By William T. Koustas –

We have previously reported on the long running legal battle between the Federal Trade Commission (“FTC”) and the American Bar Association (“ABA”) over the implementation of the FTC’s Red Flags Rule (“the Rule”).  Last Friday, the United States Court of Appeals for the District of Columbia Circuit (“the Court”) ruled that the case is moot.  ABA v. FTC, No. 1:09-cv-01636, Mar. 4, 2010.  The ruling stemmed from Congress' enactment of the Red Flag Program Clarification Act of 2010 (“Clarification Act”) on December 18, 2010, Public Law No. 111-319, 124 Stat. 3457. 

The Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”) directed the FTC to promulgate regulations that required creditors to enact procedures to prevent identity theft.  In 2007, the FTC adopted the Rule, which required creditors to implement these procedures to prevent identity theft.  16 C.F.R. § 681 et seq.  In April 2009, the FTC issued a document explaining that the Rule applied to various professions, including attorneys and healthcare providers because they bill their clients after services are rendered, thus extending credit.  The ABA filed suit against the FTC in August 2009 challenging the FTC’s application of the Rule to attorneys.  The ABA argued that the FTC was intruding on the regulation of the practice of law, which is an area of regulation traditionally left to the states.  The District Court enjoined the FTC from enforcing the Rule against lawyers.  ABA v. FTC, 671 F. Supp. 2d, 64 (D.D.C. 2009).  The FTC appealed that decision.  However, the Clarification Act was enacted shortly after the Court heard oral arguments. 

The Court ruled that passage of the Clarification Act rendered the case between the ABA and FTC moot.  The FACT Act defined the term “creditor” and “credit” such that attorneys and other professionals who bill their clients for services render could, according to the FTC, be considered creditors and required to comply with the Rule.  However, the Clarification Act defined a creditor such that the definition specifically exempts a person who “advances funds on behalf of a person for expenses incidental to service provide by the creditor to that person.”  Pub. L. No. 111-319, § 2(a).  As such, the issue at the center of the case, whether attorneys are considered creditors under the FACT Act, appears to have been mooted by the new statute.  Therefore, the Court vacated the District Court’s decision and remanded the case back to the District Court with instructions to dismiss the case as moot.

This ruling will end this litigation unless either party seeks further review from either the D.C. Circuit or the U.S. Supreme Court.

ADDITIONAL READING:

• Statement by FTC Chairman Jon Leibowitz Regarding Court Ruling on Red Flags Rule

Whether you say it in English, German (“Alles Gute zum Geburtstag FDA Law Blog!”), Hebrew (“Yom Huledet Same'ach FDA Law Blog!”), Hindi (“Janam Din ki badhai FDA Law Blog!”), Japanese (“Otanjou-bi Omedetou Gozaimasu FDA Law Blog!”), Zulu (“Ilanga elimndandi kuwe FDA Law Blog!”), or any other language, on March 6th, 2011, we’re happy to accept all Happy Birthday wishes.  On that day we turn the big 4.  Oh, and what a year it was.  We had about 360 posts, for a total of more than 1,160 posts since we started this gig.  (That’s a lot of writing!)  Our readership and subscribers continue to grow, with about 5,200 folks getting our posts on a daily basis, and we’re poised to top the 1 million hit mark for our blog webpage. 

We are particularly proud that for the second year in a row the American Bar Association named FDA Law Blog as one of the top legal “blawgs” in the blogosphere when the organization announced the “Blawg 100” last November.   Blog search engine Technorati consistently ranks FDA Law Blog well within the top 1% of all blogs in the English-language blogosphere, and with a high “authority” – the measurement of a blog’s standing and influence in the blogosphere.

And we would, of course, be remiss if we did not thank our loyal readers!  We appreciate your support and your thoughtful comments.  We also thank our Hyman, Phelps & McNamara, P.C. colleagues for their time and dedication to writing interesting and informative posts.

By John R. Fleder & Anne K. Walsh –

Perhaps Yogi Berra's most famous quote was: "This is like déjà vu all over again."  Recently proposed amendments to the Sentencing Guidelines applicable to U.S. courts suggest that companies and their executives regulated by FDA may be going through a déjà vu moment.  On January 19, 2011, the United States Sentencing Commission issued a Federal Register notice.  Relevant portions of that notice are contained here. 

The issue that raises a major concern is what may be the third proposal to amend the Sentencing Guidelines seeking to impose harsh sentences against persons convicted of "strict liability" offenses under the FDC Act.  Whether intended or not, the proposed amendments could well be interpreted to require many persons convicted under the misdemeanor provision of the FDC Act, 21 U.S.C. 333(a)(1), to be sentenced under the Guidelines that are currently applicable to fraud, the Section 2B guidelines, rather than the current "regulatory" guideline, 2N2.1.

In 1996, the Commission proposed eliminating the 2N.2.1 Guideline entirely, and in its place would have had courts sentence all FDC Act cases under the harsher fraud guidelines.  Based at least in part upon the industry's strong negative response to the proposal, the Commission withdrew it.  In 2008, FDA sought wholesale revisions to the 2N2.1 Guideline.  The Commission proposed a number of FDA's suggested amendments for public comment.  As one could probably imagine, all the proposed changes were intended to increase sentences that would be imposed under that Guideline.  Our firm submitted testimony to the Commission which started with the basic premise that there was no evidence that the courts were imposing sentences under the 2N2.1 guideline that were too lenient.  Our firm recommended that with the exception of one change that the Commission had proposed that we thought had merit, the Commission should not modify the 2N2.1 Guideline.  The Commission rejected most of FDA's proposed amendments to that Guideline.

We have recently discussed (here and here) FDA's renewed efforts to employ the so-called "Park Doctrine", under which corporate executives can be prosecuted and convicted of FDC Act violations even though an executive did not participate in, or even know about, the violation.  As a result of the Agency's renewed efforts to employ the Park Doctrine, any changes to the sentencing scheme for such violations will have a dramatic impact on persons regulated by FDA.  For instance, over the past twenty or so years, many prosecutors have shied away from bringing "Park" cases because they believed that the sentences imposed when a person is prosecuted under the Park Doctrine did not result in sufficient penalties.  Although there seems to be little or no evidence to support that proposition, any change in the Sentencing Guidelines applicable to Park cases could have dramatic effects in terms of prosecutors being willing to take on those cases. 

FDC Act violations can be prosecuted as misdemeanors without a showing of any mens rea, a unique characteristic of the law that emphasizes the highly regulated nature of FDA-related activities.  The Park Doctrine imposes a higher standard on those that involve themselves in such activities.  FDC Act violations also can be prosecuted as felonies if there is evidence of an intent to defraud or mislead, or if the defendant was convicted previously of a violation of the Act.  By their nature, felony violations typically involve more egregious conduct, often involving more impact on public health, or repeat offenders. 

FDC Act violations not involving felony conduct or fraud are sentenced under Guideline 2N2.1.  The unintended impact of the Commission’s proposed amendment is that strict liability misdemeanor offenses could be sentenced at the same levels as felony violations.  This equal consideration of strict liability and felony crimes undermines the purpose of the two-tiered approach contained in the FDCA.  (There also could be potential due process concerns raised for calculating sentences of a defendant convicted of an FDC Act strict liability misdemeanor.) 

With this background we turn to the Commission's proposed amendments.  They largely stem from provisions of the Patient Protection and Affordable Care Act (“PPACA”), enacted by Congress on March 23, 2010.  Relevant portions of that Act can be found here.

Under the section titled “Health Care Fraud Enforcement” (§ 10606), the PPACA directed the Sentencing Commission to amend the Guidelines to ensure that the Guidelines and policy statements:

• Reflect the serious harms associated with health care fraud and the need for aggressive and appropriate law enforcement action to prevent such fraud; and
• Provide increased penalties for persons convicted of health care fraud offenses in appropriate circumstances.  

From the number of times the word “fraud” is used in this short section, four in all, it should be clear the Act contemplates that any amendments to the Sentencing Guidelines should affect only those cases involving fraud.  In other words, the statutory amendments were intended to address conduct that involves a level of behavior that rises to the level of fraud on the government health care programs. In effect, however, the Commission’s proposed changes could go well-beyond raising the penalties for only fraud cases. 

The Commission proposal would amend the Guidelines with regard to "persons convicted of Federal health care offenses involving Government health care programs."  76 Fed. Reg. 3203, column 1.  As proposed, there would be no limitation with regard to the types of health care offenses involving health care programs that would be subject to the increased sentencing levels.  As a result, if adopted, prosecutors could argue that this language applies to strict liability misdemeanor cases.

The proposed Amendments contain one important limitation.  They would only apply to health care offenses "involving Government health care programs."  As we have seen from recent criminal prosecutions of many companies regulated by FDA, the government certainly believes that the term "Government health care programs" involves so-called "off-label use" cases.  However, we suspect that the government would include other more traditional FDC Act violations under the description of an offense involving a government health care program.  Thus, the proposed change could increase penalties for conduct that has nothing directly to do with the provision of health care services, such as those involving current Good Manufacturing Practice ("cGMP") violations, failing to report adverse events, or refusing to produce certain records during an FDA inspection.  Not to diminish the importance of complying with the law in these areas, but because the FDC Act’s prohibited act section covers almost all aspects of regulatory authority vested in FDA, prosecutors may well argue to courts if the proposed amendments are adopted that sentencing for a vast number of FDCA violations must be calculated under the “fraud” guidelines when in fact no fraud is involved, and even, potentially, when there is no direct impact on government health care programs.
 
The Commission appears to be well-meaning enough by proposing to amend the definition of “federal health care offense” in section 2B1.1 of the Sentencing Guidelines (the “fraud” guidelines) to have the same meaning as in 18 U.S.C. § 24.  Indeed, it proposes to amend that definition because the PPACA amended 18 U.S.C. § 24 to include FDC Act “prohibited acts” under 21 U.S.C. § 331.  But without carving out from this section the FDC Act “prohibited acts” that do not involve fraud, the Commission could be inviting courts to impose greater sentences for FDC Act crimes that have nothing to do with fraud. 

We suspect that the Commission may not be intending to make strict liability FDC Act violations subject to the fraud sentencing Guidelines.  The Sentencing Commission would have explicitly proposed changes to section 2N2.1 had it wanted non-fraud FDC Act violations covered by the proposed amendments to the Guidelines.  The Commission should explicitly preclude prosecutors from misapplying the fraud guidelines to FDC Act misdemeanor cases.

The Commission has invited comments to be submitted to the Sentencing Commission’s proposal by March 21, 2011.  There was a public hearing on the proposed amendments on February 16, 2011.  It does not appear that there was any discussion about the proposal discussed in this posting.

By Karla L. Palmer & Larry K. Houck –

Consistent with its November 24, 2010 Notice of Intent, the Drug Enforcement Administration (“DEA”) published its Final Order temporarily placing five synthetic cannabinoids into Schedule I under the Federal Controlled Substances Act (“CSA”) to avoid imminent hazard to the public safety.  76 Fed. Reg. 11,075 (Mar. 1, 2011).  Effective March 1, 2011, the synthetic cannabinoids known as JWH-018, JWH-073, JWH-200, CP-47,497 and cannabicyclohexanol are subject to the Schedule I regulatory controls and administrative, civil and criminal sanctions imposed by the CSA and its implementing regulations.

DEA has authority to temporarily place a substance into Schedule I for one year without having to comply with the usual scheduling requirements under 21 U.S.C. § 811(b) if the agency finds such action necessary to avoid imminent hazard to the public health.  DEA last invoked temporary scheduling in April 2003 when it temporarily placed alpha-methyltryptamine and 5-methoxy-N,N-diisopropyltryptamine in Schedule I.  These substances were permanently placed in Schedule I in September 2004 following an extension of the temporary scheduling.  See 68 Fed. Reg. 16,427 (Apr. 4, 2003); 69 Fed. Reg. 17,034 (Apr. 1, 2004); 69 Fed. Reg. 58,050 (Sept. 29, 2004).

In making its determination, DEA considered three of the eight statutory scheduling factors (as it is required to do under 21 U.S.C. § 811(h)(3)): Each substance’s history and current pattern of abuse; its scope, duration and significance of abuse; and what, if any, risk each poses to the public health.  DEA explained that temporary placement of the cannabinoids into Schedule I is necessary to avoid imminent hazard to the public safety because they are not intended for human consumption and “there has been a rapid and significant increase in their abuse throughout the United States.  Id.  These substances, marketed under such names as “Spice” and “K2,” are sold as herbal incense or plant food, and although labeled as “not for human consumption,” are abused for their psychoactive properties.  Id. at 11,076.  DEA observed that at least eighteen states, the U.S. military and several countries have banned the substances.  DEA concluded that the substances “have the potential to be extremely harmful and, therefore, pose an imminent hazard to the public safety.”  Id. at 11,075.

DEA explained that synthetic cannabinoids are “a large family of chemically unrelated structures functionally (biologically) similar to THC,” the primary psychoactive substance in marijuana.  DEA noted that the five cannabinoids were originally developed for research purposes in the early 1980s and mid-1990s, and are not intended for human consumption.  The rise in use of these substances represents what DEA believes is a “recent phenomenon in the U.S. designer drug market” and “are perceived by the public as ‘legal’ alternatives to marijuana despite the fact that they are typically advertised as herbal incense or plant food.”  Id. at 11,076.  DEA concluded that each of the cannabinoids meet Schedule I criteria: They have a high potential for abuse; they have no currently accepted medical use in treatment in the United States; and they lack accepted safety for use under medical supervision.

The substances will remain in Schedule I for one year with the possibility of a six-month extension, during which time DEA and the Department of Health and Human Services will study the propriety of permanent control and scheduling.

Temporary placement of the cannabinoids into Schedule I subjects them to the regulatory controls and administrative, civil and criminal sanctions applicable to their manufacture, distribution, possession, importation and exportation.  Schedule I regulatory controls include registration by DEA of legitimate handlers, security to protect against their diversion, specific labeling and packaging, manufacturing quotas, physical inventories, recordkeeping, reporting and transfer by DEA-222 Official Order Forms.  Id. at 11,077-78.

By Kurt R. Karst –      

FDA’s Unapproved Drugs Initiative, which began in June 2006 when the Agency issued its final version of “Marketed Unapproved Drugs – Compliance Policy Guide Sec. 440.100,” took a major step with the Agency’s March 2, 2011 announcement that FDA plans to take enforcement action against what appears to be hundreds of allegedly “unapproved and misbranded oral drug products that are labeled for prescription use and offered for relief of symptoms of cold, cough, or allergy and persons who manufacture or cause the manufacture of such products.”  FDA’s announcement, which specifically covers oral extended-release, tannate, and immediate-release drug products, comes just one day after FDA denied (here, here, and here) three citizen petitions concerning marketed unapproved tannate-containing drug products and Generally Recognized as Safe and Effective (“GRASE”) status.  The announcement also comes about two months after FDA issued a Federal Register notice in January 2011 intended to finalize certain Drug Efficacy Study Implementation ("DESI") proceedings related to cough, cold, or allergy drug products (see our previous post here).

FDA’s Federal Register notice on today’s announced enforcement action is scheduled for publication on March 3rd, and separately discusses the legal status of the affected oral extended-release, tannate, and immediate-release cough, cold, or allergy drug products.  FDA states in the notice that the Agency plans to take enforcement action under two tracks.  (In a separate Federal Register notice scheduled for publication on March 3rd, FDA announced the closure of the remaining DESI dockets that were the subject of a January notice.  FDA also commented on the regulatory status of dihydrocodeine bitartrate in a separate letter.)

First, FDA plans to take enforcement action against any drug product covered by the notice that was not listed with FDA pursuant to FDC Act § 510 before March 2, 2011, and is manufactured, shipped, or otherwise introduced or delivered for introduction into interstate commerce by any person on or after March 3, 2011.  In addition, FDA says that the Agency plans to take enforcement action against any drug product covered by the notice that is listed with FDA in full compliance with FDC Act § 510 “but is not being commercially used or sold in the United States on March 2, 2011 and that is manufactured, shipped, or otherwise introduced or delivered for introduction into interstate commerce by any person on or after [March 3, 2011].”

Second, for drug products covered by the March 3rd notice that are commercially used or sold in the U.S., that have a National Drug Code number listed with FDA, and are in full compliance with FDC Act § 510 before March 2, 2011 – termed as “currently marketed and listed” drugs in the notice – FDA says that the Agency intends to exercise its enforcement discretion in the following manner:

FDA intends to initiate enforcement action against any currently marketed and listed product covered by this notice that is manufactured on or after [June 1, 2011] or that is shipped on or after August 30, 2011.  Further, FDA intends to take enforcement action against any person who manufactures or ships such products after these dates. 

And for anyone under the impression that the submission of a marketing application might save them from enforcement action, FDA notes that “[a]ny person who has submitted or submits an application for a drug product covered by this notice but has not received approval must comply with this notice.”

FDA’s March notice is reportedly the 17th action on a drug class the Agency has taken as part of the Unapproved Drugs Initiative.  In addition to action related to marketed unapproved cold, cough, or allergy drug products, FDA also recently initiated a seizure action concerning Auralgan Otic Solution, a marketed unapproved prescription drug used to treat pain and inflammation associated with ear infections.  In that case, the manufactuer is reportedly holding firm that its drug product is GRASE.   Finally, FDA is fighting, in the U.S. Court of Appeals for the Tenth Circuit, an appeal of a Wyoming district court decision concerning the “new drug” status of marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products.

By Kurt R. Karst –      

Midnight, March 4, 2011 – that’s the time and date on which the federal government will close for business if Congress fails to approve a spending bill, or a short-term/stopgap funding measure that would likely just delay a shutdown for a couple of weeks.  If Congress fails to pass a spending bill, agencies like FDA are legally obligated to perform only essential activities necessary to protect life and property during a shutdown.  Although the FDA-regulated industry might be of the opinion that FDA activities related to their pending applications are necessary to protect life and property, that is not the case.  So with a government shutdown looming, it begs the question, what happens to FDA approval decision deadlines that come due during a shutdown or other emergencies, like the extreme weather conditions the Washington, D.C. metro area experienced in February 2010 (a.k.a. Snowmageddon, Snowpocalypse, or Snowzilla)?

Shortly after Snowmageddon, FDA issued a notice addressing the procedures the Agency put in place to manage Prescription Drug User Fee Act (“PDUFA”) and Medical Device User Fee Act (“MDUFA”) goals that came due during, or that were coming due soon after, the closure of the Agency’s offices.  In that case, FDA said the Agency would extend PDUFA and MDUFA goals and that “all submissions that were sent to FDA and would have normally been received during the closure may not be marked as ‘received’, for purposes of calculating any review or regulatory clocks, until the FDA center to which the submission was sent resumes its document receiving services.”  In the face of a government shutdown in the coming weeks, we think FDA could very well follow similar procedures. 

But what about statutory deadlines that, unlike mere goals under PDUFA and MDUFA, cannot be extended?  In particular, we are concerned about how FDA might handle 180-day exclusivity forfeiture decisions under FDC Act § 505(j)(5)(D)(i)(IV) during a government or other emergency shutdown.  That provision states that 180-day exclusivity eligibility is forfeited if “[t]he first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed.” 

The 2007 FDA Amendments Act clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition, the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .”  FDC Act § 505(q)(1)(G).  The “because of” language at FDC Act § 505(q)(1)(G) is important.  FDA recently made a forfeiture decision under FDC Act § 505(j)(5)(D)(i)(IV) notwithstanding the existence of a citizen petition, because “issues unrelated to those raised in the petition were the cause of the delay.”

Although FDC Act § 505(j)(5)(D)(i)(IV) includes an exception where the failure to obtain timely approval will not result in a forfeiture of 180-day exclusivity eligibility if “the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed,” FDA believes this is the only circumstance supported by the statute - and very narrowly applies the exception at that!  As FDA explained in an October 2008 Letter Decision, “[t]his express description of the circumstances in which exclusivity will not be forfeited for failure to obtain tentative approval makes it clear that, under other circumstances in which an applicant has failed to obtain tentative approval, regardless of what party might be responsible for that failure, the first applicant will forfeit exclusivity” (emphasis added).  In other words, if FDA fails to take an approval action by the 30-month date described at FDC Act § 505(j)(5)(D)(i)(IV) because, for example, there was nobody at FDA to issue a tentative approval letter during a shutdown, the failure of Congress to act or Mother Nature’s actions are effectively the ANDA sponsor’s fault.

We understand that this is the position FDA took during Snowmageddon, such that if the 30-month date at FDC Act § 505(j)(5)(D)(i)(IV) fell on February 8-11, 2010, and FDA failed to act on an application by February 7, 2010, then an ANDA sponsor would have forfeited 180-day exclusivity.  (This “day before approach” is the same approach FDA takes when the 30-month deadline falls on a weekend or a Federal holiday.)  We think FDA could very well take a similar position during a government shutdown, which could last much longer than a couple of days.  To avoid what could become a very messy situation, an ANDA sponsor in a first applicant position with a 30-month tentative approval date that is due in the coming weeks might want to contact FDA now to apprise the Agency of their particular situation.

By Susan J. Matthees –  

In an interesting twist in a developing story on the importation of thiopental, a drug used to administer the death penalty by lethal injection, the attorney for Georgia death row inmate Andrew Grant DeYoung sent Attorney General Eric Holder a letter alleging that the Georgia Department of Corrections (“GDC”) appears to have violated the Controlled Substances Act (“CSA”) by failing to register as an importer of thiopental and file a declaration to import the drug.  As we previously reported, six inmates on death row are suing FDA over the importation by three states of allegedly adulterated and misbranded thiopental.  Mr. DeYoung, the Georgia inmate on death row, is not one of the plaintiffs in the suit against FDA.

Thiopental (sodium pentothal) is a Schedule III nonnarcotic controlled substance.  Under the CSA, a nonnarcotic controlled substance cannot be imported unless it “is imported for medical, scientific, or other legitimate uses, and is imported pursuant to such notification, or declaration, or . . . as the Attorney General may by regulation prescribe.”  21 U.S.C. § 952(b).  The Drug Enforcement Administration (“DEA”), as delegated by the Attorney General, has promulgated regulations requiring importers of such substances to be registered and file an import declaration. 

The letter alleges that Dream Pharma Ltd., a distributor in London, England, sold and shipped thiopental to the GDC in July 2010, but that the GDC is not authorized to posses thiopental because it is not registered with DEA.  When questioned, the GDC allegedly produced a DEA-issued registration to possess Schedule III narcotics, but not Schedule III nonnarcotic substances, such as thiopental.  Further, the letter alleges that GDC failed to declare its importation of thiopental as required by 21 U.S.C. § 954(2). 

Federal law and regulations provide some exceptions to registration requirements for the Department of Defense and federal Bureau of Prisons in the case of prescribing, dispensing, or administering controlled substances, but not to procure or purchase.  21 C.F.R. § 1301.22(a).  There is also an exemption for state officials engaged in enforcing state or local laws relating to controlled substances.  Id. § 1301.24(a)(2).  It does not appear that these exemptions would apply to this situation. 

The letter asks Attorney General Holder to direct DEA and/or other appropriate agencies to investigate the GDC’s actions. 

By Carrie S. Martin –

In a draft guidance issued on February 28, 2011, called “Medication Guides – Distribution Requirements and Inclusion in Risk Evaluation and Mitigation Services (REMS),” FDA proposes:  (1) to implement a procedure that allows applicants with a REMS to request eliminating a Medication Guide (“Med Guide”) requirement from the REMS; and (2) to exercise enforcement discretion regarding incorrect distribution of Med Guides to healthcare providers (“HCPs”) and patients.

Eliminating Med Guides from REMS.  FDA’s Med Guide regulations (21 C.F.R. Part 208) were issued in 1998 and require the distribution of Med Guides for certain drugs and biological products that FDA determines pose a serious and significant public health concern.  The Food and Drug Amendments Act of 2007 (“FDAAA”) authorized FDA to require a REMS if the Agency determines that certain measures are necessary to ensure the benefits of a drug with a known or potential risk outweigh its risks.  Under FDAAA, a REMS can include a Med Guide, elements to ensure safe use (“ETASU”), such as limits on distribution, and a communication plan to HCPs.  Despite the two regulatory pathways to a Med Guide, all new Med Guides required by FDA since the enactment of FDAAA, as well as all safety changes to an existing Med Guide, have been part of a REMS.  As a result, the vast majority of the REMS are Med Guide-only REMS that do not include ETASU or communication plans.  Making the Med Guide as part of the REMS subjects the applicant to other requirements implemented by FDAAA that are not included in Part 208, such the creation of an assessment plan.     

With the draft guidance, FDA proposes to allow applicants with Med Guide-only REMS to submit a prior approval supplement (“PAS”) that “proposes a REMS modification to eliminate the REMS if [the applicant does] not believe that the REMS is necessary to ensure that the benefits of the drugs outweigh the risks.”  Similarly, if the REMS includes a Med Guide and a communication plan, the applicant may also submit a PAS to eliminate the Med Guide.  Of note, the draft guidance is silent as to whether an applicant with a REMS that includes a Med Guide and ETASU can similarly request elimination of a Med Guide.  Also of note, if FDA approves the PAS, the Med Guide will endure as labeling and must meet the requirements in Part 208 unless FDA approves a supplement that requests eliminating the Med Guide completely. 

Enforcement Discretion.  The Med Guide regulations in Part 208 are intended to apply primarily in an outpatient setting and require that the Med Guides be distributed directly to a patient via a pharmacist.  However, in many instances, the drug – and hence the Med Guide – is dispensed to an HCP who then gives the drug to the patient.  This often happens in hospital settings, for example.  This had created some confusion over whether the Med Guide needed to be provided to the patient each time the HCP administered the drug.  Under this draft guidance, FDA plans to exercise enforcement discretion when the drug is dispensed to an HCP for administration to a patient in an inpatient setting or an outpatient setting, such as in a clinic or dialysis center, with several exceptions.  FDA will not exercise enforcement discretion (i.e., a Med Guide must be distributed directly to patients) when:  (1) a patient requests a Med Guide; (2) the drug is given in an outpatient setting but will by used by the patient without supervision by an HCP; (3) when a HCP first gives a drug to the patient in an outpatient setting; or (4) when the HCP first dispenses a drug to patient after the Med Guide has been “materially changed.”

Submission of Comments.  FDA requests comments on the draft guidance be submitted by May 31, 2011.  Electronic comments can be submitted via the following website:  http://www.regulations.gov.  Written comments should go to the Division of Dockets Management (HFA-305), FDA, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

By David B. Clissold –

In a federal lawsuit filed on Friday, February 25, 2011 in the District of Columbia, Lorillard, Inc., Lorillard Tobacco Company, and R.J. Reynolds Tobacco Company sued the FDA, DHHS, Kathleen Sebelius, Margaret Hamburg, and Lawrence Deyton for declaratory and injunctive relief to bring the membership of the Tobacco Products Scientific Advisory Committee (“TPSAC”) and the membership of the Constituents Subcommittee of the TPSAC into compliance with the law, and to prevent the defendants from taking any action based on any report or advice provided by the TPSAC or the Constituents Subcommittee.  The complaint alleges that several members of these committees have financial interests and biases that potentially compromise their impartiality.  The plaintiffs state that these conflicts and biases stem from the members’ service as expert witnesses in litigation against tobacco-product manufacturers and their current or recent employment as consultants to the pharmaceutical industry regarding nicotine replacement therapy products and other smoking-cessation products. 

The TPSAC is currently drafting a report on menthol in cigarettes (due March 23, 2011) and will then consider dissolvable products, and the Constituents Subcommittee is currently preparing a report on constituents in cigarette smoke.  The complaint alleges that some of the TPSAC members have incentives to lead the TPSAC to develop a negative report on menthol in cigarettes, since “such a report would be of financial benefit to them in their roles as consultants to pharmaceutical companies that manufacture nicotine replacement therapy products” and “would enhance their value as paid expert witnesses in lawsuits against manufacturers of menthol cigarettes.”  The plaintiffs also touch upon the controversy within the public-health and tobacco-control communities over a possible role for smokeless tobacco products in reducing the harm from tobacco in the United States, thus potentially qualifying such products as a “modified risk tobacco product.” The complaint alleges that the non-voting members of the TPSAC have been excluded from the preparation of the TPSAC report on menthol in cigarettes, and that the defendants “probably will exclude them from important activities relating to dissolvable tobacco products and other subjects.”

As a prelude to the lawsuit, the complaint describes a flurry of correspondence regarding these potential conflicts between the plaintiffs and defendants from March 2010 through February 2011.  The complaint alleges violations of the Administrative Procedure Act, Food, Drug, and Cosmetic Act, and the Federal Advisory Committee Act.  The plaintiffs ask that the court prohibit the defendants from receiving or relying on any information or report issued by the TPSAC or the Constituents Subcommittee, enjoin the defendants from transmitting plaintiffs’ trade secret information to either committee, and require the participation of the non-voting members in matters that do not involve access to confidential information.

By Kurt R. Karst –      

In a win for compounding pharmacies and a loss for FDA, the U.S. Court of Appeals for the Fifth Circuit ruled last week in Med. Ctr. Pharmacy v. Holder that the U.S. District Court for the Western District of Texas violated the law-of-the-case waiver doctrine and that FDA forfeited its ability to argue that the Agency may conduct limited inspections of pharmacy records to determine if pharmacy-compounded drugs comply with FDC Act § 503A (pharmacy compounding) and § 512(a) (new animal drugs) when FDA failed to raise any objection to an initial district court decision on the issue.

The case was before the fifth Circuit for the second time.  In July 2008, the Court ruled in Med. Ctr. Pharmacy v. Mukasey, 536 F.3d 383 (5th Cir. 2008) (see our previous post here), that, although there are reasons to believe Congress did not intend to deem all compounded drugs unapproved “new drugs,” compounded drugs are not exempt from the “new drug” definition at FDC Act § 201(p), and that compounded veterinary drugs fall within the statutory definition of “new animal drug.”  Notwithstanding this determination, however, the Court said that compounded drugs are exempt from the FDC Act’s adulteration, misbranding, and new drug approval provisions if they comply with the conditions set forth in FDC Act §§ 503A and 512(a).

On remand to the Texas District Court, FDA argued that the Fifth Circuit’s July 2008 decision enlarged the Agency’s authority to inspect the records of compounding pharmacies under FDC Act § 704.  The district court agreed with FDA and declared that notwithstanding the pharmacy inspection exception at FDC Act § 704(a)(2)(A), the Agency may, consistent with FDC Act § 704(a)(1), conduct limited inspections of pharmacy records to determine if pharmacy-compounded drugs comply with the conditions set forth in FDC Act §§ 503A and 512(a).  (Previously, the Texas District Court had ruled that state law-compliant pharmacies are exempt from FDA records inspections under FDC Act § § 503A(a)(2)(A).)  The plaintiffs in the case, a group of ten compounding pharmacies, appealed the district court’s new inspection ruling and argued that FDA forfeited the inspection issue because the Agency did not appeal the original inspection ruling, and that the district court therefore erred by reopening the issue on remand.

In its February 25, 2011 decision vacating and remanding the case back to the district court, the Fifth Circuit agreed with the compounding pharmacies.  Under the so-called “waiver doctrine” of the “law-of-the-case doctrine,” an issue that a party could have raised in an earlier appeal in the case, but that was not raised, is barred from consideration (see United States v. Castillo, 179 F.3d 321 (5th Cir. 1999).  The Fifth Circuit ruled that “[t]he instant case . . . fits squarely within the waiver doctrine,” and that because “FDA failed to raise its objection to the district court’s original inspection declaration in the first appeal,” and indeed, “expressly disavowed any intent to raise the inspection issue,” the Agency “forfeited the inspection issue, and the district court erred by reversing its prior inspection ruling on remand.” 

The Fifth Circuit’s ruling in Med. Ctr. Pharmacy v. Holder, although it really only applies to the ten compounding pharmacy plaintiffs in the case and does not match the same level of overall success compounders had in Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002), is nevertheless a win for the plaintiffs on what is to them an important inspectional issue.

By Ricardo Carvajal –

FDA denied a citizen petition filed on behalf of OVOS Natural Health, Inc. (“OVOS”) that asked the agency to issue a regulation under FDC Act § 201(ff)(3)(B) or § 301(ll) acknowledging that marketing of homotaurine as a dietary ingredient in dietary supplements is permissible.  OVOS filed the citizen petition because OVOS had not marketed homotaurine as a dietary supplement or food before OVOS obtained authorization for an IND pursuant to which at least two substantial clinical investigations have been instituted and made public; thus, FDC Act § 201(ff)(3)(B) appeared to prohibit the marketing of homotaurine as a dietary supplement, and FDC Act § 301(ll) appeared to prohibit its addition to food.  However, both sections contain provisions that authorize FDA to issue a regulation that essentially waives their applicability to a particular substance.  

In its response, FDA concluded that the request to exercise its rulemaking authority under FDC Act § 201(ff)(3)(B) or § 301(ll) was moot because homotaurine is not a dietary ingredient within the meaning of FDC Act § 201(ff)(1)(A)-(F).  FDA determined that homotaurine is not an “amino acid” under FDC Act § 201(ff)(1)(D) because it is a gamma-amino sulfonic acid, and not an alpha-amino carboxylic acid or a constituent of proteins.  FDA also determined that OVOS’s homotaurine does not qualify as a botanical (or extract thereof) because it is made synthetically.  Further, FDA determined that there was no evidence that homotaurine “has ever been a dietary substance for use by man to increase the total dietary intake.”

FDA’s response is worth reading for its lengthy discussion of the agency’s interpretation of the term “amino acid” in the context of dietary supplement regulation.  The response also suggests that FDA can be expected to closely scrutinize the applicability of the definition of “dietary supplement” to synthetic substances that are not already part of the food supply.

By Kurt R. Karst –   

It was just yesterday that we commented on how folks in the Hatch-Waxman community have been patiently awaiting FDA’s decision on an October 2010 citizen petition (Docket No. FDA-2010-P-0545) requesting that the Agency not approve any ANDA for a generic version of XYZAL (levocetirizine dihydrochloride) that omits, via a “section viii” statement, information on seasonal and and perennial allergic rhinitis covered by U.S. Patent No. 5,698,558 (“the ‘558 patent”) – XYZAL’s so-called “primary indications.”  Earlier today, FDA responded.  FDA denied the petition and approved ANDAs with skinny labeling for chronic idiopathic urticaria – XYZAL’s so-called “secondary indication.”   The bottom line in FDA’s XYZAL petition decision is similar to many of the Agency’s previous labeling carve-out petitions:

permitting carve-outs for certain patent-protected indications for levocetirizine dihydrochloride would not require removal of safety information from the labeling or alteration of the labeling in such way that would render the drug products less safe or less effective than Xyzal for the remaining conditions of use.

The decision also gives us good reason to update our popular Generic Drug Labeling Carve-Out Citizen Petition Scorecard.  So here you go . . . .

Generic Drug Labeling Carve-Out Citizen Petition Scorecard

FDA Citizen Petition Responses Permitting a Labeling Carve-Out

• FDA Response, Docket Nos. 2001P-0495, 2002P-0191, 2002P-0252 (June 11, 2002) – ULTRAM (tramadol HCl)
• FDA Response, Docket No. 2001P-0495/PRC (Mar. 31, 2003) – ULTRAM (tramadol HCl)
• FDA Response, Docket No. FDA-2003-P-0074 (Apr. 6, 2004) – REBETOL (ribavirin)
• FDA Response, Docket No. FDA-2005-P-0368 (Dec. 1, 2006) – OXANDRIN (oxandrolone)
• FDA Response, Docket No. FDA-2006-P-0274 (Mar. 13, 2008) – ETHYOL (amifostine)
• FDA Response, Docket No. FDA-2007-P-0169 (Apr. 25, 2008) – MARINOL (dronabinol)
• FDA Response, Docket No. FDA-2008-P-0304 (June 18, 2008) – ALTACE (ramipril)
• FDA Response, Docket No. FDA-2008-P-0069 (July 28, 2008) – CAMPTOSAR (irinotecan HCl)
• FDA Response, Docket No. FDA-2006-P-0073 (Nov. 18, 2008) – PULMICORT Respules (budesonide inhalation suspension)
• FDA Response, Docket Nos. FDA-2008-P-0343 & FDA-2008-P-0411 (Dec. 4, 2008) – PRANDIN (repaglinide)
• FDA Response, Docket No. FDA-2008-P-0343/PRC and PSA & FDA-2008-P-0411 (June 16, 2009) – PRANDIN (repaglinide)
• FDA Response, Docket No. FDA-2009-P-0411 – ACTOS (pioglitazone HCl) & ACTOPLUS MET (March 15, 2010) (pioglitazone HCl; metformin HCl) 
•  FDA Response, Docket No. FDA-2009-P-0601 (June 17, 2010) – NAROPIN (ropivacaine HCl monohydrate)
• FDA Response, Docket No. FDA-2010-P-0087 (July 30, 2010) – LYRICA (pregabalin) 
• FDA Response, Docket No. FDA-2010-P-0545 (February 24, 2011) – XYZAL (levocetirizine dihydrochloride)

FDA Citizen Petition Responses Not Permitting a Labeling Carve-Out

• FDA Response, Docket No. FDA-2003-P-0002 (Sept. 20, 2004) – RAPAMUNE (sirolimus)

Pending Labeling Carve-Out Citizen Petitions

• Docket No. FDA-2007-P-0294 – ACTOS (pioglitazone)
• Docket No. FDA-2007-P-0113 – THALOMID (thalidomide)
• Docket No. FDA-2009-P-0597 – Fluticasone Propionate and/or Salmeterol Xinafoate Products
• Docket No. FDA-2010-P-0403 – VAGIFEM (estradiol)
• Docket No. FDA-2010-P-0614 – COLCRYS (colchicine)

BPCA Section 11 Pediatric Labeling Citizen Petitions

• FDA Response, Docket No. FDA-2001-P-0053 (January 24, 2002) – BPCA Implementation
• FDA Response, Docket No. FDA-2002-P-0289 (May 21, 2003) – ALPHAGAN (brimonidine)
• FDA Response, Docket No. FDA-2010-P-0545 (February 24, 2011) – XYZAL (levocetirizine dihydrochloride) 

Withdrawn or “Dead” Labeling Carve-Out Citizen Petitions

• Docket Nos. FDA-2004-P-0426 & FDA-2003-P-0081; FDA Letter – SKELAXIN (metaxalone) (see our previous post here)
• Docket No. FDA-2001-P-0445 – NEURONTIN (gabapentin) Capsules

By Ricardo Carvajal –

In a letter directed to Attorney General Eric Holder, Senator Patrick Leahy (D-VT) asked the U.S. Department of Justice (“DOJ”) for an update on its investigation of the Peanut Corporation of America (“PCA”) and its president, Stewart Parnell.  According to the letter, FDA determined that PCA knowingly distributed potentially contaminated food, and evidence suggests that PCA shopped for a testing laboratory that would provide favorable results.  Sen. Leahy contends that “it is critical [for DOJ] to determine whether these actions rise to the level of criminal conduct.”  The letter also cites the recent pistachio recall and egg-related salmonella outbreak as evidence that “wrongdoers are disregarding the health and safety of American consumers by choosing to sell contaminated products.”  The letter closes by noting that Sen. Leahy has introduced legislation to impose tougher penalties for certain food safety violations, and asks whether DOJ “needs any additional tools to protect the American people.”

By Kurt R. Karst –      

As folks in the Hatch-Waxman community patiently await FDA’s decision on an October 2010 citizen petition (Docket No. FDA-2010-P-0545) requesting that the Agency not approve any ANDA for a generic version of XYZAL (levocetirizine dihydrochloride) with skinny labeling that omits, via a “section viii” statement, information on allergic rhinitis covered by U.S. Patent No. 5,698,558 (“the ‘558 patent”), we read with interest a decision from the U.S. District Court for the Eastern District of North Carolina (Western Division) on a related issue.

The North Carolina case stems from a May 2008 Paragraph IV patent certification Sandoz, Inc. made with respect to the ‘558 patent, and a timely filed patent infringement lawsuit triggering a 30-month stay of ANDA approval.  The ‘558 patent, which expires on September 24, 2012 and is subject to a period of pediatric exclusivity that expires on March 24, 2013, is listed in the Orange Book as a method-of-use patent with a U-812 patent use code defined as “RELIEF OF SYMPTOMS ASSOCIATED WITH SEASONAL AND PERENNIAL ALLERGIC RHINITIS.”  In February 2010, Sandoz allegedly revised its Paragraph IV certification to the ‘558 patent to a section viii statement, requesting approval for its proposed generic version of XYZAL for what the NDA holder has characterized in the above-referenced citizen petition as the “secondary indication,” chronic idiopathic urticaria, and that carves out the “primary indications,” namely seasonal and perennial allergic rhinitis.

Given the change from a Paragraph IV certification to a section viii statement, Sandoz filed a Motion to Dismiss arguing that the District Court no longer had subject matter jurisdiction over the litigation.  The plaintiffs in the case filed their own motion – a Motion to Extend Sandoz’s Thirty-Month Stay – arguing that Sandoz “has not reasonably cooperated in expediting this litigation.”  Naturally, Sandoz opposed the motion, and argued that it should be denied for at least three reasons: “(1) the Court lacks subject matter jurisdiction over Sandoz’s section viii ANDA filing, (2) the 30-month stay is inapplicable to ANDA applicants proceeding under section viii, and (3) Sandoz has not unreasonably delayed this action.”

Under the FDC Act, a timely filed patent infringement lawsuit in response to a Paragraph IV certification means that “the [ANDA] approval shall be made effective upon the expiration of the [30-month stay] . . . or such shorter or longer period as the court may order because either party to the action failed to reasonably cooperate in expediting the action . . . .”  FDC Act § 505(j)(5)(B)(iii) (emphasis added).  Since the enactment of the Hatch-Waxman Amendments in 1984, it has been quite uncommon for a court to extend the statutory 30-month stay on ANDA approval.  In 2009, for example, the U.S. Court of Appeals for the Federal Circuit in Eli Lilly & Co. v. Teva Pharms. USA, Inc., 557 F.3d 1346 (Fed. Cir. 2009) affirmed a district court decision extending a 30-month stay with respect to an ANDA for a generic version of EVISTA (raloxifene HCL) Tablets.

Relying, in part, on a 2009 decision out of the U.S. District Court for the Eastern District of Wisconsin concerning an animal drug and the animal drug Hatch-Waxman counterpart, the Generic Animal Drug and Patent Term Restoration Act (Bayer Healthcare, LLC v. Norbrook Labs. Ltd., No. 08 C 0953, 2009 U.S. Dist. LEXIS 126929 (E.D. Wis. Sept. 24, 2009)), the North Carolina District Court denied Sandoz’s Motion to Dismiss.  The Court concluded that that was no evidence “to demonstrate that the FDA must or in fact has accepted the withdrawal of the Paragraph IV certification, or that the FDA will allow Sandoz to amend its application to include a section viii statement and ‘carve out’ information related to allergic rhinitis,” and that “Sandoz’s failure to cite any authority for the proposition that jurisdiction under section 271(e)(2) requires that an ANDA filer maintain a ‘Paragraph IV’ certification dooms its position” (internal quotation omitted; emphasis added).  As such the Court concluded that subject matter jurisdiction over the litigation is maintained. 

Given this conclusion, the Court rejected Sandoz’s arguments that an extension of the 30-month stay is inapplicable and proceeded to identify examples that the Court deemed sufficient to demonstrate that Sandoz failed to “reasonably cooperate in expediting the action” and that warranted an extension of the 30-month stay under FDC Act § 505(j)(5)(B)(iii) – namely failure to timely produce a privilege log and to comply with the Court’s discovery orders.  Accordingly, the Court extended the 30-month stay by 60 days, until January 27, 2011.

Now that the extended 30-month stay has ended, it would seem that the only block to an approval decision on any pending ANDAs containing a section viii statement to the ‘558 patent is FDA’s decision on the October 2010 citizen petition.  Although FDA has already approved one ANDA for generic XYZAL Tablets – ANDA No. 90-229 – that application contains a Paragraph IV certification to the ‘558 patent.  The sponsor qualified for 180-day exclusivity, which according to the most recent Orange Book Cumulative Supplement has not yet been triggered by commercial marketing, but that exclusivity would not prevent FDA from taking action on ANDAs containing a section viii statement to the ‘558 patent, just subsequent ANDAs containing a Paragraph IV certification to the patent.  Depending on (or perhaps regardless of) how FDA rules on the pending citizen petition, it is possible that the battle over generic XYZAL is far from over.

By Peter M. Jaensch –

United States Senator Charles Schumer (D-NY) recently introduced legislation that is intended to prevent sales of recalled biologics, drugs, medical devices, infant formula, and foods.  However, if that legislation is enacted it  may actually dissuade companies from undertaking voluntary recalls.

On February 14, 2011, Sen. Schumer introduced S. 330, the “Consumer Recall Protection Act of 2011,” which, if enacted, would prohibit sales “to a consumer of a covered product that is subject to a recall,” except  where the “defect was remedied” and the seller notifies the consumer of the “recall, defect, and remedy” prior to sale.  Among other products, the bill covers “[f]ood, drugs, devices, and cosmetics” as defined in the FDC Act.  The bill defines various triggers for when a product is considered to be subject to a recall.  Although specific triggers are provided for medical devices and infant formula, other products are considered subject to a recall whenever there is a “recall of the . . . product by the manufacturer or distributor in response to an advisory or other alert issued by the Commissioner of Food and Drugs that advises consumers to avoid the . . . product.”

The bill is at best ambiguous.  For example, what constitutes an “alert” or an “advisory,” and when is a recall considered to have begun “in response” to such notifications? Moreover, if enacted, S. 330 may actually reduce self-enforcement by companies.  As currently written, S.330 would appear to apply even when there is not a safety issue associated with the “recall.”  Under these and other circumstances, a manufacturer might well think twice about commencing a recall at all if the manufacturer will be prohibited from selling “recalled” products.

There is one particularly interesting bureaucratic feature in the legislation.  Even though the trigger for the prohibition of sales is largely tied to actions of the FDA, that agency would not enforce the legislation.  Instead, Sen. Schumer proposes that the Federal Trade Commission would enforce the legislation if it is enacted.