In the coming days, President Bush is expected to sign into law H.R. 6432 – the Animal Drug User Fee Amendments of 2008.  The new law reauthorizes and amends the Animal Drug User Fee Act (“ADUFA”) through Fiscal Year (“FY”) 2013, creates a new law for generic animal drug user fees (the Animal Generic Drug User Fee Act of 2008), and makes a couple of technical changes to the FDA Amendments Act (“FDAAA”), which was enacted in September 2007. 

ADUFA was first enacted in 2003 (Pub. L. No. 108-130).  Like its human drug counterpart, the Prescription Drug User Fee Act (“PDUFA”), ADUFA authorizes FDA to collect user fees to enhance the performance of the drug review process and ensure that new drugs are safe and effective. Under both laws, FDA has agreed to certain performance goals to review and act on applications. While human drug products under PDUFA are subject to three types of fees (application, establishment, and product fees), animal drug products approved under ADUFA are subject to four types of fees – application, product, establishment, and sponsor fees.  FDA’s ADUFA website provides additional information on the law.

The House Report accompanying H.R. 6432 details the changes made to ADUFA I by ADUFA II.  Among other things, the new law requires animal drug sponsors to submit annual reports to FDA on certain products containing antimicrobial active ingredients, and requires FDA to make summaries of the reports publicly available.  The information is intended to support FDA’s continuing efforts to address antimicrobial resistance.

Unlike PDUFA, which does not cover human generic drug products approved under Abbreviated NDAs (“ANDAs”), H.R. 6432 establishes a generic animal drug user fee system under the Animal Generic Drug User Fee Act of 2008 (“AGDUFA”).  Under AGDUFA, generic animal drug applicants are subject to three types of fees – application, product, and sponsor fees.  The enactment of AGDUFA will fulfill the Bush Administration’s FY2009 budget proposal to create such a law.  It is possible that the creation of a user fee system for generic animal drugs might lead to the creation of such a system for generic human drugs.  Indeed, the Bush Administration’s FY2008 and FY2009 budget proposals recommended the creation of generic human drug user fees.  While it is unlikely that a generic human drug user fee system will be proposed in Congress this year, it could happen once the 111th Congress convenes in January 2009.

In addition to handling animal drug user fees, H.R. 6432 makes a few technical corrections to FDAAA.  FDAAA added FDC Act § 505(q) concerning certain types of citizen petitions that could delay generic competition.  H.R. 6432 clarifies that “[c]onsideration of the petition shall be separate and apart from review and approval of any application.”  FDA has been criticized for its implementation of FDC Act § 505(q), and, in particular for not decoupling ANDA approval from responding to an applicable petition that could delay generic competition.  Despite this criticism, FDA has in at least one post-FDAAA instance decoupled ANDA approval and petition response.  Specifically, FDA approved ANDAs for generic CAMPTOSAR (irinotecan HCl) Injection in February 2008, notwithstanding a January 29, 2008 petition requesting that FDA stay further ANDA approvals.  FDA formally responded to the petition late last month.  H.R. 6432 also makes minor clarifying amendments to the clinical trial registry and results data bank provisions of Public Health Service Act § 402(j) added by FDAAA § 801.

An earlier version of the so-called “FDAAA fix” language that was circulated on Capitol Hill would have made more significant changes to FDAAA, including adding a provision creating Hatch-Waxman benefits for “old” antibiotics – i.e., antibiotic active ingredients (and derivatives of such ingredients) included in an application submitted to FDA for review or approved prior to the enactment of the 1997 FDA Modernization Act on November 21, 1997.  The proposal circulated on Capitol Hill mirrored § 1111 of the Staff Agreement version of FDAAA.  Section 1111 was stripped from FDAAA hours before the House of Representatives voted on the bill, reportedly due to costs concerns.  The same provisions in a proposed FDAAA fix addition to H.R. 6432 were removed, but for reasons that are unclear.

By Kurt R. Karst    

Off-label use cases have certainly become the rage.  Last week, the federal government’s Government Accountability Office released a report that outlined the government’s enforcement efforts in this area.  The report casts doubt on FDA’s ability to monitor off-label drug promotion. 

In addition, a number of individuals have filed federal False Claims Act “qui tam” lawsuits, seeking monetary rewards for lawsuits they have initiated against drug manufacturers which have allegedly engaged in unlawful off label promotional practices.  However, most of these lawsuits have been rejected by federal courts. 

On August 1, 2008, Magistrate Judge Thomas G. Wilson of the U.S. District Court for the Middle District of Florida (Tampa Division) joined the list of federal judges who have rejected off-label use qui tam cases.  In United States ex rel Hopper and Hutto v. Solvay Pharmaceuticals, Inc., Magistrate Judge Wilson issued a 27-page Report and Recommendation in which he recommended that the District Court dismiss this action under Fed. R. Civ. P. 12(b)(6).  Magistrate Judge Wilson found that although the qui tam relators’ amended complaint had gone into detail about allegations of a purported fraudulent scheme involving off label sales, the relators had utterly failed to comply with the requirements set forth in Fed. R. Civ. P (9)(b) to include specific allegations of actual false claims that were submitted to the government.  The relators acknowledged that they had no evidence of any false claims being submitted.  The Magistrate Judge rejected the argument that the court could infer that false claims were submitted because of the purported off label marketing scheme that was identified in the amended complaint.

The court’s ruling relied on three published decisions from the United States Court of Appeals for the Eleventh Circuit, which had collectively rejected qui tam cases where the relators had not submitted evidence that false claims had actually been submitted to the government.  However, the court did not need to rely on any of the four other court ruling which have dismissed off label use qui tam actions.   See e.g., United States ex rel. Rost v. Pfizer, Inc., 446 F.Supp. 6 (D. Mass 2006), a ruling later affirmed by the U.S. Court of Appeals for the First Circuit.  (Additional information on this case is available from Pharmalot.)

These qui tam off-label use cases, culminating in Hopper and Hutto establish a very demanding threshold for qui tam relators to meet in order to move forward with this type of case.  For instance, it seems very unlikely that current or former sales people can meet the 9(b) requirements even if, as in Hopper and Hutto, the sales people were allegedly involving in the off-label marketing practices of a company.

By John R. Fleder

UPDATE:

• On September 8, 2008, Judge Merryday issued an order adopting the Magistrate’s report and recommendation, and dismissing the case.

Representative John Dingell (D-MI) has revised several of the drug-related sections of the Discussion Draft of the FDA Globalization Act (“FDAGA”).  We first reported on the Discussion Draft, which has received significant attention from industry and stakeholder groups alike, in April 2008. 

Updated sections of the FDAGA were recently posted on the U.S. House of Representatives’ Energy and Commerce Committee’s website.  The updated draft does not significantly alter any sections of the original Discussion Draft, but it does include several new provisions of interest – many of which appear to be aimed at ensuring the purity of drugs.  Several of the new additions are blank placeholders left for further updating. 

First, the updated draft calls for inspections of drug, active ingredient, device, and device part manufacturing establishments every two years.  However, FDA can permit inspections once every four years if such a timeline would be appropriate when considering the class of the products, associated risks of the products, shipping volume, the history of the facility, and any other factors the Agency finds relevant.  The draft discussion also adds a section calling for reports to Congress on “the risk-based process for conducting surveillance of 8 current good manufacturing practices” under FDC Act § 510(h)(4). 

The revisions also include several sections on risk management.  If these revisions are enacted, the FDC Act would be amended to hold that a drug is adulterated if it is manufactured in a plant that fails to have a risk management plan.  The risk management plan must “provide for an assessment, prior to contracting with a person to supply raw materials or ingredients . . . of the suitability and competence of such person to carry out such activity,” explain the quality control process, “provide for the monitoring and review through periodic on-site audits of the facility,” “provide for the monitoring of incoming materials,” and explain quality control measures to ensure that the drugs manufactured are pure.  FDA would have authority to inspect this risk management plan during facility inspections.   

In addition, the updated draft adds a requirement for the documentation of the supply chain for all steps in the chain of drug manufacturing.  Each establishment registered with FDA must also be able to provide the Agency with an electronic statement that documents the chain of supply for the drug. 

Several other provisions are aimed at giving FDA greater authority.  For example, the revised Draft Discussion contains sections that would give FDA greater recall authority.  Perhaps to alert FDA to the need for a recall, a provision was added that requires that a person, other than a consumer, who “has reason to believe that a drug intended for human use would cause serious, adverse health consequences or death, shall” notify FDA as soon as practical of the danger.  The bill, if enacted, would require penalties for those who manufacture counterfeit drugs and provides for greater civil penalties for those who violate the FDC Act (although the actual dollar amounts of the penalties were mostly left blank). 

Finally, the end of the updated draft contains two very interesting additions.  First is a blank section titled “FDA Bonuses.”  Text below this heading indicates that the language will be added later.  Rep. Dingell has been a vocal critic of FDA bonuses and has launched an investigation into the Agency’s compensation practices.  Second is a section stating that FDA has “extraterritorial Federal jurisdiction over any violation of this Act relating to any food, drug, device, or cosmetic intended for import into the United States.”  It remains to be seen what, if anything, will be added to or deleted from these sections.    

Although the latest revisions to the FDAGA Draft Discussion are not extensive, they do indicate that the bill continues to receive the attention of Rep. Dingell and others in Congress.  We will continue to monitor this legislation and report on any further updates. 

By Susan J. Matthees

On July 1, 2008, ConsumerLab.com, LLC published a product review titled “Red Yeast Rice Supplements.”  Hyman, Phelps & McNamara, P.C. sent an 8-page letter to ConsumerLab on July 17 to inform the company that, as confirmed in FDA warning letters, the product review created potential safety issues for consumers as well as regulatory issues for the dietary supplement industry. 

The ConsumerLab product review of red yeast rice supplements makes incorrect statements about the law and FDA enforcement policy, and creates general confusion about the marketing of red yeast rice products.  Most important, the review encourages consumers to purchase dietary supplements with high levels of lovastatin, the active ingredient in the prescription drug Mevacor™, that FDA has determined to be unsafe.  In addition, FDA has repeatedly warned industry that the marketing of products with levels of lovastatin represented as “high” or “moderate” in the ConsumerLab review is illegal. 

Although ConsumerLab has updated its product review, ConsumerLab has not corrected the safety and regulatory issues addressed in FDA’s warning letters and this firm’s July 17 letter.  In a telephone call with counsel to ConsumerLab on July 30, this firm was informed that ConsumerLab did not intend to make further changes to the red yeast rice product review.  For this reason, we are posting a memorandum based on the firm’s letter to ConsumerLab as a warning to industry and consumers that the ConsumerLab review is in conflict with FDA’s view of the law.

By A. Wes Siegner

Yesterday, Pharmalot reported that U.S. Senator Herb Kohl (D-WI) and several co-sponsors introduced the “Independent Drug Education and Outreach Act of 2008.”   A similar version of the bill has reportedly been introduced in the U.S. House of Representatives.  According to a press release from the U.S. Senate Special Committee on Aging, the bill is intended “to provide doctors with unbiased information on prescription drugs,” and “will provide an important alternative to the way doctors currently get their information about drugs.”

If enacted, the bill would amend the Public Health Service Act to add § 904 – Prescription Drug Education and Outreach – to establish a program to award grants or contracts:

• For the development and production of educational materials concerning the evidence available on the relative safety, relative effectiveness, and relative cost of prescription drugs, non-prescription drugs, and non-drug interventions for treating selected conditions, for distribution to healthcare providers who prescribe such drugs and their patients; and

• For the development and implementation of a program to appropriately train and deploy health professionals to educate physicians and other drug prescribers concerning the relative safety, relative effectiveness, and relative cost of prescription drugs, non-prescription drugs, and non-drug interventions for treating selected conditions.

By Kurt R. Karst

On August 1, 2008, FDA will publish a Federal Register notice announcing the Fiscal Year (“FY”) 2009 user fee rates established under the Prescription Drug User Fee Act (“PDUFA”).  A similar notice will also be issued with the FY 2009 user fee rates established under the Medical Device User Fee Amendments.

The FY2009 PDUFA application user fee rates have been set at $1,247,200 for an application requiring clinical data, and one-half of a full application fee ($623,600) for an application not requiring clinical data and a supplement requiring clinical data.  (An FDA guidance document defines the term “clinical data” for PDUFA user fee purposes.)  Annual establishment and product fees have been set at $425,600 and $71,520, respectively.  The FY2009 fees, which go into effect on October 1, 2008, are only a modest increase from those set for FY2008.  The table below tracks PDUFA user fees since the inception of PDUFA. 

By Kurt R. Karst    

As we previously reported, Section 912 of the FDA Amendments Act (“FDAAA”) added a new prohibition to the Federal Food, Drug, and Cosmetic Act (“FDCA”).  The new prohibition, found at FDCA § 301(ll) (21 U.S.C. § 331(ll)), prohibits the introduction into commerce of any food that contains an approved drug or a licensed biologic.  It also prohibits the introduction of a food containing a drug or biologic for which substantial clinical investigations were initiated and made public.  There are four narrow exceptions to this prohibition, including a first-to-market exception.  As we previously noted, the § 301(ll) prohibition may have far reaching consequences for the development of new functional food and dietary ingredients.  The full impact will remain unknown until FDA determines how to resolve the  numerous interpretative issues presented by the provision in the absence of legislative history.

On July 29, 2008, FDA published a Federal Register notice inviting public comment on the possible interpretations of the prohibition and their potential effects on industry and consumers. Comments may be submitted to FDA until October 27, 2008.

The notice does not discuss the various interpretations FDA may consider or has considered.  Instead, the notice invites comments to a series of open-ended questions about the interpretation of various ambiguous terms and the possible impact of the § 301(ll) prohibition.  Among other things, FDA asks for comment on ambiguities in the prohibition and exceptions including the meaning of the following terms:

1. “drug”: how should FDA determine the identity of a drug?  For purposes of section 301(ll) should FDA consider the chemical structure of a substance?

2.  “substantial clinical investigations”: are clinical investigations limited to studies in humans or do they include studies in animals?  Should clinical studies in humans bar the use of that substance in animal feed?  When are clinical investigations in humans and/or animals substantial?

3. “marketed in food”: substances that were “marketed in food” before they were approved as a drug are excepted from the prohibition.  FDA questions whether “marketed in food” means something different than “marketed as food,” the term used in the exclusionary clause for dietary supplements, 21 U.S.C. 321(ff), and interpreted in the Pharmanex litigation.  FDA also asks for input as to the significance of “marketing in food” outside the United States.

4. “an independent biological or therapeutic effect”: substances that are used “to enhance the safety of the food supply” and do not have an “independent biological or therapeutic effect” are also excepted from the prohibition.  FDA asks for input on the meaning of “a biological [and] a therapeutic effect” and when such an effect is “independent.”

FDA also requests comment on the range of products subject to the prohibition and the likely consequences to products in those categories.  In particular, FDA requests information on how the prohibition would affect marketing of infant formula, dietary supplements, animal feed, and food contact substances.

Perhaps most importantly, the § 301(ll) prohibition does not exempt substances that were permitted before the enactment of FDAAA.  Its impact may therefore extend beyond new functional food and dietary ingredients and bar products that are currently legally marketed.  FDA asks for examples of foods that may be affected and the consequences of prohibiting these products for the consumers that use (and rely on) these products. 

Clearly, FDA is grappling with interpreting FDCA § 301(ll) prohibition.  Given FDA’s discretion in interpreting the prohibition, and its potential widespread and serious impact, industry would be well advised to seize this opportunity to influence FDA’s thinking and provide the Agency with information that will facilitate a reasonable construction of the law.

By Riëtte van Laack & Diane B. McColl

On July 25, 2008, the Department of Defense (“DOD”) issued a proposed rule to implement section 703 of the National Defense Authorization Act for Fiscal Year 2008 (“NDAA-2008”).  Section 703 of NDAA-2008 provides that the TRICARE retail pharmacy program (“TRRx”) is to be treated as an element of the DOD to the extent necessary for prescription drugs provided by TRRx pharmacies and paid for by the DOD to be subject to the Federal Ceiling Price requirements of section 603 of the Veterans Health Care Act of 1992, 38 U.S.C. § 8126.  Under the latter statute, manufacturers of “covered drugs” (generally, prescription drugs approved under a new drug application) must, in order for their outpatient drugs to be federally reimbursed under Medicaid and Medicare Part B, enter into a Master Agreement and Pharmaceutical Pricing Agreement with the Department of Veterans Affairs (“VA”) agreeing to charge no greater than a statutory Federal Ceiling Price for drugs sold on the Federal Supply Schedule to four federal agencies:  DOD, the VA, the Public Health Service, and the Coast Guard.  Congress determined that Section 703 was necessary to establish a TRRx refund program in light of a September 2006 decision by the U.S. Court of Appeals for the Federal Circuit in The Coalition for Common Sense in Government Procurement v. Secretary of Veterans Affairs.  In that case, the Court set aside on procedural grounds an October 2004 “Dear Manufacturer” Letter issued by the VA that sought to establish authority for a TRRx refund program.

Although NDAA-2008 required promulgation of implementing regulations, the substantive provisions of the statute were effective as of the date of enactment of the statute, which was January 28, 2008.  DOD’s view has been that refunds are due on TRRx drugs dispensed as of that date, even in the absence of final regulations.  Written comments on the proposed rule are due by September 23, 2008.

The proposed rule would amend 32 C.F.R. § 199.21 (the TRICARE pharmacy benefit regulation) by adding a new paragraph (q) that would require written agreements to be entered into by manufacturers, and provide for refund procedures and remedies.  The proposed rule would define a “covered drug” for the purpose of this regulation as excluding, among other things, a drug that is not a covered drug under 38 U.S.C. § 8126, a drug that is not provided through a retail network pharmacy, and a drug for which the TRRx Pharmacy Benefits Program is the secondary payor. 

The proposed rule would require manufacturers to enter into written refund agreements, as a condition for inclusion of the manufacturer’s covered drugs on the TRICARE uniform formulary and the availability of covered drugs through the TRRx pharmacies without preauthorization.  A covered drug that is not the subject of a written agreement would require preauthorization in order to be provided through a TRRx pharmacy. 

The proposed rule would require the written agreements described above to include refund procedures to ensure that prescription drugs dispensed by network pharmacies under the TRRx program would be paid for by the DOD at the Federal Ceiling Prices available to the DOD pursuant to 38 U.S.C. § 8126.  The refund procedures would “incorporate common industry practices for implementing pricing agreement between manufacturers and large pharmacy benefit plan sponsors.”  Beyond this, the proposed rule does not prescribe any details of the refund procedures, except that manufacturers must be provided “at least 70 days from the date of the submission of the TRICARE pharmaceutical utilization data needed to calculate the refund before the refund payment is due.” 

Under the proposed rule, the refund due on a covered drug would be the difference between the Federal Ceiling Price and either (a) the most recent annual non-Federal average manufacturer price (“Non-FAMP”) reported to the VA, or (b), at the manufacturer’s option, “direct commercial contract sales prices specifically attributable to the reported TRICARE paid pharmaceuticals, determined for each applicable NDC listing.”

The proposed rule would also provide that refunds due are subject to the overpayments recovery regulation at 32 C.F.R. § 199.11.  The proposed regulation would further permit the Director of the TRICARE Management Activity to take any action authorized by law if a manufacturer of a covered drug fails to make or honor an agreement under the regulation.  Although the proposal does not state this, a failure to provide a section 703 refund to DOD might be viewed by the government as a violation of the manufacturer’s Master Agreement with the VA.  Termination of that Agreement for breach would result in the manufacturer’s covered outpatient drugs being ineligible for federal payment under Medicaid and Medicare Part B, and ineligibility of the manufacturer to sell its drugs to the federal government.

The preamble to the proposed regulation notes that the DOD has proposed to enter into voluntary agreements with manufacturers for prescriptions filled on or after the date of enactment of NDAA-2008, and specifically asks for comments on alternative legally permissible implementation approaches and/or dates. 

By Michelle L. Butler and Alan M. Kirschenbaum

In the second lawsuit in as many months, the Patent and Trademark Office (“PTO”) has been sued over a decision to deny a Patent Term Extension (“PTE”).  As we previously reported, Wyeth sued the PTO and FDA in June 2008 concerning the appropriate PTE regulatory review period determination for a patent covering the company’s new animal drug CYDECTIN (moxidectin) Pour-On.

On July 11, 2008, PhotoCure ASA (“PhotoCure”) sued the PTO after the Office denied the company’s PTE application for U.S. Patent No. 6,034,267 (“the ‘267 patent”) covering the human drug product METVIXIA (methyl aminoevulinate hydrochloride).  FDA approved METVIXIA on July 27, 2004 under New Drug Application (“NDA”) #21-415 for the treatment of actinic keratoses of the face and scalp in certain patients and granted PhotoCure a period of 3-year exclusivity for a “new ester or salt of an active ingredient.”  The PTO’s decision to deny a PTE for the ‘267 patent was based on an analysis of the “first permitted commercial marketing” criterion in the PTE statute at 35 U.S.C. § 156(a).  PhotoCure’s lawsuit comes on the heels of several recent PTO decisions denying a PTE based on the “first permitted commercial marketing” criterion. 

Under the PTE statute at 35 U.S.C. § 156(a)(5)(A), the term of a patent claiming a drug shall be extended from the original expiration date of the patent if “the permission for the commercial marketing or use of the product . . . is the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred.”  In recent PTE memoranda, the PTO has heavily relied on decisions by the U.S. Court of Appeals for the Federal Circuit in Fisons v. Quigg, 8 U.S.P.Q.2d 1491 (D.D.C.1988), aff’d 876 F.2d 99 U.S.P.Q.2d 1869 (Fed.Cir.1989), Pfizer Inc. v. Dr. Reddy’s Labs., 359 F.3d 1361 (Fed. Cir. 2004), and Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392, 13 USPQ2d 1628 (Fed. Cir. 1990) to support the Office’s interpretation of the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active moiety” (i.e., the molecule in a drug product responsible for pharmacological action, excluding any salt, ester, or other non-covalent derivative) rather “active ingredient” (i.e., the active moiety in a drug product, including any salt, ester, or other non-covalent derivative).

With respect to PhotoCure’s PTE request for the ‘267 patent covering METVIXIA, the PTO issued a final decision in May 2008 stating that METVIXIA does not represent the first permitted commercial marketing or use of the product because of FDA’s December 1999 approval of an NDA for Dusa Pharmaceuticals Inc.’s LEVULAN KERASTICK (aminolevulinic acid HCl) Topical Solution, which contains the active moiety aminolevulinic acid (“ALA”).  Thus, according to the PTO, METVIXIA does not represent the first permitted commercial marketing or use of ALA and the ‘267 patent is ineligible for a PTE. 

Dissatisfied with the PTO’s decision, PhotoCure filed a complaint in the U.S. District Court for the Eastern District of Virginia (Alexandria Division) seeking declaratory relief.  Specifically, PhotoCure requests that the court declare that the PTO acted unlawfully in denying PhotoCure’s PTE application, declare that the company’s PTE application satisfies the statutory PTE criteria, and grant further relief as necessary.  PhotoCure alleges that the PTO’s interpretation of the “first permitted commercial marketing” PTE criterion should be rejected because it is “contrary to law and will frustrate the overriding purpose of [the 1984 Hatch-Waxman Amendments], which is to encourage research and innovation, including the development of new active ingredients.” 

Over the past several months, the PTO has denied several PTE applications based on the failure to meet the “first permitted commercial marketing” criterion using analyses similar to those used to deny PhotoCure’s PTE application.  Examples include decisions on patents covering SYMBICORT (budesonide; formoterol fumarate dihydrate) Inhalation Aerosol, PRILOSEC OTC (omeprazole magnesium) Delayed-Release Tablets, and EXELON (rivastigmine) Patch .  Presumably those applicants will be closely following the outcome of the PhotoCure litigation.

By Kurt R. Karst    

In a case brought by POM Wonderful under the Lanham Act and California state statutes governing false advertising and unfair competition, the U.S. District Court for the Central District of California held Purely Juice and its president liable to the tune of nearly $1.5 million.  In its opinion, the court cites substantial analytical evidence gathered by POM Wonderful that a Purely Juice product sold as “100% pomegranate juice” with “no sugar added” in fact contained low levels of pomegranate solids and contained added sweeteners.  Further, Purely Juice had been made aware of the problem with its product, but continued to market it, unlike other competitors with similar problems, who apparently took corrective action. 

Notably, the court also held that Purely Juice knew, or should have known, of problems with adulteration of foreign pomegranate juice concentrate.  In light of that knowledge, the court opinion suggests that Purely Juice should have availed itself of test methods that were readily available for determining the authenticity of pomegranate juice.

Pomegranate juice now joins the list of high value commodities, such as olive oil, linked to economic adulteration and misbranding in the public eye.  In the absence of a robust federal enforcement program, scrupulous manufacturers will continue to have to prosecute their own interests.  As for consumers, the messages are clear and ancient ones: “you get what you pay for” and “buyer beware.”

By Ricardo Carvajal

On July 15, 2008, FDA issued a final rule exempting investigational drugs used in phase 1 studies (as described in 21 C.F.R. § 312.21 of FDA’s IND regulations) from the Current Good Manufacturing Practice (“CGMP”) requirements in 21 C.F.R. Part 211.  This exemption does not apply to an investigational drug for use in a phase 1 study once the investigational drug has been made available for use by or for the sponsor in a phase 2 or phase 3 study, or the drug has been lawfully marketed.  If the investigational drug has been made available in a phase 2 or phase 3 study or the drug has been lawfully marketed, the drug used in the phase 1 study must comply with part 211. 

FDA states that it believes this change is appropriate because many of the issues presented by the production of investigational drugs intended for use in the relatively small phase 1 trials are different from the issues presented by the production of drug products for use in larger phase 2 or 3 trials or for commercial marketing.  Additionally, many of the specific requirements in the regulations in part 211, such as those relating to stock rotation, repackaging, or relabeling, do not apply to the conditions under which many drugs for use in phase 1 are produced.

The exempt phase 1 drugs are, however, still required to meet the statutory (as opposed to regulatory) requirements for CGMP.  To help companies determine what is required to comply with these statutory requirements, FDA simultaneously issued a final guidance document discussing CGMP for phase 1 drugs. This guidance provides both specific, detailed information for complying with CGMP, as well as general guidance. With respect to general guidance, it notes that adherence to CGMP during manufacture of phase 1 investigational drugs occurs mostly through: (1) well-defined, written procedure; (2) adequately controlled equipment and manufacturing environment; and (3) accurately and consistently recorded data from manufacturing (including testing).  The guidance further notes it is the manufacturer’s responsibility to provide and use methods, facilities, and manufacturing controls to ensure that the phase 1 investigational drug meets appropriate standards of safety, identity, strength, quality, and purity and that manufacturers should consider carefully how to best ensure the implementation of standards, practices, and procedures that conform to CGMP for their specific product and manufacturing operation.   

By Gwendolyn M. McKee

When Congress enacted the Federal Food, Drug, and Cosmetic Act (“FDCA”) in 1938, it required New Drug Applications (“NDAs”) for “any” new drug.  At the time, approximately half of the drugs in this country were compounded, not manufactured.  Today, while the percentage of compounded prescriptions has dropped significantly, millions of compounded drugs are dispensed each year.  One unresolved legal question was whether the NDA requirements applied to compounded drugs.  On July 18th, the United States Court of Appeals for the Fifth Circuit announced its answer to the question in Medical Center Pharmacy v. Mukasey.

In the early 1990s, FDA began asserting that the compounding of drugs without an NDA was unlawful.  FDA’s move spurred considerable controversy.  To resolve the dispute, Congress added section 503A to the FDCA when it enacted the FDA Modernization Act of 1997.  This provision stated that compounded drugs were exempt from the NDA, good manufacturing practice, and adequate directions for use requirements if they met certain criteria. 

One criterion was that pharmacies could not advertise the compounding of specific drugs.  A group of pharmacists successfully challenged this provision in Western States Med. Ctr. v. Shalala, 69 F. Supp. 2d 1288 (D. Nev. 1999).  The Ninth Circuit affirmed the Nevada district court’s ruling that the advertising restriction violated the First Amendment.  It also found that the provision was not severable from the rest of section 503A.  The Supreme Court affirmed the lower court rulings that the advertising restriction was unconstitutional, but declined to consider the severability issue.  Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002).

Subsequently, another group of pharmacists filed suit in Midland, Texas challenging FDA’s regulation of compounded drugs.  The district court granted sweeping relief, holding that compounded drugs were “implicitly exempt” from the 21 U.S.C. § 321(p) “new drug” definition.  Med. Ctr. Pharm. v. Gonzales, 451 F. Supp. 2d 854 (W.D. Tex. 2006).  FDA appealed.

In the Medical Center Pharmacy opinion issued last week, the Fifth Circuit acknowledged that there are reasons to believe Congress did not intend to deem all compounded drugs unapproved “new drugs,” but nevertheless held that compounded drugs are not exempt from the “new drug” definition.  Rejecting the pharmacies’ argument that including compounded drugs within the “new drug” definition would absurdly but effectively outlaw the lawful practice of compounding, the court concluded that “Congress hid no such elephant in §321(p)’s mousehole.”  The court also found, however, that the advertising restrictions of section 503A are severable from the rest of the law.  Thus, the court disagreed with the Ninth Circuit and held that section 503A remains in effect.

The court also found that compounded veterinary drugs fall within the statutory definition of “new animal drug.” It acknowledged, however, that compounded veterinary drugs are exempt from the FDA approval requirement if they meet the criteria established by the 1994 Animal Medicinal Drug Use Clarification Act (“AMDUCA”).  Codified at 21 U.S.C. §360b(a)(4), (5), AMDUCA permits the compounding of veterinary drugs using FDA-approved human and animal drugs upon the order of a licensed veterinarian and subject to FDA discretion as to whether the drug poses a risk to public health.

The Fifth Circuit’s decision could increase the confusion over the legal status of compounding.  Pharmacists in the Ninth Circuit cannot claim protection by section 503A, while pharmacists in the 5th Circuit can.  The status of the law elsewhere in the country remains an open question.  The Fifth Circuit’s analysis, however, is more detailed than the Ninth Circuit’s, paving the way for pharmacists elsewhere in the country to claim that they, too, are protected by § 503A.

After the district court decision in Medical Center Pharmacy, FDA said it would honor the court’s ruling in only that one district, which is geographically large but sparsely populated.  It will be much more difficult for FDA to take the same tack with the Fifth Circuit decision.  It remains to be seen whether FDA and/or the pharmacies will seek Supreme Court review based on the circuit split.  Alternatively, FDA could ask Congress for a legislative fix.  In the meantime it appears that the controversy over the legal status of compounding will continue unabated.

By Jeff N. Gibbs & Jennifer B. Davis

On July 18, 2008, in a rare “win” (depending on which side you are on) on a motion for reconsideration, the U.S. District Court for the Southern District of Indiana (Indianapolis Division), vacated the court’s September 2007 decision in Tucker v. SmithKline Beecham Corp., in which Chief Judge David F. Hamilton had earlier dismissed, on federal preemption grounds, a wrongful death/failure-to-warn lawsuit brought under Indiana state law against GlaxoSmithKline (“GSK”) concerning the company’s antidepressant drug PAXIL (paroxetine HCl).  The recent decision, in which the court found no implied conflict preemption and declined to rely on FDA’s “preemption preamble” (see pages 3933-36) changes the Drug Preemption Scorecard kept by the folks at Drug and Device Law Blog.  The case is now reopened for adjudication on the merits, which the court promised to address in the “near future.”

The case concerns the death of Father Rick Tucker, a Roman Catholic priest who allegedly committed suicide in September 2002 after being prescribed PAXIL in August 2002.  Plaintiff Debra Tucker, Father Tucker’s younger sister, brought a wrongful death suit under Indiana state law against GSK claiming that her brother committed suicide as a result of taking PAXIL. Ms. Tucker contends that GSK breached its duty to warn of an increased suicide risk in adults taking PAXIL. GSK argued that the company could not be held liable for the alleged inadequacy of the PAXIL labeling because the United States Constitution’s Supremacy Clause mandates that the Federal Food, Drug, and Cosmetic Act (“FDC Act”) and FDA labeling requirements preempt Ms. Tucker’s state law claims.  In September 2007, the district court granted GSK’s motion for summary judgment because Ms. Tucker’s “state law claims stand in direct conflict with the FDA’s labeling requirements for Paxil issued pursuant to federal law. . . .” (i.e., conflict preemption).

Fast-forward 10 months and the district court has reversed course.  After the September  2007 decision, Ms. Tucker filed a Rule 59 motion asking the court to reconsider its decision.  Ms. Tucker argued that no conflict exists between Indiana state law and federal law because “FDA has not, in fact, precluded GSK from including in its current label Paxil-specific warning language,” and that even if there is a conflict as a result of class-wide antidepressant labeling changes implemented in 2007 concerning suicide, “no conflict existed in 2002 when GSK could have warned Father Tucker or his physician about Paxil’s alleged association with suicidality.”

GSK countered that although FDA’s labeling regulations give the company the right to adopt proper labeling, and that the company had the ability to change PAXIL’s labeling if there was a “reasonable association” between a serious adverse event and the drug, FDA retains exclusive regulatory authority over prescription drug labeling.  GSK also argued that the conflict between state and federal law that favors preemption is the risk that “drug manufacturers will be forced to walk a tightrope between being sanctioned by the FDA for ‘overwarning’ and sanctioned by the courts for ‘underwarning.’”  That is, there is a Catch-22 – a company could misbrand a drug by adding warnings against non-existent risks to avoid tort liability, or adhere to FDA labeling requirements and risk failure-to-warn tort liability.

In his latest ruling, Judge Hamilton was unconvinced by GSK’s arguments.  “In [earlier] finding conflict preemption, the court failed to appreciate the significance of the fact that the FDA regulations allow a manufacturer to modify pharmaceutical labels unilaterally and immediately, without prior FDA approval, when the manufacturer has reasonable evidence of a serious hazard.”  With respect to GSK’s argument that FDA retains exclusive authority over prescription drug labeling, the court stated that:

This argument fails to appreciate, as the court failed to appreciate, the fact that the ongoing ability, authority, and responsibility to strengthen a label still rest squarely with the drug manufacturer.  Although the FDA might later disapprove of a label strengthened pursuant to 21 C.F.R. § 314.70(c) and § 201.80, the FDA’s power to disapprove does not make the manufacturer’s voluntarily strengthened label a violation of federal law, which is what it would take to establish an actual conflict between state tort law and federal law. 

With respect to GSK’s Catch-22 argument, the court found this position flawed in one key respect:

[I]n spite of the FDA’s direction regarding Paxil’s label in May 2007, GSK still had (and has) the obligation to revise its label to strengthen a warning upon reasonable evidence of an association of a serious hazard, particularly with respect to this individual drug. If GSK were to receive such evidence, it would be obligated to revise its label in spite of the FDA’s directive in May 2007. In fact, when it issued its instruction that GSK revise Paxil’s label, the FDA advised GSK that if GSK disagreed with the FDA’s belief that Paxil-specific analysis should be included in the SSRI labeling revisions, GSK could request a meeting with the FDA. The FDA’s offer, upon which GSK did not act, is consistent with GSK’s ongoing obligations under the regulations. In other words, the FDA’s revisions were not necessarily the final word on Paxil’s label and did not put GSK into a position where it was impossible for GSK to comply with both state and federal law.

Judge Hamilton also took the opportunity to take issue with FDA’s “preemption preamble” in the Agency’s January 2006 final rule on prescription drug labeling.  There, FDA asserted that “FDA approval of labeling under the [FDC Act] . . . preempts conflicting or contrary State law,” that the Agency’s labeling requirements are not minimum standards but establish both a “floor and a ceiling,” that this preemption position was “long standing,” and that state failure-to-warn lawsuits have “directly threatened the agency’s ability to regulate manufacturer dissemination of risk information for prescription drugs.” 

Citing a recent essay authored by former FDA Commissioner Dr. David Kessler and Georgetown University Law Professor David Vladeck, Judge Hamilton states that “FDA’s current position on preemption is not ‘long standing’ but is in fact a ‘180-degree reversal’ from its earlier stance.”  Thus, “[t]he court, on reconsideration, gives relatively little weight to the FDA’s opinion on the preemptive effects of its regulations.” Moreover, Judge Hamilton opined that “failure to warn litigation can serve to reinforce the FDA’s regulations, which already place the obligation to strengthen the warnings on a drug’s label squarely on the shoulders of the drug’s manufacturer.”

By Kurt R. Karst 

As widely reported earlier this month, FDA and the Department of Justice (“DOJ”) intensified their investigation of Indian drug company Ranbaxy, Inc.  On July 3, 2008, the government moved to enforce administrative subpoenas directed at Ranbaxy and the company’s consultant, PAREXEL Consulting concerning information about drugs and drug products manufactured at Ranbaxy’s Paonta Sahib, India manufacturing facility.  The motion, filed in the U.S. District Court for the District of Maryland (Southern Division), alleges that Ranbaxy, among other things, falsified documents “that have resulted and continue to result in the introduction of adulterated and misbranded products into interstate commerce with the intent to defraud or mislead.”  Ranbaxy is in the midst of selling a majority stake in the company to Japan-based drug company Daiichi Sankyo for $4.6 billion.  Ranbaxy’s stock took a hit after news of the FDA/DOJ investigation surfaced.

Last week, Ranbaxy responded to the government’s motion and “unconfirmed allegations.”  In a clear attempt to bolster public confidence in the company, Ranbaxy made several commitments “to the Court, the FDA, the DOJ,” and to the company’s “employees, customers, and business partners.”  Among other things, Ranbaxy committed to cooperating with FDA and DOJ in their investigation and states that the company “is in the process of producing requested supporting documentation for its ANDA applications to DOJ.”  Ranbaxy also states that the company “is committed to develop and market high quality generic drug products.  Ranbaxy makes that commitment to its customers, business partners, and employees every day.” 

In addition, U.S. Representatives John Dingell (D-MI), Chairman of the Energy and Commerce Committee, and Bart Stupak (D-MI), Chairman of the Energy and Commerce Committee Subcommittee on Oversight and Investigations, announced late last week that the Energy and Commerce Committee “will soon commence a formal investigation into the Ranbaxy drug approvals and potential violations of GMP regulations.”  Representatives Dingell and Stupak question whether FDA “knowingly allowed drugs suspected of being fraudulently approved and manufactured in gross violation of Good Manufacturing Practices (GMP) to continue being sold by Ranbaxy, Inc., in the United States.” 

By Kurt R. Karst  

In previous postings (here and here), we have observed that § 912 of the 2007 FDA Amendments Act (“FDAAA”), which added the new § 301(ll) prohibition to the FDC Act, could represent a fundamental shift in the dividing line between foods and drugs, and has the potential to deter innovation in the research and development of new food ingredients.  That potential is slowly starting to be realized.  To understand why, a brief recap of the Generally Recognized as Safe (“GRAS”) concept is necessary. 

Research and development of new food ingredients and of new uses of existing ingredients is typically oriented toward attempting to establish that the proposed use of the ingredient is GRAS.  Under FDC Act § 201(s), the use of an ingredient is GRAS if it is generally recognized, among experts qualified by scientific training and experience to evaluate its safety, as having been adequately shown through scientific procedures to be safe under the conditions of its intended use.  A determination that the use of an ingredient is GRAS can be made independent of FDA, and does not require FDA approval.  However, because the marketplace generally demands it, ingredient developers seek FDA’s review of their GRAS determinations by submitting a GRAS notice to FDA.  If FDA has no questions about the notifier’s GRAS determination, FDA issues a letter saying so (a so-called “no questions” letter).  In its most recent “no questions” letter, issued to Mead Johnson & Co., FDA included the following paragraph on the new FDC Act § 301(ll) prohibition:

The Food and Drug Administration Amendments Act of 2007 that was signed into law on September 27, 2007, amends the FFDCA to, among other things, add section 301(ll). Section 301(ll) of the FFDCA prohibits the introduction or delivery for introduction into interstate commerce of any food that contains a drug approved under section 505 of the FFDCA, a biological product licensed under section 351 of the Public Health Service Act, or a drug or a biological product for which substantial clinical investigations have been instituted and their existence made public, unless one of the exemptions in section 301(ll)(1)-(4) applies. In its review of Mead Johnson’s notice that [its ingredient] is GRAS for use in infant formula powder, FDA did not consider whether section 301(ll) or any of its exemptions apply to foods containing [the ingredient]. Accordingly, this response should not be construed to be a statement that foods that contain [the ingredient], if introduced or delivered for introduction into interstate commerce, would not violate section 301(ll).

The inclusion of this paragraph is notable because “no questions” letters already contain a statement advising that it is the notifier’s continuing responsibility to ensure that food ingredients marketed by the notifier “are safe, and are otherwise in compliance with all applicable legal and regulatory requirements.”  Evidently, FDA feels it necessary to specifically put all parties on notice that a “no questions” letter offers no safe harbor from FDC Act § 301(ll).

Beyond the inclusion of a § 301(ll) disclaimer in its “no questions” letters, FDA has begun raising potential  issues as it becomes aware of them during its review of GRAS notices and in pre-submission meetings.  In effect, FDA has begun implementing FDAAA § 912.  During a symposium moderated by Diane McColl at the recent Institute of Food Technologists annual conference and trade show in New Orleans, an FDA representative recommended that § 912 be “part of the product development calculus.”  Sound familiar?

By Diane B. McColl & Ricardo Carvajal