On September 28, 2007, the U.S. Department of Justice announced that Bristol-Myers Squibb (“BMS”) agreed to pay more than $515 Million Dollars to settle off-label promotion, anti-kickback, Average Wholesale Price (“AWP”), and Best Price (“BP”) allegations, and related False Claims Act claims.  The enforcement action comes just three months after BMS earned praise from a federal monitor as a company “that today is governed by the highest standards of integrity, ethics and accountability, and one that reflects its commitment to those principles in both words and deeds,” and correspondingly, having a U.S. Attorney dismiss a two year old a criminal complaint and terminate a deferred prosecution agreement (“DPA”).  Despite the seeming inconsistency between glowing praise followed by new allegations and a large settlement, the settlement documents suggest that while this is not “old news,” the “covered conduct” stopped relatively shortly after the company entered into the DPA in June 2005.  Specifically, according to the government’s allegations, the covered conduct ceased in December 2001 (anti-kickback), December 2000 (AWP), December 2003 (anti-kickback again), December 2005 (off-label promotion), and 1997 (BP).

The $515M includes a $328M federal share, $25M of which comes as disgorgement of profits under the FDC Act.  The states will share in $187M.  False Claims Act relators in seven actions will share $50M.

As is usual in these types of resolutions, BMS also entered into a Corporate Integrity Agreement with the Office of the Inspector General for the U.S. Department of Health and Human Services.

ADDITIONAL INFORMATION:

• BMS Press Release
• Boston Globe Article

By James P. Ellison

Earlier today, FDA announced a new initiative, called the Generic Initiative for Value and Efficiency (“GIVE”), which is intended to increase the number and variety of generic drug products.  According to Gary Buehler, R.Ph., Director of FDA’s Office of Generic Drugs (“OGD”):

GIVE is an initiative aimed at optimizing OGD’s generic drug review process to increase efficiency. The goals of GIVE are to approve higher numbers of applications for generic products and expedite review of applications for which there are few generics available.

Over the last three to four years, the number of [ANDAs] submitted to [OGD] has increased. This has led to a growing list of pending applications. We’ve made a number of successful process improvements during this time. In fact, the office approved a record number of applications during the past two years. We approved 510 products in 2006, and approved more than 650 in the fiscal year that just ended.

But the advancement of medical science and the related increasing cost of health care and disease prevention have caused the role of OGD and its review staff to grow. The number of firms producing generic products and the number of products each firm proposes are growing at an unforeseen pace. The improvements we have made serve to unify and enhance the review process to address the growing workload, and to increase the efficiency of our office’s review efforts.

As part of GIVE, FDA will revise the review order for certain ANDAs. “For example, first generic products, for which there are no blocking patents or exclusivity protections on the reference listed drug, are identified at the time of submission for expedited review. This will mean that these products, for which there are currently no generic products on the market, may reach the consumer much faster.”  Although there are about 215 full-time FDA staff working on ANDA reviews, under GIVE, FDA will also “hire and train new generic drug reviewers and focus on enhanced use of electronic programs for handling drug submissions and internal documents,” and, when possible, engage the efforts of other FDA components.  A diagram of how OGD will make more drugs available under GIVE is available here.

OGD’s GIVE program is the latest of several initiatives intended to accelerate the generic drug development and approval processes.  Last year, OGD announced changes to its “First-In, First-Reviewed” policy to provide for exceptions under certain circumstances (see Orange Book Blog post).  In May 2007, FDA issued its “Critical Path Opportunities for Generic Drugs,” which identifies what FDA believes are challenges in the generic drug development process and outlines some actions intended to address those challenges (see FDA Law Blog post).  Also in May, FDA announced the availability of a draft guidance document and database providing recommendations on how to design product-specific bioequivalence studies to support ANDAs (see FDA Law Blog post).

It is unclear the extent to which OGD’s GIVE initiative might or might not affect the Agency’s push for generic drug user fees.  Earlier this year, FDA proposed creating generic drug user fees as part of the Agency’s Fiscal Year 2008 budget.  The recently-enacted FDA Amendments Act does not include such a user fee program.

On September 27, 2007, the U.S. House of Representatives Committee on Energy and Commerce passed H.R. 970, the Dextromethorphan Distribution Act of 2007, after a legislative “mark-up” session.  Similar legislation was introduced in the U.S. Senate in May 2007 (S. 1378) and was referred to the Health, Education, Labor, and Pensions Committee, where it has remained dormant.  Now that the House Energy and Commerce has passed the bill, it will be scheduled for a vote by the full House.

H.R. 970, if enacted, would restrict the distribution and possession of raw dextromethorphan, an antitussive (i.e., cough-suppressant) drug found in many over-the-counter cold/cough drug products.  Specifically, the bill would restrict the distribution of unfinished dextromethorphan to anyone but FDA-registered drug manufacturers and the possession of unfinished dextromethorphan by anyone but registered drug manufacturers.  The bill defines the term “unfinished dextromethorphan” to mean “dextromethorphan that is not contained in a drug that is in finished dosage form.”

Dextromethorphan is not a federally-controlled substance, but the Drug Enforcement Administration (“DEA”) recently noted that the Agency is reviewing the drug for possible control (that is, “scheduling”) under the Controlled Substances Act (“CSA”).  DEA observes that the 2006 “Monitoring the Future Study” showed that in 2005, 4% to 7% of 8th, 10th, and 12th graders reported using dextromethorphan for non-medical use.  DEA further reports that a California Poison Control System study showed a 10-fold increase of dextromethorphan abuse by all age groups from 1999 to 2004, and a 15-fold increase of abuse by adolescents during the period.

Should DEA decide to schedule dextromethorphan as a controlled substance under the CSA, the Agency would most likely propose placement of the drug in Schedule IV or V (i.e., substances with a low potential for abuse and with a currently accepted medical use).

By Larry K. Houck

On September 27, 2007, the U.S. Attorney’s Office for the District of New Jersey announced settlements with five companies (Biomet, Inc., Depuy Orthopaedics, Smith & Nephew, Inc., Zimmer, Inc., and Stryker Orthopedics, Inc.) resolving anti-kickback allegations.

The allegation common to all five cases is that each of the companies entered into consulting agreements with orthopedic surgeons under which the companies paid to induce the surgeons to use that company’s hip and knee replacement products.

Resolution for the first four companies listed above was through a deferred prosecution agreement (“DPA”), civil settlement, and corporate integrity agreement (“CIA”).  Stryker Orthopedics, Inc., which according to the press release “cooperated with the U.S. Attorney’s Office before any other company,” entered into a non-prosecution agreement (“NPA”), but did not enter into any civil settlement agreement or CIA, and therefore, did not get a release from civil or administrative liability.

All five companies have agreed to the appointment of federal monitors, who include former Attorney General John Ashcroft, and Debra Yang, the former U.S. Attorney for the Central District of California, whose investigation of Representative Jerry Lewis (R-CA), and somewhat abrupt departure from Gibson, Dunn & Crutcher LLP (the law firm representing Rep. Lewis), made headlines in connection with the U.S. Attorney firings earlier this spring.

The criminal complaints, filed in connection with each of the four cases in which there is a DPA, allege conspiracy to violate the criminal anti-kickback statute, 42 U.S.C. § 1320a-7b(b)(2), in violation of the general criminal conspiracy statute, 18 U.S.C. § 371.  It appears that the alleged conspiracy was between each company and surgeons as co-conspirators.  There does not seem to be any allegation of inter-company conspiracy.

The press release states that the civil releases resolve "claims under the anti-kickback statute and civil federal False Claims Act."  The settlement agreement summarily states that the "United States contends that certain of these financial arrangements were improper, that the remuneration paid thereunder was improper and/or unlawful, and that these arrangements caused hospitals and physicians to submit false and fraudulent claims. . . ."  Thus, it appears that the False Claims Act theory behind these settlements follows those cases in which the government has alleged that anti-kickback allegations necessarily give rise to false claims, a theory that is not tested in a settlement. 

In a post-McNulty Memorandum footnote on the controversy over the U.S. department of Justice requesting waivers of the attorney-client privilege, each of the DPAs and the NPA is clear that the companies are not waiving attorney-client privilege or attorney work-product protection, which contrasts with a pre-McNulty Memorandum DPA from that Office.

If last week’s activity from Senator Charles Grassley (R-IA), Ranking Member of the U.S. Senate Finance Committee, and False Claims Act champion, are any indication, resolution with the N.J. U.S. Attorney’s office may not put this matter behind these companies.  Senator Grassley sent a letter to Medtronic, which settled similar allegations in July of last year for $40M.  Senator Grassley nevertheless appears to want additional information from the company.

ADDITIONAL INFORMATION:

• Biomet DPA
• Biomet Criminal Complaint
• DePuy DPA
• DePuy Criminal Complaint
• Smith & Nephew DPA
• Smith & Nephew Criminal Complaint
• Zimmer DPA
• Zimmer Criminal Complaint
• Stryker Non-Prosecution Agreement
• New York Times article

By James P. Ellison

On September 18, 2007, FDA’s Center for Drug Evaluation and Research (“CDER”) launched its latest publication, the “Drug Safety Newsletter”.  This quarterly electronic publication is intended as an additional source of drug safety information for healthcare professionals and complements existing communications targeted at healthcare professionals (i.e., prescription drug labeling, Healthcare Professional Sheets, FDA Alerts, and other information available on FDA’s website).

With its new Drug Safety Newsletter, CDER hopes to “enhance communication of new drug safety information, raise awareness of reported adverse events, and stimulate additional adverse event reporting.”  Each newsletter will include postmarketing safety information obtained from the Agency’s review of adverse event reports, and from clinical trials and epidemiological studies, postmarketing safety information for “recently approved new molecular [entities]” and “recent advisories on drug safety that have been posted on FDA’s Web site.”  In addition to these recurring items, FDA plans to include “topics of special interest.”

The first issue of the Drug Safety Newsletter includes postmarketing reviews of Rituximab, Modafinal, and Temozolamied, early safety findings of the new molecular entity Deferasirox, and FDA’s advisories on drug safety from January 1, 2007 through June 1, 2007.

The electronic newsletter is free.  Anyone interested in receiving a copy can subscribe here.

By Riëtte van Laack

On September 24, 2007, the Drug Enforcement Administration (“DEA”) published a notice of proposed rulemaking that would expand the classification of dronabinol, commonly known as delta-9-tetrahyrdocannabinol (“THC”), as a Schedule III controlled substance under the Controlled Substances Act. 

THC is a federally-controlled Schedule I controlled substance.  Currently, only MARINOL (dronabinol), an FDA-approved synthetic formulation of dronabinol in sesame oil and encapsulated in a soft gelatin capsule, is regulated as a Schedule III controlled substance.  DEA created the schedule classification for MARINOL based on the fact that the formulation greatly diminishes the potential for THC abuse.  DEA states that the Agency has received information that several companies are pursuing approval of ANDAs for generic versions of MARINOL based on the fact that the formulations would meet the statutory approval requirements because they have the same active ingredient, strength, dosage form and route of administration as MARINOL, and are bioequivalent.  DEA notes that neither FDC Act § 505(j) (ANDA approval) nor FDA’s regulations requires solid oral dosage forms such as capsules proposed for approval in ANDAs to contain the same inactive ingredient as the listed drug.  DEA notes that FDA recognizes that an ANDA sponsor referencing MARINOL could propose a capsule for approval with an inactive ingredient other than sesame oil, even though the “Marinol” referenced is not the product defined in the DEA regulation.

DEA’s proposed rule would expand the classification of dronabinol products in Schedule III to include tablets and capsules, not just soft gel capsules.  The rule would also allow for classification of both synthetic and natural (derived from the cannabis plant) dronabinol products in Schedule III.  DEA reasons that for the purposes of the proposed rule, generic dronabinol can be substituted for MARINOL “with the full expectation that the generic drug will produce the same clinical effect and safety profile as the innovator drug.” DEA also notes that the Agency expects that the “eight-factor analysis,” which is used to determine a drug’s potential for abuse, would examine the same medical, scientific, and abuse data for the innovator and the generic drug.   DEA is indicating that the abuse liability of a tablet or capsule as well as naturally-derived THC is likely to be the same as MARINOL.  Note, however, that under the proposed rule DEA will still have to make scheduling decisions on non-oral dronabinol dosage forms. 

Procedurally, DEA’s proposed rule will preempt the need for the Agency to conduct a separate scheduling action for each ANDA dronabinol product approved by FDA.  DEA notes that this will save Agency resources.

Written comments on the proposed rule must be postmarked, and electronic comments sent, on or before November 23, 2007.

By John A. Gilbert

On September 28, 2007, the Washington Legal Foundation (“WLF”) asked the Supreme Court to review the U.S. Court of Appeals for the District of Columbia Circuit’s recent ruling in Abigail Alliance for Better Access to Developmental Drugs v. von Eschenbach concerning access to experimental therapies.  As we previously reported, the full D.C. Court of Appeals ruled on August 7, 2007 that “there is no fundamental right ‘deeply rooted in this Nation’s history and tradition’ of access to experimental drugs for the terminally ill.”  The decision reversed a May 2006 D.C. Court of Appeals panel decision.

WLF’s petition to the Supreme Court caps off an effort that began in 2003 when the organization filed suit on behalf of itself and the Abigail Alliance for Better Access to Developmental Drugs to establish a right for terminally ill patients to gain access to investigational drugs.  The organization is asking the Supreme Court to reinstate the May 2006 D.C. Court of Appeals panel decision that where there are no other FDA-approved treatment options, a terminally ill patient’s access to investigational new drugs is a “fundamental right” protected under the Due Process Clause of the U.S. Constitution.

WLF requests the Supreme Court’s consideration of the following question:

Whether the Due Process Clause protects the right of a terminally ill patient with no remaining approved treatment options to attempt to save her own life by deciding, in consultation with her own doctor, whether to seek access to investigational medications that the Food and Drug Administration concedes are safe and promising enough for substantial human testing.

The organization contends in its petition that:

The D.C. Circuit [] held that FDA regulations interfering with the medical judgment of terminally ill patients and their doctors do not implicate fundamental rights, and should be subjected to nothing but rational basis review.  That is a profound and important error.  This Court has rightly urged caution in substantive due process cases, but as the dissent below noted “[t]o deny the constitutional importance of the right to life and to attempt to preserve life is to move from judicial modesty to judicial abdication.”  The D.C. Circuit’s decision abandons the textual commitment to “life” in the Due Process Clause, creates bizarre inconsistencies with this Court’s cases, and denies thousands of Americans their most important rights. [(citation omitted)]

The Supreme Court will likely decide whether or not to hear the case by January 2008.

Earlier today, FDA announced that the Agency plans to take enforcement action with respect to marketed unapproved drugs containing hydrocodone.  Hydrocodone is an opioid derived from codeine that is recognized both for its analgesic and antitussive effects, and is an active ingredient in several FDA-approved drug products.  The announced enforcement action is the first since May 2007 when FDA announced enforcement action on marketed unapproved timed-release guaifenesin drug products. 

FDA’s latest enforcement action, a notice of which will be published in the Federal Register on October 1, 2007 (a pre-publication version is available here), wraps up the Agency’s previous conclusions made under the Drug Efficacy Study Implementation (“DESI”) program for certain pre-1962 FDA-approved hydrocodone drug products, which were last addressed in 1982 Federal Register notices.  According to FDA, since 1969, when FDA first implemented an adverse event reporting system, and as of 2005, the Agency “has received more than 400 spontaneous reports of serious adverse events associated with all antitussive hydrocodone-containing products” that involve the central nervous system, the gastrointestinal tract, the cardiopulmonary system, and hypersensitivity and intentional and unintentional overdose.  In addition, “some of these [hydrocodone] products omit important labeling warnings and information or are inappropriately labeled for use in young children.”  FDA also notes additional risks, such as medication errors because of “confusion based on similarity between the proprietary names of unapproved hydrocodone-containing antitussive products and other drug products.”  

According to the FDA announcement and notice:

Anyone marketing unapproved hydrocodone products that are currently labeled for use in children younger than 6 years of age must end further manufacturing and distribution of the products on or before October 31, 2007. Those marketing any other unapproved hydrocodone drug products must stop manufacturing such products on or before December 31, 2007 and must cease further shipment in interstate commerce on or before March 31, 2008.

FDA does not expect to issue Warning Letters or any other further warnings to firms marketing unapproved hydrocodone drug products prior to taking enforcement action. 

FDA’s actions are consistent with the Agency’s June 2006 Compliance Policy Guide, in which FDA announced its enforcement priorities for marketed unapproved drugs.  These enforcement priorities include taking action on drugs with potential safety risks. 

FDA’s action comes on the heels of an article on CNN.com and an editorial in the Wall Street Journal critical of the Agency’s handling of marketed unapproved drugs.  In addition, the Wall Street Journal article notes that “Congressional legislation [creating a special regulatory pathway for marketed unapproved drugs] will be introduced shortly.”  Indeed, earlier this year the Branded Pharmaceutical Association (“BPA”) announced that the organization submitted draft legislation to Congress to create a special approval pathway for what the organization terms “legacy drugs.”  The BPA has reportedly been working with certain members of Congress to get the bill introduced.  In July 2007, 11 members of the House of Representatives sent a letter to FDA Commissioner Andrew von Eschenbach asking for FDA’s “assurance that ‘Legacy Drugs’ will not be unfairly targeted before Congress has the opportunity to afford due process.”

ADDITIONAL READING:

•   BPA Press Release on Hydrocodone Enforcement Action

Earlier today, the White House announced that President Bush signed H.R. 3580, the FDA Amendments Act of 2007, into law.  The U.S. Department of Health and Human Services subsequently issued an announcement praising the new law as "an important step forward in ensuring the safety of drugs and medical devices."  A copy of the enrolled bill sent to the President is available here.  A copy of the public law, as well as FDA’s PDUFA IV "goals documents" (and perhaps the Fiscal Year 2008 user fee rates), should be available shortly.  Any signing statement that might accompany the new law will be available in the Weekly Compilation of Presidential Documents.

Earlier today, FDA’s Office of Generic Drugs posted a letter on its website requesting comment on certain 180-day exclusivity forfeiture and Orange Book patent “delisting” issues concerning at least one ANDA submitted to the Agency containing a paragraph IV patent certification requesting FDA approval for a generic version of Bayer Pharmaceuticals’ PRECOSE (acarbose) Tablets.

Under changes made to the FDC Act by the 2003 Medicare Modernization Act (“MMA”), generic applicants that are “first applicants” are eligible for 180-day exclusivity, unless such eligibility is forfeited.  180-day exclusivity eligibility may be forfeited if, among other reasons, a “first applicant” “fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed” (FDC Act § 505(j)(5)(D)(i)(IV)), or if such applicant fails to market the drug “30 months after the date of submission of the application” (FDC Act § 505(j)(5)(D)(i)(I)(aa)(BB)).  Although FDA was previously confronted by a potential forfeiture case involving a company’s failure to obtain tentative approval within 30 months of ANDA submission, the Agency ultimately did not have to resolve the situation. 

With respect to Orange Book patent “delisting,” the U.S. Court of Appeals for the District of Columbia Circuit ruled in November 2006 on the question of “whether the FDA may delist a patent upon the request of the NDA holder after a generic manufaturer has filed an ANDA containing a paragraph IV certification so that the effect of delisting is to deprive the applicant of a period of marketing exclusivity.”  In striking down FDA’s policy decision on the matter, the court reasoned:

Not only does the statute not require litigation to preserve a generic applicant’s eligibility for exclusivity . . . such a requirement is inconsistent with the structure of the statute because, if the patent is delisted before a pending ANDA is approved, then the generic manufacturer may not initiate a period of marketing exclusivity.

By thus reducing the certainty of receiving a period of marketing exclusivity, the FDA’s delisting policy diminishes the incentive for a manufacturer of generic drugs to challenge a patent listed in the Orange Book in the hope of bringing to market a generic competitor for an approved drug without waiting for the patent to expire.  The FDA may not, however, change the incentive structure adopted by the Congress.

In the matter currently before FDA concerning Acarbose Tablets, there is one patent listed in the Orange Book for PRECOSE (NDA #20-482), U.S. Patent No. 4,904,769 (“the ‘769 patent”), which expires on September 6, 2009.  At least one generic applicant submitted an ANDA to FDA on March 22, 2005 containing a paragraph IV certification to the ‘769 patent.  According to FDA’s September 26, 2007 letter:

As of the date of this letter, which is more than 30 months from March 22, 2005, no first applicant’s ANDA has been approved. Also, on April 16, 2007, Bayer requested that the ‘769 patent be “delisted” as to Precose, i.e., they withdrew the patent information.  On September 26, 2007, FDA indicated in [the Orange Book] that the request to delist this patent had been submitted on April 16, 2007.

To determine whether any ANDA referencing Precose is eligible for final approval, the agency must consider how the 180-day generic drug exclusivity forfeiture provisions at section 505(j)(5)(D) of the [FDC Act] apply to this set of facts.  As part of the process for making such a determination, we are seeking your views regarding the applicability of sections 505(j)(5)(D)(i)(IV) — failure to obtain tentative approval within 30 months — and 505(j)(5)(D)(i)(I)(aa)(BB) — failure to market by 30 months. We also are interested in your views regarding the applicability of section 505(j)(5)(D)(i)(I)(bb)(CC) — relating to the delisting of a patent.

FDA’s letter requests that comments be submitted to the Agency by October 10, 2007.  FDA’s decision to request comment on Acarbose Tablets exclusivity issues is part of an increasing trend at FDA to ask for input to help resolve complicated exclusivity issues.  In March 2007, FDA requested comment on amlodipine besylate 180-day and pediatric exclusivity issues, and in August 2007, FDA requested comment on midodrine HCl three-year exclusivity issues.  Presumably FDA will continue this trend as new issues crop up, particularly post-MMA 180-day exclusivity issues.  

We previously reported on several cases involving FDA-regulated products and certain preemption of state law issues.  Yesterday the Supreme Court agreed to hear (i.e., granted Cert. [see page 5]) in one of those cases – Warner-Lambert v. Kent.  The case 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."  Warner-Lambert petitioned the Court for Cert. after the U.S. Court of Appeals for the Second Circuit ruled against the company earlier this year.

The questions presented for the Court’s review are:

1. Whether, under the conflict preemption principles in Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341 (2001), 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.

Copies of documents submitted in this case are available from our previous post and from SCOTUSblog.

Warner-Lambert is the second preemption case the Supreme Court is scheduled to hear next term.  Earlier this year, the Court granted Cert. in Riegel v. Medtronic, Inc., which concerns whether the FDC Act preempts state tort claims regarding medical devices that entered the market pursuant to the Premarket Approval process (see 7/8/2007 FDA Law Blog post).  It has been rumored, however, that the Court might toss out the case on a technicality.  Specifically, because the man who brought the suit died in 2004 and no attempt was made to transfer the case from his name to his wife’s name until earlier this year, the Court’s rules, which do not permit such a long delay, might be grounds for rejecting the case. 

Finally, the Supreme Court has asked the Solicitor General to submit comments in yet a third preemption case — Levine v. Wyeth (see 7/8/2007 FDA Law Blog post).  The case concerns whether FDA-approved prescription drug labeling preempts state law product liability claims.

Specialty Distribution Services (“SDS”), a corporate subsidiary of Express Scripts, Inc., has admitted to violations of FDC Act § 303(e) and agreed to pay $10.5M as part of a 36-month deferred prosecution agreement with the U.S. Attorney’s Office for the District of Massachusetts in connection with the company’s non-medical distribution of human growth hormone (“HGH”).  FDC Act § 303(e) states, in relevant part:

[W]hoever knowingly distributes, or possesses with intent to distribute, [HGH] for any use in humans other than the treatment of a disease or other recognized medical condition, where such use has been authorized by the Secretary of Health and Human Services under section 505 and pursuant to the order of a physician, is guilty of an offense punishable by not more than 5 years in prison, such fines as are authorized by title 18, United States Code, or both.

A healthcare fraud settlement out of the Massachusetts U.S. Attorney’s Office is nothing out of the ordinary these days, and SDS’s $10.5M settlement is small compared to “big” cases out of that office — for example the Schering-Plough $435M global settlement in August 2006 or the Serono $704M global settlement in October 2005.  Similarly, a deferred prosecution agreement is increasingly common fare.  KPMG, Bristol-Myers Squibb, and Computer Associates have all entered into deferred prosecution agreements in recent years.  A prosecution under FDC Act § 303(e) and the ancillary buzz of professional athletes using HGH to gain a performance edge make this resolution somewhat more notable, however.

Congress enacted the present FDC Act § 303(e) in the late 1980s and amended the statute in the late 1990s to crack down on illegal trafficking of HGH.  Unlike most felony prosecutions under the FDC Act, a felony charge under § 303(e) does not require proof of “intent to defraud and mislead.”  (Compare 21 U.S.C. § 333(e) with § 333(a)(2).)

Until the Massachusetts U.S. Attorney’s Office announcement last week, another investigation into HGH distribution had been mostly making news in the sports section of the paper.  In a seemingly unrelated investigation, the District Attorney for Albany County, New York, David Soares, has investigated and charged Specialty Pharmacy of Orlando, Florida, and top officials at Specialty Pharmacy, with illegally dispensing a controlled substance and insurance fraud.  District Attorney Soares and his office have made sports headlines and have met with National Football League and Major League Baseball representatives.  While the NFL has taken disciplinary action, Mr. Soares’ office has stated that it is not focusing on professional athletes.

It is less clear whether the federal investigation might have consequences for professional athletes linked to SDS.  The agreed statement of facts to the deferred prosecution agreement states that “[o]n or about January 2, 2003 and October 24, 2003, SDS distributed [HGH] . . . to a well-known professional athlete in Massachusetts.”  Additionally, the deferred prosecution agreement commits SDS to “providing testimony and other information deemed necessary by the USAO or the court . . . in any criminal case or other proceeding by the USAO.”  At a minimum, these state and federal investigations into non-medical use of HGH will likely lead to more revelations about athletes using performance enhancing drugs.  Whether such revelations will be accompanied by any legal sanctions remains to be seen.

By JP Ellison

The United Nations (“UN”) drug control system is given authority, through treaties (called “conventions”), to establish international controls and monitor medicines that are subject to abuse.  Member countries that are signatories to the conventions are committed to control substances at the same level as dictated by the UN.  In the United States, this is accomplished through enforcement of the federal Controlled Substances Act.

International control and restrictions on these medicines affect patient access to medicines in every country, but in the Third World the effect of scheduling controls for medicines can be devastating, as the New York Times reported in a September 2007 article, titled “Drugs Banned, Many of World’s Poor Suffer in Pain.”

Understanding and navigating the UN’s drug control system is not easy.  Very broadly, the international scheduling process can be described as encompassing the interaction of two distinct bodies.  In the usual scheduling sequence, the World Health Organization (“WHO”) conducts a scientific and medical review that forms the basis for a scheduling recommendation that is submitted to the UN Commission on Narcotic Drugs (“CND”).  The CND is constituted as a kind of legislature, comprised of representatives of the signatory nations.  The CND will consider the WHO recommendation in the context of social, behavioral and other matters related to the public health and safety to make a final scheduling decision.  These decisions become amendments to the international control treaties which member countries are then bound to adopt.

When substances are put forth to be considered by WHO for scheduling recommendations, interested parties who would seek to provide information relevant to such decisions often find just knowing how to proceed is a challenge.  The conventions and their commentary are a tangle of frequently obscure and conflicting guidance.  Administrative due process of the kind we enjoy in this country is virtually nonexistent under the convention system.

There is, however, good news to report.  At WHO, where the critical medical evaluation is formulated for a scheduling recommendation, new and much improved guidance has been proposed for the deliberations of the expert committee that WHO uses to conduct the scientific and medical review that forms the basis for the scheduling recommendation.  This document, which is lugubriously entitled “Guidelines for the WHO review of psychoactive substances for international control,” is intended to replace the even more lugubriously entitled “Guidelines for the WHO review of dependence-producing psychoactive substances for international control.”  The new guidance will be put before the Executive Board of the World Health Assembly for adoption in January 2008.  If adopted, the process at WHO will improve considerably.

If adopted, the new guidance will enhance the ability of industry to work with WHO.  For the first time interested parties, and not just governments and WHO-recognized nongovernmental organizations (“NGOs”), will be formally permitted to present information to the expert committees.

The new guidance promotes quality in the work of the expert committees.  The guidance declares that the decisions must be evidence-based.  The primary reference used by the committees is a paper created for their use, called the “critical review document.”  Under the new guidance, this vital document will now be given two peer reviews to assure quality.  In addition, the important documents in the WHO review will now be put in the public domain, on the Internet at WHO’s website.

Another important change, one that the authors of the New York Times article would appreciate, is the express recognition that availability of medicines should be considered in the expert committee’s reviews.

The new guidelines document, if adopted, will certainly help to improve the medical judgments made in the UN’s scheduling process.  Our firm, and in particular Jim Phelps, has made significant contributions in the development and promotion of this much improved guidance. 

ADDITIONAL READING:

• UN Single Convention on Narcotic Drugs (1961)
• UN Convention on Psychotropic Substances (1971)
• UN Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)

Late today, the U.S. Senate passed FDA reform legislation by unanimous consent.  The Senate vote follows the House’s action yesterday when it passed H.R. 3580, the FDA Amendments Act of 2007. 

Earlier in the day there was some concern that the Senate vote on the House bill might be delayed.  Multiple Senators reportedly placed “holds” on the bill due to frustration on how differences between the House and Senate versions of the legislation were hammered out.  Once the holds were dropped, the Senate passed the legislation.

Now that the bill has passed both legislative chambers, it will go to the President for his signature to become law.  Although the Bush Administration had previously expressed concerns about certain aspects of FDA reform legislation (i.e., biogenerics and importation) in a Statement of Administration Policy, these provisions are not in H.R. 3580.  As such, we anticipate that the President will sign the bill into law.

FDA has not yet issued final recommendations for the fourth iteration of the Prescription Drug User Fee Act (“PDUFA IV”).  Presumably the draft PDUFA IV recommendations issued in March 2007 will be very similar to the final version.  In the draft document, FDA proposed changes to the then-proposed legislation (S. 1082), and provided letters detailing the Agency’s review performance goals for fiscal years 2008 through 2012 and performance goals and procedures for direct-to-consumer television advertising over the same five-year period.

As we noted yesterday, we will continue to update you with additional information, and will provide FDA Law Blog readers with an in-depth summary of the legislation once the bill is signed into law.

UPDATE:

• FDA Statement on the passage of the FDA Amendments Act

House and Senate staff have reportedly reached an agreement on omnibus FDA reform legislation that would, among several other things, reauthorize the Prescription Drug User Fee Act (“PDUFA”) through fiscal year 2012.  Earlier today, a “staff agreement” (427 pages) and summary of the legislation was released.  As was widely expected, the bill does not contain any provisions concerning biogenerics (a topic that might be addressed in future legislation).  Late last week, FDA Commissioner Andrew von Eshhenbach sent a letter to Senator Michael Enzi (R-WY), Ranking Member of the Senate Health, Education, Labor and Pensions Committee, warning that unless the reauthorization of PDUFA could be ensured by September 21, 2007, “this will unfortunately lead to FDA beginning to issue reduction-in-force (RIF) notifications to employees that funding for their positions will expire.”  That crisis has apparently been averted.  The House may vote on the conference bill later today, and the Senate may vote on the measure tomorrow. 

We will continue to update you with additional information, and will provide FDA Law Blog readers with an in-depth summary of the legislation once the bill is signed into law.

UPDATE:

• The House passed H.R. 3580, the FDA Amendments Act of 2007, around 4:00PM today by a vote of 405-7.  A copy of the version of the bill passed by the House is available here (422 pages).  A revised summary is available here.  It appears that the new version omits certain provisions included in Sec. 1111 of the “staff agreement” above related to so-called “old” antibiotics.
• The official version of H.R. 3580 is available here.