By Kurt R. Karst –      

In a short, but scathing opinion piece published in the October 5th Wall Street Journal (“WSJ”), the editors take on the Federal Trade Commission (“FTC”) and those Members of Congress who want to ban patent settlements between brand-name and generic drug companies (what opponents call “pay-for-delay” or “reverse payment” agreements) – or at least make them a very unattractive option – under the “Preserve Access to Affordable Generics Act.”  As we previously reported, the bill, which is currently included in the report accompanying the Fiscal Year 2011 Financial Services and General Government Appropriations Bill (S. 3677) that is under consideration in Congress, would make patent settlements presumptively anticompetitive and unlawful if challenged by the FTC unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”  Some Senators have objected to the provisions, arguing that they would “do serious violence to the Hatch-Waxman process for the market entry of generic drugs,” and the Congressional Budget Office issued a cost estimate criticizing the estimated savings from the bill as “significantly overstated.”

The WSJ echoes the sentiments of those Members of Congress opposed to the “Preserve Access to Affordable Generics Act:” 

Reverse settlements expand the options for rationally ending patent disputes.  A brand-name company might settle to protect a high-risk investment even if it is convinced that its patent is strong, because anything can happen in litigation. Or the two sides might be at loggerheads.  No one can know in advance which side will prevail at trial, and a cash payment might be the only way to reach an agreement. . . .  [E]liminating reverse settlements will reduce the incentive to challenge patents at all.  If the only choice is an expensive litigation death match that lasts for years, fewer generic companies will sue under the probability that they will themselves face patent infringement suits.

The WSJ cites a January 2010 RBC Capital Markets report to make its point that patent settlements are a good thing; that is, that the patent settlement “status quo seems to be working better than anything today's Congress might produce.”  The RBC report found, among other things, that in cases that went to trial over the last three years, settlements occur on average 47% of the time.  Although many of those settlements did not involve a “reverse payment,” in those that did, “presumably payment was the only way to bridge the settlement gap and may have thus sped up generic entry,” according to the WSJ.

The WSJ is also critical of the FTC’s efforts to broker patent settlement deals – and in particular the FTC’s conduct called into question in FTC v. Bisaro.  As discussed in a recent Washington Legal Foundation Legal Opinion Letter, in that case, the FTC attempted to broker a deal between competing generic drug companies by forcing one of them to selectively waive or relinquish its 180-day exclusivity for a generic version of PROVIGIL (modafinil).  “It’s one thing for the [FTC] to litigate pay-for-delay cases, even dodgy ones, but quite another to actively attempt to broker deals in the drug business,” according to the WSJ. 

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst will be speaking at the Center for Business Intelligence’s (“CBI’s”) 3rd Annual Life Sciences Congress on Paragraph IV Disputes, which is scheduled for October 18-19, 20109 at the Hilton Alexandria Old Town in Alexandria, Virginia.  This popular CBI conference brings together representatives from both the brand-name and generic drug industries to discuss litigation strategies, statutory guidelines, current cases, and their landmark decisions.  A copy of the conference brochure is available here.  In addition to presenting a session on the FDC Act’s 180-day exclusivity forfeiture provisions, Mr. Karst, along with Sean Ryder (Glenmark), and Joe Bonaccorsi (Akorn), will put on a “Paragraph IV Boot Camp” workshop on myriad Paragraph IV issues. 

Special FDA Law Blog Discount – CBI is offering FDA Law Blog readers a $300 discount off of the registration fee.  To register for the conference, go to the CBI website and enter the following promotion code: ZUE255

By Ricardo Carvajal –

No sooner did FDA hold its advisory committee meeting and public hearing on bioengineered AquAdvantage salmon than Congressional representatives made their displeasure known with the prospect of FDA approval.  In addition to signing on to letters of protest to the Commissioner (here and here), some have opted to sponsor legislation (here, here, and here) that would amend the FDC Act to require genetically engineered fish to be labeled as such or to ban them altogether.  As we noted in a prior posting, this is the first time FDA is considering a NADA for a genetically engineered animal intended for food use.  The level of controversy and opposition engendered thus far provides a strong disincentive to those developers waiting in line.

To appreciate just how protracted a battle the folks at AquAdvantage face, one need look no further than the dairy shelf, where the slugfest over labeling of milk derived from cows not treated with rbST continues more than 15 years after that drug’s approval (rbST stands for “recombinant bovine somatotropin,” a bioengineered hormone that increases milk production).  For years, marketers of milk derived from cows not treated with rbST have sought to advertise that fact so as to tap into the desire on the part of some consumers to avoid all things biotech.  Some labeling and advertising claims (e.g., “rbST free”) have provoked trade complaints from rbST advocates, who allege that the claims are false or misleading because they imply that milk derived from cows treated with rbST  contains rbST and is somehow inferior.  Having failed to get satisfaction from FDA and FTC in response to their trade complaints, rbST advocates turned to state legislatures to challenge the claims.  Ohio obliged by banning certain types of claims (including “rbST free”) on the ground that they were false or misleading.  A First Amendment challenge to Ohio’s ban was initially turned aside by a federal district court, which found the claims to be inherently misleading - but that victory was short lived.  The 6th Circuit Court of Appeals recently reversed and remanded the case for further proceedings, noting that milk derived from cows treated with rbST might yet be found to contain rbST, and that there is “evidence that [such milk] contains increased levels of IGF-1 and might be compositionally of a lesser quality.”  If so, then the claim “rbST free” in the labeling of milk derived from cows not treated with rbST would be truthful and not misleading.  These arguments are eerily similar to those raised against AquAdvantage – arguments that FDA presumed it had put to rest, at least in the case of rbST (a more in-depth article over the rbST controversy is available here).

The biotech headaches of late have not been FDA’s alone.  USDA/APHIS has been embroiled in litigation over its attempt to deregulate bioengineered alfalfa, and has now provoked the ire of a district court by issuing permits for the production of bioengineered Roundup Ready sugar beet seedlings – less than a month after being found in violation of the National Environmental Policy Act for deregulating the beets without preparing an Environmental Impact Statement.  The court has ordered APHIS to “state under penalty of perjury exactly when and where it made the information public that the permits had been granted.”  Ouch.

All in all, it would appear that a powerful alliance has emerged between consumer groups that generally oppose biotech and producers who have staked their livelihoods on the burgeoning consumer demand for “natural” and “organic” products. 

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

The webinar will feature attorneys with decades of experience in FDA’s application of the Park Doctrine.  They will:

• Share their insights of the doctrine from their government days;
• Make predictions as to the type of cases most likely to lead to Park prosecutions;
• Provide tips on how to minimize the risk of being subject to one of these prosecutions;
• Discuss potential career-ending consequences of misdemeanor convictions; and
• Answer participants' questions.

For more information and to register for the webinar, please visit the event website.

By John A. Gilbert & William T. Koustas –

The United States Congress passed the Secure and Responsible Drug Disposal Act of 2010 (“the Act”) on September 29, 2010, and it is soon expected to be signed into law by the President.  This Act is intended to allow individuals to more easily and safely dispose of controlled substances while reducing the chance of diversion.  Under the Act, a patient who has “lawfully obtained a controlled substance” may now deliver unused portions of that controlled substance to another entity for destruction without a DEA registration if: 1) the person receiving controlled substance is “authorized” to do so under the Act; and 2) the drug is disposed of in accordance with regulations issued by the Attorney General. 

The Act addresses a longstanding issue where patients were not allowed to return drugs to a DEA registrant because such a return would be outside the “closed chain of distribution” established by the Controlled Substances Act.  This law will provide DEA with the authority to promulgate regulations to facilitate such returns but does not authorize DEA to mandate that entities establish a disposal program.  The Act would allow the Attorney General to grant long-term care facilities (as defined by the Attorney General) the ability to dispose of controlled substances from residents in a manner that reduces diversion.  In addition, any individual who is entitled to a decedent’s property may deliver any controlled substances in the decedent’s possession at the time of his or her death to a disposal program. 

Finally, the Act requires the United States Sentencing Commission to review and potentially increase the Federal sentencing guidelines for people that receive controlled substances from patients or long-term care facilities as part of a disposal program but use them for illegal activities rather than properly disposing of them.

By Ricardo Carvajal –

FDA announced the availability of a draft guidance on acidified food intended to help processors determine whether their products are subject to the current good manufacturing practice ("CGMP") requirements in 21 CFR part 114 and the “Specific Requirements and Conditions for Exemption From or Compliance With an Emergency Permit” in 21 CFR 108.25.  Those regulations impose significant pre- and post-market requirements on processors who manufacture foods that meet the definition of an “acidified food,” and grant FDA comprehensive authority to take corrective action against processors that fail to meet the requirements.  The regulations governing acidified and low acid canned foods were adopted by FDA more than 30 years ago in part under the emergency permit control authority of section 404 of the Federal Food, Drug, and Cosmetic Act, after a New York banker was killed by botulism in a can of Bon Vivant vichyssoise – an event that pushed Bon Vivant into bankruptcy. 

The guidance discusses the differences between acid foods and acidified foods, the applicability of FDA’s requirements to fermented foods, the obligations of repackers and reprocessors of acidified foods, and the agency’s recommendations with respect to acid foods and fermented foods that contain small amounts of low-acid foods.  The guidance also provides the agency’s definition of certain terms that are not defined by regulation (e.g., “equilibrium pH”).  Comments on the guidance are due December 27.

Of late, FDA has shown increased interest in exercising its authority under section 404 and its implementing regulations.  Thus, the guidance should be of interest to both domestic and foreign manufacturers.

REMINDER: Register for HPM's free webinar “The Evolution and Resurgence of Strict Liability Criminal Prosecutions Under the Park Doctrine” on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/)

By Michelle L. Butler –

Yesterday, the Office of the Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) issued a Special Advisory Bulletin regarding a new enforcement initiative to promote increased compliance by manufacturers with regard to reporting of average manufacturer prices (“AMPs”) and average sales prices (“ASPs”).  This was based at least in part on a report the OIG issued simultaneously regarding noncompliance by drug manufacturers with AMP reporting requirements.

The Medicaid Drug Rebate Program and the 340B program both rely on timely and accurate submission of AMPs by manufacturers in order to calculate rebates to be paid to the state Medicaid programs by manufacturers and statutory prices to 340B entities, respectively.  The federal upper limit (“FUL”) program for reimbursement of Medicaid drugs has also been directed by statute to rely on AMPs for the calculation of the reimbursement rate for such drugs.  Similarly, the Medicare Part B drug benefit relies on timely and accurate submission of ASPs by manufacturers to determine the reimbursement rate for Medicare Part B drugs.  A number of reviews conducted by the OIG over the years have shown that a large number of manufacturers have failed to report AMPs and ASPs in a timely manner. 

The OIG report regarding noncompliance with AMP reporting requirements that was issued with the Special Advisory Bulletin found that, in 2008, more than half of the manufacturers that were required to submit and certify quarterly AMP failed to comply with requirements in at least one quarter and more than three-fourths of manufacturers failed to comply with monthly AMP reporting requirements.  See OIG, Drug Manufacturers’ Noncompliance with Average Manufacturer Price Reporting Requirements, OEI-03-09-00060, at 10-13 (Sept. 2010).  The OIG report also found that CMS took action against some manufacturers for failure to comply with quarterly AMP reporting requirements (e.g., referral to OIG for civil money penalty (“CMP”) consideration, termination of the manufacturer’s Medicaid Drug Rebate Agreement, or both) but took no action for failure to comply with monthly reporting requirements.  Id. at 14.  In addition, with regard to the quarterly AMP data, CMS was more likely to take action against manufacturers with no AMP data reported in at least one quarter and manufacturers with late AMP data for multiple quarters.  Id. at 14-15.  Due to resource issues, CMS was much less likely to take action against manufacturers with incomplete quarterly data.  Id.  The OIG therefore recommended in its report that CMS take action against manufacturers that submit incomplete quarterly AMP data and manufacturers that fail to submit monthly AMP data in a timely manner.  Id. at 18-19.  CMS concurred with the OIG’s recommendations and stated that it intends to begin referring manufacturers that submit incomplete AMP data to the OIG for CMP consideration.  Id. at 19, 26-27.  CMS also indicated that it “will be able to begin providing the OIG with a report of manufacturers with incomplete quarterly and monthly AMP submissions in the near future.”  Id. at 27.

In addition, the Special Advisory Bulletin cited a February 2010 report regarding ASPs, which noted that the failure of manufacturers to meet deadlines for reporting ASPs introduced the potential for inefficiency and error in payments for drugs covered by Medicare Part B.  See Special Advisory Bulletin, at 3. 

The Special Advisory Bulletin concluded that “HHS’s past approach of promoting voluntary compliance has not been fully effective.”  Id. at 4.  Accordingly, in order to promote increased compliance with the reporting requirements related to the Medicaid Drug Rebate Program, the 340B program, the FUL program, and the Medicare Part B benefit, the OIG has announced a new enforcement program regarding AMP and ASP reporting.  The statute provides for CMPs in the amount of $10,000 per day for manufacturers that fail to certify and provide timely information.  See 42 U.S.C. § 1396r-8(b)(3)(C).  According to the bulletin, the “OIG will now impose CMPs on manufacturers that fail to comply with their drug product and price reporting obligations.  OIG and CMS are working together to identify and penalize noncompliant manufacturers through the CMP process.”  Id.  This is generally consistent with statements made by a CMS official at a recent industry conference, though the speaker (who gave the standard government employee caveat that she was not speaking on behalf of CMS) indicated that it was possible that the OIG might not seek CMPs for one-off problems manufacturers may have with regard to data submitted.

REMINDER: Register for HPM's free webinar "The Evolution of the Park Doctrine" on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/) 

By Riëtte van Laack –

On September 27, 2010, less than two week after POM Wonderful LLC (“POM”) filed a complaint against the Federal Trade Commission (“FTC”) (see our previous post here), the Agency filed a Complaint against POM, its sister corporation Roll International Corp. and several of its officers for violation of the FTC Act.   Specifically, the FTC charges POM with false and misleading advertising because POM’s claims that POM’s products (POM Wonderful 100% pomegranate juice, POMx Pills, and POMx Liquid) prevent, reduce the risk of, or treat heart disease, high blood pressure, prostate cancer, and erectile dysfunction are not supported by competent and reliable evidence.  The Complaint includes 25 pages of exhibits evidencing POM’s advertising, which includes POM’s statements that its claims are supported by extensive clinical studies.  Although POM in fact appears to have invested in numerous clinical studies, the FTC alleges that the results of these studies do not support POM’s claims for the health benefits of POM products. 

It is noteworthy that the Complaint and the Proposed Order do not include the two clinical study standard which led to POM’s lawsuit charging that the FTC had illegally changed its standard for substantiation.  Throughout the Complaint, the FTC refers to its standard as requiring “competent and reliable scientific evidence” and nowhere does the FTC suggest that POM’s advertising is false and misleading because the claims are not supported by two adequate and well-controlled clinical studies.  In addition, the Complaint does not allege that POM’s advertising claims are false and misleading because they have not been approved by FDA.  The Proposed Order does include a provision requiring FDA pre-approval of future claims for POM products.  The FTC’s press release suggests that FTC proposes to include this requirement in order to “provide clearer guidance for the company, facilitate [POM’s] compliance with the proposed order, and make it easier to enforce.”

The FTC has scheduled a hearing on May 24, 2011, at which POM must show cause why a cease and desist order should not be entered.  The FTC's Complaint's statement that "it may be necessary and appropriate for the [FTC] to seek relief to redress injury to consumers . . . in the form of restitution . . . and such other types of relief" suggests that the FTC is almost certain to seek money from POM.

UPDATE:

• POM’s statement in response to the FTC’s complaint is available here.

Hyman, Phelps & McNamara, P.C.’s Douglas Farquhar and Ricardo Carvajal will be presenting at FDLI’s upcoming two-day conference on FDA enforcement and litigation.  Mr. Farquhar will moderate a panel on elements of proof in an injunction case, and will present on misdemeanors, debarment, and exclusion.    Mr. Carvajal will co-lead a breakout session on food (including dietary supplements).   The FDLI Annual Enforcement Conference is perhaps the premiere event covering these topics, including presentations by compliance directors for each for the regulated industries, and featuring speeches by the Director of the Office of Consumer Litigation (the arm of the federal Department of Justice that litigates cases arising under the Federal Food, Drug, and Cosmetic Act) and FDA's Deputy Chief Counsel for Litigation. Registration information is available here.

By Randy Pollack*, Wes Siegner & Brian J. Donato –

In September 2008, California Governor Arnold Schwarzenegger signed landmark green chemistry legislation authorizing the Department of Toxic Substance Control (“DTSC”) to: (1) identify and prioritize chemicals of concern, evaluate alternatives as well as to specify regulatory responses (Assembly Bill 1879); and (2) establish an online Toxics Information Clearinghouse to provide public access to information on the toxicity of chemicals (Senate Bill 509). 

According to the DTSC, the objective of this legislation is:

that chemical and consumer product prioritization processes should seek to identify and give priority to those chemicals, and the consumer products that contain them, that pose the greatest public health and environmental threats, are most prevalently distributed in commerce and used by consumers, and for which there is the greatest potential  for consumers or environmental receptors to be exposed to the chemical in quantities that can result in public health or environmental harm.

In carrying out the law, the DTSC is the designated entity responsible for  drafting regulations to implement the law by December 31, 2010.  After 18 months of workshops and various draft proposals, the DTSC has recently released the formal proposed regulations.  Here’s a summary of the proposal . . . .

The definition of a consumer product is very broad but does exempt dangerous drugs or devices; dental restorative materials; foods; pesticides; and  mercury- containing lights.  (Mercury-containing devices are only exempted from these regulations until December 31, 2011.)

Additionally, the list of authoritative entities that could be consulted in creating the priority chemicals list is expansive.  As defined by the regulation the DTSC may review a chemical listed as a carcinogen or a reproductive toxin, or both, pursuant to one or more of the following: 

• California Health and Safety Code section 25249.8 (Proposition 65);
• The National Toxicology Program Report on Carcinogens that lists chemicals known and reasonably anticipated to be human carcinogens; 
• United States Environmental Protection Agency chemicals classified as Known or  Likely (Group A, B1 or B2), as maintained on its Integrated Risk Information System, or equivalent weight-of-evidence classifications that result from subsequent revisions to its  “Guidelines for Carcinogen Risk Assessment”; 
• The International Agency for Research on Cancer Group I and 2A chemicals;  (E) The International Agency for Research on Cancer Group 2B chemicals where there  exists sufficient evidence of carcinogenicity in animals, even if evidence of carcinogenicity in  humans is inadequate; and 
• The European Union Classification and Labeling (Globally Harmonized System)  Category 1A and 1B chemicals.

After a chemical has been listed as a Chemical under Consideration or Priority Chemical, manufacturers (which has a broad definition) must submit an Alternatives Assessment Notification if they reformulate or redesign products to remove or reduce the concentration of that chemical, or replace the original product with an alternative product.  The Alternatives Assessments must be done by an accredited “Lead Assessor” (i.e., accredited by DTSC or an Accrediting Body designated by DTSC). 

When a Priority Chemical is listed in a Priority Product, an alternative analysis report shall provide sufficient detail to support the selection of an alternative, or a decision to retain the existing Priority Product in lieu of  an alternative and selection of appropriate regulatory response.  The regulations also specify that DTSC may require any of the following as regulatory responses that it determines are necessary to limit exposure to, and reduce the level of public health or environmental hazards posed by, a selected alternative, or a Priority Product for which an alternative is not selected:

• Product information for consumers;
• End-of-life product stewardship program;
• Product sales prohibition;
• Engineered safety measures to control access or limit exposure to the Priority Chemical in a product; and
• Restrictions on the use of the Priority Chemical.

Additionally, the proposed regulations include requirements for “responsible entities” to generate toxicity and ingredient data for product components developed in a complex global supply chain.  This requirement will be expanded exponentially once California’s Department of the Office of Health Hazard Assessment (“OEHHA”) issues its regulation expanding the types of hazard traits for which data could be requested.  OEHHA is currently considering public comments on its rulemaking.  The hazard traits currently being considered as part of the proposed regulation would extend beyond just carcinogenity and reproductive toxicity –  i.e., Proposition 65 hazard traits – to also include neurotoxicity, endocrine toxicity, epigenetic toxicity, totoxicity, phytotoxicity and others.

There will be a public hearing on the green chemistry regulations on November 1, 2010. 

*  Mr. Pollack is a guest author and is an attorney with Randy Pollack Law Office in Sacramento, CA.

REMINDER: Register for HPM's free webinar "The Evolution of the Park Doctrine" on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/) 

By Jeffrey K. Shapiro –

The de novo classification procedure was added to the FD&C Act in 1997 to create a middle pathway between the 510(k) process and full blown premarket application ("PMA") approval.  It is intended for devices that utilize novel technologies that are not risky enough to justify regulation under the burdensome PMA process, but which lack a predicate device that would allow 510(k) clearance.  Under the procedure, a 510(k) submission must first be denied with a “not substantially equivalent” letter.  Then, the submitter may request de novo classification.

With FDA cracking down on the creative use of predicates, particularly split predicates, the threat to device innovation is that novel technologies will inappropriately be subject to the PMA approval process.  This process is so onerous and expensive that some of these novel technologies will simply be abandoned.

One solution would be a timely and efficient de novo classification.  Unfortunately, the device center’s 510(k) Working Group looked at de novo and found that it is not efficiently implemented at present.  Their report showed that average review times for therapeutic devices sky rocketed from 254 days in 2005 to 904 days in 2008, to 752 days in 2009.  The review times for diagnostic devices were somewhat better, increasing from 261 days in 2005 to 308 days in 2008 and 448 days in 2009.

We call your attention to a study published in June 2010 by Boston Medtech Advisors.  The study report can be found here.  It confirms the general tenor of the 510(k) Working Group’s data, but provides greater detail and more sophisticated analysis.  It is also more comprehensive:  Boston Medtech Advisors reviewed FDA’s entire de novo database from 1998 to 2009.   The report is worth reading in its entirety.

We learn from the report that there have been a mere 54 successful de novo classifications in 11 years, 38 diagnostic devices and 16 therapeutic devices.  This figure alone suggests that FDA has used de novo infrequently.  To some extent, that is appropriate if the 510(k) process is sufficiently elastic in the use of predicate devices.  But with FDA tightening up the use of predicate devices, there needs to be a greater use of de novo classification.

FDA committed at the outset to complete review of de novo applications in 60 days.  Until the end of 2006, all but two reviews were completed within 100 days, with an average review time of 62 days (median 51).  Since 2007, however, only 4 of 13 applications were reviewed in less than 100 days, and the average review time has been 241 days (median 217).  When the 510(k) review time is added in, the overall de novo review times are almost twice as long as target review times for panel-track PMAs!  Obviously, this delay lessens the attractiveness of de novo review for a device that has been denied 510(k) clearance because it lacks a predicate device.

The larger point is that FDA has a serious timing problem with its reforms.  If FDA is going to restrict the use of predicate devices, there needs to be a safety valve short of full PMA approval that allows novel technologies to reach patients.  Otherwise, device innovation is simply going to be stifled.  Not every innovation is worth the time and expense of the PMA approval process.  At present, however, the de novo process takes too long and is not used often enough, especially for therapeutic devices. 

Our own experience is that FDA is already tightening up the use of predicate devices, even prior to implementation of the 510(k) Working Group's recommendations.  If FDA wishes to further restrict the use of predicate devices, it should reform the de novo process first, so that there is a viable alternative when 510(k) clearance is denied for lack of a predicate device.  If FDA does not do so, many useful new technologies will simply be abandoned, with patients being the losers.

REMINDER: Register for HPM's free webinar "The Evolution of the Park Doctrine" on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/)

By Kurt R. Karst –   

Just two days after Novartis Pharmaceuticals Corporation (“Novartis”) filed a Complaint in the U.S. District Court for the District of Columbia challenging FDA’s September 14th approval of Watson Laboratories, Inc.’s ANDA No. 78-278 for a generic version of the herpes drug FAMVIR (famciclovir) Tablets, FDA, on September 24th, updated the Agency’s drug approval database (Drugs@FDA) to show that ANDA No. 78-278 is tentatively approved.  FDA’s move could signal an end to the litigation. 

As we reported last Thurdsay, Novartis’s Complaint alleges that FDA failed to require a split certification (Paragraph IV certification and “section viii” statement) with respect to  U.S. Patent No. 5,246,937 (“the ‘937 patent”), one of five patents listed in the Orange Book for FAMVIR, and requests that the court enter an order requiring FDA to withdraw approval of ANDA No. 78-278 until March 21, 2011.  The ‘937 patent expired on September 21, 2010, but is subject to a period of pediatric exclusivity that expires on March 21, 2011.  The ‘937 patent was listed in the Orange Book in 1994 and has since been flagged with only a method-of-use; however, Novartis alleges that the ‘937 patent also includes compound claims that cannot be carved out with a “section viii” statement. 

Prior to August 2003, technological limitations prevented FDA’s Orange Book listings from reflecting the fact that an NDA sponder submitted a patent as claiming both a drug product or drug substance claim and a method-of-use claim.  ANDA No. 78-278 contained a “section viii” statement to the ‘937 patent (and to the other four Orange Book-listed patents, which are flagged with the same patent use code as the ‘937 patent), but not a certification to the patent.

Novartis followed up its Complaint with a Motion for a Temporary Restraining Order and Preliminary Injunction (“TRO/PI”).  As with the company’s Complaint, Novartis argues in its TRO/PI motion that FDA’s decision to approve ANDA No. 78-278 is inconsistent with a March 15, 2010 FDA citizen petition decision.  In that case, FDA said that the Agency would not consider ANDAs eligible for final approval unless such application contained an appropriate certification (i.e., a split certification) to patents listed in the Orange Book for ACTOS (pioglitazone HCI) Tablets and ACTOPLUS MET (pioglitazone HCl; metformin HCI) Tablets.

Last Friday, Judge John D. Bates issued a Minute Order in the FAMVIR case for a September 30, 2010 scheduling conference.  Provided FDA maintains the tentative approval for ANDA No. 78-278 there might not be much to discuss at that conference.

REMINDER: Register for HPM's free webinar "The Evolution of the Park Doctrine" on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/)

By Kurt R. Karst –   

On September 22, 2010, Novartis Pharmaceuticals Corporation (“Novartis”) filed a Complaint in the U.S. District Court for the District of Columbia challenging FDA’s September 14th approval of Watson Laboratories, Inc.’s ANDA No. 78-278 for a generic version of the herpes drug FAMVIR (famciclovir) Tablets.  Unlike many recent lawsuits against FDA challenging ANDA approval based on bioequivalence issues and that involve the first marketing of a generic, the Novartis lawsuit takes issue with patent certification/“section viii” labeling carve-out statement issues and involves a subsequent approval.  (Back in August 2007, FDA approved the first generic version of FAMVIR under ANDA No. 77-487 and granted 180-day exclusivity.)

FDA first approved FAMVIR under NDA No. 20-363 in June 1994.  FAMVIR is listed in the Orange Book with five patents, including U.S. Patent No. 5,246,937 (“the ‘937 patent”).   The ‘937 patent expired on September 21, 2010, but is subject to a period of pediatric exclusivity that expires on March 21, 2011.  The ‘937 patent was listed in the  Orange Book shortly after the approval of NDA No. 20-363, and has since been flagged with only a U-96 patent use code, which is defined in an Orange Book addendum as  “METHOD OF TREATING VARICELLA ZOSTER (SHINGLES) INFECTIONS.”

FDA’s approval letter for ANDA No. 78-278 states that the application contains a “section viii” statement with respect to each of the five Orange Book-listed patents (all five patents are flagged with the same U-96 patent use code).  According to Novartis, however:

The FDA approved Watson’s ANDA improperly in violation of the [FDC Act] and the Administrative Procedure Act ("APA"), 5 U.S.C. § 551, et seq., because (i) Watson's ANDA No. 78-278 did not satisfy a statutory precondition to FDA approval in that it failed to include a certification, pursuant to 21 U.S.C. Section 355(j)(2)(A)(vii), with respect to the compound claims in the '937 patent directed to famciclovir; and (ii) as reflected in the FDA's Orange Book, Novartis is entitled to marketing exclusivity with respect to those tablets until March 21, 2011.

That is, Novartis alleges that the ‘937 patent covered more than a method-of-use claim and required a patent certification in addition to a “section viii” statement – i.e., a split certification.  According to the Complaint:

Watson’s section viii statement was potentially sufficient only with respect to method of use claims in the ‘937 patent, but was insufficient with respect to the drug product claims in the '937 patent.  Where a patent has been submitted for Orange Book listing that claims both the drug product and a method of using the drug, FDA has repeatedly ruled that the ANDA applicant must address all claims for which the patent was submitted. (internal quotation omitted). 

Novartis relies on FDA’s March 15, 2010 citizen petition response to a Sandoz petition involving ACTOS (pioglitazone HCI) Tablets and ACTOPLUS MET (pioglitazone HCl; metformin HCI) Tablets to support its position.  As we previously reported, the Sandoz petition requested that FDA refuse to approve any ANDA for a generic version of ACTOS and/or ACTOPLUS MET if the ANDA includes a “section viii statement” with regard to certain Orange Book-listed patents, but does not also include a Paragraph IV certification to the respective patent (i.e., a split certification). 

As with the ‘937 patent, the patents at issue in the Sandoz petition were submitted to FDA for Orange Book listed prior to August 18, 2003 and were flagged with method-of-use claims.  August 18, 2003 is the date on which FDA’s June 2003 regulations implementing the FDC Act’s patent listing provisions went into effect, and when the Agency made a technological leap in identifying Orange Book-listed patents.  As FDA explained in its March 2010 petition response, prior to 2003, the “Orange Book database lacked the technological capacity to display a single patent as claiming more than one aspect of the drug.”  Patents submitted to FDA after August 18, 2003 may be identified in the Orange Book as covering the drug product, drug substance, and/or an approved method of use. 

FDA granted the Sandoz petition and stated that the Agency would consider ANDAs that do not address the relevant drug product claims in the patents at issue to be ineligible for final approval.  Why? Because according to FDA:

Under the plain language of the statute, the patent certification requirement is not triggered by the publication in the Orange Book of patent information submitted to FDA.  Rather, . . . the statute requires certification where the patent (or patent claim) claims a listed drug, and where the NDA holder is required to submit and has submitted that patent information to FDA.  This obligation to certify attaches regardless of whether that submission is accurately reflected in the Orange Book.  Thus, the pre-2003 technological limitations that prevented our Orange Book listings from reflecting the fact that [the NDA holder] submitted the patents as claiming both a drug product and a method of using that drug product do not limit [the NDA holder’s] rights to receive patent certifications for the drug product claims in the [patents at issue.]

It is unclear whether Novartis notified FDA when the company first submitted the ‘937 patent for Orange Book listing that the patent contains both method-of-use and drug product/drug substance claims.  It will certainly be an interesting case for Hatch-Waxman folks to watch!

UPDATE:

• Novartis also filed a Motion for a Temporary Restraining Order and Preliminary Injunction later on September 23rd.  

REMINDER: Register for HPM's free webinar "The Evolution of the Park Doctrine" on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/)

By Jennifer B. Davis –

On September 20, 2010, the Health Resources and Services Administration (“HRSA”) issued two Advanced Notices of Proposed Rulemaking and Requests for Comment (here and here) announcing its preliminary plans, and requesting stakeholder input, on how best to implement new authorities over the 340B Drug Pricing Program conferred by section 7102(a) of the Patient Protection and Affordable Care Act (“PPACA”).  We previously blogged about this and other drug- and device-related provisions of PPACA.

Among other mandates relating to the 340B Program, PPACA § 7102 requires HHS to adopt regulations establishing the standards and procedures for imposing civil monetary penalties on manufacturers that “knowingly and intentionally” overcharge covered entities for 340B Program drugs, as well as regulations prescribing the procedures for resolution of claims by covered entities that they have been overcharged, and claims by manufacturers that covered entities have violated the prohibition on duplicate discounts or rebates, and resale of 340B Program drugs.  The two recent Notices focus on these mandates. 

In the Notice concerning “Manufacturer Civil Monetary Penalties,” HRSA says it is reviewing the civil monetary (“CMP”) authorities currently used by other federal agencies such as the Office of Inspector General (“OIG”) of the Department of Health and Human Services, the Federal Aviation Administration, Treasury, the Food and Drug Administration and the Centers for Medicare & Medicaid Services to determine which parts of those procedures could be adapted for the 340B Program.  It is also considering the use and adaptation of the OIG’s CMP procedures codified at 42 CFR Part 1003.  HRSA requests comment on which portions of these existing models should be incorporated into the 340B Program CMP regulations, and on anticipated elements of the regulations – for example, the threshold criteria for deciding when to impose CMPs; the type of notice that should be issued to manufacturers and given to third parties and the public regarding proposed CMPs; the hearing and administrative appeals processes; and the method and criteria for computing the penalty.  Worth particular note is HRSA’s request for comment on its view of the “knowing and intentional” requirement.  HRSA contemplates a definition that allows “knowledge and intention” to be inferred from the circumstances and imputed to the manufacturer, even in cases where no single employee may have had knowledge of all the facts or an intention to overcharge.  HRSA also envisions that repeated violations could be considered “knowing and intentional” if, for example, a manufacturer repeatedly miscalculates a ceiling price or creates a system where overcharging is a highly likely consequence.

In the Notice regarding “Administrative Dispute Resolution Process,” HRSA seeks comment on what aspects of existing dispute resolution models – such as the current 340B Program voluntary dispute resolution guidelines – can be adapted to the new 340B dispute resolution regulations.  It also requests input on the standards and threshold requirements for bringing and requesting review of a claim; the role of and appropriate format and scope of a hearing requirement; the appropriate kind of decision-making official or body; the process for discovery of information from participating manufacturers and covered entities; the guidelines for the audit a manufacturer must conduct of a covered entity before bringing a claim; and when third party organizations can bring claims on behalf of member covered entities. 

Comments on both Notices are due by November 19.  HRSA says it will consider the comments in formulating its proposed regulations.  There will be another opportunity to comment on the proposals. 

Register for HPM's free webinar "The Evolution of the Park Doctrine" on October 8th. (link to registration: http://hpmwebinar.eventbrite.com/)

By Riëtte van Laack & Wes Siegner –

In recent consent decrees against Nestle, discussed here, and Iovate, discussed here, the Federal Trade Commission (“FTC”) appeared to be tightening its substantiation standard, prohibiting future claims for defendants’ food and dietary supplements unless they are supported by two well-controlled clinical studies.  A Complaint by POM Wonderful LLC (“POM”) against FTC filed on September 13, 2010, alleges that the FTC intends to apply this requirement to all claims for food and dietary supplements.  If POM’s allegations accurately reflect current FTC policy, the agency has embarked on a radical shift in direction on the core issue of advertising, substantiation of claims.

According to the Complaint, in its communications with POM, the FTC asserted that the standard described in these recent consent orders is the FTC’s “new standard.”  POM alleges that the standard is no longer “competent and reliable evidence,” which may vary case by case depending on the claim.  POM maintains that the FTC now asserts that “competent and reliable evidence” equates two well-controlled clinical studies.  Although the FTC Act authorizes the FTC to define the standard for substantiation, POM points out that the FTC must follow the proper process of notice and comment rulemaking, which the FTC has not done.  According to POM, FTC’s actions violate the FTC Act and the Administrative Procedures Act.

POM also alleges that the FTC now requires that FDA approve “certain health-related claims” for a food or dietary supplement, even if the claims are supported by two well-controlled clinical studies.  The requirement for approval by FDA was apparently first included in the recent consent decree against Nestle.  However, it was not clear from the decree that the FTC intended that this requirement would apply to parties not subject to the consent decree.  POM alleges that wholesale application of this requirement constitutes a violation of an advertiser’s First Amendment rights and is beyond FTC’s authority.  The FTC Act prohibits deceptive advertising; it does not authorize FTC to require that FDA approve claims in order for the claims to be non-deceptive.  Further, were the FTC to attempt to impose such a requirement, besides raising legal and constitutional issues, an approval requirement would be difficult if not impossible to implement in the many cases where the Federal Food, Drug, and Cosmetic Act requires approval but FDA exercises enforcement discretion or otherwise chooses not to require approval.

POM asks the Court to declare FTC’s new standard invalid.