapproved uses of approved products.  Per the final guidance, sponsors could provide payors with information about unapproved products and unapproved uses of approved products including information about indications sought, descriptions of clinical studies, anticipated timeline for possible FDA approval/clearance, product pricing, patient utilization projections, and product related programs or services.  FDA recommended that communications include a clear statement that the product or use is not FDA-approved and that safety or effectiveness of the product or use has not been established.

As we noted back in our 2018 blogpost , the expanded scope of the final guidance – covering unapproved uses of approved products – was significant, as these discussions are tantamount to off-label discussions and discussions with Medicare and Medicaid providers could raise False Claims Act questions.  While helpful to have an FDA guidance, there was nothing specifically in the law or regulations that would otherwise protect these communications (other than the First Amendment which, let’s face it, is always a bit risky when litigating).  Reconciling the guidance with 21 C.F.R. §312.7’s prohibition on promoting investigational drugs was difficult.  We had stated, at that time, that “[r]egardless of these new, more permissive guidelines, industry should be careful of suggesting an unapproved use for an approved product.”  FDA had put industry in a quandary.

The PIE Act largely adopts the language from FDA’s guidance and provides the legal protection for these communications desperately sought by sponsors, payors, and patients.  Until now, since the publication of the final guidance, we have witnessed internal company struggles regarding whether and how to provide this important information to payors.  We are hopeful that this critical information will facilitate earlier patient access to needed treatments once they are approved.

On December 7, 2022, FDA’s Center for Biologics Evaluation and Research (CBER) and the Office of Tissues and Advanced Therapies (OTAT) held a town hall to answer questions related to cell therapy and tissue-engineered products chemistry, manufacturing, and contr­­ols (CMC).  The purpose of these town halls are to discuss topics related to OTAT-regulated products, engage with product development stakeholders, and to provide information to help stakeholders to help advance drug development.  The next town hall will focus on the clinical development of gene therapy products for rare diseases in February 2023.

As previously mentioned, sponsors can interact with FDA in the town hall by submitting questions in advance or by asking a question live during the meeting.  It is important to keep in mind that this meeting is for general CMC feedback and sponsors are informed that “FDA is not able to comment on or answer questions regarding specific investigational products or drug applications during the town hall.”

In case you do not have time to watch the town hall, we provided a summary of select topics that are discussed below.  There was a lot of information on CMC regulatory requirements and pitfalls for cellular therapies and tissue engineered products discussed during the OTAT town hall that are not included in this blog.  These topics included the requirements for using irradiated murine cell lines, core blood as a starting material, and fetal bovine serum, FDA’s standards for the development of cell and gene therapies and tissue products, testing requirements for stability, donor eligibility, delivery devices, and for a scaffolding component of a tissue-engineered product.

Common CMC Issues for Phase 1 IND Study

The Agency stated that the most common reason for a clinical hold of a Phase 1 study under an investigational new drug (IND) is related to safety.  The reasons for these holds might include not providing sufficient information to describe the manufacturing process, using reagents which are not demonstrated to be of sufficient safety or quality, not conducting donor eligibility or appropriate cell bank testing, insufficient safety testing of the product, insufficient information on the assays to conduct the safety testing, insufficient safety information on delivery device and data demonstrating that the device does not impact the safety or quality of the drug product.  The Agency repeatedly stated and strongly recommends sponsors engage with FDA prior to submitting the IND.

Potency

Similar to the OTAT town hall meeting in September, potency assay requirements and pitfalls were discussed.  The Agency referred to its 2011 FDA Guidance for Industry: Potency Tests for Cellular and Gene Therapy Products during the town hall.  As you may know, there are challenges related to developing potency assay(s), and the Alliance for Regenerative Medicine and the American Society of Gene and Cell Therapy recently published a white paper on a workshop held to discuss these challenges.  The workshop is also discussed in Cell & Gene here and here.

The Agency recommended that product developers begin designing potency assay(s) early, and developing and evaluating multiple potency assays since not all potency assays can be validated and some potency assays may not fully reflect the biological activity.  The Agency stressed that because the ability to measure potency is fundamentally related to product characterization, developers should initiate potency assay development by the way of product characterization during preclinical and early clinical investigation.  The potency assay may not be completely defined early in the development, but should become progressively more comprehensive as developers accumulate manufacturing experience, product characterization data and clinical data.  For first in human studies, developers need to provide plans for characterization, including a description of the initial critical quality attributes, potency assay development plans during clinical development, and a quality target profile.  As the product advances in clinical development, expectations are that the potency test be refined to measure a relevant biological activity of the product.  The Agency directly quoted the 2011 FDA Guidance, “if one assay is not sufficient to measure the product attribute(s) that indicates potency, then an alternative approach could be used, such as developing multiple complementary assays that measure different product attributes associated with quality, consistency and stability.”  The Agency stated because cellular and tissue-engineered products usually have multiple potentially related critical quality attributes (CQAs), the potency assay strategy could include multiple assays, each of which quantitates a potency-related CQA.

The Agency pointed out that a qualitative potency assay should be accompanied by one or more quantitative assays and cannot be used without a quantitative assay.  Although demonstrating accuracy and precision for a qualitative assay could be challenging, the Agency stated that with proper assay design (e.g., sufficient replicates), developers should be able to demonstrate adequate assay consistency.  Per the 2011 FDA Guidance, developers should validate the assay prior to conducting a clinical study that will investigate the efficacy for licensure.

Comparability

For any change, the Agency recommended that developers conduct a risk assessment per ICH Q5E to determine whether there is a potential to affect product quality.  This would include an evaluation of the potential for product attributes and process parameters to affect the product quality as they relate to the product safety and efficacy.  The goal of the comparability study is to demonstrate a lack of adverse effect on the product quality.  The Agency recommended changes in product manufacturing are implemented in the earlier phases of the clinical study to reduce risk to the development program (i.e., before evaluating clinical effectiveness).  Depending on the change and at what phase of the clinical study it is made, the Agency expects that a comparability assessment, developmental studies, and risk assessment be conducted to support the change.  The developmental studies and the risk assessment should allow sponsors to rank the different product characteristics to determine the type of evaluation that should be performed such that a study can be designed to address the risk(s) identified. The Agency emphasized that release testing alone is not sufficient to assess comparability and that additional characterization testing or in process testing be conducted to demonstrate that there is not adverse effect on product quality.

The extent of analytical evaluation needed in comparability studies generally increases with the stage of clinical and product development and should be supported by knowledge of CQA, accumulated manufacturing experience, and further understanding of the mechanism of action.  Understanding the impact of manufacturing changes on product quality is essential to determine the risks to product quality and to design the comparability study.  It is important to use analytical methods that could detect meaningful differences in product quality.  The Agency recommended developers determine the most appropriate process time points to detect the change in the quality attributes, which could entail evaluating the product at multiple stages of manufacturing.  It is possible that the comparability study results may not be sufficient to establish product comparability.  The sufficiency of comparability evaluation depends on the type of change and a developer’s level of understanding of product quality attributes as predictors of clinical safety and efficacy.  The inclusion of additional characterization tests or preclinical studies may be necessary to support comparability.  For some products, animal models may be used to demonstrate that the product has the desired biological effect and provide supportive evidence for comparable biological activity of the pre-change and post change product.

Release Criteria

The Agency acknowledged that early in development, a complete understanding of appropriate process controls may be limited and that specific controls may be added or refined during the life cycle.  However, the initial IND submission should describe and justify the controls that are implemented to ensure adequate quality and manufacturing consistency.  The Agency recommended that product be as fully tested as feasible in early stages of development and that specifications should be appropriate to the stage of product development.  For example, for early phase clinical studies, assays should be in place to access identity, quality, strength, and purity.  In later stages, more detailed product characterization and potency should be provided.  The acceptance criteria for release testing should be established and justified based on data from lots used in preclinical or early clinical studies, lots used in demonstration of manufacturing consistency, and stability studies, and relevant product studies.  The Agency recognizes few specifications will be finalized and some tests may still be under development; however, for any given stage of the development, the testing plan submitted should be adequate to describe the physical, chemical, or biological characteristics of the drug product necessary to ensure quality and safety.  Specifications should be further refined as product development and tightened based on manufacturing experience as clinical development moves forward.

Other Questions

At what point does manufacturing at the clinical site become manufacturing that requires additional final product release testing?

The Agency stated that manufacturing steps conducted at a clinical site considered to be substantial manipulations (e.g., those used to prepare final drug product after its been released) are subject to manufacturing controls and good manufacturing practices. The Agency also recommended that sponsors work to eliminate additional manipulation steps at the clinical site after the product is released and distributed from the manufacturing site.

How should sponsors handle manufacturing deviations, including product lots that do not meet lot release specifications?

Manufacturing deviations should be investigated to identify the root cause and appropriate  corrective actions should be taken to avoid repeat occurrences in the future.  The Agency expects that sponsors provide their risk management approach and change control procedures for how to address the risk manufacturing deviations in their IND.  Manufacturers who hold a biological license should report manufacturing deviations to the FDA per 21 CFR 600.14.  Product should not be released if it does not meet lot release specifications due to the manufacturing deviations.  Sponsors may consult with the Agency to release out of specification product if a patient is at significant risk and is conditioned to receive the product.

Is it acceptable to use products manufactured from engineering runs in clinical studies?

The Agency stated that this may be permissible if adequate justification on safety and quality of the batch and whether or not there are differences in the manufacturing process for that engineering run versus the intended clinical run.

If I use GMP grade reagents, isn’t that sufficient to support their safety?  What are the general expectations on reagents used to manufacture products under an IND?

The Agency pointed out that just because a reagent is labeled “GMP grade” does not necessarily mean that the reagent was manufactured using good manufacturing practices (GMP).  In some cases, a certificate of analysis from the supplier may be sufficient and FDA would not require additional information regarding the reagent.  In other cases, the Agency would require additional testing to ensure safety and quality of the GMP grade reagent. The Agency recommended that sponsors follow the requirements under 21 CFR 211.84(d)(2) and conduct an identity test on at least one lot of reagent in addition to maintaining a supplier qualification program that evaluates reagent suppliers.  The Agency stated sponsors could qualify use of research grade reagents in an IND, but that sponsors should progress towards using reagents that have been manufactured under GMP conditions.  During the town hall on gene therapy CMC, the Agency noted that it does not recommend the use of research use reagents or materials, but that it could be flexible (minute 42 of the recording here).