FDA recently finalized the guidance document, Postmarketing Safety Reporting for Combination Products (“PMSR Guidance”).  The PMSR Guidance addresses compliance with the final rule on postmarketing safety reporting (PMSR) requirements, 21 C.F.R. Part 4, Subpart B (“PMSR final rule”), for combination products.  This is a complicated area, so the guidance is welcome.

The PMSR Guidance begins with discussion of the different types of combination products because PMSR requirements vary depending on the combination product type.  A “single-entity” combination product is a product composed of two or more regulated components.  A “co-packaged” combination product includes two or more separate products packaged together.  A “cross-labeled” combination product is a drug, device or biological product packaged separately from other constituents and, according to its investigational plan or proposed labeling, is “intended for use only with an approved individually specified drug, device or biological product where both are required to achieve the intended use, indication or effect and where upon approval of the proposed product the labeling of the approved product would need to be changed.” PMSR Guidance at 3.

The PMSR final rule applies to two types of applicants:  Combination Product Applicants and Constituent Part Applicants.  When there is a single marketing authorization for a combination product, or multiple authorizations held by the same entity, the applicant of the marketing authorization(s) is a Combination Product Applicant.  In the case of cross-labeled combination products where different applicants hold marketing authorizations for the different constituent parts, these applicants are Constituent Part Applicants.  It is important to note that a company is a Constituent Part Applicant “only if that entity holds an application to market that product as a constituent part of a combination product.” Id. at 6.

Both Combination Product Applicants and Constituent Part Applicants are required to submit application type-based reports.  Additionally, constituent part-based reporting requirements are applicable to Combination Product Applicants and information sharing is required for Constituent Part Applicants.  For Combination Product Applicants, additional reporting requirements are based on the constituent types.  For example, a single-entity or co-packaged combination product approved in an NDA that includes a drug and device constituent is subject to safety reporting requirements described in 21 C.F.R. Part 314 for the drug and also to five-day reporting requirements, malfunction reporting requirements and correction and removal reporting requirements described in 21 C.F.R. Part 803 and 21 C.F.R. Part 806 for the device.  The guidance uses the term “Individual Case Safety Reports” (ICSR) to describe a “report of an event experienced by an individual user of a combination product, including adverse events and malfunctions.” Id. at 10.

The PMSR Final Rule and PMSR Guidance describe an approach for streamlined reporting.  Where reports can be submitted in the same manner and satisfy all applicable requirements, including submission timelines, a single report may be used to comply with more than one reporting requirement.  The PMSR Guidance clarifies that “in the same manner” means that a report is “submitted in the same way (e.g., electronic, paper submission) and to the same recipient group within FDA (e.g., via a common electronic gateway).” Id. at 23.

There are not many substantive changes in the final PMSR Guidance compared to the draft.  Expanded discussions are provided for five-day reports, malfunction reports and combination product ICSRs for foreign events or experiences to offer greater clarity.

The final rule was published in December 2016, establishing an effective compliance date for application type-based PMSR requirements as January 19, 2017.  The final rule also established a compliance date of July 19, 2018 for constituent part-based PMSR requirements and associated recordkeeping.   However, FDA has issued Immediately in Effect Guidance, Compliance Policy for Combination Product Postmarketing Safety Reporting, first in March 2018 and subsequently in April 2019, but is delaying enforcement.  FDA does not intend to enforce requirements for constituent part-based PMSR requirements, the submission process for constituent part-based ICSRs or recordkeeping requirements until the following dates:

• July 31, 2020, for Combination Product Applicants using the FDA Adverse Event Reporting System (FAERS) and Electronic Medical Device Reporting System (eMDR) to report ICSRs
• January 31, 2021, for Combination Product Applicants using the Vaccine Adverse Event Reporting System (VAERS) to report ICSRs

The delayed enforcement should give Combination Product Applicants time to update procedures and infrastructure to allow for the increased reporting requirements.

Overall, the PMSR Guidance provides detailed explanations and numerous helpful examples for navigating the complex requirements for postmarketing safety reporting for the various combination product types for both Combination Product and Constituent Part Applicants.

Developing drugs for kids with rare diseases is important work. If you would like to hear from one of these kids, check out this video: “My Philosophy for a Happy Life,” by the late Sam Berns.

Offering priority review vouchers to sponsors that develop new drugs for children with rare diseases is an important incentive program that has wide support.  This week, FDA published a revised draft guidance of the original November 2014 draft guidance titled, “Rare Pediatric Disease Priority Review Vouchers, Guidance for Industry” (hereinafter “revised guidance”).  This revision was primarily intended to reflect more recent legislative changes from the Advancing Hope Act of 2016, as well as clarify several other aspects of the program.

New Requirements and Changes

The revised guidance is updated to reflect a number of post-2014 statutory updates.  First, the Advancing Hope Act created a requirement for sponsors seeking a rare pediatric disease priority review voucher (RPD PRV) to request the voucher upon submission of the rare pediatric disease product application.  This change clarifies that the voucher must actually be requested in the original NDA or BLA application.  Prior to this, even if the sponsor had not requested it, the FDA felt obligated to review an application and award an RPD PRV if it appeared to meet the requirements of the program.  This shifted the burden and responsibility from the Agency to the sponsor.

A second change from the Advancing Hope Act was the clarification that no sponsor of a rare pediatric disease product application may receive more than one priority review voucher issued under any section of the Federal Food, Drug, and Cosmetic Act for the same drug. This prevents a product for a rare disease that also happens to be a neglected tropical disease or medical countermeasure from getting two priority review vouchers for the same application.

The revised guidance also reflects that the 21st Century Cures Act of 2016 provides a sunset for the RPD PRV program so that FDA may not award any RPD PRVs after September 30, 2020, unless the rare pediatric disease product was designated by September 30, 2020 and subsequently approved by September 30, 2022.  After September 30, 2022, FDA may not award any RPD PRVs.  The program could possibly be extended in the future but that will require legislative action.

Re-Defining a “Rare Pediatric Disease”

Perhaps the greatest change in this revision is its incorporation of the new statutory definition of a “rare pediatric disease.”  The original definition stated that the disease had to “primarily affect individuals from birth to 18 years of age.”  FDA interpreted this to mean that sponsors were required to submit substantiating data that greater than 50% of the affected U.S. population with the disease were aged 0-18 years.  This original definition, not only being challenging to demonstrate, had unintended consequences.  The standard of care for certain rare diseases, e.g., sickle cell disease, has gradually improved the life expectancy of people with the disease. Currently, for some rare diseases, more than 50% of the people living with the disease are surviving into adulthood.  Children with the disease continue to be seriously affected but are living longer.  Under the old definition, these diseases would be excluded from being eligible for a voucher, contrary to the intent of legislators.  The new definition corrected this problem by stating that a rare pediatric disease is one where “the serious or life-threatening manifestations (of the disease) primarily affect individuals from birth to 18 years of age.”  Under this definition, a larger range of rare diseases that would not have qualified previously may now be eligible for vouchers.

What are Serious or Life-Threatening Manifestations?

This new statutory definition of rare pediatric disease hinges on the interpretation of the word “manifestations.”  The revised guidance states that manifestations are “expressions” or “symptoms” that are serious or life-threatening that occur during childhood (i.e., 0-18 years old) given current standard of care for pediatric patients.  Importantly, the guidance states that onset of a symptom is not enough, but it must progress to be serious or life-threatening while patients are children.  Then, to determine whether these manifestations “primarily affect children,” the guidance provides the following factors:

1. Timing and rate of disease progression (e.g., end-stage organ disease occurs in childhood);
2. Manifestations of abnormal growth or development; and
3. Whether the proportion of children is greater than the proportion of adults with the given manifestation.

These factors are consistent with our experience with qualifying rare pediatric diseases as such under this new statutory definition.

Needing to Show A Drug Is “For” Prevention or Treatment of a Rare Pediatric Disease

Given that rare pediatric diseases are now defined by their manifestations, FDA included a new section on what it means for a drug to be “for” the treatment or prevention of the disease.  The revised guidance does not require a drug to be studied in or approved for treatment of the manifestations that “primarily affect children,” but instead merely requires the drug to be approved for an indication that is clinically meaningful to pediatric patients with the disease (e.g., for treatment of some other serious or life-threatening manifestation, or if it treats the underlying cause of the disease generally).  Importantly, the guidance states that applications should include in their priority review voucher requests scientific justification for how the approved indication will be clinically meaningful to pediatric patients.

Clarifying the Requirement to Rely on Clinical Data from Studies in the Pediatric Population

The revised guidance also interprets and clarifies the requirement that the application “relies on clinical data derived from studies examining a pediatric population and dosages of the drug intended for that population.”  It shifts in its language, from saying that the application “must” have certain information, to stating that it “should” have it:

1. It should have been studied in a clinically meaningful pediatric population with the rare disease (although the studies may include adults in appropriate circumstances)
2. The pediatric data should have been critical to obtaining adequate labeling for the pediatric population in terms of safety, effectiveness, and dosage information (although data from studies including adults may also have supported the pediatric labeling in appropriate circumstances).

In addition, the revised guidance walks back in requiring labeling of the drug be for use by the full range of affected pediatric patients in all cases, now acknowledging there are reasonable exceptions.  For example, the guidance states that there may be instances where it is not reasonable to include all pediatric age ranges affected by the disease without causing undue delays in completing the studies and submitting the application.  FDA appears to be most interested in preventing sponsors from submitting data from a “token pediatric population” to try and justify meeting the requirements for a voucher.

The revised guidance also added the statement reminding sponsors that after getting an RPD PRV, they may still further develop the same drug for additional indications, including different adult indications, without losing the voucher.

Providing FDA Comments on the Revised Guidance

FDA is accepting comments on the revised draft guidance by September 30, 2019 here.

As we have previously reported (see here, here, and here) four states (Vermont, Colorado, Florida, and Maine) have passed laws to establish drug importation programs.  Reversing long-standing policy, the U.S. Department of Health and Human Services (HHS) announced on Wednesday, July 31, 2019 that HHS and the U.S. Food and Drug Administration (FDA) have developed a federal “Safe Importation Action Plan” proposing two pathways to allow for the importation of drugs from foreign countries.

Pathway 1 will allow States, wholesalers, and pharmacists to submit plans to HHS for demonstration projects that allow for the importation of certain drugs from Canada.  The demonstration projects must be designed to comply with the federal drug importation laws outlined in Section 804 of the Federal Food, Drug, and Cosmetic Act (FDC Act), 21 U.S.C. § 384.  As outlined in the Safe Importation Action Plan, HHS and FDA will publish a Notice of Proposed Rulemaking (NPRM) to address Section 804’s requirements, including those related to drug quality, record keeping, and product testing.  States, wholesalers, and pharmacists that participate in the demonstration projects will be required to certify that the drug importation poses no additional risk to the public’s health and safety and will result in significant cost reductions for covered products.  Drugs eligible for importation will be limited to drugs for sale in Canada that are versions of FDA-approved prescription drugs; such drugs must be manufactured with active pharmaceutical ingredients (API) manufactured at facilities that also manufacture API for the FDA-approved version.  Under the federal drug importation laws, controlled substances, biological products, infused drugs, intravenously injected drugs, drugs inhaled during surgery, and certain parenteral drugs are excluded from importation.  HHS and FDA also plan to exclude any drug with a REMS from the importation demonstration project programs.

The future NPRM will seek feedback on how States, wholesalers, and pharmacists can demonstrate that the drug importation programs will result in significant cost reduction for the covered drug products.  As we previously reported (see here), when faced with this same question, Vermont found that the costs of implementing a compliant drug importation program may outweigh any savings the state could hope to realize from importing lower cost drugs.  The Safe Importation Action Plan says that HHS and FDA will seek feedback on “the best way to identify the expected acquisition cost of the imported drug, the cost of assuring the drug is safely imported, and the mechanism for delivering those savings to the consumer (as opposed to the savings being absorbed by the supply chain).”

Pathway 2 will allow drug manufacturers to import versions of their FDA-approved drugs that are sold in foreign countries, “potentially allowing them to offer a lower price than what their current distribution  contracts require.”  In order to take advantage of this pathway, manufacturers will need to establish that the foreign version is the same as the U.S. version.  A manufacturer who meets the requirements of the pathway will be able to sell a foreign version of a drug product in the U.S. under a different NDC number than the U.S. version.  Importation of foreign versions is expected to occur using conventional supply channels, so the pathway will rely on applicable existing safeguards to ensure supply chain integrity.

Pathway 1 will be subject to notice and comment rulemaking, so the timeframe for when interested States, wholesalers, and pharmacists will be able to submit proposals for demonstration projects to HHS is currently unknown.  Further, once the rulemaking process is complete, HHS will need to approve any demonstration projects and importation programs before drugs can be imported from Canada.  HHS and FDA plan to implement Pathway 2 through guidance, so it is possible that manufacturers may be able to take advantage of this pathway more quickly.

The Safe Importation Action Plan is significant because Pathway 1 appears to reverse decades of opposition to the importation of drugs from foreign countries by pharmacies and distributors.  Since the enactment of FDC Act Section 804 in 2003, no administration, Democrat or Republican, has been willing to provide the necessary certification that importation under that section “will pose no additional risk to the public’s health and safety; and will … result in a significant reduction in the cost of covered products to the American consumer.”  This Administration is laying the groundwork for such a certification for individual demonstration projects if compliance with the statutory requirements and upcoming regulatory requirements can be demonstrated.

Pathway 2 is also significant because it would establish a new vehicle for the importation of drugs.  The Safe Importation Action Plan states that Pathway 2 will offer a way for manufacturers to offer lower cost versions of their drugs where they otherwise could not readily do so because they are locked into contracts with other parties in the supply chain.  Certain manufacturers have recently begun to market lower cost versions of their drugs under different NDCs, as an alternative to the existing higher-priced version but unaccompanied by rebates.  It is uncertain whether manufacturers who wish to offer lower cost versions of their existing drugs in the U.S. would find Pathway 2 more advantageous than simply introducing a new, lower cost version to the U.S. market (under a new NDC) without importing it.

We will continue to monitor and report on federal and state efforts to address drug pricing issues.

The American Conference Institute’s (“ACI’s”) popular “FDA Boot Camp” – now in its 34th iteration – is scheduled to take place from September 18-19, 2019 at The Bostonian Hotel, Boston, MA. The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.

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

• The organization, jurisdiction, functions, and operations of FDA
• The essentials of the approval process for drugs and biologics, including: INDs, NDAs, BLAs, OTC Approval, the PMA process and the Expedited Approval Process
• Clinical trials for drugs and biologics
• Unique Considerations in the approval of combination products, companion diagnostics, and stem cell therapies
• The role of the Hatch-Waxman Amendments in the patenting of drugs and biologics
• Labeling in the drug and biologics approval process
• cGMPs, adverse events monitoring, risk management and recalls

In addition—and new for 2019—are special focus sessions on:

• FDA’s Digital Health Initiative
• Opioid and Other Controlled Substances Classifications
• The Impact of the FDA Reauthorization Act on Drug Approvals

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst will co-chair the conference and will present in a session titled “Navigating the Approval Process for Drugs and Biologics.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-806-806EX01.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference.

Telemedicine platforms provide consumers and patients with convenient access to healthcare services. For this reason, the interest in and use of telemedicine services has increased significantly in recent years. While many discussions of the risks related to telemedicine focus on state laws and fraud and abuse concerns, FDA has begun to exercise its enforcement authority over telemedicine-related activities.

In this month’s issue of Compliance Today, Hyman, Phelps & McNamara, P.C. associates Serra Schlanger and Rachael Hunt provide an overview of FDA’s enforcement authority and discuss examples of its application in two recent cases.   Click here to read the article, Telemedicine: Understanding the FDA’s role in recent regulatory and enforcement actions.

FDA advisory panel meetings to review pre-market applications (PMAs) are high-stakes events.  While FDA is not bound by the vote of the advisory panel, it has been long-accepted that the agency typically follows the recommendation of the panel.

Which got us thinking:  are conventional wisdom and the data on PMA advisory decisions consistent? We previously looked at advisory panel data to see whether some seemingly minor procedural changes in panel voting had affected voting patterns.  The data suggested that these changes had had an effect, but not in the way most people would have predicted.  See our prior post here, and our prior article here.

Thus, we decided to take a closer look at the relationship between panel votes and the ultimate outcomes and time to resolution of PMAs.  Once again, the results were not what might have been expected.  For example, between the change in the panel voting system in 2010, and 2016, our study cut-off, 52 devices were reviewed by panels.  All but four of them were approved, even though roughly 25% of the individual panel votes had been negative. (Panels vote on safety, effectiveness, and benefit-risk.)  Not all of the devices that eventually got approved sailed through the process; for example, a new study might have been required.  Still, it is notable that all but four that got to the panel stage crossed the finish line. (And one of the four failures apparently went out of business after a unanimous, positive panel vote and before approval.)

What about the strength of the vote? Did that lead to shorter times to approval?  Eking out a positive 7-6 win on effectiveness is presumably different than a 13-0 vote. In fact, the data show that time to approval post-meeting tended to be faster with stronger panel support (p < 0.05).  Whether this is due to the influence of the final vote on FDA, or a narrow vote reflects more problematic data is unknowable.  There are findings of interest as well, but we won’t give them away. The full article is linked here.

In case you were wondering, looking at more recent advisory panels wouldn’t have much impact on the data.  In the past 2 ½ years, there have only been 7 PMA advisory panels: 2 in 2017, 5 in 2018, and not one so far in 2019.  (There have, however, been 9 device panel meetings covering other topics in the same time period, including 2 on pending de novo requests.)

PMAs are complicated, and each PMA has its own narrative and story. Moreover, votes are not all that matter. FDA officials always caution that they consider the comments by panel members, and not just their votes.  Nor should one gainsay the significance of panel votes on investors, clinicians, and others.  Furthermore, we looked at two factors – votes and approval, but other variables changed over time, e.g., FDA’s user fee commitment.  Even so, our research suggests that conventional wisdom sometimes needs a good dose of empirical scrutiny.

On July 8, 2019, U.S. District Court Judge Amit P. Mehta struck down a recently finalized Centers for Medicare & Medicaid Services (CMS) rulethat would have required drug pricing disclosures to be included in television advertisements for certain prescription drugs and biological products (the “Price Disclosure Rule”) (see our overview of the Rule here).  Judge Mehta’s decisioncame the day before the Price Disclosure Rule was set to take effect.

As we previously reported (here), three pharmaceutical companies (Merck, Eli Lily, and Amgen) and a trade association (the Association of National Advertisers) filed a lawsuit in June challenging the validity of the Price Disclosure Rule.  The companies argued that the Department of Health and Human Services (HHS) exceeded its authority in promulgating the Price Disclosure Rule, and that the Price Disclosure Rule is compelled speech that violates the First Amendment.  HHS had argued that two provisions of the Social Security Act (SSA) gave CMS authority to adopt the Price Disclosure Rule.

Though acknowledging that HHS may have a valid motive for issuing the Price Disclosure Rule, Judge Mehta found that HHS lacks the statutory authority to do so.  When the Price Disclosure Rule was issued, HHS acknowledged that the SSA did not expressly grant HHS the authority to “compel the disclosure of list prices to the public.”  As such, the Court analyzed whether Congress implicitly delegated such authority to HHS.  The Court looked to the language of the SSA and concluded that, although the SSA grants HHS general rulemaking authority related to the administration of the Medicare and Medicaid programs, that authority does not extend to regulating the marketing of prescription drugs, particularly because pharmaceutical manufacturers are “market actors that are not direct participants in the Medicare or Medicaid programs.”

The Court explained that HHS has never previously attempted to use the SSA to directly regulate the market for pharmaceuticals.  The Court recognized that Congress has previously legislated on the advertising of pharmaceutical products under the Federal Food, Drug, and Cosmetic Act (FDCA).  The Court also pointed to HHS’ “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs”, which stated that HHS may “[c]all on the FDA to evaluate the inclusion of list prices in direct-to-consumer advertising.”  The Court reasoned that “HHS at first believed that the FDA, presumably under the FDCA, would be the proper sub-agency through which to promulgate the [Price] Disclosure Rule, as opposed to CMS under the SSA.”  The Court ultimately determined that the Price Disclosure Rule was “far afield” of HHS’ rulemaking authority under the SSA.  As such, the Court concluded that HHS had exceeded its authority and the Price Disclosure Rule was deemed invalid and set aside.  Due to this disposition, the Court did not address the First Amendment argument.

We will continue to monitor this case and other efforts to address drug pricing.

While the federal government continues to debate the hot topic of drug prices, states continue to pass new laws designed to tackle drug pricing, price reporting, and discounting.  We’ve previously reported on the laws passed in California, Connecticut, Louisiana, Maryland, Nevada, New York, Oregon, Vermont (see here, here, and here).  We’ve also reported on the laws passed in Colorado, Florida, and Vermont to establish programs for importing drugs from Canada (see here and here).  To help our readers stay informed about state obligations, we’ve summarized below new laws in five states, all of which have been enacted during the past two months.

Colorado

HB 19-1131, which focuses on “Prescription Drug Cost Education,” was signed by Governor Jared Polis on May 16, 2019.  To address concerns that prescribers are unaware of drug costs, this new law requires drug manufacturers to provide information about drug prices and generic availability to prescribers.  More specifically, drug manufacturers (or their representatives) that share information about a product with prescribers must provide the prescribers with the drug’s wholesale acquisition cost (WAC) in writing.  Drug manufacturers (or their representatives) must also provide prescribers with the names of at least three generic prescription drugs from the same therapeutic class.  If three generic drugs are not available, the manufacturer or its representative must provide the names for as many as are available.  This law will take effect on August 2, 2019, unless a petition for referendum is filed.

Maine

Governor Janet Mills signed a package of four prescription drug related bills on June 24, 2019.

1. LD 1162 seeks to “further expand drug price transparency” by authorizing the collection of prescription drug price data from payors, providers, prescription drug manufacturers, wholesale drug distributors, and pharmacy benefit managers (PBMs). Previously, only payors and providers needed to report clinical, financial, and quality data.  In addition, beginning January 30, 2020, the new law requires drug manufacturers to provide notice to the state if (A) the WAC of a brand-name drug increased by more than 20% in the prior calendar year; (B) the WAC of a generic drug that costs more than $10 increased by more than 20% in the prior calendar year; or (C) a new drug was introduced with a WAC greater than the amount that would cause the drug to be considered a specialty drug under Medicare Part D (i.e., $670 per month).  Although the new law provides that information provided by a drug manufacturer, wholesale drug distributor, or PBM is confidential, this information will be used by the state to produce an annual report available on a publicly accessible website.  The report may not disclose information attributable to any particular manufacturer, distributor, or PBM, but will include trends in the cost of prescription drugs, analysis of manufacturer prices and price increases, the major components of prescription drug pricing along the supply chain, the impacts on insurance premiums and cost sharing, and other relevant information to provide greater consumer awareness of the factors contributing to the cost of prescription drugs.  The first report will be published on November 1, 2020.
2. LD 1272 seeks to “increase access to low-cost prescription drugs” by establishing a program to import prescription drugs from Canada. As with the three other states that have enacted similar laws (see here and here), Maine must obtain approval and certification for the proposed wholesale drug importation program from the U.S. Department of Health and Human Services.  The state’s request for approval and certification must be submitted no later than May 1, 2020.
3. LD 1499 establishes the new Maine Prescription Drug Affordability Board. The Board is tasked with (A) determining annual spending targets for prescription drugs purchased by public payors (e.g., health plans for state, county, or municipal government employees); (B) determining spending targets on prescription drugs that may cause affordability challenges to enrollees in a public payor health plan; and (C) determining which public payors are likely to exceed the spending targets.  The Board shall work with each public payor to determine methods for the public payor to meet the spending targets, including negotiating rebates for the prescription drugs that contribute most to excess spending, revising formularies, establishing a common prescription drug formulary for all public payors, purchasing prescription drugs in bulk or through a single purchasing agreement for use among public payors, and collaborating with other states and state prescription drug purchasing consortia.  The Board shall begin holding public meetings no later than March 1, 2020.  The Board’s first report, including its prescription drug spending targets and recommendations, is due by October 1, 2020.
4. LD 1504 seeks to protect consumers from unfair practices related to PBMs by replacing the current registration requirements for PBMs beginning on January 1, 2020. PBMs must obtain a license, which will be valid for three years.  Under the new rules, PBMs may not retain rebates paid by manufacturers and must pass those rebates along to the consumer or health plan.  In addition, a PBM may not require a patient to make “excess payments” at the point of sale for a covered prescription drug.  Excess payments include: (A) the applicable cost-sharing amount for the prescription drug; (B) the amount the patient would pay for the prescription drug if she purchased the prescription drug without using a health plan or any other source of prescription drug benefits or discounts; and (C) the total amount the pharmacy will be reimbursed for the prescription drug from the PBM or carrier, including the cost-sharing amount paid by a patient.

Maryland

After having its drug price gouging prohibition struck down by federal courts as unconstitutional (see our coverage here), Maryland enacted HB 768 on May 25, 2019.  This law creates a new Prescription Drug Affordability Board to protect state residents from the high costs of prescription drugs.  The Board will work with a new Prescription Drug Stakeholder Council consisting of 26 members from various groups, including generic and brand-name drug manufacturers, insurance carriers, PBMs, advocacy organizations, labor unions, and healthcare providers (e.g., pharmacists, physicians, nurses, dentists, and hospitals).  The Board plans to enter into Memoranda of Understanding with states that require reporting on the cost of prescription drugs in order to “aid in the collection of transparency data for prescription drug products.”

The new Board is tasked with identifying drugs that may create affordability challenges, including: brand name drugs or biologics that have a WAC of $30,000 or more per year or course of treatment at launch; brand name drugs or biologics that have a WAC increase of $3,000 or more in any 12-month period, or course of treatment if less than 12 months; biosimilar drugs that have a WAC that is not at least 15% lower than the reference brand biologic at launch; generic drugs that have a WAC of $100 or more for a supply lasting 30-days or fewer, or for one unit of the drug; and generic drugs whose WAC increased by 200% or more during the immediately preceding 12-month period.  After identifying these drugs, the Board will determine whether to conduct a cost review of the drugs.  If publicly available information is not available for the cost review, the Board may request information from the manufacturer, PBMs, health insurance carriers and managed care organizations.  Information and data obtained by the Board that is not publicly available is considered confidential and proprietary information.  If the Board determines that spending on a drug leads to an affordability challenge, the Board may set an upper payment limit for that drug.  The Board’s first reports are due by December 31, 2020.

Texas

HB 2536 was signed by Governor Greg Abbott on June 14, 2019.  It will become effective on September 1, 2019, but the affected drug manufacturers, PBMs, and health benefit plans are not required to submit reports before January 1, 2020.

Under this new law, drug manufacturers are required to disclose when a drug’s WAC increases 15% or more compared to the previous year or 40% or more over the past three calendar years.  The new law applies to drugs with a WAC of at least $100 for a 30-day supply.  Manufacturers must report, among other things, the aggregate, company-level research and development costs for the most recent year for which final audit data is available, and a statement regarding the factor(s) that caused the increase in WAC and an explanation of the role of each factor’s impact on cost.  The information submitted to the Texas Health and Human Services Commission (HHSC) shall be made public.

HB 2536 also contains annual reporting requirements for PBMs and health benefit plans.

Washington

HB 1224 was signed by Governor Jay Inslee on May 9, 2019.  This new law requires drug manufacturers to report and provide justification for certain launch prices and price increases.  Beginning October 1, 2019, for each covered drug, manufacturers must report, among other things:

• A description of the specific financial and nonfinancial factors used to make the decision to set or increase the WAC. For a WAC increase, the manufacturer must provide the amount of the increase and an explanation of how these factors explain the increase.
• Itemized cost for production and sales, including manufacturing costs, annual marketing and advertising costs, total research and development costs, total costs of clinical trials, and total cost for acquisition of the drug;
• Total financial assistance given through assistance programs, rebates, and coupons;
• A schedule of WAC increases for the past 5 years, if applicable.

Covered drugs include (A) a new prescription drug that will be introduced to the market at a WAC of $10,000 or more for a course of treatment lasting less than one month or a 30-day supply, whichever is longer; or (B) a prescription drug that is currently on the market, has a WAC of more than $100 for a course of treatment lasting less than one month or a 30-day supply, and the WAC increased at least 20% over the prior calendar year, or 50% over the prior three calendar years.  Reports must be submitted 60-days in advance of a price increase or within 30-days after release of a new covered drug to the market.  The law specifies that information submitted by manufacturers is not subject to public disclosure.

Drug manufacturers are also required to submit written notice within 60-days after receiving FDA approval for a new drug application or biologics license application.  The state may request additional information from the manufacturer if it expects the drug to have a significant impact on state expenditures.

Finally, beginning October 1, 2019, a manufacturer of a covered drug must notify the state of a price increase in writing at least 60-days prior to the planned effective date of the increase.  The notice must include the date of the increase, the current WAC, the dollar amount of the future increase in WAC, and a statement regarding whether a change or improvement in the drug necessitates the price increase.  The state will provide recommendations on how manufacturers should provide advance notice of price increases by December 1, 2020.

HB 1224 also contains reporting requirements for health carriers and PBMs.

We can expect further new federal and state laws addressing drug pricing, and we will continue to report on these new laws.

On June 27, Medtronic announced that it was recalling certain MiniMed insulin pumps due to “potential security vulnerabilities.”  On the same day, FDA issued a Safety Communication and the Department of Homeland Security issued a Cybersecurity Infrastructure Security Advisory about the same issue.

FDA’s Safety Communication states that “FDA has become aware that an unauthorized person (someone other than a patient, caregiver, or health care provider) could potentially wirelessly connect to a nearby MiniMed insulin pump with cybersecurity vulnerabilities.”  FDA explains that the potential risk of a hacking attempt is that the hacker “could change the pump’s settings to either over-deliver insulin to a patient, leading to low blood sugar (hypoglycemia), or stop insulin delivery, leading to high blood sugar and diabetic ketoacidosis.”  FDA notes that it is not aware of any actual hacking incidents.

FDA has been increasingly focused on cybersecurity.  In recent years, FDA has released guidance on premarket cybersecurity considerations (see our past blog posts here, here, and here) and postmarket cybersecurity considerations (see our past blog posts here and here).  The Safety Communication from FDA about MiniMed is also not the first of its kind.  FDA has issued at least six other Safety Communications since 2015 about specific medical device cybersecurity issues, including issues related to other Medtronic devices, listed on its webpage on cybersecurity.

Though Medtronic’s recent recall, as described in its Security Bulletin, was due to “work performed by external researchers” that identified the potential cybersecurity vulnerability, it is possible that FDA will identify these types of vulnerabilities more often in both the premarket and postmarket context.  As we have reported in past blog posts (here and here), we are aware of FDA requesting additional information about device cybersecurity while reviewing pending premarket submissions.

If we start to see more cybersecurity-related recalls, particularly as wireless and cloud-based medical device software becomes more common, we may see more attention from FDA to cybersecurity issues in the postmarket context, including through inspectional observations.

Today’s blog post illustrates how a company’s problems can escalate rapidly from an administrative warning letter to the full weight of the criminal system.  The unfortunate subject is ACell, a manufacturer of medical devices derived from porcine urinary bladder material.  ACell received a Warning Letter in 2013 related to the Quality System and Medical Device Reporting for its MatriStem® Surgical Matrix Thick device.  Little did it know, that same year, a whistleblower filed a qui tam action alleging, among other things, off-label promotion of another one of its devices, MicroMatrix Powder Wound Dressing.  A second whistleblower filed a case in 2016 making similar allegations.  The government lawyers investigating the whistleblowers’ allegations coordinated with criminal prosecutors, culminating in ACell agreeing to pay $15 million, plead guilty to a misdemeanor charge, implement extensive compliance activities, and be subject to a five year Corporate Integrity Agreement.

The criminal plea was based on the company’s failure to report to FDA its decision to remove its MicroMatrix Powder Wound Dressing from the marketplace, a reporting requirement under 21 C.F.R. Part 806.  In 2012, ACell learned that approximately 30,000 units of its MicroMatrix powder were contaminated with endotoxin levels that posed a risk to health.  ACell removed the affected devices but concealed the reason for the removal from health care providers and did not submit an 806 Report to FDA.  On June 11, 2019, the U.S. Attorney’s Office for the District of Maryland announced that it had charged ACell with a criminal misdemeanor, imposed a fine of $3 million, and required the company to enact extensive compliance reforms.

A few notable points about the criminal portion of this case.

• No individuals are named in the plea. The failure to include an officer of ACell seems inconsistent with DOJ’s mantra about holding individuals accountable.
• The Statement of Facts accompanying the criminal plea, which the parties agreed the government could prove beyond a reasonable doubt at trial, extends to activities well beyond the single 806 reporting violation, and paints a picture of a much more culpable defendant than the single misdemeanor count reveals.
• Despite the five year statute of limitations contained in the Federal Food, Drug and Cosmetic Act, the criminal plea related to conduct that occurred seven years ago, when the reporting obligation was triggered in 2012.
• The Compliance Program contains many of the typical elements in a Corporate Integrity Agreement, but extends to include monitoring for potential violations of FDA reporting obligations.

Each of these points is worth closer examination, and perhaps even its own blog post, but for now, medical device companies simply need to recognize the potential ramifications of the government’s  enforcement of the 806 reporting obligations.

The civil settlement turned on entirely different conduct: the company’s marketing of the MicroMatrix product.  According to the settlement agreement, FDA cleared MicroMatrix only for the management of topical wounds, but ACell marketed MicroMatrix for non-topical or internal uses.  The government alleged that “ACell’s promotion was false and misleading because, at the direction of management, ACell sales representatives stated to physicians that the use of powder non-topically and internally was safe and effective, when the sales representatives knew that no such clinical data existed.”  The government also alleged the company provided incorrect coding recommendations for reimbursement of its devices and provided prescribers with “improper inducements” to encourage use of its devices.  The civil settlement requires ACell to pay $12 million over five years, which includes an initial payment of $500,000, and quarterly payments in amounts ranging from $475,000 to $675,000 (plus interest).  The qui tamrelator will receive $2,366,004 of the settlement.

We have seen the number of straight “off-label” prosecutions diminish as the government has struggled with First Amendment considerations for distributing truthful, non-misleading information.  This case, however, turned on the “false and misleading” nature of the promotion because no clinical data existed.  Thus, industry should not get too confident that off-label promotion investigations are by-gone relics, and as always, should focus on ensuring there is proper substantiation for all product claims, whether on- or off-label.

Last week, Global Genes, a global rare disease patient advocacy organization, announced the 2019 RARE Champion of Hope Awardees, which included Hyman, Phelps & McNamara, P.C.’s very own, James Valentine.  This is a great honor, bestowed upon “true champions for rare disease”, “people who inspire us all through innovation, research, compassion and a relentless spirit to affect positive change.”  It is no surprise to me, someone who works with James on a daily basis, that he would be selected for such an honor.

James has been a relentless advocate for rare disease patients from the day he started his career, as a patient liaison at FDA, over 11 years ago.  At FDA, James worked across the Agency’s three medical product centers to help incorporate the patient voice into regulatory decision-making.  He helped administer the FDA Patient Representative Program, facilitated stakeholder consultations during the reauthorization of PDUFA and MDUFA, helped launch the Patient-Focused Drug Development (PFDD) program, and developed the FDA Patient Network.

Since joining HP&M 5 years ago, James brought his advocacy skills to private practice, representing over two dozen rare disease patient advocacy groups, assisting them in engaging with drug developers and regulators.  He’s been central to the transition of the PFDD program to externally-led meetings, having helped plan and moderated the majority of these, and is also working on novel methodologies for capturing patient experience data.  He has helped ensure thousands of patients have a seat at the table with decision-makers. And his patient advocacy work is only the beginning.  James has also been critical in advising orphan drug and gene therapy sponsors in development and approval issues, having helped secure FDA approval for several new molecular entities in this relatively short period of time.

In fact, the Global Genes announcement came just one day before James moderated the Global Rare Disease Town Hall at the DIA Annual Meeting.  As pictured, James led a discussion with FDA’s Dr. Peter Stein (Director, Office of New Drugs & Acting Associate Director for Rare Disease, OND, CDER), Dr. Janet Maynard (Director, Office of Orphan Products Development), and Dr. Ilan Irony (Deputy Director, Division of Clinical Evaluation and Pharmacology/Toxicology, OTAT, CBER), as well as EMA’s Dr. Agnès Saint-Raymond (Head of International Affairs, Head of Portfolio Board).  The panel discussed important topics in the regulation of products for rare diseases, including new targeted technologies, the utility of expedited programs, patient engagement and collaboration, new Agency organizational proposals, and more.

James will be accepting his award at the 8Th Annual RARE Patient Advocacy Summit on Friday, September 20th.  The Summit is the world’s largest education event for rare disease patients and advocates.

As we discussed previously, FDA’s 2016 final regulation updating nutrition labeling requirements included a requirement to declare added sugars.  This requirement created quite a stir among several segments of the industry.  Among others, the honey and maple syrup manufacturers pushed back on the requirement to include, on single-ingredient packages for these products, a statement (in the nutrition facts box), “includes x g sugars;” the inclusion of this statement was expected to confuse consumers into thinking the honey or maple syrup were adulterated by the addition of sugar.

In March 2018, FDA issued a draft guidance allowing a disclaimer explaining the statement.  However, FDA’s proposed solution was not well received by industry.  In June, FDA announced that FDA was working with stakeholders to devise a (more) sensible solution.  Subsequently, on Sept. 6, 2018, then-Commissioner Gottlieb announced that FDA was drafting the “final guidance, which [FDA] anticipate[s] issuing by early next year.”  Then in December 2018, the President signed the Farm Bill including a provision prohibiting FDA from requiring a statement “includes x g sugar” on single ingredient packages or containers of pure honey, maple syrup and other single ingredient sugars and syrups.  Last week, about six months after the Farm Bill was enacted, FDA issued final guidance advising industry what, according to FDA, this means for the nutrition facts box for these products.

Consistent with the Farm Bill, the single-ingredient products are not required to declare the number of grams of added sugars in a serving of the product on the Nutrition Facts box but must still include the percent Daily Value (DV) for added sugars. In other words, FDA believes that it can require declaration of %DV for an undeclared nutrient.  FDA further states that it intends to exercise enforcement discretion for the use of the “†” symbol immediately following the %DV declaration, which leads to a footnote inside the Nutrition Facts label which explains the amount of added sugars that one serving of the product contributes to the diet as well as the contribution of one serving of the product toward the percent DV for added sugars or a similar non-misleading statement.  The inclusion of the footnote is not mandatory.  The guidance as well as a fact sheet include an example.

The honey and maple industries were not the only ones objecting to FDA’s final rule.  The cranberry industry also raised objections .  Cranberry juice naturally contains little sugar but is so tart that making it palatable for the consumer demands the addition of sugar (or another sweetener).  The added sugars must be declared as added sugars.  A juice, such as grape juice, that is naturally sweet, need not be sweetened to be palatable.  As a result, consumers comparing the nutrition information of a cranberry juice and grape juice, may avoid cranberry juice; even though the total sugar content of the two juices is similar, the amount of added sugar in cranberry juice is significantly higher than the amount of added sugar in grape juice (which will be 0 g).

Consistent with the draft guidance, FDA maintains its position that cranberry beverage products and certain dried cranberry products must declare added sugars in grams as well as the %DV for added sugars.  However, FDA will exercise enforcement discretion by allowing the use of a symbol immediately following the %DV for added sugars.  This symbol will link to a statement outside the Nutrition Facts label explaining that sugars are added to improve the palatability of naturally tart cranberries.  FDA provides examples of several possible statements none of which appear to address the total sugar content of the cranberry product vs. the naturally sweeter product.

In the Federal Register notice, FDA notes that it may consider the same type of enforcement discretion discussed with respect to certain cranberry products for other naturally tart fruits for which the amount of total sugars per serving is at a level that does not exceed the amount of total sugars in a comparable product with no added sugars.  Acai berry juice products do not fall in that category.

Overall, FDA is giving manufacturers of single ingredient packages/containers of pure honey, maple syrup, other pure sugars and syrups, and certain cranberry products enforcement discretion until July 1, 2021 to comply with the new nutrition labeling requirements, i.e., approximately two years after publication of the final guidance.  This will give these manufacturers additional time to make label changes consistent with the final regulations, the Farm Bill and FDA’s guidance.

We knew it would be back.

It was never dead, though perhaps forgotten by some (never us), but OTC Monograph Reform is back in the public eye again.  Lawmakers appear to be taking to heart CDER Director Janet Woodcock’s remarks last week in which she urged the adoption of reforms to the monograph system.  On June 24, 2019, a bipartisan group of lawmakers introduced H.R. 3443 to enact the Over-the-Counter Monograph Safety, Innovation, and Reform Act of 2019, and it was referred to the House Committee on Energy and Commerce.  The text of the bill can be found here.

As readers of this blog may recall, FDA has been exploring OTC Monograph Reform and its associated user fees for several years, formally beginning with a public meeting on the subject in June of 2016, which we blogged about here.  Remarkable in its bipartisan appeal and support, legislation emerged that seemed destined for passage.  However, it stalled over differences in the House and Senate bills on the proposed length of time for marketing exclusivity afforded for certain innovations.  That issue was resolved, but it wasn’t the right time for this legislation.  Due, at least in part, to complications caused by the federal government shut down, it was still not (yet) to be at the end of 2018.  Earlier this year, monograph reform was included in H.R. 269 (the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019) which was passed by the House.  Senate leadership concluded a separate bill was not necessary because the provisions had been agreed to by both chambers and it placed the bill on the Senate Legislative Calendar under General Orders where it remains.

The newly introduced H.R. 3443 contains the same language as the monograph section of the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 introduced as H.R. 269.  Among other things, it:

• changes the rulemaking process currently used to establish and modify monographs to what is hoped to be a more efficient order process
• addresses the status of products currently marketed under tentative final monographs
• allows for innovation beyond the constraints of the current system
• provides for marketing exclusivity for certain innovations
• provides FDA with more tools in the event of an emerging safety issue
• provides for user fees which will come with timeline goals for FDA actions.

There’s much more to the OTC Monograph Reform, and we will cover the details as it gets closer to becoming law.  The new bill may be added to drug pricing legislation under consideration. We will continue to follow and report on its progress.

In a 6-3 decision, the U.S. Supreme Court reversed and remanded the lower courts’ decision to publicly disclose commercial information that previously had been submitted to the government.  Given that FDA-regulated entities often submit to FDA commercial or financial information that those entities regard as privileged or confidential, this decision is notable because it upends FDA’s interpretation and application of Exemption 4 of the Freedom of Information Act (FOIA).  Exemption 4 permits the government to withhold from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”  5 U.S.C. 552(b)(4).

In this case, a South Dakota newspaper (Argus Leader) filed a FOIA request with the U.S. Department of Agriculture (USDA) for data related to the national food-stamp program (called SNAP).  The newspaper asked for annual redemption data from each of the stores, and USDA invoked FOIA Exemption 4 in declining to disclose the data.  The lower court applied the generally accepted “substantial competitive harm” test to determine whether the commercial information is “confidential.”  That test, first adopted by the D.C. Circuit in 1974 in National Parks & Conservation Association v. Morton, provides that Exemption 4 prevents disclosure of information required to be submitted to the government only if disclosure is likely “(1) to impair the Government’s ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.”   Although the court agreed that “revealing store-level SNAP data could work some competitive harm, the court could not say that disclosure would rise to the level of causing ‘substantial competitive harm,’ and thus ordered disclosure.”

Although USDA declined to appeal, the Food Marketing Institute (FMI) (a grocery retailers’ trade association) appealed the decision to the Eighth Circuit, which rejected FMI’s argument to discard the National Parks “substantial competitive harm” test and affirmed.  FMI then appealed to the Supreme Court.

Justice Gorsuch, in the Supreme Court opinion, noted that the statute does not define the term “confidential,” and thus focused on the term’s “ordinary, contemporary, common meaning” when Congress enacted FOIA.  The Court noted that contemporary dictionary definitions of “confidential” established that at least one condition has to be met for information to qualify as “confidential” – namely, the information “must be at customarily kept private, or at least closely held, by the person imparting it.”  An additional condition might also have to be met – namely, the party receiving the information must provide “some assurance that it will remain secret.”  The Court declined to resolve that question because both conditions were met in the instant case.  The grocery stores clearly treated the SNAP data as private, and USDA had provided the stores with an assurance that the agency would treat the information as such.  The Court firmly rejected the application of the “substantial competitive harm” requirement set forth in National Parks, characterizing the approach taken in that decision as “a relic from a ‘bygone era of statutory construction,’” and other courts’ subsequent application of this standard as a “casual disregard of the rules of statutory interpretation.”

Thus, the Court greatly expanded the ability of the government to withhold information from the public:

At least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is “confidential” within the meaning of Exemption 4.

(Emphasis ours.)  In an accompanying opinion concurring in part and dissenting in part, Justice Breyer maintained that the Court’s reading of Exemption 4 is at odds with the “whole point” of FOIA: “to give the public access to information it cannot otherwise obtain.” Otherwise FOIA would be unnecessary, because Google searches could suffice to obtain information that is already publicly available.  He warned that the Court’s reading will “deprive the public of information for reasons no better than convenience, skittishness, or bureaucratic inertia.”

The importance of this decision to FDA-regulated entities cannot be overstated.  Now, an FDA-regulated company that is required to submit commercial or financial information to FDA only needs to show its efforts to keep the information private, and the assurances from FDA that it would treat the information as such (and, as noted above, even the latter criterion might not apply).  There is no requirement for showing any harm from the disclosure of that information, whether substantial or negligible.  Although FDA regulation largely tracks the broad definition of confidential commercial or financial information (“valuable data or information which is used in one’s business and is of a type customarily held in strict confidence or regarded as privileged and not disclosed to any member of the public by the person to whom it belongs”), 21 C.F.R. § 20.61, FDA may need to scrub the reference to “competitive harm” in discussing its assessment of whether to provide notice to the submitter of commercial or financial information about a request for that information.

Further, the Court’s decision points toward adoption of a single standard for determining whether information qualifies as confidential, thereby eradicating the esoteric distinction between information that is required to be submitted (which was governed by the “substantial competitive harm” standard elucidated in National Parks) and information that is voluntarily submitted (which was governed by the less demanding standard elucidated in Critical Mass Energy Project v. NRC, i.e., “information qualifies as confidential ‘if it is of a kind that would customarily not be released to the public by the person from whom it was obtained’”).  While declining to articulate that single standard, the Court noted that it could not “discern a persuasive reason to afford the same statutory term to two such radically different constructions.”

FDA recently announced new changes it is making to the Medical Device Reporting (MDR) program as part of its ongoing efforts to increase transparency on device performance, and detection of device-related safety concerns. FDA is formally discontinuing the Alternative Summary Reporting (ASR) Program, which permitted certain device manufacturers to file quarterly reports rather than individual reports.  All data submitted under the program are available on the MDR Data Files web page.

The ASR data is available only in compressed files containing data for one year.  Starting in 2017, the ASR Program also required manufacturers to submit a “companion” medical device report for visibility through the Manufacturer and User Facility Device Experience (MAUDE) database so the most recent files are searchable.  For the years 1999 to 2016, the data are available, but not easy to navigate.

Files from CDRH’s Device Experience Network (DEN) also are available on the MDR Data Files page.  These include files from the database that pre-dates the MAUDE database.  Like the ASR data, DEN data are available in compressed, downloadable files containing data by year, but the DEN files also can be searched by product description, product code, manufacturer and report type.

FDA also provided an update on its plans to make the MAUDE database more user friendly and for active surveillance using the National Evaluation System for health Technology (NEST).  While improving the user interface for MAUDE will be helpful, the MDR system is a passive system and has limitations in its use for identifying emerging signals to improve patient safety.  Therefore, FDA claims it is moving to an active surveillance system, leveraging Unique Device Identifiers (UDI) and NEST.  Both the MAUDE updates and NEST received funding for development in FY2019 so we look forward to seeing progress in the near future.