Among FDA-regulated establishments and stakeholders, there is one word that makes everyone go on edge – the dreaded FDA “inspection.” In an effort to clarify for industry and alleviate some of the stress associated with these activities, last week the FDA issued a draft guidance aimed at providing recommendations on how to handle inspections under FDA’s Bioresearch Monitoring (BIMO) program. This draft guidance, titled “Processes and Practices Applicable to Bioresearch Monitoring Inspections,” was prompted by a congressional directive under the Food and Drug Omnibus Reform Act and is intended to provide recommendations that are not otherwise specified in existing publicly available guides and manuals for such inspections (see pgs. 11-12 of the guidance for a list of these resources).  It is critical that this guidance be reviewed in tandem with the guidance set forth in FDA’s Investigations Operations Manual (IOM) and the Regulatory Procedures Manual (RPM), both of which provide more detail about how FDA investigators conduct investigations and make decisions about a firm’s regulatory compliance.

As a reminder, the BIMO program oversees a wide range of activities related to FDA-regulated research, including human and animal studies, and covers the full gamut of FDA centers (CDER, CBER, CDRH, CFSAN, CTP, and CVM). BIMO inspections can consist of on-site inspections, data audits, and remote regulatory assessments of nonclinical laboratories, clinical investigators, sponsors, contract research organizations (CROs), bioequivalence facilities, institutional review boards (IRBs), and postmarketing surveillance. These inspections include unannounced or announced inspections conducted in support of FDA’s review of specific submissions or marketing applications or periodic establishment inspections and are conducted both domestically and internationally to monitor compliance with Good Laboratory Practice (GLP) and Good Clinical Practice (GCP).  In FY2023, FDA conducted over 1000 inspections under the BIMO program.

Below we highlight FDA’s views about best practices for BIMO inspection communications, handling requests for records, and inspection preparation and follow-up as outlined in the draft guidance.  We also detail some of our recommended best practices to achieve success when FDA comes knocking.

Pre-BIMO Inspection Communication Best Practices

• The FDA may provide a pre-announcement notice to ensure that the necessary records and personnel are available during the inspection and includes general information about what the FDA plans to review.
• Establishment staff should confirm arrival details with FDA investigators and provide a contact phone number. An establishment’s failure to acknowledge a pre-announcement notification is not a reason to delay the start of an inspection (see FDA’s revised draft guidance on Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug or Device Inspection).
• FDA investigators routinely share their names, titles, contact information, and, when appropriate, reasons for conducting the inspection. Establishment staff should take note of this information (either by writing it down or taking a picture of the investigator’s credentials).
• Establishments using electronic information systems to hold, analyze, process or transfer pertinent information should be prepared to provide FDA access to such systems.

Communication Best Practices During a BIMO Inspection

• Provide timely and accurate responses to information requests.
• Ask clarifying questions.
• Discussions between FDA investigators/personnel and establishment staff should include observation clarifications.

Post-BIMO Inspection Communication Best Practices

• Discuss inspection findings during an inspection close-out meeting. During this meeting, the FDA investigator will notify the establishment whether a Form FDA 483 will be issued with observations of objectionable conditions and practices identified during the inspection.
• If the FDA issues a Form FDA 483, the FDA “encourages” responses within 15 business days of the close-out of the inspection. Importantly, FDA notes in the draft guidance that any responses received within this window “will be considered before further Agency action or decision.”
• An establishment’s response to a Form FDA 483 should, in addition to being submitted within 15 business days of the close-out of the inspection:
  • Demonstrate the establishment’s acknowledgement and understanding of FDA’s observations and the establishment’s commitment (including from senior leadership) to address such observations.
  • Address each observation separately.
  • Note whether the establishment agree(s) or disagree(s), and why.
  • Provide both corrective and preventive actions (CAPAs) and timelines for completion.
  • Provide both completed and planned actions and related timelines.
  • Provide a method of verifying or monitoring the effectiveness of the actions.
  • Submit documentation as evidence of addressing the observations (e.g., training, standard operating procedure (SOPs), corrective action plans, records, etc.).
• Develop and implement corrective and preventive action plans to resolve issues.
• Document all corrective actions and follow-up to ensure sustained compliance.
• If an establishment has any questions about the FDA investigator, the establishment may request the contact information for the Office of Bioresearch Monitoring Operations (OBIMO) division management from the FDA investigator during the close-out meeting.
• If an inspected establishment has any questions about the inspection classification itself, such questions can be directed to the FDA center point-of-contact identified in the post-inspection correspondence or in the relevant compliance program.
• Unresolved concerns relating to an inspection can be directed to the ORA Ombudsman Program.

Other Inspection Best Practices

• Develop a clear SOP for inspections, including the roles and responsibilities of staff.
• Ensure all relevant records and data (whether electronic or otherwise) are readily accessible and organized for review. Delays in producing records without reasonable explanation may cause drugs or devices to be adulterated under the Food, Drug, and Cosmetic Act (see FDA’s revised draft guidance on Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug or Device Inspection).
• Foster open and transparent communication with FDA investigators and engage in proactive communication to clarify any potential issues or misunderstandings.
• Regularly review and update SOPs to reflect current regulatory requirements.
• Conduct internal audits to identify and address compliance issues before inspections.

• Maintain accurate and detailed records of all research activities, including raw data, test results, and correspondence.
• Ensure records are securely stored and protected from unauthorized access or tampering.
• Implement a robust data management system to track and retrieve records efficiently.
• Provide ongoing training for staff on regulatory requirements and inspection processes.
• Ensure staff are knowledgeable about their roles and responsibilities during inspections.
• Promote a culture of compliance and quality within the organization.

Comments on the draft guidance can be submitted to the docket by August 5, 2024.

Last month the Department of Justice and the Drug Enforcement Administration submitted a notice of proposed rulemaking to reschedule cannabis from schedule I under the federal Controlled Substances Act (“CSA”) to schedule III.  Hyman, Phelps & McNamara, P.C. Director Larry Houck will participate as a panelist focusing on this timely topic in the Food and Drug Law Institute’s (“FDLI’s”) “High Time for a Change: Implications of DEA’s Proposed Marijuana Rescheduling” webinar June 12, 2024, 2:00-3:30 pm ET.  The live webinar will dissect the proposed rule and address potential implications for the cannabis industry, state regulation, research and social justice and equity.

Information and registration is available at the conference webpage here.

It seems as though we cannot get through a week without hearing about controlled substance diversion by employees at another hospital or healthcare facility.

We learned this week that Palomar Health, one of California’s largest healthcare districts, agreed to pay $250,000 to resolve allegations that numerous vials of fentanyl had been diverted from automated medication dispensing machines over a five-month period and that the hospital did not properly dispose of unused fentanyl.  Palomar Health self-disclosed to DEA that one of its employees may have diverted the fentanyl.  The hospital also “entered into a Memorandum of Agreement with the DEA requiring Palomar Health to undertake additional measures to increase security, implement specialized training, and to handle controlled substances properly and safely.”  DEA, Palomar Hospital Pays $250,000 for Diverting Fentanyl (June 3, 2024).

We also became aware that First Choice Surgical, an ambulatory surgical center in Cedar Rapids, Iowa, agreed to pay $125,000 to resolve allegations it failed to maintain complete and accurate records and failed to provide effective controls to guard against theft and diversion of controlled substances.  Employees discovered in August 2019 that a registered nurse removed fentanyl from vials, replaced fentanyl with saline, and returned the vials to storage.  The nurse pled guilty to charges related to the theft and was sentenced to five years of probation.  An investigation also identified 130 separate occasions in which the surgical center allegedly violated recordkeeping requirements and failed to timely report the fentanyl theft to DEA after learning about it.  DOJ, Iowa Surgical Center Agrees to Pay $125,000 to Resolve Allegations It Violated the Controlled Substances Act (June 4, 2024).

Recent employee diversion of significant controlled substance quantities from hospitals and healthcare facilities has resulted in large civil monetary settlements, some in the millions of dollars, and the undertaking of costly compliance remediation to resolve allegations.  Controlled substances are a necessary component in providing needed medical care to patients, and recent employee diversion incidents illustrate the continued vulnerability of hospitals.  Hospitals that are non-compliant and fail to fulfill their controlled substance obligations pose serious health risks to patients for undertreatment and to employees for overdose and death.  Employee diversion can result in unwanted local and national publicity.

I will be presenting “Hospital/Healthcare Facility Controlled Substance Diversion,” focusing on this timely topic, at the World Conference Forum’s 2024 Opioid & Fentanyl Abuse Management Summit in Chicago on July 12^th.  Attendees will learn:

• How employees diverted significant controlled substance quantities in some high-profile cases
• Red flags that were missed
• Safeguards to minimize internal diversion risks
• Best practices for maximizing diversion detection

Click here to learn more about the Opioid & Abuse Management Summit.

The FDA’s new rule for laboratory developed tests (LDTs), unless overturned through litigation (see here), by legislation, or the election, is going to have profound effects on the U.S. health care system.  At this point, nobody knows all the impacts the rule will have.  But even FDA acknowledges that some labs will go out of business, some tests will be discontinued, there will be some consolidation of the industry, and costs will be higher.  It is absolutely foreseeable that the LDT rule will reduce innovation for new tests, make it harder for labs to modify tests, and make it much less likely that patients with rare diseases or conditions will be correctly diagnosed.

There is another foreseeable impact: sports doping will be harder to detect.  In the preamble to the rule, FDA has maintained an exemption for forensic tests, which it states is exclusively for “law enforcement.”  As the rationale for this limited exemption, the preamble says, “[t]ests used in the law enforcement setting are subject to protections and requirements associated with the judicial process that mitigate risk related to test accuracy and sample collection.”  FDA makes it crystal clear that this exemption does not apply to sports testing.  See 89 Fed. Reg. 37286, 37298 (May 6, 2024) (here).  In other words, labs that offer tests to catch cheaters will need to comply with the full panoply of device requirements.

As a threshold matter, FDA’s approach fails to recognize that sports testing, as now conducted, does involve numerous safeguards.  FDA’s exemption for forensic testing is based on the checks and balances that the judicial system provides.  While major sports leagues do not have a judicial process, there are significant technical and procedural safeguards in place, with processes negotiated with unions.  The U.S. Anti-Doping Agency (USADA) also follows extensive policies and procedures to try to ensure accuracy of test results.  For example, in the recent suspension of swimmer Kensey McMahon (announcement here), the USADA press release explained that an independent arbiter had rendered a decision after an evidentiary hearing where both the athlete and USADA were provided a full opportunity to present their case and witnesses.  FDA’s preamble completely ignores these types of measures, which differentiate sports testing from other settings for drug testing.

The world of performance enhancing drugs (PEDs) has been characterized by innovation.  Over the years, many new drugs have become available to would-be cheaters.  Historically, PEDs were thought of as steroids alone, but in recent years new types of PEDs, including experimental peptides like BPC-157 have entered the market.  See here. News outlets have also reported that with the emergence of artificial intelligence, it is possible for would-be cheaters to develop new PEDs to evade outdated drug tests.  See here.  LDTs, because they can be rapidly developed, validated, and deployed, are well‑equipped to identify these new PEDs.

Conversely, speed and flexibility are not hallmarks of the device regulatory system.  New PEDs can emerge quickly.  While an LDT can be rapidly introduced to address these new products or any variations to them, FDA-regulated diagnostics cannot.  Barring a complete overhaul in FDA’s approach, the comprehensive testing that would be needed before a marketing application can be submitted for a new PED and the extensive FDA review process, means that new 510(k)s simply can’t quickly be obtained.  Moreover, the high regulatory costs and niche market may mean these tests are uneconomical for manufacturers, barring significant subsidies from customers such as sports leagues or the U.S. Olympic Committee.

While overlooked now, this issue may get more visibility with the upcoming Paris Olympics, new stories about cheating in sports (see, e.g. here), and the run-up to the 2028 Olympics in Los Angeles.  If the current FDA approach remains in place, it is difficult to see how the USADA (or World Anti-Doping Agency) will be able to keep up in the race with sports dopers.  Without LDTs, U.S. companies will not be able to provide comprehensive panels that include the newest PEDs.  Setting up satellite facilities in other countries to run the tests for the LA Olympics might be feasible, although embarrassing and less efficient.

Maintaining integrity in sports has become increasingly challenging.  FDA’s rule adds one more hurdle to those who are trying to catch cheaters.  Because FDA’s LDT rule is short on specifics, the agency could easily decide to extend enforcement discretion to sports testing.  If it does not, then the bodies responsible for trying to hold sports doping in check are going to face new obstacles as they try to detect and punish cheaters.

Today’s email brings an interesting, and somewhat confusing settlement of what should have been an ordinary antikickback statute case, and may bring about a clash between what many companies do and what the government may be objecting to.  Or, perhaps your loyal blogger is reading too much into a brief settlement document.

The facts of the settlement are rather simple.  DePuy Synthes, a subsidiary of J&J, was alleged to have given a Massachusetts spine surgeon named Tony Tannoury spinal implants and tools worth thousands of dollars in order to secure his business.  In 2023, DePuy paid $9.75 million to resolve these allegations.  (I remember when a $9.75 million settlement meant something.  These days, I barely read the papers if it’s less than a billion.  Also, stay off my lawn you durn kids.)  All of this is very routine and not terribly interesting.

Now, here’s where things get crazy kids.  Dr. Tannoury was alleged to have performed surgeries using these products in the Kingdom of Saudi Arabia, Lebanon, and Qatar.  However, there is not a single allegation in the settlement agreement that Dr. Tannoury was paid for these surgeries.  Now, the implication may be that he was, and it was this profit that induced him to favor DePuy products with his patients who were covered by Medicare and Medicaid in the United States.

But what if there’s more here?  Reading the settlement agreement, much like reading tea leaves, leaves me with the vague feeling that if the giving of the free devices and tools was sufficient to allege the kickback, and hence the allegation that Dr. Tannoury violated the False Claims Act, that the government could use the same theory for other, benign arrangements.  Walk with me a minute.

A thought exercise:  A company, at the behest of a key opinion leader, donates product to the doctor which the doctor takes overseas to treat sleeping sickness in Africa.  Or donates products to a surgeon to fix cleft palates in Ukraine.  In neither case is the donation to a charity per se, but it is being done for charitable purposes.  The KOL looks kindly on the company and uses its products, but that wasn’t the intent of the donation.  Is this problematic where the company intends to benefit the patients and not the physician?

Obviously, the easy way around this is to donate the equipment to a legitimate charitable organization, and companies should ensure that they do so, particularly in light of this settlement.  Because while one might assume that Dr. Tannoury was treating royals or other people in power, if in fact he was treating people in need, and not financially benefitting from these surgeries, does it really make sense to punish him?

FDA’s Office of Women’s Health (OWH) recently celebrated its 30th anniversary.  This office was formed in 1994 to promote the inclusion of women in clinical trials and to provide leadership on topics related to the health of women.  Given that FDA was founded in 1906 and the Federal Food, Drug and Cosmetic Act went into effect in 1938, the OWH’s thirty years of existence, while an important milestone, constitutes a very small amount of time to be focused on the health of fifty percent of the population. The implication of this is that many women living today have spent the majority of their lives receiving healthcare that may not have been developed with the unique health needs of women in mind or tested in a representative number of women.

In celebration of the OWH anniversary, FDA Commissioner Dr. Robert Califf, and Associate Commissioner for Women’s Health and Director of the Office of Women’s Health, Dr. Kaveeta P. Vasisht, recently shared a statement, Protecting and Advancing the Health of Women Through Policy, Research, Education and Outreach, highlighting the work of the OWH.  The OWH has been involved in funding women’s health research projects, advocating for sex as a biological variable in research design, promoting diversity and inclusion of women in clinical trials, and championing better health outcomes on conditions that disproportionately, differently, or uniquely impact women.

The OWH is updating the Women’s Health Research Roadmap, in support of the Executive Order on Advancing Women’s Health Research and Innovation released by President Biden earlier this year.   The roadmap will provide a science-based framework to address research questions relevant to women’s health and to encourage research activities by FDA and other federal agencies to consider women’s health.

The Executive Order establishes the White House Initiative on Women’s Health Research (Initiative) within the Office of the First Lady to accelerate research related to women’s health.  The Initiative includes requirements for:

• Furthering integration of women’s health research in federal research programs,
• Prioritizing federal investments in women’s health research,
• Galvanizing research on women’s midlife health, and
• Assessing unmet needs to support women’s health research.

We are honored to have helped many companies bring to market FDA-regulated products that are intended specifically for women, or have been adequately tested in both men and women to ensure both groups can rely upon the results of clinical studies presented in product information. With the White House Initiative and programs offered by OWH, we look forward to supporting continued innovation in this important space.

Last week, the United States Court of Appeals for the District of Columbia ruled that Section 340B of the Public Health Service Act does not prohibit pharmaceutical manufacturers from imposing conditions on the distribution of discounted drugs to covered entities in the program.  In United Therapeutics Corporation v. Carole Johnson, et al./Novartis Pharmaceuticals v. Carole Johnson (consolidated cases), the Court found that the conditions set by Novartis and United Therapeutics on covered entities did not violate the 340B statute, although more restrictive conditions could violate the law.

The 340B statute requires drug manufacturers to sell certain drugs at discounted ceiling prices to covered entities, which are defined by statute to include certain types of safety net hospitals, health centers, and clinics receiving federal grants.  Initially, drug manufacturers were required to offer these discounts only to the in-house pharmacies of covered entities.  In 2010, the Health Resources and Services Administration (HRSA) authorized covered entities to contract with an unlimited number of retail pharmacies to fill prescriptions for their patients.  Over the ensuing years, drug manufacturers argued that extensive networks of contract pharmacies led to diversion of 340B drugs to non-340B patients, excessive profits to contract pharmacies, and abuses of the system at manufacturers’ expense.   The issue came to a head in 2021, when HRSA threatened enforcement against manufacturers who tried to limit shipments of their 340B drugs to covered entity’s in-house pharmacy and a single contract pharmacy.  A number of drug companies sued to enjoin enforcement.  We have blogged about this controversy in previous posts (see e.g., here and here).

Novartis and United Therapeutics Corporation sued in the D.C. District Court and won, prompting a government appeal to the D.C. Circuit.  In affirming the District Court’s ruling, the D.C. Circuit held that the 340B statute does not prohibit manufacturers from limiting distribution of discounted drugs via contractual terms.  The Court concluded that the 340B statute requires manufacturers to “offer” to sell covered drugs to covered entities at or below a specified “price,” but is silent about delivery.  The Court reasoned that this silence allows sellers to enforce certain delivery conditions, stating that “this silence preserves—rather than abrogates—the ability of sellers to impose at least some delivery conditions.”

However, the D.C. Circuit’s decision only addressed the specific conditions imposed by Novartis and United Therapeutics.  The Court found that the 340B statute’s requirement that manufacturers make an “offer” means at least a bona fide offer, and that “some conditions may be onerous enough to effectively increase the contract ‘price,’ thus perhaps nudging it above the statutory ceiling” such that it violates the 340B statute.  The Court was “confident” that the courts can adjudicate questions regarding what conditions would violate the 340B statute, should they arise in other cases.

The D.C. Circuit joins the Third Circuit, which decided in favor of manufacturers on similar grounds (see here).  Other drug manufacturers are awaiting a decision in a pending Seventh Circuit case.  If the Seventh Circuit reaches a different conclusion than the Third Circuit and D.C. Circuit, this circuit split would create a high likelihood that the issue would go to the Supreme Court.  Manufacturers have won this most recent battle, but whether they will win the war will depend on the rulings of other appellate courts and whether the Supreme Court will grant certiorari.

Drug manufacturers must also contend with the growing number of states seeking to prohibit drug manufacturers from imposing restrictions on 340B contract pharmacies.  Six states have enacted contract pharmacy protections into law: Kansas, Maryland, Mississippi, and West Virginia in 2024, Louisiana in 2023, and Arkansas in 2021.  Bills are pending in other states, including Missouri and New York.  We recently wrote about the Eighth Circuit’s decision to uphold the Arkansas law against a constitutional challenge brought by the Pharmaceutical Research and Manufacturers Association (PhRMA) (see here).  There, the Court held that the Arkansas law was not preempted by the 340B statute or the Federal Food, Drug, and Cosmetic Act.  This decision may encourage more state-level efforts to adopt similar laws.  To the extent states successfully enact and defend their contract pharmacy protection laws, drug manufacturers’ victories against HRSA in federal courts, including the recent D.C. Court decision, may be rendered inconsequential.

Hyman, Phelps & McNamara, P.C. (HPM) proudly announces the return of Jennifer Newberger as a Director, further boosting its already robust medical device practice. Jennifer’s combination of experiences as in-house counsel for both large and start-up companies as well as outside counsel provides clients invaluable expertise and problem-solving skills.

Jennifer has deep experience helping clients in matters including development of regulatory strategy, preparation of regulatory submissions, development and implementation of policies and procedures, review of advertising and promotional materials, regulatory aspects of commercial transactions, and responding to enforcement matters from FDA or other agencies.

On the premarket side, in addition to the preparation of pre-submission and submission materials for FDA, Jennifer assists clients in responding to inquiries from FDA during the review process and participating in meetings with clients to address FDA concerns. On the postmarket side, she advises clients on regulatory compliance matters, including complaint handling, MDRs, field actions, promotional review, and QSR compliance. Jennifer also helps clients with contract matters, regulatory due diligence, and public filings. She also specializes in medical device software and digital health.

“Jennifer’s return adds depth and breadth to our device practice and her strong relationships from her earlier time at the firm has made for a seamless reentry,” said J.P. Ellison, Managing Director at HPM.

Jennifer was with the firm from 2011-2017, before leaving for in-house roles at Apple, Abbott Laboratories, and Cognito Therapeutics. At Apple, she led executive-level meetings, including with the Chief Operating Officer, regarding regulatory and legal challenges associated with shipping regulated health features. She also managed the cross-functional team responsible for obtaining Apple’s first de novo authorizations for the ECG app and irregular rhythm notification.

With her return to the firm, she can now utilize her recent in-house experience to help HPM’s diverse client base solve complex problems.

“Having worked with Jennifer for six years previously, I am truly excited to have her return.  She was an outstanding lawyer before, and her in-house experience will provide even greater breadth and depth of expertise to medical device manufacturers,” notes Jeffrey Gibbs, HPM Director.

On May 15th and 16th, respectively, Senator Rand Paul and Congressmen Brad Finstad and Dan Crenshaw introduced Senate and House resolutions “providing for congressional disapproval under chapter 8 of title 5, United States Code” of FDA’s Final Rule to regulate Laboratory Developed Tests (LDTs). These resolutions are the first step in the (unlikely) process to repeal FDA’s Final Rule using the Congressional Review Act (CRA).

Under the CRA, regulations can be repealed by Congress with a simple majority within 60 legislative days of a rule’s submission to Congress for review. However, the President must sign the resolution, if passed, or else it must pass over the President’s veto by a two-third’s majority.

A rule subject to an enacted joint resolution of disapproval does not take effect (or continue to take effect) and also “may not be reissued in substantially the same form, and a new rule that is substantially the same … may not be issued, unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution.” 5 U.S.C. 801(b)(2).

Because the Democratic Party currently holds a majority in the Senate and President Biden would almost certainly veto the joint resolution if it passed, it is highly unlikely these resolutions will garner enough support to be enacted.

Even if the upcoming elections result in a change in Presidential Administration or composition of the Senate, FDA’s Final Rule would be ineligible for review under the CRA, as the 60 legislative days will have elapsed by January 2025. As many observers have noted, this is probably one of the key reasons the FDA rushed to issue the Final Rule as quickly as it did.

Thus, if the current Congress wants to take legislative action to repeal FDA’s Final Rule, it will likely need offer substantive legislation as a substitute for the regulation (e.g., the VALID Act, which has continued support from some members of Congress; or efforts to modernize CLIA)

In the meantime, the rule could be subject to litigation. A new Presidential Administration could also seek to rescind the rule using notice-and-comment rulemaking, which would need to survive potential legal challenges under the Administrative Procedure Act. FDA is relying heavily on the withdrawal of enforcement discretion to implement the rule.  A new administration could therefore basically decide that it will instead simply decide to exercise enforcement discretion, which would effectively put the regulatory requirements on hold.

The Final Rule is on track to go into effect 60 days from its May 6, 2024 publication date and the first phase-out stage is scheduled to take effect on May 6, 2025.  The lab industry should be watching closely for litigation and legislative developments.  If the current version of the Final Rule remains intact, they will need to develop a plan for implementing the first set of requirements in the coming months.

We recently blogged about the Center for Devices and Radiological Health’s (CDRH) reluctance to make full use of real-world data (RWD) and real-world evidence (RWE) to support marketing applications.  In response to the post, we did receive feedback from a company that had had the good fortune to have very positive experiences with RWD/RWE.  In the interest of fairness, we want to report that FDA was very receptive to the use of that information in several different applications.  (In the interest of fairness, we also heard from others who had the opposite experience.)

On the one hand, it is good to know that CDRH is capable of taking full advantage of RWD/RWE and using it to meet the data requirements.  This company’s positive experience was with a particular Division, with which one of us also had a positive experience with RWD/RWE.

On the other hand, it is frustrating to know that while CDRH is capable of utilizing RWD/RWE to meet data requirements, it does so sporadically and inconsistently.  It is not clear why one company’s experiences with a Division have not been consistently replicated across the Center.  And it is even more concerning that in the recent proposed ban of electrical stimulation devices, CDRH has publicly taken such a negative stance towards RWD/RWE, applying criteria that RWD/RWE will never be able to satisfy.

So, we appreciate the feedback from the reader that had such favorable outcomes with its RWD/RWE.  Perhaps someday that will be the norm, rather than the exception, and therefore not newsworthy.

Last August Health and Human Services (“HHS”) recommended rescheduling marijuana from schedule I under the federal Controlled Substances Act (“CSA”) to schedule III.  We wondered how given that HHS and the Drug Enforcement Administration (“DEA”) conducted eight-factor scheduling analyses in 2016, concluding that there was “no substantial evidence that marijuana should be removed from Schedule I.”  Denial of Petition to Initiate Proceedings to Reschedule Marijuana, 81 Fed. Reg. 53,688 (Aug. 12, 2016); Denial of Petition to Initiate Proceedings to reschedule Marijuana, 81 Fed. Reg. 53,767 (Aug. 12, 2016).  By recommending rescheduling to schedule III seven years later, HHS determined that marijuana no longer meets schedule I nor schedule II criteria.

The 2016 reviews concluded that marijuana continued to meet schedule I criteria for having a high potential for abuse, no currently accepted medical use in treatment in the U.S., and lacked accepted safety for use under medical supervision.  21 U.S.C. § 812(b)(1).  For HHS to recommend rescheduling marijuana to schedule III, it must find that marijuana has a potential for abuse less than substances in schedules I and II, has a currently accepted medical use in treatment in the U.S., and its abuse may lead to only moderate or low physical dependence or high psychological dependence.  21 U.S.C. § 812(b)(3).

Even though President Joe Biden had asked the Secretary of HHS and the Attorney General to “initiate the administrative process to review expeditiously how marijuana is scheduled under federal law” in October 2022, we also wondered how the Department of Justice (“DOJ”) and DEA would receive the HHS recommendation.  On Thursday, May 16, 2024, the Attorney General issued a Notice of Proposed Rulemaking (“NPRM”) to initiate rulemaking proceedings to reschedule marijuana.  The NPRM was signed by the Attorney General but published by DEA in the Federal Register on May 21, 2024.  Schedules of Controlled Substances: Rescheduling of Marijuana, 89 Fed. Reg. 44,597 (May 21, 2024).  The Attorney General also released DOJ’s Office of Legal Counsel (“OLC”) opinions providing the rationale and support for the NPRM.

The Attorney General, after considering HHS’ recommendations, “concludes that there is, at present, substantial evidence that marijuana does not warrant control under schedule I.”  NPRM at 44,619.  The Attorney General further determined “at this initial stage” of rulemaking that marijuana also does not meet schedule II criteria but its lower degree of abuse potential and moderate to low level of physical dependence weighs in favor of rescheduling to schedule III.  Id. at 44,620.

Public comments must be submitted electronically or postmarked on or before July 22, 2024, 60 days after publication in the Federal Register.

Findings

The CSA requires analysis of eight statutory factors for scheduling, rescheduling, or descheduling substances of abuse.  21 U.S.C. § 811(c).  DOJ reviewed HHS’ scientific and medical evaluation and scheduling recommendation and conducted a separate review of the eight factors.  NPRM at 44,601.  The NPRM 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 DEA’s position is that additional information during the rulemaking will further inform about the appropriate schedule for marijuana.  DEA further 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.

The eight factors with a summary of relevant findings follow.

1. Marijuana’s Actual or Relative Potential for Abuse

HHS determined that although epidemiological data indicate that marijuana has the potential for creating health hazards for the user and the community, its abuse liability compared with heroin (schedule I); oxycodone, hydrocodone, fentanyl, cocaine (schedule II); ketamine (schedule III), benzodiazepines, zolpidem, tramadol (schedule IV) and alcohol, marijuana does not produce the most frequent incidence of adverse outcomes.  Memorandum for DEA, from HHS, Re: Basis for the Recommendation to Reschedule Marijuana to Schedule III of the Controlled Substances Act, at 9 (Aug. 29, 2023) (“Basis”); NPRM at 44,603.

2. Scientific Evidence of Marijuana’s Pharmacological Effects, If Known

HHS found that marijuana abuse can lead to negative consequences that include addiction and the need for medical attention through poison center calls or emergency room visits.  Basis at 18; NPRM at 44,605.

3. The State of Current Scientific Knowledge Regarding Marijuana

HHS found that marijuana’s pharmacokinetic profile varies depending on the route of administration.  Basis at 24.  DEA noted that “there is considerable variability in the cannabinoid concentrations and chemical constituency among marijuana samples and that the interpretation of clinical data related to marijuana is complicated.”  NPRM at 44,607.  DEA explained that “the lack of consistent concentrations” of delta-9-THC and other substances in marijuana complicates the effects of different constituents within marijuana.  Id.

4. Marijuana’s History and Current Pattern of Abuse

HHS found that marijuana used for medical and nonmedical purposes in the U.S. is extensive but its use prevalence is less than for alcohol but “significantly more” than any other controlled substances.  Basis at 37; NPRM at 44,610.

5. The Scope, Duration, and Significance of Abuse

HHS’ evaluation of epidemiological databases related to medical outcomes from drug abuse placed marijuana in a lower position than alcohol, heroin, and cocaine.  Basis at 45; NPRM at 44,613.

6. What, if Any, Risk There Is to the Public Health

HHS found based on an evaluation of various epidemiological databases for emergency department visits, hospitalizations, unintentional exposures, and overdose deaths that public health risks posed by marijuana are low compared to other drugs of abuse.  Basis at 7-8; NPRM at 44,614.

7. Marijuana’s Psychic or Physiological Dependence Liability

HHS concluded that “experimental data and clinical reports demonstrate that chronic, but not acute, use of marijuana can produce both psychic and physical dependence in humans.”  Basis at 61; NPRM at 44,615.

8. Whether Marijuana Is an Immediate Precursor of a Substance Already Controlled Under the CSA

HHS concluded that marijuana is not an immediate precursor of another controlled substance.  Basis at 61; NPRM at 44,615.

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In addition to the eight factors, HHS provided three additional findings for determining the scheduling placement of marijuana:

1. Potential for Abuse

HHS conducted epidemiological analyses of marijuana abuse and its associated harms by comparison with heroin, fentanyl, oxycodone, hydrocodone, cocaine; ketamine, benzodiazepines, zolpidem, tramadol, and alcohol.  Basis at 62-63; NPRM at 44,616.  HHS found that while marijuana is associated with a high prevalence of abuse of nonmedical use, epidemiological indicators suggest that the drug does not produce negative outcomes as serious as those compared with schedule I or II drugs.  Basis at 62.  HHS concluded that marijuana is most appropriately controlled in schedule III.  Id. at 63.

The Attorney General considered HHS’ recommendations and conclusions and gave HHS’ scientific and medical determinations binding weight at this early stage in the rescheduling process.  NPRM at 44,616.  The Attorney General concurs for purposes of the initiation of rulemaking proceedings that marijuana has less potential for abuse than schedule I and II drugs.  Id.

2. Currently Accepted Medical Use in Treatment in the U.S.

In 2016, HHS and DEA determined that marijuana did not have a currently accepted medical use (“CAMU”) in treatment in the U.S. because it was not the subject of an approved new drug application (“NDA”) nor an abbreviated new drug application (“ANDA”) under the Federal Food, Drug, and Cosmetic Act.  Lacking an NDA or ANDA, DEA applied a five-part test established in 1992 and found that marijuana did not meet that alternative test either so therefore lacked a CAMU.  Denial of Petition at 53,700-02; Denial of Petition at 53,779-81.

In 2023, HHS conducted a different approach, a two-part test, to determine whether marijuana has a CAMU.  The Office of the Assistant Secretary for Health (“OASH”) found that more than 30,000 healthcare professionals “are authorized to recommend the use of marijuana for more than six million registered patients, constituting widespread clinical experience associated with various medical conditions recognized by a substantial number of jurisdictions across the United States.”  Basis at 24; NPRM at 44,617.  (Thirty-eight states authorize marijuana for specific qualifying medical conditions.)  OASH concluded “there is widespread current experience with medical use of marijuana in the United States” by licensed healthcare providers “operating in accordance with implemented state-authorized programs, where such medical use is recognized by entities that regulate the practice of medicine under these state jurisdictions.”  Basis at 63; NPRM at 44,617.  For OASH, the findings warranted a Food and Drug Administration (“FDA”) assessment under a second part to determine if credible scientific evidence supports at least one of the medical conditions.

The FDA reviewed studies investigating the safety and efficacy/effectiveness of marijuana, professional societies’ position statements, data from state medical marijuana programs and national surveys, and FDA-approved products’ labeling.  Basis at 63-64.  FDA analyzed anorexia related to a medical condition, anxiety, epilepsy, inflammatory bowel disease, chemotherapy-induced nausea and vomiting, pain, and post-traumatic stress disorder.  Basis at 63; NPRM at 44,617.  HHS concluded that “there exists some credible scientific support for the medical use of marijuana in at least one” of the following indications: the treatment of anorexia related to a medical condition, nausea and vomiting (e.g., chemotherapy-induced), and pain for which there is a widespread current experience in the U.S.  Basis at 64; NPRM at 44,619.

HHS noted that lack of accepted safety for the use of a drug under medical supervision is among schedule I criteria but concluded that there is accepted safety for the use of marijuana under medical supervision for the treatment of anorexia related to a medical condition, nausea, and vomiting (e.g., chemotherapy-induced), and pain.  Basis at 64.  HHS concluded that marijuana does not meet schedule I criteria.  Id. at 64.

The Attorney General asked OLC to advise whether HHS’ test and findings established a CAMU if a drug has not been approved FDAFDA nor meets DEA’s five-part test.  NPRM at 44,617.  OLC advised that DEA’s determination of whether a drug has a CAMU is “impermissibly narrow, because it ‘ignor[es] widespread clinical experience with a drug that is sanctioned by state medical licensing regulators.’”  Id.  OLC opined that satisfying HHS’ two-part inquiry is sufficient to establish a CAMU and that while HHS’ recommendation is not binding on DEA, the medical and scientific determinations are binding until initiation of formal rulemaking proceedings, and DEA must accord those determinations “significant deference” throughout rulemaking.  Id.

The Attorney General agreed that there is widespread clinical experience with marijuana for at least one medical condition and concurred with HHS that for purposes of initiating rulemaking, marijuana has a CAMU.  Id. at 44,617, 44,619.

3. Level of Physical or Psychological Dependence

HHS conceded that clinical studies demonstrate that marijuana produces physical and psychological dependence, and abuse may lead to moderate or low physical dependence depending on the frequency and degree of marijuana exposure.  Basis at 64-65.  But while exposure can produce psychic dependence, HHS noted that the likelihood of serious outcomes is low.  Basis at 65; NPRM at 44,619.  The Attorney General considered HHS’ conclusions and gave HHS’ scientific and medical determinations binding weight at the initial rulemaking stage, and concurred with HHS’ conclusion that the abuse of marijuana may lead to moderate or low physical dependence depending on frequency and degree of exposure.  NPRM at 44,619.

“Marijuana” Subject to Rescheduling

The proposed rescheduling would only apply to marijuana (drug code 7360) defined under the CSA (21 U.S.C. § 802(16)) and regulated by 21 C.F.R. §1308.11(d)(23) and marijuana extracts (drug code 7350) regulated by 21 C.F.R. §1308.11(d)(58).  Id. at 44,620, 44,622.  Rescheduling would also apply to delta-9-tetrahydrocannabinol (“THC”) derived from the marijuana plant (not from the mature stalks and seeds) that falls outside the definition of hemp.  Id.

The proposed rescheduling would not apply to synthetically derived THC outside of the CSA definition of marijuana, which would remain in schedule I.  Id.  HHS’ recommendation related only to marijuana as defined in the CSA.  Rescheduling would also not apply to unscheduled hemp or any previously schedule synthetic cannabinoids.  Id.

International Treaty Obligations

Prior rescheduling proceedings established that marijuana could not be rescheduled in any less restrictive schedule than schedule II for the U.S. to comply with its treaty obligations.  The United States is a signatory to the Single Convention on Narcotic Drugs, 1961, and the Convention on Psychotropic Substances, 1971.  Marijuana is a schedule I substance under the Single Convention and delta-9-THC is a schedule II substance under the Convention on Psychotropic Substances. Id. at 44,620-21

The Attorney General, based on OLC advice, concluded that marijuana could be rescheduled to schedule III, and that DEA would consider supplementing schedule III requirements with additional marijuana-specific controls such as manufacturing quotas and import and export authorizations to satisfy treaty obligations.  Id.

On May 21, 2024, the EveryLife Foundation for Rare Diseases (ELF) will host a Scientific Workshop at the National Press Club in Washington, D.C. aimed at identifying and characterizing the challenges in developing therapies for ultra-rare diseases and conditions that affect exceedingly small populations.

The workshop will drive in-depth discussions from leaders across federal agencies, the patient advocacy community, industry, academia and policy to examine the current state of drug development for patients with ultra-rare diseases and identify the considerations and implications of establishing a formal statutory definition and framework for “ultra-rare.”

Speakers at the Scientific Workshop will include Dr. Peter Marks, Director of FDA’s Center for Biologics Evaluation and Research, Dr. Janet Woodcock, former Principal Deputy Commissioner of the FDA, Dr. Janet Maynard, Director of the FDA’s Office of Rare Diseases, Pediatrics, Urologic and Reproductive Medicines, and Dr. Joni Rutter, Director of the National Center for Advancing Translational Sciences, and Hyman, Phelps & McNamara’s own Frank Sasinowski who also serves as the Vice Chair of the Board for ELF.

The workshop is free to attend and available to all.  Due to limited spacing, new registrants must attend virtually.  More information on the Scientific Workshop can be found here and registration for the live-stream can be found here.

Employee diversion of controlled substances from hospitals has been an issue since at least 1986 when I became a diversion investigator with the Drug Enforcement Administration (“DEA”).  But there has been a recent string of large civil monetary settlements, some in the millions of dollars, to resolve allegations that hospitals’ non-compliance with the federal Controlled Substances Act (“CSA”) and DEA regulations allowed employees to divert staggering quantities of controlled substances.  These recent monetary settlements and diverted quantities are eye-opening; in some instances they are staggering.  It is unclear whether such large employee diversion has always occurred but was unreported or if there has been an actual dramatic increase of large incidents.

Numerous recent examples of large monetary settlements and significant controlled substance doses illustrating the following:

• Press Release– DEA investigated the University of Michigan Health System (“UMHS”) after a nurse and an anesthesiology resident overdosed, the nurse fatally. DEA alleged that UMHS failed to maintain complete and accurate records and failed to timely notify DEA of controlled substance thefts.  DEA concluded that UMHS’ deficient recordkeeping impacted its ability to guard against theft and diversion.  UMHS agreed to resolve the allegations in August 2018 for $4,300,000 and compliance with a three-year Memorandum of Agreement (“MOA”).
• Press Release– DEA alleged that McLaren Health Care Corporation (“MHCC”), also in Michigan, dispensed schedule II drugs without prescriptions despite red flags, violated recordkeeping requirements, and failed to timely report employee thefts to DEA. In January 2021, MHCC agreed to pay $7,750,000 and comply with a comprehensive three-year MOA.
• Press Release– Sovah Health (“Sovah”), a hospital system in Virginia, agreed to pay $4,360,000 and entered into a Non-Prosecution Agreement in June 2022 after a pharmacy tech diverted more than 11,000 schedule II doses and another 1,900 schedule III-V doses. A registered nurse also admitted she replaced fentanyl and hydromorphone with saline solution for administration to patients.  DEA alleged that Sovah failed to provide effective controls and procedures to guard against diversion, filled controlled substance orders without a system to disclose suspicious orders, and failed to maintain readily retrievable records.  Sovah also agreed to four years of increased controlled substance compliance and oversight.
• Press Release– DEA alleged that Pikeville Medical Center (“PMC”) failed to maintain complete and accurate schedule II inventories and dispensing records that allowed a pharmacy tech to divert 62,780 schedule II doses. The tech’s husband distributed the drugs in the community..  The Kentucky hospital resolved the allegations for $4,394,600 and entered into a three-year MOA in November 2021.
• Press Release– DEA began investigating Cheshire Medical Center (“CMC”) in New Hampshire in February 2022 after it reported that a nurse stole twenty-three fentanyl intravenous solutions (“IV”) bags. CMC later reported an additional 634 fentanyl IV bags were unaccounted for and an audit revealed an additional 17,961 controlled substance doses missing.  The nurse who allegedly stole the drugs died in March 2022.  CMC resolved the allegations by agreeing to pay $2,000,000 and implement a corrective action plan.

Controlled substances are a necessary component in hospitals providing needed medical care to patients.  However, these recent employee diversion incidents cases illustrate the vulnerability of hospitals.  Even trusted employees are capable of bad behavior.  Hospitals that are non-compliant and fail to fulfill their controlled substance obligations pose serious health risks to patients for undertreatment, and to employees for overdose and death.  Hospitals can face potentially multi-million-dollar settlements and significant long-term compliance costs.  Employee diversion can result in unwanted local and national publicity leading to erosion of public trust and confidence.

Ownership and management would do well to ensure that their hospitals’ comply with controlled substance recordkeeping, reporting and security requirements under the CSA and DEA regulations.

On April 29, the FDA issued their long-awaited, controversial Final Rule governing the oversight of laboratory developed tests (LDTs). This new rule will dramatically alter the LDT regulatory landscape, while at the same time requiring significant operational changes and posing strategic challenges for many LDTs. The final rule also created exemptions for some other LDTs.

Join us at 12:00 p.m. EDT, Thursday, May 16, as Hyman, Phelps & McNamara, P.C. attorneys Gail H. Javitt and Jeffrey N. Gibbs—in conjunction with Jon Harol of Lighthouse Labs—dive into details of the final rule and its timeline for implementation. Don’t miss this chance to get a breakdown of this significant regulatory shift and its implications.

In this webinar you’ll learn:

• Significant changes between the proposed and final rule
• How the current enforcement discretion approach for LDTs will affect you
• A timeline for the rollout of the rule’s five phases
• Get your questions answered by the experts during the live Q&A

Don’t delay, click here to register today!

FDA has long touted the use of real-world evidence (RWE).  Extolling RWE, FDA has said “RWE can be leveraged to bring new products to market, evaluate the safety and effectiveness of existing products for new uses, and assess the continued performance and safety of products once on the market.”  FDA recognizes the potential of RWE to support regulatory submissions of medical devices and to inform benefit-risk analysis of such products, while assuring patients have timely access to devices.  FDA has even gone so far as to maintain that the “real-life clinical performance of a medical product might be more clearly demonstrated through RWD/RWE because a controlled clinical trial often cannot evaluate all applications of a product in clinical practice across the full range of potential users.”  However, in our experience, there is a large gap between FDA’s lauding the value of RWE and practice.

FDA defines real-world data (RWD) as “data relating to patient health status and/or the delivery of health care routinely collected from a variety of sources.”  RWE is “the clinical evidence regarding the usage, and potential benefits or risks, of a medical product derived from analysis of RWD.” RWD can be collected from a wide range of sources, such as electronic health records, registries, administrative claims, pharmacy data, and feedback from wearables and mobile technology.

FDA acknowledges that such data offer opportunities to generate evidence and better understand clinical outcomes.  In fact, in 2018, FDA emphasized that leveraging the use of RWD and RWE in regulatory decision-making is “a top strategic priority for the FDA.”  FDA believes that RWE has the power to “accelerate medical product development and bring new innovations and advances faster and more efficiently to the patients who need them, without compromising patient safety.”  Further, FDA has stated that enabling advanced data analytics, including RWD, is one of the objectives incorporated in the FDA’s Information Technology Strategy for FY 2024-2027.

We, and many stakeholders, agree that RWD and RWE can play an invaluable role.  However, based on our experience reviewing device premarket submissions and engaging with FDA, we have found that reviewers have not embraced it in practice.  Rather than looking at how RWD/RWE provide meaningful information on safety and effectiveness, reviewers often focus on perceived gaps.  But by their very nature, RWD/RWE will have some gaps compared to randomized controlled trials.

Congress has recognized the challenges with FDA’s acceptance of RWD and RWE.  It was Congress that intervened in 2022, to mandate FDA to issue or revise its 2017 guidance on considerations for the use of RWD and RWE to support regulatory decision-making for devices to clarify its regulatory expectations.  Also, under the MDUFA V commitment letter, FDA was directed to continue development of RWD and RWE methods and policies to advance regulatory acceptance for premarket submissions by updating and clarifying the recommendations in the 2017 guidance, and providing RWD/RWE training for FDA review teams, among other things.

In December 2023, FDA issued a new draft guidance on RWE, which updates and clarifies how FDA evaluates RWD to determine if it is sufficient to be used in regulatory decision-making for devices and provides updated recommendations for sponsors collecting RWD.  This guidance, when finalized, will replace the original version of this document finalized in 2017.

Of course, as FDA has itself acknowledged, RWE can offer some significant compensatory advantages.

FDA states it has a long history of using RWD and RWE in its regulatory decision-making for devices and conducted a sample analysis of the range of RWE that have been used in regulatory decisions in premarket submissions.  Based on a review of premarket submissions made in 2012 through 2019, FDA identified 90 examples of 510(k)s, De Novos, HDEs, and PMAs approved/cleared which utilized RWE in support of regulatory decision-making.  During this period the estimated total number of such submissions was approximately 26,121.  Based on this data set, RWD/RWE were identified by FDA as being used in a trivial 0.34 percent of examples.

This statistic is consistent with our experience.  Similar to FDA’s assessment, we have found very few examples where FDA has used RWE as the basis for making a positive regulatory decision in a premarket submission.  Not only has FDA not accepted RWD in some cases, it has even raised the evidentiary bar by requiring a clinical study as the only adequate means.

FDA’s proposed ban of electrical stimulation devices (ESD) is a case in point. FDA is proposing to ban the device, citing the absence of “large, randomized, and controlled trials, or even any large or randomized trials.”  (89 FR 20882 at 20889, March 26, 2024).  In taking this approach, FDA expressly rejected the adequacy of the substantial amount of RWD available.  Patients that use ESD undergo continuous 24/7 monitoring.  There is ample data collected on them during this 24/7 monitoring period such as case notes, contemporaneous patient medical records, and patient tapes.  Every use of ESD is recorded, as is every behavior that falls within the intended use.  Patients are continually monitored for safety.  Far more data are collected at the site than would ever be available in a registry or other source of RWD.  Nonetheless, FDA entirely discounted this information and has concluded that the available evidence is not enough to establish ESDs are effective and that instead “randomization, control, [and] large numbers of subjects” should be relied on for understanding the benefit-risk profile of ESDs (89 FR 20882 at 20890).  FDA’s rejection of all RWD supporting GED in favor of randomized controlled trials cannot be squared with its broader policies.  Device stakeholders would be right to be troubled by the inconsistency between FDA’s professed support for RWE and its very public rejection of it in the proposed ban.

We recognize that there can be challenges with using RWD/RWE in regulatory decision-making.  However, despite FDA leadership’s efforts to recognize and encourage use of RWD and RWE, reviewers have not fully embraced RWD/RWE.  FDA’s brusque rejection of data obtained from 24/7 monitoring of patients, as set forth in its recent proposed ban, will do nothing to encourage reviewers to embrace RWD/RWE.

As FDA has noted, RWD/RWE has the potential to be relied on to evaluate the safety and effectiveness of products.  Yet that potential will never be realized unless reviewers are willing to accept RWD/RWE despite their limitations.  FDA’s recent public dismissal of the use of medical information obtained from continuous, 24/7 monitoring of patients does nothing to encourage reviewers to rely upon RWD/RWE when reviewing marketing submissions.