Join Hyman, Phelps & McNamara, P.C. attorneys on October 8, 12:00 p.m. – 1:30 p.m. for a free webinar on a very important, timely topic.  You can register for the free webinar here.  (Please register by September 29th.)

In criminal prosecutions of corporate executives, ignorance of the law and the facts is often no defense.  FDA’s application of the Park Doctrine has taken different forms in the decades since its inception.  In the 1960’s through 1980’s, FDA frequently prosecuted company officials without any allegation that the defendant intended to violate the law. However, FDA has rarely brought these cases since that time.  Recently, FDA announced it will resuscitate the so-called Park Doctrine under which FDA, through the U.S. Department of Justice (“DOJ”), can criminally prosecute food, drug, medical device, and cosmetic company executives and other employees when their company has allegedly violated the Federal Food, Drug, and Cosmetic Act, even though the government can’t prove the employee knew about or approved the alleged conduct.
 
The webinar will feature attorneys from Hyman, Phelps & McNamara, P.C. with decades of experience in FDA’s application of the Park Doctrine. You will hear from FDA’s Chief Counsel from the 1980’s when many of these cases were initiated and from DOJ officials who pursued such prosecutions. They will:

• Share their insights of the doctrine from their government days;
• Make predictions as to the type of cases they believe are most likely to lead to a prosecution under the doctrine;
• Provide tips on how companies and their executives can minimize their risk of being subject to one of these criminal prosecutions;
• Discuss potential career-ending consequences of misdemeanor convictions; and
• Answer participants' questions submitted during or before the webinar.

Your presenters:

John Fleder specializes in litigation and internal investigations in criminal, civil, and regulatory matters relating to FDA, the FTC, and the CPSC. Mr. Fleder served as the Director of the Department of Justice's Office of Consumer Litigation between 1985 and 1992, after serving in various other capacities in that office since 1973. He also served as a Special Assistant United States Attorney in Baltimore. As Director of the Office of Consumer Litigation, he directed enforcement cases in federal court for FDA, FTC and CPSC.  See Mr. Fleder’s recent article on the Park Doctrine here.

Doug Farquhar works primarily on civil and criminal litigation, arbitration, and enforcement issues. He has handled a variety of consent decrees, criminal investigations, civil seizures, injunction actions (both those brought by FDA and those brought against FDA), difficult FDA inspections, lawsuits against competitors of clients, and criminal prosecutions and appeals. From 1990 to 1997, Mr. Farquhar served as an Assistant U.S. Attorney in the District of Maryland.

Tom Scarlett has practiced food and drug law for more than 40 years.  In 1971, he joined the Office of the General Counsel of the Department of Health and Human Services (then HEW) as a staff attorney in the Social and Rehabilitation Services Division. Two years later, he became a trial attorney in the FDA Chief Counsel's Office in HHS, where he served until 1979, concluding as Deputy Chief Counsel for Regulations and Hearings.  After practicing with Morgan, Lewis & Bockius from 1979 to 1981, he was appointed Chief Counsel of FDA, a position he held until 1989, when he became a Director at Hyman, Phelps & McNamara, P.C.  He now serves as Senior Counsel to the firm.

Hyman, Phelps & McNamara, P.C. (“HP&M”) is proud to announce that the inaugural “Best Law Firms” survey by U.S. News & World Report has ranked HP&M as a “Tier 1” law firm in the area of FDA Law.  Only six firms made it to the top of the heap in the FDA Law practice section.  U.S. News released the rankings following a survey that involved soliciting comments from “thousands of law firm clients; leading lawyers and law firm managers; partners and associates; and marketing officers and recruiting officers.”  

By Kurt R. Karst –   

FDA will soon announce in the Federal Register a two-day public hearing (November 2 and 3, 2010) to obtain input on specific issues and challenges associated with the implementation of the Biologics Price Competition and Innovation Act of 2009 (“BPCI Act”).  According to an advance version of the Federal Register notice, FDA is soliciting input on a broad range of BPCI Act topics, including biosimilarity, interchangeability, patient safety and pharmacovigilance, exclusivity, and user fees.  FDA’s notice follows an announcement from earlier this year after the enactment of the BPCI Act as part of the Patient Protection and Affordable Care Act (Public Law No. 111-148) that the Agency created the position of Acting Associate Director for Biosimilars (filled by Dr. Leah Christl) in Office of New Drugs and established a Biosimilars Review Committee. 

Information presented and submitted to FDA for the public hearing, which will be held at FDA’s White Oak Campus in Silver Spring, Maryland and that will also be webcast live, will be used as the Agency develops guidance and regulations to implement the BPCI Act.  Specific questions posed by FDA in the draft Federal Register notice include:

Biosimilarity

1. What scientific and technical factors should the agency consider in determining whether the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components?

2. What scientific and technical factors should the agency consider in determining the appropriate analytical, animal, and clinical study or studies to assess the nature and impact of actual or potential structural differences between the proposed biosimilar product and the reference product?

3. What range of structural differences between a proposed biosimilar product and the reference product is consistent with the standard “highly similar” and may be acceptable in a 351(k) application if the applicant can demonstrate the absence of any clinically meaningful differences between the proposed biosimilar product and the reference product?

4. Under what circumstances should the agency consider finding that animal studies or a clinical study or studies are “unnecessary” for submission of a 351(k) application?

Interchangeability

1. What factors should the agency consider in determining whether a proposed interchangeable biological product can be “expected to produce the same clinical result as the reference product in any given patient?”

2. What factors should the agency consider in evaluating the potential risk related to alternating or switching between use of the proposed interchangeable biological product and the reference product or among interchangeable biological products?

Patient Safety and Pharmacovigilance

1. What factors unique to proposed biosimilar or interchangeable biological products and their use should the agency consider in developing its pharmacovigilance program for such products?

2. What approaches can be undertaken by the agency, industry, or health care community to ensure appropriate pharmacovigilance for biosimilar and interchangeable products?

3. Assuming each product is given a unique nonproprietary name, should a distinguishing prefix or suffix be added to the nonproprietary name for a related biological product that has not been demonstrated to be biosimilar, a biosimilar product, or an interchangeable product to facilitate pharmacovigilance? What factors should be considered to reduce any negative impact on the healthcare delivery system related to unique nonproprietary names for highly similar biological products?

4. What safeguards should the agency consider to assist the healthcare community when prescribing, administering, and dispensing biological products to prevent inadvertent substitution of products not identified as interchangeable without the intervention of the prescribing health care provider?

5. What are some mechanisms that FDA may consider to communicate findings that a particular product is or is not biosimilar to or interchangeable with a given reference product?

The Use of Supportive Data and Information

1.  From a scientific perspective, to what extent, if any, should animal or clinical data comparing a proposed biosimilar product with a non-U.S.-licensed comparator product be used to support a demonstration of biosimilarity to a U.S.-licensed reference product?

2.  What type of bridging data or information would be needed to scientifically justify the relevance of the comparative data?

Definition of a Biological Product

1. What scientific and technical factors should FDA consider in developing a regulatory definition for the category of “protein” (as distinguished from peptide or polypeptide)?

2. What scientific and technical factors should FDA consider in developing a regulatory definition for the category of “any chemically synthesized polypeptide”?

Guidances

1. What types of guidance documents for industry should be a priority for the agency during the early period of implementation?

2. Section 351(k)(8)(E) of the PHS Act permits the agency to indicate in a guidance document that the science and experience, as of the date of the guidance document, with respect to a product or product class (not including any recombinant protein) does not allow approval of a 351(k) application for such a product or product class. What scientific and technical factors should the agency consider in determining if the existing science and experience are sufficient to allow approval for a product or product class under section 351(k) of the PHS Act?

Exclusivity

1. In light of the potential transfer of BLAs from one corporate entity to another and the complexities of corporate and business relationships, what factors should the agency consider in determining the types of related entities that may be ineligible for a period of 12-year exclusivity for a subsequent BLA?

2. What factors should the agency consider in determining whether a modification to the structure of the licensed reference biological product results in a change in safety, purity, or potency, such that a subsequent BLA may be eligible for a second 12-year period of marketing exclusivity?

Transition Provisions

1. What scientific factors should FDA consider in defining and applying “product class” for purposes of determining which applications for biological products may be submitted under the FD&C Act during the 10-year transition period?

2. What scientific factors should FDA consider in determining whether another biological product approved under section 351(a) of the PHS Act could serve as the reference product for an application submitted under section 351(k) of the PHS Act?

User Fees

1. If the existing fee structure under the Prescription Drug User Fee Act (PDUFA) were to be considered as a model in establishing a user fee structure for applications and supplements for proposed biosimilar and interchangeable biological products, what factors and changes should FDA take into consideration, and why?

2. What factors should FDA take into account when considering whether to recommend that user fees for biosimilar and interchangeable biological products should also be used to monitor safety after approval?

By Kurt R. Karst –   

Do you have an ANDA prior approval supplement pending at FDA?  How long has it been pending – 6 months?  One year?  18 months?  Well it might still some time until there is any action on it.  Over the past few weeks we have received sporadic reports that FDA’s Office of Generic Drugs (“OGD”) has quietly placed a hold on ANDA prior approval supplement reviews and approval actions until further notice to focus instead on original ANDA submissions (and minor amendments). 

Although the details of the directive are still a bit sketchy, from what we understand, it is not a per se suspension.  OGD will review ANDA supplements if there is a compelling reason, such as supplements that might ordinarily qualify for expedited review – i.e., “supplements which would accomplish a public health need, eliminate an extraordinary hardship on the applicant, or accomplish a bona fide Agency goal” (MaPP 5240.1).  But that is the exception to the directive.  We also understand that although OGD hopes the directive will be short-lived it could remain in effect until OGD has made some headway in addressing the original ANDA backlog.  As we previously reported, and according to FDA-Track, there is a backlog of more than 2,000 original applications – 2,136 as of June 2010 (approximately 1,600 of which have been pending for more than 180 days).  And the backlog continues to grow.  So OGD has apparently decided to let the ANDA prior approval supplement queue grow (which may account for 50% of the total supplement backlog of about 3,900) in an effort to shorten the original ANDA queue.

Word of the ANDA supplement review directive has come out just as the debate over generic drug user fees has been heating up.  On Friday (September 17th), FDA will hold a public meeting to discuss and solicit from industry what a generic drug user fee system might look like.  There are several significant issues to be discussed, including how to handle the ANDA backlog and what the review goals should be.  And, of course, legislation needs to be enacted.   Industry will certainly not be happy to learn that supplement reviews have been stalled for the time being, even though there is a renewed effort to use “scarce agency resources” to tackle the original ANDA queue, for which OGD has been criticized.  The supplement directive could help drive FDA and stakeholders to come to a quicker consensus on generic drug user fees.  

By Ricardo Carvajal –

A district court dismissed a complaint alleging consumer fraud in food labeling that highlights the presence of fiber.  Plaintiff alleged that defendants violated state consumer fraud laws by failing to disclose that their products contain alleged “non-natural” fibers that “have not been shown by current scientific evidence to possess all of the health benefits of natural fibers.”  The court dismissed the case on the ground that the consumer’s state law claim is preempted by the Federal Food, Drug, and Cosmetic Act ("the Act").  The Act preempts any state requirement for nutrition labeling, nutrient content claims, or health claims that is not identical to the requirements of the Act.  With respect to fiber, the Act and its implementing regulations require food labels to bear nutrition information on the amount of dietary fiber present in a food, specify how dietary fiber must be disclosed, authorize nutrient content claims for fiber, and specify how health claims for fiber can be made.  In light of these requirements, the court concluded that the Act preempts plaintiff's demand under state law that certain fiber ingredients be labeled as “non-natural” and that the labeling disclose the purported differences in health benefits of “non-natural” fibers.

It’s that time of year again when the Blawggeratti (legal bloggers) are all atwitter about the American Bar Association’s (“ABA’s”) Blawg 100 – the top 100 legal blogs in the blogosphere.  With your help we made the top 100 list last year, and we are hoping for a repeat in 2010 – with your help once again!   The ABA announced that it is now accepting nominations for 2010.  We ask that FDA Law Blog readers visit the ABA’s “Blawg 100 Amici” website and nominate FDA Law Blog!  Thank you!  (It will only take a couple of minutes. Remember, when you complete the nomination form, our URL is www.fdalawblog.net.)

By Kurt R. Karst –   

How much is the potential for four month being lopped off your NDA review period (i.e., the difference between FDA’s standard and priority review goals under PDUFA)?  FDA set the baseline earlier this week when the Agency issued a Federal Register notice setting the Priority Review Voucher (“PRV”) User Fee for Fiscal Year 2011 at (drumroll please) . . . $4,582,000.  And that is in addition to the Fiscal Year 2011 application fee of $1,542,000 that must accompany the submission of an NDA.  We won’t bother you with all of the numbers that went into the calculation, but they are detailed in FDA’s notice if you are interested. 

PRVs were established by § 1102 of the 2007 FDA Amendments Act, which created  FDC Act § 524.  Under the statute, applicants for certain new drugs and biologics for “tropical diseases” that have received priority review may receive a PRV entitling the holder to a 6-month priority FDA review of another application that would otherwise be reviewed under FDA’s standard 10-month review clock.  To our knowledge, FDA has granted only a single PRV – in connection with the April 2009 approval of NDA No. 22-268 for COARTEM (artemether; lumefantrine) for the treatment of acute, uncomplicated malaria infections in adults and children weighing at least five kilograms. 

PRVs are transferable – indeed, FDC Act § 524 allows for a single actual transfer of a PRV from the original recipient to another sponsor, and FDA has clarified in draft guidance that “contractual arrangements such as the use of an option or transfer of the right to designate the voucher’s recipient could comply with the terms of the statute” – so there has been speculation that a market could be created for them.  In fact, one non-profit organization has created a website to track the PRV program and to help build a market for the vouchers.  As we previously commented, ultimately, the value of a PRV must be based on two considerations: (1) the prospect of saved approval time; and (2) the anticipated sales of a new drug.  And it is difficult  to predict either with any certainty.  A redemption fee of $4,582,000, however, could hurt PRV marketability in light of these uncertainties. 

Moreover, a redemption fee of $4,582,000 could hurt the prospects for the passage of the Creating Hope Act of 2010 (S. 3697).  As we previously reported, S. 3697 was introduced earlier this year and would, among other things, amend the PRV program to extend it to applications for a “rare pediatric disease” – that is, a disease “recognized in the medical community as affecting a pediatric population” and that is “a rare disease or condition, within the meaning of section 526” (i.e., the Orphan Drug Act).  With such a high redemption fee, the marketability of a PRV (i.e., sale for profit) is questionable, and support for the bill could wane.  Of course, Congress could amend the PRV statute to require a different redemption fee calculation or set a flat fee, either for a rare pediatric PRV or for a tropical PRV, or both. 

By Kurt R. Karst –   

Earlier this week, Senator Patrick Leahy (D-VT) introduced the Food Safety Accountability Act of 2010 (S. 3767).  The bill, which follows Sen. Leahy’s Food Safety Enforcement Act of 2010 (S. 3669) introduced earlier this year and the recent egg recall, is intended to strengthen criminal penalties for food safety violators. 

S. 3767 would amend Title 18 of the U.S. Code (Chapter 47 – Fraud and False Statements) to add a new section – § 1041 Misbranded and adulterated food – making it unlawful for any person to knowingly: “(1) introduce or deliver for introduction into interstate commerce any food that is adulterated or misbranded; or (2) adulterate or misbrand any food in interstate commerce.”  A violation of proposed § 1041 would carry with it a fine and/or imprisonment for not more than 10 years.  S. 3669 would have amended the FDC Act to impose criminal penalties for persons who knowingly contaminate the food supply.

According to a press release, Sen. Leahy, who chairs the Senate Judiciary Committee, has scheduled a Committee business meeting for Thursday, September 16th that will include a discussion of the bill.  Continuing concern about the safety of the food supply could increase pressure on Congress to pass food safety legislation that might include at least some version of the Food Safety Accountability Act.

By Kurt R. Karst –   

It was not a question of whether ViroPharma Incorporated (“ViroPharma”) would sue FDA in connection with the approval of ANDAs for generic versions of the company’s antibiotic drug of last resort, VANCOCIN (vancomycin HCl) Capsules, but when.  In addition to a pending FOIA lawsuit (see our previous post here), ViroPharma has made voluminous submissions to FDA challenging the Agency’s draft bioequivalence recommendation for generic VANCOCIN, which provides that bioequivalence may be established based on comparative dissolution (i.e., in vitro information).  Last Friday we got the answer to the outstanding “when” question when ViroPharma sued FDA in the U.S. District Court for the District of Columbia. 

ViroPharma’s Complaint alleges that FDA violated the Administrative Procedure Act (“APA”) when the Agency failed to engage in notice-and-comment rulemaking “before effectively amending its [ANDA] regulations to permit a waiver of the in vivo bioequivalence requirement based on 21 C.F.R. § 320.24 even when none of the waiver criteria of 21 C.F .R. § 320.22 are satisfied.”  ViroPharma requests declaratory relief from the court, including “that the plain reading of FDA’s regulations requires an ANDA applicant seeking a waiver of the in vivo bioequivalence testing requirement to first meet one of the criteria set forth in 21 C.F.R. § 320.22,” and that a previous statement from FDA in a May 2008 response to a November 2007 citizen petition concerning generic PRECOSE (acarbose) – that 21 C.F.R. § 320.24 provides an independent basis for waiving the in vivo testing requirement even when none of the criteria of 21 C.F.R. § 320.22 is satisfied – constitutes an amendment to FDA’s ANDA bioequivalence regulations.

Under the FDC Act, as amended by the 2003 Medicare Modernization Act, for a drug, like vancomycin HCl, “that is not intended to be absorbed into the bloodstream, [FDA] may establish alternative, scientifically valid methods to show bioequivalence if the alternative methods are expected to detect a significant difference between the drug and the listed drug in safety and therapeutic effect” (FDC Act § 505(j)(8)(C)).  Although ANDAs often include the results of both in vivo and in vitro studies demonstrating bioequivalence to a reference listed drug, FDA’s ANDA regulations at 21 C.F.R. § 320.21 and § 320.22 provide that bioequivalence can be demonstrated through in vitro testing and that in vivo testing can be waived.  FDA’s regulations at 21 C.F.R. § 320.24 describe the types of in vivo and in vitro methods to establish bioequivalence. 

According to ViroPharma, “21 C.F.R. § 320.24 does not authorize the waiver of the in vivo bioequivalence requirement, which is the function of §§ 320.21 and 320.22.  Rather, § 320.24 lists the various methods for establishing either in vivo or in vitro bioequivalence, depending on which of those two types of testing is otherwise required by the regulations.”  And none of the circumstances identified in 21 C.F.R. § 320.22 apply to vancomycin HCl capsules, says ViroPharma:

[V]ancomycin capsules are not an injectable, topical or oral solution, or inhalation drug product (§ 320.22(b)); vancomycin is not a DESI drug (§ 320.22(c)); vancomycin capsule ANDAs do not seek approval of a different strength of a drug product that has already been approved (§ 320.22(d)(2); in vitro bioequivalence methods for vancomycin have not, to ViroPharma's knowledge, been shown to be correlated with in vivo data (§ 320.22(d)(3)); vancomycin capsule ANDAs do not seek approval for a reformulation of an already-approved product (§ 320.22(d)(4)); nor is there a need to approve vancomycin capsule ANDAs to ensure the continued marketing of a medically important drug product because Vancocin is readily available in the market (§ 320.22(e)).

When FDA issued its May 2008 PRECOSE citizen petition response, the Agency, according to ViroPharma, “claimed that under § 320.24 of its regulations, FDA has the discretion to accept in vitro studies for a nonsystemically absorbed drug product such as acarbose when such studies are determined to be a scientifically valid method of determining bioequivalence” (internal quotation omitted).   Thus, the Complaint argues that “[t]hrough this response, FDA effectively amended its regulations, which on their face plainly require that one of the waiver criteria of § 320.22 be satisfied before FDA can waive the in vivo requirement.  Instead, FDA interpreted the list of bioequivalence methods provided in 21 C.F.R. § 320.24 as a separate and sufficient regulatory basis for waiving in vivo bioequivalence requirements independent of 21 C.F.R. § 320.22.”

ViroPharma also points to FDA’s June 2010 Final Product Specific Bioequivalence Guidance as further evidence of this effective amendment of FDA’s ANDA bioequivalence regulations.  That final guidance states that “[f]or a drug that is not intended to be absorbed into the bloodstream, FDA may establish alternative methods to show bioequivalence that may be expected to detect a significant difference between the drug and the listed drug in safety and therapeutic effect (21 U.S.C. 355(j)(8)(C); 21 CFR 320.24)” [(emphasis in original)].  Thus, ViroPharma states:

In citing 21 C.F.R. § 320.24 in the Final Product Specific Bioequivalence Guidance as the sole regulatory basis for its decision to waive in vivo testing, FDA plainly ignored both the plain text of its own regulations and ViroPharma’s submissions explaining that one of the criteria of § 320.22 must first be satisfied in order for FDA to waive the in vivo bioequivalence testing requirement of § 320.21, and affirmed the rationale it enunciated in its Acarbose Bioequivalence Decision.

FDA’s alleged amendment to its ANDA bioequivalence regulations “increase[s] the likelihood of approvals for generic vancomycin ANDAs” – for which there are reportedly 11 ANDAs pending. 

By Nisha P Shah –

In a letter to the Electronic Cigarette Association, FDA stated its intention to regulate electronic cigarettes (also referred to as e-cigarettes or e-cigs) as drug products.  Specifically, FDA maintained that e-cigarettes “meet the definitions of both a drug and device under the [Federal Food, Drug, and Cosmetic] Act and the definition of a combination product … with a drug primary mode of action.”  Therefore, to market these products, FDA states that companies will have to comply with the drug approval process, which includes submission of an investigational new drug ("IND") application and completion of the new drug approval process.

FDA also issued Warning Letters to five distributors of electronic cigarettes for certain violations of Federal Food, Drug, and Cosmetic Act, including making unsubstantiated drug claims and poor manufacturing practices.  In the letters, FDA claims that e-cigarettes are devices intended to deliver a drug, nicotine, and points to the fact that the corresponding marketing materials and websites are unlawfully promoting e-cigarettes as smoking-cessation aids.  Because the products are being marketed as smoking cessation aids, FDA warns that the products must receive premarket approval.

Earlier this year, the District Court for the District of Columbia ruled that FDA cannot regulate e-cigarettes as combination drug/device products absent a showing that the products are intended to assist in treating nicotine addiction or to “affect the structure or function of the body in a way distinguishable from ‘customarily marketed’ tobacco products” (see our prior post here).  That case is under appeal.

By Kurt R. Karst –   

Earlier today (September 9th), in a notice filed with the U.S. District Court for the Eastern District of Virginia (Alexandria Division), the government informed the court that “the Solicitor General has, at this time, elected against appeal” of Judge Claude M. Hilton’s August 3rd decision in which he granted The Medicines Company’s (“MDCO’s”) Motion for Summary Judgment and ordered the U.S. Patent and Trademark Office (“PTO”) to consider timely filed MDCO’s Patent Term Extension (“PTE”) application for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering MDCO’s ANGIOMAX (bivalirudin) under a next business day interpretation of the PTE statute (35 U.S.C. § 156).

But MDCO is not popping any champagne corks yet.  As we previously reported, on August 19, APP Pharmaceuticals, LLC (“APP”) filed a Motion to Intervene in the case.  A hearing on APP’s motion is schedule for September 10th at10:00 AM before Judge Hilton, who could very well rule from the bench.

The government decided not to take an official position on APP’s motion, and instead provided a “brief explanation of some of  the thorny legal issues raised through APP’s motion, including the analytical framework and pertinent decisional authority that play a role – at least in part – in this Court’s adjudication of the motion.”  Not surprisingly, MDCO vigorously opposes APP’s intervention, and stated in its opposition brief (before it was clear that the government would not intervene) that:

APP seeks to intervene because it believes the government may choose not to appeal this Court’s decision. But it is hornbook law that a party may not intervene to pursue an appeal in the absence of the principal party on its side unless it can establish both prudential and Article III standing.  And APP’s motion fails even to mention these requirements, much less to show that they are satisfied here.  In fact, APP has neither prudential nor constitutional standing.

APP, which has already put the court on notice that “[i]n the event that the Court denies or conditionally grants APP’s pending Motion for Leave to Intervene, . . . APP shall appeal to the United States Court of Appeals for the Federal Circuit from that Order and related rulings as well,” argues in its rebuttal brief that:

Both the Plaintiff and the Government fundamentally misunderstand, or misrepresent, the grounds for APP’s motion to intervene.  APP is not seeking to challenge the PTO’s action on Plaintiff’s application for extension of the ’404 patent’s term.  APP is not seeking to insert itself into the patent term extension process.  APP does not claim to be harmed by, and does not wish to appeal, the underlying agency decision.  Instead, APP seeks to appeal the decision of this Court changing the timeliness requirements for patent term extension applications retroactively, a decision that harms APP, in substantial ways. . . .

We’ll keep you posted as things progress in this case and will issue an update to this post if Judge Hilton decides on APP’s motion tomorrow.

UPDATE:

• On September 10th, Judge Hilton denied APP’s motion to intervene.  APPs’ appeal has already been docketed in the Federal Circuit – Case No. 10-1534. 

By Ricardo Carvajal –

In late August, FDA issued warning letters to Unilever and Dr. Pepper Snapple Group objecting to the use of unauthorized nutrient content claims for antioxidants in the labeling of certain products containing green tea.  Similar warning letters addressing other types of products with antioxidant claims have been issued in the past year, but none previously to large manufacturers. 

Of special interest, FDA concludes that green tea and green tea flavonoids “are not nutrients with recognized antioxidant activity,” and that “flavonoids” cannot properly be the subject of a nutrient content claim.  In addition, FDA restates its position that it is inappropriate to fortify snack foods such as carbonated beverages – an issue the agency addressed last year in a warning letter to Coca-Cola for its Diet Coke Plus – see our previous post here.  

FDA is increasing scrutiny of nutrient content claims, which are generally preferred by both manufacturers and consumers for their short, punchy nature.  These latest warning letters serve as additional reminders that such claims must be formulated with care.

Correction: In our earlier posting on FDA's clamp-down on antioxidant claims, we missed a gaffe on FDA's website and erroneously stated that one of the warning letters was issued to Cadbury Adams. In fact, the letter was issued to the Dr. Pepper Snapple Group. The posting has been corrected.

By Kurt R. Karst –   

Earlier this week, the U.S. Court of Appeals for the Second circuit denied without comment a Petition for Rehearing and Rehearing En Banc filed on behalf of certain plaintiffs-appellants in In Re Ciprofloxacin Hydrochloride Antitrust Litig,, an antitrust challenge to certain patent settlement agreements (what opponents call “pay-for-delay” agreements) involving manufacturers of Ciprofloxacin HCl (CIPRO).  As we previously reported, an April 2010 decision by a 3-judge panel of the U.S. Court of Appeals for the Second Circuit in the case affirmed (3-0) a 2005 decision by the U.S. District Court for the Eastern District of New York granting summary judgment for defendants (i.e., Ciprofloxacin HCl manufacturers) (In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514 (E.D.N.Y. 2005)); however, the panel decision invited further review of the case by the full Court. 

According to the April 29, 2010 panel decision, the Court affirmed the district court decision because the Court’s 2005 decision in Joblove v. Barr Labs., Inc., (, compelled it to do so: “Since Tamoxifen rejected antitrust challenges to reverse payments as a matter of law, we are bound to review the Cipro court’s rulings under the standard adopted in Tamoxifen.”  The Court states in its decison, however, that “because of the ‘exceptional importance’ of the antitrust implications of reverse exclusionary payment settlements of patent infringement suits,” plaintiffs-appellants should petition for rehearing en banc.  The Federal Trade Commission (“FTC”), a vocal opponent to patent settlement agreements, quickly issued a press release after the decision came down exclaiming that the Court’s invitation for the plaintiffs-appellants to seek further review “is further evidence that courts are rethinking their approach to pay-for-delay settlements.” 

Although the panel invited the submission of the petition for rehearing en banc submitted in May 2010, the full Court denied the request . . . but not without dissent.  Circuit Judge Rosemary S. Pooler filed a 5-page dissent critical of the Tamoxifen decision and patent settlement agreements in general.  According to Judge Pooler, patent settlement agreements “serve no obvious redeeming social purpose” and the Tamoxifen decision “unambiguously deserves reexamination.”  In addition, Judge Pooler commented that:

The Tamoxifen majority recognized the “troubling dynamic” of permitting exclusion payments that “inevitably protect patent monopolies that are, perhaps, undeserved.” Subsequent experience has shown that the majority was right to be “troubled.” Although the “enormous importance” of the issues that this case raises is beyond dispute, Fed. R. App. P. 35(a)(2), a majority of this Court has voted against en banc rehearing. . . .  It will be up to the Supreme Court or Congress to resolve the conflict among the Courts of Appeals.

But as Rutgers School of Law-Camden Professor Michael A. Carrier commented, although “[a] petition for certiorari likely will be filed with the Supreme Court . . . that strategy has not been successful in previous cases.”  Patent settlement agreements is a hot topic in the halls of Congress.  As we previously reported, in July, the U.S. Senate Committee on Appropriations, over the objection of several Senators, approved the inclusion of the “Preserve Access to Affordable Generics Act” in the report (Senate Report No. 111-238; pages 144-148 & 150-151) accompanying the Fiscal Year 2011 Financial Services and General Government Appropriations Bill (S. 3677).  The legislation would not ban patent settlement agreements (as proposed in previous legislation), but would make them presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”

The FTC, which did not comment on the Second Circuit’s rehearing denial, has been pushing for passage of the “Preserve Access to Affordable Generics Act,” and will presumably use the Second Circuit’s rehearing denial as fodder to keep the pressure on Congress to pass the bill when Congress reconvenes next week. 

By Ricardo Carvajal –

Section 10(b) of the Exchange Act and Securities and Exchange Commission (“SEC”) Rule 10b-5 prohibits “any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”  To adequately allege a violation, a plaintiff must allege (among other things) that a defendant has engaged in a material representation or omission of fact, and that the defendant has done so with an intent to deceive, manipulate, or defraud – otherwise known as “scienter.”

Last fall, the 9th Circuit overturned a district court’s dismissal of a class action lawsuit alleging that Matrixx Initiatives, Inc. (“Matrixx”) violated securities laws when it failed to disclose information about possible adverse health effects of Zicam, its zinc-based cold remedy.  The district court had dismissed the complaint on the ground that plaintiffs alleged insufficient evidence to support their claim of a securities fraud violation.  In specific, the district court held that adverse event reports (“AERs”) about Zicam were not material because they were not statistically significant, and also that plaintiffs’ allegations of scienter were inadequate.  The appellate court reversed, concluding that the district court erred when it applied a statistical significance standard to determine the materiality of the AERs.  The appellate court also concluded that the inference of scienter was sufficiently strong to survive dismissal.

Matrixx appealed the 9th Circuit decision, and the Supreme Court granted certiorari in June on the question of “[w]hether a plaintiff can state a claim under § 10(b) of the Securities Exchange Act and SEC Rule 10b-5 based on a pharmaceutical company's nondisclosure of adverse event reports even though the reports are not alleged to be statistically significant.”  Since then, the drug, medical device, and dietary supplement industries have lined up in solid opposition to the 9th Circuit decision, as evidenced by briefs recently filed in the case by PhRMA, AdvaMed, BayBio, the Consumer Healthcare Products Association, the Council for Responsible Nutrition, and the Natural Products Association, among others (see the U.S. Supreme Court docket here and SCOTUSBlog for copies of the briefs). 

Generally, the briefs argue that the district court properly applied the statistical significance standard, and that upholding the 9th Circuit decision would have strong detrimental effects on companies, investors, and consumers.  More specifically, the briefs argue that AERs are not evidence of a causal relationship between a product and an adverse event, and that data submitted in AERs requires analysis to determine its significance.  Yet, if the 9th Circuit decision stands, companies would have little choice but to disclose all adverse event reports.  The resulting flood of information could confuse and mislead both investors and consumers.

Although most of the briefs focus on the statistical significance standard, the Washington Legal Foundation (“WLF”) filed a brief that focuses solely on the issue of scienter.  WLF argues that the facts alleged in the case do not adequately support the inference of scienter drawn by the appellate court.  Rather, those facts support the inference that Matrixx considered the AERs for Zicam to not be material – a position that Matrixx advances in its own brief.

Given the potential impact on a wide range of FDA-regulated companies, this is a case that should be watched closely.

By Michelle Butler & Alan Kirschenbaum –  

It took CMS 17 years to issue a regulation implementing the Medicaid Rebate Program, and much of that regulation is turning out to be short-lived.  On Friday, September 3, CMS published a proposal to withdraw provisions of its 2007 regulation governing the determination of average manufacturer price ("AMP") and the setting of federal upper limits ("FULs") for multiple source drugs.  Both of these regulations have been superseded by the Patient Protection and Affordable Care Act ("PPACA"), which, as described in our summary of that law, made significant changes to the definition of AMP and also redefined the methodology for calculating FULs. 

As a result of the PPACA changes, CMS is proposing to withdraw 42 C.F.R. § 447.504, “Determination of AMP,” in its entirety.  In the preamble, CMS advises companies to calculate AMP based on the definitions set forth in the statute (effective October 1, 2010) rather than definitions in the withdrawn AMP regulation and other CMS guidance.  CMS states that it expects to develop regulations that will implement the changes made by PPACA relating to the determination of AMP and the setting of FULs.  However, no timeline is provided, and regulations certainly will not be forthcoming by the time the first monthly AMP report (for October) is due under the new PPACA methodology on November 30.  For that report, manufacturers will have to rely on the statutory definition, whatever subregulatory guidance CMS may issue before then, and reasonable assumptions regarding issues that are not addressed in the statute or any guidance.  CMS also proposes to withdraw in its entirety 42 C.F.R. § 447.514, “Upper limits for multiple source drugs,” which is inconsistent with the new FUL methodology set forth in PPACA. 

It is important to note that certain AMP-related provisions of the 2007 regulation would not be withdrawn under CMS’ proposal, including the requirements that AMP be reported monthly and quarterly, that 12-month averaging be used for lagged price concessions, and that bundled discounts be allocated in calculating AMP.  Also remaining intact would be provisions relating to best price, authorized generics, certification of reports, recordkeeping, restatements of AMP and best price, nominal price sales, and reporting of prompt pay discounts.

Comments may be submitted to CMS until 5 pm on October 4, 2010.