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.

Many pharmaceutical manufacturers are already struggling under the regulatory burden associated with the various requirements of state gift reporting statutes.  That burden may soon be made heavier.  Earlier this month, Senators Herb Kohl (D-WI) and Charles Grassley (R-IA) introduced legislation that would require drug, biologic, medical device, and other medical supply manufacturers to whom payments are made under Medicare, Medicaid, or the State Children’s Health Insurance Program (“SCHIP”) to disclose to the Secretary of Health and Human Services, on a quarterly basis (and in annual summaries), the amount of money they give to physicians through payments, gifts, honoraria, travel, and other means.  The bill, titled the “Physician Payments Sunshine Act of 2007” (S. 2029), is modeled on similar state legislation in Minnesota, Vermont, Maine, and West Virginia, and was introduced following a hearing earlier this summer before the Senate Special Committee on Aging on the same topic.  If enacted, S. 2029 will add to manufacturers’ regulatory burdens, and unless the legislation is amended to preempt current state “physician payment sunshine” laws, companies will need to coordinate reporting obligations because of a tapestry of varying state and federal requirements.   

S. 2029 would amend the Social Security Act (42 U.S.C. § 1301 et seq.) to create new § 1128G (“Quarterly Transparency Reports From Manufacturers of Covered Drugs, Devices, or Medical Supplies Under Medicare, Medicaid, or SCHIP”) to require companies with $100 million or more in annual gross revenues to report the name and address of the physician, any facility with which the physician is affiliated, the value and the date of the payment or gift, its purpose, and what, if anything, was received in exchange. If a payment or other “transfer of value” is provided to an entity that employs the physician (or with whom the physician has tenure or has an ownership interest in), the company must report the entity and its primary place of business or headquarters.  Companies that fail to report the required information would be subject to penalties ranging from $10,000 to $100,000 for each violation.  Such penalties would be imposed and collected in the same manner as civil monetary penalties under the Social Security Act.

S. 2029 would also require the Secretary of Health and Human Services to: (1) establish procedures (no later than June 1, 2008) to ensure that the information and summary reports submitted pursuant to new § 1128G are readily accessible to the public through an internet website “that is easily searchable, downloadable, and understandable;” and (2) provide annual reports to Congress (beginning in 2009) detailing the information submitted by companies and any enforcement actions taken under the new law.    

In a press release announcing the introduction of S. 2029, Sen. Grassley commented:

As the editorial board of the Des Moines Register wrote recently, and I quote, “Your doctor’s hands may be in the till of a drug company. So how can you know whether the prescription he or she writes is in your best interest, or the best interest of a drug company?”  That is an excellent question.  Currently, the public has no way of knowing whether their doctor has taken payments from the drug and device industries, and I intend to change that–not just for Iowans but for all Americans. . . .

The Physician Payments Sunshine Act sheds light on these hidden payments and obscured interests through the best disinfectant of all: sunshine.

Senators Claire McCaskill (D-MO), Charles Schumer (D-NY), Amy Klobuchar (D-MN), and Ted Kennedy (D-MA) are original cosponsors of S. 2029.  The bill has been referred to the Senate Finance Committee.  If enacted, the information made available pursuant to S. 2029 would certainly be used by some organizations as fodder to further attack drug and device marketing practices.

Earlier today, the U.S. District Court for the District of Columbia denied Apotex’s motion for a temporary restraining order and preliminary injunction in a case against FDA involving Apotex’s ANDA for a generic version of AstraZeneca’s PRILOSEC (omeprazole) Delayed-Release Capsules and the effects of AstraZeneca’s pediatric exclusivity. 

The case stems from a June 14, 2007 judgment from the U.S. District Court for the Southern District of New York in which the court concluded that Apotex’s omeprazole drug products infringe certain PRILOSEC claims in patents that naturally expired in April 2007, and that “pursuant to 35 U.S.C. § 271(e)(4)(A), the effective date of [Apotex’s ANDA] and related ANDAs shall be not earlier than October 20, 2007” when AstraZeneca’s pediatric exclusivity expires.  Although FDA had approved Apotex’s ANDA (#76-048) in October 2003, subsequent to the New York court’s judgment, FDA sent Apotex a letter informing the company that “in light of the [New York court’s] order, the Agency hereby converts the final approval of ANDA 76-048 issued on October 6, 2003, to a tentative approval. . . .  Final approval cannot be granted earlier than October 20, 2007.” 

Apotex promptly filed a complaint and a motion for injunctive relief.  Apotex argued that:

FDA has unlawfully revoked the final approval of Apotex’s generic omeprazole capsules. FDA’s decision ignores and violates the Agency’s own precedent [(i.e., pediatric exclusivity issues concerning amlodipine)] and constitutes a complete abdication of the Agency’s statutory authority and obligation. The Court therefore should —indeed must— set aside that decision as arbitrary, capricious and contrary to law under the Administrative Procedures Act (“APA”), and enjoin the revocation of Apotex’s lawful final approval.

Essentially, Apotex’s argument rests on the premise that the New York District Court’s order only “purports to reset the effective date of [the company’s] approval to the expiration of [AstraZeneca’s] supposed pediatric exclusivity on October 20, 2007,” and that FDA is not obligated to follow that order.  FDA respectfully disagreed. 

FDA’s opposition memorandum, which heavily relies on the November 2004 U.S. Court of Appeals for the District of Columbia decision in Mylan v. Thompson (concerning DURAGESIC), states:

As an administrative agency, it is not FDA’s role to second-guess a district court’s order granting relief in a patent infringement suit between two private parties.  Nor is FDA free to simply ignore the order of the New York court.  This is particularly true here, where the district court issued its order pursuant to its “general equitable powers,” which is not part of the FDCA and which FDA is not charged with administering.

Once the New York court determined that Apotex’s ANDA should have a delayed effective date until October 20, 2007, FDA gave effect to that order, in recognition of the New York court’s judicial power to grant relief.  Although FDA was not a party to that case, FDA properly determined in Mylan ([D]uragesic) and here that it would respect the authority of a district court to issue orders that collaterally require the agency to take action. Indeed, the district court’s authority to issue orders awarding relief under 35 U.S.C. § 271(e)(4)(A) inherently depends upon FDA’s compliance with those orders, even when, as here, FDA is not a party to a private patent infringement litigation. [(citations omitted).]

AstraZeneca’s brief in the D.C. District Court case, not surprisingly, sides with FDA: 

Apotex’s argument challenges the central assumptions of the pediatric exclusivity provisions of the Food and Drug Administration Modernization Act (“FDAMA”), Pub. L. No. 105-115, 111 Stat. 2296 (1997).  In FDAMA, Congress recognized that far too little drug research was being conducted on pediatric populations, and it created an incentive . . . for manufacturers that conducted such research.  This reward is designed to apply to any holder of a valid patent that conducts pediatric research at the request of FDA. . . .  Under Apotex’s argument, however, pediatric exclusivity could be denied to manufacturers who did everything requested of them by the statute and by FDA, simply by virtue of a generic producer’s infringing conduct and the uncontrollable timing of a court’s decision on patent validity and infringement.  There is no support for such a result in the statute, and it would introduce unacceptable uncertainty into the availability of pediatric exclusivity, substantially undermining the legislative scheme to the detriment of children’s health.

Ultimately, Apotex’s argument is that, as a consequence of Apotex’s decision to take the risk of going to market before the patent infringement suit was decided, Astra should lose all the benefit of the pediatric exclusivity period it earned through extensive research efforts.  The judge in the patent litigation properly termed such a result anomalous and at odds with the statute.  And it is surely inconsistent with principles of equity for Apotex to turn its own infringing activity into a basis for inflicting further loss on Astra.

D.C. District Court Judge Ricardo M. Urbina sided with FDA (and AstraZeneca) in his 18-page opinion and concluded that Apotex had not established by a clear showing that FDA improperly applied the New York District Court’s June 2007 order by converting the status of ANDA #76-048 from a final approval to a tentative approval.  Indeed, Judge Urbina’s opinion states that “once the [New York] court issued its ruling establishing pediatric exclusivity, the FDA had no authority to issue final approval to [Apotex].  Quite simply, the FDA believes that it had no choice but to convert the plaintiff’s approval from final to tentative.”

FDA announced on September 14, 2007 the release of a final guidance document pertaining to analyte specific reagents (“ASRs”), titled “Guidance for Industry and FDA Staff – Commercially Distributed Analyte Specific Reagents (ASRs):  Frequently Asked Questions” (“the ASR Guidance”).  A draft version of this guidance document was issued on September 7, 2006, and was widely criticized in stakeholders’ comments.  A crucial section of the ASR Guidance – addressing what entities meet the definition of an ASR – was modified in response to these comments.  Not all points raised by stakeholders, however, have been incorporated in the final document. 

FDA states that the ASR Guidance is designed to “eliminate confusion regarding particular marketing practices among ASR manufacturers.”  FDA purports to base the ASR Guidance on the definition of ASRs provided in existing regulations:  “antibodies, both polyclonal and monoclonal, specific receptor proteins, ligands, nucleic acid sequences, and similar reagents which, through specific binding or chemical reactions with substances in a specimen, are intended for use in a diagnostic application for identification and quantification of an individual chemical substance or ligand in biological specimens.”  In the ASR Guidance, FDA interprets this definition to mean that an ASR has three characteristics: 

• an ASR is “used to detect a single ligand or target (e.g., protein, single nucleotide change, epitope);”
• an ASR is “not labeled with instructions for use or performance claims;” and
• an ASR is “not promoted for use on specific designated instruments or in specific tests.” 

To clarify these characteristics, FDA provides examples of entities that the Agency considers, and does not consider, to be ASRs.  Examples of entities that qualify as ASRs include: 

• “a single antibody . . .;”
• “a single forward/reverse oligonucleotide primer pair . . . or [a] single forward or reverse primer individually;”
• “a nucleic acid probe . . . intended to bind a single complementary amplified or unamplified nucleic acid sequence;” and
• “a single purified protein or peptide . . . .” 

Examples of entities that do not qualify as ASRs include:

• “Multiple individual ASRs (e.g., antibodies, probes, primer pairs) bundled together in a single pre-configured or optimized mixture so that they must be used together in the resulting [laboratory developed test (‘LDT’)] . . .”;
• “Products that include or require more than a single ASR . . . and/or [have] instructions for use . . .”; and
• “Reagents that are designed to require use in a specific assay or on a     designated instrument (e.g., arrayed on beads) . . . .”

To further explain the first example of an entity that does not qualify as an ASR – multiple antibodies, probes, and primer pairs – FDA provides another example:  “a set of 5 primer pairs combined in a single tube that are used to detect 5 different viral genotypes . . . .”  Since issuing the draft guidance document, FDA has modified its examples of what it does and does not consider to be an ASR.  However, the revised examples leave open questions regarding whether many current products sold as ASRs constitute an ASR under FDA’s interpretation of the existing rule.  There are still several ambiguities.

The ASR Guidance clarifies that ASRs cannot have specific performance claims, procedural instructions, or interpretations for use, and cannot be offered with software for interpretation of results.  Additionally, software and microarrays are not considered ASRs.  With respect to instructions, FDA states in the ASR Guidance that “ASR manufacturers should not provide instructions for developing or performing an assay with an ASR.”  ASR manufacturers cannot assist laboratories with validation of LDTs.  The only information that ASR manufacturers can provide to laboratories includes “peer-reviewed and published/presented literature, that establishes characteristics of the ASR itself, such as information describing the single ligand or target the ASR detects.”  This information “may not, however, describe the use of an ASR in a specific test, including information regarding an ASR’s clinical utility and clinical performance as well as specific instructions-for-use and validation protocols.” 

Additionally, ASR manufacturers cannot distribute or promote ASRs with for use with general purpose reagents, control material, software, or instrumentation.  ASR manufactures are permitted to supply quality control material if it is “promoted independently of specific ASRs.” 

In the draft guidance document released on September 7, 2006, FDA stated that ASRs had the characteristics of “a single moiety” and a “single endpoint.”  In the final ASR Guidance, these two characteristics have been replaced with “used to detect a single ligand or target.”  Many of the comments submitted to the draft guidance document argued that the terms “moiety” and “endpoint” were not included in the existing regulations and had not been defined by FDA.  These new terms substantively changed the definition of ASRs.  Comments therefore emphasized that the ASR rule could not be changed through the guidance process; notice-and-comment rulemaking would be required.  Presumably, in response to these comments, FDA has not included the terms “moiety” or “endpoint” in the final ASR Guidance.   

Comments to the draft guidance document also stressed that requiring clearance of approval of products that are currently sold as Class I, 510(k)-exempt ASRs may result in a lack of availability of ASRs, which could delay or deny access to clinically important diagnostic tests, stifle innovation, increase the costs of LDTs, and diminish the quality of health care.  Though FDA omitted “moiety” and “endpoint” as characteristics of ASRs, it is still not clear how many products currently sold as ASRs will be deemed by FDA to require clearance or approval (and may therefore be removed from the market).  The effect on test availability and quality remains to be seen. 

Many stakeholders argued in their comments to the draft guidance document that FDA had not considered the quality measures imposed on laboratories through the Clinical Laboratory Improvement Amendments (“CLIA”).  Regulations under CLIA include requirements to ensure consistent laboratory test development.  According to several comments, guidance from FDA could conflict with CLIA.  The ASR Guidance does not address this.  Additionally, stakeholders requested that any final guidance pertaining to ASRs not be applicable upon release; there should be a grace period for implementation.  Though the text of the ASR Guidance does not include any grace period, the Federal Register notice announcing the guidance states that “FDA intends to exercise enforcement discretion with respect to premarket approval and clearance requirements for 12 months . . . .”

By Christine P. Bump