Hyman, Phelps & McNamara, P.C. (“HPM”) is pleased to announce that Ricardo Carvajal has joined the firm as Of Counsel.  From 2002 to 2007, Mr. Carvajal served as Associate Chief Counsel in FDA’s Office of Chief Counsel, where he handled issues concerning foods (including conventional foods, bioengineered foods, dietary supplements, functional foods, and food additives), labeling compliance (such as the use of health, nutrient content, structure/function, and disease claims), Good Manufacturing Practices, and the Hazard Analysis and Critical Control Point regulations.  Mr. Carvajal has particular expertise in the regulation of products derived through biotechnology and nanotechnology, and in the regulation of allergens.  Mr. Carvajal has also worked on matters involving drugs, devices, and other products regulated by the FDA.  Mr. Carvajal received an M.S. in Biology from the University of Michigan, and his law degree from Northwestern University School of Law.  He is an active member of the Food and Drug Law Institute, the Institute of Food Technologists, and the American Bar Association.

Last month, we reported on the U.S. Supreme Court’s 8-1 decision in Riegel v. Medtronic, in which the Court provided a definitive decision preempting state tort law claims for medical devices subject to an approved Premarket Approval Application.  Immediately after the decision was issued, some members of Congress threatened to introduce legislation that would have the effect of overturning the Riegel decision.  Representative Henry Waxman (D-CA) vowed that Congress will “pass legislation as quickly as possible to fix this nonsensical situation,” and House Energy and Commerce Health Subcommittee Chair Rep. Frank Pallone (D-NJ) stated that the Riegel decision “shows why it is more necessary than ever for Congress to step in and restore the protections that patients are entitled to if they are the victim of a life-altering accident caused by a medical device.” 

A 2-page draft bill, styled as the “Medical Device Safety Act of 2008,” is being circulated on Capitol Hill.  The bill (apparently originating from Rep. Pallone) would amend § 521 of the Federal Food, Drug, and Cosmetic Act (“FDC Act”) to add a new subsection, titled “No Effect on Liability Under State Law,” which states: “Nothing in this section shall be construed to modify or otherwise affect any action for damages or the liability of any person under the law of any State.” If enacted, the amendment would apply to any civil action pending or filed on the date of the enactment of the Medical Device Safety Act of 2008.  Furthermore, the bill, if enacted, would be retroactive to the enactment of the Medical Device Amendments of 1976, which added FDC Act § 521.

By Kurt R. Karst    

Last Friday, Representatives Anna Eshoo (D-CA) and Joe Barton (R-TX) announced the introduction of H.R. 5629, the “Pathway for Biosimilars Act.”  We previously reported on a draft version of the bill circulated on Capitol Hill in February 2008.  H.R. 5629 will be referred to the House Energy and Commerce Committee where it will presumably be scheduled for a hearing or mark-up session later this year.

Much of H.R. 5629 is similar to the draft version.  The bill would amend § 351 of the Public Health Service Act (“PHS Act”) to permit the submission of an application for licensure of a biogeneric that includes, among other things, information demonstrating that the biogeneric is biosimilar to a reference product based on analytical studies, animal studies, and a clinical study or studies sufficient to demonstrate the safety and efficacy of the biosimilar product.  While the draft version would have permitted the Department of Health and Human Services Secretary (“Secretary”) to waive only analytical and animal studies (if determined to be unnecessary), H.R. 5629 also permits the Secretary to waive clinical studies (again, if determined to be unnecessary).

As with the draft version, H.R. 5629 provides the sponsor of the first biogeneric determined to be interchangeable with a reference product with a 24-month period of market exclusivity.  Innovator companies would get a period of 12-year exclusivity after initial licensure that may be increased to 14 years if during the 8-year period following licensure of the reference product, the Secretary approves a supplement for a “medically significant new indication” that would be a “significant improvement” compared to marketed products.  The 12-year or 14-year exclusivity periods may be extended by 6 months by pediatric exclusivity.  As is currently the law for pediatric exclusivity applicable to drugs under § 505A of the Federal Food, Drug, and Cosmetic Act (“FDC Act”), H.R. 5629 states that pediatric exclusivity would not apply to a biological product unless FDA determines no later than 9 months prior to the expiration of market exclusivity that pediatric studies submitted to the Agency in response to a Pediatric Written Request meet the terms of the request.  Other provisions in FDC Act § 505A would also apply to biologics under H.R. 5629.

New to H.R. 5629 is a provision stating that an application for a biological product must be submitted under PHS Act § 351, except that “an application for a biological product may be submitted under [FDC Act § 505] if  – (A) such biological product is in a product class for which a biological product in such product class is the subject of an application approved under [FDC Act § 505] not later than the enactment of [the Pathway for Biosimilars Act]; and (B) such application” was submitted to FDA before the enactment of the Pathway for Biosimilars Act or is submitted to FDA not later than 10 years after enactment.  This exception provision is limited so that “if there is another biological product approved under [PHS Act § 351(a)] that could be a reference product with respect to such application” (that is, if such application were submitted under new PHS Act § 351(k) for a biosimilar), then the application may not be submitted under FDC Act § 505.  If enacted, H.R. 5629 would also deem an application for a biological product approved under FDC Act § 505 to be a license under PHS Act § 351 on the date that is 10 years after the enactment of the Pathway for Biosimilars Act.

FDA Law Blog will continue to follow H.R. 5629 as it makes its way through the legislative gauntlet. 

By Kurt R. Karst    

There is a rather memorable (and hilarious) scene from the movie “Good Morning, Vietnam” in which Robin Williams (playing the role of Airman First Class and disc jockey Adrian Cronauer) questions an Army lieutenant about a 1965 press conference to be given by former Vice President Richard Nixon: “Excuse me, sir.  Seeing as how the VP is such a VIP, shouldn’t we keep the PC on the QT?  ‘Cause if it leaks to the VC he could end up MIA, and then we’d all be put out in KP.”

Although the use of acronyms in the military is ubiquitous and probably not matched in any other sector, the healthcare sector probably comes in a close second.  It not uncommon to read legal memoranda, court documents, or agreements in which a single sentence contains 5 or more acronyms.  Consider the following:  “FDA’s ANDA regulations implementing the FDCA provide that a PE drug product must be shown to be BE to the RLD covered under an approved NDA in order to obtain an AB rating in the OB.”  Translated: “The Food and Drug Administration’s Abbreviated New Drug Application regulations implementing the Federal Food, Drug, and Cosmetic Act provide that a pharmaceutically equivalent drug product must be shown to be bioequivalent to the Reference Listed Drug covered under an approved New Drug Application in order to obtain a substitutable rating in the Orange Book.” 

For those of us who need a guide to wade through the various FDA-related acronyms, FDA has created an Acronyms and Abbreviations Database, beginning with “A-V” (arteriovenous) and ending with “YTD” (year to date).  The database is not complete; however, visitors to FDA’s website may suggest new entries.  (How about “AAD” – Acronyms and Abbreviations Database?)

Click here for previous FDA Law Blog “Lighter Side” posts.

By Kurt R. Karst    

Under the Hatch-Waxman Act, certain patents related to products regulated by FDA are eligible for extension if patent life was lost during a period when the product was undergoing regulatory review.  The “regulatory review period” is composed of a “testing phase” and a “review phase.”  For a medical device subject to an approved Premarket Approval Application (“PMA”), the Patent Term Extension (“PTE”) statute at 35 U.S.C. § 156(g)(3)(B) states that the “testing phase” begins on “the date a clinical investigation on humans involving the device was begun and [ends] on the date [a PMA] was initially submitted with respect to the device.”  The “review phase” is the period between PMA submission and approval.  A patent term may be extended for a period of time that is the sum of one-half of the time in the “testing phase,” plus all the time in the “review phase.”  The “regulatory review period” must be reduced by any time that the applicant “did not act with due diligence.”  The total (calculated) regulatory review period may not exceed 5 years, and the extended patent term may not exceed 14 years after the date of PMA approval.  FDA’s regulations implementing the PTE statute are located at 21 C.F.R. Part 60.

In March 2004, FDA approved a PMA for Boston Scientific Corp.’s TAXUS™ Express 2™ Paclitaxel-Eluting Coronary Stent System (Monorail and Over-the-Wire).  In May 2004, Angiotech Pharmaceuticals, Inc. (“Angiotech”), which owns U.S. Patent #5,716,981 (“the ‘981 patent”) covering the TAXUS device, submitted a PTE application to the U.S. Patent and Trademark Office (“PTO”) requesting that the Office extend the ‘981 patent.  Angiotech calculated the maximum eligible PTE for the ‘981 patent to be 807 days.  This number is based on a testing period beginning on October 12, 2000, which is the initiation date of the first clinical trial involving the TAXUS device conducted in Germany, and a review period ending on March 4, 2004 when FDA approved the TAXUS PMA. 

In July 2006, FDA issued a Federal Register notice in in which the Agency determined the maximum eligible PTE for the ‘981 patent to be 716 days.  FDA’s PTE calculation was based on a testing period beginning on March 21, 2002 (and not October 12, 2000 as Angiotech claimed), when FDA records showed that the applicable Investigational Device Exemption (“IDE”) was determined to be substantially complete for permitting clinical studies to have begun, and a review period ending on March 4, 2004 with PMA approval.  On April 3, 2007, the PTO issued a notice of final determination to Angiotech stating that the PTE date would be calculated based on the March 21, 2002 IDE date and the March 4, 2004 approval date. Angiotech was given the option of filing a request for reconsideration of PTO’s determination. 

On May 3, 2007, Angiotech filed a request for reconsideration challenging the PTE determination.  Angiotech argued that the testing phase should have begun on October 12, 2000 when the first clinical trial was initiated in Germany, and not on the March 21, 2002 IDE date.  In referring to FDA’s decision that the testing phase began on March 21, 2002 instead of October 12, 2000, Angiotech’s request for reconsideration states that “[t]he apparent basis for this determination is [FDA’s] regulation governing calculation of the regulatory review period.  Although the statue mandates that the regulatory review period be deemed to commence ‘on the date a clinical investigation on humans involving the device was begun,’ 35 U.S.C. 156(g)(3)(B)(i), FDA’s regulation [at 21 C.F.R. § 60.22(c)(1)] imposes additional criteria.” 

Specifically, FDA’s regulatory review period determinations regulation at 21 C.F.R. § 60.22(c)(1) states:

[A] clinical investigation is considered to begin on whichever of the following dates applies:

(i) If an [IDE] is required, the effective date of the exemption. 

(ii) If an IDE is not required, but institutional review board (IRB) approval under [FDC Act § 520(g)(3)] is required, the IRB approval date.

(iii) If neither an IDE nor IRB approval is required, the date on which the device is first used with human subjects as part of a clinical investigation to be filed with FDA to secure premarket approval of the device.

According to Angiotech, FDA’s regulation is contrary to the plain meaning of 35 U.S.C. 156(g)(3)(B)(i).  “The statute directs that the PTE be based on a regulatory review period commencing ‘on the date a clinical investigation on humans involving the device was begun with no additional requirement,” states Angiotech. “The imposition of additional statutory requirements is contrary to the plain meaning of the statute.” 

Angiotech notes that “Congress made clear in the broader context of the PTE provisions that it intended to distinguish the testing phase of the [regulatory] review period based on the commencement of a clinical investigation from a [regulatory] review period based on the effective date of a statutory investigational exemption under the FDCA.”  In support of its argument, the company notes that in contrast to the device PTE provision, the drug PTE provision in 35 U.S.C. 156 specifically states that the testing phase begins on the effective date of an Investigational New Drug Application.  With respect to the PTO’s ability to reconsider FDA’s determination the request for reconsideration states that although “Congress directed that FDA determine the review period for the PTO, it is appropriate for the PTO to consider and to determine – with FDA – whether the terms of the PTE were established on extra-statutory, and unlawful, criteria.”

In late December 2007, the PTO denied Angiotech’s request.  Instead of addressing the difference between the PTE statute and FDA’s PTE regulations, however, the PTO defers to FDA’s authority over regulatory review period determinations.  Under 35 U.S.C. § 156(d)(2)(A), “[n]ot later than 30 days after the receipt of a [PTE] application by the [PTO], [FDA] shall review the dates contained in the application . . . and determine the applicable regulatory review period.”  Citing the statute and judicial precedent, the PTO concludes that “the statute thus plainly mandates the FDA to determine the regulatory review period,” and that the Office “has no authority to change or redetermine the regulatory review period determined by the FDA. . . .”

It is unclear whether Angiotech will fight on with the PTO in court, or perhaps raise the issue with FDA in a citizen petition or in informal communication. 

By Kurt R. Karst    

Hyman, Phelps & McNamara, P.C. (“HPM”) is happy to announce that 4 of the firm’s attorneys have been named Super Lawyers in the Washington, D.C., area.  The March 2008 edition of Washington, D.C. Super Lawyers identifies 17 Super Lawyers from the Food and Drug Bar.  HPM snagged 4 of the slots – more than any other firm!  Congrats go to HPM’s James R. Phelps, Paul M. Hyman, Robert A. Dormer, and Douglas B. Farquhar.

Earlier today, FDA announced that Dr. Janet Woodcock was appointed as the permanent director of FDA’s Center for Drug Evaluation and Research (“CDER”).  The CDER directorship is a position familiar to Dr. Woodcock.  She served as CDER Director from 1994 to 2005.  Dr. Woodcock’s most recent position at FDA was as the Agency’s Chief Medical Officer and Deputy Commissioner.  She also served as Acting CDER Director since October 2007.  Over the past several years Dr. Woodcock played a leading role in FDA’s “Critical Path” Initiative, which is designed to improve the scientific basis for medical product development, and spearheaded the Agency’s pharmacogenomics initiative, among other things.

In April 2007, we reported on a complaint filed by a group of non-profit organizations (including the Association of American Physicians & Surgeons, Concerned Women for America, Family Research Council, and Safe Drugs For Women) against FDA (and later Duramed Pharmaceuticals, Inc.) in the U.S. District Court for the District of Columbia requesting that the court, among other things, vacate FDA’s August 24, 2006 approval of a supplemental NDA (“sNDA”) for Duramed’s emergency contraceptive PLAN B (levonorgestrel) Tablets, 0.75mg.  FDA’s August 24, 2006 approval permitted Over-the-Counter (“OTC”) use of PLAN B in women 18 years and older and maintained prescription status for women 17 years old and younger. 

After FDA and Duramed filed motions to dismiss the case based primarily on a lack of standing, the Plaintiffs amended their complaint in an attempt to cure any deficiencies.  The amended complaint includes 8 counts:

(1) that the FDA’s approval was unlawful because the SNDA failed to demonstrate that Plan B was safe for OTC use by consumers age 18 and older;

(2) that the FDA’s approval violated the [Federal Food, Drug and Cosmetic Act (“FDCA”)] by allowing Plan B to be marketed as both a prescription and an OTC drug;

(3) that the FDA’s age-based decision violated the FDCA;

(4) that the FDA has created a “third class” of drugs in violation of the FDCA;

(5) that the FDA violated the [Administrative Procedure Act (“APA”)] by failing to conduct a rulemaking;

(6) that the FDA violated the FDCA by failing to conduct a rulemaking;

(7) that the [FDA was] improperly influenced by political pressure; and

(8) that the FDA is not authorized to impose administrative exhaustion requirements.

FDA and Duramed filed motions to dismiss the amended complaint (available here and here) arguing that the Plaintiffs lacked standing to bring any claim and that that they failed to exhaust their administrative remedies, and objecting to the Plaintiffs’ legal theories with respect to counts 2, 4, 5, and 6 of the amended complaint.  “Although plaintiffs have alleged numerous standing theories on behalf of women, physicians, and pharmacists within their membership, and the organizations themselves, their allegations are insufficient to establish the elements of standing on behalf of any of these subgroups or individuals,” states FDA’s memorandum in support of the Agency’s motion to dismiss. “Similarly, plaintiffs have failed to allege a cause of action within the Court’s jurisdiction.  There is no right under the FDCA or APA for members of the general public to challenge or participate in a drug application proceeding.  Plaintiffs have also failed to exhaust administrative remedies as required by FDA regulations . . . .”

On March 4, 2008, Judge John Bates granted FDA’s/Duramed’s motion to dismiss.  In the memorandum opinion accompanying the dismissal order, Judge Bates ruled that the court has no jurisdiction to entertain the amended complaint because of the plaintiffs’ lack of standing to assert the claims in the complaint, and because the plaintiffs also failed to exhaust their administrative remedies, thereby further rendering the action nonjusticiable. 

With respect to standing, the plaintiffs challenging FDA articulated a representational standing argument in their court papers based on several alleged injuries flowing from FDA’s August 24, 2006 PLAN B approval.  The court did not buy the argument and stated that “Plaintiffs have failed to establish standing because they lack a sufficient personal stake in the outcome of the litigation so as to warrant the invocation of federal-court jurisdiction.” 

On the issue of failure to exhaust administrative remedies raised by FDA and Duramed in their motions to dismiss, the court noted that “[t]his threshold issue presents a more difficult question.”  The plaintiffs argued in their court papers, among other things, that 21 C.F.R. § 10.45(e), which permits “interested persons” to, under certain circumstances, “request judicial review of a final decision of the [FDA] Commissioner in the courts without first petitioning the Commissioner for reconsideration or for a stay of action,” allowed them to proceed to court without first presenting their arguments to FDA, because the Agency’s PLAN B sNDA approval was final agency action.  The court ultimately disagreed: “Although plaintiffs’ interpretation of the regulatory requirements has some surface appeal, it would allow ‘interested parties’ to bypass the administrative remedies and would undermine the entire regulatory process” (internal quotations omitted).

It is unclear whether the organizations challenging FDA’s PLAN B approval will appeal the district court decision or will first exhaust their administrative remedies at FDA – or perhaps abandon all hope of vacating the PLAN B approval.  Stay tuned!

By Kurt R. Karst    

On February 29, 2008, Judge Stadtmueller of the United States District Court for the Eastern District of Wisconsin dismissed a lawsuit brought by Schering-Plough Healthcare Products, Inc. (“Schering”) against three manufacturers of prescription polyethylene glycol 3350 (“PEG”), a laxative drug product.  In its lawsuit, Schering sought to use the Lanham Act, 15 U.S.C. § 1125, (along with state law claims) to privately enforce the Federal Food, Drug, and Cosmetic Act (“FDC Act”).  The court, following the reasoning of many other courts, held that Schering could not do so and dismissed the case.  Hyman, Phelps & McNamara, P.C., represented one of the defendants in the case. 

In October 2006, FDA approved Schering’s New Drug Application (“NDA”) (#22-015) to switch the company’s PEG product, MIRALAX, from prescription to Over-the-Counter (“OTC”) use – a so-called “Rx-to-OTC switch.”  MIRALAX was first approved in February 1999 under NDA #20-698 for prescription use only.  Schering began marketing OTC MIRALAX in early 2007.  Schering received 3 years of market exclusivity for the Rx-to-OTC switch. 

Prior to Schering’s switch, FDA had approved three Abbreviated New Drug Applications (“ANDAs”) for prescription PEG drug products.  Those three manufacturers had used prescription MIRALAX as their reference listed drug (“RLD”) in their ANDA submissions.

Following FDA’s approval of Schering’s OTC switch NDA, an Agency employee sent letters to the three generic manufacturers of prescription PEG products expressing the views that: (1) the FDC Act prohibits simultaneous prescription and OTC marketing of the same drug; and (2) the generic manufacturers’ prescription products were misbranded because they were labeled as “Rx only.”  FDA did not attempt to withdraw ANDA approval, however.

Schering brought suit alleging that the labeling of the generic prescription PEG products was false and misleading under the Lanham Act and Wisconsin law because the products’ labeling contained the statements “prescription only” and “Rx only.”   Schering sought partial summary judgment as to liability under the theory that the generic manufacturers’ prescription labeling was “literally false,” a claim, that if proven, establishes liability under the Lanham Act, even in the absence of a showing of consumer confusion.  The defendants opposed Schering’s motion for partial summary judgment, arguing that their labeling was not false, but in fact true and required by FDA, and that the terms “prescription only” and “Rx only” referred to each of their own products, and not to all PEG products.  The court found the defendants’ arguments persuasive and denied Schering’s motion for partial summary judgment.

Additionally, the defendants sought dismissal of Schering’s complaint on the grounds that it constituted an attempt to privately enforce the FDC Act in an area where FDA had not definitively interpreted the law.  The court agreed with the defendants, and dismissed the complaint.  In so deciding, the court rejected Schering’s argument that FDA opined on the defendants’ labeling because FDA employees had sent letters to the defendants.  Following established precedent, and FDA’s own regulations, the court reasoned that the letters did not constitute an official FDA determination.

By James P. Ellison

In August 2007, Teva Pharmaceuticals USA submitted a citizen petition to FDA requesting that the Agency relist in the Orange Book U.S. Patent #5,158,952 (“the ‘952 patent”) covering Janssen Phaemaceutica’s RISPERDAL (risperidone) Tablets (approved under NDA #20-272), and to confirm the company’s eligibility for 180-day exclusivity. (See Orange Book Blog post here.)  According to the petition, Teva submitted ANDA #76-228 to FDA on August 28, 2001.  The ANDA contained a Paragraph III certification to U.S. Patent #4,804,663 (which expired in December 2007, but is covered by a period of pediatric exclusivity scheduled to expire in June 2008), and 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.

In November 2006, the U.S. Court of Appeals for the District of Columbia decided in Ranbaxy Laboratories Ltd. v. Leavitt 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.  Teva states in its petition that following the Ranbaxy decision the company 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 argues in its petition that because the “official Orange Book” (that is, the printed edition of the Orange Book) listed the ‘952 patent when the company submitted ANDA #76-228, “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 February 26, 2008, FDA denied Teva’s petition.  FDA states that according to the Agency’s records, the ‘952 patent was delisted before Teva submitted ANDA #76-228 to FDA, and that as a result, the delisting was proper and Teva is not eligible for 180-day exclusivity.  Specifically, according to FDA, Janssen requested that the Agency delist the ‘952 patent from the Orange Book in April 2001, and “[i]n accordance with these instructions, FDA modified its patent listing database on June 11, 2001” to remove the patent from its RISPERDAL Orange Book file.  FDA states that the “delisting of the ‘952 patent was reflected in the publicly available, electronic Orange Book shortly after June 29, 2001, and no later than July 20, 2001, the date of the next database update.”  As such, “at the time Teva submitted its ANDA, the electronic Orange Book contained the most current information regarding patents listed for Risperdal tablets . . . [and Teva’s] assertion that the delisting of the ‘952 patent did not become effective until publication of the 2002 annual edition of the Orange Book is without merit.” 

FDA notes that the Agency’s decision is consistent with the Ranbaxy decision.  In Ranbaxy, “[t]he NDA holder’s request to delist the patents for simvastatin came almost 2 years after the Ranbaxy ANDA was submitted and almost 3 years after the Ivax ANDA was submitted.  In contrast, [Janssen] requested that the ‘952 patent for Risperdal be delisted 2 to 4 months before Teva’s ANDA for risperidone was submitted” (emphasis in original). 

Dissatisfied with FDA’s petition response, Teva sued the Agency on March 4, 2008 in the U.S. District Court for the District of Columbia requesting injunctive relief.  Specifically, Teva’s complaint requests that the court enter an injunction compelling FDA to relist the ‘952 patent and restore the company’s paragraph IV patent certification, and declare that Teva is entitled to 180-day exclusivity.  Teva also requests that the court enjoin FDA from granting final approval to other ANDAs for generic RISPERDAL during Teva’s 180-day exclusivity period.  (Both Mylan and Pliva have tentatively approved ANDAs.)  Teva’s memorandum accompanying the company’s motion for expedited preliminary injunctive relief makes similar requests and argues that “FDA’s refusal to relist the ‘952 patent and honor Teva’s right to 180-day exclusivity as the first Paragraph IV filer fundamentally undermines the Hatch-Waxman regime and flatly contradicts the [Ranbaxy decision].”

By Kurt R. Karst    

On February 27, 2008, the U.S. Court of Appeals for the Seventh Circuit issued a decision in United States v. Caputo, in which the court generally affirmed a “complex and unusual” district court decision holding criminally liable a corporate Chief Executive Officer (“CEO”) and, remarkably, a Chief Compliance Officer (“CCO”) for the illegal marketing of a medical device.  As discussed further below, the Seventh Circuit’s ruling could significantly affect civil and criminal defense strategies, particularly with respect to the use of expert testimony.

The defendants, Ross Caputo (CEO) and Robert Riley (CCO) of the medical device company AbTox, advanced a First Amendment (freedom of speech) argument at the appellate level, alleging that the Federal Food, Drug, and Cosmetic Act (“FDC Act”) violated the U.S. Constitution by restricting promotional materials to those uses that FDA has approved.  The court stated that whether the First Amendment applies to promotional activity by a product’s manufacturer “which struck a bargain with the FDA in the approval process by promising to limit its promotion . . . is a difficult question.  The doctrine of unconstitutional conditions places limits on the promises that an agency may extract from those who seek approval.”  Ultimately, the Seventh Circuit decided not to consider whether a seller of medical devices has a constitutional right to promote off-label uses because in this case the medical device at issue was not lawfully on the market for any use.

Following an 8-week jury trial, the defendants were convicted of 19 criminal counts, including conspiracy, fraud, mail fraud, wire fraud, and the introduction of an “altered” or misbranded device into interstate commerce. Applying the sentencing objectives set forth at 18 U.S.C. § 3553(a), the district court sentenced the CEO to 10 years imprisonment and 3 years of supervised release and the CCO to 6 years imprisonment and 3 years of supervised release.  In addition, the district court found the defendants jointly and severally liable for $17,209,074 in restitution to the hospitals, which, in the court’s opinion, were left with a worthless medical device not cleared by FDA. 

The Seventh Circuit affirmed the district court’s decision in all respects except as to the amount of restitution owed the hospitals, setting forth guidelines for the district court to apply in recalculating the appropriate amount upon remand.

Key to the appellate and district court’s analysis is that the “case involved a scheme which went beyond economic harm to the marketplace and involved direct physical harm to consumers.”  The district court found that at least 25 patients at 5 different hospitals suffered corneal decompensation in one eye after ocular surgery performed with instruments sterilized with the defendants’ product.  The district court further found that defendants had knowledge that brass instruments sterilized in defendants’ product would produce a potentially harmful blue-green residue, identified as copper acetate and zinc acetate.  Despite this knowledge, and in light of reports of patient harm, defendants allegedly did not conduct an investigation, open a complaint file with FDA, or file a medical device report.

The product in this case is the plazlyte sterilizer manufactured and marketed by AbTox; this sterilizer uses a peracetic acid mixture as its principal sterilant.  AbTox filed a 510(k) premarket notification with FDA to support the claim that its plazlyte sterilizer was substantially equivalent to ethylene oxide sterilizers currently on the market.  In its application, AbTox sought FDA clearance for a smaller sterilizer than the model the company ultimately marketed.  The company also allegedly withheld adverse test results from FDA during the premarket notification process. Based on the information submitted in the 510(k), FDA cleared the small sterilizer limited to be used for the sterilization of only flat, stainless instruments without lumens or hinges.  Upon FDA clearance, the district court found that AbTox induced its customers to purchase the large sterilizer by distributing “printed promotional material boldly proclaiming the ability of the AbTox sterilizer to process instruments with hinges and lumens, and to serve as a complete replacement for ethylene oxide.  Indeed . . .  the defendants jettisoned the manual [cleared by FDA] and substituted expansive language tending to obscure the narrow scope of the clearance.” 

AbTox then submitted a new 510(k) premarket notification to FDA requesting clearance for the expanded claims (lumens, different wraps) and a shorter time cycle and again failed to inform FDA of adverse test results.  The FDA reviewer reportedly found the premarket notification wholly deficient and sent AbTox a letter requesting additional information, and that also directed the defendants not to put the device into commercial distribution.  Shortly thereafter, the FDA sent AbTox a Warning Letter directing the company to desist from off-label promotion of the company’s already cleared sterilzer.  The company agreed to do so, discontinued some of its promotional materials, revised its operator’s manual back to the original language cleared by FDA, but then went on selling the large sterilizers to hospitals under the guise that those devices had been cleared by FDA.

The district court found thus that “defendants . . . effectively carried out a bait-and-switch scheme on the FDA and its customers, obtaining clearance on one sterilizer but using the clearance to sell another . . . in defiance of law and FDA directives through a pattern of falsehoods and deception, until the company shut down sales operations . . . under pressure from the FDA.”  Of special note is the district court’s treatment and findings regarding the company’s CCO: 

Corporate compliance officers are very much today’s corporate ‘fire personnel.’  They are often the company’s ‘first responders’ and must focus on both proactive and reactive efforts to be effective.  Proactive efforts need to emphasize the complementary goals of crime prevention and corporate ethical behavior.  Reactive efforts measure how well a corporation reacts when it learns that questionable and potentially illegal corporate conduct has occurred.

The Seventh Circuit’s opinion includes a number of discussions that will be somewhat controversial.  Perhaps most noteworthy is the court’s treatment of expert testimony.  The court found that the district court did not abuse its discretion in keeping out of evidence proposed expert testimony the defendants wanted to introduce “about the meaning of the [FDC Act] and [FDA’s implementing] regulations.”  Without citing any FDA-related judicial precedent, the court found that this topic is “a subject for the court, not for testimonial experts . . . .  The only legal expert in a federal courtroom is the judge.”  If adopted by other courts, this ruling could have a significant effect on the way that companies defend themselves in civil cases, as well as criminal cases.

The Seventh Circuit’s opinion also has an interesting discussion about the extent to which a manufacturer may modify a device that FDA has cleared under the 510(k) procedures. The court rejected the defendants’ argument that the Fifth Amendment precluded FDA from keeping the product at issue off the market.  The court ruled that FDA had provided the defendants with numerous warnings that the defendants’ sale of the product at issue was illegal, thus precluding them from putting forth a successful Due Process challenge.  The Court ruled that “[w]hen Caputo and Riley chose to go their own way, the question on the table for the court became simply who is right about the meaning of the legal rules, not whether adequate notice was given.”

It will be interesting to see if other like decisions follow, and how FDA might use this decision to its advantage.

ADDITIONAL INFORMATION:

• An MP3 file of the oral argument before the Seventh Circuit is available here.

• A copy of the Washington Legal Foundation’s brief in the case is available here.

• An article, titled “Corporate Compliance Officer – Gatekeeper or Jailbird,” by Hyman, Phelps & McNamara, P.C.’s, John R. Fleder discussing the district court’s decision in Caputo is available here.

One year ago today, Hyman, Phelps & McNamara, P.C., started FDA Law Blog with this post and a promise to provide you with timely updates on FDA enforcement actions, proposed rules, personnel changes, new and improved policies, along with related issues such as healthcare fraud and abuse, drug and device reimbursement, and other topics of interest.  Since then, we have made over 200 posts covering hundreds of pages of text and analysis that you are unlikely to find anywhere else (at least not for free!).  The response to FDA Law Blog has been tremendous (as our soaring subscription rates show us).  Over the past year, we have been cited in numerous trade press publications, including (just to name a few) The Pink Sheet, FDA Week, Dickinson’s FDA Review, and FDA News. The pharma blogosphere has also come to rely on FDA Law Blog’s timely information and analysis.  We have been cited (again, just to name a few) by The Wall Street Journal Health Blog, Pharmalot, On Pharma (which called our blog “required reading”), Patent Baristas, Drug and Device Law Blog, and our blogfather, Orange Book Blog, which is run by attorney Aaron Barkoff. 

Of course, none of FDA Law Blog’s success would have been possible without the tremendous support from our Hyman, Phelps & McNamara, P.C. colleagues, who often draft blog posts, and from our avid readers from around the world.  Jeff Wasserstein and I (Kurt Karst), as co-authors of the blog, thank all of you for making FDA Law Blog a success. As we at Hyman, Phelps & McNamara, P.C., know all too well, drafting blog posts is a time-consuming and often difficult task.  There is always a lot going on in our world, and it is a complicated field of law.  We strive to provide you with posts that are long enough to cover the topic, but short enough to be interesting. 

We appreciate the constant feedback we receive from FDA Law Blog readers.  While we do not always post comments, we do read all of them.  Thank you – and keep the comments coming (especially the positive ones)!  We look forward to another year, which appears to hold the possibility of tremendous change for our niche area of the law. 

Earlier this year, we reported on Senator Sherrod Brown’s (D-OH) request to the Congressional Research Service (“CRS”) for information concerning FDA’s “Fast Track” designation program “to help determine whether a case exists for changing or eliminating the 10-year-old initiative that was intended to speed the availability of drugs for serious diseases.”  The request was made after The Plain Dealer reported in December 2007 that “[Fast Track] designation has amounted to a government blessing, which has served as a marketing tool for drug companies and a boon for investors looking to make quick money on the stock market.”  Fast Track was created in 1997 by the FDA Modernization Act (FDC Act § 506) to help facilitate the development and expedite the review of drugs and biologics for serious or life-threatening conditions that demonstrate a potential to address unmet medical needs. 

In February, CRS, which provides policy and legal analysis to committees and to Members of both the U.S. House of Representatives and the U.S. Senate, issued a 6-page report, which concludes that there is insufficient information available from FDA to determine whether Fast Track Product designation is more likely to lead to product approval than those products without such designation.  “Are products that receive Fast Track designation more likely to have their NDA/BLA approved by FDA than products that receive no such designation?” asks CRS in its report.  “The answer is we don’t know, because, while FDA provides statistics on the products it designates as Fast Track, it does not make public information on the NDA/BLAs it receives unless and until the product is approved/licensed.”

In a follow-up article, The Plain Dealer reported that Sen. Brown is unhappy with the CRS report.  “My concern is that neither the market nor the government has enough information to make intelligent decisions,” said Sen. Brown.  The Plain Dealer also reported that Sen. Brown’s staff is planning to meet soon with Sen. Edward Kennedy’s (D-MA) staff to discuss Fast Track designation.  It is unclear whether the Senators will propose legislation to change or eliminate FDC Act § 506.

By Kurt R. Karst    

Earlier today, the U.S. Supreme Court announced a 4-4 split in Warner-Lambert v. Kent – just a few days after hearing oral arguments on February 25, 2008.  The case, which concerns the narrow issue of a Michigan law immunizing drug companies from products liability claims except in cases of “fraud-on-the-FDA” is a blow to pro-preemption advocates, as it leaves the U.S. Court of Appeals for the Second Circuit’s October 2006 ruling intact.

In 1995, Michigan enacted legislation immunizing pharmaceutical companies from products liability claims, provided FDA approved the drug product at issue.  The law contains an exception, however, that preserves liability if the drug company withheld or misrepresented information that would have altered FDA’s decision to approve the drug product (i.e., “fraud-on-the-FDA”).  Specifically, the Michigan law states, in relevant part:

In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the [FDA], and the drug and its labeling were in compliance with [FDA’s] approval at the time the drug left the control of the manufacturer or seller.

This subsection does not apply if the defendant at any time before the event that allegedly caused the injury does any of the following:

(a) Intentionally withholds from or misrepresents to the [FDA] information concerning the drug that is required to be submitted under the [FDC Act] and the drug would not have been approved, or the [FDA] would have withdrawn approval for the drug if the information were accurately submitted.

In March 2000, Warner-Lambert (a wholly-owned subsidiary of Pfizer), which marketed REZULIN (troglitazone), voluntarily withdrew the drug product from the market amid certain safety concerns.  Several Michigan consumers alleging injuries caused by REZULIN subsequently sued Warner-Lambert in state court alleging, among other things, that Warner-Lambert “knowingly concealed material facts about the safety and efficacy of Rezulin from the FDA, which would have prevented its approval and/or resulted in its earlier removal from the market.”  The case was removed to federal district court, where the court granted Warner-Lambert’s motion for judgment on the pleadings on the grounds that the Plaintiffs could not establish under Michigan law that REZULIN was “defective,” and that that an immunity exception in the Michigan law was preempted by the FDC Act under the reasoning of the Supreme Court’s 2001 decision in Buckman Co. v. Plaintiffs’ Legal Comm.  In Buckman, the Court ruled that federal law impliedly preempted state “fraud-on-the-FDA” claims. 

The case was appealed to the U.S. Court of Appeals for the Second Circuit to determine whether, under the rationale of Buckman, federal law also preempts traditional common law claims that survive a state’s legislative narrowing of common law liability through a fraud exception to that statutory limitation.  In vacating the district court’s ruling, the Second Circuit ruled that:

because Michigan law does not in fact implicate the concerns that animated the Supreme Court’s decision in Buckman, and because Appellants’ lawsuits depend primarily on traditional and preexisting tort sources, not at all on a “fraud-on-the-FDA” cause of action created by state law, and only incidentally on evidence of such fraud, we conclude that the Michigan immunity exception is not prohibited through preemption.  It follows that common law liability is not foreclosed by federal law, and Appellants’ claims should not have been dismissed.

Warner-Lambert challenged the Second Circuit’s decision and presented two issues for the Supreme Court’s review:

1. Whether, under the conflict preemption principles in [Buckman], federal law preempts state law to the extent that it requires the fact-finder to determine whether the defendant committed fraud on a federal agency that impacted the agency’s product approval, where the agency—which is authorized by Congress to investigate and determine fraud—has not found any such fraud, and thus—as in Buckman—the state requirement would interfere with the agency’s critical functions.

2. Whether, under the conflict preemption principles in Buckman, federal law preempts the provision in a Michigan statute that allows a product liability claim to be maintained against a manufacturer of an FDA-approved drug where, without an FDA finding of fraud on that agency, the fact-finder is required to make a finding under state law as to whether the manufacturer committed fraud-on-the-FDA and whether, in the absence of that fraud, the FDA would not have approved the drug.

Warner-Lambert argued, among other things, that “the Second Circuit’s holding will interfere with the FDA’s ability to perform its critical functions, which is precisely what this Court sought to avoid in Buckman.” 

The Supreme Court’s March 3, 2008 4-4 split in Warner-Lambert is the result of Chief Justice Roberts’s decision to recuse himself from the case because of stock ownership.  Although the Warner-Lambert case is important, the most significant preemption case for the drug industry might be Wyeth v. Levine, which concerns whether federal law preempts state torts claims imposing liability with respect to FDA-approved drug labeling.  A decision in that case is anticipated later this year or in early 2009, although oral argument has not yet been scheduled.

By Kurt R. Karst   

ADDITIONAL INFORMATION:

• March 7, 2008 Washington Legal Foundation Legal Backgrounder on the what the Supreme Court’s Riegel decision portends for drug and device suit preemption.

Preemption of state law concerning FDA-regulated products (drugs, devices, and foods) has been the hot topic over the past few weeks.  First, on February 20, 2008, the U.S. Supreme Court ruled in Riegel v. Medtronic that preemption principles and the 1976 Medical Device Amendments bar common law claims on the basis of safety or effectiveness of devices approved by FDA under a Premarket Approval Application (see 2/22/08 FDA Law Blog post).  Then, on February 25, 2008, the U.S. Supreme Court heard oral arguments in Warner-Lambert v. Kent, which concerns Warner-Lambert’s REZULIN (troglitazone), certain people alleging injuries caused by the drug product, and a Michigan law immunizing pharmaceutical companies from products liability claims except in cases of “fraud-on-the-FDA.”  Also, as we recently reported, the Supreme Court of California ruled in February 2008 in a case concerning farm-raised salmon that preventing a company from bringing a private action for violating a California law when the FDC Act authorizes such a state law would constitute an intrusion into state sovereignty.

Now, as reported by our fellow blogger Ed Silverman over at Pharmalot, former FDA Commissioner Dr. David Kessler and Georgetown University Law Professor (and former Public Citizen attorney) David Vladeck published an essay in the Georgetown Law Journal highlighting two of what they call the “most problematic aspects of the FDA’s pro-preemption policy – one legal, the other practical – that do not stand out in more comprehensive treatments of the issue.”  The authors summarize their concerns as follows:

The first point we make is that the FDA’s pro-preemption arguments are based on a reading of the FDCA that, in our view, understates the ability of drug manufacturers to change labeling unilaterally to respond to newly discovered risks, or to seek labeling changes from the FDA. In fact, drug manufacturers have significant authority – and indeed, a responsibility – to modify labeling when hazards emerge and may do so without securing the FDA’s prior approval.

Our second concern is that the FDA’s pro-preemption arguments are based on what we see as an unrealistic assessment of the agency’s practical ability – once it has approved the marketing of a drug – to detect unforeseen adverse effects of the drug and to take prompt and effective remedial action.

The authors take exception to FDA’s current pro-preemption policy.  They have a different perspective than FDA about the relevant Agency decision that should be subject to review in failure-to-warn cases arising under state law: 

The FDA focuses on the approval process, suggesting that the FDA’s approval of a drug’s labeling reflects the agency’s definitive judgment regarding risks that must be shielded from the possible second-guessing that might take place in a failure-to-warn case. . . .  But in our view, the FDA is wrong to focus on the moment of approval as determinative of the preemption question. The relevant timeframe is postapproval, and the question, in our opinion, is what did the FDA and the drug company know about a drug’s risks at the time the patient-plaintiff sustained the injury.

The authors also argue that a “Rule of Construction” included in the recently-enacted FDA Amendments Act (“FDAAA”) undercuts FDA’s pro-preemption position.  In this provision, which was added to FDC Act § 505(o) by FDAAA § 901(a), Congress amended the law to state that the Agency’s labeling authority over drugs and biologics “shall not be construed to affect the responsibility of the [manufacturer] to maintain its label in accordance with existing requirements, including [21 C.F.R. § 314.70 and § 601.12] (or any successor regulations).”  This provision was reportedly included in FDAAA instead of an express preemption provision.  According to the essay’s authors, “[t]he codification of this obligation undercuts the key pro-preemption argument the FDA and manufacturers make – namely, that the FDA alone decides the content of drug labels.”  In January 2008, we reported on FDA’s proposal to codify its “longstanding position” on postapproval labeling changes that could significantly affect preemption defenses.  Two of the regulations cited in the proposal are 21 C.F.R. § 314.70 and § 601.12.

By Kurt R. Karst