By Kurt R. Karst –      

In a November 16th decision that might not mark the end to the dispute between Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) and FDA over marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products, Judge Alan Johnson from the U.S. District Court for the District of Wyoming granted FDA’s Motion to Dismiss the case.  Judge Johnson ruled that the court “does not have jurisdiction over any of the agency actions [Cody/Lannett] ask this Court to review, as the FDA has yet to complete a final agency action.  Any attempt to review such actions would be premature and contrary to law.”

As we previously reported, the Cody/Lannett lawsuit stems from FDA’s March 2009 Warning Letters to Cody and Lannett (among other companies) to stop manufacturing certain unapproved narcotic drugs, including morphine sulfate oral solutions.  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”  In subsequent communications with Cody/Lannett, FDA stated that the Agency would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products until July 24, 2010, which is 180 days after FDA approved Roxane’s NDA for the drug product.  Meanwhile, Lannett submitted its own NDA to FDA for Morphine Sulfate Solution Immediate-Release 20mg/mL in late February 2010.  That NDA is still under review and FDA has not taken any further enforcement action against Cody/Lannett.

Cody/Lannett sued FDA arguing that the Agency should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on the Agency’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act in determining that the product is a “new drug.”  In a July July 26th decision, the district court denied Cody/Lannett’s Motion for Temporary Restraining Order and Preliminary Injunction.  Cody/Lannett then filed, FDA opposed, and the court granted, a Motion for Clarification, Amendment, or Reconsideration of Order  raising certain jurisdictional issues.  FDA promptly filed a Motion to Dismiss arguing for dismissal for lack of jurisdiction or failure to state a claim (or both).

In a short, 11-page decision, Judge Johnson granted FDA’s Motion to Dismiss and quickly dispensed with the three issues raised by Cody/Lannett – (1) FDA’s alleged determination that Cody/Lannett’s product is a “new drug;” (2) FDA’s alleged failure to develop an administrative record for its determination that Cody/Lannett’s Morphine Sulfate Solution Immediate-Release 20mg/mL is a “new drug;” and (3) FDA’s alleged disparate treatment of Cody/Lannett compared to its competitor Roxane. 

Judge Johnson whittled the issue list down to two, treating Cody/Lannett’s claim that  FDA failed to develop an administrative record as a prayer for relief concerning the review of the FDA’s new drug determination.  The remaining issues were examined in the context of whether FDA’s actions in this case were final.  With respect to FDA’s alleged “new drug” determination, Judge Johnson ruled that FDA’s Warning Letters to Cody/Lannett do not constitute final agency action:

Because the warning letters. . . indicate the FDA’s intention in the future to institute enforcement action against [Cody/Lannett], this Court finds those letters do not constitute final agency action as they do not mark the consummation of the agency's decisionmaking process.  Had the FDA made its determination about the product at the conclusion of an enforcement action or in response to a citizen petition, that determination would constitute a final agency action. Such is not the case here. [(internal quotation and citation omitted)]

As to FDA’s alleged disparate treatment of Cody/Lannett compared to its competitor Roxane (specifically, that FDA granted priority NDA review to Roxane but refused to do so for Cody/Lannett), the court ruled that:

it does not have jurisdiction to review this agency action. . . .   In addition to the action marking the consummation of the agency's decisionmaking process, the agency action must be one by which rights or obligations have been determined or from which legal consequences will flow.  This agency action fails the second requirement, because no rights or obligations are determined based on the type of review given to an NDA.  It is not the type of review given – but the culmination of the application process – that determines an applicant’s rights to market a drug. [(internal quotation and citation omitted)]

Despite Cody/Lannett’s loss yesterday, we think there is a good chance that the district court’s decision will be appealed.  Only time will tell, of course.  And we’ll be there to tell you all about it.

By Kurt R. Karst –   

Following up on a June 11, 2010 invitation from the U.S. Court of Appeals for the Sixth Circuit to file an amicus brief in the consolidated appeals of Smith v. Wyeth, Inc. (Case No. 09-5460), Wilson v. Pliva, Inc. (Case No. 09 5466), and Morris v. Wyeth, Inc. (Case No. 09-5509),  FDA filed its brief earlier today answering the question: “Whether federal law preempts a tort claim under state law that a generic drug approved by the Food and Drug Administration was inadequately labeled.”  FDA’s amicus brief reflects the same position on generic drug preemption that the Solicitor General took in his November 2, 2010 amicus brief submitted to the U.S. Supreme Court on this topic (see our previous post here).

The consolidated Wyeth cases before the Sixth Circuit all concern the drug metoclopramide, which is marketed under the brand-name REGLAN.  The plaintiffs in each case allege that the metoclopramide they took was defective because both the generic and brand-name manufacturers failed to adequately warn of the risks of long-term use (i.e., tardive dyskinesia).  In each case, a district court dismissed the plaintiff’s claims against the generic drug manufacturers, holding that their failure-to-warn claims were preempted by federal law.

Although we are still poring over FDA’s 44-page amicus brief to see what nuggets it might contain, here is the summary of the Agency’s argument:

The district court incorrectly held that plaintiffs’ failure-to-warn claims against generic drug manufacturers are categorically preempted by the FDCA and FDA’s regulations.  The district court’s decision is inconsistent with the decisions of the only courts of appeals to address the question since Wyeth v. Levine, 129 S. Ct. 1187, 1196 (2009).  Demahy v. Actavis, 593 F.3d 428, 449 (5th Cir. 2010); Mensing v. Wyeth, Inc., 588 F.3d 603, 612 (8th Cir. 2009).  Though federal law may circumscribe the possible theories of recovery by plaintiffs, it does not present an outright bar to recovery.

Plaintiffs’ failure-to-warn claims are not categorically preempted, because a generic pharmaceutical manufacturer, like a brand-name manufacturer, can (and indeed, must) inform FDA of new information about risks that may require a change in the labeling of its drug.  Furthermore, though the “changes being effected” and prior approval supplement processes were not expressly available to generic manufacturers, the defendants could have asked FDA to coordinate appropriate “Dear Health Care Professional” letters or to take other action with respect to labeling.  Moreover, holding a generic pharmaceutical manufacturer liable on a failure-to-warn theory would not unacceptably frustrate the purposes of the Hatch-Waxman Amendments.

Now that FDA has shown its cards, it will be interesting to see whether the new Congress, once it convenes in January, will take interest in the issue of generic drug preemption.  In 2009, Sen. John Cornyn (R-TX) filed an amendment to pending legislation that, if enacted, would preempt tort suits against generic drug makers.  Specifically, Sen. Cornyn’s amendment would have amended the law to state:

Notwithstanding any other provision of State or Federal law, a person who manufacturers a generic drug approved under an abbreviated new drug application shall not be liable because the label did not warn against an adverse reaction, unless the Food and Drug Administration required a change to the label to provide such warnings and the manufacturer failed to comply with such requirement, or the manufacturer failed to provide to the Food and Drug Administration health and safety information otherwise required to be provided under regulations issued by the Secretary for Health and Human Services regarding such drug.

It is possible that similar legislation could be introduced in the 112th Congress. 

By Kurt R. Karst–      

The generic drug industry is headed for its own version of a “patent cliff” – a “180-day exclusivity cliff” – according to a report from MorganStanley on large cap and specialty pharmaceuticals issued earlier this month.  “Patent cliff” is a colloquial term used to describe the disruption that occurs when a company or industry loses the market for a product as a result of the expiration of patents. 

The report, which covers myriad issues from the prospects of legislation banning patent settlement agreements (not high) to the prospects of biosimilar approvals (don’t hold your breath), estimates that the growth in the generic drug industry seen in the past few years will begin to slow starting in 2013 “due to fewer and lower value opportunities.”  According to , generics drugs accounted for 57.7% of prescriptions dispensed five years ago, and close to 75% today.

More than $100 billion of brand name drug sales are expected to go generic between 2010 and 2015, says MorganStanley, and a majority of the generic opportunities will likely be realized by the end of 2012.  More importantly (for us Hatch-Waxman folk at least), MorganStanley estimates that “exclusivity opportunities drop by 75% after 2012, from $40B in 2010-2012 to $10B in 2013-2015.  The declining value of first-to-file exclusivities after 2012 could pressure earnings since exclusivity opportunities are roughly 4x more profitable than base business generics (75% operating margins vs. 10-20% in the base business).”

 
The “180-day exclusivity cliff” tracks the “patent cliff” brand-name companies are expected to face as many blockbuster drugs come off patent between 2011 and 2014. 

Hyman, Phelps & McNamara, P.C. is very pleased to announce that Ricardo Carvajal has been named Director of the firm, and that Dara Katcher Levy has been named Of Counsel.  Mr. Carvajal’s practice focuses on providing FDA and FTC regulatory counseling and litigation support to manufacturers and marketers of foods (including dietary supplements and medical foods), cosmetics, and OTC drugs.  He has particular expertise in the regulation of products derived through biotechnology and nanotechnology. Ms. Levy’s practice focuses on the review of launch and post-launch promotional materials.  She also concentrates on import/export issues.

By Dara Katcher Levy –

We previously blogged about the Amphastar lawsuit – a suit seeking declaratory judgment and injunctive relief with regard to FDA’s detention of two entries of semi-purified heparin.  Amphastar had responded to each of FDA's allegations,  however, the shipments remained detained. 

On November 5, Amphastar filed a Motion for Preliminary Injunction against FDA alleging that Amphastar was likely to succeed on the merits of its suit and that the company was suffering irreparable harm due to the continued detention of these shipments.  A week later, on November 12, Amphastar filed a Notice of Withdrawal without prejudice of its prior Motion for Preliminary Injunction on the basis that FDA had released the materials shortly after the November 5 Motion had been filed.

It is becoming increasingly common for import issues to be resolved through utilization of the courts (often, limited to initial pleadings) in order to compel cooperation from FDA.

By Kurt R. Karst –      

In our post last week on letters issued by the U.S. Patent and Trademark Office (“PTO”) clarifying when patents covering certain drug products are eligible for a Patent Term Extension (“PTE”) in light of the U.S. Court of Appeals for the Federal Circuit’s May 10, 2010 decisions in PhotoCure v. Kappos, 603 F.3d 1372 (Fed. Cir. 2010) and Ortho-McNeil Pharm., Inc. v. Lupin Pharms., Inc., 603 F.3d 1377 (Fed. Cir. 2010), we made reference to some dicta in the PhotoCure decision and a pending PTE request and promised to blog on that issue soon.  That time is now.

As we noted last week, the Federal Circuit’s PhotoCure decision, which interpreted the term “product” in the PTE statute at 35 U.S.C. § 156(a)(5)(A) to mean “active ingredient” instead of “active moiety,” contains dicta to the effect that a patent – in that case, U.S. Patent No. 6,034,267 covering the drug product METVIXIA (methyl aminoevulinate HCl) – is eligible for a PTE not only because methyl aminoevulinate HCL is a different chemical compound from previously approved aminolevulinic acid, but because “it is not disputed that they differ in their biological properties, warranting separate patenting and separate regulatory approval, although their chemical structure is similar.” 

Latching on to the above-quoted language, a PTE application was recently submitted to the PTO for U.S. Patent No. RE 41,571 (“the ‘571 patent”), a method-of-use patent listed in the Orange Book covering BUTRANS (buprenorphine) Transdermal System.  FDA approved BUTRANS under NDA No. 21-306 on June 30, 2010 “for the management of moderate to severe chronic pain in patients requiring a continuous, around-the-clock opioid analgesic for an extended period of time.” 

Buprenorphine is, of course, not new.  FDA has approved several applications for drug products containing buprenorphine, including BUPRENEX (NDA No. 18-401), SUBUTEX (NDA No. 20-732), and SUBOXONE (NDA No. 20-733).  Nevertheless, the PTE applicant for the ‘571 patent claims eligibility for a PTE because:

In contrast to these three products, the active ingredient for Butrans™ is buprenorphine base, which has never before been approved by the FDA. Moreover, buprenorphine base was required to undergo full FDA review, and has pharmacological properties that set it apart from buprenorphine hydrochloride.  Accordingly, the ‘571 patent that covers Butrans™ remains eligible for a patent term extension under 35 U.S.C. § 156.  See Photocure ASA v. Kappos, 603 F.3d 1372 (Fed. Cir. 2010) (allowing a § 156 extension even where similar active ingredient was previously approved by the FDA, since later approved active ingredient covered by extension application had different biological properties and underwent separate regulatory approval); Ortho-McNeil Pharm. v. Lupin Pharm. 603 F.3d 1377 (Fed. Cir. 2010) (allowing § 156 extension for enantiomer even though the racemate had already been approved by the FDA).

In other words, notwithstanding FDA’s previous buprenorphine NDA approvals, the PTE applicant believes that the ‘571 patent covering BUTRANS is eligible for a PTE because the drug product contains a different active ingredient (i.e., buprenorphine base) and has different properties that warranted separate patenting and separate FDA NDA approval (i.e., a different regulatory review period). 

The PTE statute does not contain the additional requirements of products having different properties that warrant separate patenting and separate FDA approval for PTE eligibility, and the PTO has historically hewed closely to the PTE statutory language in the Office’s decisions.  Moreover, as we noted last week, the PTO framed the eligibility inquiry in three parts: (1) Has the active ingredient been previously approved? (2) Has a salt of the active ingredient been approved? (3) Has an ester of the active ingredient been approved?  A "yes" to any of these questions means that permission does not meet the first permitted commercial marketing prong of 35 U.S.C. § 156(a)(5)(A).  Given the PTO’s interpretation of the PTE statute, it is possible that the BUTRANS PTE application was submitted to elicit a denial that can be challenged in court. 

By Dara Katcher Levy –

The government is surely persistent when it comes to imported products that relate to FDA.

On November 2, 2010, the U.S. Court of International Trade denied the U.S.’s application for a default judgment of $17,734,926 against a British corporation that many years ago imported a product regulated by FDA.  The underlying activities that formed the basis of the complaint occurred 18 years ago.

 The ruling is part of the Evening Primrose Oil saga.  In 1985, FDA issued a series of Import Alerts announcing that Evening Primrose Oil could not be sold lawfully in the United States without FDA approval, that the substance did not have FDA approval, and that all import shipment of evening primrose oil offered for entry into the U.S. were to be detained by Customs. 

In this lawsuit, which was originally filed in 1997, the Justice Department alleged that Callanish, a Scotland-based manufacturer and shipper of Evening Primrose Oil, created false invoices to materially mislead Customs as to the nature of the product being imported so that it would evade FDA’s Import Alerts.  The U.S. alleged that between 1988 and 1992, 52 shipments of Evening Primrose Oil entered the country because of these false statements.  Under section 592 of the Tariff Act of 1930, as amended, it is unlawful for any person to introduce merchandise into the U.S. by means of material and false documents, statements, or acts. 

The U.S. successfully served Callanish in May 2010.  Callanish failed to appear after being served and the court entered Callanish’s default. Because of the default, the court accepted as true all well-pled facts in the complaint.  The court did not take issue with any of the facts alleging Callanish’s misconduct, but took issue with the U.S.’s assertion that the domestic value of the evening primrose oil equaled $17,734,926.  The court stated that the mere allegation of an amount, absent anything more, does not constitute a well-pled fact.  The court therefore, denied, without prejudice, the U.S.’s claim.

The U.S. has pursued this civil penalty case for over 13 years, even though the U.S. has known of the insolvency of Callanish and the lack of any funds to pay the penalty since 2001.  Despite the apparent illogic of the government’s effort to collect the penalty from an insolvent foreign company, this case is a reminder of the potential consequences to importers if they do not have clear and accurate descriptions of the imported products on the importation documents.

By Alan M. Kirschenbaum –

The Centers for Medicare & Medicaid Services (“CMS”) has finalized the withdrawal of its regulations on the calculation of Average Manufacturer Price (“AMP”) and the determination of federal upper limits.  As we previously reported, CMS is withdrawing these regulations because they have been superseded by statutory amendments as part of the Patient Protection and Affordable Care Act (“PPACA”).  The final rule will be published in the Federal Register on November 15.  Don’t look for any helpful guidance in this final rule or its preamble.  If anything, the final rule makes a number of AMP issues more murky than they were before.

The preamble does contain some clarifications regarding the effect of the withdrawal of the AMP regulations, but these clarifications leave underlying questions unanswered.  For example:

• The definition of "bona fide service fee" at 42 C.F.R. § 447.502 is not being withdrawn and should continue to be used for purposes of best price, but should not be used in the calculation of AMP.  The treatment of bona fide service fees in AMP will be addressed in a future rulemaking.
• The provision providing that the quarterly AMP is calculated as a weighted average of the monthly AMPs in the quarter is being withdrawn.  Responding to a question whether quarterly AMP should continue to be calculated in this manner, CMS responded that manufacturers should rely on the statutory definition of AMP.  (This is a puzzling answer, because the definition does not address this issue.)  Apparently, this question will also be answered in the future rulemaking.
• CMS has not yet determined whether to permit manufacturers to restate base date AMPs.
• The proposed rule was unclear whether the provision requiring lagged price concessions to be smoothed was being deleted.  CMS confirms that it is being deleted, but declines to advise whether smoothing may nevertheless be used.

The preamble contains a long list of additional questions that CMS declined to answer, including:

• Should manufacturers continue to include wholesaler sales unless they have adequate documentation that the drugs are subsequently sold to an excluded entity?
• How should manufacturers determine whether an injectable, infusible, inhaled, instilled, or implanted drug is "not generally dispensed" in retail community pharmacies?
• Should sales of an authorized generic to a secondary manufacturer who sells to retail community pharmacies be included in AMP?
• How should rebates for line extensions be calculated?

CMS’s response to these questions is that it intends to issue a proposed regulation addressing changes made by PPACA.

By Ricardo Carvajal –

The graphic artists working on behalf of FDA have been busy, busy, busy!  The agency posted 36 proposed graphic health warnings that would accompany the new health warning statements required under section 201 of the Family Smoking Prevention and Tobacco Control Act.  FDA’s proposed rule to implement the new warning requirements is due to publish in an upcoming issue of the Federal Register. 

If a picture is worth 1,000 words, the pictures proposed by FDA obviate the need for words altogether.  The proposed rule provides a rationale for compelling industry to use the proposed graphic health warnings that is clearly intended to head off a First Amendment challenge.  Nonetheless, such a challenge is almost certain to be raised as FDA’s rulemaking goes forward.

By Kurt R. Karst –      

In a series of letters, the U.S. Patent and Trademark Office (“PTO”) has clarified when patents covering certain drug products are eligible for a Patent Term Extension (“PTE”).  The PTO issued the letters as a result of recent decisions from the U.S. Court of Appeals for the Federal Circuit in PhotoCure v. Kappos, 603 F.3d 1372 (Fed. Cir. 2010) and Ortho-McNeil Pharm., Inc. v. Lupin Pharms., Inc., 603 F.3d 1377 (Fed. Cir. 2010).  Both decisions (here and here) were issued on May 10, 2010 and concern the proper interpretation of 35 U.S.C. § 156(a)(5)(A), which states that the term of a patent claiming a drug shall be extended from the original expiration date of the patent if, among other things, “the permission for the commercial marketing or use of the product . . . is the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred.” 

The term “product” at 35 U.S.C. § 156(a)(5)(A) is defined at 35 U.S.C. 156(f)(2) to mean, in relevant part, “the active ingredient of – a new drug, antibiotic drug, or human biological product . . . including any salt or ester of the active ingredient, as a single entity or in combination with another active ingredient.”  (The term “active ingredient” is defined in FDA’s regulations to mean “any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure of any function of the body of man or of animals.”) 

For several years, the PTO interpreted the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active moiety” (i.e., the molecule in a drug product responsible for pharmacological action, regardless of whether the active moiety is formulated as a salt, ester, or other non-covalent derivative) rather than “active ingredient” (i.e., the active ingredient physically found in the drug product, which would include any salt, ester, or other non-covalent derivative of the active ingredient physically found in the drug product).  In contrast, the Federal Circuit’s 1990 decision in Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392 (Fed. Cir. 1990) (“Glaxo II”), which affirmed a 1989 district court decision in Glaxo v. Quigg, 706 F. Supp 1224 (E.D. Va. 1989) (“Glaxo I”), construed the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active ingredient.”  The Federal Circuit’s May 2010 decisions in PhotoCure and Ortho-McNeil ruled that the Glaxo II decision and its “active ingredient” interpretation of the PTE statute should be applied for PTE purposes.  The Federal Circuit also pointed out that according to the Court’s 1997 decision in Hoechst-Roussel Pharms. Inc. v. Lehman, 109 F.3d 756 (Fed. Cir. 1997), “[f]or purposes of patent term extension, [the] active ingredient must be present in the drug product when administered.”

PhotoCure stems from the PTO’s denial of a PTE for U.S. Patent No. 6,034,267 (“the ‘267 patent”) covering the drug product METVIXIA (methyl aminoevulinate HCl).  Applying the active moiety interpretation of the law, the PTO determined that METVIXIA, a prodrug, did not represent the first permitted commercial marketing or use of the product because of FDA’s previous approval of an NDA for Dusa Pharmaceuticals Inc.’s LEVULAN KERASTICK (aminolevulinic acid HCl) Topical Solution, which contains the active moiety aminolevulinic acid (“ALA”).  Thus, according to the PTO, METVIXIA did not represent the first permitted commercial marketing or use of ALA and the ‘267 patent was ineligible for a PTE.

Given the Federal Circuit’s May 2010 decision that an “active ingredient” interpretation instead of an “active moiety” interpretation of the PTE statute should be applied for PTE purposes, the PTO recently issued a letter stating that the ‘267 patent is eligible for a PTE.  The PTO’s letter states, in part, that:

Applying the Hoeschet [sic] and Glaxo I analyses here, the active ingredient of Metvixia is methyl aminolevulinate hydrochloride.  Neither it, nor any salt or ester of methyl aminolevulinate hydrochloride has been previously approved by FDA.  Because no salt or ester of methyl aminolevulinate hydrochloride had been approved prior to the approval of Metvixia, the grant of permission to commercially market or use Metvixia is the first permitted commercial marketing or use of the product/active ingredient as required by section 156(a)(5)(A).  Accordingly, the ‘267 patent is eligible for extension under the provisions of section 156.

The PTO issued a similar letter with respect to a PTE application for U.S. Patent No. 5,362,718 covering TORISEL (temsirolimus).  In that letter, which is substantially similar to the letter concerning the '267 patent, the PTO emphasizes that the order of drug product approval is important, stating, in relevant part with respect to PhotoCure, that "the requirement in section 156(a)(5)(A) that the permission for the commercial marketing or use of the product claimed in the patent must be the first permitted commercial marketing or use was met where a drug substance, formulated as an ester (Metvixia), is approved after an approval of the same drug substance formulated as a salt (Levulan)."

The PhotoCure decision applying an “active ingredient” interpretation to 35 U.S.C. § 156(a)(5)(A) (and 35 U.S.C. 156(f)(2)) means that more patents may be eligible for a PTE.  And, in fact, PhotoCure, is already taking advantage of the Federal Circuit’s decision.  The company recently requested a PTE for U.S. Patent No. 7,348,361 (“the ‘361 patent”) covering CYSVIEW, which contains the active ingredient hexaminolevulinate HCl.  Pre-PhotoCure, the ‘361 patent presumably would not have qualified for a PTE. 

(Interestingly, in a recent decision from the U.S. Court of Appeals for the District of Columbia Circuit concerning the availability of New Chemical Entity (“NCE”) exclusivity, the Court notes the PhotoCure decision and comments that “the Federal Circuit has held that ‘active ingredient’ has a plain meaning that, if adopted, would allow more prodrugs to attain five-year exclusivity than the FDA’s current interpretation.”  FDA has as stated – in the preamble to the Agency’s 1989 proposed regulations implementing the Hatch-Waxman Amendments – that “[a] compound (other than an ester) that requires metabolic conversion to produce an already approved active moiety is considered a ‘new molecular entity,’ . . . and will be considered a new chemical entity entitled to 5 years of exclusivity.”) 

The Federal Circuit’s PhotoCure decision also contains dicta to the effect that the ‘267 patent is eligible for a PTE because “[methyl aminoevulinate] hydrochloride is a different chemical compound from ALA hydrochloride, and it is not disputed that they differ in their biological properties, warranting separate patenting and separate regulatory approval, although their chemical structure is similar.”  Sounds like an interesting basis on which to request a PTE for a drug product containing a previously approved active ingredient.  (And, in fact, we’ll be tackling that issue soon, because such a request has already been made to the PTO.)

Ortho-McNeil stems from the PTO’s decision to grant a PTE with respect to U.S. Patent No. 5,053,407 (“the ‘407 patent”) covering Ortho McNeil’s LEVAQUIN (levofloxacin).  Levofloxacin is an enantiomer in the previously approved Ortho racemate drug product FLOXIN (ofloxacin).  Lupin initially challenged the ‘407 patent PTE in the context of ANDA Paragraph IV Certification patent infringement litigation on the grounds that the PTE is invalid because FDA previously approved the active ingredient levofloxacin when the Agency approved the racemate ofloxacin.  In upholding the validity of the PTE for the ‘407 patent, the Federal Circuit concluded that “the enantiomer [levofloxacin] is a different drug product from the racemate ofloxacin. . . .”  (In July 2010, the Federal Circuit denied Lupin’s Petition for Rehearing en banc.)

Now that the Federal Circuit has affirmed the PTO’s position with respect to PTE availability for a patent covering an enantiomer in a previously approved racemate, the PTO is apparently clearing its docket of old PTE requests that could have been affected by the Federal Circuit’s decision.  For example, in one letter concerning a 2006 PTE application for U.S. Patent No. 6,589,508 covering BROVANA (arformoterol tartrate), which contains an enantiomer in the previously approved racemate FORADIL (formoterol fumarate), the PTO stated:

The USPTO maintains that a patent which claims an enantiomer, which was subject to regulatory review before FDA before its commercial marketing or use, is eligible for extension even if a racemate having the same chemical formula had been previously approved.  That is, the approval of a racemate does not exhaust patent term extension for either an R or S enantiomer of the racemate. . . .  In accordance with the holding of Ortho-McNeil Pharm., Inc. v Lupin Pharms., Inc., it is the position oft he USPTO that the patent claiming a method of using arformoterol (Brovana®) is eligible for patent term extension since the approval of Brovana® complies with the requirement of section 156(a)(5)(A).

As we previously commented, the PTO’s position, as affirmed by the Federal Circuit, leaves standing an interesting dichotomy with respect to the treatment of single enantiomers in previously approved racemates insofar as the availability of PTEs and NCE exclusivity are concerned.  Notwithstanding FDC Act § 505(u), which permits the sponsor of an NDA for an enantiomer that is contained in a previously approved racemic mixture to “elect to have the single enantiomer not be considered the same active ingredient as that contained in the approved racemic drug” (and thus be eligible for NCE exclusivity), FDA has for decades treated single enantiomers of previously approved racemates as previously approved drugs not eligible for 5-year NCE exclusivity (but eligible for three-year new clinical investigation exclusivity).

By John R. Fleder, Douglas B. Farquhar & Peter M. Jaensch –

The U.S. Department of Justice announced on November 9, 2010, the government version of a six-count indictment filed in the District of Maryland against Lauren Stevens, a former Vice President and Associate General Counsel for a brand pharmaceutical company that the government mysteriously refers to as “K-Corp,” but which we have identified (it wasn’t that hard) as GlaxoSmithKline.

The government alleges that in connection with an FDA investigation of alleged off-label promotion of a prescription drug product, Ms. Stevens committed one count of obstruction of an FDA proceeding (18 U.S.C. § 1512), one count of falsification of documents (18 U.S.C. § 1519), and four counts of making false statements (18 U.S.C. § 1001).  It is curious that the government does not allege that Ms. Stevens violated the FDC Act.

According to the indictment, in 2002, FDA made inquiries to the company about its alleged unlawful promotion of one of its products for off-label use as a weight loss drug.  FDA requested that the company provide its marketing and promotional materials to FDA. The indictment alleges that Ms. Stevens was the attorney and corporate officer responsible for, and who signed and sent in, the company’s response letters.

The indictment alleges that Ms. Stevens made false statements to FDA, including, among other things, that:

1.      She denied that her employer engaged in any activity promoting off-label use, when at the times of her denials, she purportedly knew that many of the company’s promotional speakers did promote off-label use of the product;

2.      She stated that no compensation or reimbursement was provided to attendees at company promotional speaker events, apart from parking fees, when she allegedly knew that entertainment and gifts had been provided to attendees; the government also alleges that evidence of these gifts etc. were removed from documents provided by the company to FDA; and

3.     She informed FDA that any off-label promotion was a result of “isolated deficiencies” and “the objective evidence clearly demonstrates” that the company had “not developed, maintained, or encouraged promotional plans or activities to promote” weight loss; the government also alleges that she actively withheld contrary documentary evidence from FDA.

The indictment also alleges that Ms. Stevens requested slides from approximately 550 of her employer’s promotional speakers, and that at least twenty-eight responded with evidence of off-label promotion. The indictment alleges that Ms. Stevens directed withholding from FDA the allegedly damaging slides, while representing to FDA that K-Corp’s production of responsive documents was complete.

DOJ’s press release notes that “[e]ach of the obstruction charges carries a maximum penalty of 20 years in prison. Each of the false statement counts carries a maximum of five years in prison.”

It is certainly a rare, but not unheard of, event to see an in-house corporate counsel criminally prosecuted.  The case is instructive for the clear warning that the government has given to corporate attorneys that they are not immune from the government’s scrutiny. Ms. Stevens has been indicted for allegedly actively deceiving federal officials about corporate violations.  The indictment does not allege that she acted out of a desire to obtain some personal gain.

In-house counsel are generally not the final decision-makers in most large companies.  So, the indictment against Ms. Stevens raises questions about who was the person or persons who made the ultimate decisions about submissions to FDA that the government now believes were false and misleading.  Also, it is possible that the government is using this indictment as a stick to try to get Ms. Stevens to “roll over” against some other current or former high-ranking officials from her company.  The fact that the indictment and press release do not name her former employer suggests that the government may have some other targets in this investigation.  Finally, the timing of the Indictment is quite curious.  The last allegedly unlawful act took place almost seven years before the indictment.  The indictment does not allege a conspiracy.  Thus, to avoid a statute of limitations defense, the government almost surely obtained a waiver from Ms. Stevens that effectively tolled the statute of limitations.  Why indict her now, but not the company?  One can only guess, but 1) the government may have had settlement discussions with Ms. Stevens that did not pan out, where the government sought her cooperation; 2) Ms. Stevens may have refused to sign an agreement further tolling the statute of limitations, whereas other targets (if there are any) did sign such agreements; and/or 3) the government may have decided that Ms. Stevens bore responsibility for the offenses, and decided not to pursue the company because the company volunteered information from an internal investigation that led to the investigation and indictment.  We may never know the answers to any of these questions.

Our purpose here is only to summarize the indictment and some of its broader implications, so we did not try to contact Ms. Stevens or her attorneys for their comments.  However, we have been informed by a reporter for the mainstream media that Ms. Stevens denies the charges and expects to be exonerated.

UPDATE:

• HP&M Director Doug Farquhar is quoted in a November 9th New York Times article about the case – see “Ex-Glaxo Executive Is Charged in Drug Fraud”

In the September/October 2010 edition of the Food and Drug Law Institute’s Update publication, HP&M attorney Jennifer B. Davis authored an article, titled “New Use of Old Tools: Career-Ending OIG Exclusion and FDA Debarment.”  The article focuses on the Department of Health and Human Service’s Office of Inspector General’s exclusion authority and FDA’s debarment authority – particularly now that the government has vowed to wield more aggressively these authorities in conjunction with misdemeanor prosecutions – and their potentially career-crippling effect.  The article discusses what the “exclusion” and “debarment” tools are and the implications for pharmaceutical managers and executives who, although perhaps not personally at fault or even aware of criminal acts, may nevertheless be targeted and prosecuted on grounds that they are “responsible” or “accountable” for what happened.

By Ricardo Carvajal –

A California district court dismissed a class action lawsuit alleging that baked-goods products manufactured by Hostess Brands, Inc. are marketed in violation of California law because they are promoted as containing “0 grams of Trans Fat” despite containing partially hydrogenated oils.  The court noted that FDA labeling regulations “explicitly define the term ‘0 Grams of Trans Fat’” to include amounts of less than 0.5 grams, and that the FDC Act and its implementing regulations explicitly preempt “any requirement for nutrition labeling of food that is not identical to the requirement of section 403(q)” of the FDC Act.  Thus, a food containing less than 0.5 grams of trans fat per serving may properly declare the amount of trans fat as zero.

Some aspects of the court’s analysis are open to question (e.g., the court characterizes a statement about the amount of a nutrient in a food as an “express nutrient content claim” even where that statement does not implicitly characterize the level of the nutrient and is not false or misleading).  Nonetheless, this is one of several courts to find preemption under similar circumstances, which suggests that “0 Grams Trans Fat” claims that comply with applicable regulatory requirements are likely to withstand a challenge grounded in state law claims of unfair competition and false advertising.

By John A. Gilbert & Karla L. Palmer –

On November 1, 2010, the Deputy Administrator of the Drug Enforcement Administration published for the second time in three years a proposed rule to modify the listing of approved drug products containing dronabinol as Schedule III controlled substances under the Controlled Substances Act (“CSA”).  See 75 Fed. Reg. 67054 (Nov. 1, 2010) (Listing of Approved Drug Products Containing Dronabinol as Schedule III).  Dronabinol is commonly known as delta-9-tetrahydrocannabinol (“THC”), and is a federally-controlled Schedule I substance — in all but one if its formulations.  Marinol®, which is an FDA-approved synthetic formulation of THC in sesame oil encapsulated in a soft gel capsule, is regulated as a Schedule III controlled substance.  See 21 U.S.C. § 1308.13(g)(1) (specifically, “Dronabinol (synthetic) in sesame oil and encapsulated in a soft gelatin capsule in a U.S. Food and Drug Administration approved product”).  All other forms of THC, either natural or synthetic, and in whatever formulation (i.e., hard tablets, capsules, or other gel suspensions), are regulated as Schedule I controlled substances.  Marinol® is the only drug product containing any form of THC that has been approved by the FDA. 

The issue of universally reclassifying dronabinol in Schedule III is not a new one.  The DEA first attempted to modify the listing of dronabinol back in 2007  (see blog entry dated October 1, 2007) (see 72 Fed. Reg. 54266 (Sept. 24, 2007) (Technical Amendments to Listing in Schedule III of Approved Drug Products Containing Tetrahydrocannabinois – Notice of Proposed Rulemaking.)
 
In 2007, the DEA proposed expanding the dronabinol Schedule III classification to include forms of the product other than the Marinol® formulation.  The purpose of the 2007 proposed rule was to ensure that the generic versions of Marinol® would be classified in the same schedule as Marinol®, and not as a Schedule I controlled substance.  The FDA and DEA expressed concern that the Marinol® formulation listed in Schedule III was (and still is) the only DEA listing in the CSA that has the (unintended) effect of excluding all generic versions of the brand name formulation.  The DEA stated that listings of drugs based on differences in formulation is inconsistent with the structure and purpose of the CSA, which schedules drugs regardless of their formulation, and would result in a generic version being scheduled separately from the innovator drug.  See generally 72 Fed. Reg. 54228-29.

Based on industry comments, the 2007 proposed rescheduling rule hit a road block in 2008.  The DEA opted instead to require the application of the formal eight-factor statutory analysis set forth in 21 U.S.C. §811(c) for each generic version of dronabinol approved by FDA, and for transferring each approved dronabinol product from Schedule I to Schedule III based on that eight factor analysis.  DEA also withdrew the 2007 proposed rule out of a concern that administrative appeals of any final rule could take years to resolve — with no final regulation ever taking effect until well after the approval of generic forms of Marinol®.  DEA believed the simpler form of action would be to continue to require the formal statutory rescheduling process for each individually FDA-approved generic form of the branded substance.  See 73 Fed. Reg. 56533 (Sept. 29, 2008) (Technical Amendment to Listing in Schedule III of Approved Drug Products Containing Tetrahydrocannabinois; Withdrawal of Proposed Rule).   

Now faced with four petitions from companies whose products are currently the subject of ANDAs under FDA review for a generic equivalent of Marinol®, the DEA is actively revisiting the issue of whether to amend the CSA regulations to expand the Schedule III classification of dronabinol to include generic versions of Marinol®.  The 2010 proposed regulations seek to expand 21 C.F.R. § 1308.13(g)(1) to include: (1) both naturally-derived or synthetically-produced dronabinol; and, (2) hard or soft gelatin capsules.  Contrary to the first attempt to reschedule dronabinol, this time the Assistant Secretary of Health, Department of Health and Human Services (“DHHS”), has chimed in by providing to the DEA Administrator supporting documentation, dated March 17 and June 1, 2010, recommending that FDA-approved, naturally derived, and hard- and soft-gelatin encapsulated dronabinol be placed in an expanded Schedule III definition of dronabinol. 

The DHHS’s supporting documents contain a detailed review of the eight statutory factors set forth in 21 U.S.C. § 811(c).  The DHHS’s recommendation of March 17, 2010 concluded that “drug products containing synthetic dronabinol in sesame oil and encapsulated in a hard gelatin capsule, have a similar potential for abuse as Marinol.” 75 Fed. Reg. 67057.  (Emphasis added.)  The FDA and the National Institute for Drug Abuse (“NIDA”) also reviewed available information and concluded that the hard capsule formulation of synthetic dronabinol should be a Schedule III controlled substance.  Similarly, the DHHS’s scheduling recommendation of June 1, 2010 considered data and concluded that the naturally-derived form of dronabinol should be included in Schedule III.  The DHHS’s scheduling recommendations for dronabinol are available for review on the DEA’s website.  The DEA noted, as it did in 2007, that Congress structured the CSA so that there would be no distinction, for purposes of scheduling controlled substances, between the brand name and their generic counterparts.  Thus, the 2010 proposed rule is yet another attempt to ensure that this principle holds true for generic versions of Marinol®. 

In addition to the above analysis (and adopting a “belts and suspenders” approach not present in the 2007 proposed rulemaking) this time around the DEA also includes in the proposed rule a specific finding by the DEA Administrator that, “FDA-approved generic dronabinol products, both naturally-derived or synthetically produced, in sesame oil encapsulated in both hard gelatin or soft gelatin capsules meet the criteria for placement in schedule III set in 21 U.S.C. § 812(b).”  The proposed rule next specifically details, factor by factor, why generic dronabinol formulations meet the eight-factor statutory test in 21 U.S.C. §811.  The intended effect of the final rule will obviate the need for DEA to make a case-by-case determination, pursuant to 21 U.S.C. §812(b), whether a specific FDA-approved generic formulation of a dronabinol product will be listed as a Schedule III drug product.  Those that meet the amended definition of 21 C.F.R. § 1308(g)(ii) will automatically be listed in Schedule III. 

All comments on the proposed rule must be received by DEA on or before January 3, 2011. 

By Kurt R. Karst –      

Just as FDA was getting started with its two-day public meeting earlier this week on the Approval Pathway for Biosimilar and Interchangeable Biological Products, which occurred a little more than seven months after the enactment of the Biologics Price Competition and Innovation Act of 2009 (“BPCI Act”), Senator Bernie Sanders (I-VT) sent a letter to FDA Commissioner Margaret Hamburg, M.D. criticizing the 12-year exclusivity period created by the law.

The BPCI Act amended the Public Health Service Act to create a new pathway for the approval of applications for biological products shown to be biosimilar to or interchangeable with a licensed reference product.  The law now provides for up to 12.5 years of non-patent market exclusivity for a biological product approved under a BLA, consisting of an initial 12-year exclusivity period that may be extended by 6 months of pediatric exclusivity.  The first 4 years (or 4.5 years with pediatric exclusivity) is a period of data exclusivity during which time an application for a biosimilar or interchangeable version of the reference product may not be submitted to FDA. The 12-year exclusivity period is not be available with respect to the approval of a supplement or subsequent application submitted by the sponsor of the reference biological product for certain changes or modifications.  The licensure of a biosimilar or interchangeable version of a reference product that was designated and approved as an orphan drug may only occur after the later of the expiration of any applicable 7-year orphan drug exclusivity or the 12-year market exclusivity period (or 7.5 years and 12.5 years with pediatric exclusivity).

Sen. Sanders states in his November 2nd letter that the BPCI Act is “the first instance of . . . a licensing barrier that, in effect, legislatively mandates that an applicant for marketing approval violate the ethical standards set out in, among other ethical codes to which the United States, its doctors and its researchers adhere, Article 20 of the Declaration of Helsinki on Ethical Principles for Medical Research Involving Human Subjects.”  Article 20 of the Declaration of Helsinki states that “[p]hysicians may not participate in a research study involving human subjects unless they are confident that the risks involved have been adequately assessed and can be satisfactorily managed.  Physicians must immediately stop a study when the risks are found to outweigh the potential benefits or when there is conclusive proof of positive and beneficial results.”

Referring specifically to the 12-year exclusivity period under the BPCI Act, which  “would prevent an applicant for marketing approval of a biosimilar or bioequivalent product from relying on existing data establishing the safety and efficacy of the product” and would require generic applicants to “repeat clinical trials to answer questions that have already been answered,” and Article 20 of the Declaration of Helsinki on stopping studies in the face of “conclusive proof of positive and beneficial results,” Sen. Sanders takes aim at the exclusivity provision, stating that:

a 12-year data exclusivity period by design requires exactly that: the conduct of a clinical trial despite the fact that ‘conclusive proof of positive and beneficial results’ already exists.

By establishing such a de facto requirement, the biologics industry has achieved something quite profound: a virtually absolute bar to competitors for a full 12 years from market entry of a new product, regardless of the patent status of the product . . . .

(Interestingly, according to a  November 3rd Bloomberg article, some companies might decide to bypass the the BPCI Act and conduct their own studies in support of a BLA instead of pursuing a biosimilar or interchangeable version of a reference product.)

Sen. Sanders has a solution, however, to “reform [the] indefensible requirement” and “defect” created by the BPCI Act: S. 3921, the Ethical Pathway Act of 2010.  Introduced in September 2010, S. 3921 would, according to Sen. Sanders, “mandate that applicants for drug marketing approval, including generic and biosimilar producers, be allowed to rely on existing test data when applying for marketing approvals, subject to paying an appropriate share of the costs to rely upon the results of such trials.”  Another version of S. 3921 was submitted as an amendment to legislation that eventually became the Patient Protection and Affordable Care Act (Pub. L. No. 111-148), but it failed to pass.  It seems likely that the Ethical Pathway Act of 2010 will have a similar fate.

Sen. Sanders has been a harsh critic of patent and non-patent market exclusivities for drug and biological products.  In 2007, Sen. Sanders introduced S. 2210, the Medical Innovation Prize Act of 2007.  That bill proposed to  replace the then-current patent and non-patent market exclusivity system for drugs and biologics with a new “prize system.”  Specifically, S. 2210 would have amended the law to provide that notwithstanding the U.S. patents laws, the Hatch-Waxman Amendments, the Medicare Modernization Act, the Orphan Drug Act, the Best Pharmaceuticals For Children Act, and “any other provision of law providing any patent right or exclusive marketing period for any drug, biological product, or manufacturing process for a drug or biological product . . . , no person shall have the right to exclusively manufacture, distribute, sell, or use a drug, a biological product, or a manufacturing process for a drug or biological product in interstate commerce, including the exclusive right to rely on health registration data or the 30-month stay-of-effectiveness period for Orange Book patents. . . .”  Instead, a person could receive a “prize payment” “in lieu of any remuneration the person would have otherwise received for the exclusive marketing, distribution, sale, or use of a drug, biological product, or manufacturing process,” and “in addition to any other remuneration that such person receives by reason of the nonexclusive marketing, distribution, sale, or use of the drug, biological product, or manufacturing process.”