By Kurt R. Karst –   

On July 26, 2010, the U.S. District Court for the District of Wyoming denied a Motion for Temporary Restraining Order and Preliminary Injunction filed last week by Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) against FDA in a case involving marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL products.  The 37-page opinion, which is nearly identical to the proposed Order submitted by FDA, also dismissed Cody/Lannett’s Complaint filed last week.

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

Cody/Lannett argued in their lawsuit that FDA should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on FDA’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act (“APA”) in determining that the product is a “new drug.”  Cody/Lannett also alleged that FDA violated the APA by not treating Cody/Lannett fairly in the NDA process.

In denying the injunctive and declaratory relief requested by Cody/Lannett, the court relied on the U.S. Supreme Court’s decision in Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594 (1950).  Ewing and its progeny “established that courts lack jurisdiction to enjoin FDA from initiating enforcement proceedings under the FDCA.”  Specifically, the Supreme Court held in Ewing that “district courts do not have jurisdiction to review an FDA determination to initiate an enforcement action under the FDCA, finding that ‘[j]udicial review of this preliminary phase of the administrative procedure does not fit the statutory scheme nor serve the policy of the FDCA.’”  Applying the Ewing decision to the current case, the district court ruled:

[T]he Supreme Court in Ewing has foreclosed the possibility that an injunction, like the one plaintiffs seek here, can be granted to halt FDA enforcement actions.  Because plaintiffs are attempting to enjoin an anticipated enforcement action, the well-settled precedent applies with all the more force.  Such relief would be without foundation and a wholly inappropriate interference with FDA’s charge to protect the public health.  FDA’s ability to enforce its statutory mandate would be frustrated if, prior to even determining that initiation of an enforcement action was warranted, a lawsuit could be brought against the Agency.  Because the relief sought by plaintiffs is clearly foreclosed by Ewing and its progeny, plaintiffs’ complaint must be dismissed.

Moreover, with respect to Cody/Lannett’s claim to grandfather status for their marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL products, the court commented:

By their very nature, plaintiffs’ claims cannot be evaluated as a question of pure law.  An enforcement action brought on behalf of FDA by the United States Department of Justice, alleging that Plaintiffs' drug may not be legally marketed because its composition and the conditions of use reflected in its labeling have changed since 1938, would provide the appropriate forum to resolve the factual basis for plaintiffs' dispute.

Alternatively, plaintiffs could can [sic] file a citizen petition at any time seeking FDA's views as to the claimed grandfather status of their drug, and FDA's response to such a petition constitutes final agency action subject to immediate judicial review under the APA. Plaintiffs failed to exhaust this much-utilized procedure under which they could have obtained FDA's view on an administrative record.

If this Court were to become involved in this matter now, it would need to apply the criteria in FDA's regulations to plaintiffs' drug and undertake an evaluation to determine whether plaintiffs' have produced sufficient evidence in support of their claim that their drug meets the requirements of the 1938 grandfather clause and is not a "new drug." [(citations omitted)]

The court further ruled that Cody/Lannett’s claim is not ripe for adjudication, because the companies seek to “enjoin a possible future FDA enforcement action to remove their unapproved morphine sulfate oral solution from the market.”  Cody/Lannett relied on FDA’s Warning Letter as evidence of imminent and inevitable Agency enforcement action.  Consistent with other court decisions (including the recent decision in Regenerative Sciences, Inc. v. FDA, although not cited by the court), however, the district court ruled that “the issuance of a warning letter by FDA does not constitute final agency action ripe for judicial review. . . .”

Even if FDA were to take enforcement action based on the fact that Cody/Lannett’s product is an illegally marketed unapproved new drug, the court ruled that the plaintiffs’ only defense – that their drug is grandfathered under the FDC Act’s 1938 grandfather clause – would fail:

Unless the evidence produced by plaintiffs establishes that there have been no changes whatsoever in the formulation, dosage form, potency, route of administration, indication for use, or intended patient population for their 20 mg/ml morphine sulfate oral solution since 1938, plaintiffs' drug does not qualify for the 1938 grandfather clause exemption. . . .  Plaintiffs admit that they have only been marketing their drug for the past five years and have failed to produce any pre-1938 labeling for their drug.  Thus, it is impossible for plaintiffs to demonstrate that their drug's "labeling contained the same representations concerning the conditions of its use" in 1938 that it presently contains. [(citations omitted)]

Finally, the district court disagreed with Cody/Lannett’s allegations that FDA acted unfairly in violation of the APA in considering Lannett’s NDA for Morphine Sulfate Solution Immediate-Release 20mg/mL.  “FDA did nothing more than follow its well established policies for the designation of certain NDAs for priority review,” according to the court.  “Because FDA gave everyone the same notice at the same time and encouraged all to apply, and now intends to do exactly what it said 15 months ago it would do, FDA's actions are not unreasonable.”

It is unclear whether Cody/Lannett will appeal the decision.  If the decision stands, FDA will likely use it as “Exhibit A” if any company expresses its intent to challenge FDA in court over the Agency’s Unapproved Drugs Initiative enforcement plans.

By Kurt R. Karst –

Earlier today, FDA issued its long-awaited response (45 pages) to a February 2003 citizen petition submitted to the Agency on behalf of Aventis Pharmaceuticals, Inc. (“Aventis”) concerning the approval of generic versions of the company’s anti-coagulant drug LOVENOX (enoxaparin sodium injection).  FDA approved LOVENOX in March 1993 under NDA No. 20-164.

Aventis requested that FDA not approve an ANDA for generic LOVENOX unless certain conditions are met – specifically, (1) “until enoxaparin has been fully characterized . . . unless the manufacturing process used to create the generic drug product is determined to be equivalent to Aventis’s manufacturing process for enoxaparin or the application is supported by proof of equivalent safety and effectiveness demonstrated through clinical trials;” and (2) “unless the generic product contains a 1,6 anhydro ring structure at the reducing ends of between 15 percent and 25 percent of its poly(oligo)saccharide chains.”  FDA granted Aventis’s petition with respect to item (2), and denied the petition in all other respects.  At the same time, FDA approved Sandoz Inc.’s ANDA (which presumably contains a 1,6 anhydro ring structure in the proper position and which will presumably be “AB” rated to LOVENOX in the Orange Book).  Sandoz is not a first-filer, and therefore, will not be awarded 180-day exclusivity.  As FDA explains in the Sandoz approval letter, 180-day exclusivity for generic LOVENOX, which is governed by the pre-Medicare Modernization Act version of FDC Act § 505(j), was triggered by a court decision and has since expired. 

Briefly, FDA explained in its petition response that the FDC Act:

does not require ANDA applicants to (1) completely characterize all the different polysaccharides of enoxaparin by isolating, purifying, and sequencing each of its unique polysaccharide chains and determining their relative abundance, (2) use the same manufacturing process as that used for the RLD, or (3) conduct clinical studies to demonstrate equivalent safety and effectiveness. 

For an ANDA applicant to demonstrate sameness of its active ingredient as compared to LOVENOX, the Agency considers five criteria (i.e., standards for identity): (1) equivalence of physicochemical properties; (2) equivalence of heparin source material and mode of depolyierization; (3) equivalence in disaccharide building blocks, fragment mapping, and sequence of oligosaccharide species; (4) equivalence in biological and biochemical assays; and (5) equivalence of in vivo pharacodynamic profile.  According to FDA, a robust showing on all five of these factors by a generic applicant would demonstrate that the molecular diversity of the generic is equivalent to that of enoxaparin, including with respect to the 1,6 anhydro ring structure. 

FDA’s petition response may have implications on other complex drug products for which ANDAs are pending at FDA.  While FDA claims that the Agency’s approach to determining enoxaparin sameness is consistent with the Agency’s previous ANDA approval decisions for heterogeneous polysaccharides, such as heparin and hetastarch, we would not be surprised if FDA is sued over its petition response and ANDA approval.

ADDITIONAL READING:

• FDA, Generic Enoxaparin Questions and Answers

• FDA, Establishing Active Ingredient Sameness for a Generic Enoxaparin Sodium, a Low Molecular Weight Heparin

By Kurt R. Karst –   

Earlier this week, Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) filed a Complaint and a Motion for Temporary Restraining Order and Preliminary Injunction in the U.S. District Court for the District of Wyoming requesting that the court enjoin FDA from taking any enforcement action with respect to their marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL products.  The lawsuit is (to our knowledge) the first challenge arising from FDA’s Unapproved Drugs Initiative, which was kicked off in June 2006 with the publication of the Agency’s Compliance Policy Guide (“CPG”).  FDA’s CPG articulates the Agency’s risk-based enforcement approach to taking enforcement action with respect to the manufacture and distribution of marketed unapproved drugs.  Under that policy, FDA gives higher priority to enforcement action against unapproved drugs in certain categories, including drugs that present direct challenges to the “new drug” approval and over-the-counter drug monograph systems (e.g., when a drug is approved under an NDA and other companies market the same product without approval). (An article we authored that appeared in RAPS Focus a couple of years ago discussing the world of marketed unapproved drugs is available here.)

The Cody/Lannett lawsuit stems from FDA’s March 2009 decision to issue Warning Letters to nine companies, including Cody and Lannett, to stop manufacturing fourteen unapproved narcotic drugs, such as high concentrate morphine sulfate oral solutions, morphine sulfate immediate release tablets, hydromorphone, and oxycodone (see our previous post here).  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”

Shortly thereafter, in April 2009, FDA announced that the Agency would reverse course to allow the continued marketing and distribution of one of the drug products – Morphine Sulfate Solution Immediate-Release 20mg/mL – on an interim basis due to concerns over a drug shortage, and sent letters to the affected parties, including Cody and Lannett.  (see our previous post here)  Specifically, FDA stated that the Agency would exercise discretion not to take enforcement action “until 180 days after any firm receives approval for a morphine sulfate oral solution 20 mg/ml product.” 

FDA approved an NDA for Morphine Sulfate Solution Immediate-Release 20mg/mL on January 25, 2010.  In follow-up letters sent to Cody and Lannett (here and here) in March 2010, FDA stated that consistent with the Agency’s previous communications, FDA would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL until July 24, 2010.  Meanwhile, Lannett submitted its own NDA to FDA in late February 2010.  Cody/Lannett have continued to market their unapproved morphine sulfate products, but have reportedly encountered problems in obtaining quota from the Drug Enforcement Administration for additional raw material to manufacture new product – apparently as a result of FDA’s position on this unapproved drug.

Enter the lawyers . . . .

Cody/Lannett argue in their lawsuit that FDA should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on FDA’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act (“APA”) in determining that the product is a “new drug.”  Specifically, Cody/Lannett argue that:

The FDA failed to develop an adequate record to support its determination that the Product is a “new drug” that does not fall within the grandfathering provisions of the FDCA. . . .  By failing to develop an adequate record for its determination that the Product is a “new drug” for purposes of the FDCA, the FDA acted arbitrarily, capriciously, contrary to law, and abused its discretion in violation of the APA in reaching such a determination.

The 1938 and 1962 grandfather clauses in the FDC Act have been construed very narrowly by FDA and the courts.  FDA believes that there are few, if any, marketed drugs that are actually entitled to grandfather status, because the drugs currently on the market likely differ from the previous versions in some respect, such as formulation, dosage form, strength, method of manufacture, route of administration, indications or intended patient population.  If a company claims that its product is grandfathered, FDA considers it the firm’s burden to prove that assertion.  FDA stated in the Agency’s 2006 CPG that it believes “it is not likely that any currently marketed prescription drug product is grandfathered or is otherwise not a new drug,” but recognizes that “it is at least theoretically possible” that such a product exists.

Cody/Lannett take aim at FDA’s 2006 CPG in their lawsuit, stating that the CPG “operated effectively to render the grandfather provisions of the FDCA inoperative,” and that the CPG “is contrary to the express terms of the statutory grandfather provisions of the FDCA, through which Congress expressed an unequivocal intent that the FDCA apply only prospectively to ‘new drugs’ and not retroactively to drugs on the market at the time of its passage.”

Cody/Lannett also allege that FDA violated the APA by not treating Cody/Lannett fairly in the NDA process.  Specifically, that FDA provided another company “greater assistance in moving through the NDA process” and by creating “substantial delays in scheduling meetings with Cody/Lannett and denying Cody/Lannett’s request for expedited treatment of its NDA.”

By Nisha P. Shah –

A U.S. District Court recently held that misrepresentation and false description of active ingredients by a manufacturer of generic prescription vitamins can be actionable under the Lanham Act.  Sciele Pharma, Inc. v. Brookstone Pharmaceuticals, LLC.  
 
Plaintiff, Sciele Pharma, Inc., develops and sells branded prescription products, including the prenatal vitamins PRENATE ELETE and PRENATE DHA.  An alleged unique feature of PRENATE is that it contains a 1 mg combination of 400 mcg of folic acid and 600 mcg of L-Methylfolate (“L-MTHF”), a bioactive form of folate that does not require additional metabolism by the body. Defendant, Brookstone Pharmaceuticals, LLC, a/k/a Acella Pharmaceuticals, LLC, develops and sells generic prescription prenatal vitamins called PNV and PNV-DHA.  Defendant’s labels and package inserts represent that PNV vitamins contains the same combination of folate as the PRENATE vitamins. 

However, plaintiff asserts in this litigation that defendant’s vitamins do not contain L-MTHF, but rather a different dietary ingredient known as D,L-MTHF.  This ingredient allegedly contains an equal mixture of the L-isomer and D-isomer of MTHF.  According to plaintiff, D,L-MTHF and L-MTHF are recognized as distinct dietary ingredients.  Plaintiff also claims that the presence of the D-isomer may be harmful to women taking the PNV vitamins. 
 
Plaintiff argues that defendant’s labels and package inserts for PNV vitamins are false and likely to deceive consumers, pharmacists, and others in the pharmaceutical distribution chain as to the content of the vitamins.  Since PNV vitamins are cheaper than PRENATE vitamins, plaintiff contends that pharmacists could decide to substitute PNV for PRENATE, despite having different active ingredients.  Plaintiff asserts claims under (1) the Lanham Act for false advertising and unfair competition, and (2) the Georgia Uniform Deceptive Practices Act.  Defendant filed a motion to dismiss on the grounds that the Federal Food, Drug, and Cosmetic Act (“FDCA”) precludes plaintiff from bringing Lanham Act claims.

The Court initially recognizes that the FDCA does not allow for a private right of action and that a tension exists between the FDCA and the Lanham Act in cases involving products regulated by FDA.  Further, the Court remarks that plaintiffs cannot use the Lanham Act as a vehicle to enforce the FDCA. 

Nevertheless, the Court looks at “the extent to which the plaintiff relies on the FDCA as the basis for its claim, or alternatively the extent to which the claim would require the Court to interpret or apply the FDCA or FDA regulations.”  Id. at *10.  According to the Court, “plaintiff credibly argues” its claim that defendant is misrepresenting the content of the PNV vitamins “can, and will, be proven without reference to the FCDA.”  Id. at *12.  In rejecting defendant’s motion, the Court concludes that “the simple fact that a Lanham Act claim touches upon an area that is within the purview of the FDCA is not a bar to proceeding,” and that “the Lanham Act prohibits exactly the type of misconduct that plaintiff alleges in its complaint: the misrepresentation and false description of the nature of the product.”  Id. at *12-13.

The Court similarly dismisses Brookstone’s second motion to dismiss on the merits of the Lanham Act claims.  Defendant argues that plaintiff’s claims cannot success because defendant complied with Georgia law on pharmaceutical substitution and that the disclaimers used with the vitamins insulate defendant from Lanham Act liability.  According to the Court, at the motion to dismiss stage, it must accept as true plaintiff’s allegations that the L-MTHF in PRENATE vitamins and the D,L-MTHF in the PNV vitamins are distinct dietary ingredients, and therefore, the two vitamins are not legally substitutable.  If plaintiff’s claims are accurate, the Court concludes that defendant’s misrepresentation is “unquestionably actionable under the Lanham Act.”  Id. at *14-15.  Moreover, the Court agrees with plaintiff’s argument that the disclaimer issue is better resolved on a motion for summary judgment or at trial. 

The Court also addresses several other motions, including the Court’s grant of plaintiff’s motion to remove the confidentiality designation to documents that (1) identify defendant’s manufacturers and suppliers, and (2) state the current formulation and/or ingredients of PNV vitamins, as both types of documents are not considered trade secrets. 

ADDITIONAL READING:

• March/April 2010 issue of FDLI Update article – The Lanham Act: Another Vehicle to Enforce the FDC Act?

By Kurt R. Karst –   

Earlier this week, Rep. Jan Schakowsky (D-IL), along with Reps. Ed Markey (D-MA) and Tammy Baldwin (D-WI), introduced H.R. 5786, the Safe Cosmetics Act of 2010.  The bill would significantly change the regulatory structure of cosmetics in the U.S., more closely aligning it with other FDA-regulated products, such as drugs, biologics, and medical devices. 

Except for color additives, there is no requirement today that a cosmetic establishment be registered with FDA or that a cosmetic ingredient be approved by, or even listed with, FDA prior to use.  Instead, FDA administers voluntary cosmetic establishment registration and ingredient filing programs (21 C.F.R. Parts 710 & 720).  Currently, FDC Act § 601(a) simply establishes a general principle that a cosmetic shall be deemed to be “adulterated” (and thus subject to regulatory action by FDA) “[i]f it bears or contains any poisonous or deleterious substance which may render it injurious to users under the conditions of use prescribed in the labeling thereof, or, under such conditions of use as are customary or usual. . . .”  FDA’s regulations prohibit or restrict the use of certain ingredients in cosmetics.  Most of these regulations appear in 21 C.F.R. part 700.  FDA would consider a cosmetic containing an ingredient in violation of any of the prohibitory regulations to be adulterated.  FDA may initiate regulatory action (including, for example, a civil seizure action in a U.S. district court, or a request for recall) whenever the Agency concludes that a particular ingredient used in a cosmetic product violates the general adulteration standard of  FDC Act § 601(a).

The Safe Cosmetics Act of 2010 would maintain current FDC Act §§ 601-603 concerning adulterated and misbranded cosmetics, but would amend the FDC Act to add a new subchapter on the regulations of cosmetics.  H.R. 5786 would, among other things:

• Require domestic and foreign establishments that manufacture, package, or distribute cosmetics to register annually with FDA, including providing FDA with contact information, a description of the establishment’s activities, gross receipts, the number of employees, and the name and address of any company that supplies a cosmetic manufacturing establishment with ingredients for its products.  FDA would be required to make its registration list publicly available, but not the registration documents.  Establishments would also be required to provide detailed product-specific information to FDA;

• Require FDA to establish a “schedule of fees . . . to provide for oversight and enforcement” of the new FDC Act subchapter on the regulation of cosmetics.  Such fees would be prorated based on an establishment’s gross receipts or sales, and would only be assessed on companies with annual gross receipts or sales of more than $1 million;

• Require, within one year after the date of enactment of the Safe Cosmetics Act of 2010, “the label on each package of cosmetics, including cosmetics distributed for retail sale and professional use, to bear a declaration of the name of each ingredient in such cosmetic in descending order of predominance.”  A similar requirement applies to Internet vendors with respect to providing ingredient information;

• Require manufacturers and distributors of cosmetics and ingredients to submit (in an electronic format) to FDA, not later than one year after the date of enactment of the Safe Cosmetics Act of 2010, “all reasonably available information in the possession or control of the manufacturer or distributor that has not previously been submitted to [FDA] regarding the physical, chemical, and toxicological properties of single or multiple chemicals listed on the cosmetic labels,” including function and uses, tests of cosmetics, and exposure and fate information;

• Require FDA to issue regulations not later than two years after the date of enactment of the Safe Cosmetics Act of 2010 that includes lists of ingredients  identified by the Agency as “prohibited ingredients,” “restricted ingredients,” or  “safe without limits” for use in cosmetics.  FDA must also develop a “priority assessment list of not less than 300 ingredients” that cannot be included on the above-referenced lists “because of a lack of authoritative information on the safety of the ingredient.”  FDA must make safety determinations for these ingredients.  

• Prohibit companies from manufacturing, importing, distributing, or marketing a cosmetic or cosmetic ingredient if the company failed to provide information to FDA as required under the bill or if the company’s products contain non-permitted ingredients;

• Require responsible parties to notify FDA if a marketed cosmetic “is adulterated or misbranded in a manner that presents a reasonable probability that the use or exposure to the cosmetic (or an ingredient or component used in any such cosmetic) will cause a threat of serious adverse health consequences or death to humans.”  FDA may request a voluntary recall of the affected products, issue an order for the company to cease distribution, and, under certain circumstances, require a recall or issue an emergency recall order;

• Give FDA the authority to require that cosmetics containing “nano-scale” materials be labeled as such;

• Mandate the reporting of adverse health effects associated with the use of a cosmetic; and

• Require FDA to publish a list of “alternative testing methods” that do not involve the use of animals to test a chemical substance and that must be used in product testing where practicable.  (As we recently reported (here and here), FDA was sued by a coalition of animal rights advocates for not substantively responding to a November 2007 citizen petition requesting that Agency require drug and device companies to submit data only from non-animal test methods whenever available.  FDA subsequently denied the citizen petiton and explained that there are currently no suitable non-animal alternatives to the testing necessary for FDA to conclude that a drug or device is safe for human use.)  

The introduction of H.R. 5786 comes just days after The Personal Care Products Council (“PCPC”) (formerly CTFA) announced that the organization had sent a letter to key health policy leaders in Congress outlining “a number of new science-based regulatory changes that we believe should be adopted in legislation that would further strengthen the effective FDA regulation of our products – including FDA reviews of cosmetic ingredients.”  The PCPC proposal includes enhanced FDA registration, a new process to set safety levels for trace constituents, a new FDA ingredient review process, new FDA oversight of Cosmetic Ingredient Review findings, and FDA-issued Good Manufacturing Practices.  Several of these proposal are included in H.R. 5786 in one form or another.

By Susan J. Matthees –

FDA recently announced that the Agency is seeking public comments on how to implement section 4205 of the Patient Protection and Affordable Care Act of 2010 (“PPACA”), which requires certain restaurants and vending machines to disclose nutrition information.  The docket opened on July 7 and will remain open for comment for 60 days. 

Under PPACA § 4205, chain restaurants and retail food establishments with 20 or more locations doing business under the same name and offering for sale substantially the same menu (“chain restaurants”) as well as  vending machine owners or operators with 20 or more vending machines must display certain nutrition information.  The law does not limit the location count to the United States, so it is not clear whether restaurants and vending machines outside the US count towards the 20 limit. Chain restaurants with drive-through menus must display calorie information next to each standard menu item.  All chain restaurants also must include on  menus  the Secretary of the Department of Health and Human Services’ (“the Secretary”) statement on suggested daily caloric intake, provide  written  nutrition information to customers upon request, state on menus that written nutrition information is available, and, for self-service foods (e.g., buffets), include  calorie disclosures next to each food.  The Secretary must pass regulations that establish how nutrition content will be disclosed for standard menu items that are offered in a variety of flavors or combinations (e.g., pizza, ice cream). 

Vending machines must bear calorie disclosures for each item offered for sale unless the Nutrition Facts panel for a food is available for the customer to view before purchasing food. 

FDA seeks input on a number of matters related to implementing the law, including:

• The types, sizes and nature of activities of chain restaurants, and size of chain vending machine operators;
• Current practices with respect to the use of menus and menu boards, including the disclosure of nutrition information on menus and menu boards;
• The disclosure of calorie content  in self-service areas and for vending machine foods;
• The calorie disclosure statement to be established by the Secretary  for addition to  chain restaurant menus;
• Methods on how to achieve nutrition disclosure for menu items offered in a variety of flavors and combinations;
• Categories that should be exempt from the disclosure requirements;
• Estimated number of chain restaurants and vending machine operators that might be affected by the law and those that might voluntarily comply;
• How to determine calorie content of foods offered by chain restaurants; and
• How to display the Nutrition Facts panels on vending machines.

The comment period closes on September 5.

By Kurt R. Karst –   

Last week, the U.S. Court of Appeals for the Federal Circuit denied Lupin Pharmaceuticals, Inc.’s (“Lupin’s”) Petition for Rehearing en banc of a May 10, 2010 panel decision in Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc. in which the Court affirmed a May 2009 decision from the U.S. District Court for the District of New Jersey that the Patent Term Extension (“PTE”)  granted by the U.S. Patent and Trademark Office (“PTO”) with respect to U.S. Patent No. 5,053,407 (“the ‘407 patent”) covering Ortho McNeil’s (“Ortho’s”) LEVAQUIN (levofloxacin) is valid.  The Court’s May 2010 panel decision, which was issued on the same day as the Federal Circuit’s decision landmark PTE decision in Photocure ASA v. Kappos, and the Court’s July 2010 denial of Lupin’s rehearing petition leave  standing an interesting dichotomy with respect to the treatment of single enantiomers in previously approved racemates insofar as the availability of PTEs and New Chemical Entity (“NCE”) exclusivity are concerned.

Levofloxacin is an enantiomer in the previously approved Ortho racemate drug product FLOXIN (ofloxacin).  Lupin initially challenged the ‘407 patent PTE in the context of ANDA Paragraph IV Certification patent infringement litigation on the grounds that the PTE is invalid because FDA previously approved the active ingredient levofloxacin when the Agency approved the racemate ofloxacin.  (See our previous post here.)

Under the PTE statute at 35 U.S.C. § 156(a)(5)(A), the term of a patent claiming a drug shall be extended from the original expiration date of the patent if, among other things, “the permission for the commercial marketing or use of the product . . . is the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred.”  The term “product” is defined at 35 U.S.C. 156(f)(2) to mean, in relevant part, “the active ingredient of – a new drug, antibiotic drug, or human biological product . . . including any salt or ester of the active ingredient, as a single entity or in combination with another active ingredient” (emphasis added).  (The term “active ingredient” is defined in FDA’s regulations to mean “any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure of any function of the body of man or of animals.”) 

For several years, the PTO had interpreted  the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active moiety” (i.e., the molecule in a drug product responsible for pharmacological action, regardless of whether the active moiety is formulated as a salt, ester, or other non-covalent derivative) rather than “active ingredient” (i.e., the active ingredient physically found in the drug product, which would include any salt, ester, or other non-covalent derivative of the active ingredient physically found in the drug product).  In contrast, the Federal Circuit’s 1990 decision in Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392, 13 USPQ2d 1628 (Fed. Cir. 1990) (“Glaxo II”), construed the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active ingredient.”  The Federal Circuit’s May 2010 decision in Photocure and Ortho-McNeil, both of which concerned the proper interpretation of 35 U.S.C. § 156(a)(5)(A), ruled that the Glaxo II decision and its “active ingredient” interpretation of the PTE statute should be applied for PTE purposes. 

In contrast, FDA has for decades, treated single enantiomers of previously approved racemates as previously approved drugs not eligible for 5-year NCE exclusivity (but eligible for three-year new clinical investigation exclusivity).  For example, FDA stated in the preamble to its 1989 proposed regulations implementing the Hatch-Waxman Amendments that “FDA will consider whether a drug contains a previously approved active moiety on a case-by-case basis.  FDA notes that a single enantiomer of a previously approved racemate contains a previously approved active moiety and is therefore not considered a new chemical entity.”  FDA still adheres to this policy today, although the FDA Amendments Act of 2007 amended the FDC Act to add § 505(u), which permits the sponsor of an NDA for an enantiomer (that is contained in a previously approved racemic mixture) containing full reports of clinical investigations conducted or sponsored by the applicant to “elect to have the single enantiomer not be considered the same active ingredient as that contained in the approved racemic drug,” and thus be eligible for NCE exclusivity.

The dichotomy between the treatment of enantiomers in previously approved racemates with respect to PTE and NCE exclusivity eligibility was at the heart of Lupin’s Petition for Reconsideration.  Lupin argued that: 

The FDA and PTO abused their discretion when they applied two conflicting interpretations to the same words – “active ingredient” – in the same legislation – the “Hatch-Waxman Act.”  Thus, the district court and the panel erred in failing to consider the important legal issue: what the term “active ingredient” means and how it should be applied to enantiomers.  The Court should grant this petition for rehearing en banc to adopt and apply a consistent definition of “active ingredient” and to reverse the district court’s determination that the [PTE] was properly based on the approval of LEVAQUIN®, which contained the previously approved enantiomer, levofloxacin, as its active ingredient.

Lupin also relied on the Federal Circuit’s 2004 decision in Arnold Partnership v. Dudas to build its case.  In that case, which concerned the availability of a PTE for a combination drug, the Court ruled that “the [PTE] statute places a drug product with two active ingredients, A and B, in the same category as a drug product with a single ingredient . . . .  To extend the term of a patent claiming a composition comprising A and B, either A or B must not have been previously marketed.”  In reaching its decision in Arnold Partnership, the Court relied on FDA’s regulations to construe the term “active ingredient” as used in the PTE statute.  Applying the concept that “[w]hen the same term appears in multiple locations in the same Congressional Act, it is generally considered to have the same meaning each time,” Lupin argued (unsuccessfully) that “the term ‘active ingredient’ should be construed to have the same meaning when it appears in the [PTE] provisions of the Hatch-Waxman Act . . . and in the new product exclusivity provisions of the Hatch-Waxman Act,” such that the PTO should have considered levofloxacin to have been previously approved in ofloxacin and not granted a PTE with respect to the ‘407 patent covering LEVAQUIN.

By Kurt R. Karst –   

As the U.S. Senate Committee on Appropriations begins its markup and consideration of appropriations bills for Fiscal Year (“FY”) 2011, and in particular the Agriculture, Rural Development, FDA, and Related Agencies Appropriations bill (S. 3606), rare and neglected disease (i.e., orphan disease) advocates appear to be poised to make big gains (once again!). 

The FY 2011 Senate bill includes a $2 million increase (for a total of  $16,035,000) for FDA’s Orphan Product Development Grant program.  The FY 2010 funding for the program was about $14 million, of which approximately $10 million funded noncompeting continuation awards, and approximately $4 million of which funded 10 to 12 new awards.  The FY 2011 increase is the first since FY 2005.

The FY 2011 Senate bill also includes funding of $1 million for the new Office of the Associate Director for Rare Diseases in the Office of New Drugs in FDA’s Center for Drug Evaluation and Research (“CDER”).  FDA announced the position of Associate Director for Rare Diseases in February 2010.  This orphan drug czar “will serve as CDER’s focal point to the rare disease drug development community and assist stakeholders and developers of drug and biologic products in navigating the complex regulatory requirements for bringing safe and effective treatments to patients in need.”  The $1 million funding will be used to hire additional staff with specific expertise in facilitating the development and review of products to treat rare and neglected diseases. 

Finally, we understand that the manager’s package that will hopefully be adopted by the Appropriations Committee will include the provisions below, which are intended to build on § 740 of the Agriculture, Rural Development, FDA, and Related Agencies Appropriations Act of 2010 (Pub. L. No. 111-80) co-sponsored by Senators Sam Brownback (R-KS) and Sherrod Brown (D-OH).  As we previously reported, the Brownback/Brown amendment requires FDA to convene a committee of expert Agency employees to consider the ways FDA reviews products to treat people with rare and neglected diseases, and consider policy improvements that might help people with rare diseases get better treatments faster.

The proposed language in the manager’s package (tentatively identified as § 741 in Senate Report 111-221 accompanying S. 3606) states:

Sec. __. (a) When implementing the authority provided in paragraphs (2) and (3) of section 740(c) of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2010 (Public Law 111-80) that requires the Commissioner of Food and Drugs to develop updated guidance documents and review standards for the development of safe and effective products to treat rare diseases and neglected tropical diseases, the Commissioner shall —

(1) maximize the use of accelerated approval where feasible and appropriate;

(2) work with sponsors to facilitate expanded access to investigational therapies;

(3) increase coordination and interaction with the World Health Organization, European Medicines Agency, and other international regulatory agencies;

(4) implement mechanisms for enhanced collaboration between the Food and Drug Administration and National Regulatory Authorities in developing countries;

(5) develop guidance on clinical development programs for rare diseases;

(6) develop guidance on the use of surrogate endpoints that are reasonably likely to predict clinical benefit of drugs and biological products under the regulations under subpart H of part 314 of title 21, Code of Federal Regulations and subpart E of part 601 of title 21, Code of Federal Regulations; and

(7) increase coordination among individual drug, biological product, and device review divisions across Food and Drug Administration centers to support the development of safe and effective medical products for rare and neglected diseases.

(b) The Commissioner of Food and Drugs shall submit a report to the Committee on Appropriations of the Senate and the Committee on Appropriations of the House of Representatives not later than 180 days after the report required in section 740(c)(1) of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2010 (Public Law 111–80) is submitted: Provided, That the report submitted in response to this section shall describe in detail how the Food and Drug Administration is implementing subsection (a).

The latest legislative push to address rare and neglected disease issues has been spearheaded by the National Organization for Rare Disorders (“NORD”) and Dr. Emil Kakkis’s Kakkis EveryLife Foundation.  NORD has issued a press relase on the FY 2011 appropriations bill.  The NORD Board of Directors is chaired by Hyman, Phelps & McNamara, P.C. Director Frank J. Sasinowski.

There have been several events leading up to the appropriations bill language.  On June 23, 2010, the Senate Appropriations Committee held a hearing to discuss FDA’s review process for products to treat rare and neglected diseases.  That hearing was followed up by a two-day FDA public hearing on the same topic (see our previous post here).  In addition, Representatives Joseph Crowley (D-NY) and Fred Upton (R-MI) recently announced the establishment of the Rare and Neglected Diseases Caucus.

In the May/June 2010 edition of FDLI Update, HP&M Director John R. Fleder published his latest article on enforcement matters.  This article is entitled “Whistleblowers: Treat Them With Kid Gloves.”  The article addresses various issues that companies face when they are confronted with employees who raise complaints within a company about its compliance with regulatory requirements.  The article discusses how one company benefitted from having generated contemporaneous documents that refuted allegations that a company employee (and potential whistleblower) had made about the company's alleged failure to comply with FDA-related requirements.  The article also discusses the current government enforcement environment in which a large percentage of cases brought these days are based on whistleblower complaints.  Finally, the article provides a number of practical suggestions for companies with regard to their treatment of potential and actual whistleblowers.

By Peter M. Jaensch –

On July 14, 2010, the Federal Trade Commission (“FTC”) announced an agreement with Nestle HealthCare Nutrition, Inc. (“Nestle”) to settle an FTC investigation with regard to alleged false and misleading health claims. The FTC's Complaint arose from claims made by Nestle for its beverage product, BOOST Kid Essentials, which employs an attached straw to deliver probiotics to the drinker.  According to the Complaint, Nestle claimed in various advertisements that clinical studies showed that the product (1) strengthened children’s immune systems, (2) reduced the duration of acute diarrhea in children, (3) reduced illness-related absences from school and childcare, and (4) reduced fevers among infants. The Complaint asserted that clinical studies did not support these claims.

As part of the settlement, Nestle agreed to a Consent Order with some unusual, if not novel, provisions:

(1) Nestle agreed not to claim that the product prevents or reduces the risk of upper respiratory tract infections, unless labeling for such claims is approved by the Food and Drug Administration under the Nutrition Labeling and Education Act of 1990.  We cannot recall many, if any, prior FTC Orders or Injunctions that contain specific language that a company cannot make a claim unless the claim is approved by FDA.  Instead, the FTC has, for years, included a provision in numerous health claim orders that exempt claims from coverage under an Order if the FDA has specifically approved labeling for that claim.

(2) Nestle also agreed in Part II of the Order to cease making claims that the product reduces the duration of acute diarrhea and reduces illness-related daycare or school absences, unless it possesses "competent and reliable scientific evidence" which the Order defines as at least "two adequate and well-controlled human clinical studies" substantiating the representation. The Order specifies that these studies must be double-blinded and placebo-controlled, unless such conditions would be impossible to effectively and ethically implement. This language is a marked change from the language previously employed by the FTC in defining the substantiation an advertiser must possess.

(3) In Part III of the Order, the FTC prohibits other claims from being made unless Nestle has adequate substantiation.  It is interesting that for these other claims, the Order employs a totally different definition of what constitutes "competent and reliable scientific evidence." 

(4) It is also notable that although Nestle made the claims specifically for children up to age 13, the scope of the restrictions in the Order is not so limited.

In recent speeches, FTC officials had been stating that they intend to make their orders more specific.  This was, in part, a response to the agency's failed effort to hold Lane Labs in contempt of its previous consent order.  The district court there held that the issue was "a battle of experts" and found the company's experts more persuasive.  In the recent amended order against Kellogg, the FTC added to its "competent and reliable" standard the requirements that the evidence be "sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields" and that the evidence be "considered in light of the entire body of relevant and reliable scientific evidence."  Those phrases were added to the Nestle order, along with the specific requirement of two adequate and well-controlled studies.

Hyman, Phelps & McNamara, P.C. (“HP&M”) is pleased to announce that Diane B. McColl has been elected to  the U.S. Pharmacopeial Convention’s (“USP’s”) Expert Committee for the Food Chemicals Codex (Monographs – Food Ingredients) for the 2010-2015 cycle.  The committee develops new monographs and revises existing monographs and their associated reference materials for food ingredients, as well as for contaminants/adulterants, flavors and extracts, additives, and colorants.  Ms. McColl, who is also a pharmacist, is the only attorney elected to the Expert Committee for the Food Chemicals Codex (Monographs – Food Ingredients).  Additional information on USP Expert Committees is available here.

On July 14th, the FTC announced the settlement of a significant false advertising case against Iovate Health Sciences U.S.A. and Canadian affiliates for false weight loss, cold, flu and allergy claims relating to 5 of the company's products.   The settlement includes $5.5M for refunds to consumers, and represents a continuation of the FTC's focus on the weight loss and immune/cold/flu dietary supplement categories. The case illustrates two aspects of advertising that can be expected to result in increased scrutiny — the use of actors dressed to look like doctors, and claims that products are "clinically proven." Just over one year ago, Iovate conducted a significant recall of one of its major products, Hydroxycut, as a result of adverse event reports that the product was associated with liver damage.

By Kurt R. Karst –   

Although it took a little longer than we expected, late last week, Graceway Pharmaceuticals, LLC (“Graceway”) sued FDA in the U.S. District Court for the District of Columbia requesting declaratory and injunctive relief with respect to the Agency’s January 2010 denial of a Graceway citizen petition and approval of a generic version of Graceway’s ALDARA (imiquimod) Cream, 5%.

As we previously reported, the primary issue raised in the Graceway petition was whether a generic applicant can demonstrate bioequivalence for a multi-indication Reference Listed Drug (“RLD”) with a comparative clinical trial in just one indication.  Graceway requested that FDA refuse to approve ANDAs for generic versions of ALDARA Cream unless such applications contain, among other things, data from bioequivalence studies conducted in patients with each of ALDARA’s three approved indications – actinic keratoses (“AK”), primary superficial basal cell carcinoma (“sBCC”), and external genital and perianal warts/condyloma acuminata (“EWG”). 

FDA has long held (see e.g., Docket No. FDA-1995-P-0044) that a clinical endpoint bioequivalence study in one indication for a multi-indication RLD can suffice as proof of bioequivalence in another indication when the indications are “related” and involve the “same site of action.” 

In 2008, FDA denied a citizen petition raising issues similar to those in the Graceway petition.  In that case, FDA ruled, in the context of approving ANDAs for generic versions of EFUDEX (fluorouracil) Topical Cream, 5%, which is approved for AK and sBCC, that “even when clinical trials are needed, it has not been the Agency’s policy to require that bioequivalence be shown in every indication if drug release from the dosage form and appearance at the or sites of activity has been demonstrated.”  FDA’s decision was challenged in court, and, as we previously reported, in September 2009, the U.S. District Court for the Central District of California ruled in FDA’s favor, leaving intact FDA’s stellar batting average in bioequivalence decision court challenges.  (The September 2009 decision falls in between FDA wins (here and here) in challenges concerning generic PROGRAF (tacrolimus) and generic ZOSYN (piperacillin sodium; tazobactam sodium) ANDA approval requirements.) 

FDA concluded in the Graceway petition response that a well-designed study in AK will suffice to show bioequivalence of a generic version of ALDARA for all indications.  Just a few weeks later – on February 25, 2010 – FDA approved Nycomed US Inc.’s (“Nycomed’s”) ANDA No. 78-548 with 180-day exclusivity, even though there was a failure to obtain tentative ANDA approval within 30 months of ANDA submission (see our previous post here).  FDA also issued a draft bioequivalence recommendation for applicants seeking approval of an ANDA for Imiquimod Cream, 5%, in which the Agency, consistent with its petition response, recommends a single clinical endpoint bioequivalence study in the treatment of AK.

Graceway alleges in its complaint, which challenges only FDA’s conclusion that a single clinical endpoint bioequivalence study in the treatment of AK suffices to demonstrate bioequivalence in EWG and not FDA’s determination that a single study in AK patients suffices to demonstrate bioequivalence in sBCC, that:

FDA’s decision not to require bioequivalence studies in patients with [EWG] was based on its unsupportable conclusion that genital warts are “related” to and share the same “site of action” as the other two conditions treated by Aldara, both of which result from sun exposure.  This determination was unsupported by – and in fact, contrary to – basic science, common sense, and the agency’s previous actions in similar situations.  While Graceway is not contesting for the purposes of this lawsuit that AK and [sBCC] may be “related” in the sense that both result from sun exposure, neither has anything in common with genital warts, which appear in the pubic area and are caused by an infectious disease – a sexually-transmitted virus. [(internal citation omitted)]

Graceway expands on both the “related to” and “same site of action” criteria supporting a single clinical endpoint study.  The company states that while “[b]oth AK and sBCC involve abnormal proliferations of cells that arise within the epidermis as a result of sun exposure,” “EGW is a contagious disease caused by a virus that has a fundamentally different pathophysiology than AK and sBCC,” and therefore, “EGW is wholly unrelated to either AK or SBCC.”  In addition, Graceway relies on a March 2009 FDA citizen petition response (Docket No. FDA-2004-P-0215) concerning DERMA-SMOOTHE/FS (fluocinolone acetonide 0.01 % topical oil) in which the Agency noted that skin that is penetrated by “terminal” (i.e., coarse, thick) hairs may have different absorption properties than skin that is penetrated by “vellus” (i.e., thinner, finer) hairs.  According to Graceway:

EGW occurs at a different anatomical location and on different types of skin than AK and sBCC.  While AK and sBCC usually occur on the face, head, and extremities, EGW by definition occurs in the pubic area, an area that is comprised of very different types of skin (e.g., vaginal tissues, the penis, the anus, and the scrotum). . . .  Because FDA itself has recognized [in Docket No. FDA-2004-P-0215] the difference in absorption properties between the types of skin located at the different sites of action for EGW and AK, comparative clinical testing is required in patients with EGW as well as AK before bioequivalence can be shown for the product as a whole.

As a result, Graceway alleges that FDA violated the Administrative Procedure Act, the FDC Act, and the Agency’s implementing regulations in denying the company’s petition and in approving ANDA No. 78-548.  Graceway asks the court for declaratory relief, including a declaration that FDA’s petition response and ANDA approval were unlawful, as well as injunctive relief, including enjoining FDA from approving any further ANDAs for Imiquimod Cream, 5%, until bioequivalence is demonstrated based on a clinical endpoint study in EWG patients and rescinding the approval of ANDA No. 78-548.

By William T. Koustas –

FDA recently released a draft of it class-wide opioid REMS in preparation for an advisory committee meeting on the issue.  The Joint Meeting of the Anesthetic and Life Support Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee is scheduled to meet July 22 and 23, 2010 to examine FDA’s most recent proposed REMS for extended-release opioids. 

This draft of FDA’s opioid REMS is substantially less onerous than previously discussed versions which would have required both patient and physician registries.  The draft REMS includes a medication guide, elements to assure safe use (“ETASU”) and a timetable of assessment.  The medication guide would be required to include class language as well as product specific information.  The ETASU would consist of both prescriber and patient education, but no restrictions on distribution.  The prescriber education is to be developed by the drug sponsors and would educate prescribers on patient selection and monitoring as well as counseling patients on the safe use/storage/disposal of their opioids.  FDA would encourage (though not mandate) sponsors to use a third party to develop the prescriber education and FDA would have to approve any training materials beforehand.  Sponsors would have to demonstrate that prescribers have been educated through prescriber surveys.  Patients would be educated via patient education sheets provided by sponsors to prescribers to use in their discussions with patients.  Sponsors would be required to encourage prescribers to use these materials, though FDA cannot actually mandate their use by physicians.  As with the prescriber education materials, these patient information sheets would also have to be approved by FDA. 

FDA openly considered requiring prescribers to enroll in a registration program and patients to enroll in a patient registry, but determined that the risk of prescribers and pharmacies opting out of the program, which may reduce patient access to these drugs, was outweighed by the benefits at this time.  While FDA left open the possibility of linking prescriber education with the DEA registration system, the agency acknowledged that this is outside its current authority and would require new legislation.  Further, FDA decided that enrolling the nearly 4 million patients currently using extended-release opioids on an annual basis would be too burdensome of an undertaking to make part of a class-wide REMS at this time.

The periodic assessments will likely include various metrics to measure the effectiveness of this new REMS, such as the means to measure patient and prescriber knowledge, the use of opioids for non-medical purposes, adverse events and access to care. 

Immediate release producst appear safe for now.  FDA explained that it does not think that it is wise to institute a REMS for immediate-release opioid products at the present time as data indicate a substantially higher rate of adverse outcomes associated with extended-release opioids compared to immediate-release versions.  However, in addition to these REMS, FDA noted that it intends to use its Safe Use Initiative to partner with other Federal agencies and the private sector to develop and implement non-REMS programs to reduce the abuse/misuse of opioids.

By John R. Fleder –

It is hardly a secret that FDA’s favorite regulated industry is certainly not the businesses that compound pharmaceutical products.  For years FDA has struggled to establish an enforcement mechanism that passes muster with Congress and the courts.  Two compounding pharmacies have recently fought back against government regulation.

Earlier this year, FDA (through the Department of Justice) filed an injunction suit against Franck’s Lab, Inc. and others (collectively “Franck’s”) in the Middle District of Florida.  Franck’s compounds veterinary drugs for non-food producing animals.  On July 1, 2010, the defendants filed a Motion to Dismiss that action, arguing among things, that the government’s Complaint is deficient.

Perhaps one of the main poster children of FDA’s fight against compounding pharmacies has been with regard to Signature Pharmacy, Inc. (Signature) which is also based in Florida.  Signature has been aggressively defending itself in federal and state court actions for several years.  Recent court rulings (here, here, and here), which are summarized below, have been quite sympathetic to Signature.  Although the proceedings began in Florida state court, a federal district court in the Middle District of Florida has now gotten involved in three actions concerning Signature.

In November 2005, authorities began investigating Signature and its principals for possible violations of various federal and state laws.  Signature is owned by Stan Loomis, his wife Naomi Loomis, and Mike Loomis.

On August 4, 2006, two Florida officials presented a 144 page application for a wiretap, and an affidavit to a Florida state court.  The court entered an order approving the wiretap that same day and Signature’s phone and fax lines were monitored for the next 60 days.

On February 27, 2007, state officials from New York and Florida, working in conjunction with FDA and other agencies, executed criminal search warrants at Signature’s Orlando and Winter Park Florida locations.  Government agents arrived at the premises with large U-haul trucks and proceeded to seize virtually everything within Signature’s stores.  The agents seized hundreds of thousands of patient prescriptions, all of Signature’s electronically stored information, and many of its drug inventories and financial records.  In short, according to the court, law enforcement seized everything essential to Signature’s business.  This led to four state indictments all of which were dismissed.  A fifth indictment was returned on June 16, 2010.

On the day of the raids, the Loomises and one other person were arrested and transported to New York.  The Florida federal court recently noted that the indicted defendants had never set foot in the State of New York prior to their arraignment, and Signature had no physical presence in New York.  New York simply appears to have been just one of the many states to which Signature shipped or filled prescriptions.

The federal court found that the media presence during the raids and arrests was intense.  The raids were even conducted in the presence of the media and were highly publicized.  In the months that followed, media from around the country implicated or mentioned numerous professional athletes and celebrities in connection with the investigation, including boxer Evander Holyfield, and former baseball player Jose Canseco.  Indeed, the Florida federal court found that state officials began a public relations campaign by attempting to connect Signature to professional athletes who were allegedly taking steroids, and the officials made deals with various media outlets to scoop the story.

During the two years after the raids, the Florida state court received over 2,600 objections from patients expressing privacy concerns about the seizure of their prescription records.  On November 24, 2009, that court entered an order establishing a procedure for holding individual hearings on the thousands of objections.

During a hearing on December 22, 2009, the Florida state court learned that the evidence seized during the raids had been transferred to the United States Attorneys’ Office in Florida, in violation of the state court’s order.  The United States Attorney’s office had issued a grand jury subpoena in an effort to keep the Florida state court from returning Signature’s property. In light of the State’s “Formal Notice of Intent Not to Prosecute,” the state court had ordered the evidence seized during the raids to be immediately returned to Signature.

The Florida federal court judge also was clearly troubled by many actions taken by the various governments.  For instance, the court noted that during the flight from Florida to New York after the arrests, one of the agents sat next to Mrs. Loomis and according to the Court, the agent lifted up the armrest between himself and Mrs. Loomis and rubbed up against her body while talking to others on the plane.

The federal court concluded that since the raids and arrests, Signature has been unable to conduct any pharmacy business, its reputation having been severely damaged and its inventory, business records and other items essential to its operations have been unlawfully retained by law enforcement for nearly three years. The court found that although Signature was never found guilty of any crime, Signature’s bank and merchant accounts were frozen, and its shipping accounts with Federal Express were suspended.

On April 12, 2010, the U.S. Attorneys’ Office issued yet another grand jury subpoena, this time to Signature.  On April 26, 2010, Signature moved to quash the grand jury’s subpoena.  On June 10, 2010, the federal court granted that Motion.  It found that grand juries are not licensed to engage in arbitrary fishing expeditions and cannot select targets of investigation out of malice or an intent to harass. It ruled that the grand jury subpoena must be quashed. First, the subpoena was deemed to be clearly overbroad, and compliance would, as a practical matter, be unreasonable.  Second, it ruled that the subpoena, without more, cannot substitute for a search warrant and alienate Signature from property that the Florida state court had earlier ordered should be immediately returned to Signature.  The federal court ruled that the grand jury’s continued and indefinite possession of all the property taken from Signature would certainly preclude Signature from reopening its doors.

The Court also raised serious concerns about the search warrants.  It found that there appeared to be at least colorable constitutional infirmities in the probable cause affidavits upon which the warrants used to originally seize the evidence were issued.  It ordered that the United States Attorneys’ Office and its agents immediately return to Signature any and all property, including copies of Signature’s electronically-stored information.

Unhappy with their treatment by the governments, Signature and its principals took an aggressive action by suing various state officials who the plaintiffs believed had wronged Signature.  They sued the District and Assistant District Attorney, respectively, for New York’s Albany County; a peace officer with the New York Bureau of Narcotics Enforcement; the City of Orlando; and a police officer with the Orlando Police Department.  One or more of the defendants in that action argued that they were exempt from being sued on “immunity” grounds.  The federal court generally rejected that argument and has ruled that the plaintiffs are entitled to go to trial on at least some their claims against the state officials.

Judges have sometimes referred to FDA as the “jail keeper” of firms that the agency regulates.  Government’s role becomes particularly troublesome when officials fall into the “bad guy” mindset.  When officials decide to investigate someone simply because the agents believe that the investigated person is one of the “bad guys”, they slip into the mode we often see on television, namely that the ends justify the means as a vehicle to “bring the bad guys to justice.” Companies do have many opportunities to defend themselves but they should not have to do so just because an investigation is designed to punish someone who the government believes is a “bad guy.”