On May 20, the Physician’s Committee for Responsible Medicine (PCRM) submitted a Petition to FSIS requesting that FSIS require all meat and poultry establishments to test and report on a weekly basis the number of workers and the number of their family members with presumptive or confirmed SARS-CoV-2 infections and those dying of COVID-19; weekly posting of the number of FSIS inspectors with presumptive or confirmed SARS- CoV-2 infections and those dying of COVID- 19; and requiring a label statement on meat and poultry: “Warning: Workers in the U.S. meat and poultry processing facilitates have been sickened or killed by the SARS-CoV-2 virus, and this product has not been certified virus-free.”

On July 1, after an expedited review, FSIS denied the Petition.  As to the warning statement, FSIS responded that public health and food safety experts have found no evidence to support the notion that COVID-19 is transmitted by meat or poultry products. The Petition referenced a study regarding transmission of viruses via food.  However, as FSIS noted, the referenced study focused on common foodborne viruses, such as norovirus, which can be transmitted by infected food handlers.  SARS-CoV-2 and other coronaviruses are airborne, and the study did not suggest that airborne viruses can be transmitted by meat and poultry products.

The requested warning statement would be misleading because it implies that meat and poultry products that have not been “certified as virus-free” may transmit COVID-19 or are somehow unsafe. Because public health and food safety experts have found no evidence to support the transmission of COVID-19 associated with meat or poultry products (and the Petitioner did not provide any such evidence), the requested warning statement would cause meat and poultry products to be misbranded.

Similarly, it also would not be useful to test meat and poultry for the presence of the virus because there is no evidence of transmission.  The effort and resources spent on testing the meat and poultry would be better used on preventing transmission of COVID-19 in the meat and poultry establishments.

Some of the actions requested were outside the scope of FSIS’s authority.  There is nothing in the law or regulations that gives FSIS the authority to require that FSIS-regulated establishments report information on the health status of employees to public health authorities, or that authorizes FSIS to make information related to the health status of Agency inspectors available to the public.

After a few months’ delay caused by the COVID-19 pandemic, FDA released its blueprint for adapting to ongoing and anticipated changes in the food system, titled New Era of Smarter Food Safety: FDA’s Blueprint for the Future.  The blueprint is the result of discussions that have been underway since last year, and FDA describes it as a work in progress that is subject to change. Nonetheless, the four “core elements” identified by FDA seem likely to remain central to the agency’s strategy for enhancing foodborne illness prevention and response. Those elements are:

• Tech-enabled traceability – FDA’s ultimate goal is “to have end-to-end traceability throughout the food safety system.”  To that end, FDA seeks to foster development of “foundational components” (e.g., adoption of existing consensus standards), encourage industry to adopt new technologies, and leverage “the digital transformation” (e.g., potential internal implementation of blockchain). FDA flags as its first step the completion of rulemaking under section 204 of the Food Safety Modernization Act “to harmonize the key data elements and critical tracking events needed for enhanced traceability.”
• Smarter tools and approaches for prevention and outbreak response – FDA seeks to harness new data streams to “enhance and strengthen root cause analysis and predictive analytics” so as to minimize identified risks, optimize use of resources, and maximize the agency’s “food safety reach.” Specific goals identified in the blueprint include invigoration of root cause analysis; strengthening of capabilities in predictive analytics (e.g., expanded use of artificial intelligence for activities such as screening imported foods); strengthening of mutual reliance with regulatory partners; implementation of additional tools for inspections, training, and compliance (e.g., use of remote/virtual inspections); enhancing response to outbreaks of foodborne illness; and modernization of recalls (e.g., develop guidance on consumer notification).
• New business models and retail modernization – New models of food production and delivery – and continuing risks associated with existing models – are prompting a fresh look at how best to protect against contamination. FDA seeks to ensure food safety as new models are implemented (e.g., home delivery), and modernize retail food safety.
• Food safety culture – The blueprint posits that the burden of foodborne illness cannot be dramatically reduced without behavioral changes. FDA thus seeks to “promote food safety culture throughout the food system” (including among consumers); promote food safety culture throughout FDA itself (e.g., by potentially factoring food safety culture into the frequency of inspections); and educate consumers on the importance of food safety.

In FDA’s view, the experiences of the COVID-19 pandemic only highlighted the need for the blueprint and the need to modernize FDA’s approach –  from “unprecedented imbalances in the marketplace, to changing consumer behaviors and a rise in e-commerce, to challenges to performing inspection and compliance work in FDA’s traditional manner.”

FDA has appointed some familiar senior food staff as team leaders for each of these core elements, who will “help to identify the short and long-term actions to fulfill the goals laid out in the blueprint over the next decade, working in partnership with stakeholders.” In the context of that partnership, the agency may find itself working through thorny questions regarding the limits of its statutory authority, and confronting significant internal and external resource limitations that could hamper the fulfillment of its vision. Given the agency’s description of that vision as a “sea change,” those who haven’t been paying attention and have a stake in the outcome might want to start tuning in.

On July 10th, FDA announced its goal of restarting domestic on-site inspections beginning the week of July 20th.  The regions of the U.S. that will be on the receiving end of these inspections are those that the agency’s rating system demonstrates are the safest for conducting prioritized inspections.  Apparently, the rating system assesses the number of COVID-19 cases in localities based on both state and national data.

The Advisory Level is based upon the outcome of three metrics: Phase of the State (as defined by the White House guidelines) and statistics measured at the county level to gauge the current trend and intensity of infection. When each of these is taken into consideration, the FDA will identify regulatory activities that can occur within the given geographic region. The three main categories of regulatory activity at the county level will be: mission critical inspections only, all inspections with caveats to help protect staff who have self-identified as being in a vulnerable population and resumption of all regulatory activities.

This is all well and good, but the bulk of inspection sites, particularly drug and biologic manufacturing facilities, are outside the United States, and that’s where the major backlog is.  Indeed, according to Congressional testimony provided by FDA officials in June of this year, the U.S. only accounted for one quarter of all Active Pharmaceutical Ingredient (API) manufacturing, and less than half of all Finished Dosage Form (FDF) manufacturing.

It remains unclear when on-site foreign drug and biologic inspections will resume, but arguably, FDA should be able to restart those soon based on the same principles FDA has outlined above regarding domestic inspections.  In countries where the testing is widespread and reliable, where epidemiological information from such governments can be trusted, and where the data shows an analogous concentration of COVID-19 cases as what is considered acceptable for domestic inspections, FDA should be able to resume on-site foreign inspections.  Of course, FDA investigators will need to be able to get to their foreign destinations, meaning that the entry of Americans into the countries in question will need to be permitted.

Failing a resumption of foreign on-site inspections soon, it is unclear what FDA’s plan is to resolve the existing backlog, and that is presumably worsening by the week.  As a result of the COVID-19 pandemic, FDA suspended foreign on-site inspections in early March of this year, except for those deemed “mission critical.”

It is also reasonable to assume that this suspension in inspections has, or will soon be, worsening the drug shortage situation, as foreign manufacturing facilities that have been designated by FDA as Official Action Indicated (OAI) are generally unable to obtain approval of Abbreviated New Drug Applications, New Drug Applications and Biologics License Applications without an improvement in facility status to Voluntary Action Indicated (VAI).  Furthermore, these facilities are hampered from taking on new drug development opportunities as sponsors are reluctant to risk contract manufacturing with a facility for which they do not see a plausible end to OAI status (i.e., little chance for quick FDA re-inspection).

Furthermore, FDA appears unwilling, or unable, to use its statutory authority under section 706 of Food and Drug Administration Safety and Innovation Act (FDASIA) (codified at 704(a)(4) of the Federal Food, Drug, and Cosmetic Act (FDCA)) to conduct so called “record review” to resolve the OAI status at these facilities.

(4)(A) Any records or other information that the Secretary may inspect under this section from a person that owns or operates an establishment that is engaged in the manufacture, preparation, propagation, compounding, or processing of a drug shall, upon the request of the Secretary, be provided to the Secretary by such person, in advance of or in lieu of an inspection, within a reasonable timeframe, within reasonable limits, and in a reasonable manner, and in either electronic or physical form, at the expense of such person. The Secretary’s request shall include a sufficient description of the records requested. [emphasis added]

Indeed, FDA officials have been quoted over the past few weeks as saying that if the FDA is not on-site at the manufacturing facility, then whatever remote FDA facility review takes place “cannot be an inspection” for purposes of the FDCA, and therefore presumably cannot resolve a firm’s OAI status.  That seems like an unduly restrictive interpretation of the agency’s statutory authority.  Arguably, if FDA had maintained such a restrictive construction of the FDCA over the 80 years since its enactment, the agency would have had to abandon some of the authority it currently exercises and takes for granted.

In summary, one of three occurrences are likely over the coming months: either on-site foreign inspections will resume; FDA will loosen its overly restrictive interpretation of section 704(a)(4) of the FDCA regarding “record review”; or we can expect a worsening of America’s drug shortage and a slowing of the availability of new drugs.  Here’s hoping that it won’t be the latter.

Back in the Spring, one of the first COVID-related guidances FDA issued was on the conduct of clinical trials during the COVID-19 emergency.  This guidance was updated with a Q & A section just a week later (see our blog posts here and here) and several times thereafter.  On July 2, 2020, FDA issued another update to its guidance on “Conduct of Clinical Trials of Medical Products during COVID-19 Public Health Emergency”.

The Q & A Appendix has been updated by the addition of a new question and revisions to existing questions concerning the informed consent process.  These changes expand on and clarify previously suggested methods to obtain informed consent in certain scenarios that have become routine among patients suffering from COVID-19 and recognize the limitations on face-to-face interactions and the retention of paper copies imposed by infection control protocols being implemented in many hospitals.

For hospitalized patients in isolation, the guidance provides for two alternative methods of obtaining and documenting informed consent from a hospitalized patient in isolation if the infection-control procedures prevent the collection of the usual signed consent form.  One alternative is to have a photograph of the signed informed consent transmitted to the clinical trial staff following a telephone or video conference call between the patient and investigator or designee (and any others requested by the patient if feasible), during which the patient has a copy of the consent document and the investigator or designee reviews the consent document with the patient and answers questions.  The patient must state their consent and affirm that they have signed and dated the consent form.

The second method is an alternative for use when a photograph of the signed consent form cannot be transmitted.   In this case, the call between the patient and investigator or designee includes a witness who is otherwise unconnected to the study, as well as others requested by the patient, if feasible.  In lieu of using a witness, the call can be recorded.  As with the first method, the patient will have a copy of the consent document and the investigator or designee will go through the consent document and answers questions, and the patient will affirm verbally that they consent and have signed and dated the form.

In each of the scenarios above, the prospective trial participant has a paper or electronic copy of the consent form that can be signed physically or electronically.  A new question-and-answer (Q12) has been added to the guidance to address obtaining informed consent from a prospective trial participant when:

• the enrollment timeframe is limited such that providing a physical copy of the consent form via mail or courier is not feasible;
• the patient can receive a copy of an informed consent document electronically; and,
• the patient cannot sign it electronically or print it out for signature.

The guidance outlines the steps that must be taken to obtain and document informed consent in this scenario.

The updated guidance also describes what records of these varying consenting procedures must be retained by the clinical trial staff.

Earlier this year FDA established an email box for receipt of questions on clinical trial conduct during the COVID-19 emergency: Clinicaltrialconduct-COVID19@fda.hhs.gov.

On July 7, 2020, a unanimous panel of the D.C. Circuit held that FDA violated the Tobacco Control Act (TCA) and the Administrative Procedure Act by failing to study whether the extensive health warnings required on cigars would actually lower the number of smokers in promulgating the regulation “Deeming Tobacco Products to Be Subject to the FDCA,” 81 Fed. Reg. 28,973 (May 10, 2016) (the Deeming Rule).  In Cigar Association of America, et al. v. FDA, No. 18-5195 (D.C. Cir. July 7, 2020), the panel said that while the FDA did conclude that the warnings would help convey the health risks of smoking, they were required to consider how the warnings would likely affect the number of smokers, but did not do so. The panel determined that because the FDA failed to consider that question, they acted arbitrarily and capriciously.  The court did not address the First Amendment challenge to the required warnings, indicating that their “analysis begins, and ends, with the plaintiffs’ statutory claims.”

This decision is an appeal of a 2018 ruling by the federal district court in D.C., which found that the regulation was lawful and the required health warnings on cigars did not violate the First Amendment since they are aimed at informing the public of health risks. 315 F. Supp. 3d 143 (D.D.C. 2018). On the First Amendment question, the district court applied the standard set forth in the U.S. Supreme Court’s 1985 ruling in Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, and held that the warnings are factual, uncontroversial disclosures meant to disseminate information about the risks of smoking cigars, and to correct public misperceptions about the use of cigars and pipe tobacco.

Under the TCA, which amended the Federal Food Drug and Cosmetic Act (FDCA), Congress directed the agency to establish a comprehensive regulatory scheme for tobacco, and requires the FDA to consider the impact of any tobacco regulation on smoking cessation and adoption rates. The 2016 Deeming Rule which extended the FDA’s authority over tobacco products and requires warnings statements on tobacco products, did not consider the impact of warnings on smoking cessation, according to the appeals panel. “In fact, the rule scrupulously avoids that issue, and the FDA barely even contends otherwise,” the panel said.  Indeed, the FDA acknowledged in the Deeming Rule’s Final Regulatory Impact Analysis that “[r]eliable evidence on the impacts of warning labels . . . on users of cigars, pipe tobacco, waterpipe tobacco, and [electronic nicotine delivery systems] does not, to our knowledge, exist.”

The appeals court ultimately determined that “[b]y its terms, section 906(d)(1) [of the FDCA] required the FDA to “tak[e] into account” whether the warning requirements would affect the number of smokers.  Because the FDA declined even to consider that question, it violated section 906(d)(1) and acted arbitrarily and capriciously.”

We will keep you informed of this case as it is remanded back to district court.

On June 22, 2020, the Eastern District of California entered a permanent injunction barring enforcement of the Proposition 65 (Prop 65) cancer warning requirements for glyphosate.  Those familiar with Prop. 65 know that a win for industry battling Prop 65 is a rare event.

California Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, is a state law that requires that the Governor of California publish a list of chemicals (the Prop 65 list) known to the State to be a reproductive toxicant or to cause cancer, as determined by certain authoritative entities, including the United States Environmental Protection Agency (EPA) and the International Agency for Research on Cancer (IARC).  Prop 65 prohibits businesses from knowingly exposing individuals to listed substances without providing a clear and reasonable warning

In 2017, after the IARC classified glyphosate as “probably carcinogenic” to humans based on evidence that it caused cancer in experimental animals and could cause cancer in humans, the substance was added to the Prop 65 list as a cancer-causing chemical.  IARC’s determination was inconsistent with determinations by other authorities, such as the EPA and the European Commission, which had concluded that glyphosate is not likely to be carcinogenic in humans.  In fact, IARC was the only entity that determined that glyphosate was a probable carcinogen.

On November 14, 2017, Plaintiffs Monsanto and several farming associations sued the State of California alleging that the listing of glyphosate under Prop 65 as a carcinogen, and the resulting warning requirements, violated Plaintiffs’ First Amendment rights by forcing them to make “false, misleading, and highly controversial statements.”  The Court initially entered a preliminary injunction precluding enforcement of the warning rules.

The Court considered whether California’s regulation of commercial speech should be scrutinized under the standard set by the Supreme Court in Zauderer v. Office of Disciplinary Counsel or under the intermediate standard set by Central Hudson Gas & Electric v. Public Service Commission.  The Zauderer standard applies to mandatory disclosure of “purely factual and uncontroversial information.” In light of the inconsistency between the finding of IARC and others, such as EPA, the Court found that the Prop 65 warning for glyphosate was not factual and not uncontroversial.  Thus, the higher standard of scrutiny of the Central Hudson level would apply.  Under that standard, a governmental agency may restrict commercial speech when the restriction directly advances an important governmental interest and the restriction may not be more extensive than necessary to serve that governmental interest.  The Court determined that the Prop 65 warning for glyphosate is misleading because it requires a warning that the chemical is known to the state of California to cause cancer when that statement is not true – only one organization concluded glyphosate was “probably carcinogenic” (IARC), and a multitude of other organizations that reviewed the safety of the product found the opposite.  Requiring a misleading statement does not directly advance the interest of the state in informing consumers regarding potential cancer hazards.  Thus, the warning could not be justified as a valid restriction on commercial speech and, therefore, is contrary to the First Amendment of the Constitution.

California argued that it had set a quantitative “safe harbor” level for glyphosate exposure that in practice means that few if any products would need to include a Prop 65 warning.  However, the Court found that a safe-harbor level does not protect companies from enforcement actions; even if a product were tested and found to contain glyphosate well below the safe harbor level, there was no reasonable assurance that a company would not be subject to enforcement actions. In fact,  there have been enforcement actions for various chemicals notwithstanding a defense of compliance with the safe harbor level for those chemicals, including where the California Attorney General said a proposed enforcement suit had no merit.

The statute allows any person to file an enforcement suit notwithstanding the State’s finding of no merit. To bring suit, a private party need only credibly allege that that a product has some amount of the chemical at issue, not that the amount of the chemical is harmful or that it exceeds the safe harbor level;  defendants in Proposition 65 enforcement actions have the burden of showing that the level of the chemical in their product falls below the safe harbor level.  As a result, without a permanent injunction, Plaintiffs in this case would face a credible threat of enforcement regardless of the safe harbor level for glyphosate.

As we previously reported, there is a similar First Amendment challenge to the required Prop 65 warning for acrylamide filed in October 2019.  Similar to the case with glyphosate, neither OEHHA nor any other governmental entity has determined that acrylamide is a known human carcinogen; in fact, OEHHA acknowledged that the agency does not know that acrylamide increases the risk of cancer in humans.  That case is still ongoing, and the glyphosate decision could greatly impact the ongoing acrylamide litigation.

We will be monitoring further developments.

Initially enacted in 2012 and reauthorized for the first time in 2017, the Generic Drug User Fee Act (“GDUFA”) was adopted to accelerate access to safe and improve the predictability of the generic drug review process.  FDA touts the GDUFA as a “remarkable success” that “demonstrates how FDA, industry and other stakeholders can work together to achieve tremendous results.”  Indeed, GDUFA was a product of extensive negotiation between the agency, the generic drug industry, and other stakeholders under which FDA agreed to adopt aspirational review timelines in exchange for fees paid to the agency by sponsors.  Initially, sponsors paid fees for review of Abbreviated New Drug Applications (“ANDA”), Drug Master Files, and Prior Approval Supplements, as well as annual fees for facilities generic drug facilities.  GDUFA II scrapped the supplement user fee in favor of an annual program fee based on the number of ANDAs a sponsor holds.

This summer, FDA begins negotiations with industry for GDUFA III.  GUDFA II expires at the end of fiscal year 2022 (September 2022), and FDA is soliciting public input on the path of the program going forward.  To that end, FDA will hold a (virtual) Public Meeting on the Reauthorization of GDUFA on July 21, 2020.  The meeting agenda has not yet been announced but will include presentations by FDA staff and stakeholder groups.  Public presentations are invited, and FDA will allot some time for public discussion.  To attend or speak at the meeting, register or email GenericDrugPolicy@fda.hhs.gov on or before July 7, 2020.  FDA will also accept public comments through August 20, 2020 to Docket Number FDA-2020-N-1459.

These types of meetings are a great opportunity for industry to air its grievances with GDUFA II.  Now that generic drug sponsors have had three years of experience with GDUFA II, there are undoubtedly some hiccups in the system that should be addressed.  Refunds often take years to process: maybe it is time to ask for some time commitments for review of refund requests?  Or maybe the consequences of failure to pay those fees are not adequate given that the last time a GDUFA-related Warning Letter was issued was 2015?   Whatever your gripe or praise of the system is, this meeting is a prime time for generic sponsors to give the Agency feedback on the amount of fees, the types of fees, and the consequences for failure to pay fees.  And, like everything this year, the meeting is virtual, so public presentations can be made without leaving the house.

More information about the Meeting will be posted on the Meeting Page as it becomes available.

Notwithstanding FDA’s earlier efforts touting the benefits of outsourcing facility registration, here,  there are less than 75 registered facilities.  Almost the same number of outsourcing facilities have opened – and shut – their doors since the passage of the 2013 Drug Quality and Security Act (Title I) (DQSA), which created the outsourcing facility registration category and set forth statutory parameters for their operation.  In addition to those statutory parameters within the DQSA, FDA has published multiple guidance documents dictating additional confines in which outsourcing facilities should function.  Why are not more drug manufacturers or pharmacy compounders jumping at the chance to enter into this novel, unique drug space?  FDA recently published in the Federal Register a notice seeking comments on certain information collection activities in order to better understand issues facing  outsourcing facilities.  See “Activities; Proposed Collection; Comment Request; Obtaining Information To Understand Challenges and Opportunities Encountered by Compounding Outsourcing Facilities (85 Fed. Reg. 36857 (June 18, 2020) (Docket No. FDA–2019–N–3077).  FDA recognizes that, “Five years since its creation, this domestic industry is still relatively small and is experiencing growth and market challenges.”  The Agency further notes that there continues to be drug quality issues concerning the products manufactured at outsourcing facilities.  FDA is soliciting comments on proposed information collection associated with FDA “research” to obtain information from pharmacists and other management at outsourcing facilities, and related compounding businesses, to “support a comprehensive analysis of the outsourcing facility sector that will inform ongoing FDA work in this area.”  More specifically:

FDA intends to engage in several initiatives to address challenges and support compliance and  advancement.  One initiative includes conducting in depth research to understand better the challenges and opportunities encountered by the outsourcing facility sector in a number of different areas. These include: Operational barriers and opportunities related to the outsourcing facility market and business viability; knowledge and operational barriers and opportunities related to compliance with Federal policies and good quality drug production; and barriers and opportunities related to outsourcing facility interactions with FDA.

85 Fed. Reg. 36858.  FDA intends to pose the following types of questions during its research activity, and believes 300 respondents will participate, with total burden of 600 hours.  The types of issues that FDA intends to consider in its research include the following:

1. What financial and operational considerations inform outsourcing facility operational and business model decisions?
2. What factors impact the development of a sustainable outsourcing facility business?
3. What financial and operational considerations inform outsourcing facility product decisions?
4. Do outsourcing facilities understand the Federal legislative and regulatory policies that apply to them? What, if any, knowledge gaps need to be addressed?
5. What challenges do outsourcing facilities face when implementing Federal current good manufacturing practice (CGMP) requirements?
6. How do outsourcing facilities implement quality practices at their facilities?
7. How is CGMP and quality expertise developed by outsourcing facilities? How do they obtain this knowledge, and what training do they need?
8. What are the economic consequences of CGMP noncompliance/product failures for outsourcing facilities?
9. What are outsourcing facility management and staff views on current interactions with FDA? How do they want the interactions to change?
10. What are outsourcing facilities’ understanding of how to engage with FDA during and following an inspection?

The comment period will be open for 60 days (until August 17, 2020).  This blogger believes other considerations that FDA’s researchers may want to ponder include exactly what outsourcing facilities are permitted to compound, and whether limitations of exactly what an outsourcing facility can used in compounding affects market entry decision making.  In addition, researchers may want to consider the effect on market entry of the “Bulks List 1 (i.e., permissible substances) significant “limitation” on what outsourcing facilities may compound.  Simply put, Bulks List I is woefully “short” – and getting shorter —  when compared to the substances that can be used in compounding by Section 503A pharmacies (even given statutory limitations on compounding “essentially copies” of commercially available drug products).  FDA’s removal of substances from Bulks List 1, after significant investment by outsourcing facilities (i.e., stability and other studies) to ensure the safe, appropriate use of such substances, likely stifles not only innovation in the space, but also the facility’s ability to engage in the expenditure of resources to compound the drug product in the first instance.  This likely affects the ability of outsourcing facilities to engage in profitable compounding opportunities, especially when one considers the effect of FDA’s drug approval status for certain bulk substances on the potential removal of those FDA approved “substances” from FDA’s Bulks List 1 (i.e., vasopressin and others).  Among other significant “market” issues, researchers also may want to consider the effect of the vague “Prohibition on Wholesaling” statutory provision on the ability of outsourcing facilities to sell for resale their safer, cGMP-quality formulations to compounding pharmacies and doctors’ offices.  In addition, FDA should also consider the effect of myriad state licensing requirements on outsourcing facilities’ market entry.  States and FDA have not coordinated registration, licensing or other regulatory requirements.  As two significant examples, some states require pharmacy licensure notwithstanding the DQSA’s provision stating that pharmacy licensure is not required (but operations must be supervised by a licensed pharmacist).  Other states do not permit co-location of an outsourcing facility and a traditional FDA-registered drug manufacturer, notwithstanding FDA’s Facility Guidance that permits such co-location.  If outsourcing facilities want a stake in the discussion, please submit comments to docket number FDA-2019-N-3077, linked here.

The U.S. Departments of Agriculture (USDA) and Health and Human Services (HHS) work together to update and release the Dietary Guidelines for Americans (Dietary Guidelines) every five years. (See our post about the 2015 Dietary Guidelines here.)  Each edition of the Dietary Guidelines is intended to reflect the current state of nutrition science and provide advice on what to eat and drink to promote public health and reduce risk of chronic disease. The 2015-2020 Dietary Guidelines for Americans  are currently in effect until the 2020-2025 Dietary Guidelines are released.

The Dietary Guidelines Advisory Committee (DGAC) is tasked with providing USDA and HHS with a scientific review of specific topics and supporting scientific questions on nutrition and health. While the final report of the scientific review was expected on June 17, 2020, instead the DGAC hosted a webinar outlining its findings and providing an understanding of what might be in the final report to be presented to USDA and HHS in July.  To put it simply (and this won’t surprise anyone who spent time looking at the food pyramid on the back of your cereal box) the  current advice remains eat more vegetables, fruits, whole grains, nuts, legumes, seafood, and lean meat; and eat less added sugars, refined grains, sodium, and red and processed meats. And drink less alcohol.

Concerns have been raised that the DGAC is influenced by industry and the current administration.  Those with concerns point in part to the issues that the scientific report will not address, including red meat, sodium levels,  and the impact of food production on the environment.  There are, however, two recommendations discussed in the June 17, 2020 webinar that are surprising given those concerns.  The first is the recommended amount of energy from added sugars. The 2015-2020 Dietary Guidelines recommended no more than 10% of energy intake be from added sugars (recall that this forms the basis of FDA’s reference daily intake value for added sugars). This year’s recommendation seems to be 6% of energy, which is even less than the level recommended by the WHO.

On the issue of alcohol, for those who already drink alcohol, the DGAC recommends no more than one drink per day – “at all levels of consumption, drinking less is generally better for health than drinking more.”  This is a change from prior years, when the recommendation for men who drink alcohol was two drinks or less per day.

The final scientific report by DGAC due in July 2020 is a resource that helps to inform the final Dietary Guidelines — it is not a draft of the Dietary Guidelines.  The next step in the Dietary Guidelines process is the forwarding of the final and full scientific report to HHS and USDA in July, followed by a period of public comment.   HPM will keep you abreast of the process as it moves forward.

As we previously reported, the Made in the USA claim, as a voluntary claim on consumer goods, including products under FDA jurisdiction such as foods, over-the-counter drugs, and cosmetics, continues to be a popular advertising claim.  Generally, FTC enforcement actions regarding unqualified Made in the USA claims have been limited to closing letters and orders enjoining companies from making false and misleading Made in the USA claims.  In these actions, the FTC relied on the standard for such claims laid out in FTC’s 1997 Enforcement Policy Statement on US Origin Claims.

Last year, the FTC received a Petition requesting that it  issue a rule for Made in the USA claims.  As the Petition pointed out, the FTC Act provides the FTC with the authority to issue a rule for “Made in the U.S.A.” product labels at 15 U.S.C. § 45a.  Importantly, violations of such a rule would be treated as a violation of a rule under 15 U.S.C. 57a, allowing the FTC to seek not only an injunction but also civil penalties.

In fall of 2019, the FTC held a public workshop and collected public comments covering three aspects of Made in the USA claims: (1) consumer perception of such claims; (2) concerns about the FTC’s current enforcement approach; and (3) potential changes to the FTC’s enforcement strategy.  A report of that workshop was published on June 19, 2020 and is available here.

Also on June 19, 2020, FTC announced a notice of proposed rulemaking for the unqualified Made in the USA claim.  Consistent with the 1997 Policy Statement and the various consent orders, the proposed rule will prohibit marketers from including unqualified Made in USA claims on product labels unless:

• final assembly or processing of the product occurs in the United States;
• all significant processing that goes into the product occurs in the United States; and
• all or virtually all ingredients or components of the product are made and sourced in the United States.

The proposed regulation would not preempt state law that sets higher standards.

The proposed rule does not apply to all advertising claims, as the FTC’s authority regarding Made in the USA claims is limited to claims on product labels.  Interestingly, the rule extends beyond claims made on product labels to Made in the USA claims appearing in “mail order catalogs or mail order advertising.”  That term is defined as “materials, used in the direct sale or direct offering for sale of any product or service, that are disseminated in print or by electronic means, and that solicit the purchase of such product or service by mail, telephone, electronic mail, or some other method without examining the actual product purchased” that “include[] a seal, mark, tag, or stamp labeling a product Made in the United States.”

Commissioner Phillips and  Commissioner Wilson issued statements, here and here, asserting that the scope of FTC’s authority under 15 U.S.C, § 45a does not extend to online and mail order claims as that provision refers to product labels, not to other labeling or advertising.

Comments may be submitted until 60 days after publication of the proposed rule in the Federal Register.

In recent months, the Food and Drug Administration (FDA) has issued a record number of Emergency Use Authorizations (EUAs) under Section 564 of the Federal, Food, Drug, and Cosmetic Act (FDCA).  With a large number also pending, this review pathway is becoming almost common for a wide range of products, predominantly devices, although drugs and biologics are also eligible.

In this light, some questions of law and policy already settled regarding 510(k) submissions or premarket approval (PMA) applications may need to be re‑analyzed to determine if the answer is the same in the EUA context.  With the COVID emergency likely to continue for some time, these questions will not soon disappear.

Today, we tackle the question of whether a company may lawfully advertise a device with an EUA pending (prior to issuance of the EUA)?  For more than 40 years, FDA’s policy has been that a device with a 510(k) pending may be advertised (promoted) prior to clearance.  In Compliance Policy Guide (CPG) 300.600,

FDA considered the question of judging when a device has entered commercial distribution (not interstate commerce).  This question was central to qualifying for “preamendment” status by being “on the market” as of May 28, 1976.  (The policy was issued in 1978.  Obviously, this question is no longer very important.)

The answer FDA gave was that a device would be considered in “commercial distribution” if it had been (i) displayed, advertised or offered for sale for a non‑research/investigational use and (ii) the manufacturer had accepted or was prepared to accept an order “that resulted, or would have resulted, in a contract of sale for the device in the United States, generally with delivery to occur immediately or at a promised future date.”  So a willingness to contract or entering into actual contractual agreements was deemed an essential element of commercial distribution.

In the same policy, FDA stated that, as a derivation from this analysis, devices with a 510(k) pending are not considered to enter commercial distribution if they are advertised (meeting required condition (i)) so long as no orders for sale are solicited or accepted (defeating required condition (ii)).  The policy statement itself does not address orders contingent on obtaining a 510(k) clearance, but FDA historically has taken the position that such orders satisfy required condition (ii) and constitute an element of commercial distribution.

At first blush, it would seem relatively straightforward to apply this policy to EUAs.  An EUA authorizes the introduction of a device into interstate commerce.  It is essentially a substitute legal permission in the absence of 510(k) clearance or PMA approval.  Therefore, if promoting a device (without taking orders) is permissible in the 510(k) pending context, it is logical to apply the same rule in an EUA pending context.

But there is a complication to consider:  FDA’s policy only explicitly applies to devices with a 510(k) pending.  FDA has never said that it applies to devices with a PMA pending.  The EUA pathway, however, applies to all device types.  A device with an EUA pending could be 510(k)‑able, but it might also be one that is ordinarily required to obtain PMA approval.  The pathway depends upon the device technology and indications for use.  If the device is novel, the ultimate classification may not yet be decided.

It can be replied that FDA has never said the 510(k) pending policy is not applicable to PMA‑pending devices.  In fact, there is not an obvious basis for excluding PMA‑pending devices from policy in CPG 300.600.  This policy is based upon a determination that advertising a device is a necessary but not sufficient activity to put it into commercial distribution.  That determination would logically apply to PMA‑pending devices as well.  Also, the policy in CPG 300.600 was formulated in the context of a question that only implicated 510(k)‑eligible devices.  Therefore, FDA did not have occasion in CPG 300.600 to address devices that require PMA approval.

Nor has FDA had much occasion since that time to address whether CPG 300.600 extends to PMA‑pending devices.  The reason is that a provision in the Investigational Device Exemption (IDE) regulation prohibits all promotion of an investigational device (21 C.F.R. § 812.7).  Most devices requiring PMA approval require a supporting IDE study, thereby triggering this prohibition.  In short, even if CPG 300.600 were to be extended to PMA­‑pending devices, it is largely a moot point, because the IDE regulation flatly forbids promotion of a device while it is investigational.

So what does all this mean in the EUA context?  It appears that the general rule of thumb should be that a device with an EUA pending, just like a device with a 510(k) pending, may be promoted prior to issuance, provided that purchase orders are not solicited or accepted.

A more difficult question is whether § 812.7 prohibits promotion of an EUA‑pending device if the same device was or is under IDE study.  Take the strongest case, in which the indications for use in the IDE study (and eventual PMA application) are the same as the EUA indications.  (That will not be entirely true in many cases, because an EUA must focus on fighting the pandemic.)  There is no doubt that § 812.7 prohibits promotion of the investigational device.  Does it apply to the same device with an EUA pending?

In my view, the prohibition against promotion of the investigational device does not apply.  The question really comes down to whether the IDE regulation applies simultaneously to the investigational and EUA versions of a device.  One reason that the IDE regulation should be applied to the former but not the latter is that the two devices are not the same.  They may have the same technology and the same or similar indications, but the EUA device will be labeled differently.  Among other things, it will be labeled as an “EUA device” and not an “investigational device.”  That distinction is meaningful, because the IDE regulation only applies to investigational devices.  Things will get tangled up very quickly if the EUA device is subjected to the IDE regulation alongside the investigational device.

For instance, the IDE regulation requires that an investigational device be labeled “Caution:  Investigational Device.  Limited by U.S. Law to Investigational Use” (21 C.F.R. § 812.5).  If the IDE regulation were applied to an EUA device, then the EUA device would have to bear this caution as well.  That result would be nonsensical.

As another example, the IDE regulation requirements apply until the device receives clearance or approval.  What happens when the EUA is obtained and the EUA device begins to be advertised and shipped?  Does that end the investigational status of the device being studied?  Arguably, it would, if the EUA and investigational versions of the device are being treated as one and the same under the IDE regulation.  Therefore, it makes sense to acknowledge that the they are not the same and that the IDE regulation does not apply to the EUA version of the device.

Finally, as a policy matter, there is no need to fear that the investigational devices will be deployed “off­ label” for an advertised EUA use.  The use of the investigational devices is strictly controlled under the IDE regulation and must follow a written protocol.  Therefore, if an EUA device is advertised while the EUA is pending (or after issuance of the EUA), that cannot induce off-label use of the investigational device so long as the sponsors complies with the IDE regulation.

In short, under the analysis above, any device with an EUA pending may be advertised prior to issuance of the EUA.  Of course, FDA has not weighed in on this issue, so there is some regulatory uncertainty.  A company considering whether to advertise an EUA pending device should proceed with caution after careful consideration of all the circumstances.

CMS Proposed MDRP regulation:  In the Federal Register of Friday, June 19, CMS published a proposed rule to implement statutory amendments to the Medicaid Rebate Program statute, and to add CMS’s own policy proposals to encourage value based purchasing arrangements and discourage patient copay assistance.  The variety of topics covered in this rule include:

• Best price changes and other and other measures to encourage value based arrangements in Medicaid (and elsewhere)
• Additional regulations to implement the alternative rebate for line extensions, including an exceptionally broad definition of “new formulation” and a definition of “oral dosage form”
• Introduction of a new, problematic hurdle for claiming the best price exceptions for manufacturer coupon and other patient savings programs
• Clarification of the average manufacturer price (AMP) and best price treatment of rebates to Medicaid Managed Care plans that are not paid pursuant to a CMS-approved supplemental rebate program.
• Implementation of statutory amendments to exclude sales of authorized generics from the brand AMP, redefine single source and innovator source drugs to remove references to “original NDAs”; and redefine multiple source drugs to include OTC drugs that are covered outpatient drugs.

HPM has prepared a memo summarizing this wide-ranging rule (click here).

Federal District Court Decision on Base AMP Reset:  On the same day that CMS published its proposed rule, the Federal District Court for the District of Columbia issued a decision upholding CMS’s rejection of a base AMP reset by a drug manufacturer.  In Ipsen Biopharmaceuticals, Inc. v. Azar, Ipsen had obtained approval in 2007 for Somatuline Depot for the treatment of acromegaly.  In 2014, FDA approved two supplemental NDAs (sNDAs), one for changes in manufacturing and the container closure system, and the other for a new indication for treatment of gastroenteropancreatic neuroendocrine tumors.  Ipsen notified CMS that it intended to establish a new baseline AMP for the revised product, because the revisions were substantial and required two sNDA approvals.  CMS responded that the new version must assume the same base AMP as the original version, because the dosage form and strengths of the drug remained the same and they were marketed under the same NDA.  Ipsen ultimately filed suit against HHS, claiming that CMS’ decision was arbitrary and capricious and exceeded CMS’ statutory authority.  The Court upheld CMS’s position.  At least for drugs that are not subject to an alternative rebate for line extensions (because the original drug was not an oral dosage form drug), CMS’s bright line rule prevails:  a manufacturer may establish a new baseline AMP for a drug only if the manufacturer obtains approval (i.e., an NDA or BLA) for a new dosage form or strength of the drug.

It has been over three months since FDA issued its press releases stating that it was postponing most foreign and domestic facility surveillance inspections (see here and here).  Since then, apparently only “mission critical” surveillance inspections have taken place, leaving the bulk of registered facilities on FDA’s inspection list to await the agency’s eventual return.  While this might be good news for some drug facilities, it is creating an enormous headache for many more, including those that are currently listed as Official Action Indicated (OAI), since it is difficult to get a New Drug Application (NDA), Abbreviated New Drug Application (ANDA) or Biologics License Application (BLA) approved when one of the manufacturing facilities in a drug application is listed as OAI on FDA’s inspection database.

And it is nearly impossible for the review process to reach a successful conclusion if FDA finds that a manufacturing facility is exhibiting major deviations from current Good Manufacturing Practice, which is associated with an “unacceptable” state of compliance.  Worse yet, even if the OAI classification is associated with a manufacturer of an Active Pharmaceutical Ingredient, rather than that of a Finished Dosage Form, FDA may, and frequently does, block review of the NDA, ANDA and BLA for the finished drug product made with that API (or drug substance).

Without any public statements on this issue from FDA, it is difficult to understand why this bottleneck is occurring.  After all, FDA has had the statutory authority to conduct so called “paper inspections” since the Food and Drug Administration Safety and Innovation Act (FDASIA) was signed into law on July 9, 2012.  Section 706 of FDASIA (codified at 704(a)(4) of the Federal Food, Drug, and Cosmetic Act (FDCA)) specifies FDA’s authority to demand production of drug records remotely by the addition of the following text to the FDCA:

(4)(A) Any records or other information that the Secretary may inspect under this section from a person that owns or operates an establishment that is engaged in the manufacture, preparation, propagation, compounding, or processing of a drug shall, upon the request of the Secretary, be provided to the Secretary by such person, in advance of or in lieu of an inspection, within a reasonable timeframe, within reasonable limits, and in a reasonable manner, and in either electronic or physical form, at the expense of such person. The Secretary’s request shall include a sufficient description of the records requested. [emphasis added]

In addition, FDA has section 501(j) FDCA, which states that a drug shall be deemed to be adulterated:

If it is a drug or device and it has been manufactured, processed, packed, or held in any factory, warehouse, or establishment and the owner, operator, or agent of such factory, warehouse, or establishment delays, denies, or limits an inspection, or refuses to permit entry or inspection. [emphasis added]

In guidance that FDA published in October 2014, entitled Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug Inspection, FDA has interpreted section 501(j) FDCA as including some circumstances where inspection records are not provided by an establishment pursuant to 704(a)(4) FDCA.

“…[T]he ability to access and copy records is a critical aspect of FDA inspections. Not allowing an authorized representative of the FDA access to or copying of records that FDA is entitled to inspect by law, including not providing records that FDA requests pursuant to section 704(a)(4) of the FD&C Act, may be considered limiting an inspection.  Examples of records limitations include, but are not limited to…:

• A facility provides some, but not all of, the records requested by the FDA investigator that FDA has authority to inspect.
• A facility provides the FDA investigator the requested records that FDA has authority to inspect, but they are unreasonably redacted.
• A facility refuses to provide records that FDA requests pursuant to section 704(a)(4), or such records are unreasonably redacted.” [emphasis added]

In addition, on August 25, 2017, FDA published SMG 9004.1 “Policy and Procedures for Requesting Records in Advance of or in Lieu of a Drug Inspection” that outlines the relevant timeframes for receipt and review of establishment records, and the types of records that can be requested.

Hence, it is unclear why agency resources, which have not been used for on-site surveillance inspections for over 90 days, have not been quickly redirected, en masse, to “paper inspections” under section 704(a)(4) FDCA.  Nor is this simply an issue of FDA falling behind on inspections.

In the era of Covid-19 and anecdotal evidence of people hoarding medicines, the possibility of growing drug shortages has become a public health issue, and hence there is no excuse for further delaying approval of NDAs, ANDAs and BLAs due to FDA investigators who cannot travel to an OAI facility to perform a follow-up inspection.  To make matters worse, some of these facilities could be manufacturing the next drug or biologic that preliminary evidence shows is helpful in treating Covid-19 symptoms.*

*As a postscript, there are indeed avenues to seek marketing authorization if the drugs are on FDA’s Drug Shortage List, or are used to treat COVID-19.   Hyman, Phelps has extensive experience assisting clients in seeking Emergency Use Authorizations for pharmaceuticals and medical devices, even if the products are not approved (or, in the case of medical devices, cleared).   We also have advised clients who have sought permission to distribute drugs that are experiencing shortages, despite prior adverse findings by FDA.

The American Conference Institute (“ACI”) is sponsoring its annual Food Law Conference on July 15, 2020. Like a lot of conferences this year, the ACI conference format has changed from a live, in-person event to an interactive, virtual conference.

ACI’s Food Law conference is a unique, interactive forum where key legal, regulatory and compliance stakeholders for the food industry will gather to discuss how to best prepare for the future by examining current challenges, benchmarking existing strategies, and analyzing critical areas for innovation.

The “Who’s Who of the Food Law Bar” will give you critical insights as they discuss and analyze:

• Plant-Based “Meats” and “Milks”: Anticipating the FDA’s/USDA’s Regulatory Platform
• Status check on CBD and Cannabis for the Food Industry
• Analysis of the Current Trade and Tariff Environment on the Food Industry
• Social Media Think Tanks on the Role of Influencers/Virtual Influencers and User-Generated Content for the Food Industry
• Recalls and Crisis Management Integration War Room

Hyman, Phelps & McNamara, P.C.’s Riëtte van Laack will be speaking at a session titled “Food Law and Regulation 101: A Primer on Applicable Laws, Regulations and Key Agencies Having Authority over Food.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-825-825EX01. You can access the conference brochure and sign up for the event here.  We look forward to “seeing you at the conference.”

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.