The American Conference Institute’s (“ACI’s”) popular “FDA Boot Camp” – now in its 36th iteration – is scheduled to take place from March 24-25, 2021 (Eastern Time).  The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.  And like a lot of conferences over the past year, the ACI conference format has changed from a live, in-person event to an interactive, virtual conference.

ACI’s FDA Boot Camp will provide you not only with the essential background in FDA regulatory law to help you in your practice, but also key sessions that show you how this regulatory knowledge can be applied to situations you encounter in real life. A distinguished cast of presenters will share their knowledge and provide critical insights on a host of topics, including:

• The organization, jurisdiction, functions, and operations of FDA
• The essentials of the approval process for drugs and biologics
• Clinical trials for drugs and biologics
• The role of the Hatch-Waxman Act in the patenting of drugs and biologics
• Labeling in the drug and biologics approval process
• cGMPs and other manufacturing concerns relative to products liability
• Proactive adverse events monitoring and signal detection
• Recalls, product withdrawals, and FDA oversight authority

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst is co-chairing the conference and will also present at a session titled “Understanding the Relevance of New FDA Initiatives and Policies and How They May Redefine the Life Sciences Industry in the Aftermath of COVID-19.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-874-874EX05.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you (virtually, of course) at the conference.

Welcome to the latest edition of HPM’s monthly wrap up of food, beverage and supplement news, including regulations, guidances, events, and whatever else is catching our eye. It’s been quite a January, hasn’t it?

Food & Beverage

• Transition: As of this writing, Janet Woodcock is Acting Commissioner of Food and Drugs; Norris Cochran is Acting Secretary of Health & Human Services; and Kevin Shea is Acting Secretary of Agriculture.
• Whither regulation of bioengineered animals? USDA and HHS officials signed an MOU under which USDA would take the lead on regulation of bioengineered animals intended for agricultural purposes. Then-Commissioner Hahn quickly disavowed the MOU via Twitter, thereby suggesting that the future of that initiative is uncertain.
• Another source of protein. EFSA has declared mealworms safe for human consumption. This is their first opinion on insects as a novel food and could help drive the category forward.
• Uniformity is good. The FDA announced that January 1, 2024, will be the uniform compliance date for final food labeling regulations that are issued in calendar years 2021 and 2022. This action does not change existing requirements for compliance dates contained in final rules published before January 1, 2021.
• Traceability is good too. The FDA published FAQs about the FSMA Food Traceability Proposed Rule to assist those considering submitting comments (due Feb. 21, 2021). FDA also updated its Food Traceability List to provide some clarity (without changing any of the listed foods).
• Not-so Short Form. On January 8, 2021, California’s Office of Environmental Health Hazard Assessment (OEHHA) announcedproposed amendments to Proposition 65 warning regulations that would limit use of the short-form version of the safe harbor warning. Check out Riëtte’s blog post for more information.

Supplements

• Another try at CBD: Legislation was again introduced in Congress that would make lawful the use of hemp and its derivatives (including CBD) as dietary ingredients in a dietary supplement, provided that the supplement complies with all other applicable requirements. Hat tip to CRN, which posted the bill on its website.
• And another NAD decision on “natural”: NAD took issue with the word “natural” in a brand name used for products in which the key ingredients are not naturally derived. Other aspects of the decision also make it a worthwhile read.

More on Cannabis

• Just under the wire: As the Trump administration was winding down, the USDA finalized on Jan. 15 its regulatory framework for the Establishment of a Domestic Hemp Production Program, which takes effect on March 22.
• Out with the old: The Biden administration sent a memo to all federal agencies on January 20 telling them to withdraw pending rules, and the Cannabidiol Enforcement Policy; Draft Guidance for Industry was

Other things that caught our eye:

• AMG v. FTC: With a legal question that led to a classic oral argument where all nine Justices refused to tip their hands on how the case will turn out, the U.S. Supreme Court this month heard oral argumentsin AMG Capital Management v. Federal Trade Commission. Karin’s blog post has more details.

The American Conference Institute (“ACI”) is sponsoring its Advanced Legal, Regulatory, and Compliance Forum on OTC Drugs Conference on February 26, 2021 (Eastern Time).  Like a lot of conferences over the past year, the ACI conference format has changed from a live, in-person event to an interactive, virtual conference.

Hear from leading OTC industry counsel and regulatory executives who will provide timely analysis and best practices for:

• Preparing for monograph reform under the CARES Act
• Substantiating COVID-related claims
• Identifying labeling and manufacturing missteps for imports, to avoid costly hold ups at the border
• Leveraging lessons from recent Rx-to-OTC switch success stories to overcome complex legal and regulatory hurdles
• Navigating recalls and adverse events protocols

Hyman, Phelps & McNamara, P.C.’s Deborah L. Livornese will be speaking at a session titled “How to Prepare for a Modernized OTC Drug System under the CARES Act.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-826-826DX01. You can access the conference brochure and sign up for the event here.  We look forward to “seeing you at the conference.”

In late November, the OIG published a final rule that excludes from the Federal healthcare program safe harbor for discounts rebates paid to Medicare Part D plans, or their PBMs (see our post here).  The rule also establishes two new safe harbors: one for rebates paid to Medicare Part D plans and Medicaid Managed Care plans, or their PBMs, if the rebates are passed through by the plan or PBM to the dispensing pharmacy; and another for service fees paid to PBMs.  Together, these safe harbor amendments were intended to force PBMs to pass manufacturer rebates through to pharmacies to lower the out‑of‑pocket costs of government beneficiaries at the pharmacy counter.  The exclusion from the discount safe harbor had a delayed effective date of January 1, 2022, while the two new safe harbors were scheduled to go into effect on January 29, 2021 (last Friday).  However, since Friday, both the discount safe harbor exclusion and the new safe harbors have now been delayed further.

On Friday, just under its deadline, the OIG issued a “correction” to the two new safe harbors delaying their effective dates until March 22, 2021.  The delay was pursuant to the regulatory freeze issued by the White House on inauguration day, which, among other things, directed federal agencies to consider delaying published rules that have not yet become effective for 60 days, and longer where necessary, to permit the agency and OMB to review factual, legal, and policy issues raised by the rule.

On Saturday — the very next day — the new discount safe harbor exclusion was also delayed, this time by court order.  Earlier this month, before the change in administration, the Pharmaceutical Care Management Association (PCMA), a trade association of PBMs, had sued HHS to vacate the rule on procedural and substantive grounds.  Saturday’s Order delayed the effective date of the exclusion one year from January 1, 2022 to January 1, 2023, “pending the duration of HHS’ review of the November 20, 2020 rule,” with the consent of the parties.

The fate of these safe harbor amendments under the Biden administration is in doubt.  As we pointed out in our previous post, the safe harbor amendments would reduce coinsurance for some federal program enrollees but would preclude PBMs from using rebates to reduce premiums across all enrollees.  The Congressional Budget Office estimated that the impact would be to increase Medicare and Medicaid spending by $177 billion over 10 years.  This Administration, like the previous one, has committed to reducing drug prices, but can be expected to favor price reduction measures that do not increase costs to the government.

At a conference sponsored by the Parenteral Drug Association on January 27, speakers demonstrated that:

• Industry has developed best practices for auditors or regulatory inspectors to conduct virtual inspections of drug-manufacturing facilities (virtual inspections are those in which the auditor or inspector is not physically on-site, but, instead, conducts the inspection remotely through audio or video streaming techniques, or both).
• Advanced technology is available and is easily controlled by remote auditors in such a fashion as to replicate the physical presence on-site of an inspector or even a team of inspectors.
• Sponsors of approved applications for drugs regularly conduct virtual audits of their Contract Manufacturing Organizations (CMOs).
• Other drug-manufacturing regulatory agencies worldwide routinely conduct virtual inspections, and have done so since COVID-19 began to shut down travel of inspectors.

As we have previously reported (here, here, and here) and as my colleague Mark Schwartz wrote in a Bloomberg article, numerous FDA approvals of critically needed drugs are being blocked because FDA is insisting that the approvals must await in-person inspection of the facilities manufacturing either drugs or the Active Pharmaceutical Ingredients that are essential components of pharmaceuticals.  And yet FDA has not promulgated guidance or publicized policies on virtual FDA inspections so that the unnecessary blockade of drug approvals can be lifted.  FDA has claimed it has performed virtual inspections of food-manufacturing facilities, but has not claimed that it has performed a single virtual inspection of a drug-manufacturing facility.  By contrast, the European drug manufacturing regulatory body (the European Medicines Agency, or EMA) and its British counterpart (the Medicines and Healthcare products Regulatory Agency, or MHRA) have been performing such inspections since March.

At the PDA webinar, which was attended by more than 350 individuals involved in drug manufacturing (and also apparently by some FDA officials: let’s hope they recognize the ease and promise of virtual inspections), presentations described the procedures that drug manufacturers should establish for the conduct of virtual inspections (including that video and audio should be streamed in real time, without alteration or enhancement) and discussed the practices that inspected entities need to embrace (such as ensuring that adequate wifi capabilities are available in all areas which are subject to inspection).  (This blogpost will be updated to provide a link to the presentations, when they are available.)  One presenter, Peter Miller of Dynamic Compliance Solutions, demonstrated a 360camera that provides viewers of the video feed the same capabilities that an inspector or multiple inspectors would have if they were personally present at the inspected facility.  As you can see in the brief video, viewers can:

• Instruct personnel on-site to move the camera to particular places or in certain directions;
• Remotely pan or tilt the view provided by the camera as the remote inspectors wish, and, if there are multiple remote inspectors, each viewer can tilt or pan the camera to view different areas, people, or equipment as they wish (by left-clicking and rolling the mouse), and can zoom in and out;
• Interview plant personnel; and
• Demand to view specific documents through a flexible and high-resolution document camera.

Which brings us to the immortal lyrics of Cole Porter, popularized by Ella Fitzgerald.  “Let’s Fall in Love” suggested that “birds do it, bees do it, even educated fleas do it,” and implied, “Why don’t we do it?”  The same question could be asked of FDA about virtual inspections.  (This blogger’s question is rhetorical, only, because offering his honest response would be based on speculation and the content of the answer would be undignified.)  It is clear that COVID is going to prevent adequate FDA on-site inspections for months, if not years, and yet . . .

UPDATE: A copy of the presentations noted above is available here.

While receiving less public attention than some other types of health care products, in vitro diagnostics (IVDs) have for years been playing an increasingly important role in health care.  The COVID-19 pandemic has highlighted what has long been the case: IVDs are indispensable to public health.  Whether used as companion diagnostics to guide therapeutic treatment, or liquid biopsy to identify tumors from blood tests, or to detect an infectious disease, or to help determine whether a patient has had a heart attack, or in thousands of other ways, IVDs are essential in medicine.

There has not, however, been a single source that someone could consult to learn about how IVDs are regulated today.  To fill that void, the Food and Drug Law Institute (FDLI) has just released Diagnostics at a Crossroads: Navigating IVD Regulation in a Changing Environment, the first book in over a decade that addresses the world of IVD regulation.

The book comprehensively covers diagnostic regulatory issues, from premarket issues, e.g., analytical testing, statistics, clinical studies, and pathways to the market, to post-market issues, such as Quality System Regulation and Medical Device Reporting.  And, of course, it addresses two of our favorite topics: laboratory developed tests (LDTs) (see, e.g., our earlier posts here, here, here, here, here, and here) and research use only (RUO) products.  The authors represent a range of disciplines and expertise.  To name just a few, they include Dan Schultz, former director of CRRH; Nina El-Badry of BARDA; and Sally Hojvat, who was Director of one of the IVD Divisions at CDRH and now consults with WHO; and several colleagues at Hyman, Phelps & McNamara, P.C., and other law firms.  The book also covers other topics critical to IVD manufacturers and investors, such as reimbursement – simply getting on the market isn’t often enough for a test to be commercially viable – and the evolving European regulatory model.

More information about the book can be found here: https://www.fdli.org/IVD-book.

With the ongoing leaps in technology the importance of IVDs will only continue to grow.  We expect that this book will be a valuable resource for those who are seeking to learn how to better understand and navigate the world of IVD regulation.

In the waning days of the Trump administration, the Department of Health and Human Services announced a fairly significant change in addiction medicine policy. The new policy permits physicians (and only physicians) more flexibility to prescribe buprenorphine – a much used and effective drug that treats opioid use disorder.  On a side note, it has always been a “head scratcher” that it was actually much easier to prescribe highly addictive opioids (like schedule II or schedule III narcotic controlled substances) than buprenorphine, which is used for the much-needed treatment for abuse of opioids.  Until HHS’s recent announcement, any physician seeking to treat opioid use disorder with buprenorphine was required to obtain an “X” DEA number (i.e., “X waiver” or “Data 2000 waiver”).  Unless appropriately board certified, this required an 8-hour training; advanced practitioners including physician assistants and nurse practitioners need 24 hours of training.  Prescribers were also limited to 30 patients at a time within their first waiver year, and 100 patients thereafter (after meeting additional notification requirements).

We were waiting for — and wondering why — the Practice Guideline had not been been published in the Federal Register notwithstanding its release more than ten days ago, yet remained hopeful.  Enter the Biden Administration.  As published in The Washington Post, and carried by other news outlets, these practice Guidelines announced by the Trump administration in its final days “had significant legal and clinical concerns” and the Biden will not issue the Practice Guidelines that were previously announced.

As the original blogpost stated, the attached Practice Guidelines for the Administration of Buprenorphine for Treating Opioid Use Disorder exempts from certain certification requirements under 21 U.S.C. § 823(g)(2) of the Controlled Substances Act (CSA) those physicians licensed under State law and who possess a DEA registration.  Note the following important limitations on the new HHS exemption:

• The exemption only applies to physicians who may only treat patients who are located in the state or states in which they are authorized to practice medicine.
• Physicians will be limited to treating no more than 30 patients with buprenorphine for opioid use disorder at any one time (but note: the 30-patient cap does not apply to hospital-based physicians, such as emergency department physicians).
• The exemption applies only to the prescribing of drugs or formulations covered under the X waiver, such as buprenorphine, and does not apply to the prescription, dispensation, or use of methadone for the treatment of OUD (which – appropriately used — must be administered in a SAMHSA-certified program).
• Physicians utilizing this exemption shall place an “X” on the prescription and clearly identify that the prescription is being written for opioid use disorders (and separately maintain information in the chart used for the patient being treated for OUD).
• An interagency working group will be established to monitor the implementation and results of these new practice guidelines, as well as the impact on diversion.

Notwithstanding the benefit of greater access to medication assisted treatment using buprenorphine in what appears to be a thoughtful, controlled and reasonable manner, it seems like, given the new administration’s unwillingness to publish them, at least this blogger will continue to wonder why it appears easier to obtain the addictive opioid than it is to obtain the medication assisted treatment (at least the prescribing of buprenorphine) for opioid addiction.

2020 was unprecedented and tumultuous due to simultaneous challenges of a once-in-a-century global pandemic, the resulting socio-economic fallout, and political polarization regarding policy responses to the pandemic, civil rights protests and presidential elections. The FDA has been pressured and challenged and responded with varying degrees of success and now faces an incoming administration that in many ways could not contrast more sharply with its predecessor.

Join the all-star panel of FDA consultants and lawyers, including HPM’s own Frank Sasinowski in a discussion and Q&A of the 2020 experience and the FDA outlook for 2021 and beyond. To register, please click here.

As we previously reported (see here and here), in three separate cases, federal courts blocked the implementation of the Most Favored Nation (MFN) rule for Medicare Part B drug payment.  (Our summary of the MFN rule is available here.)  In December 2020, the District Court for the Northern District of California and the District Court for the Southern District of New York issued nationwide preliminary injunctions, while the District Court for the District of Maryland issued a temporary restraining order.  Each order effectively blocked the MFN rule from taking effect on January 1, 2021.

On January 13, 2021, Judge George J. Hazel granted a stay in the suit filed in the District Court for the District of Maryland.  As explained in the Joint Motion to Stay, the plaintiffs (the Association of Community Cancer Centers, the National Infusion Center Association, the Global Colon Cancer Association, and PhRMA) and government defendants agreed to stay the litigation until a new final rule is published in the Federal Register, based on “(1) Defendants’ agreement that they will not appeal the preliminary injunction issued by the Northern District of California; and (2) Defendants’ agreement that the performance period for any final regulation … shall not commence earlier than 60 days after publication of that regulation in the Federal Register.”  We note that, in a fourth lawsuit challenging the MFN rule, the government filed a Status Report on January 8, notifying the District Court for the District of Columbia that it will not appeal the nationwide preliminary injunctions issued by the District Courts in the Northern District of California and Southern District of New York.

A new administration has taken over since these court developments.  Based on what we’ve seen so far, including the Biden White House’s “Regulatory Freeze Pending Review” memo issued on January 20, we can safely say the MFN Rule published in November 2020 will not take effect in the short term.  We can also confidently predict that, if and when a new MFN rule is introduced, it will be in the form of a proposed rule with an opportunity for public comment.  More difficult to predict is whether an international reference pricing model will fit into the overall drug price reduction strategies of the new administration and Congress.

On January 12, 2021, FDA issued an Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) Action Plan (“AI/ML Action Plan”) and a discussion paper on their Proposed Regulatory Framework for Modification to Artificial Intelligence/Machine Learning (AI/ML) – Based Software as a Medical Device (SaMD) (“Modifications Discussion Paper”).  FDA started its public discussion of AI/ML in 2019, as we blogged about here, with publication of an AI/ML-based SaMD discussion paper outlining a potential framework for regulation of AI/ML-based SaMD.

The new AI/ML Action Plan describes feedback in response to the initial discussion paper and briefly describes a five-part action plan at a high level.  The Modifications Discussion Paper provides more detail on FDA’s thoughts related to modification of AI/ML-based SaMD and the “Predetermined Change Control Plan” that was introduced in the 2019 discussion paper.

The AI/ML Action Plan describes the following actions and goals:

• Develop an update to the proposed regulatory framework presented in the AI/ML-based SaMD discussion paper, including through the issuance of a Draft Guidance on the Predetermined Change Control Plan.

• Strengthen FDA’s encouragement of the harmonized development of Good Machine Learning Practice (GMLP) through additional FDA participation in collaborative communities and consensus standards development efforts.

• Support a patient-centered approach by continuing to host discussions on the role of transparency to users of AI/ML-based devices. Building upon the October 2020 Patient Engagement Advisory Committee (PEAC) Meeting focused on patient trust in AI/ML technologies, hold a public workshop on medical device labeling to support transparency to users of AI/ML-based devices.

• Support regulatory science efforts on the development of methodology for the evaluation and improvement of machine learning algorithms, including for the identification and elimination of bias, and on the robustness and resilience of these algorithms to withstand changing clinical inputs and conditions.

• Advance real-world performance pilots in coordination with stakeholders and other FDA programs, to provide additional clarity on what a real-world evidence generation program could look like for AI/ML-based SaMD.

AI/ML Action Plan at 8.

SaMD as a whole, and especially SaMD that uses AI/ML, is updated frequently.   Under the current regulatory framework, for class II devices subject to 510(k) premarket notifications, a new submission is required whenever software changes introduce new risks, impact risk controls, or significantly affects clinical functionality or performance specifications.  With AI/ML, software can be retrained using new data and, given the technology, these changes can be made more quickly than other types of design changes.  These types of changes often times improve performance or allow use of the software in expanded populations which, today, require a new regulatory submission.

In the Modifications Discussion Paper, FDA proposes a total product lifecycle (TPLC) approach for regulation of AI/ML-based SaMD that would allow some modifications that currently require a new regulatory submission to be made without one.  The proposed TPLC approach would start with the incorporation of GMLPs into the device manufacturer’s quality system.  While the specifics are not yet defined, GMLPs would describe best practices such as data management, feature extraction, training and evaluation used in the development of AI/ML-based SaMD.

The Modifications Discussion Paper then describes a regulatory pathway including an initial premarket evaluation of the AI/ML-based SaMD that includes both an evaluation of the safety and effectiveness of the device as well as an evaluation of “SaMD pre-specifications” (SPS) and an “algorithm change protocol” (ACP).

An SPS would describe “anticipated modifications to ‘performance’ or ‘inputs,’ or changes related to the ‘intended use’ of AI/ML-based SaMD.” Modifications Discussion Paper at 10.

An ACP would define “specific methods that a manufacturer has in place to achieve and appropriately control the risks of the anticipated types of modifications delineated in the SPS.” Id.   After initial FDA clearance, including the SPS and ACP, future modifications within the bounds of the cleared SPS and ACP could be made without a pre-market submission.

The Modifications Discussion Paper also proposes a process for transparency and real‑world performance monitoring of AI/ML-based SaMD, including “periodic reporting to FDA on updates that were implemented as part of the approved SPS and ACP, as well as performance metrics for those SaMD.” Id. at 14.  Labeling to accurately and completely describe the modification and its impact on performance are also proposed.  Again, the Modifications Discussion Paper does not provide details on the mechanisms by which transparency would be achieved as it seeks to receive input from stakeholders.

For some SaMD, we see a potential tradeoff between speed of the initial clearance and speed at which future changes may be made.  If the future path of the AI/ML-based SaMD is clear, spending extra time to develop an SPS and/or an ACP before the initial submission would allow future changes to be implemented without pre-market review, which will decrease time to market.  In cases where future modifications may not be well defined during initial review, developing an SPS and/or an ACP may delay initial submission without much gain down the road.

Anticipating that changes may not always be known at the time of the initial submission, the Modifications Discussion Paper proposes a step where FDA can perform a focused review of the SPS and ACP for any modification that is outside of the SPS and ACP agreed to in the initial clearance.  The mechanism for this interaction and its timeframe are not yet defined.   For any AI/ML-based SaMD where development of an SPS and ACP at time of initial submission does not make sense or would be likely to cause delays that are not balanced by improved speed of future modifications, the traditional framework would still remain an option.

While the unique characteristics of AI/ML may make it faster to implement a design change compared to other device types, the proposed framework may also be welcomed by industry for other types of devices.  A regulatory submission is currently filed at the end of development when verification and validation data supporting the final, finished device are complete for FDA review.

Many manufacturers start with an initial regulatory application for a foundational device and then submit subsequent submissions to add new feature and uses, many of which are known from the beginning.  The Modifications Discussion Paper makes us wonder, if FDA can define a mechanism by which to allow modification of an AI/ML-based SaMD based on pre‑specifications and change protocols, would they consider a similar approach for other device types?

In thinking about the current approach to FDA review, we recognize that, in using the pre-submission process, there are frequently multiple iterations of a protocol with the agency before agreement is obtained.  For device submissions that include data generated by following a protocol that had been subject to pre-submission interactions with FDA, FDA still scrutinizes the data and often raises questions or concerns during review of the study report in the pre-market application.

It is hard to envision FDA becoming comfortable with granting marketing authorization based on authorization of specifications and a change plan without review of the test results to ensure the protocol was strictly followed, that all data meet the specification as it was agreed upon, that appropriate regression testing was also performed, and that any justified anomalies or adverse events are appropriate.  The proposed real-world performance monitoring will need to be robust to ensure FDA feels the types of issues it may have detected in premarket review would be detected quickly via the postmarket processes.

As with the initial AI/ML discussion paper, the Modifications Discussion Paper is not a guidance or even a draft guidance, but is intended to further the AI/ML discussion by eliciting additional comments and feedback that the Agency can incorporate into guidance planned for later this year.

Despite these matters being in the discussion phase, FDA has already granted marketing authorization via the De Novo pathway of a device incorporating artificial intelligence that utilized a predetermined control plan to incorporate future modifications (DEN190040); thus, it seems the Agency is committed to going in this direction for regulation of AI/ML-based SaMD.

Interested parties are encouraged to provide feedback to the questions FDA has raised in the Modifications Discussion Paper to ensure that the process, when it is able to move out of the discussion phase, will provide a viable mechanism for today’s SaMD and innovations that are yet to come.

On January 8, 2021, California’s Office of Environmental Health Hazard Assessment (OEHHA) announced proposed amendments to Proposition 65 warning regulations that would limit use of the short-form version of the safe harbor warning.

Proposition 65, California’s Safe Drinking Water and Toxic Enforcement Act of 1986, mandates that businesses that sell consumer products—including food, cosmetics, and OTC drugs—notify Californians about possible exposure via a clear and reasonable warning about certain chemicals that have been identified as substances that cause cancer or reproductive toxicity.

Since the original warning requirements took effect in 1988, most Proposition 65 warnings simply stated that a chemical is present that causes cancer or reproductive harm, but they did not identify the chemical or provide specific information about how a person may be exposed or ways to reduce or eliminate exposure to it.

New OEHHA regulations, adopted in August 2016 (and effective in August 2018) changed the “safe harbor warning” that was deemed to meet the requirements for a clear and reasonable warning.  Importantly, the new safe harbor warning was to identify at least one chemical that prompted the warning.  In addition, the warning statement would no longer state “contains” the chemical but instead “can expose you to” a Proposition 65 chemical.  The regulations did provide for a short-form version of the Proposition 65 warning.  The key difference between these two warning statements is that the long-form warning requires that the business specifically must name at least one Proposition 65 chemical that could result in exposure from the product’s use, whereas the short form warning requires only a statement of the potential health hazard.  For example, a long-form warning for a product containing a chemical listed as a carcinogen could read:

⚠WARNING: This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause cancer. For more information go to www.P65Warnings.ca.gov.

A short-form warning for the same product could read:

⚠WARNING: Cancer – www.P65Warnings.ca.gov

Not surprisingly, many businesses chose to use a short-form warning.  In its “Initial Statement of Reasons” OEHHA asserts that the short-form warnings are used in ways that were not intended and do not further the purposes of Proposition 65.  Specifically, the intent of the 2016 updates had been to provide consumers with more meaningful and informative warnings, avoid over-warning, and limit the use of the short form warning where the full-length warning will not fit on the label. Therefore, OEHHA is proposing amendments that limit and revise the use of short-form warnings.  Proposed changes include:

• Allow the short-form warning only

(a) on products with 5 square inches or less of “label space” and

(b) when the standard warning will not fit.

• Prohibit the short-form warning for internet and catalog sales. This prohibition would apply even if the actual product label is eligible and contains the short-form warning.
• Add a requirement that the name of at least one chemical per relevant toxicity endpoint be included in the short-form warning; and
• Include the words “Risk” and “Exposure” in the warning.

Under the proposal, the new safe harbor warning for a product containing a potential carcinogen would read “ WARNING: Cancer Risk from [insert chemical name] Exposure – www.P65Warnings.ca.gov.”

The existing minimum type size requirements under the current regulations would not change.  In addition to requiring more transparency concerning the identity of chemicals in the warning, OEHHA hopes the proposed changes will dissuade businesses from over-warning.

OEHHA is accepting comments on the proposal through March 8, 2021.

With a legal question that led to a classic oral argument where all nine Justices refused to tip their hands on how the case will turn out, the U.S. Supreme Court this week heard oral arguments in AMG Capital Management v. Federal Trade Commission.  The sole issue before the Court is the FTC’s authority to seek and obtain equitable relief from a court with regard to the meaning of a statutory scheme that both sides acknowledged is not expressly resolved by the wording of Section 13(b) of the FTC Act, 15 U.S.C. 53(b).  The operative language of that provision simply authorizes the FTC to seek, and a court to issue, “a permanent injunction.”

You can read more about the background of this case in our previous posts here, here, and here.  At its base, though, the Justices clearly recognized that this issue is the classic – and moot court-worthy – conflict between a pure textual reading of the statute, versus examining the historical context of the provision built on decades of enforcement actions and court decisions both before and after the provision was enacted by Congress in 1973.  AMG primarily argued that because Congress explicitly included equitable relief in Sections 19 and 5(l), the failure to include that language in 13(b) must mean that Congress intended to exclude such relief from that provision. The FTC asserted that while the legislative history of the 13(b) is sparse, Congress employed the facially unclear “injunction” language in 13(b) with a backdrop that Congress intended that two pre-enactment Supreme Court rulings involving other federal agencies gave the FTC the same powers to seek equitable relief.  However, several Justices noted that soon after 13(b) was enacted, the FTC itself did not believe that this section authorized the FTC to seek equitable relief.

Joel Marcus, Deputy General Counsel for Litigation argued for the FTC, and Michael Pattillo of MoloLamken argued for AMG.  One interesting sidenote is that the case is one of the extremely rare cases where the FTC is representing itself before the Court, rather than relying on the Solicitor General of the United States.

Both sides’ arguments were excellent, as were their briefs, and as Justice Breyer commented during the argument, “Blue brief I think you’re right. Red brief I think you’re right. You can’t both be right. That’s right. Alright. You see, that’s the old joke but that’s where I am.”  Many commentators are right there with you, Justice Breyer.

Chief Justice Roberts noted that the Court has changed over time the way that it interprets statutes.  He stated (and other justices agreed) that the Court interprets statutes in a “more disciplined” way than its prior approach, which he described as “freewheeling.” While he made this comment in the course of asking if the court should construe the statute in the environment in which it was passed, the Chief Justice did not explain what he meant by these terms.

While we could look into a crystal ball and try to guess where the Court will land, we won’t – mainly because it would be a wild guess. We do, however, want to address an oversimplification that came up a few times during the argument, that being that employing 13(b) as a means to get relief is the “easier” or “more attractive” path for the FTC to take to get equitable relief when the FTC is deciding to choose among Section 13(b), Section 19 (15 U.S.C. § 57b) or Section 5(l) (15 U.S.C. § 45(l)) of the FTC Act.

In contrast to Section 13(b), Sections 19 and 5(l) expressly authorize the government to obtain equitable relief.  The first provision requires the FTC to first obtain an administrative cease and desist order against a company or other person, before the FTC can go to court to get equitable relief.  The second provision is also quite limited because it too requires a prior cease and desist order or administrative rule before the FTC can go to court to seek equitable relief.  In contrast, 13(b) allows the FTC to go to court to enjoin allegedly unlawful conduct without providing any notice at all to the alleged violator.  This “lack of prior notice” contrast was noted by a number of the Justices in this week’s argument.

Speaking as a former FTC staff attorney (Karin) and the former Director of the DOJ’s Office of Consumer Litigation (now called the Consumer Protection Branch) (John), we believe this contrast oversimplifies the strategic analysis that FTC Staff conducts when assessing which provision to employ to determine the path forward on every case.  We have clearly seen that FTC Staff considers a multitude of factors in their strategic analysis of whether to proceed against an alleged offender by bringing a 13(b) action in court as opposed to seeking an administrative cease and desist order without first resorting to a court.  For example, the FTC weighs primarily which of the two actions is most conducive to discovery issues and an expedited resolution.  In addition, the FTC considers how forthcoming the target of the investigation has been with information, whether the case presents a novel theory or otherwise complex issues or whether it’s “run of the mill”, what injunctive relief is necessary and how quickly it is needed, what equitable relief might be available, where assets are located (here or abroad).  In other words, FTC lawyers do not necessarily agree in every case that a 13(b) action, which the Court seemed to believe is always the faster and better alternative for the FTC, is the path the agency wants to follow.  And for defendants, there are other important distinctions between the two paths.  For example, injunctions obtained by the FTC in court are generally much more detailed and onerous on the defendants than most cease and desist administrative orders.

Additionally, the concept that 13(b) is “easier” or “more attractive” seems to ignore the reality of the hundreds of cases the FTC has decided administratively.  See, e.g., In re POM Wonderful, LLC, 155 F.T.C. 1 (2013), aff’d as modified, 777 F.3d 478 (D.C. Cir. 2015) (FTC order clarifying policy on health claim substantiation); In re 1-800 Contacts, 2018 WL 6078349 (F.T.C. 2018) (FTC order resolving antitrust case alleging anticompetitive practices in the online contact lens market).

As noted above, this is a case where it is impossible to predict the outcome.  It is possible that the Court will overrule its earlier precedent dealing with agencies’ authority to seek and obtain equitable relief.  It is also possible that the Court will decide to follow that precedent.  We also do not know if the Court will use this case as a vehicle to reexamine long standing precedent regarding what is and is not appropriate equitable relief.  But one thing is crystal clear: a ruling against the FTC will put a dagger in the agency’s enforcement of the FTC Act.  Absent a subsequent amendment of that statute, the FTC would lose what is probably its main enforcement weapon, namely obtaining monetary relief, to combat alleged violations of the FTC Act.

As we have written before, this is not solely an issue for those dealing with the FTC.  Other federal agencies such as the SEC and FDA have also sought to obtain equitable relief under statutory schemes that authorize the agencies to bring lawsuits seeking injunctions.  It may well be true that the parameters of agencies’ authority to obtain such relief will depend on the specific wording of their governing statutes.  Nevertheless, the Court’s ruling could well impact other agencies.

In light of the developing case law, FDA may also need to be more circumspect in seeking equitable relief when it (through the Department of Justice) files an injunction action under 21 U.S.C. § 332.  That provision authorizes courts to “restrain violations” of the Federal Food, Drug, and Cosmetic Act, but is silent on the court awarding equitable relief as part of the injunction.  We will let you know what the Supreme Court decides.

An historical note.  Over fifty-five years ago, on November 8, 1965, the Supreme Court decided a false advertising case entitled FTC v. Mary Carter Paint Co.  The Beatles were in their heyday, at least in terms of performing concerts in this country.  The Selma to Montgomery freedom marches had occurred earlier that year.  And alas, the Cleveland Browns had won their last championship less than one year earlier.  It is hard to believe that this ruling was probably the last case decided by the U.S. Supreme Court involving the scope and powers of the Federal Trade Commission’s Bureau of Consumer Protection relating to deceptive practices.  The Court’s decision in AMG will likely come down sometime between mid-March and the end of June.

Those of you keeping up with the Orange Book know that FDA has been considering changes to patent listing requirements, many of which industry has been requesting for decades.  Now, Congress is trying to facilitate effective administration of the Orange Book.  On January 5, 2021, President Trump signed into the law the Orange Book Modernization Act, Pub. L. 116-290, which had been kicking around since March 2019.  Though the Act does revise the seminal Federal Food, Drug, and Cosmetic Act (FDC Act) drug provisions set forth in Section 505, there are few new concepts introduced.  Primarily, the Orange Book Modernization Act codifies existing FDA listing practices, most of which are described in 21 C.F.R. § 314.53.  Notwithstanding the lack of new policies, the Orange Book Modernization Act represents Congress’s interest and attention to Orange Book reform—something (as we mentioned in our June 2020 post) FDA essentially has been avoiding for the last 15 years.

In the House Report on the bill, written in May 2019, Congress explains its concerns over the patent listing process.  Despite patent listing regulations, Congress noted that “some branded drug manufacturers may choose not to submit every patent on a product to the FDA, and others are submitting patents potentially for the purpose of blocking generic competition.”  Further, stakeholders are concerned that “the patent information included in the Orange Book is not as accurate or up-to-date as it could be.”  To address such concerns, the Orange Book Modernization Act specifies the patent information that must be submitted and listed in the Orange Book, clarifies that canceled or invalid patents must be timely removed, directs FDA to solicit public comments on information listed in the Orange Book (which FDA already did) and issue a report to Congress, and instructs the Government Accountability Office (GAO) to study whether certain patents should be listed in the Orange Book at all.

The specific provisions of the Orange Book Modernization Act amend FDC Act § 505(b), (c), and (j).  The revisions to FDC Act § 505(b) are mainly administrative, revising the numbering and enumerating the elements that must be included in any 505(b)(1) submission.  It’s in this section that Congress codifies the limitations on patents listed in the Orange Book, stating that only drug substance, drug product, or method of use patents can be listed.  Of course, this has been FDA’s policy for years, but now it’s statutorily-mandated.  The most interesting revision to 505(b)(1) is the removal of sentence: “Upon approval of the application, the Secretary shall publish [patent] information submitted under the two preceding sentences.”  This sentence, albeit revised to conform with the amended statutory language, was originally included in the bill and is included in the 2019 House Report, but it does not appear in the final version.  While seemingly a minor blip, removal of this provision means that FDA no longer needs to publish patent information immediately on approval and can instead publish it 30 days after approval as set forth in 505(j)(7).  At first, this seems like an oversight, but because it was intentionally removed, it raises some questions about whether FDA will change its patent publishing practices.

The Act revises 505(c)(2) to conform to the changes in (b)(1), address timing for submission of patent information (again, codifying existing policy), and emphasizes that patent information not addressed in 505(b)(1) should not be submitted to the Agency.  The Act also revises 505(j)(7) to conform to the revisions in (b)(1), but, more importantly, adds authority for FDA to list exclusivities in the Orange Book (again, something FDA already does).  It also tries to better explain the requirements to delist patents that have been cancelled or invalidated by PTAB, requiring FDA to remove from the Orange Book such patent information, other than patents subject to challenges that may result in periods of 180-day exclusivity, within 14 days of notification.  However, the PTAB decisions on cancellation and invalidity remain limited to those decisions “from which no appeal has been taken or can be taken,” meaning that most IPR decisions still fall outside the scope of delisting requirements.

Finally, the Orange Book Modernization Act requires FDA to solicit comments on the types of information that should be included on or removed from the Orange Book and provide a summary to Congress of such comments and any responsive action.  The GAO also must investigate and commission a report on the listing of drug/device or device delivery system patents in the Orange Book, as well as the effects of such listing on market entry.  Congress required that the GAO Report include recommendations as to whether such device patent information should be included in the Orange Book and which patents should not be listed at all in order to reduce barriers to approval and market entry.  Presumably, these reports will be used to assess whether further revisions to the Orange Book listing process are necessary – and will perhaps provide long-awaited answers to the questions associated with listing device patents in the Orange Book.

Again, nothing in the Orange Book Modernization Act is revolutionary, but it does signal that FDA and Congress are on the same page with respect to the importance of maintaining accurate and up-to-date patent information, and that Congress is willing to fold PTAB/IPR decisions into Hatch-Waxman.  That could be important in the future if it becomes necessary to further incorporate PTAB/IPR decisions into Hatch-Waxman for purposes of 30-month stay termination or 180-day exclusivity forfeiture. In any case, the orderly administration of the Orange Book helps both innovators and generics attain certainty.  Further, that Congress passed this Act in the first place suggests that if FDA is not prepared to reform the Orange Book and industry listing practices, Congress may take the issue into its own hands.

That did not take long.  As we reported at the end of 2020, FDA announced in a notice the User Fees for OTC Monograph Drug Manufacturers and other fees.  Then on Jan. 6, 2021, HHS announced that the fees are off the table.

What happened?  Well, apparently, the notice about user fees for OTC monograph drug manufacturers took some parties by surprise.  Notably, distilleries and other parties, which, during the pandemic, had started to manufacture badly needed hand sanitizer (a monograph product), learned that their registration as OTC monograph drug manufacturers (a requirement to fall under FDA’s temporary policy) was associated with a significant price ticket that would negate at least some of the benefit (if any) of their (temporary?) move into drug manufacturing.  FDA’s temporary policy makes no mention of possible liability for user fees and many were unaware that these fees might apply to their activities under the policy.

Not long after the notice was published, just before the end of 2020, HHS issued a statement that the action by FDA had not been

cleared by HHS leadership, who only learned of it through media reports . . . HHS leadership convened an emergency meeting  . . . to discuss the matter and requested an immediate legal review. The HHS Office of the General Counsel (OGC) has reviewed the matter and determined that the manner in which the fees were announced and issued has the force and effect of a legislative rule. Only the HHS Secretary has the authority to issue legislative rules.

This is consistent with the HHS memo from September 2020, which stated that all departmental rules must be signed by the Secretary.

The Jan 6, 2021 Federal Register announcement states that HHS has “ordered FDA to cease collections activities related to the Over-the-Counter Monograph User Fee Program (‘OMUFA’) until, with the approval of the Secretary, the Department issues further direction concerning FDA’s administration of OMUFA which provides the public with notice and opportunity for comment.”  The latter is somewhat surprising as other user fee programs have not been treated as rules and the setting of annual fees has not been subject to notice and comment prior to going into effect.

Since the user fees are an essential component of the OTC monograph reform program, a new notice (with opportunity to comment this time) can be expected.  It seems that the monograph system’s long history of delay is not yet over.

It’s a burning question: when will we return to normal?  And although the answer is hugely subjective, this post focuses on the date the official emergency declaration for COVID-19 will terminate.  Despite the general sentiment that we want to be back to normal sooner rather than later, precedent reveals that the termination of an emergency declaration can take years.  Indeed, many public health crises that now seem historic, like Ebola or Zika, remain subject to a Public Health Emergency Declaration, with some extending over seven years.  This lengthy duration is not a bad thing, however, as the emergency status supports the continued distribution of medical products subject to an Emergency Use Authorization (EUA).

As background, in 2004, through the National Defense Authorization Act, Congress established a program to permit during times of emergency the sale of a drug, biologic, or medical device that lacks FDA approval, license, or clearance.  This program, codified in section 564 of the Federal Food, Drug, and Cosmetic Act, allows FDA to authorize the use of an unapproved drug, biologic or medical device when alternative therapies are not available.  The criteria for issuance of an EUA are lower than the standards FDA typically requires for product approval and, among things, only requires a showing that there is a “reasonable belief” that a product “may be effective.”   21 U.S.C. § 360bbb-3(c).

The Secretary of HHS published a statement in February 2020 declaring that there is a public health emergency involving the virus that causes COVID-19.  See 85 Fed. Reg. 7316 (Feb. 7, 2020).  This Declaration serves as the basis for hundreds of EUAs, including face masks and other personal protective equipment, ventilators, remdesivir, convalescent plasma, and most recently vaccines.

Companies have relied on these EUAs, some of which are tied to a specific product and others that provide an “umbrella” authorization for whole product categories, to build up infrastructure and distribution chains to bring these necessary products to market.  But there is uncertainty about how long these companies can rely on the EUA as its marketing authorization.  Under the statute, an EUA is effective until 1) the Secretary terminates the declaration or the company obtains approval for the product; or 2) FDA revokes or revises the EUA based on its determination that the circumstances supporting the EUA no longer exist.   See 21 U.S.C. § 360bbb-3(f)(1).  This post provides perspective on when the first criterion might occur.

Since 2005, there have been 11 declarations of a public health emergency under the FDC Act.  The chart below lists in chronological order the type of emergency and the date HHS issued its declaration.

Of the 11 public health emergencies since 2004, HHS has terminated only three: two for Anthrax and one for H1N1.  The other public health emergency declarations remain open, and products marketed under EUAs for these emergencies continue to be available to the public.

The bar chart below shows the duration of each recent public health emergency (the data were run back in November 2020).  In context, the short tenure of the COVID-19 emergency (just shy of a year) in comparison with Bird Flu (approaching 8 years), makes us reasonably confident that HHS will not terminate the COVID-19 declaration any time soon.  The pace in which vaccines and treatments have become available could change the calculus, of course.

And even if the Secretary decides to terminate the emergency declaration, the statute provides some comfort to companies selling products pursuant to an EUA that they will not be left in the lurch with huge inventories of unapproved product.  The Secretary must provide advance notice that a declaration will be terminated, and that period of advance notice must reasonably provide sufficient time for disposition of the product or relabeling, as needed.  21 U.S.C. § 360bbb-3(b)(3).  Thus, the program has built-in a safety mechanism for companies to manufacture and distribute unapproved products pursuant to EUAs without fear that the rug could be pulled out from underneath them.