The Centers for Medicare & Medicaid Services (“CMS”) continues to evaluate and modify, where necessary, Medicare coverage of anti-anemia drugs.  On May 14, 2007, after reviewing clinical evidence in peer-reviewed literature and considering concerns raised by a recent FDA advisory panel, CMS issued a Proposed Decision Memorandum restricting use of “Erythropoiesis Stimulating Agents” (“ESAs”) in cancer and related neoplastic conditions.  ESAs enhance red blood cell production by a hormone pathway that involves erythropoietin and erythropoietin receptors.  Citing safety concerns including thrombosis, cardiovascular events, tumor progression and reduced survival, CMS has decided that there is sufficient evidence to conclude that ESA treatment is not medically reasonable and necessary for certain Medicare beneficiaries undergoing anticancer therapy.  Contemporaneously, CMS will continue to review ESAs in the end-stage renal disease (“ESRD”) setting for possible Medicare coverage policy modification.

A 30-day public comment period on the Proposed Decision Memorandum ends June 14, 2007.  CMS requests public comments on the restriction of ESAs used to treat certain non-renal clinical conditions either because of the deleterious effect of ESAs on certain underlying diseases or because the underlying disease increases a patient’s risk of suffering adverse effects related to ESA use.  Generally, the clinical conditions include anemia caused by certain cancers or related chemotherapy.  CMS proposes that ESAs are only medically reasonable and necessary to treat cancer-related anemia in cancers in which the presence of erythropoietin receptors on either normal tissue/cell lines or malignant tissue/cell lines has been reported in peer-reviewed literature.  The cancers include, for example, bone, breast, cervical, hepatic, ovarian, prostate, and uterine cancers.  CMS would also impose certain clinical limitations on ESA use for treatment.

The Proposed Decision Memorandum reflects CMS’s evaluation of public comments on an internally generated National Coverage Decision (“NCD”) formally accepted and opened on March 14, 2007. The NCD reviewed Medicare coverage of non-renal use of ESAs.  CMS’s review follows several FDA Alerts issued in November 2006, and February and March 2007 regarding ESA safety.  Also, as we previously reported, on March 9, 2007, FDA strengthened its warning about cardiovascular and thrombotic events in several populations requiring and Black Box warning, and one Medicare contractor, Noridian, has issued a Local Coverage Decision (“LCD”) restricting off-label coverage and payment for three ESAs — ARANESP, EPOGEN, and PROCRIT. 

After the June 14th close of the public comment period on the Proposed Decision Memorandum, CMS plans to issue a final NCD within 60 days.  Interested parties should also monitor CMS’s website for further guidance on Medicare coverage of ESAs used to treat patients with ESRD.

By Kirk L. Dobbins

West Virginia continues to move forward with implementing its prescription drug advertising expense reporting law.  On April 24, the West Virginia Secretary of State filed the West Virginia Pharmaceutical Cost Management Council’s revised emergency rule for Prescription Drug Advertising Expense Reporting.  The rule will go into effect upon approval of the Secretary or the 42nd day after filling (June 5, 2007), which ever occurs first.  While this rule is substantially similar to a December 2006 version of the rule, there are two key differences.

Generally, the rule requires all drug manufacturers or labelers whose drugs are dispensed in West Virginia to annually report the advertising expenses they incurred in the preceding calendar year.  Advertising expenses required to be reported include:

• Direct or indirect gifts, grants, or payments to prescribers for advertising purposes;
• Direct-to-consumer (“DTC”) advertising;
• Direct or indirect gifts of $10,000 or more to a disease-specific patient support or advocacy group for advertising purposes; and
• Direct or indirect gifts of $10,000 or more to a pharmacy licensed in West Virginia for advertising purposes.

The first change from the December 2006 version of the rule eliminates the need to report for the 2006 calendar year.  Instead, March, 1, 2008 is the deadline for filing the first report, which will cover only the period from July 1, 2007 through December 31, 2007.  Subsequent annual reports must cover the full preceding calendar year and will be due on April 1, 2008.

The second change lowers from $1,000 to $100 the minimum annual aggregate amount of gifts, grants and payments that requires reporting on the prescription drug advertising expenses reporting form.

In addition, the revised rule also clarifies that national or regional DTC advertising expenses should be reported on a prorated basis.  Such expenses are to be calculated by multiplying the total expenses by West Virginia’s most recent population (as reported by the U.S. Census Bureau), divided by the total population targeted by the DTC advertising.

Comments on the rule are due to the West Virginia Pharmaceutical Cost Management Council by May 25, 2007.

By Bryon F. Powell

As we previously reported, FDA’s Division of Drug Marketing, Advertising, and Communications (“DDMAC”) has, in the past year, focused its efforts on ensuring that promotional pieces contain proper presentations of safety data and appropriate efficacy claims.  Two new Untitled Letters from DDMAC, however, illustrate that safety issues are not DDMAC’s sole focus; companies also need to support any comparative efficacy and superiority claims with substantial evidence. 

On May 9, 2007, DDMAC issued two Untitled Letters, one concerning a detail aid for GlaxoSmithKline’s FLONASE (fluticasone propionate) Nasal Spray, 50 mcg and the other regarding a detail aid for Schering Corporation’s NASONEX (mometasone furoate monohydrate) Nasal Spray, 50 mcg.  FLONASE and NASONEX are approved for seasonal allergic and perennial allergic rhinitis in certain patients. 

According to DDMAC’s Untitled Letters, the detail aids misbrand the drugs in violation of the FDC Act §§ 502(a) and 201(n) because:

• Both detail aids make unsubstantiated superiority claims that misleadingly imply that each drug is superior to the other;
• Both detail aids use the word “congestion” when neither drug is specifically indicated for congestion, thus overstating their efficacy; and
• The FLONASE detail aid fails to reveal a material fact in that it does not contain the full, approved indication. 

Superiority Claims

DDMAC found that the superiority presentations in the FLONASE detail aid are misleading because the cited reference does not constitute “substantial evidence” for two reasons.  First, the study design did not clearly plan a head-to-head trial (it originally contemplated a placebo-controlled trial of FLONASE and, therefore, it is difficult to determine the significance of the comparison finding).  Second, the study was not replicated, and typically superiority claims should be based on comparisons of the two drug products in two adequate, well-designed, head-to-head clinical trials.

DDMAC found that the superiority presentations for NASONEX in the detail aid are misleading because they are based on patient responses to a single question in the “overall preference questionnaire” that assessed 8 product sensory attributes.  DDMAC found that the use of a response to a single question is insufficient to support the broad concept of overall patient preference.  DDMAC also stated that patient preference claims should be derived from well-designed and controlled head-to-head studies using well-developed instruments that can evaluate patient preference.  Further, DDMAC found a graph in the NASONEX detail aid to be misleading in that it only presented favorable results from the preference questionnaire, when NASONEX only received favorable results for half of the questions. 

Overstatement of Efficacy

DDMAC cited both detail aids for highlighting “congestion” when the drugs are approved, in relevant part, for seasonal allergic rhinitis.  The indication, “seasonal allergic rhinitis” is based on studies reviewing results of both FLONASE and NASONEX on a composite of several symptoms that may have included congestion as one of those symptoms.  These results are referred to as a total nasal symptoms score (“TNSS”).  DDMAC stated that because the primary efficacy endpoint of the studies for both drugs was on TNSS, the studies do not represent a clear effect on any individual TNSS component.

DDMAC’s Untitled Letters to Glaxo and Schering are consistent with previous enforcement letters addressing comparative claims, but are an interesting departure from DDMAC’s practices in the past year in that they do not cite to the omission or minimization of risk information.  As we previously reported, in 2006, of the 22 Enforcement Letters issued by DDMAC, only one did not cite the omission or minimization of risk as a violation. 

By Dara Katcher Levy

The Office of Management and Budget (“OMB”) recently gave clearance for FDA to publish final regulations on current good manufacturing practices (“GMPs”) for dietary supplements.  The dietary supplement GMPs are expected to appear in the Federal Register in June 2007, which is over four years after they were proposed in March 2003.  Upon hearing the news, Sen. Orrin Hatch (R-UT) exclaimed “Finally!”  Sen. Hatch is one of the principal authors of the Dietary Supplement Health and Education Act of 1994 (“DSHEA”).  DSHEA gave FDA the authority to write dietary supplement GMPs.

The key question, given that over 4 years have passed since the publication of the proposed rule, will be whether the final rule has changed so much from the proposed rule that the regulation could be subject to legal challenge.  If the changes are significant, the final dietary supplement GMPs could be challenged under the Administrative Procedure Act for a lack of notice if the final GMPs are not a “logical outgrowth” of the proposed GMPs.  As the U.S. Court of Appeals for the District of Columbia Circuit stated in its 2005 opinion in Envtl. Integrity Project v. EPA, “we have refused to allow agencies to use the rulemaking process to pull a surprise switcheroo on regulated entities.”  There is some indication, however, that the rule may be published as an “interim final rule” permitting further comments and changes, which would likely avoid legal challenges.   The rule is purported to be part of a 1,300-page document.  No wonder it took more than 4 years to get them written!

By Cassandra A. Soltis

On May 15, 2007, the U.S Department of Agriculture (“USDA”) issued a proposed rule to amend the agency’s National Organic Program (“NOP”) regulations at 7 C.F.R. Part 205.  The proposal, if finalized, would add 38 ingredients to the National List of Allowed and Prohibited Substances (“National List”) at § 205.606 of the NOP regulations. 

The NOP develops the federal regulatory framework governing organic food, and covers all agricultural products, including crops and livestock, and fresh and processed food.  Under the NOP regulations, farmers and food processors must be certified in order to use the word “organic” in reference to their businesses and products.  A finished food product qualifies for an organic seal if at least 95% of the product is organic and the remaining non-organic substances appear on the National List as permitted substances. A finished product may bear a label stating “made with organic” if at least 70% of the product is organic and the remaining non-organic substances appear on the National List.

In January 2005, the U.S. Court of Appeals for the First Circuit ruled in Harvey v. Veneman that an interpretation that the NOP regulations at 7 C.F.R § 205.606 create a blanket exemption from the National List was contrary to the Organic Foods Production Act of 1990, which authorized the establishment of the NOP regulations.  On remand, the U.S. District Court of Maine ruled in Harvey v. Johanns that § 205.606 was unclear and had been misinterpreted to permit the use of any non-organic agricultural product in “certified organic” or “made with organic” products as long as an accredited certifying agent determined that an organic version of the product was not commercially available.  To prevent future misinterpretation, the court ordered the USDA to clarify that any non-organic agricultural product may be used in organic and made with organic food products only if that product is included on the National List as a permitted substance. The court allowed the continued sale of products “produced in conformance with the misinterpretation” until June 9, 2007.  Subsequently, the USDA issued a final rule clarifying § 205.606 (effective June 9, 2007) so that a non-organic agricultural product may only be used when the product is listed in § 205.606 and an accredited certifying agent determines that an organic form of the product is not commercially available.  Consequently, as of June 9, 2007, the use of any non-organic agricultural substance that is not included in § 205.606 is prohibited.  The use of a product is not permitted until the USDA publishes a final NOP regulation amending the National List to include the substance.  To prevent the disruption of organic commerce, the USDA/NOP allows only seven days to comment on a proposed amendment to the National List.

Any interested person may send a petition to the NOP to add a substance to the National List.  The National Organic Standards Board (“NOSB”) reviews each petition.  At least 30 days before a public hearing by the NOSB, the petition is made available to the public for comment.  During the NOSB meeting, any interested person has an opportunity to publicly comment on the petition.  Based on the petition, oral and written comments, and discussion, the NOSB votes on whether to recommend the addition of a petitioned ingredient to the National List.  Therefore, interested parties have an opportunity to comment on proposed additions to the National List long before a proposal to amend the National List is published in the Federal Register.

The 38 substances that the USDA/NOP proposes to add to the National List at § 205.606 include 19 colors, fish oil, fructooligosaccharides, gelatin, oligofructose-enriched inulin, pectin, chipotle chili pepper, unmodified rice starch, and whey protein concentrate.  The deadline for written comments is May 22, 2007.  Inclusion on the National List does not mean that the product can be used.  Annually, a certifying agent must evaluate whether an organic alternative is commercially available.

By Riëtte van Laack

RELATED READING:

• Congressional Research Service Report on Harvey v. Veneman

As pharmaceutical manufacturers all know by now, the Deficit Reduction Act changed the definition of the average manufacturer price reported to the Centers for Medicare & Medicaid Services for purposes of the Medicaid Rebate Program, requiring that customary prompt pay discounts to wholesalers are no longer to be deducted in the calculation of AMP as of the first quarter of 2007.  (And if you don’t know this already, please contact Jeff Wasserstein or Alan Kirschenbaum right away!)

Under the 340B program, manufacturers are required to offer certain PHS covered entities a discounted price, which is the AMP minus the unit rebate amount (which is the greater of 15.1% of AMP or AMP minus best price).  With the shift in the calculation in AMP mandated by CMS, one might have thought that this would carry over to other programs, such as the 340B program, as well, since the definition of AMP is tied into the definitions set up by the Medicaid Drug Rebate statute, 42 U.S.C. § 1396r-8.  Until recently, however, the Office of Pharmacy Affairs (OPA) at the Health Resources and Services Administration (HRSA), which administers the 340B program, insisted that manufacturers calculate two AMPs, one using the new methodology for CMS’s purposes under the Medicaid Rebate Program, and one to be used for calculating the 340B ceiling price that included prompt pay discounts. 

Thankfully, OPA listened to reason and rescinded this policy, which directed manufacturers to calculate AMP for purposes of the 340B program by taking into account prompt pay discounts, contrary to the DRA.  A May 9 Dear Manufacturer letter from Jimmy Mitchell, Director of OPA, the letter rescinds OPA’s January 30 letter, which had set forth the requirement that manufacturers calculate two separate AMPs.  As you can see in the attached letter, OPA has listened to reason and decided that a single AMP that meets the DRA’s statutory requirements should be used for both programs.

The Centers for Medicare & Medicaid Services (“CMS”) proposed brand-specific Healthcare Common Procedural Coding System (“HCPCS”) code changes for intravenous immune globulin (“IVIG”) that may lead to enhanced reimbursement for the biologic.  The HCPCS coding changes are effective July 1, 2007, and were announced in preliminary decisions for a May 15, 2007 HCPCS Public Meeting Agenda.  The new HCPCS codes coincide with the release of an April 2007 report from the Health and Human Services Office of Inspector General, which examined Medicare reimbursement for IVIG and addressed concerns about the biologic’s availability.

IVIG is a blood plasma derivative that is FDA-approved to treat patients whose immune systems produce insufficient antibodies to fight infection. Patients are infused with IVIG to temporarily replace antibodies to guard against various opportunistic infections that otherwise could be life-threatening.  FDA-approved indications include primary immunodeficiency, and certain immunodeficiency syndromes such as pediatric human immunodeficiency syndrome.  IVIG is also prescribed for many off-label uses, however, including chronic idiopathic demyelinating polyneuropathy, also known as chronic GuillainBarré syndrome.  There are currently two HCPCS codes for IVIG products, depending on whether they are powder or liquid.

Medicare reimbursement for IVIG is based on manufacturer average sales price (“ASP”).  Currently, Medicare Part B IVIG administered in hospital outpatient departments and in physician offices is reimbursed at 106% of the weighted average ASP.  Medicare also makes a separate payment of $75 to physicians and hospital outpatient departments for pre-administration-related services associated with IVIG (HCPCS code G0332) to cover the effort to locate and acquire IVIG for administration.  Even so, some providers believe that Medicare ASP-based reimbursement is not enough to pay acquisition costs for IVIG.  Because reimbursement is based on a weighted average of the ASPs for the various IVIG products, providers that use more expensive IVIG products may be under-reimbursed, since the weighted average incorporates lower-priced products as well.  This has caused some providers to stop furnishing the biologic to Medicare patients.

CMS’s decision to split HCPCS codes for IVIG into brand-specific codes may improve Medicare reimbursement for the biologic.  Brand-specific HCPCS coding will allow Medicare reimbursement to more accurately reflect provider acquisition cost of IVIG.  The new codes will also enable CMS to more readily monitor IVIG claims and access.

By Kirk L. Dobbins

In the near future, one might see the following ad on Ebay or Craig’s List: "For Sale:  One FDA Priority Review voucher.  Mint condition.  Entitles 505(b)(1) applicant to 6-month FDA review.  Sponsor must pay additional user fee."

In an effort to incentivize companies to invest in the development of treatments for neglected and tropical diseases, the Senate-passed version of the FDA Revitalization Act ("FDARA") creates a transferable priority review voucher for companies that obtain approval for such products.  When FDA grants "priority review," the Agency agrees (under PDUFA III) to review and act on an application within 6 months of receipt. 

The bill, if enacted, would add § 524 to the FDC Act –"Priority Review To Encourage Treatments For Tropical Diseases."  Under this provision, FDA "shall award a priority review voucher to the sponsor of a tropical disease product upon approval by [FDA] of such tropical disease product" after the enactment of FDARA.  "Tropical disease products" are defined to include products for HIV, malaria, tuberculosis and related diseases, and "any other infectious disease that disproportionately affects poor and marginalized populations, including those diseases targeted by the Special Programme for Research and Training in Tropical Diseases cosponsored by the United Nations Development Program, UNICEF, the World Bank, and the World Health Organization."  A priority review voucher may be used when FDA would otherwise assign a "standard review" (10-month review) to an application. 

A priority review voucher awarded to a sponsor is transferable.  The bill states that "[t]he sponsor of a tropical disease product that receives a priority review voucher . . . may transfer (including by sale) the entitlement to such voucher to a sponsor of a new drug for which an application under section 505(b)(1) will be submitted after the date of the approval of the tropical disease product."  In addition to limiting priority review vouchers to 505(b)(1) applications (it is unclear why 505(b)(2) applications are excluded), there is a string attached to such vouchers.  Specifically, FDA must assess a new priority review voucher user fee.  Under the bill, FDA "shall establish a user fee program under which a sponsor of a drug that is the subject of a priority review voucher shall pay to [FDA] a user fee . . . in addition to any fee required to be submitted under" PDUFA.  Presumably FDA will establish this new fee under the goals document that will be issued as part of PDUFA IV once FDARA is signed into law later this year.   

The tropical disease incentive provision was added by an amendment sponsored by Sen. Sam Brownback (R-KS).  In introducing the amendment Sen. Brownback commented that:

According to the World Health Organization, more than 1 billion people -nearly one in every 6 people worldwide- are affected by at least one neglected tropical disease.  In addition, neglected tropical diseases claim roughly 500,000 lives each year.  However, less than 1 percent of the 1,400 drugs registered between 1975 and 1999 -over a 25-year-period- fewer than 1 percent of the 1,400 drugs registered treated such diseases.  This disparity is clearly due to the lack of financial incentive for pharmaceutical companies to bring neglected tropical disease treatments to market because these diseases disproportionately affect low-income countries, with the poorest of the poor in those countries needing those medicines, most of them in Africa.  Creating incentives for companies to invest in treatments for these diseases is not only in our country’s national interest, but it is consistent with our longstanding tradition of caring for those who are less fortunate around the world.  In other words, it is consistent with American values.

Although the FDC Act does not currently offer incentives specifically for the development and approval of products for tropical diseases, if a tropical disease meets the requirements of the Orphan Drug Act, e.g., United States prevalence of 200,000 or less persons (presumably many do), FDA may designate a drug for a tropical disease as an "orphan drug."  Orphan drug designation qualifies an applicant for a 7-year period of orphan drug exclusivity, tax credits, and other benefits.  Therefore, while Sen. Brownback’s amendment offers a new type of incentive for the development of drugs for tropical diseases (some of which may not qualify for Orphan Drug Act benefits), sponsors should also consider whether their drug qualifies as an "orphan drug."

Earlier this week, the U.S. Senate passed S. 1082, the “Food and Drug Administration Revitalization Act” (“FDARA”) by a vote of 93-1 (Sen. Bernie Sanders (I-VT) was the lone “nay” vote).  The bill is an omnibus FDA reform and user fee package that, among other things, reauthorizes the Prescription Drug User Fee Act (i.e., PDUFA IV).  The U.S. House of Representatives must now move forward on its version of the legislation.  Once the House bill is passed, any differences between the bills will be reconciled in conference committee.

A copy of the version of the bill passed by the Senate was published in the Congressional Record, and is available here.  Next week, FDA Law Blog plans to make a series of posts on various provisions of the bill.

Last week we reported on motions submitted by Mylan and Apotex requesting that the U.S. District Court for the District of Columbia reconsider its April 30, 2007 memorandum opinion concerning 180-day generic drug and pediatric exclusivity issues involving NORVASC (amlodipine besylate) Tablets and the availability of generic versions of the drug product.  Mylan’s amlodipine drug product is the only generic version of NORVASC currently approved by FDA.

Apotex claims in its reconsideration motion that the company was successful in having the district court injunction lifted by a March 29, 2007 order entered by the U.S. District Court for the Northern District of Illinois, and that because of this order, FDA should immediately approve Apotex’s ANDA.  Mylan’s motion for reconsideration takes issue with FDA’s interpretation of FDC Act § 505A(c)(2) with respect to the applicability of Pfizer’s pediatric exclusivity to other generic applicants. 

On May 8, 2007, FDA filed a memorandum in opposition to the Mylan and Apotex requests.  With respect to Mylan’s claims, FDA argues that “Mylan’s brief adds nothing new that requires reconsideration,” and that the court should deny the company’s reconsideration request.  With respect to Apotex, FDA refers to a May 7, 2007 letter answer the Agency sent to the company.  In that letter, FDA declines to immediately approve Apotex’s amlodipine ANDA.  FDA’s letter states:

The issuance of the March 29 Order by the Illinois district court does not change the result under the above analysis or entitle Apotex to immediate approval.  Pediatric exclusivity will continue to bar approval of Apotex’s ANDA until Apotex affirmatively wins its patent litigation, with a final effective decision that the patent is invalid or not infringed.  The March 29 Order is not a final effective decision that the patent is invalid or not infringed.  Lifting the injunction does not by itself convert the original Illinois district court finding the ‘303 patent is valid and infringed into a finding that the patent is invalid or not infringed.  Either the Illinois district court’s original judgment that the patent is valid and infringed remains in effect until the mandate issues, or, at best, the lifting of the injunction nullified that court’s initial decision so that there is in effect no district court judgment.  Under either scenario, Apotex has not obtained a final effective court determination that the patent is invalid such that pediatric exclusivity has ceased to bar approval of Apotex’s ANDA.

Both Mylan and Apotex have submitted briefs contesting FDA’s May 8, 2007 opposition memorandum. 

On April 30, 2007, the District Court for the Southern District of Illinois issued its opinion in Connell v. Secretary of Health and Human Servs., No. 05-cv-4122-JPG, 2007 WL 1266575 (S.D. Ill. Apr. 30, 2007) concerning a final decision by the Secretary of the Department of Health and Human Services (“HHS”) excluding an individual, Mr. Jeffrey Connell, from participating in federal healthcare programs, including Medicare and Medicaid, for a period of five years.  The court adopted the report of a magistrate judge recommending the reversal of the HHS decision.  The court’s decision was based on the fact that there was a delay of 35 months between Mr. Connell’s criminal convictions forming the basis for his exclusion (i.e., causing a false statement to be made to a Medicaid program and misbranding prescription drugs with incorrect lot numbers or expiration dates) and notification that he had been excluded.

According to the court, the Secretary did not evaluate evidence or make administrative findings regarding the reasonableness of the 35-month delay in administrative proceedings.  In finding that the appropriate decision was to remand the case to the Secretary for further proceedings, the Court provided the following analysis.  Although the Secretary, acting through the Inspector General, is required to provide reasonable notice of an exclusion, the timing is otherwise left to the Inspector General’s discretion.  Because there is no statute or regulation setting a deadline for exclusion determinations, the Court cannot impose a judicial deadline.  However, the Court would be able to fashion an appropriate remedy in an individual case involving unreasonable administrative delay.  In this case, however, the administrative record did not contain any discussion of the delay and its reasonableness or unreasonableness.  Accordingly, the Court decided that it was necessary to remand the case to the Secretary for further proceedings and a new decision in which the Secretary “shall evaluate the reasonableness of the 35-month delay between Connell’s criminal conviction in March 2001 and his exclusion in February 2004.  In deciding whether the delay was reasonable, the Secretary should consider the relevant circumstances, including the complexity of the issues considered, the volume of materials reviewed, any justification for delay, and the adverse impact on Connell.”  Id. at *2.  The Court, despite sympathy for Connell’s argument “that the wheels of justice turn too slowly,” declined to make a factual finding that the 35-month delay was unreasonable because it is not “empowered to weigh evidence itself and make factual findings” under these circumstances.  Id.

By Michele L. Butler

The Council for Entrepreneurial Development will hold a “MedTech” forum on June 6, 2007 in Research Triangle Park, NC to discuss FDA’s regulation of medical devices and device reimbursement under the Medicare program.  HPM’s own Marc Shapiro will moderate the program.  Jeff Gibbs and Kirk Dobbins will provide “A View from Washington.”  Jeff will present on “Recent Regulatory & Legislative Developments In FDA Device Regulation: What’s Changing?”  Kirk will present on “Obtaining Medicare Device Reimbursement: From Development to Market.” 

Additional details and registration information are available on the Council for Entrepreneurial Development website.

Yesterday, a former Federal Trade Commission (“FTC”) staffer recommended that drug companies follow a “moderate approach” in pursuing “reverse payments” — payments made by brand name companies to generic drug companies to persuade the generic companies to stay off the market for a particular drug.  Such payments are made in the context of a patent infringement settlement agreement.  The comments were made during a May 7, 2007 panel discussion at the BIO International Convention. 

The Federal Trade Commission (“FTC”) has contested a number of reverse payment settlements.  Last week, FTC Commissioner Jon Leibowitz testified before the House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee On Energy and Commerce that “recent court cases have made it more difficult to bring antitrust cases to stop exclusion payment settlements between brand manufacturers and their generic competitors, and that ‘the impact of the court rulings is becoming evident in the marketplace.’”  Commissioner Leibowitz’s testimony was given at a hearing on H.R. 1902 introduced by Rep. Bobby Rush (D-IL).  That bill would end such settlement arrangements.

Earlier this year, Rep. Henry Waxman (D-CA) introduced H.R. 1432, the “Preserve Access to Affordable Generics Act.”  The bill also seeks to end reverse payment settlements.

Rep. Waxman’s reverse payment bill, if enacted, would amend the Clayton Act to add new § 28 (Unlawful Interference With Generic Marketing) making it unlawful for a person, in connection with the sale of a drug product, to be a party to any “agreement” (as defined in § 1 of the Sherman Act) resolving or settling a patent infringement claim in which: (1) an ANDA applicant receives anything of value; and (2) such generic applicant agrees not to research, develop, manufacture, market, or sell the generic product for any period of time.  However, the bill would exclude a resolution or settlement that includes no more than the right to market the generic product prior to the expiration of the patent:

Nothing in [§ 28] shall prohibit a resolution or settlement of patent infringement claim in which the value paid by the NDA holder to the ANDA filer as a part of the resolution or settlement of the patent infringement claim includes no more than the right to market the ANDA product prior to the expiration of the patent that is the basis for the patent infringement claim.

The bill would also amend § 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) to set forth additional filing requirements related to agreements between brand name and generic drug companies. MMA § 1112(c)(2) currently states:

The parties that are required in [MMA § 1112] (a) or (b) to file an agreement in accordance with this subsection shall file with the Assistant Attorney General and the [FTC] the text of any agreements between the parties that are not described in such subsections and are contingent upon, provide a contingent condition for, or are otherwise related to an agreement that is required in [MMA § 1112] (a) or (b) to be filed in accordance with this subsection.

H.R. 1432 would add a second report requiring parties to file with the Assistant Attorney General and the FTC “a description of the subject matter of any other agreement the parties enter into within 30 days of an entering into an agreement covered by [MMA § 1112] (a) or (b).”  The bill also requires the Chief Executive Officer or the company official responsible for negotiating any agreement to file a certification that materials filed with respect to such agreements are complete, final, and exclusive.

Finally, H.R. 1432 would amend the 180-day exclusivity forfeiture provision at FDC Act § 505(j)(5)(D)(i)(V) to provide that an ANDA applicant that is a “first applicant” forfeits exclusivity if an agreement violates new § 28 of the Clayton Act.

On April 25, 2007, the Senate Finance Committee released the results of a Committee inquiry into drug company grants to fund continuing education for medical providers.  The Finance Committee report was two years in the making and addresses the Committee’s belief that the pharmaceutical industry uses educational grant funding to promote the use of their drugs, including unapproved uses of some medicines.  This report will likely fuel the government’s continued crackdown on pharmaceutical companies engaged in off-label promotion and signals the government’s continued skepticism of the use of Continuing Medical Education (“CME”) programs to transmit off-label information.   

The Committee contacted the 23 largest pharmaceutical manufacturers to inquire about their use of educational grants and subsequently sent questions to the Accreditation Council for Continuing Medical Education (“ACCME”), the primary accrediting body for CME providers. The Committee found that “drug companies have used educational grants as a way to increase the market for their products in recent years.  This practice is of particular concern when the companies use educational grants to encourage physicians to prescribe products for uses beyond their FDA approval.”  The Committee cited ACCME’s records, which the Committee believed showed numerous cases over the past 3 years in which companies exercised too much influence over the content of supposedly independent educational programs. 

The Committee stated that drug manufacturers have implemented compliance policies that separate the grant-making process for educational programs from their marketing efforts.  In most instances, drug manufacturers have limited the direct involvement of field sales representatives and sales and marketing departments in the educational grant-making process.  The Committee concluded that the “major drug companies have adopted corporate policies that, on their face, do not allow educational grants to be awarded for unlawful purposes.  However, corporate policies still allow this industry to walk a fine line between violating rules prohibiting off-label promotion and awarding grant money in a manner likely to increase sales of their products, including sales for off-label uses.”  According to the Committee, risks still exist for kickbacks, unveiled advertising of drugs, efforts to bias clinical protocols, and off-label promotion.  Another concern expressed by the Committee is the lack of proactive or real-time oversight for educational grant programs. 

In a follow-up letter to the ACCME, the Committee was quite critical of the ACCME’s oversight activities of CME providers, noting that the ACCME considered CME providers to be in compliance with ACCME standards, even if a substantial minority of CME providers’ programs were not in compliance with ACCME standards, including the requirement that the program be free of commercial influence or bias.  The Committee noted that “[i]t also appears that compliance with ACCME standards still allows CME providers to accommodate the business interests of their commercial sponsors and affords drug companies the ability to target their grant funding at programs likely to support sales of their products.”   

The report did not provide any recommendations on how to address the concerns.  However, a press release issued by Senators Max Baucus (D-MT) and Charles Grassley (R-IA) stated that the Committee will follow up on its findings with participating drug manufacturers and with organizations that have issued guidelines on medical educational grants, including the FDA, the Inspector General at the Department of Health and Human Services, and the ACCME.

By Noelle C. Sitthikul

FDA has come under fire from U.S. lawmakers and public interest groups for its handling of a spate of recent food contamination outbreaks concerning E. coli-contaminated bagged spinach, salmonella-contaminated peanut butter, and melamine-contaminated pet food and animal feed.  Speaking at a recent congressional hearing, former FDA Commissioner David Kessler stated that major improvements were needed from Congress, the industry, and FDA:

FDA scientists are ill-resourced to do the research necessary to turn scientific findings about foodborne illness into practical guidance that food companies can implement to make our food supply safer.  This lack of scientific leadership does not make the headlines, but there is no question that one of the greatest losses from lack of resources is the Agency’s ability to serve as a leading voice on sound scientific decision-making.

In an effort to address concerns about the food safety system, on May 1, 2007 FDA announced the creation of the position of Assistant Commissioner for Food Protection (a “food safety czar”).  The position will be filled by Dr. David Acheson, who is the current chief medical officer and director of the Office of Food Defense, Communication and Emergency Response at the Center for Food Safety and Applied Nutrition. Dr. Acheson has been involved in the investigation of E. coli-contaminated spinach, the peanut butter recall, and the recent recall of melamine-contaminated pet food.

FDA’s new food safety czar is to “advise and counsel . . . the [FDA] Commissioner on strategic and substantive food safety and food defense matters.” He is expected to work with individual FDA product centers and the Office of Regulatory Affairs, to coordinate FDA’s food safety and food defense assignments and commitments, and to serve as liaison to other U.S. departments and agencies influencing food safety.  One of his first projects will be to develop a strategy to identify potential gaps in the food safety system and determine how to fill those gaps.

Some lawmakers do not believe that the creation of a food safety czar is the answer to addressing the nation’s food safety problems.  Instead, they suggest that the increase in outbreaks of foodborne illnesses is the result of a systemic problem that can only be solved by creating a single food safety agency. Such calls are nothing new.  In the 90s, the General Accounting Office and others called for the creation of a single food safety agency. In recent years, Senator Richard Durbin (D-IL) introduced several bills aimed at creating a single food safety agency.  For example, Sen. Durbin and Rep. Rosa DeLauro (D-CT) introduced The Safe Food Act (S. 654 and H.R. 1148), which is intended to give FDA the authority to order mandatory recalls and fine companies that do not promptly report contamination of food. The bill, if enacted, would also establish a single food safety agency.

Acknowledging, however, that the political climate is not right for such a dramatic change, on May 2, 2007, Sen. Durbin proposed amendments to S.1082, which reauthorizes the Prescription Drug User Fee Act.  The amendments, if enacted, would, among other things, establish “an early warning and notification system for human food, as well as pet food, establish fines for companies that don’t promptly report contaminated products, [improve] inspections/monitoring of imports, and [provide] better, more uniform pet food safety standards.” 

By Riëtte van Laack