By Ricardo Carvajal –

In conjunction with other plaintiffs, the Alliance for Natural Health has filed suit in the D.C. district court challenging FDA’s denial of plaintiffs’ petition for the use of four qualified health claims for selenium and certain forms of cancer, and FDA’s imposition of an unfavorable disclaimer on the use of a fifth claim.  Plaintiffs contend that FDA’s actions violate their First Amendment rights to communicate “scientific information vital to those who seek to reduce their risks of certain kinds of cancers through dietary means.”  Plaintiffs ask the court to declare invalid FDA’s final order denying their petition for the claims and to enjoin FDA from taking any action to preclude their use of the claims in the labeling of dietary supplements.  This is the latest in a string of actions that have been brought against the agency over its handling of health claims, some of which have been successful (see Whitaker v. Thompson, 248 F.Supp.2d 1 (D.D.C. 2002) (Whitaker I) and the cases cited therein, but see Whitaker v. Thompson, 239 F.Supp.2d 43 (D.D.C. 2003), aff'd. 353 F.3d 947 (D.C.Cir. 2004), cert denied 543 U.S. 925 (Whitaker II)).

The complaint presents a fundamental challenge to FDA’s current approach to the regulation of qualified health claims, which the agency developed in the wake of Whitaker I and its antecedents.  First, plaintiffs take issue with FDA’s refusal to consider more than 90% of the publications submitted in support of plaintiffs’ petition.  In its consideration of qualified health claim petitions, FDA routinely excludes a significant number of publications that the agency deems for one reason or another to be irrelevant.  Second, based on prior judicial opinions, plaintiffs contend that FDA can deny use of a claim only in two instances: when “no evidence” supports the claim, or when “evidence in support of the claim is qualitatively weaker than evidence against the claim – for example, where the claim rests on only one or two old studies.”  Even then, FDA must first “demonstrate with empirical evidence that disclaimers. . . would bewilder consumers and fail to correct for deceptiveness.”  Plaintiffs maintain that FDA has failed to meet this burden.  Third, plaintiffs contend that FDA is “constructively suppressing” claims through the “imposition of an onerous, value laden set of qualifications that only allow Plaintiffs to propound a false, negatively value-laden, and inaccurate claim to the public.” 

The case is Alliance for Natural Health US et al. v. Sebelius et al., No. 1:09-cv-01470 (D.D.C. filed August 4, 2009).

By Kurt R. Karst –      

On August 12th, FDA announced the publication of final regulations concerning “Expanded Access to Investigational Drugs for Treatment Use” and “Charging for Investigational Drugs Under an Investigational New Drug Application.”  Both rules will be officially published in the August 13th Federal Register.  In addition, FDA launched a new website where patients and their health care professionals can learn about options for accessing investigational drugs. 

According to FDA, the “Expanded Access” final rule “clarifies existing regulations and adds new types of expanded access for treatment use.”  In particular:

Under the final rule, expanded access to investigational drugs for treatment use will be available to:

• individual patients, including in emergencies  
• intermediate-size patient populations  
• larger populations under a treatment protocol or treatment investigational new drug application (IND) 

It is intended to improve access to investigational drugs for patients with serious or immediately life-threatening diseases or conditions who lack other therapeutic options and who may benefit from such therapies. . . .

The “Charging Rule” revises FDA’s regulation, and will, according to FDA:

• clarify the circumstances under which charging for an investigational drug in a clinical trial is appropriate, 
• set forth criteria for charging for an investigational drug for the different types of expanded access for treatment use described in FDA's final rule on expanded access for treatment use of investigational drugs, and 
• clarify what costs can be recovered.

The rule permits charging for a broader range of investigational and expanded access uses than is explicitly permitted in current regulations.

Stay tuned for additional analysis of these new regulations . . . .

By Carmelina G. Allis –

The FDA has issued a Federal Register notice announcing a program that establishes a timeframe for the submission and agency review of responses to Form FDA-483s before the agency’s issuance of Warning Letters.  This announcement is in line with our prior report regarding the new FDA Commissioner’s promises to intensify the agency’s enforcement program.

After issuance of a 483, it is not uncommon for inspected establishments to submit a written response to FDA describing their intent to correct the observations listed in the 483.  Such responses, however, which can sometimes result in numerous correspondences over a period of many months, generally help delay FDA’s issuance of a Warning Letter.  It has been the agency’s practice not to issue a Warning Letter if the company is not a serious or repeat offender, and the 483 written response appears to indicate that the company has implemented most corrective actions and shows the company’s good-faith effort to comply with FDA’s regulations.  That is, in general, FDA will not issue a Warning Letter until it has completed its review of the company’s 483 response.

That practice, however, will soon come to an end.  As of September 15, 2009, FDA will start a new program where it will allow a company 15 business days to respond to a 483 from the date of issuance of the 483.  If the response is received within those 15 business days, FDA will conduct a detailed review of the response before determining whether to issue a Warning Letter.  If the agency decides to issue the Warning Letter after reviewing the company’s timely response, the Warning Letter will recognize receipt of the response and contain a reply as to the apparent adequacy of the company’s corrective actions set forth in its response.  If FDA receives a 483 response more than 15 days after the 483 was issued, the agency will not likely delay the issuance of a Warning Letter in order to review the 483 response.

These procedures have been prompted by the efforts of Dr. Margaret A. Hamburg, the new FDA Commissioner, to step up the agency’s enforcement program.  Along with those efforts, Dr. Hamburg recently promised that the agency will issue “close-out notices” to those companies that fully correct violations.  This Federal Register notice, however, fails to explain whether FDA will implement such a program, or whether companies should expect to receive such letters after satisfactorily addressing FDA’s observations.

FDA will conduct an assessment of this program after 18 months, and will then decide whether to implement it permanently.  The announcement fails to identify the criteria that the agency will evaluate that will serve as indicators that the program has been successful.  The stated goal of the program is to facilitate the agency’s timely issuance of Warning Letters.

By Kurt R. Karst –   

Earlier this week, Astellas Pharma US, Inc. (“Astellas”) filed a Complaint and an accompanying Memorandum of Points and Authorities in the U.S. District Court for the District of Columbia requesting declaratory and injunctive relief in connection with FDA’s response to a citizen petition and approval of an ANDA for a generic version of Astellas’ PROGRAF (tacrolimus).  Astellas had previously announced in a company press release that it planned to sue FDA over the petition decision.

FDA’s August 10, 2009 decision substantially denied a September 21, 2007 citizen petition submitted by Astellas requesting that the Agency take certain actions related to orally administered immunosuppressants used in the transplant population – and in particular, PROGRAF.  Specifically, the Astellas petition requested that FDA, with respect to orally administered immunosuppressants “characterized by a narrow therapeutic index”:

(1) Require bioequivalence studies in healthy subjects be supplemented by studies performed in the transplant patient population.  (FDA’s draft guidance document for bioequivalence testing of tacrolimus recommends that bioequivalence be demonstrated in two single-dose studies in healthy volunteers.);

(2) Require additional warnings and precautions in drug product labeling that physicians must be notified whenever a substituted oral formulation is about to be provided to a transplant patient;

(3) Add to the Orange Book Preface (§ 1.8 – Description of Special Situations) a discussion of narrow therapeutic index immunosuppressive drugs for use in transplant patients that highlights the “particular risks associated with switching patients among different oral formulations of immunosuppressants, such as tacrolimus;” and

(4) Require manufacturers of substitute oral formulations to “differentiate between strengths by color of capsule and container closure, to provide prominent dosage strength information, and to clearly differentiate between sources so that patients, physicians and pharmacists know when the sourcing has changed” in order to “reduce the potential for medication errors associated with confusion regarding strengths and sourcing of different formulations.”

FDA’s August 10th petition decision substantially denied Astellas’ requests.  FDA ruled that bioequivalence studies in the transplant patient population are not justified, and that with respect to tacrolimus, “there is insufficient scientific evidence to suggest that the use of specific patient population(s) in bioequivalence studies would detect differences in formulation that might have clinical significance and that would not be detected by bioequivalence studies in healthy subjects.”  (Also, concerning Astellas’ claim that tacromilus is characterized by a narrow therapeutic index – i.e., a product with a narrow margin of safety between doses that are therapeutic and doses that are toxic – FDA notes that “[w]hile tacrolimus is a drug product that requires careful dosage titration and monitoring of patient blood levels, FDA has not made a determination whether to characterize tacrolimus as a narrow therapeutic range drug product,” but that the Agency “is confident that it has established suffcient criteria to determine bioequivalence for tacrolimus whether or not the agency subsequently decides to characterize tacrolimus as a narrow therapeutic range drug product.”)

FDA also denied Astellas’ request for labeling changes, stating that they are not needed and that “[t]he current review process for ANDAs is adequate to assure the interchangeability of generic versions of immunosuppressant drugs such as tacrolimus with their branded counterparts.”  In addition, FDA disagreed that the Orange Book Preface should be amended, and that manufacturers should be required to differentiate between product source.  FDA did agree, however, that “it is important to differentiate between strengths for immunosuppressants,” and said that the Agency “will ensure that different strengths of a generic version of these drug products are differentiated by appropriate means (e.g., the use of unique color and/or adequate documentation of dosage strength information in the labeling).” 

Astellas’ complaint challenges FDA’s decisions concerning bioequivalence study requirements, product labeling, and source differentiation, as well as FDA’s decision to approve an ANDA for a generic version of PROGRAF.  The complaint alleges that FDA’s petition denial and and generic approval decision violate the Administrative Procedure Act, the FDC Act, and FDA’s regulations, by “failing to require bioequivalence testing in transplanted patients because meeting the FDA-established bioequivalence standards in studies with only healthy volunteers will not sufficiently predict the pharmacokinetics observedwhen tacrolimus is administered to trransplant patients,” and by “failing to require that the label of Prograf and any approved generic alert physicians and patients to the risks associated with substituting formulations of tacrolimus and to any change in the source of manufacturing.”  The company requests declaratory and injunctive relief requiring FDA to revoke ANDA approval. 

UPDATES: 

• On August 12, FDA filed its opposition memorandum, and the court issued an Order denying Astellas' TRO/PI motion.  A memorandum opinion will soon follow.  An Astellas press release issued after the court's order states that the company is evaluating its options.
• The district court's Memorandum Opinion was issued on August 17th and is available here.

By Jamie K. Wolszon & Ricardo Carvajal –

FDA has published three draft guidances that instruct growers, packers, processors, transporters, retailers and others on the prevention of microbial hazards in tomatoes, melons, and leafy greens.  According to FDA’s press release, Dr. Hamburg stated that the guidances “will be made final as soon as possible after public comment, and will be followed within two years by enforceable standards for fresh produce.”  Coincidentally, the guidances were published on the heels of House passage of the Food Safety Enhancement Act (“FSEA”) of 2009 (see our post here).  Section 104 of FSEA would explicitly authorize FDA to establish by regulation science-based standards for the safe growing, harvesting, packing, sorting, transporting, and holding of raw agricultural commodities for which FDA has determined that such standards are needed to minimize the risk of serious adverse health consequences or death to humans or animals.  Although FDA has now made clear its intention to establish such standards based on its existing statutory authority, FSEA could help make it easier for FDA to fulfill the Commissioner’s commitment to establish those standards within two years by providing FDA with more explicit authority.

The three new guidances target the risks inherent to specific types of commodities.  However, all three guidances reference the agency’s 1998 draft guidance that more generally describes good agricultural practices or GAPs (see FDA’s Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables).  Notably, section 104 of FSEA calls on the agency to update its GAP guidance.  The three new guidances also reference FDA’s Current Good Manufacturing Practices Regulations, as well as the agency’s Guide to Minimize Microbial Food Safety Hazards of Fresh-cut Fruits and Vegetables (these are minimally processed and altered in form prior to being packaged for use by the consumer or retail establishment such as ready-to-eat salad mixes).  The three new guidances complement, rather than replace, these pre-existing recommendations and requirements.
 
For each of the three guidances, the agency examined pre-existing industry guidelines on the specific commodities as a foundation for its own guidance.  The guidances recommend measures specifically crafted to ward against risks likely to occur during production and harvest, post harvest, fresh-cut processing, distribution and retail and food service.  The guidances address environmental assessments, worker health and hygiene, water quality, product tracing and records at these stages along the food supply chain.  For instance, the guidances contain suggestions for adequate toilet facilities and handwashing, convincing sick workers to stay home, ensuring that water used to wash plants is not contaminated, deterring contamination from animals or other elements on soil, ensuring the equipment and transports are not contaminated, and establishing appropriate use of gloves.

Comments on the guidances should be submitted by November 3 at www.regulations.gov using docket numbers FDA-2009-D-0346 (tomatoes), FDA-2009-D-0347 (melons), or FDA-2009-0348 (leafy greens).

FDA Law Blog welcomes back to the blogosphere our friend Scott Hensley, formerly of the Wall Street Journal (where he was the founding editor and a regular contributor to the paper’s Health Blog).  Scott will be blogging at the National Public Radio Health Blog and appearing on NPR as well.  The NPR Health Blog covers news about health and medicine, including FDA-related issues, and is written and reported by NPR’s Science Desk.

By Douglas B. Farquhar –

In an August 6, 2009 speech at an event sponsored by the Food and Drug Law Institute, Margaret A. Hamburg, M.D., the new FDA Commissioner, promised to ratchet up enforcement by speeding up issuance of Warning Letters, reducing the amount of time that industry has to respond to notices of violations, and landing on repeat violators quickly and severely.  However, she also offered a reward to cited companies who respond expeditiously and effectively, in FDA’s view.  She promised that companies which fully correct violations cited in a Warning Letter will receive a “close-out notice,” which will be posted on the FDA website, documenting that the companies have achieved a state of compliance (trumpets sound and choirs sing).  (A copy of FDA's press release announcing Dr. Hamburg's speech and enforcement vision is available here.) 

Warning Letters have traditionally been FDA’s most potent weapon against FDA-regulated industry, short of the agency seeking an injunction, initiating criminal prosecutions, or persuading state officials to shut down a company.  Hundreds of Warning Letters, which are publicly available, are issued every year to food processors, drug manufacturers or distributors, investigators in clinical trials, medical device manufacturers, pharmacies, and Institutional Review Boards (IRBs) which monitor clinical trials.  The agency routinely follows up on Warning Letters with inspections to ensure that corrective actions have been taken.  Enforcement officials at FDA have repeatedly said that if violative conditions cited in Warning Letters are not corrected, the agency will proceed to more significant enforcement measures, including those listed above, or, if available, import detentions.

Noting a “steep decline in the FDA’s enforcement activity over the past several years,” Dr. Hamburg said that many enforcement actions have been “hampered by unreasonable delays.”  She focused primarily on the issuance and resolution of Warning Letters.  Although companies routinely have, by agreement with FDA officials, 30 to 60 days to respond to inspectional reports (Form 483s) citing violations of FDA regulations, she said that, from now on, cited companies will “generally have no more than fifteen working days in which to respond,” thus speeding up the issuance of Warning Letters when responses do not satisfy FDA’s concerns.  Her speech re-emphasized past pronouncements that there will not be “multiple warning letters to noncompliant firms before taking enforcement action.”

She also said that FDA will work more closely with “local, state and international officials” who have authority to shut down companies more quickly than FDA, especially when the “public health is at risk.”

Warning Letters are very rarely retracted or withdrawn by FDA, and there is generally no public indication that a firm has corrected the violations covered by a Warning Letter.  Dr. Hamburg pledged to set up a “close-out” process so that, after a re-inspection determines that “a firm has fully corrected the violations,” the firm and the public will be informed that issues raised in a Warning Letter have been resolved.

Dr. Hamburg praised the agency for its rapid and repeated Warning Letters issued to promoters of products who promised to “diagnose, prevent, or treat” the H1N1 virus (commonly referred to as the “swine flu” virus).  She also praised the agency for its action to stop the distribution of anabolic steroids “sold under the guise of dietary supplements.”

By Kurt R. Karst & Michelle L. Butler –      

Winston Laboratories, Inc. (“Winston”) recently sued FDA after the Agency denied a waiver of the Prescription Drug User Fee Act (“PDUFA”) application fee assessed with respect to the company’s human drug application (NDA No. 22-403) for CIVANEX (civamide (zucapsaicin)) Cream, 0.075%.  Specifically, the complaint, filed in the U.S. District Court for the Northern District of Illinois Eastern Division, seeks declaratory and injunctive relief with respect to FDA’s denial of Winston’s application for waiver of the application user fee – which was $1,247,200 in Fiscal Year 2009 – under the small business waiver provisions of the FDC Act, notwithstanding the Small Business Administration’s (“SBA’s”) determination that Winston is a “small business.”  (The correspondence identified below is included as exhibits to Winston’s complaint and is available here.) 

Under the FDC Act, FDA shall grant a waiver or reduction of user fees where “the applicant involved is a small business submitting its first human drug application to [FDA] for review.”  FDC Act § 736(d)(1)(d).  The statute further provides “Rules Relating to Small Businesses” and requires that FDA shall waive “the application fee for the first human drug application that a small business or its affiliate submits to [FDA] for review."  FDC Act § 736(d)(4)(B) (emphasis added).  The statute defines a small business as “an entity that has fewer than 500 employees, including employees of affiliates, and that does not have a drug product that has been approved under a human drug application and introduced or delivered for introduction into interstate commerce.”  FDC Act § 736(d)(4)(A). 

FDC Act § 735(11) defines the term “affiliate” to mean “a business entity that has a relationship with a second business entity if, directly or indirectly – (A) one business entity controls, or has the power to control, the other business entity; or (B) a third party controls, or has power to control, both of the business entities.” 

After FDA grants a small business or its affiliate a waiver, the company or its affiliates must pay “application fees for all subsequent human drug applications submitted to [FDA] for review in the same manner as an entity that does not qualify as a small business,” and “all supplement fees for all supplements to human drug applications submitted to [FDA] for review in the same manner as an entity that does not qualify as a small business.”  FDC Act § 736(d)(4)(B)(i)-(ii).

In May 2008, in advance of the CIVANEX NDA submission, Winston requested that FDA waive the application user fee in accordance with FDC Act § 736(d)(1)(D), asserting that the company met the statutory requirements for FDA to grant the waiver.  After receiving the request, FDA requested the SBA to determine whether Winston and its affiliates met the “small business” definition.  The SBA, which does not consider those firms that are no longer in business in determining affiliates, made a formal size determination in August 2008 that Winston and its affiliates had fewer than 500 employees. 

In December 2008, FDA denied Winston’s waiver request, stating that although Winston and its affiliates have fewer than 500 employees, the company failed to meet the requirement that the marketing application must be the first human drug application that a company “or its affiliate” submits to FDA.  FDA noted that “for purposes of determining whether to grant a small business waiver, FDA considers all affiliates, even those that are no longer in existence” (emphasis added), and that according to the Agency’s records, the CIVANEX NDA is not the first human drug application submitted by Winston or its affiliates.  Specifically, according to FDA, two now defunct companies with ties to Winston through its CEO, Joel E. Bernstein, M.D. – GenDerm Corporation (“GenDerm”) and Northbrook Testing Co., Inc. (“Northbrook”) – were considered to be affiliates of Winston that previously submitted human drug applications to FDA.  In the course of making this determination FDA conducted its own analysis of whether Dr. Bernstein was affiliated with GenDerm and Northbrook. 

Dissatisfied with FDA’s decision, Winston promptly requested that FDA reconsider the waiver denial, arguing that Winston is not an affiliate of either GenDerm or Northbrook.  In February 2009, FDA affirmed its finding that Winston is a “small business,” but also confirmed its prior decision to deny the small business waiver on the basis that, given the affiliate status of GenDerm and Northbrook, Winston did not satisfy the requirement that the NDA be the first human drug application submitted by a small business or its affiliate.  In reaching this decision, FDA stated that “[t]here is no requirement in the definition of affiliate that all relevant parties be in existence at the same time.”

In April 2009, Winston appealed the decision, explaining that FDA’s interpretation of the term “affiliate” to include companies that are no longer in business is unacceptable and inconsistent with the definition of affiliation.  In June 2009, FDA issued a final decision denying Winston’s appeal and affirming its previous determination that Winston does not qualify for a small business waiver.  In that decision, FDA affirmed that Northbrook is a Winston affiliate, but found that there is insufficient evidence to conclude that GenDerm and Winston are affiliates for PDUFA user fee purposes.  In explaining its interpretation of the scope of the term “affiliate” FDA commented that:

In contrast to the [SBA’s] process for making a size determination, which require consideration of a company’s status at the time the determination is made, PDUFA contemplates that FDA examine past events in order to determine whether an NDA is the first human drug application submitted by a company or its affiliates.  Therefore, it is reasonable, indeed, arguably necessary, to consider whether companies that may no longer exist should be considered affiliates of that company and whether they have submitted applications. Given the clear purpose of this provision and the fact that the statute's plain language includes no temporal limitation to prevent the consideration of now defunct companies, it is reasonable to consider companies that are no longer in business to be affiliates of an applicant for a small business waiver.

Moreover, policy considerations support a broader interpretation of the term affiliate. Under the interpretation promoted by Winston, a company could obtain a fee waiver for its “first human drug application,” dissolve the company, establish a new company that is essentially a duplicate of the first, and obtain a fee waiver for its next NDA (which would technically be the “first” NDA of that incarnation of the company).  This cycle could be repeatedly indefinitely.  PDUFA’s emphasis that a waiver is only available for the first human drug application submitted by “a small business or its affiliate,” and not for subsequent applications, 21 U.S.C. § 379h(d)(4)(B) (emphasis added), instead of all applications submitted by a “small business,” id. § 379h(d)(1)(D), certainly suggests that Congress intended to prevent such abuse.  To adopt an interpretation that would permit companies to easily circumvent the limitation on the small business waiver put in place by Congress is not sound public policy. [(italics in original)]

Winston’s complaint requests that the court enter a judgment declaring that FDA’s refusal to grant a small business waiver of user fees violates the Administrative Procedure Act (i.e., that FDA’s interpretation of the user fee statute is arbitrary, capricious, and an abuse of discretion, contrary to law, and in excess of the Agency’s statutory authority).  Winston also requests that the court enter an injunction requiring FDA to immediately grant Winston the small business user fee waiver. 

By Kurt R. Karst –      

Earlier this week FDA issued several Federal Register notices setting the Fiscal Year (“FY”) 2010 user fee rates for human drugs under the Prescription Drug User Fee Act (“PDUFA”), for medical devices under the Medical Device User Fee and Modernization Act (“MDUFMA”), and for animal drugs (here and here) under the Animal Drug User Fee Act (“ADUFA”) and Animal Generic Drug User Fee Act (“AGDUFA”). 

The FY10 PDUFA application user fee rates have been set at $1,405,500 for an application requiring “clinical data,” and one-half of a full application fee ($702,750) for an application not requiring “clinical data” and a supplement requiring “clinical data.”  (The term “clinical data” for PDUFA user fee purposes is explained in an FDA guidance document available here.)  Annual establishment and product fees have been set at $457,200 and $79,720, respectively.  The FY10 fees go into effect on October 1, 2009. 

While the FY10 increases in the establishment and product user fee rates are generally consistent with the jump between FY08 and FY09 rates, the increase in the application user fee rate is more significant – increasing 12.7% in FY10 over FY09, compared to a 5.9% increase in FY09 over FY08.  The table below shows the percent increase since the previous FY, and should be used with the table from our previous post, which tracks PDUFA user fees since the inception of PDUFA.

The FY10 MDUFMA user fee rates have also increased over FY09.  For example the standard Premarket Application fee, which was $200,725 in FY09, is now $217,787 – an 8.5% increase.  The standard 510(k) user fee is $4,007 for FY10, which is also an 8.5% increase over the $3,693 FY09 fee.

For FY10, the animal drug user fee rates under ADUFA are $290,400 for an animal drug application, $145,200 for a supplemental animal drug application for which safety or effectiveness data are required, $6,185 for an annual product fee, $73,850 for an annual establishment fee, and $57,100 for an annual sponsor fee.  This compares to FY09 when the fees were $246,300, $123,150, $4,925, $59,450, and $52,700, respectively. 

The FY10 fees under AGDUFA are $75,000 per application for an abbreviated generic new animal drug application for which safety or effectiveness data are required, a $3,255 annual product fee, and an annual sponsor fee (that is lower than FY09) of $54,050 for each generic new animal drug sponsor paying 100% of the sponsor fee, $40,537 for each generic new animal drug sponsor paying 75% of the sponsor fee, and $27,025 for a generic new animal drug sponsor paying 50% of the sponsor fee.  This compares to FY09 when the fees were $41,400, $3,005, $56,350, $42,265, and $28,175, respectively. 

By Alan M. Kirschenbaum –

As we reported on August 2, the House Energy and Commerce Committee last Friday reported out its healthcare reform bill, the America’s Affordable Health Choices Act (H.R. 3200).  In order to help finance healthcare reform, the bill contains numerous provisions that would increase the current discounts that prescription drug manufacturers provide under federal programs and add several new pricing/discount provisions.  One such provision, which was added by amendment at the Committee mark-up, was the repeal of the “non-interference” provision under Medicare Part D.  This prohibition, which was a cornerstone of the Part D prescription drug benefit legislation initially enacted in 2003, would be replaced by a provision explicitly permitting the Secretary of Health and Services to negotiate with pharmaceutical manufacturers to obtain price concessions on Part D drugs.

Numerous other drug discount and pricing provisions contained in the Committee draft were reported out intact.  These include the following:

• Rebates for Part D beneficiaries in the coverage gap (§1182):   The bill would eliminate the Part D coverage gap (the so-called “donut hole”) over a nine-year period beginning in 2011.  However, while the coverage gap exists, drug manufacturers would be required, as a condition of drug coverage under Part D, to enter into an agreement modeled after the Medicaid Rebate Agreement, in which the manufacturer agrees to pay rebates to prescription drug plan (PDP) sponsors on units dispensed to Part D beneficiaries in the coverage gap.  The rebate would be equal to 50% of the negotiated price of the drug.  This provision implements an agreement negotiated between the industry and the Obama Administration.

• Rebates for Dual Eligibles (§1181(b)):  In addition, again as a condition of having their drugs covered under Part D, manufacturers would be required to enter into a separate agreement providing for payment to Medicare of rebates on Part D drugs dispensed to full-benefit dual eligibles.  The rebate would be the difference between the Medicaid Rebate and the average amount of discounts, rebates, and other price concessions offered by the manufacturer on each drug dispensed to full-benefit dual eligibles under Part D.

• Changes to the Medicaid Rebate Program (§§ 1741-1743):  Beginning in 2010, the minimum per-unit Medicaid Rebate for innovator drugs would be increased from 15.1% to 22.1%.  Rebates would now be payable on units dispensed to enrollees in Medicaid managed care organizations.  There would be several changes to the definition of average manufacturer price (AMP):  the current regulatory exclusion of bona fide services fees and returns would be codified in the statute, and AMP would additionally exclude (1) price concessions (if not passed through to retail pharmacies) and direct sales to PBMs, managed care organizations, HMOs, insurers, long term care providers, and mail order pharmacies not open to the public; (2) price concessions and direct sales to hospitals, clinics, and physicians, except for inhalation, infusion, or injectable drugs, or except as determined by CMS; and (3) rebates required under the Part D agreements described above.  The AMP calculation for extended release formulations of oral dosage drugs would have to take into account price increases of the original formulation.  With regard to Federal Upper Limits, CMS would be required to continue to use the method established by regulation in 2006 (previously codified at 42 C.F.R. 447.332) until January 2011, when the methodology would be revised to 130% of weighted AMPs of the multiple source drugs.

• Expansion of 340B Program (§§ 2501-2502):  The list of covered entities eligible for discounts under section 340B of the Public Health Service Act would be expanded to include certain children’s hospitals, critical access hospitals, Medicare-dependant small rural hospitals, sole community hospitals, and rural referral centers, and inpatient drugs as well as outpatient drugs purchased by these hospitals would be eligible for the 340B discount.  In addition, maternal and child health clinics, mental health services providers, and substance abuse treatment centers receiving federal funds would be added to the list of covered entities.

It is too soon to predict whether these provisions will survive in the final health care reform bill – if there is one.  H.R. 3200 will reach the House floor for a vote following the August recess.  In the Senate, a healthcare reform bill has cleared the HELP Committee, but the Finance Committee has yet to complete legislation.  If and when the Senate passes a bill, differences from the House version will have to be reconciled.  We’ll be posting updates on this legislation as it progresses.

By Kurt R. Karst –      

Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia ruled in a 27-page opinion issued last Friday that the 180-day exclusivity forfeiture patent information withdrawal provision at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC) is not ambiguous and that FDA’s interpretation of the statute is reasonable.  As we previously reported (here and here), Teva Pharmaceuticals USA, Inc. (“Teva”) filed a Complaint and a Motion for Preliminary Injunctive Relief against FDA concerning 180-day exclusivity forfeiture for generic versions of Merck & Co., Inc.’s (“Merck’s”) blockbuster angiotensin II receptor antagonist drugs COZAAR (losartan potassium) Tablets and HYZAAR (hydrochlorothiazide; losartan potassium) Tablets.  Although FDA has made no determination with respect to generic COZAAR and HYZAAR 180-day exclusivity, Teva believes that FDA’s interpretation of the statute will result in a forfeiture of 180-day exclusivity for both products. 

Teva’s lawsuit challenged FDA’s interpretation of the “failure to market” 180-day exclusivity forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I), which were added to the FDC Act in December 2003 by the Medicare Modernization Act (“MMA”), and in particular FDA’s interpretation of the patent information withdrawal provision at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC).  That provisions states that one of the dates for calculating a forfeiture is the date that is 75 days after which “[t]he patent information submitted under [FDC Act § 505(b) or (c)] is withdrawn by the holder of the application approved under [FDC Act § 505(b)].”

According to Teva, FDA’s interpretation of FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC), as stated and applied in two previous 180-day exclusivity forfeiture decisions concerning generic PRECOSE (acarbose) and generic COSOPT (dorzolamide hydrochloride; timolol maleate), is unlawful.  Specifically, Teva argues that the mechanism added to the FDC Act by the MMA – i.e., FDC Act § 505(j)(5)(C)(ii)(I) – permitting a cause of action that allows a generic applicant to seek a court order compelling the brand manufacturer to delist a challenged patent must be read together with FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC):

Read together, as statutory provisions must be, it thus is clear that these twin Amendments – the delisting mechanism, on one hand, and the delisting trigger, on the other – were not remotely intended to open the proverbial floodgates to manipulative, exclusivity-divesting patent delistings by brand manufacturers, and thus sub silentio to abrogate the longstanding prohibition against such delistings that Ranbaxy recognized.

(In Ranbaxy Labs. Ltd. v. Leavitt, the U.S. Court of Appeals for the District of Columbia Circuit held in 2006 in a pre-MMA case that FDA may not condition the delisting of a patent on the existence of patent litigation and deprive an ANDA applicant eligible for 180-day exclusivity of such exclusivity.)

FDA filed a Motion to Dismiss the case on several grounds – that Teva is not challenging final agency action, Teva’s claims are not ripe, Teva has not suffered sufficient injury for Article III standing, and Teva has failed to exhaust administrative remedies.  Judge Collyer denied FDA’s Motion to Dismiss.  With respect to final agency action, the court held that:

FDA’s interpretation of the MMA in the context of the Acrabose [sic] and Cosopt Decisions constitutes a rule of decision made through adjudication, and the FDA’s interpretation of the MMA constitutes “final agency action” that is subject to review under APA §§ 702 and 704.  Thus, Teva has stated a claim under the APA seeking to set aside the FDA’s statutory interpretation as arbitrary and capricious under § 706(2).

With respect to FDA’s challenges based on a failure to exhaust administrative remedies, lack of ripeness, and lack of standing, the court ruled that:

Teva has exhausted its remedies by participating unsuccessfully in the Acrabose [sic] litigation and pursuit of administrative remedies would be futile.  In these circumstances, the law does not require further administrative exhaustion. . . .

The issue raised by Teva – whether the FDA’s interpretation of subsection (bb)(CC) of the MMA is arbitrary and capricious under the APA – is purely a legal question fit for judicial review.  It is a challenge to the FDA’s interpretation of the statute on its face and not as applied to a particular set of facts.  There is no need for further factual development as there is no material fact missing from the record that could alter the FDA’s interpretation of the MMA. . . . .

The FDA’s interpretation imminently will cause Teva to lose its right to exclusive marketing, and Teva already has altered its operations due to this imminent loss. . . .  Teva has demonstrated standing.

On the substantive issue challenged by Teva – FDA’s interpretation of FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC) – the court ruled in FDA’s favor.  The court, analyzing the arguments under the familiar Chevron standard, concluded that, “[a]t Chevron step one this Court must give effect to the clear intent of Congress as reflected in the statute because subsection (bb)(CC) is not ambiguous on its face.”  The court went on to state that “Teva is correct that the statute does not address when an Innovator may withdraw a patent, but what is important is that the statute does not limit the Innovator’s right to withdraw patent information.  The Court cannot take on the role of the legislature by creating such limitations when they were omitted by Congress.”

As to Teva’s argument that the delisting mechanism at FDC Act § 505(j)(5)(C)(ii)(I) and the delisting trigger at FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC) are linked and must be read together, the court stated that:

[t]he problem with this interpretation is that the MMA contains no language linking the forfeiture provision and the counterclaim provision as Teva would prefer.  The provisions simply do not refer to one another.

Moreover, even if subsection (bb)(CC) were construed in the context of the whole statute to be ambiguous, the Court would be required to defer to the FDA’s interpretation under Chevron step two.  It is not arbitrary or capricious for the FDA to interpret (bb)(CC) as broadly applying whenever an Innovator withdraws patent information because the statute provides no limitations on withdrawal of patent information and subsection (bb)(CC) makes no reference to the counterclaim provision.  The FDA’s interpretation of the statute is reasonable.

The court also dismissed the utility of the Ranbaxy decision in interpreting the 180-day exclusivity forfeiture provisions added by the MMA, noting that “Ranbaxy was decided under the Hatch-Waxman Amendments as they existed prior to the enactment of the MMA,” and concluding that “FDA’s interpretation of the MMA is a reasonable interpretation of the balance Congress struck between these competing goals.”

It is unclear whether Teva will appeal the decision to the U.S. Court of Appeals for the District of Columbia Circuit.  We will update you as we learn additional information.

By Kurt R. Karst –      

Last Friday, the House Energy and Commerce Committee favorably reported its version of “America’s Affordable Health Choices Act” (H.R. 3200) by a 31-28 vote after adopting several amendments.  A copy of the bill and amendments are available here.  Importantly, the committee agreed to amendments sponsored by Representatives Anna Eshoo (D-CA) (by a 47-11 vote) and Bobby Rush (D-IL) (by voice vote) that would create a Follow-On Biologics (“FOB”) approval pathway and that would prohibit so-called “pay-for-delay” or “reverse payment” settlements between generic and brand-name drug companies, respectively. 

The Eshoo Amendment would amend the Public Health Service Act to create a pathway for the approval of biosimilars (i.e., FOBs), including provisions to resolve patent disputes.  The amendment incorporates many of the principles in Rep. Eshoo’s “Pathway for Biosimilars Act” (H.R. 1548) introduced earlier this year, as well as those in FOB legislation passed in mid-July by the U.S. Senate Health, Education, Labor, and Pensions Committee (see our previous post here). 

One important difference between H.R. 1548 and the Eshoo Amendment is that whereas H.R. 1548 would provide for up to 14.5 years of exclusivity for a new biological product, the Eshoo Amendment to H.R. 3200 would provide for up to 12.5 years of exclusivity, composed of an initial 12-year exclusivity period that may be extended by 6 months of pediatric exclusivity.  In addition, the 12-year exclusivity period would not be available with respect to the approval of “a supplement for the biological product that is the reference product” or “a subsequent application filed by the same sponsor or manufacturer of the biological product that is the reference product” for certain changes or modifications.  Another difference is that the Eshoo Amendment does not require FDA to issue guidance before reviewing or acting on a FOB application.  H.R. 1548 included requirements on FDA guidance before FOB submissions and approvals could be made.

Biotechnology Industry Organization (“BIO”) President and CEO Jim Greenwood said in a press release that the amendment “strikes the appropriate balance among ensuring patient safety, expanding competition, reducing costs and providing necessary and fair incentives that will provide for continued biomedical innovation.”  PhRMA's press release is avaiable here, and GPhA's press release is available here. 

The Rush Amendment would amend the FDC Act to add section 505(w) – “Protecting Consumer Access to Generic Drugs” – to, among other things, make it unlawful for any person from being a party to any agreement resolving or settling a patent infringement claim in which an ANDA applicant receives anything of value, and the ANDA applicant agrees not to research, develop, manufacture, market or sell the generic drug that is the subject of a patent infringement claim.  The Rush Amendment is similar legislation sponsored by Rep. Rush earlier this year – the “Protecting Consumer Access to Generic Drugs Act of 2009” (H.R. 1706).  One notable difference is that while H.R. 1706 would amend the FDC Act to add new 180-day exclusivity forfeiture provisions with respect to settlement agreements, the Rush Amendment to H.R. 3200 does not include such provisions. 

The FTC has urged the passage of legislation prohibiting “reverse payment” settlement agreements and recently stated that such agreements are “presumptively illegal” (see our recent post here).  FTC Chairman Jon Liebowitz commended the House Energy and Commerce Committee for adopting the Rush Amendment. 

By Carrie S. Martin –

Last Wednesday, the Senate Special Committee on Aging held a hearing to discuss the conflicts of interest presented by the funding of continuing medical education (“CME”) by pharmaceutical and medical device companies.  Lewis Morris, Chief Counsel to the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”), testified that industry funding of CME  has increased by more than 300 percent in the last decade and that the pharmaceutical industry spent over a billion dollars on CME-related events in 2007, nearly half of all CME costs.  He said that this funding, however, is not entirely philanthropy:  according to one study, every dollar spent on physician events, like CME, results in over three dollars in increased revenue. 

In order to prevent industry from “co-opting” CME as a marketing tool, Mr. Morris recommended creating an independent CME grant organization, through which funding from industry would be pooled and then distributed by an independent board of experts.  Most panelists on the Aging Committee endorsed the recommendation.  Mr. Morris also recommended that pharmaceutical and medical device companies:

• Separate grant making functions from sales and marketing;

• Establish objective criteria for making educational grants to CME providers; and
• Eliminate any control over the speakers or content of the educational activity.

He acknowledged that the Pharmaceutical Research and Manufacturers of America (“PhRMA”) has already incorporated the first two recommendations into its PhRMA Code and that the Advanced Medical Technology Associates ("AdvaMed") has incorporated some restrictions on CME into its Code of Ethics as well.

The Chairman of the Committee on Aging, Herb Kohl (D-WI), is also a cosponsor of the Physician Payments Sunshine Act (S. 301), which requires industry to report payments and gifts to doctors.  Similar provisions are included in the House tri-committee health reform bill, which also requires disclosure of payments to medical schools and sponsors of continuing medical education programs.  It is conceivable, therefore, that Mr. Morris’s recommended CME “firewall” could make its way into health reform legislation as well. 

Yesterday, President Obama announced that he intends to nominate Anne Northrup as a Commissioner of the Consumer Product Safety Commission.  Anne Northrup was a Congresswoman from Kentucky from 1997-2006.  As we previously reported, earlier this month, Inez Moore Tenenbaum was sworn in as the ninth CPSC Chairman.

By Ricardo Carvajal –

The U.S. House of Representatives has passed the Food Safety Enhancement Act of 2009, which would substantially strengthen FDA’s regulatory authority over foods.  The bill would grant FDA mandatory recall authority, expanded access to records, stronger seizure and administrative detention authorities, and authority to quarantine foods.  In addition, the bill would prohibit delaying, limiting, or refusing inspection, authorize the issuance of subpoenas, provide whistleblower protection, and provide for enhanced criminal and civil penalties for certain prohibited acts with respect to foods.  The bill would also authorize FDA to establish science-based performance standards for classes of food, safety standards for fresh produce, a tracing system for domestic and imported food, a requirement for third party certification of imports, and safety and security guidelines for food imports.  Finally, the bill would require FDA to adopt a risk-based food facility inspection schedule.

In addition to complying with requirements imposed by FDA pursuant to the authorities summarized above, producers would be obliged to register their facilities annually and pay fees, conduct a hazard analysis and implement risk-based preventive controls, and develop and implement a written food safety plan.  Importers would be required to use only accredited testing laboratories and would be required to register and pay fees annually.

The text of the bill (H.R. 2749) is available here.  The Senate is not expected to take up similar legislation until it has addressed health care reform.