A Supreme Court decision this week shows good potential to upend FDA and FTC’s claim that they can without limits seek disgorgement of “profits” from defendants who engage in unlawful activities.  In Liu v. Securities and Exchange Commission, the question was whether the SEC could obtain disgorgement of all the money received by a defendant which has engaged in unlawful activity, under the SEC’s  general statutory authority to obtain equitable injunctive relief.  The lower courts had held that the SEC could force disgorgement as an equitable remedy, but the Supreme Court vacated and remanded that award.  Considering the already tenuous grounds that FDA and FTC rely on to demand disgorgement, this case sets the stage for future challenges to these agencies’ ability to obtain disgorgement and restitution pursuant to their authorizing statutes.

Justice Sonia Sotomayor wrote the Opinion in which all the Justices joined except Justice Clarence Thomas, who would have gone further to hold that disgorgement was wholly unavailable because “disgorgement is not a traditional equitable remedy.”  The majority Opinion struck a middle ground, however, finding it “inequitable that [a wrongdoer] should make a profit out of his own wrong,” even if the term “disgorgement” has not always been recognized by equity courts.  But even if disgorgement is allowable equitable relief, the Court delineated several limits on disgorgement “to avoid transforming it into a penalty” beyond courts’ equitable powers.  First, disgorgement is permissible only as a way to return the defendant’s wrongful gains to those harmed.   This limitation cast serious doubt on the SEC’s ability to put some or all of the disgorgement award into the U.S. Treasury.  (Similarly, the FTC and FDA commonly ask that courts put disgorgement awards into the U.S. Treasury.)  Second, the amount of disgorgement should be limited to the profits obtained by an individual defendant, making joint and several liability relief unjustified.  And third, disgorgement should generally only apply to “net” profits, taking into account expenses, rather than all revenues from the wrongful acts.  Although the Court declined to decide whether the SEC had pursued disgorgement in violation of these limitations, the guiding principles it laid out strongly lean against the disgorgement amount previously awarded being awarded again on remand.

In evaluating whether disgorgement was available in this case, the Court parsed the language of the Securities Exchange Act, 15 U.S.C. § 78u(d)(5):  “In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, . . . any Federal court may grant . . . any equitable relief that may be appropriate or necessary for the benefit of investors.”  (Emphasis added.)  And even with this explicit language giving courts the power to grant “any equitable relief” for securities violations, the Court still vacated the award and remanded for consideration of whether disgorgement here was fashioned pursuant to the limiting principles for equitable relief set forth above.

In contrast, the FDC Act and the FTC Act contain more limiting language about the availability of equitable relief in conjunction with an action brought under these statutes.   Indeed, nowhere in the FDC Act is there any mention of equitable relief, such as disgorgement or even restitution.  Rather, FDA simply relies on the vague statement that courts can “restrain violations” of the FDC Act to support its demand for disgorgement and/or restitution:  “The district courts of the United States and the United States courts of the Territories shall have jurisdiction, for cause shown to restrain violations of section 301 . . . .”   21 U.S.C. § 332(a).   There is no doubt that Congress specifically authorized FDA, through DOJ, to bring injunction actions under the FDC Act, but it does not come close to the language in the securities law authorizing courts to grant “any equitable relief” as part of the injunctive remedy.  See also Jeffrey N. Gibbs and John R. Fleder, Can FDA Seek Restitution or Disgorgement?, 58(2) Food & Drug L.J. 129 (2003).

And Section 13(b) of the FTC Act similarly suffers from the same problem.  It provides that “in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction”  in a federal district court.  15 U.S.C. 53(b).  But like the FDC Act, it is silent on  equitable relief that could include disgorgement or restitution.

We eagerly await the Court’s decision on whether to grant the petition for a writ of certiorari in FTC v. Credit Bureau Center, LLC, a case challenging whether the FTC Act authorizes courts “to enter an injunction that orders the return of unlawfully obtained funds.”   See our previous posts here and here for more information about this case.

On Tuesday, June 16, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a district court decision to vacate the May 2019 Drug Price Transparency rule published by the Centers for Medicare & Medicaid Services (CMS).  As we reported when the rule was issued, the rule would have required pharmaceutical manufacturers to disclose the Wholesale Acquisition Cost (WAC) in Direct-To-Consumer (DTC) television advertisements for certain prescription drugs and biological products.  See 84 Fed. Reg. 20,732 (May 10, 2019) (“Disclosure Rule” or “Rule”).

According to CMS, the Rule was designed to invite public scrutiny into manufacturers’ list prices and to give consumers price information that could help them make critical health care decisions.  The Rule was immediately challenged by a group of pharmaceutical manufacturers on Administrative Procedures Act (APA) and First Amendment grounds. On July 8, 2019, the District Court of the District of Columbia published a memorandum opinion vacating the Rule on APA grounds while declining to reach the Constitutional argument. See Merck & Co. v. HHS, 385 F. Supp. 3d 81 (D.D.C. 2019).

On appeal, the Circuit Court reviewed de novo the district court’s interpretation of 42 U.S.C. §§ 1302(a) and 1395hh(a)(1), the two statutes that CMS used as its authority for the Disclosure Rule.  Unlike the district court, which ruled at Chevron Step One that the statute unambiguously foreclosed any regulation of pharmaceutical advertisements or price disclosure requirements, the Circuit court assumed that the statutes conferred “some relevant regulatory authority” in these areas, and proceeded to a Step Two analysis to decide that the Rule fell outside any reasonable reading of the Agency’s general administrative authority.

The text of the statute authorizes CMS to promulgate regulations that are “necessary to the efficient administration of the functions” of CMS,” see 42 U.S.C. § 1302(a), or “necessary to carry out the administration of the insurance program” under the Medicare Act, see 42 U.S.C. § 1395hh(a)(1).  The court explained that, “for a regulation to be ‘necessary’ to the programs’ ‘administration,’ . . .  the Secretary must demonstrate an actual and discernible nexus between the rule and the conduct or management of Medicare and Medicaid programs,” the “focus must also be on those two programs,” and have an effect on them that is “more than tangential.”  Instead, she found that the Disclosure Rule “bears at best a tenuous, confusing, and potentially harmful relationship to the Medicare and Medicaid programs.”

CMS had argued that the rule was necessary for the “efficient administration” of Medicare and Medicaid because price transparency will reduce wasteful and abusive increases in drug and biologics list prices. Judge Millett disagreed with the Agency for four reasons. First, as the government acknowledged, WAC “has no meaningful relationship” to what the federal and state governments pay for the drugs under Medicare Part B, Medicare Part D, and Medicaid,  and WAC is “even further removed” from what beneficiaries pay under these programs (deductibles and copays).  Second, beneficiaries, who are largely unaware of how their payments are computed, will likely be confused and deterred by high prices listed in the advertisements that they will almost never pay and that they are unlikely to understand.  Third, TV advertisements are not targeted to Medicare/Medicaid recipients but are accessible to healthcare consumers not covered by these federal programs. According to Judge Millett, this “increases the distance between the Disclosure Rule and any actual administration” and shows an example of the Rule’s administrative overreach. Fourth, and finally, Judge Millett noted that the regulation was “sweeping” in nature and scope and may have broad implications, not least of which was that it “implicate[d] a substantial constitutional question”—even if, as CMS argued, the cost of compliance was low.

Like the lower court’s decision, this decision did not reach the constitutional question raised by the manufacturers – i.e., whether the WAC disclosure rule compelled speech in violation of the First Amendment.  Certain states, such as New Hampshire, Oregon, and Vermont, have enacted statutes and issued implementing regulations that require manufacturers to report WAC information on certain new drugs and drugs whose WACs have increased, and also require this WAC information to be published on a government web site for public access.  Judge Millett’s conclusion that WAC is information that consumers are “unlikely to understand,” that may “generate harmful confusion,” and that “bears at best a tenuous, confusing, and potentially harmful relationship” to government programs throws some doubt, not only on the wisdom of disseminating WAC information to consumers, but also on whether such WAC consumer disclosure laws and their implementing regulations pass Constitutional muster.

On June 3, 2020, the Sugar Association (SA) filed a Petition with FDA.  The Petition calls on FDA to

1. improve the labeling of alternative sweeteners in the ingredients list on food labels,
2. take steps to address the “particular difficulties raised by the unquantified presence of nonnutritive sweeteners in the diets of children,”
3. require disclosures of potential gastrointestinal effects of various sweeteners at meaningful quantities,
4. take action against what SA claims are “misleading or otherwise unlawful” added sugars claims, and
5. issue guidance to industry specifying that no/reduced added sugars claims be accompanied by appropriate disclosures.

SA notes that the new “added sugar” labeling requirement (a major aspect of the updated nutrition labeling regulation discussed here) seems to have led food manufacturers to replace sugar with what SA calls “Alternative Sweeteners,” defined as “Substances used as substitutes for sucrose and other mono-and disaccharides in food and beverage products to provide sweetness. Alternative Sweeteners provide less than 4 calories per gram and include all low and non-calorie sweeteners including high-intensity sweeteners, artificial sweeteners, and sweeteners used for bulking purposes such as sugar alcohols.”  According to SA, this definition of Alternative Sweeteners would include certain fibers,  such as polydextrose and chicory root fiber which, according to SA, are added to foods for their sweetening effect.

Petitioner asserts that consumers do not realize that the product contains alternative sweeteners because their presence is not called out and consumers do not recognize the chemical names for such substances.  Therefore, Petitioner request that FDA issue guidance providing that the parenthetical term “(Sweetener)” be included after the common or usual name of each sweetener used in a food that is not already required to be identified as a sweetener or is required to be disclosed on the Nutrition Facts label.

SA claims that no/reduced added sugar claims  lead consumers to conclude that the reformulated products are healthier.  SA questions that conclusion for various reasons.

Among other things, Petitioner brings up the issue of safety of high intensity or nonnutritive sweeteners for children.   Petitioner suggests that parents are unknowingly feeding their kids products that include nonnutritive sweeteners.  Its ask that FDA require disclosure of the  type and quantity (in mg) of each non-nutritive sweetener on products consumed by children.

Petitioner further raises the concern that some alternative sweeteners, including sugar alcohols but also products such as polydextrose and chicory fiber (inulin), may cause gastrointestinal discomfort.  It asks that FDA require disclosure of  gastrointestinal effects of various sweeteners, at minimum thresholds of effect (which it suggests is 10 g per day).

Petitioner provides several examples of products with reduced sugar claims but appear but do not significantly less calories. It asks that FDA take immediate action to stop these claims.   To address the alleged misimpression that a food with no or reduced added sugar claims has lower calories, Petitioner further requests that FDA issue guidance requiring that any no/reduced sugar claim be accompanied with the following disclosure “Not lower in calories” unless the reformulated products have 25% fewer calories than the reference product.  In addition, it asks that FDA require that any such food product include (on the principal display panel) a statement ““Sweetened with [name of Sweeteners(s)]” when sugar alternatives are included.

This Petition brings up various issues each of which can be expected to generate more discussion.  We will be monitoring comments and possible FDA action.

The Prescription Drug Marketing Act (PDMA) and implementing regulations establish procedures for distributing prescription drug samples, including requirements related to requests, receipts, and recordkeeping.  Federal Food, Drug, and Cosmetic Act § 503(d); 21 C.F.R. Part 203.  Typically, many drug manufacturers that use drug samples as part of their marketing programs provide samples through in-person visits by sales representatives.  FDA notes that during the COVID-19 public health emergency, drug manufacturers have been relying more on mail and common carriers to deliver these samples.

The desire of most people to avoid unnecessary in-person contact with others during this COVID-19 public health emergency has affected package delivery practices, in general, and increased the use of telemedicine for non-emergency doctor “visits.”  Recognizing these changes, FDA last week issued an immediately effective temporary guidance for industry entitled, “Temporary Policy on Prescription Drug Marketing Act Requirements for Distribution of Drug Samples During the COVID-19 Public Health Emergency,” in which FDA, through the exercise of enforcement discretion, relaxes (for now) some requirements for obtaining  signatures for receipt of samples and expands where samples may be delivered during this time.  Except as noted, this guidance, like several others issued during this time, is intended to be temporary and to remain in effect only for the duration of the COVID-19 public health emergency.

Under normal circumstances, a drug manufacturer or authorized distributor of record may deliver drug samples upon the written request of a licensed practitioner by mail or common carrier to either the licensed practitioner or to the pharmacy of a hospital or other healthcare entity specified by the requesting practitioner provided certain conditions are met. 21 C.F.R. § 203.30.  The new temporary guidance does not affect request requirements.

But the guidance loosens the requirements in the PDMA and regulations that a receipt of delivery contains certain specified information and is signed by the recipient.  In the interest of employee and patient safety at this time, mail and common carriers may be considering alternate ways of verifying receipt and FDA is doing the same.  Specifically, FDA states that it does not intend to take action against a manufacturer or authorized distributor of record that accepts alternate ways of verifying delivery and receipt of drug samples instead of obtaining the signature, provided that other receipt requirements are met.

FDA also lays out in the temporary guidance the conditions under which drug samples can be provided to a patient’s home or a licensed practitioner’s home.  The regulations limit the locations to which drug samples may be delivered to the licensed practitioner or to the designated pharmacy of a hospital or other healthcare facility.  Under the temporary guidance, drug samples may also be delivered to the patient’s home if the written request from practitioner is for an identified designated patient  (and has all the other usual written request requirements), and the receipt and recordkeeping requirements are met.

With respect to delivery to the licensed practitioner’s home being used as an office, FDA notes that neither the PDMA nor the regulations prohibit delivery to the practitioner’s home, provided all other request, receipt, and recordkeeping requirements are met.  FDA goes on to say that this interpretation represents its current thinking and is not anticipated to change following termination of the current emergency.  FDA intends to address the issue in a future guidance with appropriate changes based on comments and its experience with implementation.

Interestingly, the PDMA and regulations on their face do not require that the licensed practitioner’s home is being used as an office, but it appears that FDA assumes that this is the case.  In this era of telemedicine, it may not be difficult to meet that requirement, but it will be interesting to see if FDA expands on this idea in future guidance and requires more than intermittent use of the home for taking calls.

Anyone who has recently (on Tuesdays and Thursdays at least) tried – and we mean tried – to wander on to www.regulations.gov to do a little FDA docket research has likely been redirected to a new URL: https://outage.regulations.gov/beta-redirect/.  And the first thing you see on that redirected webpage is the following message:

You are being redirected to Beta.Regulations.gov.

Why is this happening?

In order to get important user feedback, www.regulations.gov will be redirecting users to the Beta site at https://beta.regulations.gov every Tuesday and Thursday in June and July for 24 hours starting at 8:00 am ET.  Please note that all comments that are submitted through the Beta, both during the redirect and regular operations, are provided to agencies.

Read the GSA Blog Post

We went ahead and read the blog post from the U.S. General Services Administration (“GSA”), titled “GSA Steps Forward to Modernize Electronic Rulemaking,” and also viewed an Introduction Video.  Afterwards, we had the same question the GSA proffers above: “Why is this happening?”

According to the GSA’s blog post:

GSA’s eRulemaking program is modernizing Regulations.gov, the source for information on the development of federal regulations and other related documents issued by the U.S. government.  On Regulations.gov, you can find, read, and comment on regulatory issues that are important to you.  The Regulations.gov beta version is a re-envisioning of the site, with enhanced search capabilities, a simplified commenting process, and a brand new design to improve user experience in public commenting.

The existing Regulations.gov site is planned to be formally decommissioned in September 2020 and replaced with the modernized version that is currently available for evaluation at beta.regulations.gov.

In another document with Frequently Asked Questions the GSA states:

Why is Regulations.gov beta necessary?

Regulations.gov has received almost 10 million comments since 2006, making it a heavily trafficked site that is critical to government transparency and the public’s ability to comment on agency documents and regulations.  To ensure Regulations.gov is continually improving to meet the needs of this user base, the site’s user interface, commenting process, and behind-the-scenes architecture require enhancements to reflect updated design and technology standards.

While the Beta site may provide for “a brand new design to improve user experience in public commenting,” it’s certainly a step down for researching those public comments and other documents.

FDA moved from the Agency’s now-legacy docketing system to Regulations.gov back in January 2008 (here).  Though it took a little getting used to at first, the then-new Federal Dockets Management System quickly grew on us.  It provides an easy-to-use search feature that allow one to create daily docket sheets by agency and to search across dockets.  That’s important to us.  We need to know what’s going on each day at the Agency.

Unfortunately, the new, but not improved, Beta site is not so easy to maneuver.  It seems to us that in an effort to simplify things, the GSA has made searching dockets a tedious and frustrating process.  Give the Beta site a quick spin and you’ll see what we mean.  We even had to come up with a workaround to create quick daily docket sheets.  Here are example URLs: “https://beta.regulations.gov/search?agencyIds=FDA&postedDateFrom=06-09-2020&postedDateTo=06-10-2020&sortBy=title&sortDirection=desc” (for documents) and “https://beta.regulations.gov/search/comment?agencyIds=FDA&postedDateFrom=06-09-2020&postedDateTo=06-10-2020&sortBy=postedDate&sortDirection=desc” (for comments).  These URLs search FDA docket entries on the Beta site from June 9, 2020 to June 10, 2020, from newer to older postings, under the “Documents” and “Comments” tabs, respectively.  You just have to modify the dates in the URLs when you want a different time period.  But two searches are necessary.

If you’re up to it, there’s a “Feedback” button where you can submit comments on the Beta site.  Maybe if enough people comment, the GSA will do some retooling to add better search and other capabilities.  Here are some of our specific comments:

• Add the ability to sort search results by “ID number,” which amounts to Docket Number. This is critical.  There can be hundreds – and sometimes thousands – of entries each day.  Folks need to maximize the ability to sort by “ID number” to group dockets together.
• In Beta, you have to separately search “Documents” and “Comments.” That means running each search twice . . . . and reviewing the results twice.  That’s a lot of unnecessary work.
• Currently on the Beta site, the “old” Regulations.gov links do not work (e.g., https://www.regulations.gov/docket?D=FDA-2007-D-0369). It is unclear whether this will be the case once the Beta site is fully live.  If so, then a lot of our old blog posts with links to Regulations.gov will no longer work.  The same is true for other publishing outlets.  So, there should be automatic forward-linking between the old and new platforms.

FDA’s recent announcement (see our previous post here) that after 40 years the Orange Book may get a bit of a facelift – as well as a comment in a new draft guidance that folks could obtain prior editions of the Orange Book through the Freedom of Information Act – got us thinking: Wouldn’t it be nice if the entire Orange Book – that is, all of the prior editions and supplements from the 1979 draft edition to the current 2020 BPCIA Transition edition and beyond – were available online so that folks could see how the publication has evolved over the past 40 years??  So we’ve gone ahead and done just that.  Please give a warm welcome to the Orange Book Archives!

The Orange Book Archives is the culmination of several years’ worth of work at hunting down each of the annual editions and supplements and then scanning them into PDF format.  We are still missing a few of the monthly supplements from the early 1980s.  So if you happen to have one of them handy, please send us a PDF so that we can add it to the collection.  We will add the missing supplements from 2002 and 2003 once COVID-19 stay-at-home orders are lifted and we are allowed to return to the office.

Putting together the Orange Book Archives has been a labor of love . . . and probably not so different than trying to put together a full set of the difficult-to-find 1933 Goudey baseball cards.  Along the way we had help from some folks, including Bruce Pokras (now Editor-in-Chief of the Orange Book Companion), Erika Lietzan (Associate Professor of Law, University of Missouri School of Law), and the Office of Generic Drugs, which allowed us to borrow Donald Hare’s Orange Book collection (Don is the Father of the Orange Book and passed away earlier this year).  Of course, we supplied FDA with a copy of the collection we assembled.

We hope you enjoy the Orange Book Archives as much as we enjoyed putting together the collection.  Over time, we will try to make modifications and add extra materials related to the Orange Book, such as historical versions of the Reference Listed Drugs by ANDA Reference Standard List and the Orange Book Patent Listing Dispute List.

FDA issued another COVID-related guidance for immediate implementation last week.  Citing a substantial increase in the number of requests for individual patient expanded access requests for COVID-19 investigational drugs (which we will use here to include biological products), on June 2, 2020, FDA released a guidance for investigational review boards (IRBs)  and clinical investigators entitled “Institutional Review Board (IRB) Review of Individual Patient Expanded Access Requests for Investigational Drugs and Biological Products During the COVID-19 Public Health Emergency Guidance for IRBs and Clinical Investigators”.

As in many of the other guidances issued during the ongoing COVID-19 public health emergency, FDA states that it intends this guidance to remain in effect only for the duration of the emergency, but notes that the within 60 days following termination of the public health emergency, the agency intends to review and revise the guidance taking into consideration its experience with implementation and any comments received.

As its title suggests, the guidance applies only to requests under FDA’s individual patient expanded access pathway (21 C.F.R. §312.310), sometimes referred to as “compassionate use,” and does not apply to expanded access programs for intermediate-size or treatment expanded access requests (under 21 C.F.R. § 312.315 or 312.320).  Under the regulation, individual patient expanded access allows a patient with a serious or immediately life-threatening disease or condition to gain access to an investigational drug when there is no comparable or satisfactory alternative therapy, the potential benefits to the patient justify the potential risks, and the requested use will not interfere with clinical investigations that could support marketing approval.  The primary purpose of providing individual access to an investigational drug under this pathway is for diagnosing, monitoring, or treating the patient, rather than generating scientific safety or effectiveness data.

A request for individual patient expanded access can be submitted to FDA by a licensed physician as a new investigational new drug application (IND) or by the sponsor of an existing IND as a protocol amendment.  An emergency request does not require prior IRB approval, but the IRB must be notified within 5 working days of treatment initiation, and subsequent use is subject to IRB review.  Prior IRB approval is required for non-emergency requests for individual patients.  A physician submitting a non-emergency request may request a waiver from the ordinary requirement for full IRB approval.  As FDA has outlined in previous guidance (“Expanded Access to Investigational Drugs for Treatment Use – Questions and Answers”), such a waiver is appropriate when the physician obtains concurrence from the IRB chairperson or another designated IRB member.

FDA states that it is providing recommendations about the key factors and procedures IRBs  should consider when reviewing individual patient access requests, including IRB reviews conducted by an individual member, because the agency has become aware that during the existing public health emergency IRBs are seeking clarity on how to comply with their obligations under 21 C.F.R. part 56.

FDA recommends that IRBs consider establishing procedures for a single IRB member to review an expanded access submission for an individual patient when a waiver from full IRB review is requested, including procedures that outline relevant factors to be reviewed and procedures for documenting the decisions made.

FDA suggests that review of an expanded access request for an individual patient focus on assessing the risks and benefits for the patient involved, and notes that the information must be adequate to assess whether these risks have been minimized and are reasonable in relation to the anticipated benefits.  FDA does not expect that a protocol will be necessary to provide sufficient information to determine if those criteria are satisfied (although if the request is submitted by the sponsor it is likely that a protocol is already available).

FDA lists the following as information that should be included, noting that the information may be included in a thorough patient history and treatment plan:

• proposed daily dose, route, and frequency of administration, duration of planned treatment, criteria for discontinuation of treatment, and planned dose modifications for adverse events;
• planned monitoring for adverse events, response to treatment, and changes in clinical status, as well as proposed modifications to the treatment plan to mitigate risks to patients if appropriate;
• key details of the patient’s history, including diagnosis and summary of prior therapy (including response to such therapy), and information regarding a patient’s relevant clinical characteristics (such as comorbid conditions and concomitant medications); and,
• summary of the known risks of the drug.

The guidance also provides that the IRB’s review of an expanded access request for an individual patient should include:

• an assessment of the qualifications of the requesting physician submitting the individual patient expanded access request;
• if the request is for a pediatric patient, confirmation that adequate provisions are included for soliciting age-appropriate assent from children and permission from a parent or guardian; and,
• confirmation that the informed consent document contains the information required under 21 C.F.R 50.25. Given that the drug used under expanded access is investigational, FDA considers a statement in the informed consent document indicating that although the primary use of the drug is for treatment, the drug is investigational and FDA has not determined that the drug is safe or effective for use in treating COVID-19, to satisfy the requirement under 21 C.F.R §50.25(a)(1) that the informed consent provide a statement that the use of the product “involves research.”

The U.S. Department of Agriculture (“USDA”) continues to consider and approve state and tribal hemp production plans, announcing the approval of plans for the U.S. Virgin Islands, Cheyenne River Sioux Tribe, Chippewa Cree Tribe, Lac Courte Oreilles Band of Superior Chippewa Indians, and Red Lake Band of Chippewa Indians on May 27th.  To date, USDA has approved 47 hemp production plans: 18 for state/territory plans and 29 tribal plans.  USDA, USDA Approves Hemp Production Plans for U.S. Virgin Islands, Cheyenne River Sioux Tribe, Chippewa Cree Tribe, Lac Courte Oreilles Band of Superior Chippewa Indians and Red Lake Band of Chippewa Indians (May 27, 2020).

The Agricultural Improvement Act of 2018, popularly known as the Farm Bill, established general requirements for the oversight of hemp producers.  The USDA exercises primary regulatory authority over hemp producers in the United States under the Agricultural Marketing Act of 1946 (“AMA”), as amended by the Farm Bill.  USDA regulates hemp production under a federal regulatory framework in states and within tribal boundaries that do not have a USDA-approved plan.

The AMA also authorizes the states and Indian tribes desiring to exercise regulatory authority over hemp production within their boundaries to submit plans for approval by USDA.  The AMA gives USDA sixty days to review state and tribal plans.  USDA issued its interim final rule in October 2019 establishing a domestic hemp production program, including implementing the requirements for state and tribal plans set forth in the Farm Bill.  State and tribal regulatory plans must include:

• Maintaining relevant information about the land on which hemp is produced, including a legal description of the land, for at least three years;
• A procedure for testing hemp THC concentration levels;
• A procedure for disposal of plants that exceed hemp THC levels, and products from those plants;
• A procedure to comply with the enforcement provisions specified in the AMA;
• A procedure for conducting random, annual inspections of hemp producers;
• A procedure for submitting information to USDA; and
• Certification that the state or tribe has adequate resources and personnel to implement required hemp production procedures.

In addition, USDA is reviewing one state and four tribal plans, and has reviewed and returned three state plans as well as a tribal plan for editing or amendment.  USDA, Status of State and Tribal Hemp Production Plans for USDA Approval (updated Apr. 29, 2020).  Four states and three tribes have expressed interest or intent to submit a plan, one state will apply USDA’s plan, and eighteen states continue to operate under the 2014 agricultural pilot program.  In sum, there are or will be over 80 hemp production regimens in play around the country.  

The American Conference Institute (“ACI”), together with the Council for Responsible Nutrition, are sponsoring ACI’s Annual Legal, Regulatory, and Compliance Forum on Dietary Supplements. The virtual conference is scheduled to take place on June 23-24, 2020.

This “must-attend” event for legal, regulatory, and compliance stakeholders in the dietary supplement industry will not only provide “state of the union updates,” but will also allow for the opportunity to discuss and assess the politics and policy shaping the industry’s current political, legislative, and regulatory atmosphere. Conference speakers will provide their insights into the most pressing topics affecting the space.

Highlights from this year’s agenda include:

• Focus Session on Addressing Inconsistent Interpretations of the Dietary Supplement Definition
• Case Study on the Best Way of Establishing Ingredient Safety: NDI notification vs. GRAS determination
• Spotlight on the Current Status of a Legal Path for CBD in Dietary Supplements
• Think Tank on Increased State Consumer Protection Activity
• Risk Assessment of Innovative Claims and the Use of Influencers in Product Promotion

Hyman, Phelps & McNamara, P.C.’s Ricardo Carvajal will be speaking at a session titled “Defining a “Dietary Supplement” as Intended by DSHEA: Examining Questions Surrounding Synthetic Botanical Constituents, Drug Exclusions, and Other Inconsistent Interpretations of the Dietary Supplement Definition.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-669-669CX06. You can access the conference brochure and sign up for the event here.  We look forward to “seeing you at the conference.”

Much to our delight, the Orange Book is getting quite a bit of attention from FDA in 2020.  And why not?!?  After all, the Orange Book is celebrating its 40th anniversary this year.  There was even a special “BPCIA Orange Book Transition Edition” published in March.  And here at the FDA Law Blog we too have been celebrating the Orange Book.  Although COVID-19 has temporarily prevented us from continuing our popular Orange Book World Tour (see here, here, here, here, and here for example), we will soon be publishing the “Orange Book Archive” so that folks have easy access to all of the old editions.

With the publication of three (!!!) notices in the Federal Register today, FDA is finally taking the steps to make the Orange Book more accessible that the Agency promised in February 2019.  As part of FDA’s “transparency initiative,” today’s Federal Register notices provide a little bit of Orange Book love for newbies and experienced Orange Book users alike.  For newbies, FDA published the long-promised guidance, “Orange Book: Questions and Answers,” while the old pros were asked a series of questions about general Orange Book improvements and patent listings.

For those less familiar, the Orange Book is an incredibly handy tool in drug development.  Its formal name is the “Approved Drug Products With Therapeutic Equivalence Evaluations,” and it lists drug products approved by FDA (other than those determined to have been withdrawn from sale for safety or effectiveness reasons) and patent and exclusivity information related to approved drug products.  It also contains therapeutic equivalence evaluations for approved multisource prescription drug product, which are frequently used for purposes of drug substitution and containment of health care costs.  The print edition of the Orange Book contains a detailed “Preface,” which explains the Orange Book in detail.

In a new guidance, “Orange Book: Questions and Answers,” the Orange Book staff put together a list of frequently asked questions with respect to the content and format of the Orange Book, “Petitioned” ANDAs (ANDAs with a suitability petition), the Active and Discontinued sections of the Orange Book, and patent listings.  The guidance explains that some products are notably absent from Orange Book specifically those products discontinued prior to 1987, products with tentative approval, DESI drugs, BLAs, and marketed drugs not subject to an NDA or ANDA (i.e. compounded drugs or OTC monograph drugs).  The guidance explains the frequency of Orange Book updates, how to access data files, how to move products from the Active to Discontinued section of the Orange Book, and how to timely update or remove patent listings.  The guidance also provides details on notifying FDA that a product is or will be withdrawn from sale under section 506I of the FDCA.

For those who have already mastered the Orange Book basics, FDA has some questions.  Specifically, FDA has opened two dockets: one soliciting comments on improving the Orange Book generally and one soliciting comments on the listing of patent information in the Orange Book.  The Federal Register notice soliciting general comments on the Orange Book is part of FDA’s Drug Competition Action Plan.  It provides a detailed explanation of the contents of the Orange Book and an interesting history of the updates FDA has made to it since 1985.  Then, as part of FDA’s “continued effort to provide more accessible and useful information in the Orange Book,” FDA announces questions to guide FDA’s priorities in enhancing the Orange Book.  These questions focus on the users and uses of the Orange Book, information or features that would make it more useful, the utility of the therapeutic equivalence codes and related information, and any other information that users would like to provide.

Finally, the third effort, soliciting comments on the listing of patent information in the Orange Book, is intended to address very important considerations with respect to generic competition.  As we recently discussed (in an only tangentially related blog post), only patents listed in the Orange Book are eligible for the Hatch-Waxman “patent dance” and are considered artificially infringed upon the filing of an ANDA.   FDA regulations limit the types of patents that can be listed in the Orange Book to drug substance (ingredient) patents, drug product (formulation or composition) patents, and method-of-use patents.  Process patents, packaging and container patents, and patents claiming intermediates or metabolites are not eligible for listing.  But not all patents that are relevant to drug products fit neatly into one of these categories: in particular, device patents for combination drug-device products and REMS patents.  FDA has avoided addressing these types of questions for at least 15 years, and the First Circuit recently intervened in one case.

Not prepared to let anyone steal its thunder, FDA seems poised to update its Orange Book listing requirements to address combination products and REMS patents.  FDA notes in the Federal Register notice that it is “aware that some NDA holders have submitted patents for listing in the Orange Book, including certain types of device-related patents and REMS-related patents, for which there may be uncertainty regarding whether these are in fact the type of patents that must be submitted.”  Because there are benefits and challenges in the listing and omission of certain patents—specifically including the opportunity to challenge a patent while applications are under review and the possibility of a 30-month stay, FDA wants stakeholder input on:

• The listing of patents that claim a device constituent part of a combination product approved under section 505 of the FDCA (e.g. a drug delivery device);
• The listing of patents that claim a device whose use is referenced in approved drug labeling;
• The listing of patents associated with an established REMS; and
• The listing of patents associated with digital applications (e.g. clinical decision support software, software as a medical device).

FDA also includes 14 specific questions for stakeholders to address.

FDA is providing stakeholders with a great opportunity to provide insight and advice on potential revisions to the Orange Book.  Given that FDA has ignored some of these issues for a decade and a half, these solicitations present a rare opportunity to shape the Orange Book.  Indeed, those who want to “squeeze all of the juice” out of the Orange Book should definitely submit comments in response.  Comments on both the solicitations and the Questions and Answers guidance are due on September 1, 2020.

Two new guidances, both issued by FDA on May 11, 2020, focus on drugs and biological products proposed for use against COVID-19.  The first is entitled COVID-19 Public Health Emergency:  General Considerations for Pre-IND Meeting Requests for COVID-19 Related Drugs and Biological Products (the “Pre-IND Guidance”) and the second is COVID-19:  Developing Drugs and Biological Products for Treatment or Prevention (the “Clinical Guidance”).  Both provide more insight into FDA’s expectations for drug development programs for new treatments for COVID-19.  FDA intends that these guidances will remain in effect only for the duration of the COVID-19 public health emergency, although FDA expects to revise and reissue the Clinical Guidance within 60 days of termination, taking into consideration lessons-learned from its experience and comments received to the extent appropriate.

In the Pre-IND Guidance, FDA cites the numerous inquiries and applications it has received from prospective sponsors and the Agency’s need to obtain key information in order to efficiently address proposals and ensure they are properly evaluated in a timely manner.  It may be that the Agency has been inundated with pre-IND meeting requests (as well as requests for an Emergency Use Authorization (“EUA”) under its Coronavirus Treatment Acceleration Program (“CTAP”) many of which do not include the type of information essential to evaluation.  FDA’s CTAP web page states that as of April 16, 2020, FDA had received 950 inquiries and proposals for COVID-19 related drug development.  These guidances appear to be an effort to improve the quality of those inquiries and proposals, and to highlight that the vast majority of proposed therapies are more appropriate for the investigational new drug (“IND”) route rather than the EUA route which requires more fully developed data to support.

The Pre-IND Guidance

For sponsors that already have an active IND for a drug in development, FDA recommends submitting a new pre-IND meeting request for a proposed COVID-19 indication, rather than amending their current submissions, in order to allow FDA to quickly identify, prioritize and assess the proposed study.  FDA also recommends that drug development discussions be initiated under the pre-IND program, rather than a pre-EUA request, noting that submitting a pre-IND request does not preclude submitting an EUA request if it becomes appropriate and that, in most cases, at the time a sponsor seeks to initiate discussion with FDA the available information is insufficient to determine effectiveness.  Until enough information is available for FDA to make a determination that the potential benefits outweigh the potential risks, an EUA is not the appropriate mechanism.

The Pre-IND Guidance lays out a list of general content recommendations most of which are comparable to what would be expected for any pre-IND meeting (e.g., drug name and description, brief description of manufacturing, proposed indication, existing pharmacokinetic, nonclinical and clinical data, suspected mechanism of action).  FDA cautions that while it may, in the case of a proposal for an unapproved use of an approved drug, exercise some flexibility in the type and amount of nonclinical data required to proceed, typically nonclinical in vivo data will be required.  The guidance also describes the types of nonclinical studies needed for small molecule drugs and biological products, and calls out inhalation drugs, in particular, as requiring toxicology studies to support the proposed dose and route of administration.   FDA also advises, however, that for cellular and gene therapies, blood products, vaccines and other complex biological products regulated by the Center for Biologics Evaluation and Research (“CBER”), there may be additional considerations. Inclusion of a draft protocol in the pre-IND meeting request is strongly encouraged.

Specific to COVID-19, FDA notes that some sponsors may seek development advice in the very early stages, and directs sponsors who do not yet have antiviral activity information, but have reason to believe the drug may have potential activity against the COVID-19 virus to the National Institutes of Health (NIH) Division of Microbiology and Infectious Diseases web page which contains information about preliminary screening activities that may be available.

Finally, the guidance provides the email addresses for questions about the process for CDER-regulated drugs and for CBER-regulated drugs (COVID19-productdevelopment@fda.hhs.gov and CBERProductJurisdiction@fda.hhs.gov, respectively), as well as one for sponsors unsure of how their drug would be regulated ( COVID19-productdevelopment@fda.hhs.gov ).

The Clinical Guidance

Vaccines and convalescent plasma are specifically excluded from the scope of the Clinical Guidance which focuses on Phase 2 and Phase 3 studies of drugs and other biologics (we refer to both as drugs unless a distinction is necessary), with recommendations specific to COVID-19 studies.  The key considerations covered include study population, trial design (including length of study, use of standard of care (“SOC”), early stopping criteria), efficacy endpoints, and safety and statistical considerations.  Many of the recommendations are not unique to studies involving COVID-19.

For treatment trials, FDA recommends that the baseline severity of the enrolled population be documented and provides criteria for defining categories of severity.  The population should include persons at high risk of complications such as the elderly, those with underlying cardiovascular or respiratory disease, diabetes, or chronic kidney disease, and the immunocompromised.  Due to the disproportionate effects seen on the elderly, sponsors are directed to consider conducting trials in nursing homes and other elder care facilities.  The need for racially and ethnically diverse populations is noted.  Specific to COVID-19, the possible need to close some sites and open new ones during the study due to the expected fluctuation of disease in regions should be anticipated and addressed in the study design.  FDA notes that children should not be categorically excluded, and encourages enrollment of pregnant and lactating individuals in Phase 3 studies.

It is no surprise that FDA strongly recommends that drugs for preventing or treating COVID-19 be evaluated in randomized, placebo-controlled, double-blind clinical trials using a superiority design, and that background SOC be maintained in all treatment arms.  The evolving nature of the SOC should be taken into consideration, as well as whether the SOC has the same mechanism of action as the investigational agent.  FDA advises limiting in-person data collection to the extent possible due to infection control concerns.  The appropriate length of the study will depend, in part, on the population being treated with shorter arms for trials involving mechanically ventilated patients (e.g., four weeks) and longer for studies of those who are less ill.  Whether it is appropriate to move directly to conducting a trial of sufficient size and design to provide substantial evidence of effectiveness and characterization of safety or a smaller pilot study is needed first will depend on how much preclinical and preliminary clinical evidence is available and how compelling it is.

FDA also encourages sponsors to use an independent data monitoring committee (“DMC”) and take into consideration the possibly rapid enrollment rate and incorporating a potential pause in enrollment to allow the DMC to assess data before dosing the entire study population.  Prospectively planned stopping criteria are also recommended.

In its recommendations on efficacy endpoints, FDA notably states that virologic measures may be appropriate for a Phase 2 trial, but will not be appropriate as a primary endpoint in a Phase 3 trial because of the lack of an established predictive relationship between viral reduction and the clinical benefit of how a patient feels, functions or survives.  FDA considers viral measurements as appropriate secondary endpoints in Phase 3 trials.

Examples of important clinical outcome measures in treatment trials are provided and include all-cause mortality, respiratory failure (e.g., need for mechanical ventilation), a move to ICU or hospitalization, objective measures of improvement (e.g., return to room air or other baseline oxygen requirement), and resolution of symptoms.  The choice of endpoint and the time of measurement should take into consideration the population being studied.  FDA advises that potential relapses should be addressed in the endpoint definition to ensure an adequate assessment of the durability of response.

For prevention trials, FDA states that the primary endpoint should be the occurrence of laboratory-confirmed infection with the virus (with or without symptoms) or infection with symptoms through a specified time point.  FDA also notes that ascertaining whether COVID-19 is milder in those receiving preventive treatment is of interest and recommends collecting clinical outcome data (e.g., hospitalization) and data on symptoms for this purpose.

Among the statistical considerations listed in the guidance are a few specific to COVID-19.  In particular, FDA recommends that if the study enrolls a mix of patients with varying baseline severity levels, a subgroup or interaction analysis by baseline severity should be conducted to assess for differences in treatment effect.

Last week, FDA announced availability of a guidance that would temporarily  provide flexibility regarding certain labeling requirements during (and possibly after) the COVID-19 pandemic.

This is the fifth time since the start of the pandemic that FDA announced flexibility regarding labeling regulations for foods.  The temporary policies are intended to ease manufacturers’ problems due to supply-chain issues associated with the pandemic.

FDA’s latest action addresses FDA’s position regarding manufacturers’ substitution of certain hard-to-get ingredients in their products without changing the label.  Under the temporary guidance, manufacturers may make some minor formulation changes without changing the labeling provided the changes do not pose a health or safety issue and do not cause significant changes in the finished food.

The  guidance discusses various factors that FDA will consider and provides several examples illustrating when FDA would not object to substitution without a conforming label change.  Not surprisingly, the formulation change can not cause any potential adverse health effect, e.g., the replacement ingredient may not be a major allergen,  a sulfite, or another ingredient associated with food sensitivity, e.g., aspartame.  Replacement of a characterizing ingredient, e.g., cinnamon in cinnamon rolls, would not be appropriate either.

With the exception of bleached flour, minor formulation changes to food(s) that involve a food standard are not covered under this guidance.  Bleached flour is subject to a standard of identity.  However, because of a shortage of the bleaching ingredient, benzoyl peroxide, FDA will not object to substitution of unbleached flour for bleached flour without a corresponding label change.

The labeling flexibilities associated with formulation changes set out in this guidance remain in place only as long as needed to help ensure an adequate food supply during and after the pandemic.  FDA encourages manufactures to use digital disclosures, stickers and point of sale labeling as alternative ways to inform consumers about the formulation changes.

In the same guidance, FDA also provides flexibility regarding disclosure of calorie declaration for food from vending machines under 21 C.F.R. § 101.8.  This flexibility applies for the duration of the pandemic.

As noted above, this is not the first time that FDA provided flexibility regarding food labeling rules.  Previous guidances address nutrition labeling on food packages intended for restaurants and food manufacturers that may not be labeled for retail sale, menu labeling at chain restaurants, and the packaging and labeling of eggs during the pandemic.

In addition, separate from any guidance, FDA announced in March 2020, that it would work “cooperatively with manufacturers for the remainder of the year [i.e., Dec. 31, 2020] regarding using updated Nutrition and Supplement Facts labels and will not focus on enforcement actions during this time.”  Previously, FDA had announced that it would do so until July 1, 2020.

Hyman, Phelps & McNamara, P.C. seeks to add a 1st to 4th year associate to its enforcement and litigation team.  Our team investigates and defends against threatened enforcement actions by government prosecutors and regulators, including the FDA and DEA.  Types of matters include:

• Representing clients in False Claims Act investigations or in criminal investigations by the U.S. Department of Justice;
• Assisting clients in investigations by U.S. Attorney’s Offices, DEA, or Main Justice, including responding to administrative and criminal subpoenas;
• Conducting internal investigations;
• Representing FDA-regulated entities and DEA registrants in administrative hearings and federal courts; and
• Litigating affirmative and defensive civil litigation matters.

The boutique, collaborative nature of this firm provides junior attorneys unique opportunities to work directly with clients and to contribute in substantive ways to sophisticated, high-end matters.  Strong verbal and writing skills are required.  The ideal candidate will have experience working at FDA, DOJ, or DEA, prior big firm experience, including litigation experience, and a federal judicial clerkship.  E-discovery expertise is a bonus.

Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.  Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

Drug Development Attorney

We are seeking an attorney to work with our drug development team. The attorney must possess at least two years of relevant experience in the drug development arena, either by working at FDA or by assisting companies develop product development strategy or navigate the regulatory process.  Strong verbal and writing skills are required.  Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

The U.S. Government Accountability Office (GAO) released a report titled “Food Safety: FDA and USDA Could Strengthen Existing Efforts to Prepare for Oversight of Cell-Cultured Meat.”  This report was requested by Rep. Rosa DeLauro (D-Conn.), and concerns the federal oversight of cell-cultured (or cell-based) meat, poultry and seafood, specifically the extent to which FDA and USDA are cooperating.

Based on the GAO’s findings from a literature review, analysis of documentation from FDA, USDA and stakeholder groups, review of public comments and site visits to select cell-cultured meat firms, the GAO outlined several recommendations for executive action, including a more effective collaboration between the FDA and USDA and identification of specific outcomes and a method for monitoring and evaluating progress towards those outcomes. In addition, the GAO noted that the USDA/FDA interagency agreement on cell-cultured meat does not cover cell-cultured seafood other than catfish. FDA and USDA purportedly have agreed that those seafood products will be regulated exclusively by FDA – a decision that GAO recommended be formally documented so as to provide greater clarity to industry.

As readers of this blog know, for meat and poultry (and catfish, which is also under the jurisdiction of USDA), a major issue has been which agency, FDA or USDA should regulate these cell-cultured products.  After several meetings, hearings, etc., FDA and USDA announced that the Agencies had come to an agreement that FDA would oversee the early phases of cell-cultured meat production, i.e., obtaining cell samples, cell selection, storage, and cell growth/product through the point of harvest and at that point, USDA would take over the oversight for meat and poultry (not for seafood other than catfish).  The memorandum of understanding (MOU) was short on details.

GAO noted that the Agencies have created three working groups: a pre-market assessment working group lead by FDA, a working group that is focused on developing joint principles for product labeling and claims led by USDA, and a working group that addresses procedures for the transfer of inspection authority, co-led by FDA and USDA.  However, GAO concluded that developing a strategy as to how to evaluate the safety of cell-cultured meat, poultry and seafood products is hindered by a lack of information about technologies used in production.  Specifically,  information about the technology being used and the eventual commercial production methods as well as the final products is lacking.  Questions that remain include:

• Use of source animals used for biopsy samples (and how frequently will new cells need to be collected).
• Use of genetic engineering: Some companies plan to use genetic engineering to select/create desirable traits in the cells used to culture, whereas other companies have represented that they will not use such techniques.
• Use of antibiotics: Initially, many companies represented that they would not use (or need) antibiotics in the production of cell-cultured meat.  However, there is uncertainty as to whether the large-scale production of cell-cultured products will be possible without their use.
• Other unknowns include the composition of the growth medium, use of scaffolding, and product composition. This type of information is needed for evaluation of safety.
• Naming of the final products is also uncertain. As we have previously reported, the traditional (animal) industry (and farmers) has opposed naming the cell-based products using terms that have been used for products derived from whole animals. Several states have enacted laws reserving the meat and poultry terms for the traditionally produced products.  At this time, it is not clear whether those laws will stand.
• Environmental benefits: Proponents of cell-cultured meat claim that cell cultured meat is environmentally friendly. However, there exists disagreement about the potential benefits, and absent information about scaled up production, use and disposal of growth media, possible need for antibiotics, etc., it is not possible to evaluate the potential environmental, animal welfare and health impact.

Now that most of the country has been in lockdown for about two months, everyone is undoubtedly aware that COVID-19 has been declared an “official” public health emergency.  In addition to the official declaration in January, HHS issued an additional and separate declaration – called a PREP Act declaration – that COVID-19 constitutes a public health emergency under section 319 of the Public Health Service Act.  As we explained in some of our earlier COVID-19 coverage, this PREP Act declaration provides broad statutory immunity from liability under federal and state law for public health activities related to combatting COVID-19, such as the manufacture, testing, development, distribution, administration, or use of one or more “covered countermeasures,” defined as a drug, biologic, or device intended to address the public health emergency, to address side effects of such products, or to enhance the effect of such products.   While the PREP Act is critical to the COVID-19 response, it also  offers incentives for the development of drugs to treat “material threats” –but right now, that incentive cannot be utilized to address COVID-19.

As an added incentive to develop more medical countermeasures, defined as “FDA-regulated products (biologics, drugs, devices) that may be used in the event of a potential public health emergency stemming from a terrorist attack with a biological, chemical, or radiological/nuclear material, or a naturally occurring emerging disease,” the 21st Century Cures Act added section 565A to the Federal Food, Drug, and Cosmetic Act.  Section 565A requires FDA to award a priority review voucher (PRV) to sponsors of certain medical countermeasure applications.  The application must be eligible for Priority Review, approved by FDA, and the first instance of approval for the active ingredient of the drug, including an ester or salt of the active ingredient.  Most importantly, the medical countermeasure must be an application for a drug intended to prevent or treat harm from a material threat or intended to mitigate, prevent, or treat harm arising from the administration of a drug or biological product against a material threat.  “Material threats,” defined under 42 USC 247d–6b(c)(2), are threats “sufficient to affect national security” that have been determined to be a priority by the Department of Homeland Security (DHS), in conjunction with Health and Human Services (HHS).  PRVs will be awarded only to sponsors of drug applications for products that have been designated a “material threat.”

As critical as it is to develop drugs to treat COVID-19, we recently learned that even though COVID-19 has been declared a national emergency and is a pandemic wreaking havoc on the world, “a Material Threat Determination (MTD) has not been issued for SARS-CoV-2 (COVID-19).”  This means that the country has not yet decided that we need to incentivize drug development to treat COVID-19 with a PRV, one of the most valuable incentives that FDA has to offer.  PRVs are incentives to spur the development of drugs to treat much-needed drugs to treat serious disease.  The voucher entitles the holder to designate a subsequent 505(b)(1) drug or biologic application as “priority” even if it would not otherwise have qualified for Priority Review.  Such a voucher is used to accelerate FDA’s review process of any drug by four months, allowing a drug to come to market earlier – potentially with more patent protection.  Additionally, they can be sold to other companies for substantial profit: sales of PRVs have ranged from $50 million to as much as $350 million back in in August 2015 (most seem to go for around $125 million).

Arguably, COVID-19 is the most “serious” disease this country has seen – at least in the last 100 years, and definitely since the adoption of the PREP Act.  And it certainly meets the definition of “material threat.”  But, for some reason, DHS and HHS have not yet declared it a material threat.  Ebola has been declared a material threat.  Pandemic influenza is a material threat.  Smallpox, the plague, and typhus are all medical threats.  But not COVID-19.

The major question is why doesn’t COVID-19 merit “material threat” status?  Is it because the country fears that any drug or vaccine developed to treat COVID-19 would be such a blockbuster drug that a PRV would be windfall for the developer?  Is it because companies are already striving to develop these products anyway and don’t need incentives?  Or maybe it has something to do with the public outcry that arose when FDA designated Gilead’s remdesivir an orphan drug back in March?  Regardless, there are many companies that could really benefit from any incentives to develop a COVID-19 product.  An incentive that requires very little of the agency, like a PRV, could make drug development financially feasible where it otherwise might not be.  There seems to be little reason not to declare COVID-19 a material threat, especially because a PRV is awarded only once a drug is ultimately approved.  And even if the development of a COVID-19 drug actually leads to the award of a PRV is a blockbuster drug, would it really be so bad to reward the developer with administrative priority?  Ultimately, that leaves us with a single question: why is the country not doing everything it can to incentivize drug development for COVID-19?

There’s legislation pending that may provide that incentive.  On February 28, 2020, Rep. Jeffries introduced H.R. 6019, the Cure the Coronavirus Act, which indirectly addresses the consequences of the lack of “material threat” status for COVID-19.  Congress does not have the authority to designate COVID-19 material threat, but it can find other ways to offer priority review vouchers as incentives to drug development.  This bill would do just that: instead of a “medical threat counter measure” priority review voucher, COVID-19 would become eligible for a “tropical disease” priority review voucher.  All the bill does is expand the definition of a “tropical disease” to include COVID-19.  COVID-19 is not your typical tropical disease.  FDA has explained that tropical diseases usually those that disproportionately affecting poor and marginalized populations and are found primarily in developing countries.  Obviously, COVID-19 is a lot more widespread than that.  But, even if COVID-19 is not a typical tropical disease, does it matter?  The priority review voucher for medical threat countermeasures and tropical diseases are the same.  So it provides the same incentive.

The bill hasn’t made any traction on the hill yet, as it hasn’t yet been addressed by the House Committee on Energy and Commerce.  Hopefully, it will.  It’s a clever piece of legislation that would go a long way to address the issues raised by the lack of a material threat designation.  That priority review voucher could be the incentive needed to get the right company involved in treatment development.