Jeffrey K. Shapiro of Hyman, Phelps & McNamara, P.C. will be speaking at American Conference Institute’s 8th National Conference on Reducing Legal Risks in the Sale and Marketing of Medical Devices, November 17-18, 2008 at the Allerton Hotel on the Magnificent Mile in Chicago, IL. A copy of the program is available here. 

The conference features a faculty of leading outside counsel, distinguished in-house counsel and compliance officers, as well as 9 government enforcers and regulators. They will help those in attendance:

• REASSESS compliance programs as a result of the Deferred Prosecution Agreements
• DISSEMINATE peer-reviewed studies of off-label uses and AVOID off-label scrutiny
• AVOID anti-kickback red flags when handling activities involving prescribers and purchasers
• DESIGN compliant policies and procedures for consulting arrangements
• RESPOND to government inquiries and NEGOTIATE and IMPLEMENT CIAs
• REDUCE the risk of FCPA investigations and violations
• OVERCOME the current coverage, coding, and payment challenges with device reimbursement
• EXAMINE the appropriate circumstances for discounting, bundling and price concessions
• IDENTIFY legal parameters of DTC marketing, including "new media"
• TRACK state legislative initiatives and HARMONIZE inconsistent state obligations

Additional details and registration information are available at www.AmericanConference.com/MedicalDevices or by calling 888-224-2480.

The latest FDLI Update “Enforcement Corner” article by Hyman, Phelps & McNamara, P.C. discusses the fact that government entities, including FDA, are taking enforcement actions against companies that market cosmetics and cosmetic-like products.  The article highlights recent enforcement actions in this area, and also notes possible future areas of enforcement against cosmetics.  A copy of the article is available here. Contact Bryon F. Powell for additional information.

Representatives John Dingell and Bart Stupak are investigating advertising claims made for Wyeth Pharmaceuticals’ Centrum Cardio multi-vitamin.  The inquiry stems from a review of direct-to-consumer advertising for pharmaceutical products by the Committee on Energy and Commerce and its Subcommittee on Oversight and Investigations.  In a September 12, 2008 letter to Wyeth, the Congressmen requested documentation for advertising claims that Centrum Cardio can reduce cholesterol within four weeks, reduce the risk of heart disease, block cholesterol absorption, and significantly lower LDL cholesterol.  Some of the claims appear in TV advertisements, and others appear on the Company’s web site.  Both the Food and Drug Administration ("FDA") and the Federal Trade Commission ("FTC") can assert jurisdiction over web site content:  the FDA, as labeling, the FTC, as advertising.

Wyeth appears to be basing many of these advertising claims on FDA’s health claim regulation and enforcement discretion letter for products containing plant sterol/stanol esters.  Qualifying products can bear the health claim as well as other information described in the regulation related to plant sterol/stanol esters and coronary heart disease – specifically, that plant sterol/stanol esters may reduce the risk of coronary heart disease and lower blood total and LDL cholesterol levels. 

The claims Wyeth makes for Centrum Cardio appear to substantially comply with FDA’s plant sterol/stanol health claim regulation and enforcement discretion letter.  Although some of the claims may be more aggressive than the wording in FDA’s regulation (e.g., lowers cholesterol within a month), the claims generally follow the spirit of the health claim regulation. 

Moreover, for the claims appearing in pure advertising – for example, radio or TV advertisements – Wyeth technically need only be sure that its claims are truthful, not misleading, and adequately substantiated, which is the standard employed by the FTC.  Therefore, Wyeth should be able to make claims for Cardio Centrum in advertising that go beyond those provided in FDA’s plant sterol/stanol esters health claim regulation as long as the Company has adequate substantiation to support the claims. 

For claims related to health, the FTC typically consults with scientific experts – that is, experts in the field that relates to the claim – to see whether they agree that there is sufficient substantiation, based on “competent and reliable scientific evidence,” to support the claim.  How Congress expects to make the determination as to whether the claims are substantiated, however, is unclear. 

By Cassandra A. Soltis 

FDA has denied a petition for administrative reconsideration of its June 2005 decision on qualified health claims for green tea and certain cancers.  In that decision, FDA stated its intent to consider the exercise of enforcement discretion for two weakly worded qualified health claims for the relationship between consumption of green tea and a reduced risk of breast cancer and prostate cancer, but denied qualified health claims for the relationship between consumption of green tea and a reduced risk of various other cancers. 

Under 21 C.F.R. § 10.33(e), a request for reconsideration must demonstrate that FDA did not consider or adequately consider relevant information or views contained in the administrative record, among other things.  According to FDA, the request for reconsideration failed to meet this test.  FDA’s denial further asserts that, even if the request for reconsideration were granted under 21 C.F.R. § 10.33(d) as being in the public interest and in the interest of justice, FDA would reach the same decision as it reached in 2005.  FDA’s denial notes that the agency may revisit its decision as warranted by the emergence of new scientific evidence or changes in consumption patterns.

By Ricardo Carvajal

Over the past several months, FDA has responded to or companies have submitted citizen petitions to FDA requesting that the Agency refrain from approving ANDAs for generic drugs with less than complete labeling – so-called “skinny labeling.”  That got us thinking – what is the scorecard on labeling carve-out citizen petitions?  Below, after a brief discussion of the topic, is a listing of labeling carve-out citizen petitions that FDA has responded to or that are pending before the Agency.  We will update the lists from time to time as new FDA petition responses are issued and new petitions are submitted to FDA.

In the report accompanying the 1984 Hatch-Waxman Amendments, Congress stated that a generic applicant:

need not seek approval for all of the indications for which the [Reference Listed Drug (“RLD”)] has been approved.  For example, if the [RLD] has been approved for hypertension and angina pectoris, and if the indication for hypertension is protected by patent, then the application could seek approval for only the angina pectoris indication.

This view was codified in FDC Act § 505(j)(2)(A)(v), which states that an ANDA must contain “information to show that the labeling proposed for the new drug is the same as the labeling approved for the [RLD] except for changes required because of differences approved under a [suitability petition] or because the new drug and the [RLD] are produced or distributed by different manufacturers.”  In addition, FDA’s implementing regulations at 21 C.F.R. § 314.94(a)(8)(iv) state:

Labeling (including the container label and package insert) proposed for the drug product must be the same as the labeling approved for the [RLD], except for [certain differences] . . . .  Such differences between the applicant’s proposed labeling and labeling approved for the [RLD] may include. . . omission of an indication or other aspect of labeling protected by patent or accorded exclusivity under [FDC Act § 505(j)(5)(D)].

However, FDA’s regulations at 21 C.F.R. § 314.127(a)(7) further provide that to approve an ANDA that omits an aspect of labeling protected by patent or exclusivity, FDA must find that the “differences do not render the proposed drug product less safe or effective than the listed drug for all remaining, non-protected conditions of use.”

In Bristol-Myers Squibb Co., v. Shalala, 91 F.3d 1493 (D.C. Cir. 1996), the U.S. Court of Appeals for the District of Columbia Circuit held that FDA may approve an ANDA for a generic drug even though the labeling of the generic product does not include one or more indications that appear in the labeling of the RLD upon which the ANDA is based.  Similarly, in Sigma Tau Pharma. Inc. v. Schwetz, 288 F.3d 141 (4th Cir. 2002), the U.S. Court of Appeals for the Fourth Circuit held that FDA did not violate the Orphan Drug Act when the Agency approved generic CARNITOR (levocarnitine) where the labeling omitted an indication protected by orphan drug exclusivity. 

FDA Citizen Petition Responses Permitting a Labeling Carve-Out

• FDA Response, Docket Nos. 2001P-0495, 2002P-0191, 2002P-0252 (June 11, 2002) – ULTRAM (tramadol HCl)
• FDA Response, Docket No. 2001P-0495 (Mar. 31, 2003) – ULTRAM (tramadol HCl)
• FDA Response, Docket No. 2003P-0321 (Apr. 6, 2004) – REBETOL (ribavirin)
• FDA Response, Docket No. 2005P-0383 (Dec. 1, 2006) – OXANDRIN (oxandrolone)
• FDA Response, Docket No. 2006P-0410 (Mar. 13, 2008) – ETHYOL (amifostine)
• FDA Response, Docket No. FDA-2007-P-0169 (Apr. 25, 2008) – MARINOL (dronabinol)
• FDA Response, Docket No. FDA-2008-P-0304 (June 18, 2008) – ALTACE (ramipril)
• FDA Response, Docket No. FDA-2008-P-0069 (July 28, 2008) – CAMPTOSAR (irinotecan HCl)

FDA Citizen Petition Responses Denying a Labeling Carve-Out

• FDA Response, Docket No. 2003P-0518 (Sept. 20, 2004) – RAPAMUNE (sirolimus)

Pending Labeling Carve-Out Citizen Petitions

• FDA Docket No. 2007P-0354 – THALOMID (thalidomide)
• FDA Docket No. 2007P-0322 – ACTOS (pioglitazone)
• FDA Docket No. FDA -2008-P-0343 – PRANDIN (repaglinide)

If there is a single take away message from FDA’s various petition responses over the years it is that 21 C.F.R. § 314.127(a)(7) is controlling.  FDA will permit skinny labeling when the omission of protected RLD labeling information does not render the proposed generic drug product less safe or effective than the RLD for all remaining, non-protected conditions of use.  Conversely, if FDA believes that a labeling carve-out would render the proposed generic drug product less safe or effective than the RLD, then the Agency will not permit a labeling carve-out. 

By Kurt R. Karst    

On September 12, 2008, the U.S. Court of Appeals for the District of Columbia heard oral argument and ruled in Teva Pharmaceuticals USA, Inc. v. Leavitt, which concerns the availability of 180-day exclusivity for a generic version of Janssen Phaemaceutica’s schizophrenia drug RISPERDAL (risperidone) Tablets based on Teva’s Paragraph IV certification to U.S. Patent #5,158,952 (“the ‘952 patent”).  As we previously reported, Teva sued FDA in March 2008 after the Agency denied a citizen petition Teva submitted in August 2007 requesting that FDA relist the ‘952 patent in the Orange Book and confirm Teva’s eligibility for 180-day exclusivity. 

According to Teva’s citizen petition, Teva submitted an ANDA to FDA on August 28, 2001.  The ANDA contained a Paragraph IV certification to the ‘952 patent.  In October 2001, FDA notified Teva that the ‘952 had been delisted from the Orange Book, and required the company to amend its patent certification to reflect that the ‘952 patent was no longer listed in the Orange Book as claiming RISPERDAL Tablets.  Teva complied and submitted the ANDA amendment.  After the U.S. Court of Appeals for the District of Columbia Circuit decided in Ranbaxy Laboratories Ltd. v. Leavitt in November 2006 that FDA may not delist a patent from the Orange Book following the submission of an ANDA with a Paragraph IV certification to that patent, however, Teva reportedly reviewed its ANDA portfolio for any potential unlawful patent delistings that could affect the company’s eligibility for 180-day exclusivity.  This review led to the company’s August 2007 citizen petition.

Teva argued in its citizen petition that because the “official Orange Book” (that is, the printed edition of the Orange Book) listed the ‘952 patent when the company submitted its ANDA, “FDA’s putative delisting of the ‘952 patent did not become effective until January 2002, when the official Orange Book reflected the delisting of that patent.”  As such, according to Teva, given the decision in Ranbaxy, FDA could not have lawfully delisted the ‘952 patent because of the company’s Paragraph IV certification to that patent, and the company remains eligible for 180-day exclusivity.  Teva also contends that because FDA “failed to provide official notice of the ‘delisting’ for several months following the submission of Teva’s ANDA,” the delisting does not affect Teva’s “entitlement” to 180-day exclusivity. 

On April 11, 2008, Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia issued a 2-page order siding with Teva.  Judge Lamberth’s order declared that the delisting of the ‘952 patent was unlawful, ordered FDA to relist the patent in the Orange Book and to restore Teva’s Paragraph IV patent certification, and enjoined FDA from approving any generic RISPERDAL Tablets ANDAs until Teva’s 180-day exclusivity expires.  FDA approved Teva’s ANDA with 180-day exclusivity and appealed Judge Lamberth’s decision.

After being fully briefed on the issues raised in this case, the D.C. Circuit (a 3-judge panel of Circuit Judges Brown, Kavanaugh, and Senior Circuit Judge Williams) filed a per curiam judgment (without memorandum) on September 12, 2008 – the same date on which oral argument was heard.  The court’s order vacates the district court’s April 11, 2008 injunction and reverses the court’s order.  Also, in a rather unusual move, the court issued its mandate on September 12, 2008.

ADDITIONAL READING:

• Reuters Article
• Teva’s Appellate Brief
• FDA’s Appellate Brief
• FDA’s Reply Brief

By Kurt R. Karst    

Human history is replete with examples of the use of lethal or debilitating agents in war and by terrorists.  As early as the 6th Century B.C., the Assyrians are reported to have poisoned the wells of their enemies with ergot of rye (causing ergotism), and Solon of Athens reportedly poisoned the water supply with hellebore, a purgative agent, during the siege of Krissa.  During World War I, munitions filled with the irritants ethyl bromoacetate and chloroacetone were used to limit the effectiveness of unprotected troops, and German troops at Ypres, Belgium discharged 180,000 kilograms of chlorine gas from 5,730 cylinders against the Allied positions.  More recently, in the fall of 2001, letters containing weapons-grade anthrax were mailed to locations in New York, Florida, and Washington, D.C. resulting in several deaths.

The likelihood that a terrorist attack using Chemical, Biological, Radiological, or Nuclear (“CBRN”) substances might occur in the United States led FDA to promulgate regulations on May 31, 2002 intended to expedite the development and approval of new drug and biological products.  The final rule, titled “New Drug and Biological Products; Evidence Needed to Demonstrate Effectiveness of New Drugs When Human Efficacy Studies Are Not Ethical or Feasible” (commonly referred to as the “Animal Efficacy Rule”), amended FDA’s drug and biologic regulations to “allow appropriate studies in animals in certain cases to provide substantial evidence of effectiveness of new drug and biological products used to reduce or prevent the toxicity of [CBRN] substances.”  Although given relatively little attention since it was promulgated, the Animal Efficacy Rule creates a new regulatory paradigm for measuring efficacy by permitting FDA to approve drugs and biologics for counterterrorism uses based on animal data when it is unethical or unfeasible to conduct human efficacy studies. 

Under the Animal Efficacy Rule (21 C.F.R. § 314.610, drugs; § 601.91, biologics), FDA can rely on the evidence from animal studies to provide substantial evidence of effectiveness only when:

1. There is a reasonably well-understood pathophysiological mechanism of the toxicity of the CBRN substance and its prevention or substantial reduction by the product;

2. The effect is demonstrated in more than one animal species expected to react with a response predictive for humans, unless the effect is demonstrated in a single animal species that represents a sufficiently well-characterized animal model for predicting the response in humans;

3. The animal study endpoint is clearly related to the desired benefit in humans (generally the enhancement of survival or prevention of major morbidity); and

4. The data or information on the kinetics and pharmacodynamics of the product or other relevant data or information, in animals and humans allows selection of an effective dose in humans.

Since it was promulgated in 2002, FDA has approved two products under the Animal Efficacy Rule: (1) Pyridostigmine Bromide (NDA #20-414) for prophylaxis against the lethal effects of Soman nerve agent poisoning; and (2) CYANOKIT (hydroxocobalamin) (NDA #22-401) for the treatment of known or suspected cyanide poisoning.

On September 9, 2008, FDA issued a draft concept paper, titled “Animal Models – Essential Elements to Address Efficacy Under the Animal Rule.”  According to FDA the draft concept paper “is intended to identify the critical characteristics of an animal model that should be addressed when efficacy of the product under development will be established under the Animal Rule. It should also help determine whether an animal model can be considered sufficiently well-characterized to propose that the effect demonstrated in a single animal species can be used to support approval/licensure.”  Essential elements identified by FDA include the characteristics of the CBRN agent that influence the disease or condition, host susceptibility and response to etiologic agent, natural history of disease (pathophysiologic comparability), and characterization of medical intervention.  FDA emphasizes throughout the draft concept paper that sponsors should initiate early and frequent discussion with FDA regarding the essential data elements for the development and evaluation of animal models.

Over the past few years, several companies have reportedly expressed interest in pursuing approval of their products under the Animal Efficacy Rule.  FDA’s concept paper should provide a useful aid in the development of such products.

By Kurt R. Karst

In United States v. Stein, the United States Court of Appeals for the Second Circuit recently upheld a lower court’s decision to dismiss charges against former employees of KPMG on the basis that the prosecutors interfered with the employees’ constitutional right to counsel. 

Ex-employees of KPMG, a large accounting firm, were indicted after the Department of Justice (“DOJ”) investigated KPMG’s role in devising and marketing allegedly fraudulent tax shelters.  KPMG had initially advanced the ex-employees their legal fees but stopped after the government threatened KPMG that paying the legal fees would be used against the company in the investigation.  KPMG then stopped paying the legal fees.   

In January 2006, the ex-employees moved to have the indictments dismissed on the basis that the government had interfered with KPMG’s willingness to pay their legal fees.  The lower court found that but for the government’s interference, KPMG would have paid the employees’ legal fees and that the government’s conduct interfered with the employees’ Sixth Amendment rights. 

In July 2007, the lower court dismissed the indictment against the ex-KPMG employees.  On review, the Second Circuit has now held that KPMG stopped paying the ex-employees’ legal fees due to government pressure and therefore KPMG’s conduct “amounted to state action.”  The court also held that the government interfered with the defendants’ right to counsel in violation of the Sixth Amendment.  As a result, the Second Circuit upheld the dismissals. 

Coincidentally, the decision in Stein occurred on the very day the DOJ issued new guidelines for prosecuting corporate crimes.  In particular, the guidelines states that “credit for cooperation will not depend on the corporation’s waiver of attorney-client privilege or work product protection, but rather on the disclosure of relevant facts.”  The guidelines further state that when evaluating cooperativeness, prosecutors should not consider whether a corporation advanced attorney’s fees to employees.  In addition, participation in a joint defense agreement “will not render a corporation ineligible for cooperation credit” and prosecutors “may not consider whether a corporation has sanctioned or retained culpable employees in evaluating whether to assign cooperation credit to the corporation.” 

By Susan J. Matthees

On March 5, 2008, FDA published a notice in the Federal Register announcing an opportunity for public comment on a proposed collection of information concerning the new clinical trial certification requirement created by Title VIII of the FDA Amendments Act (“FDAAA”).  We previously reported on this new requirement here and here. 

Pursuant to PHS Act § 402(j)(5)(B), as amended by FDAAA § 801(a)(2), drug and device sponsors must include a certification (Form FDA 3674) with their regulatory submissions that they have complied with new PHS Act § 402(j), under which the responsible party of an “applicable clinical trial” must submit to the National Institutes of Health certain required information for inclusion in the clinical trial data bank at ClinicalTrials.gov.  Specifically, PHS Act § 402(j)(5)(B) states:

At the time of submission of an application under [FDC Act §§ 505, 515, 520(m), or PHS Act § 351], or submission of a report under [FDC Act § 510(k)], such application or submission shall be accompanied by a certification that all applicable requirements of [PHS Act § 402(j)] have been met.  Where available, such certification shall include the appropriate National Clinical Trial control numbers.

Since FDA published its March 2008 notice, several issues have been raised about the applicability of the new certification requirement.  Chief among these concerns is whether INDs are subject to the new requirement.  Indeed, several comments were submitted to FDA questioning whether IND submissions are “applications” in the terminology of the FDC Act.  For example, the Biotechnology Industry Organization (“BIO”) contends in a docket submission that “an IND submission is not an ‘application’ within the meaning of the FD&C Act” because FDC Act § 505(i) (concerning INDs) “does not refer to INDs as ‘applications’ but as ‘submissions’ for purposes of obtaining an ‘exemption,’” and that “the legislative history of Title VIII of FDAAA makes clear that Congress considered – and expressly rejected – the application of the certification requirement to INDs.”  The Pharmaceutical Research and Manufacturers of America (“PhRMA”) makes similar arguments in its docket submission.

On August 25, 2008, FDA published a second Federal Register notice announcing that a proposed collection of information concerning the FDAAA clinical trial certification requirement was submitted to the Office of Management and Budget for review and clearance.  In that notice, FDA addresses several issues, including those issues raised by BIO and PhRMA about IND submissions, and states:

FDA does not agree with these conclusions.  FDA agrees that the word “application” is not used in section 505(i) of the FD&C Act in reference to an IND.  However, section 505(i)(1) directed the Secretary of Health and Human Services to issue regulations exempting from the requirements of section 505 of the FD&C Act drugs intended solely for investigational use.  The regulations issued by FDA under this authority define an IND as “an investigational new drug application.”  21 CFR 312.3 (emphasis added).  Furthermore, these regulations repeatedly use the term “application” in reference to an IND.  Therefore, FDA considers an IND to be an application under section 505 of the FD&C Act .  Congress is familiar with FDA regulations and could have specifically exempted INDs from the certification process by directly excluding 505(i) from the scope of section 402(j)(5)(B) of the PHS Act. . . .  Congress understood the difference between marketing applications and IND submissions and exemptions.  FDA has concluded that the reference to section 505 of the FD&C Act was simply a streamlined reference to all applications and submissions possible under section 505 of the FD&C Act.

Several comments also questioned whether or not the clinical trial certification requirement should apply to trials over which the manufacturer/sponsor had no control – e.g., published reports of clinical studies included in a 505(b)(2) application.  FDA responded –

The certification provision, section 402(j)(5)(B) of the PHS Act, does not make a distinction between trials conducted by the sponsor and trials relied upon in the application but conducted by entities other than the sponsor.  FDA is aware that sponsors or applicants will be required to certify as to trials they did not conduct or register in the clinical trials data bank.  FDA has addressed this concern by requiring the submitter to declare that the information submitted is accurate, true, and complete “to the best of her/his knowledge.”

FDA also adds to the August 2008 notice an estimated annual reporting burden for ANDAs.  The March 2008 notice did not include ANDAs in the burden calculation, “but have since been determined to require a certification form . . . .”  We previously reported that it has been unclear whether a company submitting an ANDA containing the results of an in vivo bioequivalence study must certify on Form FDA 3674 that new PHS Act § 402(j) applies and that the studies have been registered at ClinicalTrials.gov.  That is, it has been unclear whether an in vivo bioequivalence study is an “applicable clinical trial” subject to the PHS Act § 402(j) databank registration requirements.  Although FDA’s August 2008 notice does not address specifically whether an in vivo bioequivalence study is an “applicable clinical trial,” its “determination” that the clinical trial certification must accompany ANDA submissions announced in that notice may be a signal that FDA is headed in the direction of concluding that in vivo bioequivalence studies are, in fact, “applicable clinical trials” that must be registered.  FDA is reportedly in the process of drafting a guidance document that will provide the Agency’s interpretation of the scope of the term “applicable clinical trial” and that should provide greater clarity to industry on the types of studies to which FDA believes PHS Act § 402(j) applies.   

By Kurt R. Karst    

Kurt R. Karst of Hyman, Phelps & McNamara, P.C. (and co-chief blogger of FDALawBlog.net) will be speaking at the Center for Business Intelligence’s Pharmaceutical Congress on Paragraph IV Disputes, October 15 – 16, 2008, at the Marriott Philadelphia Downtown in Philadelphia, Pennsylvania.  A copy of the program is available here.  At the event, preeminent members of the nation’s Food and Drug Bar will address a broad range of topics, including: 

• FTC address on pharmaceutical antitrust
• In depth analysis of recent court cases and their implications on brand and generic companies
• Effects of KSR on brand and generic litigation strategies
• Panel discussion on acceptable settlement strategies for paragraph IV disputes
• Litigating paragraph IV disputes with multiple ANDA filers
• Interpreting forfeiture provisions for better business decisions
• Pre-suit preparedness strategies for paragraph IV disputes
• Citizen petitions and their impact on generic entry
• Declaratory judgments
• At-risk launches

For more information or to register, please contact the Center for Business Intelligence toll-free by phone at 1-800-817-8601 or via e-mail at cbireg@cbinet.com.

According to the Associated Press, a federal court has sentenced Steven Warshak, founder of Berkeley Premium Nutraceuticals, to 25 years in prison for crimes including mail fraud, conspiracy to commit fraud, and money laundering.  In addition, Warshak and other defendants must forfeit money and assets in excess of $500 million.  Berkeley reportedly made hefty profits from the sale of Enzyte, a dietary supplement, which was claimed to promote “natural male enhancement.”

In our view, as a benchmark for a "standard" dietary supplement FDC Act prosecution, it is easy to read too much into Warshak’s conviction and sentencing.  It is true that dietary supplement distributors must have adequate substantiation for any claims that they make,  that false representations about Enzyte’s effectiveness are cited in the case, and that such violations can result in criminal prosecution, conviction, and sentencing.  However, given the facts of this case, from our perspective, the verdict and subsequent sentencing are based on a wide array of unlawful business practices, in which the use of unsubstantiated claims played a small, if essential, part in driving the prosecution and subsequent sentencing.  For example, central to Berkeley’s fraudulent scheme was the placement of unauthorized charges on customers’ credit cards.  Consequently, the fraud loss in this case–which drives sentencing in fraud cases–was significant.  Also worth bearing in mind is that the product at issue was at least implicitly positioned as an alternative to prescription medications – always a risky marketing strategy.  In light of these circumstances, we would be surprised to see similarly aggressive prosecutorial efforts aimed more broadly at the use of unsubstantiated claims within the dietary supplement industry, or that such cases –if prosecuted– would result in similar sentences.

By Ricardo Carvajal & J.P. Ellison

2009 is shaping up to be a big year for debate on Follow-On Biologics (“FOBs”).  Earlier this year, Representative Anna Eshoo introduced FOB legislation and the House Energy and Commerce Committee Subcommittee on Health requested comment on various FOB issues.  The legislation and comments submitted in response to the subcommittee’s request are expected to provide a platform for debate in the 111th Congress – once it convenes in January 2009.  Now the Federal Trade Commission (“FTC”) plans to weigh in on the issue – from a competition perspective. 

On August 27, 2008, the FTC announced plans to hold a workshop concerning “competition provided by developing an abbreviated regulatory approval pathway for follow-on biologic drugs.”  According to the FTC’s Federal Register notice, a date for the workshop has not yet been set, but the FTC plans to issue a report in spring 2009 analyzing the potential impacts on the marketplace of FOBs.  As part of the FTC’s analysis, the Commission requests comment on two sets of questions (18 questions in all).  The first set deals with regulatory exclusivities and FOB competition and focuses on “whether, or to what extent, these regulatory incentives should be adopted in creating a pathway” for FOB approval.  The second set concerns patent dispute resolution issues and asks, among other things, about the lessons that have been learned from Hatch-Waxman incentives to encourage early resolution of patent issues. 

In what might be a sign of the FTC’s recommendation in any report that is issued, it is noteworthy that earlier this year, the Commission submitted a letter to the House Energy and Commerce Committee Subcommittee on Health noting that “Congress should consider the risks and rationales of establishing a period of generic exclusivity in the context of biologics,” and that:

to the degree Congress determines that exclusivities to branded or generic companies are beneficial, it should limit companies’ ability to game those exclusivities at the expense of consumers by (1) disconnecting the FDA approval process for generic biologics from patent litigation, and (2) ensuring there is no opportunity for brands effectively to lengthen their exclusivities through insignificant changes to a branded biologic product or through excessive procedural delays.

In addition, in June 2007, FTC Commissioner Pamela Jones Harbour stated during a speech that “it would be incorrect to assume that Hatch-Waxman [patent and exclusivity benefits] can simply be imported from the pharmaceutical realm to biologics.  There are too many critical differences . . . . For example, I would be very skeptical of a follow-on biologic approval pathway that included an Orange Book-like system of patent listings.”

By Kurt R. Karst    

A recent decision by the U.S. Court of Appeals for the District of Columbia in Chein v. DEA demonstrates the Court’s deference to agency expertise and a registrant’s heavy burden in overturning final action by the Drug Enforcement Administration (“DEA”) absent a “flagrant departure from DEA policy and practice.” 

In this case, DEA revoked a practitioner’s registration and denied his application for an export registration finding that the practitioner’s registration was not in the public interest.  The registrant, who is both a physician and lawyer, had a less than stellar history with DEA, the California Medical Board, and local law enforcement.  Relying on a 1995 decision of the Court in Morall v. DEA, the registrant argued that DEA revoked his registration when it had not revoked other physician’s registrations in analogous circumstances.  The Court explained its reasoning in Morall, stating that under the Administrative Procedure Act “the [DEA’s] choice of sanction is entitled to substantial deference and will be set aside only if [the] decision is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’” Relying on Supreme Court precedent in Butz v. Glover Livestock Comm’n Co., the court went on to explain that the “mere unevenness in the application of a sanction will not render its application in a particular case unwarranted in law.”  The Court found noteworthy that the practitioner failed to demonstrate that DEA has a “consistent” policy of allowing a practitioner to retain his registration under similar circumstances and “never accepted responsibility for his misconduct,” nor “cooperated with DEA.”

By John A. Gilbert & Serafina E. Lobsenz

In Novelty Distributors, Inc. v. Leonhart, the U.S. District Court for the District of Columbia recently confronted the issue of whether district courts have jurisdiction over a challenge to an agency action that is admittedly not final.   

Novelty Distributors, Inc. (“Novelty”), a distributor of controlled substances, must obtain a registration every year to distribute the List I chemicals ephedrine and pseudoephedrine.  Based on findings from an administrative inspection, the Drug Enforcement Administration (“DEA”) concluded that Novelty’s continued registration posed an imminent danger to the public health and safety and immediately suspended Novelty’s registration pursuant to 21 U.S.C. § 824(d). Following an expedited administrative hearing, and before DEA had issued its final decision, Novelty filed suit in federal district court seeking injunctive and declaratory relief.

DEA challenged Novelty’s choice of forum citing 21 U.S.C. 877 and the D.C. Circuit’s 2007 decision in John Doe, Inc. v. DEA.  In John Doe, which concerned DEA’s denial of a permit to import for bioequivalency testing a generic version of an FDA-approved drug, the Court affirmed a district court decision concluding that exclusive jurisdiction over Doe’s claims lies in the courts of appeals pursuant to 21 U.S.C. § 877.  The court found, however, that “[r]ather than supporting DEA’s argument, John Doe demonstrates that only the district court can have jurisdiction at any time prior to a final DEA decision.”  As noted by the court:

Novelty’s motion for a preliminary injunction is not a disguised attempt at forum shopping or gun-jumping by going directly to the district court before exhausting its administrative remedies, but is rather a request for temporary injunctive relief from its pre-hearing suspension, which the court of appeals lacks jurisdiction to consider, until such time as DEA issues a final agency determination regarding the suspension or revocation of its registration, which the court of appeals can hear on appeal. . . . Accordingly, this Court has jurisdiction to consider Novelty’s motion for a preliminary injunction against DEA’s suspension of Novelty’s registration pending a final agency determination on the matter.

In considering whether to issue a preliminary injunction, however, the court found that: (1) DEA did not act arbitrarily and capriciously in suspending Novelty’s registration for posing an imminent danger to the public health or safety; and (2) that Novelty had not met the burden necessary of showing a “substantial likelihood of success on the merits.”  The court ultimately denied Novelty’s motion for preliminary injunction.

By John A. Gilbert & Serafina E. Lobsenz

In recent years, FDA has studiously avoided taking any broad regulatory action on the issue of whether, and under what circumstances, the presence of methylmercury in fish renders that fish adulterated.  FDA recognized that the scientific evidence that addresses the potential risks posed by methylmercury in fish left a number of questions unanswered, while evidence addressing the benefits of fish consumption continued to mount.  In fact, FDA’s public advisory on methylmercury in fish (issued in tandem with EPA) had evolved to give greater recognition to the benefits of eating fish.

FDA’s public advisory is just that – a public advisory.  It is carefully worded so as not to be a guidance document subject to the requirements of the agency’s Good Guidance Practices regulation in 21 C.F.R. § 10.115 (i.e., it does not purport to be either an interpretation of statutory or regulatory requirements, or a statement of policy).  Thus, it was a source of dismay to more than a few agency insiders when then-Commissioner Dr. Lester Crawford sent a letter to California’s Attorney General claiming that the public advisory was part of a “carefully considered federal approach to advising consumers” constituting federal law that preempted California’s lawsuit aimed at requiring Proposition 65 warnings on canned tuna.

FDA’s letter initially hit its mark.  In People v. Tri-Union Seafoods, the Superior Court of California held that California’s lawsuit was preempted by federal law under the theory of conflict preemption advanced in FDA’s letter, and cited FDA’s letter in support of its ruling.  Shortly thereafter, in Fellner v. Tri-Union Seafoods, the U.S. District Court for the District of New Jersey granted Tri-Union’s motion to dismiss in a lawsuit contending that Tri-Union was guilty of negligence under New Jersey law for failing to warn consumers of the risks posed by methylmercury in its canned tuna products.  But, earlier this month, the U.S. Court of Appeals for the Third Circuit reversed – and what a reversal it is.

For starters, the appellate court thoroughly disparages FDA’s letter, concluding that “it merits a particularly low level of deference” because it is not “the product of an agency proceeding.”  Footnote 8 dryly observes that the letter “follows, and bears a striking resemblance to, a letter… sent to the agency’s chief counsel” by counsel apparently representing the tuna industry in the California litigation, and that the views in the letter “apparently were formulated without the benefit of exposure to conflicting views or critiques.”

The court’s rejection of the significance of FDA’s letter, and of the views espoused therein, is central to the court’s holding that there is “no federal law with which the alleged state duty to warn conflicts.”  With respect to FDA’s public advisory, the court concludes that it simply gives advice to consumers and promulgates no legal standard with which the state law claim conflicts.  With respect to FDA’s contention that the use of warning labels would frustrate its approach to advising consumers of the benefits and risks of eating fish, the court finds that there has been no “authoritative federal determination that the area [of health warnings] is best left unregulated.”  And with respect to FDA’s view that the requirement of a warning would render canned tuna misbranded under federal law, the court observes that “FDA has taken no misbranding action pertaining to the risk of mercury in tuna whatsoever.”  On the basis of those conclusions (and Tri-Union’s failure to identify an actual conflict between the state law claims and FDA’s actions), the court rejected all of the conflict preemption arguments advanced by Tri-Union.

The Third Circuit’s decision in Fellner stands as a counterpoint to the court’s April 2008 decision in Colacicco v. Apotex, Inc.  As we previously reported, the plaintiffs in Colacicco alleged claims for failure-to-warn against two drug manufacturers (Apotex and Pfizer) with respect to two selective serotonin reuptake inhibitors (paroxetine HCl and sertraline HCl) that they caused an increased risk of suicidality.  The court ruled that the failure-to-warn claims conflict with (and are therefore preempted by) FDA’s regulatory actions with respect to such drugs.  In Fellner, however, the court states that “[t]his does not mean . . . that federal law capable of preempting state law is created every time someone acting on behalf of an agency makes a statement or takes an action within the agency’s jurisdiction . . . We decline to afford preemptive effect to less formal measures lacking the ‘fairness and deliberation’ which would suggest that Congress intended the agency’s action to be a binding and exclusive application of federal law.”

All of this is not to say that FDA’s approach to the issue of methylmercury in seafood lacks merit, or that lawsuits such as the one against Tri-Union are a positive development.  As FDA points out, the public health consequences of warning consumers away from seafood are likely to be negative. 

By Ricardo Carvajal & Kurt R. Karst