Hosted by American Conference Institute, the FDA Boot Camp returns for its 40th iteration with the continued intent of providing an essential working knowledge of core FDA concepts, and real-world examples that will help you to excel in your everyday practices.

This year’s conference co-chairs include Stacy Cline Amin (Partner, Morrison Forester) and Kurt R. Karst (Director, Hyman, Phelps & McNamara P.C.). Comprehend the structure of FDA and the roles of the three major agency centers: CDER, CBER and CDRH, master the basics of the application and approval processes for drugs and biologics, gain a practical working knowledge of clinical trial process for pharmaceutical products and much more! The distinguished speaker faculty includes Jennifer Bragg (Partner, Skadden Arps Slate Meagher & Flom LLP), Seth Mailhot (Partner, Husch Blackwell), Cathy L. Burgess (Partner, Alston & Bird LLP) and many, many more!

The speaker faculty of top FDA regulatory authorities will share critical insights on:

• The organization, jurisdiction, functions, and operations of FDA
• The essentials of the approval process for drugs and biologics
• The role of the Hatch-Waxman Act in the patenting of drugs and biologics
• Clinical trials for drugs and biologics
• Labeling in the drug and biologics approval process
• cGMPs and other manufacturing concerns relative to products liability
• Proactive adverse events monitoring and signal detection
• Recalls, product withdrawals, and FDA oversight authority

FDA Boot Camp is taking place virtually from March 22-23, 2023, visit http://bit.ly/3WxcEHs to learn more!

Save 10% with the FDA Law Blog promo code: D10-999-FDALAWBLOG

On December 23, 2022, when many of us were distracted by the cold weather, Congress passed the Food and Drug Omnibus Reform Act of 2022 (“FDORA”) as part of the Consolidated Appropriations Act of 2023. FDORA includes, as subtitle E, the Modernization of Cosmetics Regulation Act of 2022!

As discussed here, the Modernization of Cosmetics Regulation Act of 2022 (“MOCRA”) originally was included in the Senate version of the FDA Safety and Landmark Advancements (FDASLA) Act (S.4348).  However, the House’s version of this bill did not include cosmetics regulation reform, and the final  version of the FDA user fee legislation, which was enacted and signed into law on September 30,  did not include the cosmetics regulation language.

MOCRA amendments to the Federal Food, Drug, and Cosmetic Act constitute the first statutory change to FDA’s authorities over cosmetics since 1938.  As described in our previous blog post, MOCRA focuses on safety of cosmetics.  Among other things, FDA is to develop and issue good manufacturing practice regulations, develop tests for asbestos and address PFAs in cosmetics.  Industry will become subject to registration and listing requirements (one year after enactment of MOCRA), must have records to substantiate safety of its products, and must report serious side effects to FDA.  MOCRA gives FDA mandatory recall authority (when it determines that there is a reasonable probability that a cosmetic is adulterated or misbranded and the use or exposure to the cosmetic will cause serious adverse health consequences or death) and expands FDA’s access to certain records.

MOCRA  preempts state law requirements differing from, or in addition to, those relating to registration and product listing, good manufacturing practice, recordkeeping, recalls, adverse event reporting, and safety substantiation.  However, other prohibitions and limitations on the use or amount of an ingredient in a cosmetic product, state tort laws, and state laws and referendums, such as California’s Proposition 65, are carved out from preemption.  Although the preemption provision certainly is not as strong as industry would prefer, industry has generally supported modernization of cosmetic regulation as it will advance innovation, modernize oversight and (presumably) bolster consumer confidence. At least for now, industry has been successful in preventing user fees for cosmetic companies. Congress appropriated $14,200,000 for fiscal year 2023, $25,960,000 for fiscal year 2024, and $41,890,000 for each of fiscal years 2025 through 2027 to FDA for developing regulations and performing the other activities under MOCRA.

The passing of MOCRA does not change matters for industry overnight.  The requirements for registration and listing and new enforcement provisions become effective one year after enactment of the legislation.  A client memo prepared in early 2023 will address MOCRA and other major provisions of FDORA in further detail.

Back in June, when Congress was negotiating the User Fee Acts, FDA asked Congress to add in some provisions reversing several lawsuits that it had just lost.  Ultimately, FDA lost that fight, and a slimmed down version of the FDA Safety and Landmark Advancements (“FDASLA”) passed without those sections.  That fight has now been moved to the Appropriations Bill, where Congress is trying to integrate certain provisions that would reverse—at least in part—some of those litigation losses with little scrutiny, either by Congress or other stakeholders.

One of the more concerning provisions in the Appropriations Bill can be found in section 3306, which addresses “Bans of Devices for One or More Intended Uses.”  This section is directly in response to the 2022 D.C. Circuit decision in Judge Rotenberg Educ. Ctr., Inc. v. FDA, which held that that banning a single intended use of a specific device was inconsistent with the Federal Food, Drug, and Cosmetic Act’s (“FDC Act”) clear pronouncement that FDA cannot regulate the practice of medicine.  (Hyman, Phelps & McNamara, P.C., was co-counsel for the Judge Rotenberg Center in this litigation.)  In brief, that case involved the appeal of a 2020 Final Rule in which FDA banned the use of an Electrical Stimulation Device (“ESD”) only in the treatment of self-injurious behavior or aggressive behavior.

The site offering the treatment, the Judge Rotenberg Educational Center, and parents of patients that were treated with an ESD for self-injurious or aggressive behavior filed a Petition for Review in the D.C. Circuit of FDA’s Final Rule banning the ESD specifically for those purposes.  The Petitioners alleged multiple violations of the Administrative Procedure Act, as well as alleged that FDA violated the FDC Act itself by banning a particular use of a device rather than the device itself.  The Court agreed with the Petitioners, holding that banning the use of the device would regulate the practice of medicine or prohibit the off-label use of a device.  Now, Congress seeks to overturn that decision by amending the FDC Act to permit FDA to ban a specific intended use.

In the Appropriations Bill, the proposed provision amends section 516(a) of the FDC Act (21 U.S.C. § 360f(a)) to allow FDA to ban a device “for one or more intended uses” and states that “A device that is banned for one or more intended uses is not a legally marketed device under section 1006 when intended for such use or uses.”  Section 1006 refers to the “Practice of Medicine” provision of the FDC Act (21 U.S.C. § 396), which prohibits FDA from limiting or interfering “with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease . . . .”  In other words, Congress is proposing to let FDA ban devices for particular uses, including off-label uses.

This provision represents a complete shift in the way FDA is allowed to regulate products.  Previously, FDA determined whether a product was safe and effective for its intended use but could not dictate the way a practitioner used that product.  That, of course, is reserved for the practice of medicine, and FDA does not govern the practice of medicine.  This proposed revision turns that premise on its head: If FDA can say that a given device can’t be used for a specific treatment, then the practice of medicine is inherently subject to FDA discretion, regardless of the provisions in section 1006.   Congress has effectively narrowed Section 1006 by giving FDA the authority to ban off-label uses of devices.

At first blush, this might not seem like such a big deal.  After all, FDA has only used its banning authority 3 times since 1976.  Yet this provision would have serious implications.  Firstly, the proposed provision, should it pass, would allow FDA to ban a device in a way it has never been allowed to, ultimately giving the Agency authority to dictate the practice of medicine.  Secondly, the proposed provision would be implemented with no scrutiny, public input, or public hearing.  Yet this provision could potentially have far-reaching consequences.  Even if FDA has infrequently used its banning authority, nothing would stop FDA from seeking to use this power much more extensively in the future.  Giving FDA the power to ban off-label uses could preclude patient access to off-label therapies that FDA objects to even though their physicians deem the treatment essential.  Thirdly, this provision erodes a bedrock principle: FDA does not have the power to regulate the practice of medicine.  This particular provision may seem like a small exception, but small holes in the fabric of the law can grow into gaping holes over time.

In our previous blog post, we provided a flowchart for the Digital Health Policy Navigator’s process so that our blog readers can quickly review the seven steps in determining whether their product’s software functions may be potentially the focus of FDA oversight. Two days after the blog post, FDA updated the Digital Health Policy Navigator to improve access to the tool through the webpage and add examples to the clinical decision support software policy considerations in Step 6.  These include the following examples of software functions that meet Criterion 3 of clinical decision support software (section 520(o)(1)(E)(ii) of the Federal Food, Drug, and Cosmetic Act):

• Evidence-based clinician order sets for an HCP to choose from, tailored for a particular condition, disease, or clinician preference;
• Matching patient-specific medical information from records or reports to reference information (e.g., clinical guidelines);
• Contextually relevant reference information about a disease or condition;
• Drug-drug interaction and drug-allergy contraindication notifications to avert adverse drug events;
• Drug formulary guidelines;
• Duplicate testing or prescription production prevention notification (e.g., medication reconciliations and test reconciliations);
• Reminders for preventive care or clinician’s orders; and
• Patient data reports and summaries (e.g., discharge papers).

Besides the newly included examples above, no other changes were made to the Digital Health Policy Navigator. As a result, the flowchart we created is still current and can be downloaded here.

On December 9, 2022, FDA issued a draft guidance document on the Voluntary Malfunction Summary Reporting (VMSR) Program for medical devices.

Generally, FDA’s MDR regulations require device manufacturers to submit Medical Device Reports (MDRs) for individual reportable malfunctions within 30 calendar days of the manufacturer becoming aware of the malfunction.  The VMSR Program allows manufacturers to bundle malfunction reports of “like events” together in a single summary report.  The purpose of this program is to reduce the volume of reports that a manufacturer needs to submit to FDA and to “make malfunction event trends more readily apparent.”

FDA began an initial VMSR pilot program in 2015.  Then, in 2016, FDA noted its goal to streamline MDR requirements in the Medical Device User Fee Amendments of 2017 (MDUFA IV) commitment letter.  In that letter, FDA stated that it would “permit manufacturers . . . to report malfunctions on a quarterly basis and in a summary MDR format” for devices in certain product codes that the Agency would publish in a list.

In August 2018, FDA published a notice in the Federal Register granting an alternative under 21 C.F.R. § 803.19 permitting manufacturers of devices in eligible product codes to submit certain device malfunction MDRs in summary form on a quarterly basis (see our blog post on this notice here).

The draft guidance provides information about the VMSR Program eligibility and scope, reporting conditions, and the reporting process.

When FDA initially implemented the VMSR Program, in 2018, the Agency reviewed all product codes to determine eligibility for the program.  Product codes that had been in existence for less than two years were generally not eligible for the program, because FDA wanted more timely and detailed malfunction information from newer product codes.  The draft guidance states that FDA intends to periodically reassess product codes to update eligibility for the VMSR Program, but does not provide details on the frequency, timeline, or process for reassessment.

Each product code’s eligibility for the program is noted for that product code in FDA’s Product Classification database.  In assessing eligibility, FDA intends to consider the frequency of reported serious injuries and deaths, the number of 5-day reports (for events that require remedial action to prevent an unreasonable risk of substantial harm to the public health), and whether any devices in the product code have had any class I or class II recalls.  Manufacturers can also submit a request to FDA for a product code to be considered for eligibility in the VMSR Program.  The draft guidance sets forth a process for doing so.

As described in the draft guidance, there are certain conditions for participation in the VMSR Program.  Specifically, manufacturers that participate in the VMSR Program must submit individual reports, rather than summary reports, for (1) malfunctions associated with a 5-day report, (2) malfunctions that are the subject of certain device recalls, (3) when FDA has determined that individual MDR reporting is necessary to address a public health issue, (4) when FDA has determined that a manufacturer may no longer report in a summary reporting fashion (e.g., due to failure to comply with MDR reporting requirements), and (5) when a new type of reportable malfunction occurs for a device.

Summary malfunction reports should be submitted electronically on Form FDA 3500A.  The draft guidance provides instructions for completion of this form, including an appendix with a sample report.  Additionally, the draft guidance restates the VMSR reporting schedule set forth in the regulations:

In short, the guidance provides little detail beyond what was in the final rule and regulation.  But what it does provide may be of some practical use to manufacturers.  Interested parties can submit comments on the draft guidance to FDA until February 7, 2023 via Regulations.gov.

On December 7, 2022, FDA announced the availability of the final guidance regarding the enforcement policy for homeopathic drug products.  This concludes FDA’s reevaluation of the regulation of homeopathic drugs which it started in 2015.

As we reported previously, here, and here, as a result of the growth of the industry and safety issues, in 2015 FDA started the reevaluation of its regulatory framework for homeopathic products.  In 2017, it decided to withdraw the compliance policy guide (CPG; from 1988) under which, for decades, the Agency essentially had permitted the marketing of over-the-counter homeopathic drug products. FDA concluded that the CPG limited its ability to act against unsafe homeopathic drug products and decided to develop a risk-based enforcement policy.  It issued a draft guidance in 2017 which was subsequently revised in 2019.

The final guidance issued last week is the same as the 2019 draft guidance except that the final guidance includes a paragraph in which FDA mentions that the provisions of the CARES Act regarding OTC monograph reform do not apply to homeopathic drug products.

As we previously reported, the 2017 draft guidance generated many comments including a citizen petition by  Americans for Homeopathy Choice.  FDA denied that petition in 2019.  Not deterred by this denial, Americans for Homeopathy Choice submitted another citizen petition in 2020.  The 2020 petition requested that FDA issue a proposed regulation for homeopathic drugs.  As described in the executive summary of the petition:

Petitioners [sought] to have FDA establish regulations that would assure consumers: that drug products labeled “homeopathic” are either included in the HPUS or can be reasonably expected to be accepted for inclusion in the HPUS because they meet eligibility thresholds, as determined by relevant third-party review; that products that do not meet the foregoing criteria are not permitted to be labeled “homeopathic;” that homeopathic drugs are free of adulteration and properly labeled; and that FDA applies standards appropriate for low-risk products when evaluating the risks of homeopathic drugs. Further, petitioners [sought] recognition by FDA that homeopathic drugs, properly manufactured and labeled, and evaluated by appropriate standards, do not meet the legal definition of “new drugs,” and therefore are not subject to premarket review other than satisfying the requirements of current or likely inclusion in the HPUS

FDA issued its denial of this second petition a day before the final guidance became available.  Consistent with its prior thinking,  FDA’s response lays out FDA’s conclusion (consistent with its prior thinking) that homeopathic drug products are new drugs; they are not eligible for any exception and may legally be marketed only if they are approved by FDA.

FDA’s actions and statements leave no uncertainty that FDA has concluded that homeopathic drug products are unapproved drugs.  That said, the Agency acknowledges that many homeopathic drug products will fall outside the categories of drug products for which FDA intends to prioritize enforcement and regulatory action as described in its final guidance.  Although FDA is authorized to take action against those products, any enforcement action is not likely in the absence of evidence that a product poses a risk described in the guidance.

In the wake of President Biden’s July 2021 Executive Order—Promoting Competition in the American Economy—and the exchange of letters between the Patent and Trademark Office (USPTO) and FDA, the USPTO announced recently a “public listening session” in collaboration with FDA to seek comments on how the agencies can work together to promote greater access to medicines.  That session will be held on January 19, 2023, and the agencies have opened a docket to receive comments on effective collaboration.  Registration to speak at the conference closes on January 5, 2023.  Written comments will be accepted until February 6, 2023.

As a brief reminder, the July 9, 2021 Executive Order directed FDA to write a letter to the USPTO describing concerns about uses of the patent system to delay generic and biosimilar competition.  FDA’s September 2021 letter explains the issues raised by patent thickets, patent evergreening, and product-hopping—all of which, FDA explains, are used to delay approval of less expensive, generic versions of branded products.  The USPTO responded to FDA’s letter on July 6, 2022, citing its intent to enhance collaboration with other agencies; improve procedures for obtaining a patent; improve the PTAB challenge practice; and improve public participation.  Both letters recognized the need for “robust and reliable patents” to “incentivize and protect” the research and development investment made to bring new drug products to market, but they also cite the importance of increased competition.  More information about these letters can be found in our July 21, 2022 blog post.

The intent of the “listening session” is to obtain input on additional areas for USPTO and FDA collaboration.  The agencies are seeking broad feedback from patients, healthcare providers, and industry alike.   The PTO asks stakeholders to consider several questions (while emphasizing that this list is not all-inclusive).  Specifically, the PTO seeks feedback on:

• Publicly available FDA resources that should be included when training USPTO patent examiners to assess the patentability of claimed inventions;
• Mechanisms to assist patent examiners in determining whether patent applicants have submitted inconsistent statements to the USPTO and the FDA;
• Opportunities and challenges related to the use of AIA proceedings to address the patentability of claims in pharmaceutical and biotechnological patents;
• Collaboration and information exchange between the USPTO and the FDA with respect to patent term extensions;
• Additional information to provide the public regarding patent term extensions;
• Policy considerations the USPTO and FDA should explore related to method of use patents and associated FDA use codes;
• Policy considerations the USPTO and FDA should explore in relation to the patenting of risk evaluation and mitigation strategies (REMS) associated with FDA-approved products;
• Steps, other than those set forth in the USPTO letter, the USPTO and FDA could take to collaboratively address concerns about potential misuse of patents to improperly delay competition or to promote greater availability of generic versions of scarce drugs that are no longer covered by patents;
• Any additional input on any of the initiatives listed in the USPTO Letter.

The USPTO, in collaboration with FDA, is waiting to hear from you, so provide your comments before the docket closes in February.  In the words of the esteemed Dr. Frasier Crane, the USPTO says: “I’m listening.”

It is widely expected that the fate of the VALID Act – and therefore the world of diagnostic regulation – will be determined in the next two weeks (see our previous post here).  While the potential mitigating impact of the “grandfathering” clause on laboratories currently offering LDTs has been the focus of much attention, many of the numerous other provisions have received little attention.  One example is a short provision that could have a large adverse effect on telehealth-based laboratory testing by sharply restricting grandfathering.

This is not a trivial matter.  Telehealth has become increasing important to the health care system.  It has undergone dramatic recent growth, due in part to COVID-19.  Telehealth can address significant issues with access and convenience.

In response to concerns that VALID would harm health care by blocking currently available tests, the grandfathering provision has been expanded.  However, not all LDTs currently on the market would qualify for grandfathering.  One significant limitation is that VALID would prohibit laboratories from performing LDTs on specimens collected at home unless the specimen collection devices used for such collection are FDA authorized for the specific type of testing performed by the laboratory.  While there are numerous commercial products labeled for sample collection by health care professionals, there are very few collection devices explicitly “authorized” for at-home collection.  Thus, this condition could force laboratories to reduce – or even discontinue — home collection-based testing. (FDA has, in fact, been very resistant to allowing home collection devices on the market, but that’s another story for another day.)  Although on its face the restriction applies to LDTs, collection device manufacturers could, as a consequence, effectively be precluded from continuing to market their specimen collection devices to labs offering LDTs which enable home collection unless they first obtain authorization specifically for home collection.

The latest draft of the VALID Act being circulated states (Section 587G) that “in vitro clinical tests” (a term that encompasses tests now offered as LDTs) will be exempt from the new statutory requirements if they were “first offered for clinical use … not later than 45 days after the date of enactment” of the legislation, as long as they meet certain conditions.

Of relevance here, the grandfathering provision applies to an LDT only if:

• The test is not for use with home specimen collection, unless the specimen is collected with a collection container, receptacle, or kit that—
  1. has been approved, cleared, or authorized by the Secretary for home specimen collection and the collection is performed pursuant to the approved, cleared, or authorized labeling, including any indication for use as prescription use or over-the-counter use, or
  2. is exempt from premarket review and its use is consistent with applicable limitations on the exemption. (Emphasis added)

This provision could upend longstanding laboratory practice.  Laboratories routinely test specimens collected in a wide range of specimen types (e.g., blood, urine, saliva) that have been collected using a variety of specimen collection devices.  Laboratories also routinely supply third-party sourced collection devices from IVD manufacturers and distribute them to end users, which may include blood collection stations, physician offices, or – increasingly – individuals at home.  Laboratories are responsible under CLIA to ensure that the specimen collection and transport method adequately maintains sample integrity.

Many of these collection devices are classified as Class I, 510(k)-exempt (e.g., capillary blood collection tube) while some are Class II and require 510(k) clearance (e.g., blood specimen collection device).   The classification regulations typically are worded generically, i.e., they do not specify the type of test that can be performed on the specimen or the setting in which specimen collection must be performed.  Collection device manufacturers routinely sell these devices to laboratories for general specimen collection purposes, without labeling or promoting them for a specific type of test or the setting of collection.  Laboratories take these collection devices, which are lawfully in distribution, and then send them to consumers.

The clause stating that the use of the collection container must be “consistent with applicable limitations on the exemption” could (and we believe in some circumstances likely would) be interpreted by FDA to prohibit home collection unless the collection device was specifically authorized for the type of test being performed by the laboratory.  FDA has in fact asserted this position in the past: CRL v. Sullivan involved an effort by FDA to prohibit a clinical laboratory from offering LDT-based HIV antibody testing on urine and saliva specimens on the basis that the specimen collection devices did not have FDA premarket approval for such testing.  While the appellate court in that case disagreed, based on the “common sense” proposition that the “function of generic . . . specimen containers does not vary with the protocols later executed upon the samples they hold” – the VALID Act’s provision could provide renewed support for FDA’s position.  FDA could also argue that products that are otherwise exempt lose that exemption if they are intended to be used by patients for home collection.The specimen collection provision could therefore limit consumer access to a wide range of laboratory testing via “telehealth.”  Home specimen collection is a linchpin of remote laboratory testing, which has grown in popularity because of the pandemic but is expected to continue to grow significantly even in a post-COVID environment (see here).  The inability to offer existing LDTs via telehealth could create substantial barriers to consumer access to home tests.

In summary, under the VALID Act’s “grandfathering” provision, laboratories may continue performing their LDTs on home-collected specimens only if the specimen collection devices have been specifically authorized for such use or, for devices that are otherwise exempt from FDA review, the device’s use is deemed consistent with the limitations on that exemption.  Since very few specimen collection devices include home use indications and FDA could take the view that an otherwise exempt device forfeits the exemption if intended for home use, the VALID Act may effectively limit the performance of LDTs to specimens collected in a healthcare setting.  Telehealth-based laboratory services providers may well find it much harder to source LDTs, which are critical to caring for their patients.

As far as we can tell, inhibiting telehealth-based laboratory services is not a goal of the legislation, but an inadvertent side effect. Indeed, creating barriers to telehealth-based laboratory testing would appear contrary to bipartisan Congressional efforts to foster telehealth flexibility during the pandemic (see here) which stakeholders have overwhelmingly urged Congressional leaders to extend (see here).  It similarly is out of step with HHS initiatives aimed at expanding telehealth to enable direct to consumer care (see here).

Thus, this seemingly insignificant clause in VALID could have far reaching, unintended consequences.  This makes us wonder what else is lurking in this is nearly 250-page, 43,000-word bill that could have far-reaching – and unintended – consequences. The legislation never received any consideration by a House committee.  And it has never been reviewed as a standalone bill by either chamber.  The seemingly inadvertent limitation on home testing for telehealth stands as a warning sign that the effects of the bill should be better understood by Congress before the bill is enacted.

Last summer, FDA published a draft guidance, Laser-Assisted In Situ Keratomileusis (LASIK) Lasers – Patient Labeling Recommendations (July 29, 2022) setting forth a proposal for new recommended patient‑directed labeling.  It is focused on excimer lasers with premarket application (PMA) approval for LASIK  in product code LZS.  This proposal is not, however, simply advice for preparation of an application for a new device.  The draft guidance purports to apply to current PMA holders.  This broad scope is curious.  The approved devices already have patient‑directed labeling that FDA has approved.  Why would it be necessary for FDA to issue a new set of patient labeling recommendations in a non‑binding guidance?  How could the manufacturers even follow this guidance without illegally departing from their previously approved labeling?  What is going on here?

Draft Guidance

In the draft LASIK guidance, FDA has a 15‑page outline of recommended patient labeling, broken into 10 subsections that would address things like the risks, benefits, and possible alternatives to LASIK.  In an appendix, FDA provides a model “decision check list” for patients.  It looks similar to the type of procedural informed consent a surgeon ordinarily would present to a patient.  The introductory paragraph states:

The review and understanding of this document is a critical step in making the decision whether you should choose LASIK surgery.  This form lists important risks, including those known or reported to be associated with the use of the LASIK laser devices based on information from clinical trials, scientific literature, and reports from patients who have undergone LASIK.  After reviewing the information . . . please read and discuss the items in this checklist with your doctor. You should place your initials in the location provided next to each item to indicate that you have read and understood the item. Your full signature at the end of this document means that you have read and understood the materials and that your physician has answered all questions to your satisfaction.  [Draft LASIK Guidance at 22.]

Public Comments

It was this apparent foray into the realm of informed consent that appears to have provoked considerable backlash in the public comments on the draft guidance.  The Refractive Surgery Council (RSC) and Society for Excellence in Eyecare (SEE), the Medical Device Manufacturers Association (MDMA), and even the Commonwealth of Kentucky’s attorney general (AG) all requested the draft guidance be withdrawn.  All of them stated some version of an argument that this guidance requires labeling that will overlap and potentially clash with the informed consent process.  MDMA, for example, states:

The patient labeling recommendations in the Draft Guidance inappropriately require manufacturers, rather than surgeons, to provide information to patients regarding the risks of LASIK as a procedure, as distinct from the risks of the approved device (i.e. excimer laser systems) used to perform the procedure. The Draft Guidance incorporates a Patient Decision Checklist Example (the “Checklist”) at Appendix A, which would become part of the device’s labeling.  There appears to be significant overlap in content between the Checklist and informed consent forms and processes routinely provided by healthcare providers to their patients. MDMA is concerned this Checklist will not assist patients in their decision regarding whether to undergo surgery, but rather do the opposite by presenting potentially conflicting informed consent information. In addition, the Checklist is not device-specific and may not reflect the data contained in the manufacturer’s premarket approval application (PMA). This proposal is a[n] . . . intrusion [into] the doctor-patient relationship.

The Kentucky AG uniquely adds that FDA’s proposal improperly interferes with the Commonwealth’s exercise of supervisory authority over its physicians, including statutes addressed to obtaining informed consent.

There was also controversy in the comments over how to characterize LASIK’s risks, underscoring how far FDA seems to have strayed from its statutory mandate.  The argument was not about evaluating the performance of a particular device, which is FDA’s bread and butter.  Rather, it was about the assimilation of the full range of available medical data and information to assess how procedural risk generally should be conveyed to patients, regardless of the specific LASIK device being used.

More than one commenter on the draft guidance was troubled that FDA’s proposed labeling fails to incorporate most recent data bearing on LASIK’s risks.  Additionally, several of the commenters pointed out apparent errors in FDA’s characterization of risk.  We are not equipped to say who is right about the data, but this dialogue seems to be playing out on the medical professionals’ home turf.

Regulatory Analysis

We return now to the puzzle of how these new draft recommendations relate to the previously approved labeling for these devices.  FDA describes the legal effect of the draft guidance as follows:  “The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. . . .  This document is intended only to provide clarity to the public regarding existing requirements under the law.”  In this context, this statement is absurd.  FDA has already approved the patient labeling in connection with each individual manufacturer’s PMA approval.  None of the manufacturers require any clarification, since FDA has already specifically reviewed and approved the labeling.

At the end of this discussion, we learn what the game is.  The draft guidance states (p. 4):  “FDA intends to work with manufacturers of new LASIK devices through the premarket approval application (PMA) process, and manufacturers of currently marketed LASIK devices through the PMA supplement process, to integrate these important labeling recommendations.”

FDA’s statement tacitly concedes that current PMA holders have a limitation on their ability to adopt the recommendations in this guidance.  As a legal matter, they would need to first obtain supplemental approval from FDA granting them permission to do so.  It appears that the purpose of the guidance is really to induce manufacturer’s to seek approval of a labeling change, and to direct them as to what changes they should request.  As FDA points out, the agency can readily impose this labeling for new devices during an original PMA process, but they need existing PMA holders to “voluntarily” file supplements to make these changes.

The draft guidance is directed at devices in the LZS product code, most of which originally gained approval in the mid‑1990s to early 2000s.  While there are PMA supplements steadily filed in this product code until the present, it appears from FDA’s database that the last original PMA approval was in 2006.  Therefore, it is likely that this guidance is really directed at existing PMA holders.

It would seem that these targeted PMA holders would be on rock solid legal ground to ignore the guidance.  They may legally continue to use their existing PMA‑approved labeling.  No doubt, if FDA persists, some manufacturers may be unable to resist the pressure.  That does not speak to the propriety of this maneuver.

A final word about the limits of FDA’s authority.  FDA is not categorically barred from requiring manufacturers to provide patient information.  These lasers were previously approved with patient information booklets.

The problem here is that FDA seeks to substitute new patient labeling based on a generalized assessment of procedural outcomes obtained via a wide range of medical information, not device‑specific evaluations.  And, perhaps more important, FDA is requesting that the labeling convey risk information to patients that clearly overlaps with routine surgical informed consent.  FDA’s mandate, however, is to supervise the safety and effectiveness of specific devices used in LASIK procedures.  FDA is not authorized to impinge on the informed consent process.  It is a subtle distinction, but it is well established and is usually honored by the agency.  In this case, it appears that FDA has crossed over the line.

With the explosion of health‑related software, many software developers are generating products with functionality that is subject to regulation by the Food and Drug Administration (FDA).  If you are a manufacturer of implants that go into the human body for the treatment of disease, it’s an easy yes that you are a manufacturer of a medical device. But, for software products, it is often not straightforward to address this question by simply referring to the statutory definition of a device. Determining whether your product meets the definition of a medical device has significant implications, such as whether you need to comply with the Federal Food, Drug, and Cosmetic Act (FD&C Act).

This blog post describes the medical device determination process and a way of assessing software functions to determine if your software product is subject to FDA regulations.  While the methodology for determining if your product is a medical device has not changed, FDA’s Digital Health Policy Navigator (“Navigator”) provides a convenient and efficient framework for developers to assess software functions.  This interactive 7-step process guides developers in assessing each discrete software function in a product.  It identifies key questions to consider that originate from a variety of FDA guidance documents and aggregates the information into a one-stop shop. While the Navigator should not be used in place of seeking regulatory advice, it is a helpful tool to review when determining what features of a software product may be subject to FDA oversight.

Medical Device Determination Process

The first step of the device determination process is to compare the intended use and indications for use of your product against the above statutory definition of a device (see here).  Section 201(h)(1) of the FD&C Act defines a medical device, in pertinent part, as an “instrument, apparatus, implement . . . or other similar or related article” which is “intended for use in the diagnosis of disease or other conditions.”  Note that section 201(h)(1) of the FD&C Act ends with the sentence “[t]he term “device” does not include software functions excluded pursuant to section 520(o).”

Thus, the second step is to determine if an appropriate product classification exists for your product. This can be done by either searching the FDA Product Classification Database or searching for similar devices. Please check out FDA’s presentation on this very topic – Is My Product a Medical Device? (See here for the slides, here for the recording of the presentation, and here for the transcript.)

In case your product meets the definition of a device but an appropriate product classification is not identified, you may need to submit a de novo classification request to FDA. Also, even if your software product meets the definition of a device, there is a chance that your product meets one of the five carve-outs described below.

Section 3060(a) of the 21st Century Cures Act amended the FD&C Act to add section 520(o), which provides carve-outs from the definition of device in section 201(h)(1) of the FD&C Act.  These are functions that are intended for (1) administrative support of a health care facility, (2) maintaining or encouraging a healthy lifestyle, (3) serving as electronic patient records, (4) transferring, storing, converting formats, or displaying data and results, and/or (5) providing clinical decision support. Manufacturers of software products should determine whether their software functions are excluded from the definition of a device.  If the software functions do not meet the definition of a device under section 201(h)(1) of the FD&C Act or are excluded from the device definition by section 520(o) of the FD&C Act, FDA does not regulate them as devices.

There are multiple resources that FDA provides to facilitate the understanding of the Agency’s thinking regarding the amended device definition and the interpretation of section 3060(a) of the Cures Act, including sections 520(o)(1)(A)-(D) of the FD&C Act.  The following Guidance documents are critical to understanding the FDA’s policy for software products:

• Changes to Existing Medical Software Policies
• General Wellness: Policy for Low Risk Devices
• Policy for Device Software Functions and Mobile Medical Applications
• Clinical Decision Support Software
• Off-The-Shelf Software Use in Medical Devices
• Medical Device Data Systems, Medical Image Storage Devices, and Medical Image Communications Devices
• Multiple Function Device Products: Policy and Considerations

Digital Health Policy Navigator Tool

FDA  developed the Digital Health Policy Navigator (Navigator) to aggregate the FDA’s digital health guidance documents into one user-friendly resource.  The Navigator guides manufacturers in their assessment of whether a particular software function meets the device definition and if so, whether it is the focus of FDA’s regulatory oversight. A software function is the distinct purpose of the product which could be the intended use or subset of the intended use of the product.  The Navigator is designed as an interactive overview with seven simple steps, each with a set of questions that should be answered for each software function.  It then identifies the applicable laws, guidances, and policies that may apply.

• Step 1: Is the software function intended for a medical purpose?
• Step 2: Is the software function intended for administrative support of a health care family?
• Step 3: Is the software function intended for maintaining or encouraging a healthy lifestyle?
• Step 4: Is the software function intended to serve as electronic patient records?
• Step 5: Is the software intended for transferring, storing, converting formats, or displaying data and results?
• Step 6: Is the software function intended to provide clinical decision support?
• Step 7: Does the Device Software Functions and Mobile Medical Applications Guidance apply?

The possible outcomes from the Navigator are:

• Likely not a device
• Likely FDA intends to exercise enforcement discretion
• Likely the focus of FDA’s regulatory oversight
• Your product may be a device

Below, we reproduced the Navigator’s process in a flowchart format so that our blog readers can quickly arrive at an outcome and its implications for their software product. The flowchart can be downloaded here. For detailed explanations for each step, please refer to the Digital Health Policy Navigator. We appreciate FDA’s efforts to aggregate relevant resources so that manufacturers can more easily identify whether their software products are subject to regulation.

Last week, the U.S. Food and Drug Administration (FDA) issued two guidance documents, one draft and one final, on food allergen labeling requirements.

The draft guidance, “Questions and Answers Regarding Food Allergen Labeling (Edition 5),” replaces the 16-year-old Edition 4 of the final guidance with new and revised questions and answers related to:

• The Food Allergen Labeling and Consumer Protection Act of 2004 (FALCPA), which, inter alia, amended the Federal Food, Drug, and Cosmetic Act (FDC Act) to define “major food allergen”;
• The Food Allergy Safety, Treatment, Education, and Research Act of 2021 (FASTER Act), which amended the definition of “major food allergen” to include sesame, effective Jan. 1, 2023;
• The applicability of food allergen labeling requirements to specific products (e.g., labeling of major food allergens in bulk foods, dietary supplements, protein-free ingredients, and foods produced through genetic engineering); and
• Other technical labeling matters.

Under Section 201(qq) of the FDC Act, “major food allergens” include milk, eggs, peanuts, wheat, soybeans, fish, shellfish, tree nuts, and effective Jan. 1, 2023, sesame.  In addition to providing additional examples of tree nuts, the draft guidance states that FDA considers the following categories of fish to be major food allergens under Section 201(qq):

• Jawless fish (e.g., lampreys);
• Bony fish (e.g., trout); and
• Cartilaginous fish (e.g., shark, rays, and skates).

Most notably, the draft guidance clarifies that the following food products are subject to the allergen labeling requirements:

• Bulk containers (e.g., reusable totes of bulk food shipped for further processing, labeling, or repacking);
• Spice mixes and seasoning mixes with incidental additives that might contain a major food allergen;
• Ingredients from major food allergens produced through genetic engineering when they contain proteins derived from a major food allergen or through using the major food allergen’s DNA sequence;
• Dietary supplement ingredients, including dietary ingredients, source ingredients, and other ingredients containing a major food allergen;
• Unit containers in a multiunit retail food package that contain a major food allergen; and
• All packaged foods served or sold on transportation carriers (e.g., airlines).

On the other hand, these products are not subject to food allergen labeling requirements:

• Pet foods, animal feeds, cosmetics, drugs, or household cleaning products;
• An ingredient derived from a major food allergen that does not contain protein (e.g., ingredients processed using technology that reliably produces a protein-free ingredient and for which the manufacturer can ensure that the ingredient does not contain protein);
• Foods in which a major food allergen has been unintentionally incorporated due to cross-contact; and
• Roots, leaves, stems, bark, or other parts distinct from the tree nut or allergenic portion of a tree nut bearing plant.

The final guidance, which accompanies and shares the same title as the draft guidance, preserves the questions and answers from Edition 4, with minor editorial and organizational changes.

Comments on the draft guidance must be submitted by Jan. 29, 2023.  After reviewing comments, FDA will revise and move questions and answers to the final document, as it deems appropriate.  Going forward, FDA intends to continue to revise and add questions and answers, and issue subsequent editions of the guidance document.  With that in mind, we expect that the next edition will come sooner than 16 years from now.

On November 22, 2022, FDA approved CSL Behring’s BLA for Hemgenix (etranacogene dezaparvovec), an AAV-based gene therapy for the treatment of adults with Hemophilia B who currently use Factor IX prophylaxis therapy, have current or historical life-threatening hemorrhage, or have repeated, serious spontaneous bleeding episodes.  This product was developed by uniQure prior to being licensed to CSL Behring.  This approval marked the 5th  viral vector gene replacement therapy product for genetic disorders (referred to in this post as “gene therapies” for simplicity’s sake), and the 3rd this year, approved by FDA following, in order, Luxturna (voretigene neparvovec), Zolgensma (onasemnogene abeparvovec) (see previous coverage here), Zynteglo (betibeglogene autotemcel), and Skysona (elivaldogene autotemcel).

As demonstrated by the few gene therapies approved by FDA, we are still in the early days of the development and evaluation of gene therapy benefits and risks in the United States.  In simple terms from a non-scientist, these gene therapies add functional versions of genes to patients that do not have them, and thus the idea is to have these genes function in the same way as they do in individuals without these disorders.

At times, there has been speculation that these can be actual “cures,” and at some point, they might well be.  However, there are many treatment goals that patients and their caregivers have that fall short of a cure, not only improvements but, for progressive conditions, a slowing or halting of worsening.  It takes many years to determine if something provides durable treatment and to what degree it may fade over time.  Thus, the current reality of gene therapy products presents a conundrum to FDA: If you have an efficacious one-time treatment, how long do you wait to see if the treatment stops working or stops working as well, while patients receive very real benefits in the interim?

Of course, neither “cure” nor permanency are the bar for FDA to find that a new drug is effective; simply because there is the potential for something to be a “cure” or offer permanent/near-permanent effects does not mean it should be required to be such.  At the same time, it is understandably important to be able to measure and characterize a treatment’s effect over time.  We know, for example, the use of viral vectors results in antibody production that could inhibit future administration of gene therapies using the same or similar viruses, which will inform treatment decisions by patients with their doctors.  However, with this most recent approval, FDA did not leave the question of durability as something to be answered postapproval, which signals to us that this issue looms large in FDA’s preapproval regulation of gene therapies.

We can see this evolution for requiring longer-term follow-up play out with this most recent approval of Hemgenix.  We can look to what information has been shared in the public domain as we do not yet have FDA’s summary basis of approval.  The gene therapy demonstrated that it increased Factor IX (“FIX”) plasma levels at 6 months, the original primary endpoint of the Phase 3 trial.  It seems reasonable to assume that there was some hope this would be sufficient for accelerated approval based on this surrogate endpoint.  However, while announcing in November 2020 that this endpoint was achieved, the sponsor shared that “[b]ased on interactions with the FDA and EMA,” it changed this primary endpoint for the trial to the co-primary endpoints of FIX activity and annualized bleeding rate (“ABR”), now measured at 52 weeks.  This was despite the 6-month data also demonstrating clinical benefits in reduction of bleeding events and declines in the use of FIX replacement therapy.

In June 2021, uniQure provided another regulatory update, announcing that FDA was requiring a demonstration of “durability of effect” based on data from patients followed for at least 52 weeks after FIX levels achieve steady state, which occurs by 26 weeks.  Essentially, FDA was now asking for 18 months of data following treatment.  Thus, the primary endpoint changed again to a sole primary endpoint of ABR at 78 weeks.  Again, this was despite the fact that subjects in the trial had demonstrated durable FIX activity to this point, with a mean of 41.5% of normal as compared to 39% at 6 months, that was coupled with substantial reductions in ABR and usage of FIX replacement therapy apparent as early as at 6 months that had now demonstrated persistence at 1 year.

That brings us to the product’s approval.  The FDA-approved Package Insert describes the “main efficacy outcome” as being “a non-inferiority test of annualized bleeding rate (ABR) during Months 7 to 18” as compared to the ABR during the lead-in period.  Therefore, the durability of response in FIX activity appeared to support the FDA-requested evidence of durability.

This approval suggests that FDA may have shown a reticence to allow such FIX levels, even with corresponding clinical benefit at earlier timepoints, to serve as a surrogate endpoint to support approval, including as a surrogate that is reasonably likely to predict clinical benefit for an accelerated approval.  Instead, FDA is requiring follow-up using this surrogate biomarker coupled with durable clinical benefits and may be delaying approvals due to the assumption that the biomarker predicts durability of effectiveness.

The fact that FDA seemingly required Hemgenix to demonstrate a degree of durability out to 18 months before determining it met the approval standard begs the question: would FDA have approved this one-time gene therapy treatment if the effects were not permanent (i.e., they waned over time), even though patients would have benefited over a shorter duration?  The regulatory bar has never required curative level or permanency of effect, so what magnitude of effect and for how long is enough for the Agency? And on what basis is FDA making such judgments?  We’ll have to stay tuned for the summary basis of approval to be posted here in the coming weeks to see what FDA has to say.

Sentencing for defendants convicted in federal court of felony offenses that involve fraud, including violations of the Federal Food, Drug, and Cosmetic Act, may be dramatically reduced based on an opinion issued last week by a panel of the Third Circuit Court of Appeals.  The change in sentencing practices has the potential to reverberate in federal courts not only in the Third Circuit (which has responsibility for federal cases in Pennsylvania, Delaware, and New Jersey), but also elsewhere in the United States.  Consistent with Third Circuit practice, the written opinion in the case is marked, at the beginning, as “PRECEDENTIAL.”

In sentencing defendants in mail or wire fraud cases, judges rely on the fraud loss levels spelled out in Section 2B1.1 of the Federal Sentencing Guidelines.  The higher the amount of fraud, the more a defendant’s offense level increases, as does the possible sentence imposed.  But even defendants whose crimes do not cause actual loss, such as when the fraud was attempted but not actually effectuated, have faced long terms of incarceration, because sentencing judges have employed what they determine to be “intended loss” to set sentences.  Section 2B1.1’s Application Notes instruct that “loss” is the greater of realized loss or intended loss, and judges often have looked to the amount of attempted, if not realized, ill-gotten gains when calculating fraud loss and offense levels.

Section 2B1.1 is also applied in sentencing for offenses other than mail and wire fraud, including felony criminal violations of the prohibited acts in the FDCA.  For example, Section 2N2.1 is the primary applicable guideline for “Violations of Statutes and Regulations Dealing With Any Food, Drug, Biological Product, Device, Cosmetic, Agricultural Product, or Consumer Product.” It states that “[i]f the offense involved fraud, apply §2B1.1.”  Normally, convictions for felony violations of the FDCA require the government to prove that the offense was committed with intent to defraud or mislead, so judges often employ a fraud loss calculation under 2B1.1 when sentencing FDCA criminal cases.

Last week, an appellate panel of the Third Circuit, in United States v. Banks, ruled that the amount of intended but unsuccessful fraud was not a suitable basis to increase a defendant’s offense level under 2B1.1. That ruling brushed aside a common practice at Federal criminal sentencings.  But perhaps Banks is less of a novel ruling when it is viewed in light of the current judicial currents that adhere to deference to the literal meaning of the words of a statute, combined with the prevailing headwinds facing deference to accompanying agency interpretation.

Prosecutors in the Western District of Pennsylvania convicted Frederick Banks of wire fraud.  According to the Third Circuit opinion, Banks tried to exploit the lag in the timing of deposits and withdrawals between different accounts.  The opinion explains that Banks used bogus information to open accounts at the FOREX.com international exchange system, ostensibly to buy and sell foreign currencies.  He then made electronic deposits into those accounts from others that lacked funds.  Attempting to exploit the timing between transfers, he tried to withdraw $264,000 from FOREX accounts before FOREX detected that the transfers were bogus.  However, Banks’s attempts to transfer money all failed.

After trial, the District Court sentenced Banks to 104 months of incarceration based on his attempted fraud, relying on the Application Notes that describe loss under 2B1.1.  The District Court found that those Notes define “loss” as not only actual loss, but also as intended loss.  This is a common interpretation among the Federal judiciary.  Here, Banks faced a base offense level of 7.  Based upon the loss he intended to inflict, the District Court added 12 levels, for a total of 19.

The Third Circuit panel of three judges disagreed, applying strict statutory construction to the word “loss” in 2B1.1, and deciding that the District Court could not consider intended loss.  Section 2B1.1 lays out a chart of “Specific Offense Characteristics” that guide judges.  They raise offense levels through a series of increasing steps based upon the serious of the relevant financial harm.  Section 2B1.1 does not, in the unmodified words of the Guideline, add anything to describe what “loss” is.  It merely states that “if the loss” exceeds certain amounts, offense levels rise with it.  In a lengthy discussion of dictionary definitions of the word “loss,” the Circuit Court here determined that “loss” means only actual, realized loss, and that further analysis was unnecessary.

Discounting reliance on the Application Notes, the panel ruled that the District Court erred in applying on the Notes’ definition of “intended loss” as the basis for the enhanced sentence.  As a result, in the Third Circuit, the commentary in the Guidelines does not expand the meaning of the word “loss” to include intended loss.

The Third Circuit’s ruling rests upon the agency deference roadmap the U.S. Supreme Court laid out in Kisor v. Wilkie.  That 2019 decision directed courts to exhaust all traditional tools of statutory construction before turning to agency interpretations, beginning with analysis of the clarity of the relevant words of the law or legislative rule at issue.  Here, the Banks judges affirmed that the Guidelines themselves are legislative rules.  The Application Notes that expound on “intended loss” are, therefore, relegated to the category of agency interpretive rules, and are extraneous since, according to the Third Circuit, the relevant legislative rule defining “loss” is clear.

Perhaps the Department of Justice would try to appeal this decision, either through a hearing before the Third Circuit en banc (as opposed to the panel of three judges that issued the Banks decision) or eventually through a petition for review with the Supreme Court.  It is unclear whether doing so would be worth the effort and risk.  In this case, at re-sentencing, the District Court may take greater pains to base its decision on the factors set out in 18 U.S.C. § 3553.  While Banks’ re-sentencing will not be predicated on the commentary-based enhancement, the Guidelines are not binding on judges.  Perhaps the District Court will more thoroughly articulate other reasons under 3553 to enhance Banks’ sentence above the base offense level, if the judge is so inclined.

One of the panel judges also sits on the U.S. Sentencing Commission as its Vice-Chair.  That connection may prompt discussion of a small but impactful change to the text of the Guidelines, specifically including intended loss in fraud loss guidelines.  As this opinion just came down, expanding “loss” in the Guideline’s language does not appear on the Commission’s recently published list of 2023 Amendment Priorities.  That said, the Commission’s appetite for amendment in any direction is unknown.

One final speculation, based on this case: how deeply will federal prosecutors and agents dig into cases where the accused defendant did not actually profit from fraud?  Unsuccessful fraud schemes may result in plea offers more favorable to defendants or even declinations of prosecution as prosecutors see vanishing likelihood of long sentences for unsuccessful fraud schemes.

In any event, prosecutors and defense attorneys in Pennsylvania, Delaware, and New Jersey now must work with new limitations on the scope Federal Sentencing Guidelines.

Anne Walsh of Hyman, Phelps & McNamara PC will be presenting on “The Relationship Between Outside Counsel Investigations and Quality System Investigations, and What to Do when they Conflict” as part of the Food and Drug Law Institute’s Enforcement, Litigation, and Compliance Conference on December 7-8 in Washington, DC. As we move out of the COVID-19 pandemic, come hear from your peers about how they are staying compliance and inspection ready as FDA ramps back up inspections, what companies need to do to plan for and manage enforcement risk, trends in criminal and civil litigation, and government priorities for the new year. Sign up with the discount code SAVE15 for 15% off registration and learn more at fdli.org/enforcement.

Earlier this year, we posted on the still unsettled state of the law regarding whether “FDCA violations may, in certain circumstances, be material to the government’s decision whether to pay for the affected product, and thus relevant in an FCA case.”  In particular, we noted that a recent statement of interest from the U.S. Department of Justice staked out a position that preserved that possibility.  Last month the United States Court of Appeals for the Second Circuit affirmed  the district court’s decision to dismiss a False Claims Act (FCA) (21 U.S.C 3729) qui tam suit, alleging that Grifols USA, Grifols Biologicals, Grifols, S.A., and Grifols Shared Services as defendants (collectively, “Grifols”) concealed and submitted falsified information to the United States Food and Drug Administration (FDA) to obtain FDA approval for manufacture of Gamunex at its new manufacturing facility in Los Angeles in order to receive reimbursement and contracts with various government healthcare programs for Gamunex.

According to the allegations in the complaint, approval of the new Los Angeles manufacturing facility required a Prior Approval Supplement (PAS) and a Pre-Approval Inspection (PAI) of the facility.  The purpose of the PAI was to determine whether the facility has a quality system that was designed to achieve sufficient control over the facility and commercial manufacturing operations and evaluate the facility’s Good Manufacturing Practice (GMP) compliance. The Relator, a former quality assurance plant manager at the Grifols Los Angeles facility, alleged there were discrepancies in the Clean In Place (CIP) equipment qualification.   According to the Relator, these CIP qualification discrepancies “may lead to contamination” and “…over time [lead to] to adulterated [Gamunex] product and significant risk of patient harm.”  The Relator also found various CIP equipment qualification reports with his initials, indicating his approval even though he had never signed those reports.  These CIP equipment qualification reports were provided to the FDA in support of its PAS and PAI to approve the new facility.  The Relator also alleged that rabbits injected with Gamunex had developed a fever, indicating presence of endotoxin in the product, and that these results were concealed by Grifols from the FDA during the PAI.  In sum, the Relator alleged factual support for potential FDCA violation.  As readers of this blog well know, there is no private right of action to enforce the FDCA.  Therefore, in an attempt to turn FDCA violations into an FCA case, Relator asserted violations of the FCA.  The Relator argued that the government healthcare programs require that drugs not be “adulterated,” which means that Grifols’ manufacturing processes must comply with all applicable GMPs.  In addition, Grifols’s eligibility for government contracts is conditioned on FDA approval of Gamunex and FDA approval is conditioned on compliance with GMPs.

The district court dismissed the complaint, concluding primarily that the Relator failed to sufficiently allege that Grifols’ claims for payment to government programs that contained records or statements material to a fraudulent claim.  On October 14, 2022, the 2^nd Circuit affirmed the district court decision similarly, concluding that the Relator did not plausibly allege that any misrepresentation by Grifols materially impacted the government healthcare programs’ payment determination.

This result follows from the Supreme Court’s observation in Escobar that emphasized “[t]he False Claims Act is not an all- purpose antifraud statute or a vehicle for punishing garden-variety breaches of contract or regulatory violations.”  FDA regulated companies should not take too much comfort from this and similar results, though, because while relators cannot enforce the FDCA, the FDA certainly can, and one function of qui tam FCA cases is that they prompt the government to evaluate and investigate the allegations in the complaint and written disclosure of the material evidence that the relator possesses.  If a relator discloses to the government material evidence of previously unknown FDCA violations, those violations likely spell trouble, regardless of whether an FCA complaint survives a motion to dismiss.

This blog will continue to monitor how DOJ and the courts analyze the intersection between the FDCA and the FCA.