On Thursday, the 27^th of June, the Supreme Court issued its decision in Securities and Exchange Commission v. Jarkesy.  The court ruled that the Securities and Exchange Commission (SEC) may not impose fines to penalize securities in its administrative proceedings because that practice violates the Seventh Amendment “right of trial by jury” in all “suits at common law.” This decision likely will impact other federal administrative agencies, including those relevant to our practice.

Here are some brief facts of the case.  SEC charged George Jarkesy Jr. with securities fraud for alleged improper reporting regarding two investment funds that he ran.  An internal SEC process found him guilty and imposed a penalty of $300,000 and disgorgement of $685,000 in illicit profits.  In response, Jarkesy sued, claiming that the agency’s ability to both charge him civil penalties and conduct an administrative judicial proceeding violated his Seventh Amendment right to a trial by jury.

The Seventh amendment provides that in “suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States.”

The first question in the Court’s analysis was whether the claim that the SEC brought is a “suit at common law,” i.e., if the case is legal in nature.  That the claim rested on a federal statute and required the SEC to establish facts that do not match any cause of action known to the common law in 1791 was not dispositive.  Rather the analysis must consider whether the cause of action resembles a common law cause of action and whether the remedy is the sort that traditionally was obtained in a court of law.  According to the Court, the remedy is considered the more important factor.  In fact, the Court asserted that it “is all but dispositive [that] the SEC seeks civil penalties, a form of monetary relief, [because] money damages are the prototypical common law remedy” that could only be enforced in courts of law.

This did not end the analysis, however.  Even if the claim is legal in nature, agencies may avoid a trial by jury when the public rights exception applies.  As described by the Court, this “public rights exception” recognizes that when Congress creates a “public right” it may “assign the matter for decision to an agency without a jury.”  Therefore, the critical question in the Court’s analysis was whether this case involved a public right.

This is where the majority and dissent differ.  The majority answered this question by looking, again, at the nature of the claim for relief.  According to the Court, the matter is presumed to concern a private right if it is “made of the stuff of the traditional actions at common law.”  In other words, the civil penalties did not only determine that the suit was legal in nature, it also determined that the suit did not concern a public right.  The Court acknowledged that the determination as to whether it concerns a public or private right has not been “definitively explained” but stressed that the public right is an exception and should be interpreted narrowly.

The dissent agreed that the critical question is whether the matter concerns a private or public right.  However, it strongly disagreed with the majority on the conclusion.  According to the dissent, where the government is the claimant, it concerns a public right.

Justice Sotomayor’s lengthy dissent discusses the consequences of the Court’s analysis; “Today, for the very first time, this Court holds that Congress violated the Constitution by authorizing a federal agency to adjudicate a statutory right that inheres in the Government in its sovereign capacity.”  As the dissent points out, the federal government has operated for decades on the assumption that many disputes can be adjudicated by ALJs. According to a review of federal law she cited, by 1986 there already were more than 200 federal statutes calling for trials before ALJs.

Some of these laws, including the one allowing the SEC to bring enforcement actions against people like Jarkesy, give the government a choice. That is, they allow federal agencies to bring a proceeding either before an ALJ or before a federal district court that may conduct a jury trial.  So the SEC has the option of retrying Jarkesy in a district court. But, Justice Sotomayor warns that some agencies may not be able to collect certain civil penalties at all because the statutory and regulatory provisions governing those penalties specify that they must proceed administratively, which the Court has now said is unconstitutional.

We note that questions remain, such as whether there are statutes providing for civil penalties that are of a kind that did not already exist under the common law, and how much, if any, of the public rights doctrine remains.  The Court asserts that its ruling is limited to civil penalty suits for fraud.  For an example, the Court points to the Occupational Safety and Health Act of 1970 (OSH Act), a statute that created a federal regulatory regime to promote safe working conditions which created a cause of action not existing under common law.  However, the dissent does not buy this, stating that “the incredible assertion [that the ruling is limited to civil penalty suits for fraud] should fool no one,” and concludes that the Court’s decision “is a massive sea change.”

There is no question that the Jarkesey decision has created significant uncertainty as to the authority of many agencies imposing civil penalties administratively.  The decision likely will have minimal impact on FTC or CPSC cases because Congress or court decisions previously determined that both commissions could only seek civil penalties in court.  The impact on FDA matters could be significant.  FDA has civil money penalty authority relating to clinical trials, devices, foods, drugs, and tobacco; although with the exception of tobacco, FDA has not recently exercised that authority with regularity.  If FDA is prohibited from pursuing the relatively small dollar value tobacco penalty cases administratively, it could affect enforcement.  Bringing an administrative claim is typically much less demanding in time and resources than litigating a jury trial.  The impact on USDA and DEA could be similarly significant.  It should be noted, that the Jarkesy decision does not affect an administrative tribunal’s right to adjudicate equitable (non-monetary damages) issues.

We will be monitoring the effect of this decision on federal agencies and the regulated industry.

In its final rule on laboratory developed tests (LDTs) (see our prior blog here), FDA acknowledged that “some laboratories may lack familiarity, experience, or existing infrastructure for complying with FDA requirements” and made multiple references to a “small entity compliance guidance” that the agency intended to publish to “provide additional guidance to small businesses.”  Laboratories struggling to understand the myriad implications of being regulated as device “manufacturers” were hopeful that additional guidance would shed light on how to apply FDA’s existing medical device regulatory framework to their operations.

Unfortunately, the guidance for small entities recently published by FDA is little more than a summary digest of the multi-hundred-page final rule. The guidance restates the central premise of the final rule, i.e., that LDTs are medical devices and the clinical laboratories that design, manufacture and use them to test patient specimens are manufacturers.  It then reiterates the process and timeframe for phaseout of generalized enforcement discretion for LDTs, lists the categories of LDTs that will, to varying degrees, continue to be subject to enforcement discretion, and repeats that “certain tests” that were historically excluded from enforcement discretion —those offered directly to consumers, those used in blood and tissue donor screening, and those intended for use in public health emergencies — will continue to be ineligible for enforcement discretion.   The guidance also reminds readers of the somewhat illusory protection offered by enforcement discretion, noting that “FDA retains discretion to pursue enforcement action for violations of the FD&C Act at any time and intends to do so when appropriate.”

To be sure, Table 2 provides a handy visual of the categories of LDTs, the timeline for phaseout, and the scope of enforcement discretion for each test category.  However, the guidance provides no new information on how FDA expects laboratories to implement these new requirements.  Section IV, Additional Resources, provides links to previously-issued guidance documents and other educational materials geared to traditional device manufacturers, with no additional commentary on how to apply these requirements to the very different clinical laboratory environment.

The first phaseout milestone is less than a year away; by May 6, 2025 most laboratories will need to demonstrate compliance with Medical Device Reporting (21 C.F.R. § 803), Reporting of Corrections and Removals (21 C.F.R. § 806) and Complaint Files (21 C.F.R. § 820.198).  Below we describe the specific requirements that clinical laboratories will need to meet and identify interpretive questions that may pose challenges to implementation.

Complaint Handling

CLIA regulations, with which all clinical laboratories must already comply, state that a clinical laboratory must “have a system in place to ensure that it documents all complaints and problems reported to the laboratory,” and must “conduct investigations of complaints, when appropriate”.[1] However, the focus of CLIA requirements is on laboratory processes, not specific assays. Furthermore, CLIA regulations are more general and provide more opportunity for customization of complaint handling processes provided the underlying objectives are met.  The CLIA State Operations Manual (SOM) which provides interpretive guidance to investigators conducting laboratory surveys, states that an inspector should “[v]erify that the laboratory documents all complaints and problems reported to the laboratory, and that it has a mechanism to determine which complaints require investigation.” The SOM includes three “probes” to guide evaluation, which focus on (1) the mechanism used by the laboratory to enable individuals to report complaints or problems to the laboratory; (2) the laboratory’s process for informing laboratory personnel of the ability to anonymously report laboratory quality complaints to outside agencies; and (3) the laboratory’s mechanism for referring complaints or problems to its reference laboratory(s), or other offices or agencies, when appropriate, as well as whether the such activity is documented.

Like CLIA, FDA requires device manufacturers to have written procedures that define the complaint handling process and to maintain the complaint files in accordance with their own developed procedures.  However, FDA’s complaint handling requirements for device manufacturers are more detailed and prescriptive in nature, and it is not clear whether they will in practice align with laboratories’ existing complaint handling procedures; FDA may find laboratories’ existing processes insufficient or may impose different or conflicting requirements that increase administrative burdens.

FDA regulations define a complaint expansively, to include “any written, electronic, or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a device after it is released for distribution.”[2]  The regulations require manufacturers to establish a “formally designated [complaint handling] unit,”[3] which can be accomplished by describing the unit in a procedure and/or including a diagram that identifies individuals, activities, and departments that are charged with “…receiving, reviewing, and evaluating” complaints.[4] Manufacturers maintain complaint files for a “period of time equivalent to the design and expected life of the device, but in no case less than 2 years from the date of release for commercial distribution”  consistent with regulatory requirements for record retention.[5]  In contrast to traditional medical device manufacturers, laboratories do not “commercially release” an IVD device but instead report results based on the performance of the LDT.  It is therefore unclear what the “life expectancy” of an LDT is or when the “commercial distribution” of an LDT begins for the purpose of maintaining complaint files.

As discussed below, complaint handling is closely tied to FDA’s medical device reporting (MDR) and corrective and preventive action (CAPA) requirements.  Laboratories should therefore expect that FDA auditors will, in addition to reviewing complaint handling, also evaluate MDR processes and decisions and consider whether a complaint should have triggered a CAPA.  If a laboratory determines that a complaint does not require further investigation, it will need to document the “reason no investigation was made and the name of the individual responsible for the decision” in the complaint file.[6]  If the laboratory determines that investigation is required, the record of the investigation “shall be maintained by the formally designated unit.”[7]

FDA regulations require specific information to be recorded in complaint files, including, at a minimum: the name of the device, date of the complaint, unique device identifier (UDI), name, address, phone number of the complainant, nature and details of the complaint, dates and results of the investigation, any corrective action taken, and any reply to the complainant. Laboratories will need to ensure the complaints are processed in a “uniform and timely manner.”[8]  Laboratories will need to develop written procedures for complaint handling.  Failure to handle complaints in a consistent and timely manner can be cited as a nonconformance during an FDA inspection. Laboratories will therefore need to describe what does, and does not, constitute a complaint about the LDT. Training of personnel in the “designated complaint handling unit” on FDA requirements for complaint handling will be critical to ensure consistent complaint evaluations.  Timeliness is critical not only for developing appropriate corrective actions but also for evaluating and, when necessary, submitting reportable events to FDA as discussed below.

Medical Device Reporting

In the preamble to the final LDT rule, FDA stated it intends to develop additional education resources for MDR reporting to assist laboratories in coming into compliance with these requirements.  Merely providing links to existing MDR training materials for traditional device manufacturers, as the new compliance guide does, fails to meet FDA’s stated objective.  As stated above, while CLIA requires to have processes for detecting problems, these processes focus on detecting and addressing errors by the laboratory, and not on a specific test in isolation.

The MDR regulations require device manufacturers to “report deaths and serious injuries that your device has or may have caused or contributed to . . .  report certain device malfunctions, and . . . establish and maintain adverse event files.”[9]  The regulations define a “malfunction” as a “failure of a device to meet its performance specifications or otherwise perform as intended.”[10]  Performance specifications “include all claims made in the labeling for the device,” and “the intended performance of a device refers to the intended use for which the device is labeled or marketed.”[11]

In the context of an LDT, it is unclear what FDA will include within the scope of “labeling” and what types of communications will be considered “claims.”  At a minimum, the laboratory report, which typically includes patient information, specimen type, test results, reference ranges, and test interpretation, would foreseeably be considered test labeling, and statements made therein, or by laboratory personnel about the test report, could be considered evidence of the LDT’s intended use.  Treating the test report as labeling could, however, interfere with the laboratory director’s duty to ensure that “consultation is available to the laboratory’s clients on matters relating to the quality of the test results reported and their interpretation concerning specific patient conditions” and could have a chilling effect on the laboratory director’s ability to provide meaningful guidance to healthcare providers about their patients’ test results.[12]

Reporting under the MDR regulation is required within 30 calendar days of “becoming aware” of such an event, unless remedial action is necessary to prevent unreasonable risk of substantial harm to the public health, in which case reporting must occur within 5 work days.[13]   A manufacturer is considered to “become aware” of an event when any of its employees become aware of a reportable event.  It will therefore be imperative that any laboratory employees who receive complaint information notify the group responsible for evaluating such reports as soon as possible.  Given the short timeframe for submitting an MDR, some of the facts surrounding an event may not be known at the time of the initial report, in which case laboratories will need to file supplemental MDR reports.

Laboratories will be responsible for developing MDR procedures, training employees on MDR requirements, training the complaint-handling employees on recognizing and evaluating MDR reportable events, and developing MDR event files.  The learning curve for laboratories will presumably be steep; even seasoned device manufacturers can find themselves at odds with FDA about whether an MDR should have been filed with the agency following an event, so revisions to policies and further training of personnel should be expected.

MDRs must be reported to FDA in electronic format.  Laboratories will need to develop an electronic means of submitting said reports to FDA well in advance of the reporting requirements to ensure they are ready to report as of May 6, 2025.  Laboratories will also need to become familiar with the various codes used in MDR reports.   FDA has seven categories of MDR adverse event codes, and laboratories will need to become familiar with the codes and how to apply them to any adverse events or malfunctions of the device. The codes are organized in a “tree-like hierarchical structure, where higher-level codes are more generic, while lower-level codes are more specific.”[14]

Reports of Corrections and Removals

The final rule also requires most clinical laboratories to begin submitting reports of corrections and removals, and to maintain records of all corrections and removals, whether or not reported, beginning May 6, 2025.  A “correction” means “the repair, modification, adjustment, relabeling, destruction, or inspection (including patient monitoring) of a device without its physical removal from its point of use to some other location.”[15]  A “removal” means the “physical removal of a device from its point of use to some other location for repair, modification, adjustment, relabeling, destruction, or inspection.”[16]  A correction or removal must be reported to FDA within 10 working days of its initiation, if it was initiated, to “reduce a risk to health posed by the device” or to “remedy a violation of the act caused by the device which may present a risk to health . . . .”.[17]   A “risk to health” means a “reasonable probability that use of, or exposure to, the product will cause serious adverse health consequences or death”; or that “use of, or exposure to, the product may cause temporary or medically reversible adverse health consequences, or an outcome where the probability of serious adverse health consequences is remote.”[18]

Attempting to apply these regulations to LDTs seems, at least on first consideration, an exercise in fitting a square peg in a round hole.  It is by no means obvious what terms such as “repair,” “destruction,” “inspection,” or “physical removal” means in the context of an LDT, which is not a discrete physical object and which does not ever leave the confines of the laboratory.

Even where a correction or removal does not meet the threshold for reporting, a manufacturer must maintain records that include information about the brand name, common or usual name, classification, name and product code if known, and the intended use of the device; the UDI or other identifier used for the device; a description of the event(s) giving rise to the information reported and the corrective or removal action taken; the justification for not reporting the correction or removal action to FDA; and a copy of all communications regarding the correction or removal.  LDTs, however, many do not have a brand name, common or usual name, applicable product code, or a unique identifier.

In addition to the FDA, manufacturers must communicate corrections and removals to the consignees, i.e., the customers to whom a device was distributed.  For corrections and removals reported to the FDA, device manufacturers also must provide FDA a copy of the communication that sent to the consignees that describes the actions they need to take (e.g., return of the device) and when corrections will be implemented.  In the case of LDTs, however, it is unclear who the “consignee” is, since, as noted above, the LDT does not leave the laboratory.  If the consignee is the laboratory performing the LDT, then the laboratory would be required to, essentially, notify itself of the correction or removal and provide FDA a copy of the communication it sends to itself.

Records of corrections and removals must be retained for a “period of 2 years beyond the expected life of the device.”[19] It is unclear how the “expected life” of an LDT would be established; the life of an LDT performed on a specific specimen arguably ceases when the assay is completed, but the LDT test protocol used to perform the specific assay arguably continues to exist as long as the laboratory continues to perform it.

Labeling

We note that while labeling requirements are not being phased in until stage 2 (May 6, 2026), the regulatory requirements in stage 1 appear to assume that at least some labeling requirements – such as UDI, which must be included in complaint files –  will already be implemented). With respect to the UDI requirement, FDA regulations require them to be placed on the device “label.”  But, similar to the challenges noted above regarding interpretation of the term “labeling” for MDR purposes, it is not clear what would constitute the “label” of an LDT, since it comprises multiple elements used in combination by the laboratory, not a discrete finished product sold to third parties. Moreover, to the extent a UDI is intended to facilitate identification of a device throughout its journey from manufacturer through distribution to the end user, it is not clear what purpose it would serve for an LDT, which has no physical existence outside the laboratory.

Conclusion

Laboratories that were hoping for substantive guidance from FDA on how to navigate the unfamiliar, and by no means self-executing, complaint handling, medical device reporting and correction and removal regulations, will need to look elsewhere for advice or use their best judgment and hope for FDA’s understanding if such judgments fail to meet FDA’s unarticulated expectations.

[1] 42 C.F.R. § 493.1233.

[2] 21 C.F.R. § 820.3(b).

[3] Id. § 820.198(a).

[4] Id.

[5] Id. § 820.180(b).

[6] Id. § 820.198(b).

[7] Id. § 820.198(e).

[8] Id. § 820.198(a).

[9] Id. § 803.1.

[10] Id.

[11] Id.

[12] 42 § 493.1407; id. § 493.1445.

[13] 21 C.F.R. § 803.3.

[14] FDA, MDR Adverse Event Codes, at https://www.fda.gov/medical-devices/mandatory-reporting-requirements-manufacturers-importers-and-device-user-facilities/mdr-adverse-event-codes.

[15] Id. § 806.2.

[16] Id.

[17] Id. § 806.10.

[18] Id. § 806.2.

[19] Id. § 806.20.

Among the tools that the government has to enforce the FDC Act is the injunctive power granted by Congress in 21 U.S.C. § 332. That statute provides that courts “shall have jurisdiction, for cause shown, to restrain violations” of the FDC Act. Historically, courts have modified, watered down, or altogether eschewed the traditional equitable requirements for an injunction when considering FDA’s request for injunctive relief. The Supreme Court’s decision in Starbucks Corp. v. McKinney strongly suggests that courts should engage in a different analysis in the future.  

Starbucks was a labor case, but the Court’s decision affects most if not all federal agencies that have injunctive authority. The Court ruled unanimously that the traditional equitable requirements for obtaining an injunction from Winter v. Natural Resources Defense Council, Inc. apply to the National Labor Relations Board. Courts had previously interpreted statutory language to provide for a different pathway, applicable to the agency exercising its enforcement powers. While the decision did not explicitly expand this requirement to other agencies, it’s hard not to see how this doesn’t apply to FDA’s injunction authority.

The Starbucks case revolves around the “Memphis Seven,” Starbucks employees who invited media into their shop to highlight their attempt at unionization. Starbucks fired the Memphis Seven, and the NLRB then began administrative proceedings to investigate. The NLRB also went to federal district court for a preliminary injunction to, among other things, prevent Starbucks from firing the employees.

Relying on Section 10(j) of the National Labor Relations Act (NLRA) of 1914, the District court granted the injunction, which the Sixth Circuit upheld. Both courts used a two-part test to determine first if there was “reasonable cause to believe that unfair labor practices had occurred,” and second, relying on the language from Section 10(j), if an injunction was “just and proper.”

Overturning that decision, Justice Thomas wrote that the statutory language of “just and proper” was not a substitute for the traditional equitable standard from Winter. That standard demands that a party seeking relief “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

According to Starbucks, a court reviewing a preliminary injunction under Section 10(j) has to get to “just and proper” through the Winters standard; NLRB’s status as a federal agency with its own statute and specific mission does not dispense with that requirement. While the analysis for permanent injunctive relief will be different, Starbucks strongly suggests that agencies will be subject to the traditional rules of equity.

But the 9-0 decision was not unanimous in its reasoning, as Justice Jackson filed a partial dissent. While she agreed with the decision here, she did not join in the Court’s decision that the traditional pillars of equity apply in all cases where a special statute provides for injunctive relief. Where a statute has a distinct purpose, she wrote, courts should additionally assess the specific public interest that the statute seeks to protect.

Notwithstanding Justice Jackson’s partial dissent, it really seems like FDA now faces a new-yet-old standard for obtaining an injunction.

FDA has a history of relying on the weight that courts give to the public health function of the FDCA to bring injunction suits under Section 332. And while the Winter factors do include consideration of the “public interest,” courts reviewing FDCA injunctions have long modified the traditional four-tiered equitable standard that private litigants face, emphasizing the specific public health interests that the FDCA protects. With Starbucks, that looks to be ending.

For FDA regulated industry, injunctions arise most commonly as a result of negotiated consent decrees, but that does not mean that Starbucks is any less relevant. The decision of whether to agree to a consent decree is necessarily informed by a company’s chances in litigating the threatened injunction case. Starbucks almost certainly changes that calculation. How FDA and regulated industry will respond to this decision will likely play out in district courts across the country in the coming months, so stay tuned for future posts on the Starbucks fallout.

The Drug Enforcement Administration (“DEA”) has received more than 27,000 public comments in response to its May 21, 2024, Notice of Proposed Rulemaking (“NPRM”) to reschedule marijuana from schedule I to schedule III.  However, none may carry more weight than a short comment just over one page in length.  That letter, dated June 19th and signed by nine former DEA Administrators and Acting Administrators, requests that their successor, the current DEA Administrator, hold a hearingon rescheduling.  They opine that “[g]iven the magnitude of the impact of the proposed rule and considering we face an unprecedent drug overdose crisis in this country . . . a hearing on this rulemaking is in the public interest.”  Letter to DEA Administrator Anne Milgram, from Peter Bensinger, et al., (June 19, 2024).  

The decision whether to hold a hearing to address matters of fact and law in the rescheduling rests with the DEA Administrator.  The deadline for requesting a hearing or participating in a hearing was June 20, 2024, but the deadline for all public comments is July 22, 2024.

The request for hearing follows an October 2023 letter preceding the NPRM from six former Administrators and five former Directors of National Drug Policy.  That letter to Attorney General Garland and Administrator Milgram imploredagainst rescheduling, urging them “to follow the science demonstrating marijuana’s high addictive potential and its lack of accepted medical use, as well as the impact rescheduling will have on law enforcement and the ability to prosecute drug trafficking organizations.”  Letter to U.S. Attorney Merrick Garland and DEA Administrator Anne Milgram, from Michele Leonhart, et al., (Oct. 2023). Five former Administrators who signed the October letter also signed the June letter.

The Controlled Substances Act (“CSA”) requires analysis of eight statutory factors for scheduling, rescheduling, or descheduling substances of abuse.  21 U.S.C. § 811(c).  The Department of Justice reviewed Health and Human Services’ August 2023 rescheduling recommendation and conducted a separate review of the eight factors.  NPRM at 44,601.  The NPRM, however, noted that DEA “has not yet made a determination as to its views of the appropriate schedule for marijuana.”  Id. For each factor, the NPRM noted that for DEA, additional information during the rulemaking would inform about the appropriate schedule for marijuana. The NPRM further stated that DEA believes that factual evidence (including scientific data) and expert opinions with additional data on different forms, formulations, delivery methods, dosages, and concentrations “may be relevant.”  Id.

In the June letter, the Administrators characterize marijuana rescheduling to schedule III as “likely the most consequential rulemaking DEA has ever attempted . . . [and] would be the most significant relaxation of narcotics restrictions in the history of the CSA.”  Letter to DEA Administrator Anne Milgram (June 19, 2024).  They say that such a “sweeping change” requires “a robust administrative record.”  Id.

The Administrators point to DEA stating in the NPRM that determining whether marijuana should be rescheduled to schedule III requires “additional data and rigorous scientific analysis” and that the claims about “marijuana’s pharmacological effects, potential for abuse, and implications for public safety” should be subject to a hearing.  Id.  A hearing, they note, would allow outside experts to opine on the latest evidence and be cross-examined.  In addition, a hearing would also allow local leaders, law enforcement, and advocacy organizations to address the subject.  Id.

The Administrators further stress the importance of assessing how such a “major change in drug policy could impact the ongoing and devastating drug abuse crisis facing this country.” Id.  Lastly, they express their belief that a public hearing on rescheduling “would enhance transparency, integrity, and public confidence in this process, regardless of what final resolution is reached.”  Id.

We cannot help but wonder how much weight the current Administrator and DEA will give to the Administrators’ June 2024 request for hearing and the earlier October request to leave marijuana in schedule I.

RAPS Convergence 2024 is set to host a must-attend session on CDRH’s Total Product Life Cycle Advisory Program (TAP), promising attendees an exclusive insight into a pioneering initiative aimed at improving the medical device commercialization landscape.

Session Details:

• A Path to Faster Breakthrough Device Commercialization – CDRH’s Total Product Life Cycle Advisory Program (TAP)
• Thursday, September 19, 2024, 4:30 PM – 5:30 PM
• Session Leader: Adrienne Lenz, RAC – Principal Medical Device Regulatory Expert, Hyman, Phelps & McNamara, P.C.; Presenter: Laura Gottschalk – TAP Advisor, FDA

Session highlights include:

• An in-depth overview of the TAP Pilot
• Options for participant interactions with the FDA
• Real-world experiences and benefits of the TAP Pilot Program
• This session is a must-attend for professionals seeking to understand the intricacies of the TAP Pilot and leverage this program for breakthrough devices. To register visit the official conference website, here.

Meet the Expert: Adrienne R. Lenz

Adrienne R. Lenz, a highly esteemed Principal Medical Device Regulatory Expert at HPM will lead the session. Ms. Lenz brings a wealth of experience, having provided consulting to medical device and combination product manufacturers on a wide range of pre and postmarket regulatory topics. Her expertise includes developing regulatory strategies, preparing regulatory submissions, drafting policies and procedures, and addressing enforcement matters.

Ms. Lenz has an impressive track record in the premarket area, where she prepares IDEs, 510(k)s, de novos, and PMAs, along with pre-submissions and representing clients in pre-submission meetings with the FDA. In the postmarket domain, she advises on design controls, risk management, MDRs, field actions, and QSR compliance, and assists with quality system audits and regulatory due diligence.

About the FDA’s TAP Pilot Program:

CDRH introduced the Voluntary Total Product Life Cycle (TPLC) Advisory Program (TAP) Pilot in late 2022. This program was designed to address the significant challenges known as the “medical device valley of death,” where many technologies fail to reach the market due to developmental hurdles.

To participate in the TAP Pilot, a device must be in its early development stages, have received a Breakthrough Device designation, and not have submitted a Q-Submission request post-Breakthrough status. The TAP Pilot aims to expedite the time from concept to commercialization by improved engagement between developers and the CDRH, increasing the predictability of the review process.

The program is structured to provide early identification and mitigation of risks, as well as aligning expectations regarding evidence generation. Moreover, the TAP Pilot offers opportunities for strategic interactions with non-FDA stakeholders, enhancing the overall developmental ecosystem.

We blogged in February 2022 about the Drug Enforcement Administration’s (“DEA’s”) revocation of Gulf Med Pharmacy’s registration after finding that it failed to exercise its corresponding responsibility by repeatedly filling controlled substance prescriptions that exhibited “obvious red flags of diversion without documenting the resolution of those red flags.”  Last December we blogged on the $275,000 civil penalty imposed by the U.S. District Court for the District of Texas on Zarzamora Healthcare LLC for repeatedly dispensing opioids and other controlled substances “by filling prescriptions while ignoring red flags.”

DEA recently revoked the registration of Coconut Grove Pharmacy (“Coconut Grove”), like Gulf Med Pharmacy also in Florida, for its failure to resolve prescribing red flags and document such resolution.  Coconut Grove Pharmacy; Decision and Order, 89 Fed. Reg. 50,372, 50,377 (June 13, 2024). The Coconut Grove decision introduces no new red flags, but further clarifies DEA’s expectations, especially in the context of Florida’s standard of care.  After issuing an Order to Show Cause and Immediate Suspension of Registration in September 2022, and an administrative hearing in March 2023, DEA adopted the hearing Administrative Law Judge’s (“ALJ’s”) Recommended Decision to revoke Coconut Grove’s registration based on the public interest factors of 21 U.S.C. §823(g)(1).  Id. at 50,372.

Prescribing Red Flags

In the Gulf Med decision, DEA emphasized that “[r]ed flags are circumstances surrounding a prescription that cause a pharmacist to take pause, including signs of diversion or the potential for patient harm.”  Gulf Med Pharmacy; Decision and Order, 86 Fed. Reg. 72,694, 72,703 (Dec. 22, 2021).  The presence of a red flag does not prohibit a pharmacist from filling a controlled substance prescription but “means that there is a potential concern with the prescription, which the pharmacist must address and . . . make a record of its resolution, assuming it is resolvable.”  Id.

The Florida Administrative Code codifies prescribing red flags and establishes a standard of care for pharmacists.  The government’s expert testified that any red flag associated with a controlled substance prescription must be resolved and that resolution documented before dispensing.  89 Fed. Reg. 50,372 at 50,372-73.  DEA noted that “red flag” as used in the Coconut Grove decision refers to “‘things to look for’ identified in [Florida Administrative Code § 64B16-27.810].”  Id. note 13.

Coconut Grove

The expert reviewed the records of seven patients whose prescriptions were filled over almost two years and found no resolutions of red flags.  Id. at 50,373.  Finding no documentation identifying nor resolving the red flags associated with the prescriptions, the expert opined that Coconut Grove’s dispensing “fell below the Florida standard of care” and the pharmacy failed to meet its corresponding responsibility.  Id.

Coconut Grove had noted “verified” on the prescriptions which DEA found “is not sufficient to identify and resolve any red flags that may be present.”  Id. at 50,374.  The ALJ found, and DEA agreed, that the standard of care in Florida requires any red flags for a prescription or a patient must be resolved before dispensing and resolution must be documented.  Id.  Coconut Grove’s failure to do this “render[ed its] dispensing practices outside the usual course of professional practice and in violation of the Florida standard of care.”  Id.

Red Flags at Issue

a.  Prescription Drug Cocktails

The government’s expert opined that a combination of drugs in different classes or drugs with synergistic effects is a “drug-drug interaction red flag.”  Id.  He observed that the Food and Drug Administration has issued a Black Box warning to avoid opioid and benzodiazepine combination “because both drug classes affect the central nervous system, cause respiratory depression, increase the risk of overdose, and have an ‘exponentially higher effect on the body’” when taken together.  Id.  The expert specifically found that:

• Patient A.R. simultaneously filled prescriptions for oxycodone-acetaminophen 10-325 and tramadol, immediate-release opioids, with alprazolam;
• Patient J.C. filled temazepam prescriptions at Coconut Grove and oxycodone prescriptions at a different pharmacy; and
• Patient M.W. filled oxycodone prescriptions at Coconut Grove and alprazolam prescriptions at a different pharmacy.

The expert also found that Patient J.C. simultaneously filled prescriptions for the stimulant methylphenidate and benzodiazepine, a depressant.

b.  Immediate-Release and High Dosage Opioids

The government’s expert asserted that opiate prescriptions alone can create a “therapeutic duplication” red flag when two separate immediate release opioids are prescribed in their highest strength version.  Id.  In addition, “incorrect drug dosage or duration of drug treatment” occurs when immediate-release opioids for treating acute pain are prescribed for chronic pain over extended periods of time.  Id.  The expert cautioned about prescribing 90 Morphine Milligram Equivalents (“MMEs”) per day or greater and that filling immediate-release opioid prescriptions month after month for an extended period constitute red flags.  Id. at 50,374-75.

Specific to Coconut Grove, Patient A.R. filled prescriptions for oxycodone-acetaminophen 10-325 with tramadol, and oxycodone, two immediate-release opioids, and Patient J.K. filled prescriptions for oxycodone-acetaminophen 10-325 also with oxycodone.  Id. at 50,375.

Coconut Grove dispensed immediate-release opioids for extended time periods as the expert found that:

• Patient A.R. filled prescriptions for oxycodone-acetaminophen and tramadol for approximately two years;
• Patient J.K. filled prescriptions oxycodone and oxycodone-acetaminophen 10-325 for a year and a half;
• Patient C.S. filled prescriptions for hydromorphone at its highest strength when an extended strength version was available for over a year and a half;
• Patient J.L. filled prescriptions for high-strength oxycodone 30 mg. monthly for a year and half; and
• Patient M.W. filled prescriptions also for oxycodone 30 mg. monthly for a year. Id.

As for high dosage opioid prescriptions, the expert found that:

• Patient A.R. filled prescriptions for oxycodone and acetaminophen 10-325 and tramadol together totaling 120 MMEs per day;
• Patient C.S. filled prescriptions for the highest strength of hydromorphone (8 mg.) totaling up to 260 MMEs per day;
• Patient J.L. filled prescriptions for the highest strength of oxycodone (30 mg.) totaling approximately 135 MMEs per day;
• Patient M.G. filled prescriptions for oxycodone 30 mg. totaling between 135 and 270 MMEs per day; and
• Patient M.W. filled prescriptions for oxycodone 15 or 30 mg. totaling between 90 and 265 MMEs per day. Id.

c.  Alternating Between Cash and Insurance

According to the government’s expert, patients paying for prescriptions with insurance and for others with cash is a red flag for those paid with cash.  Id.  For these, the expert found that Patient J.C. paid for some medications with insurance while paying for other controlled medications in cash, and Patient M.W. paid cash for oxycodone at Coconut Grove while using insurance for alprazolam at a different pharmacy.  Id.

The expert opined that these red flags, like the others, needed to be resolved before Coconut Grove dispensed.  Patient J.C.’s physician had told Coconut Grove’s Pharmacist-in-Charge that the patient only had limited insurance.  When the pharmacist noted “verified” on the prescription, the expert opined that “is not sufficient to actually resolve a red flag.”  Id.

Public Interest Factors

The Controlled Substances Act provides that DEA may suspend or revoke a registration upon finding that the registrant has committed acts that would render the registration inconsistent with the public interest.  21 U.S.C. § 824(a).  In making the public interest determination for Coconut Grove, DEA agreed with the ALJ’s finding the Government’s evidence showed that the pharmacy’s continued registration would be “inconsistent with the public interest” under two of the five factors of 21 U.S.C. § 823(g)(1).  Factor B was the pharmacy’s experience with dispensing or conducting research with respect to controlled substances while Factor D was compliance with applicable state, federal, or local laws relating to controlled substances.  21 U.S.C. § 823(g)(1)(B), (D).

The Government alleged that Coconut Grove violated numerous federal and state controlled substance laws.  Id. at 50,376.  “A prescription for a controlled substance may only be filled by a pharmacist, acting in the usual course of his professional practice” and “[a] prescription for a controlled substance to be effective must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.”  21 C.F.R. §§ 1306.04(a), 1306.06.  DEA regulations also establish that “[t]he responsibility for the proper prescribing and dispensing of controlled substances is upon the prescribing practitioner, but a corresponding responsibility rests with the pharmacist who fills the prescription.”  21 C.F.R. § 1306.04(a).  A pharmacist is prohibited “from filling a prescription for a controlled substance when he either knows or has reason to know that the prescription was not written for a legitimate medical purpose.” 86 Fed. Reg. 72,694 at 72,694.

Florida’s Administrative Code requires pharmacists prior to dispensing to “review the patient record and each new and refill prescription . . . to promote therapeutic appropriateness by identifying: (a) Over-utilization or under-utilization; (b) Therapeutic duplication; (c) Drug-disease contraindications; (d) Drug-drug interactions; (e) Incorrect drug dosage or duration of drug treatment; (f) Drug-allergy interactions; [and] (g) Clinical abuse/misuse.”  Fla. Admin. Code § 64B16-27.810(1).  It also requires upon recognizing any one of these that “the pharmacist shall take appropriate steps to avoid or resolve the potential problems which shall, if necessary, include consultation with the prescriber.”  Id. at § 64B16-27.810(2).  The Administrative Code requires that pharmacies maintain a “patient record system,” that “provide[s] for the immediate retrieval of information necessary for the dispensing pharmacist to identify previously dispensed drugs” and “shall record any known allergies, drug reactions, idiosyncrasies, and chronic conditions or disease states of the patient and the identity of any other drugs, including over-the-counter drugs, or devices currently being used by the patient which may relate to prospective drug review.”  Fla. Admin. Code § 64B16-27.800(1), (2).  The regulation requires that pharmacists “ensure that a reasonable effort is made to obtain” this information.  Id. at § 64B16-27.800(2).  It also states that “[t]he pharmacist shall record any related information indicated by a licensed health care practitioner.”  Id.

Lastly, the Florida Administrative Code states that in filling “valid prescriptions for controlled substances,” pharmacists should “exercis[e] sound professional judgment,” and “dispens[e] controlled substances for a legitimate medical purpose in the usual course of professional practice” considering “each patient’s unique situation.”  Fla. Admin. Code § 64B16-27.831.

DEA agreed with the ALJ’s analysis that Coconut Grove’s dispensing fell below Florida’s standard of care and, therefore, was outside the usual course of professional practice by dispensing controlled substance prescriptions to the seven patients without properly addressing and resolving the red flags of abuse and/or diversion.  These red flags included drug cocktails, immediate-release and high dosage opioids, and patients alternating between paying for prescriptions with cash and insurance.  DEA agreed with the ALJ, finding that the pharmacy repeatedly violated federal and state law relating to controlled substances, Factors B and D weighed in favor of revoking the pharmacy’s registration, and continued registration was inconsistent with the public interest.

FDA recently released a new eSTAR template for device pre-submissions and 513(g) Requests for Information, referred to as PreSTAR.  A pre-submission provides the submitter an opportunity to obtain FDA feedback prior to a planned medical device premarket submission.  A 513(g) Request for Information is a means of obtaining FDA’s views about the classification and regulatory requirements for a particular device.

eSTAR Templates

As we have previously explained in our blog post here, eSTAR is an interactive PDF form designed to assist users in creating “complete” submissions. It includes questions about the product, that when answered, reveal additional information that should be supplied with a submission.  It includes “help text” that will assist the applicant in providing complete information.

PreSTAR

The PreSTAR template for pre-submissions and 513(g) Requests for Information is currently voluntary.  There is only one template for both in vitro diagnostic devices and non-in vitro diagnostic devices, which is different from other eSTAR submission templates.  If an applicant chooses to use it, it allows the user to choose either a “Request for Classification Information (513g)”, “Pre-Sub Written Feedback (Q-Sub),” or “Pre-Sub Meeting and Written Feedback (Q-Sub).”  Other planned options, which are not yet available, include: accessory requests, determination meetings, agreement meetings, expedited program entrance requests, study risk determination, expedited program interaction submissions, informational meetings, PMA 100-Day meetings, and submission issue requests.

PreSTAR for Pre-Submissions

The PreSTAR template for pre-submissions will look familiar to those who have been submitting 510(k)s using eSTAR with the same sections for Cover Letter/Letters of Reference, Applicant Information, Standards, General Product Characteristics, System/Kit Components and Accessories, Classification, Labeling, and Literature References.  However, the applicant is not required to include all attachments to complete the submission (e.g., package labeling is optional).  They are, however, required to minimally attach a comprehensive product description which should include the key design features for the principle of operation, how performance is achieved, any components or accessories used with the proposed device, and a description of all proposed interfaces.  Similar to other eSTAR templates, there is a section for indication for use statement.  The applicant is required to provide a proposed indications for use and select whether the device will be prescription use, over-the-counter use, or both.

There are sections in PreSTAR for a pre-submission that differ from the eSTAR template for marketing applications.  One of which is a section for “pre-submission correspondence and previous regulatory interactions.”  Depending on your answers the PreSTAR template will let you know if you should be using the PreSTAR.  For example, if you answer yes to the following question, “Do the provided questions relate to your marketing submission hold letter, CLIA hold letter, Clinical hold letter or an IDE letter?” a pop-up message instructs you to submit a Submission Issue Request (SIR) via eCOPY as the SIR Q-Submission via PreSTAR is currently not available.  If you have had prior submissions or regulatory interactions related to the product that is subject of the PreSTAR pre-submission, the template will require you to add in the submission numbers and attach the prior regulatory feedback.

Another section when used for a pre-submission is “submission characteristics.”  This section requires the applicant to provide an overall purpose of the submission, including goals for the outcome of the interaction with the FDA, what type of future submission the applicant intends to submit, and requires the selection of a maximum of four (4) category topics.  If you choose “not listed (applicant specified),” you will need to provide a category heading.  For each question submitted, the applicant will be required to choose the Topic Category.  While four topics may be applicable for many pre-submissions, this may be challenging for start-ups or applicants with very novel technology where the first pre-submission interaction often covers a broad range of topics, leaving specifics for follow-on pre-submission supplements.  A topic of “overall testing strategy” may be a helpful addition to the template to allow these broader, initial discussions.

The template allows up to ten (10) questions and will indicate when you have reached the limit of questions entered, noting that you can consider submitting separate pre-submissions for additional questions; see our previous blog posts here on pre-submissions and the effect limiting questions may have on speed of innovation of medical devices.   Further, by limiting the number of questions, it may lead sponsors to create more general questions that lack the level of specificity needed to tease out a specific issue or to combine questions in a way that make them more difficult for the Agency to address.  Either way, putting a hard limit on questions is not in the best interest of the pre-submission program.

The applicant can choose the length (i.e., 30 minutes or one hour) and type of meeting (i.e., teleconference or face-to-face) requested.  In addition, the applicant is required to provide a draft agenda with an estimated time for each item on the agenda.  The agenda at this point is usually quite general, with specifics added after receipt of FDA’s written feedback ahead of the meeting.  The applicant provides a list of attendees and if they are requesting any specific FDA staff to attend the meeting.  Additionally, the applicant is required to confirm they will be responsible for submitting the draft meeting minutes and must confirm they understand FDA’s policy against recording the meeting (either with audio or video).

PreSTAR for 513(g) Requests for Information

If the applicant chooses to submit a 513(g) Request for Information, there are two main sections to complete, “General Product Characteristics” and “Description.”   The intent of the questions in the “General Product Characteristics” section of the template is to answer the questions and provide FDA information about the functions the applicant believes are non-medical device functions or exempt device functions (i.e., not subject to premarket review).  In the “Description” section the applicant should describe any medical device functions of the product that would require a premarket submission.  Similar to other eSTAR templates, there is a section for providing the indication for use statement.  We assume this would be related to those functions that the applicant believes are medical device functions, since the applicant is required to select whether the device will be prescription use, over-the-counter use, or both as part of the indications for use statement.  This distinction between what sections are to be completed for non-device function and device functions could be confusing to the sponsor especially since there is no opportunity to explain the intended use of the product (which may include both device and non-device functions).  The template is set up such that it assumes the applicant understands which functions of the product would be subject to regulation, what the classification would be and if the function requires a premarket submission.  For example, the template includes a section for the applicant to classify the device functions by choosing the medical specialty, regulation, and product code.  This seems to defeat the purpose of submitting a 513(g) request, since most applicants are asking the FDA to determine if the product is a device, what the classification regulation might be, and whether a premarket submission (e.g., PMA or 510(k)) is required.

As with the eSTAR templates for premarket submissions, the preSTAR template introduces some complexity into the process that will take users time to navigate.  FDA has not provided any information on whether it remains voluntary or will be required in the future, but if it does become a requirement, as it has for 510(k)s, we hope the Agency will continue to make improvements to allow it to be useful for the wide range of pre-submissions and 513(g) requests that sponsors may submit.

In a short but sweet Guidance issued last week, FDA proposed a dramatic change to the way it evaluates interchangeable biosimilars.  For the last 14 years, an applicant could get approval of a biosimilar as a standard biosimilar or an interchangeable biosimilar, but the interchangeable biosimilar presented a higher hurdle to approval: Applicants needed to show that a patient could be switched from the Reference Product to the biosimilar and back without issue.  But, as time has marched on and FDA’s experience with interchangeable biosimilars grown, the Agency’s “experience has shown that . . . the risk in terms of safety or diminished efficacy is insignificant following single or multiple switches between a reference product and a biosimilar product.”  Indeed, 9 of the 13 interchangeable products FDA has approved thus far have not included switching studies.  Accordingly, FDA issued this new draft guidance that, when finalized, will revise certain sections of another guidance document, Considerations in Demonstrating Interchangeability With a Reference Product, which was written before FDA had received and reviewed any interchangeable biosimilar applications.

Interchangeable biosimilars differ from standard biosimilars as they may be substituted for the reference product without the intervention of a healthcare provider.  The switching study was intended to provide assurances that such a switch can be done safely by examining any immunogenicity risks.  Based on experience to date, along with currently available analytical technologies that can structurally characterize highly purified therapeutic proteins and model in vivo functional effects, FDA has decided to revise the Interchangeability Guidance such that switching studies are no longer required.  Instead, applicants may choose to provide an assessment of why the comparative analytical and clinical data provided in the application or supplement support a showing that the switching standard has been met.  This new policy applies retroactively to pending biosimilar applications, to which an applicant may submit an amendment, including such an assessment in lieu of switching studies.

FDA, in abrogating the requirement for switching studies, has removed the only significant barrier to interchangeability.  Rather than conducting studies, applicants can use modeling to support interchangeability, drastically decreasing the investment necessary to obtain approval of a biosimilar as interchangeable.  Lowering this standard should increase access to interchangeable drug products, but it raises questions as to whether any differences ultimately remain between biosimilars and interchangeable biosimilars.  And interchangeable exclusivity becomes an extraneous incentive, as there are no additional studies performed for which the reward serves as an incentive.  Effectively, all biosimilars could be interchangeable with the right explanation, which leaves questions of whether the distinction between a regular biosimilar and an interchangeable biosimilar is necessary at all.  Given that FDA asked Congress specifically to do away with the line between interchangeable biosimilars and other biosimilars in its recent Budget Request, this Guidance should not come as much of a surprise.

This afternoon Hyman, Phelps & McNamara, P.C. (HPM) Director Dara Katcher Levy will present an informative webinar on the newly released AMCP Format for Formulary Submissions version 5.0. The event, titled “New and Improved – AMCP Format for Formulary Submissions v5.0,” aims to educate pharmaceutical manufacturers and other healthcare stakeholders on the latest updates and best practices in dossier development.

The AMCP Format for Formulary Submissions (the Format) serves as the gold standard for pharmaceutical manufacturer dossiers, guiding the submission of evidence and information to support formulary placement decisions. Since its inception, the Format has been instrumental in standardizing the submission process, ensuring that critical data is presented in a clear and consistent manner. The latest iteration, version 5.0, released in April 2024, marks the first update since 2020. This update incorporates new guidelines and enhancements to address the evolving needs of the healthcare industry, improving the clarity and utility of the submitted information.

In this educational session, Dara Katcher Levy, alongside Jonathan Toft, PharmD, MBA, Principal at Formulary and Rebate Optimization, MedImpact Healthcare Systems, Inc., will delve into the specifics of the new and improved Format v5.0.

Participants will gain a thorough understanding of:

• The history and impact of the AMCP Format; how did we get here?
• Identify crucial updates made in AMCP Format 5.0 — understanding the nuance of certain new requirements is critical to your success
• Learn actionable best practices for developing compliant AMCP Format dossiers

The session will be moderated by Steven Kheloussi, PharmD, MBA, FAMCP, Director of Professional Affairs at AMCP.

To register for this insightful webinar, visit AMCP Learn. Don’t miss this opportunity to stay abreast of the latest developments in formulary submission standards.

For more than 50 years, the Drug Enforcement Administration (DEA) has enforced the central mandate of the Controlled Substances Act (CSA) to maintain a closed chain of distribution for drugs with a potential for abuse and diversion.  The CSA and regulations promulgated by DEA are intended to reduce the potential for diversion and abuse and ensure that controlled substances are dispensed and delivered to patients for a legitimate medical purpose.  However, the well-intentioned statutory language enacted in 1970 did not anticipate important changes in clinical therapies and advances in medical technology, and in some cases has created obstacles both to ensuring needed patient access and successful medical outcomes.

One such requirement which has been a controversial issue for many years is the requirement that a controlled substance can only be dispensed and delivered to the “ultimate user.”[1]  Under the relevant definitions in the CSA, the dispensing/delivery of controlled substances is limited to the “ultimate user” (i.e., the patient or a member of the patient’s household).[2]  Why is this an issue?  Because a strict interpretation of the law and regulations (other than a recent and limited amendment to the CSA) prohibits any alternative dispensing or delivery of critically needed medicines, e.g., directly to the practitioner’s office, even where such alternatives inarguably provide a safer and more effective treatment, and inarguably remove the risk of diversion.

For example, intrathecal infusion therapy, via an implanted infusion pump, or Targeted Drug Delivery (TDD), is a last-line therapy for patients who have failed all other conventional pain therapies.  This lifesaving and life-sustaining option is reserved for a small but highly vulnerable population of approximately 130,000 patients suffering from severe chronic pain due to, for example, spinal cord injuries, amputation, cancer, or spasticity caused by multiple sclerosis. The therapy involves an FDA-cleared surgically implanted pump that typically involves the delivery of compounded liquid pain medication directly into the patient’s spinal column and requires medication refills every 60-90 days.  However, TDD medications are highly concentrated opioids and cannot be self-administered.  Highly concentrated opioid formulations (e.g., fentanyl, morphine, hydromorphone, etc.) used in intrathecal pain therapy have strict sterility and stability requirements and are life-threatening if mishandled.  A qualified medical professional must perform the refill; it cannot be done by the patient.  This procedure is usually performed in a practitioner’s office, and rarely done in the home setting.

At 1/100 to 1/300 the typical oral dose of opioid and other controlled substance medications, intrathecal pain pumps substantially reduce use of and reliance upon oral opioids, which, in turn, significantly reduces abuse and diversion.  Further, the therapy reduces or eliminates the side effects of opioids and leads to better health outcomes and patients’ return to activities of daily living.  But requiring that the medicine be dispensed or delivered to the patient or at the patient’s home rather than directly to the practitioner’s office creates a significant safety issue, a greater potential for diversion, and could compromise the efficacy of the medication.

In 2016, DEA issued a guidance letter stating that delivery or dispensing to a practitioner’s office for administration to the patient was not addressed in the CSA or DEA regulations and therefore not specifically prohibited.  This information was widely publicized, and we are aware that industry practice evolved whereby pharmacies would deliver or dispense to practitioner’s office in certain cases including those discussed above.  However, two events conspired to undermine this prior guidance.  First, in 2018 Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, which created a narrow statutory exemption to the CSA’s “ultimate user” definition that authorizes the dispensing of injectable buprenorphine to a practitioner’s office for treatment of opioid use disorder.[3]   Second, the Trump Administration issued Executive Order 13891, requiring that all industry guidance be promulgated pursuant to specific criteria set forth in the Executive Order, including publication on an Agency’s website.  Then, President Biden revoked that Executive Order on his first day in office, January 20, 2021.  In either event, the 2016 DEA guidance letter is not currently published or otherwise available on DEA’s guidance portal.[4]

As a result, we are aware that DEA recently issued a letter stating that DEA’s current interpretation of the law and regulations require that, other than the specific SUPPORT Act statutory exception, all controlled substances must be dispensed or delivered to the patient or a member of the patient’s household (i.e., the “ultimate user”).  This interpretation would prohibit delivery to any other location such as a DEA-registered practitioner’s office or a nurse working as an agent of the practitioner in the field who would then deliver the medication specifically to the patient’s home for administration to the patient.

However, to DEA’s credit, we understand that the Agency has indicated that it intends to issue new guidance which would authorize dispensing or delivery to a practitioner’s office if the patient and practitioner execute a power of attorney (POA) wherein the patient specially authorizes the practitioner to receive the medicine on their behalf for the sole purpose of administration in the practitioner’s office.  We also understand that DEA has indicated this would be the only scenario in which the Agency believes the law and regulations would authorize an alternative dispensing or delivery of a prescription (other than the SUPPORT Act exception), excluding other dispensing models such as delivering the controlled substance medication to nurses for delivery and administration to patients at their residence.

With this much needed and anticipated new DEA guidance, a significant barrier to access will be removed, and patients will achieve better, safer access to life-sustaining medications, and the DEA will establish clear guidelines on how pharmacies may dispense these needed medications.  The proposed guidance furthers DEA’s goal of expanding access to alternative pain therapies while protecting the controlled system of drug delivery from diversion and abuse.

We do not know the timing of when DEA will issue such guidance, but we look forward to the guidance, and applaud DEA’s effort to expand access while maintaining the integrity of the controlled substance drug supply.  We also hope this is the first step towards the DEA and industry working together on additional CSA amendments to reduce obstacles to important patient care.

[1] 21 U.S.C.  § 802 (27) (The CSA’s “ultimate user” definition).

[2] See, e.g., id. § 802 (10) (defining “dispense”); § 802 (27) (defining “ultimate user”) and § 802(8) (defining “deliver or delivery”).

[3] 21 U.S.C. § 829a(a).

[4] See https://apps.deadiversion.usdoj.gov/guidance/#no-back-button.

FDA’s Office of Pharmaceutical Quality (OPQ) in the Center for Drug Evaluation and Research (CDER) is charged with assuring that drugs marketed in the U.S. are safe, effective, and meet appropriate quality standards. While no office at FDA truly works in a vacuum, we can safely call OPQ the tip of FDA’s quality spear.

Last week, OPQ released its 6th Annual Report on the State of Pharmaceutical Quality. This report is not to be confused with OPQ’s Annual Report, a shorter and gauzier look into OPQ’s operations. Instead, the State of Pharmaceutical Quality Report provides more detailed statistics and data from FY2023 (October 1, 2022—September 30, 2023), and a clearer window into enforcement priorities.

The Quality Report includes a rundown of what the universe of FDA-registered drug manufacturing sites looks like as included in the CDER Site Catalog. Of the 4,819 facilities in the Site Catalog, 60% manufacture drugs approved under a New Drug Application (NDA), Abbreviated NDA (ANDA), or Biologics License Application (BLA). (See here and here to better understand what BLAs are under CDER’s purview, as opposed to the Center for Biologics Evaluation and Research (CBER)). The remaining 40% are “no application” sites that manufacture drugs not marketed under an application approved by FDA, which includes OTC monograph drugs, homeopathic products, and unapproved prescription drug products (e.g., drugs subject to an open drug efficacy study implementation (DESI) program proceeding).

Medical gas manufacturers and 503B outsourcing facilities—both of which meet the definition of “manufacturer”—are excluded from the Quality Report. However, sites that manufacture exclusively alcohol-based hand sanitizers are no longer excluded as they had been from the FY2020, FY2021, and FY2022 reports.

From FY2019 through FY2023, Mexico (26%), China, (25%), South Korea (25%), India (16%), Germany (15%), and Spain (15%) saw the most substantial increase in registered facilities by percentage. Canada (-4%) and the U.K. (-1%) were the only countries that experienced a net decrease over OPQ’s 5-year survey. Measured in raw numbers, the U.S. is still the registered facilities leader with 2,009 of the overall 4,819 registered facilities. India (585), China (484), Germany (195), and Italy (151) follow.

See here: Source: OPQ Report on State of Pharmaceutical Quality, Table 1, page 3

Readers of this blog know that as the pharmaceutical industry continues its global growth, FDA has wrangled with inspecting foreign sites to varying degrees of success. Foreign drug quality inspections are conducted either by FDA or by a foreign regulatory authority with which FDA has a Mutual Recognition Agreement (MRA)—which currently includes all EU nations, Switzerland, and the United Kingdom. The number of MRA inspections increased from 144 in FY2022 to 187 in FY2023 (the highest number of MRA inspections to date). Inspections continued their post-pandemic creep upwards in FY2023, at just under 800 inspections of registered facilities internationally. That’s still way down from the over 1,300 inspections in FY2019, but way up from the pandemic low of under 300 inspections in FY2021. The bulk of inspections are still taking place in the U.S., but OPQ reports a substantial increase in India in FY2023, driven by for-cause inspections triggered by some dubious and notable quality deficiencies. OPQ professes a desire to bolster inspection numbers in China but says travel restrictions have hampered that effort.

See here: Source: OPQ Report on State of Pharmaceutical Quality, Figure 1, page 4

A note here that while the sheer number of inspections is a useful metric, the post-inspection classification of facilities also tells an important part of the story. OPQ reports that globally, “94% of all sites in the CDER Site Catalog received no action indicated (NAI) or voluntary action indicated (VAI) as their most recent inspection classification.” Perhaps predictably given the for-cause nature of inspections there, India lagged with 89% of inspected sites achieving good levels of classification status, European sites set the gold standard in FY2023 at 98% either NAI or VAI.

Other notes from the report include:

• FDA keeps a vast catalog of drug products. At the end of FY2023, the FDA Drug Product Catalog included 17,519 application products, to include 13,572 ANDAs, 3,593 NDAs, 354 BLAs, and 131,367 non-application products such as over-the-counter drugs. That total—148,886 listed products—is a 6% increase over FY2022. Every category saw an increase last year, led by BLAs (9%).
• FDA continues to increase its use of import alerts as an enforcement tool, adding 93 companies to import alerts in FY2023. In FY2021 and FY2022 combined, FDA added 77 companies. Of the sites placed on quality-related import alert, 90% are manufacturers of OTC monograph drugs and a full third of sites added (31) were manufacturers of hand sanitizers.
• Recalls declined in FY2023, down to 674 from 912 in FY2022. Most of those recalls were from antibacterials, cardiovascular agents, and the well-publicized spate of adulterated ophthalmic agents which accounted for 17% of all recalled products. The 53.7% increase in quality-related consumer complaints in FY2023 was also largely attributed to the recall of OTC eye drops.
• FDA issued 94 Warning Letters in FY2023, approaching its previous high from FY2019. Of the 94 quality-related Warning Letters, 80% were issued to manufacturers of OTC drugs—over half of which manufactured either hand sanitizer or products that could be contaminated with diethylene glycol (DEG) or ethylene glycol (EG).
• OPQ reports that the vast majority of the 81 drug shortages reported in CY2022-23 were due to quality issues (40%) and increase in demand (40%)—a significant change from 2013-2017 when quality issues were the cause of 62% of shortages.

The Quality Report comes out this year as FDA’s budget battle continues on Capitol Hill, and it makes a strong case that the Agency’s needs in this area dwarf its robust accomplishments. Every American consumer expects the U.S. to maintain its gold standard of pharmaceutical quality. While other tools are helpful to FDA, the data here show that in-person inspections are the primary tool to ensure global quality.

As we have noted for the last year or so, the FTC has been on a mission to clean up the Orange Book by removing what it deems to be “improper” patents.  The FTC has put out policy statements, challenged patent listings, tapped Congress, appeared on talk shows, and filed amicus briefs all in the span of the last 8 months.  It seems like all that work is paying off.  Though some drug companies have been reluctant to delist certain patents from the Orange Book, the District Court of New Jersey just ordered Teva to delist 5 of its patents that it deemed improperly listed.  And on X (R.I.P. Twitter), the FTC is taking credit for that.

As we explained back in March, Teva had initiated Hatch-Waxman pre-launch patent litigation against Amneal for infringement of 5 Orange Book-listed patents reading on the device constituent (a metered dose inhaler) of Teva’s combination product ProAir HFA.  Amneal, in turn, filed a counterclaim against Teva seeking a declaratory judgment of non-infringement and invalidity of all 5 patents, removal of those patents from the Orange Book, and relief from allegedly anticompetitive conduct in violation of state and federal antitrust laws.  FTC, deep in its foray into the Orange Book, filed an Amicus Brief in the case arguing that the patents do not claim any FDA-approved drug.  In the brief, FTC took the position that “In the FTC’s view, device patents that do not mention any drug in their claims do not meet the statutory criteria for Orange Book listing, and a device patent that is improperly listed in the Orange Book must be delisted” (emphasis added).

On June 10, 2024, the District Court of New Jersey issued its Opinion in the case, finding that Teva’s patents were improperly listed.  First, the Court dealt with the antitrust issue that Teva raised in a Motion to Dismiss.  Teva had argued that the alleged conduct—improper Orange Book listing and sham litigation—do not support an antitrust claim and consequently asked the Court to dismiss Amneal’s antitrust counterclaim.  Citing to a 2004 Supreme Court case, Verizon Commc’ns., Inc. v. Law Offs. of Trinko, LLP, 540 U.S. 398 (2004), Teva argued that Amneal has no cause of action under antitrust law because the Hatch-Waxman Amendments impose a new statutory duty on a company to cooperate with competitors and established a remedy for breach of that obligation.  The Court disagreed, stating that “Teva has not demonstrated that the Orange Book listing provisions at issue comprise a regulatory structure designed to deter and remedy anticompetitive harm.”  Not finding convincing any of Teva’s other arguments to dismiss the antitrust claims—and finding the FTC brief persuasive—the Court denied Teva’s Motion to Dismiss the antitrust claims.

Now, to the part we’ve all been waiting for: the Court determined that Teva’s patents covering only the inhaler component of ProAir HFA “are not properly listed in the Orange Book as a matter of law” (emphasis added).  More specifically, the Court concluded that “the Inhaler Patents do not claim the drug for which the applicant submitted the application” (emphasis added).  Though the Court acknowledged that the definition of the term “drug” is broad enough to include the ProAir HFA inhaler, the Court found that “this broad statutory definition of drug does not suffice to establish the Inhaler Patents claim the drug for which Teva submitted its application . . . .”  (emphasis added).  In other words, because FDA identified the drug “for which the applicant submitted the NDA” as “albuterol sulfate HFA Inhalation Aerosol,” albuterol sulfate must be claimed in the patent to be listable.  The Court supported this position by relying on the First Circuit’s Opinion in a case involving the listing of a device component patent (the patent claimed only the drive mechanism of an injector pen).

The Court addressed Teva’s valid argument that the Inhaler Patents are drug product patents and thus listable.  While the relevant regulation defines “drug product” as the “finished dosage form,” which theoretically includes the delivery device, the Court again falls back on the wording in 21 C.F.R. § 314.53(b)(1) that drug product patents may be listed if they claim the “drug product . . . that is described in the pending or approved NDA” (emphasis added).  According to the Court, the Inhaler Patents do not claim the finished dosage form that is the subject of the approved ProAir HFA NDA, which presumably the Court is interpreting to require the inclusion of the drug substance.  Given that the term “finished dosage form” is defined as “tablet, capsule, or solution, that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients,” and FDA has stated that dosage forms include prefilled drug delivery systems like ProAir HFA, one could argue that an inhaler-specific patent covers part of the finished dosage form that is integral to the product and thus should be listed.  But FTC has been fighting hard against that position and likely will continue to do so.  Again, the FTC has been clear that only patents that actually include the drug substance should be listed.

Teva has noticed its appeal of the delisting decision.  We’re confident that FTC will file another amicus brief at the appellate court, which doesn’t bode well for the future of listing device patents in the Orange Book, as the District Court makes clear that the FTC’s position is compelling. We’re looking forward to seeing what the Third Circuit has to say.

UPDATE: On Thursday, June 13th, U.S. District Judge Stanley Chesler ordered a 30-day stay of his earlier ruling, reportedly saying that he wanted the matter to reach the appellate court in the most orderly way possible.

Hyman, Phelps & McNamara (HPM) would like to congratulate the 7 rare disease programs selected for the inaugural class of the FDA’s “Support for clinical Trials Advancing Rare disease Treatment” (START) pilot program. The START pilot program was announced last September as a way to offer selected participants developing potentially life-saving and life-changing rare disease therapies enhanced communications with FDA review staff and a mechanism for addressing clinical development issues, similar to the “Operation Warp Speed” communication model for vaccines in development during the COVID-19 pandemic.

We are looking forward to seeing the START pilot program chart a path for a broader application of this more enhanced communication approach and FDA’s continued collaboration to facilitate development of new drugs for rare diseases, as we know there are many programs that would benefit from this approach, not just those included in the pilot. Following an evaluation of the pilot and feedback from the initial pilot participants, FDA may consider a second iteration of the START program.

HPM is proud to aid 5 of the 7 selected participants for the START pilot program.

It’s been over a year and a half since Over-the-Counter (“OTC”) hearing aids became legal, and it’s not clear that they’ve made the difference in hearing loss treatment that Congress anticipated.  (FDA once estimated that OTC hearing aids would save patients over $3000.)  A recent GAO Report hasn’t found that OTC hearing aids have had much impact.  While that’s not to say that OTC hearing aids aren’t working to address the critical issue of hearing loss, it seems that almost two years is still not enough time to assess market impact, or to show that some of the promises of significant savings for large numbers of consumers have been realized.

The category of OTC hearing aids was created by congressional mandate and implemented by FDA to address an “unmet public health need.”  With input from medical professionals, stakeholder, trade associations, and patient advocacy groups, FDA provided a pathway to market for air-conduction hearing aids without a prescription or the involvement of a licensed professional.  These OTC hearing aids are intended only for patients 18 and older and only those with mild-to-moderate hearing loss.

The GAO Report provides an overview of the rulemaking process for OTC hearing aids, the resulting OTC hearing aid regulatory scheme, and FDA’s interaction with other agencies when regulating OTC hearing aids.  While helpful background, it’s not new information.  What the GAO Report does provide though is a discussion of the effect of OTC hearing aid availability on patient access to hearing loss treatment.  Early research suggests that OTC hearing aids can be as effective as prescription hearing aids in certain circumstances, and published literature that FDA has reviewed has left the agency seeming hopeful.  But the GAO Report highlights the lack of research on OTC hearing aids thus far.  This is because “FDA officials and six external stakeholder groups . .  . said it was too early after implementation of the Rule to have data on its effects.”  Nevertheless, industry stakeholder report consumer interest in hearing loss treatment initially increased following  issuance of the OTC hearing aids rule and, anecdotally, a small initial increase in consumers accessing hearing health care.  Particularly interesting is that the increase in consumer interest isn’t limited to OTC hearing aids; industry noticed an increase in interest in audiologist assistance as well.    Another study found that consumers prefer working with hearing health care professionals in person rather than shopping online, while another study found many consumers had concerns about product safety absent professional oversight.

The Report highlights some of the barriers that remain for access to hearing treatment: consumer preference and professional concerns, difficulty in self-assessing hearing loss, and affordability.  Stakeholders also suggested to the GAO monitoring of the hearing aid market for concerns about marketing, pediatric use of hearing aids, return policies, and gain limits.  FDA seemingly dismissed most of these concerns, and, the Report notes, “[a]s of February 2024, FDA did not have any plans to revise its OTC hearing aid regulations.  The Agency “may issue technology specific regulations and guidance as new hearing technologies are approved and cleared by FDA.”  FDA does, however, expect to issue a report on OTC hearing aid adverse events to Congress by August 2024.

In all, the GAO Report did not provide much in the way of new information for industry.  As for whether the rules were worth all the trouble: It seems like it’s just too early to tell. However, at least in the short term, the issuance of the final rule has not resulted in the dramatic uptake of OTC hearing aids that some proponents had predicted.

Hyman, Phelps & McNamara, P.C. (HP&M) seeks to add an experienced attorney (7+ years) to our government discount program and price reporting practice. Our ideal candidate will have significant substantive experience working with:

• Price calculation and reporting under the Medicaid Drug Rebate Program and the 340B Drug Discount Program
• Average sales price reporting under Medicare Part B
• Price reporting and contracting with the Department of Veterans Affairs
• Drug discounting requirements under the Inflation Reduction Act Medicare inflation rebate programs, maximum fair price negotiation program, and Part D manufacturer discount program

Experience in FDA and other regulatory issues affecting the pharmaceutical industry is a plus.

Our firm culture is collaborative, and the subject matter is intellectually stimulating.   Strong verbal and writing skills are required. Partner/director, counsel and senior associate level attorneys with the requisite substantive experience are encouraged to apply. The ideal candidate will have a book of business.

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 Deborah Livornese (dlivornese@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.