This case caught our eye for a few reasons, none of which directly relates to the business activities of most of our blog readers but may relate to their happy-hours activities.  As most know, FDA regulates foods, including beverages, but Congress delegated most of the authority to regulate alcoholic beverages to other federal agencies.  Nevertheless, FDA is more involved than you would think – recent litigation illuminates the close relationship FDA holds with those regulatory agencies.

In a cleverly drafted opinion from Judge Boasberg (D.D.C.), in which the court pours alcohol humor throughout (e.g., “Whichever way the Court tilts the wineglass, Bellion’s vintage is wanting,” “Not so fast, Plaintiffs say – the Court’s methodology is corked.”), the question was whether the plaintiffs could make certain health claims on labels of its vodka products.  Plaintiffs, Bellion Spirits and Chigurupati Technologies, were manufacturers of vodka infused with a proprietary compound called NTX.  Plaintiffs sought to advertise their vodka as having benefits associated with NTX, claiming that NTX could help protect against, or reduce, damage to DNA caused by the alcohol.

The Alcohol and Tobacco Tax and Trade Bureau (TTB), an agency under the Department of Treasury, requires mandatory pre-approval for any health claims made on alcohol beverage labels.  Bellion petitioned TTB for approval of these health claims, and TTB determined that the claims were unsubstantiated and misleading and denied Bellion’s petition.  TTB explained that the claims lacked substantiation and that they were misleading as to the “serious health consequences of both moderate and heavy levels of consumption of alcohol beverages containing NTX.”   The claims also implied that drinking the beverages would reduce the risk of damage to the liver and to the brain.  In short, TTB rejected the idea that NTX-infused vodka was less harmful to a person’s DNA than other vodka.

Bellion submitted to TTB several animal and in vitro studies purportedly supporting the health claims.  TTB, in turn, forwarded the full petition along with these studies to FDA for its scientific and medical review of whether the data provided adequate substantiation for the proposed claims.  Bellion sued TTB, claiming the government had overstepped its authority by involving FDA in its review of the claims and arguing the restrictions infringed on Bellion’s First and Fifth Amendment rights. The court patiently addressed each of Bellion’s constitutional and APA arguments, which are far too detailed for this blog post, and affirmed TTB’s conclusion that any claims about salutary health effects are misleading, and thus not subject to First Amendment protection.

It may not ever be clear without a FOIA request or congressional inquiry how often FDA is consulted by TTB for its scientific expertise.  In this case, FDA’s involvement was significant: FDA reviewed the scientific and medical evidence submitted by Bellion, which included 112 articles or studies; and assessed whether the data adequately substantiated the proposed claims.  FDA and TTB took over a year to respond to plaintiffs’ petition.  It would be interesting how many competing priorities of FDA were deprioritized or postponed for this project.

On August 13, 2019, FDA announced that it has issued the first Warning Letter (WL) for a violation of the requirements for a Foreign Supplier Verification Program (FSVP).  This is a good reminder for importers that they must have a FSVP for each food for which they are the FSVP importer.

The Food Safety Modernization Act (FSMA) provided FDA with a new tool to enhance FDA’s oversight of foreign food facilities and farms.  Under the FSVP requirements, a U.S.-based FSVP importer must conduct a range of activities to ensure that food from foreign suppliers is produced in compliance with applicable U.S. food safety provisions.  The first FSVP compliance date was May 30, 2017.   By now, most importers of human foods are past the compliance date and all FSVP importers of food, unless exempted, must have developed a FSVP.

The FSVP regulations for the first time assigned importers of food (including dietary supplements) the responsibility to ensure that the products they bring into the United States are held to the same safety standards as domestically produced food.  FDA recognized that this was a new concept to a lot of importers which previously may not have had any dealings with FDA.  FDA indicated that it would apply the same approach as it had done previously with the introduction of other new FSMA regulations, i.e., educate while regulating to create a culture of compliance but take swift action when it becomes aware of food safety problems that pose an imminent public health risk.

The first WL concerning the FSVP was issued to Brodt Zenatti Holdings LLC in Jupiter, Florida.  The Company imported tahini which, in May 2019, had been implicated in a Salmonella outbreak.  After identifying the importer, FDA conducted an FSVP inspection.  According to the WL, FDA found that the importer did not develop an FSVP for the imported tahini as required.  As with everything imported, the consequences of a violation of the applicable regulations may have serious consequences.  As mentioned in the WL, if it fails to take the appropriate corrective actions, FDA may place the Company on the newly created import alert 99-41 resulting in all foods that the Company imports being detained without physical examination.  (The tahini contaminated with Salmonella already is subject to DWPE under import alert 99-19).

Hyman, Phelps & McNamara P.C. (“HP&M”) is pleased to announce that Suchira Ghosh has joined the firm as Counsel.  Suchira comes to HP&M with more than 10 years of FDA and Hatch-Waxman legal experience, as well as several years of experience working as a process engineer in R&D at a global pharmaceutical company.  Most recently Suchira was Counsel at Axinn LLP where she helped develop the firm’s FDA practice and worked as a patent litigator.

As part of the Hatch-Waxman practice at HP&M, Suchira will continue to provide counseling and litigation services to pharmaceutical companies on the Hatch-Waxman Act, the BPCIA, and the Orphan Drug Act.  Suchira has extensive experience with coordinating IP and regulatory strategy for her clients, including advising them on exclusivity, forfeiture, and labeling issues.  She also counsels drug sponsors on approval requirements, lifecycle strategies, post-marketing requirements, and REMS issues, and frequently represents clients before FDA via citizen petitions, formal dispute resolution, and comments to rulemaking and guidance.  In addition to her work with drug sponsors, Suchira provides regulatory counseling to medical device and HCT/P manufacturers.

Suchira has been recognized as a “Rising Star” in Life Sciences, and she frequently presents and comments on emerging issues in FDA law.  She graduated from the University of Michigan Law School and received her B.S. in Chemical Engineering from Columbia University.  Prior to law school, she worked at Schering-Plough where she was responsible for developing and scaling up the manufacturing processes for new sterile drugs.

After reading OPDP’s latest enforcement letter, we had déjà vu all over again and were transported back to 2016 when we blogged that OPDP was Not Dead Yet.  At that time, OPDP had posted two enforcement letters on the same day relating to TV ads and alleging misleading risk presentations.  Both letters cited to individuals dancing during the major statement.  Fast forward almost 3 years and OPDP’s fourth letter of 2019 asserts the following:

Additionally, the presentation of certain risk information in the “major statement” of risks through audio and SUPERs is undermined by the simultaneous presentation of fast-paced visuals that feature choreographed dancing to instrumental background music and multiple scene changes. . .  As a result, it is difficult for consumers to adequately process and comprehend the risk information, resulting in a misleading impression of the drug’s risks.

The language is almost identical to the language used in one of OPDP’s 2016 Letters:

The TV ad communicates the “major statement” of serious risks through the audio and onscreen SUPERS. At the same time, the TV ad presents fast-paced visuals that feature a man continuously dancing to music from the song “Let’s Groove” throughout multiple scene changes . . .   As a result, it is difficult for consumers to adequately process and comprehend the risk information. The overall effect undermines the communication of the important risk information and thereby misleadingly minimizes the risks associated with the use of Toujeo.

Putting OPDP’s apparent disdain for dancing aside, allegations of misleading risk presentations in TV ads due to distractions are not new.   It is consistent with previous enforcement letters (see, e.g., here) as well as FDA research on consumer comprehension of risk.   And, in fairness, OPDP’s latest letter did not simply allege that dancing was the issue – OPDP cited omissions and other mechanisms for minimizing risk in this 30 second commercial.

So, what are the key takeaways here (the tl; dr if you will): The subject of OPDP’s latest letter ticks off at least two boxes from previously stated enforcement priorities – the ad was a far-reaching campaign (DTC TV) and was the subject of a complaint (brought to FDA’s attention through the “Bad Ad” program).  Other enforcement priorities for OPDP are drugs new to the market; drugs that have serious risks; and drugs cited for past violations.

One need only look at OPDP’s research page to see the emphasis put on consumer comprehension and understand that DTC is a high enforcement priority.  Given the number of studies specific to TV ads, industry should holistically consider visuals, audio and timing (both overall length of the commercial as well as narration cadence) and how these play into consumer comprehension.

And then there’s another key takeaway – don’t include dancing in TV ads for drugs.  While not a specifically stated enforcement priority, it doesn’t seem to go well.

The Food and Drug Administration (FDA) regulates human cell, tissue, and cellular and tissue-based products, or HCT/Ps, under a unique regulatory regime set forth in 21 C.F.R. Part 1271 (Part 1271).   An HCT/P that meets certain requirements is eligible for regulation as a “361 HCT/P.”  This term is a shorthand way to designate a product that is regulated solely under section 361 of the Public Health Service Act (PHSA) and Part 1271, both of which are aimed at preventing the transmission of communicable disease.  Such a product is not subject to additional regulation by FDA as a device, drug, or biologic under the Food, Drug, and Cosmetic Act (FDCA).

This discussion will focus on the requirement that a 361 HCT/P be labeled and advertised only for homologous use.  We will look first at the basic regulatory definition and guidance.  Then, we will ask the specific question of whether advertising the clinical effects (performance characteristics) of an HCT/P 361 is compatible with meeting the homologous use requirement.

Homologous Use

The regulation defines homologous use to mean “the repair, reconstruction, replacement, or supplementation of a recipient’s cells or tissues with an HCT/P that performs the same basic function or functions in the recipient as in the donor.”  In determining whether a product is “intended” for homologous use, FDA considers only “the labeling, advertising, or other indications of the manufacturer’s objective intent.”  21 C.F.R. § 1271.10(a)(2).

In the preamble to the regulation, FDA clarified that homologous use does not require use of tissue in its native anatomic location:  “a use of a structural tissue may be homologous even when it does not occur in the same location as it occurred in the donor.  For example, the use of bone for repair, replacement, or reconstruction anywhere in the skeleton of the recipient (including the vertebral column) would be considered homologous use.”  66 Fed. Reg. 5447, 5457 (Jan. 19, 2001).

In addition, as a general matter, FDA indicated that the homologous use test merely would be a coarse screen for unproven uses:  “We intend to interpret ‘nonhomologous’ narrowly. Examples of uses that would be considered nonhomologous include:  The use of dermis as a replacement for dura mater . . .  and the use of cartilage in the bladder.”  Id.   And:  “For example, promotion of an HCT/P for an unproven therapeutic use, such as curing cancer, would clearly make it inappropriate to regulate the HCT/P [as a 361 HCT/P].”  Id.  Instead, an HCT/P intended for an unproven therapeutic use would be regulated under both Part 1271 (to prevent disease transmission) and the Federal Food, Drug, and Cosmetic Act as a drug, device or biologic.  These preamble statements are legally entitled to great weight in interpreting and applying the regulation.

In a recent guidance, FDA elaborated on the concept of the “same basic function or functions” of an HCT/P:

The basic function of an HCT/P is what it does from a biological/physiological point of view, or is capable of doing when in its native state.  By “basic” we mean the function or functions that are commonly attributed to the HCT/P as it exists in the donor.  Basic functions are well understood; it should not be necessary to perform laboratory, pre-clinical, or clinical studies to demonstrate a basic function or functions for the purpose of applying the HCT/P regulatory framework.

FDA, Guidance for Industry, Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use, 16 (Dec. 2017) (footnotes omitted) (2017 Guidance).

FDA adds:  “Also, clinical effects of the HCT/P in the recipient that are not basic function or functions of the HCT/P in the donor would generally not be considered basic function or functions of the HCT/P for the purpose of applying the definition of homologous use.”  Id. at 16‑17.

As an example, FDA cites different uses of amniotic membrane.  The basic functions of amniotic membrane “include serving as a selective barrier for the movement of nutrients between the external and in utero environment, protecting the fetus from the surrounding maternal environment, and serving as a covering to enclose the fetus and retain fluid in utero.”  Id. at 18.  Accordingly, FDA concludes that when “an amniotic membrane product is used for wound healing and/or to reduce scarring and inflammation,” this intended use “is not homologous use because wound healing and reduction of scarring and inflammation are not basic functions of amniotic membrane.”  Id. at 18.  In contrast, amniotic fluid as a covering is homologous.  For instance:

amniotic membrane product is applied to the surface of the eye to cover or offer protection from the surrounding environment in ocular repair and reconstruction procedures.  This is homologous use because serving as a covering and offering protection from the surrounding environment are basic functions of amniotic membrane.  [Id.]

Clinical Effects

This sounds like a fair distinction – an amniotic membrane intended as a wound cover in the recipient is essentially performing its native covering function.  On the other hand, the same amniotic membrane when “intended” to reduce scarring or inflammation is likely not performing the same function as it did in utero.

But what exactly does it mean for the amniotic membrane to be “intended” to reduce scarring or inflammation?  Is it not possible for an amniotic membrane to be intended as wound cover (a homologous use) and, as such, have the clinical effect of reducing scarring and inflammation compared to other wound covers?

There are at least two ways one could establish this proposition.  One way is to claim that the biological/physiological composition of amniotic tissue (e.g., presence of cytokines) is such that it is likely to have anti‑scarring and anti‑inflammatory effects in a skin wound.  This approach may be what FDA implicitly meant to convey in the example above.  It is not homologous because, says FDA, preventing scars or inflammation is not a well understood biological/physiological function of native amniotic membrane.  On this view, it is an unproven functional claim.

A second way to establish the proposition is to conduct a well‑controlled randomized clinical trial to substantiate it.  Imagine a clinical trial showing that an amniotic membrane used as a skin wound cover provides a 10% statistically significant reduction in scarring as compared to a synthetic wound cover.

The question is whether presenting this study in labeling or advertising would generate a new, non‑homologous “intended use.”  This question has important ramifications.  Increasingly, manufacturers seek to study 361 HCT/Ps and quantify their clinical effects.  These studies help advance the science of medicine and benefit patients.  Such studies, however, may never be undertaken if the results cannot be disseminated without exposing a 361 HCT/P to regulation as a drug, device or biologic under the FDCA or PHSA.

As discussed above, the concept of homologous use does not derive from the treatment intent of an HCT/P.  Rather, it is based upon the biological or physiological functioning of an HCT/P.  For instance, if an HCT/P is being used to perform a covering function, the definition of homologous use is satisfied, regardless of where the covering is applied.  That is why FDA agrees that homologous use is not dependent upon an HCT/P being used in the same location as the native tissue.  It also why FDA correctly asserts (as quoted above) that clinical effects in a recipient are not to be considered in determining homologous use.

This principle logically cut both ways.  If clinical effects in the recipient cannot contribute to a determination that an intended use is homologous, then providing information about such clinical effects cannot contribute to a determination that an intended use is non‑homologous.  The homologous use test is not a general inquiry into the objectively intended therapeutic effects of an HCT/P.  Rather, it is a limited inquiry into the biological or physiological functioning that is objectively claimed for the HCT/P.  If this limited intent meets the requirement of homologous use, the inquiry should be over.  Claims as to clinical effects, of course, require adequate substantiation and must be presented in a truthful and non‑misleading manner.  But they are not properly part of a homologous use analysis.

To return to the amniotic membrane example, a white paper describing the results of a study comparing the two types of wound coverings (amniotic membrane and synthetic) is not relevant to whether the amniotic membrane covering is intended for homologous use.  That is because the study results are based upon observed clinical effects in the recipient; they do not address the putative biological or physiological function involved, which is the basis of a homologous intended use determination.  On the other hand, if the white paper also discusses the role of native cytokines in the amniotic membrane in inhibiting scar formation as an explanation for the study results, that would properly be considered in determining whether the intended use is homologous.  If FDA finds that native cytokines in the donor are not commonly understood to prevent scarring, then it potentially could find that the amniotic membrane has a non‑homologous intended use.

None of this is to say that FDA has accepted this approach.  Frankly, the discussion around homologous use has not proceeded in these terms.  Yet, the framing here seems implicit in the logic of FDA’s regulatory definitions and guidance.  It would certainly be helpful to have more explicit guidance from FDA, because this confusion around homologous use may inhibit sponsors from initiating valuable clinical studies of 361 HCT/Ps.  Any clarity FDA could provide around its position on this issue would be very welcome.

Among the provisions contained in CMS’ proposed Physician Fee Schedule revisions for 2020, which appeared in today’s Federal Register, were proposed changes to the Open Payments program (sometimes called the Physician Payment Sunshine Law).  See 84 Fed. Reg. 40482, 40713-16 (Aug. 14, 2019).  Some of the proposals implement an expansion of the Open Payments program enacted in October 2018 as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), which we reported on here.  CMS proposes additional changes as well.  Here are the highlights:

• New covered recipients: To implement the SUPPORT Act amendments, CMS proposes to add to the current covered recipients (physicians and teaching hospitals) the following new covered recipients (with a definition for each):  physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives.
• New “nature of payment” categories: Three new types of payment categories are proposed to be added:  (1) debt forgiveness; (2) long-term loans of covered devices or medical supplies (as distinct from the current category of short-term loans of 90 days or less); and (3) acquisitions, comprising buyout payments to covered recipients in an acquisition of a company in which a covered recipient has an ownership interest.
• DIs for devices: Currently, applicable manufacturers are not required to report device identifiers (DIs) or other numerical identifiers of specific devices to which a payment or other transfer of value relates.  CMS now proposes that the DI of a device, if any, must be reported.  See 21 C.F.R. § 801.20 et seq. (FDA requirements for unique device identifiers).
• Consolidation of continuing education program nature of payment categories: There are currently two nature of payment categories for direct compensation for serving as faculty or speaker – one for accredited/certified medical education programs and another for unaccredited/noncertified programs.  These would be consolidated into one category for medical education programs generally.

The new requirements would go into effect for payments and other transfers of value made in CY 2021, which will be reported in March 2022.  Comments on the proposed changes will be accepted until September 27, 2019.

The Food Allergen Labeling Consumer Protection Act (FACLPA) amended the FDC Act to require that foods containing a “major food allergen,” defined as milk, eggs, fish, shellfish, tree nuts, peanuts, wheat, and soybeans, must declare the food source of the allergen using its common or usual name on food labels.  There appears to be increasing evidence that sesame allergies may be a growing concern.  In fact, a recent study published in JAMA Network Open suggests that more American children and adults have an allergy to sesame than previously thought.  Based on results of a survey, investigators concluded that more than 1.5 million children and adults in the United States (i.e., 0.49% of the population) report a current sesame allergy.

As a result of the growing concern regarding sesame as a food allergen, there have been several calls for action by FDA to require disclosure when sesame is present in a food.  Last year, FDA issued a request for information “to learn more about the prevalence and severity of sesame allergies in the US.”  Comments were due December 31, 2018. (More than 4800 comments were submitted to the docket).  However, FDA has yet to take further action and, based on the most recent semi-annual agenda, FDA does not have any immediate plans to develop a regulation.

Seemingly tired of waiting, the State of Illinois amended its state Food, Drug and Cosmetic Act to include a provision that a packaged food not for immediate consumption is misbranded if it contains sesame, unless the food bears labeling stating that fact.  Apparently, the hope is that this state requirement will “spark a national trend.”  However, in light of the FALCPA preempting state laws (meaning that state governmental agencies may not adopt labeling requirements that differ from the federal requirements), the validity of the Illinois law is open to question.  Thus, the law might prove to have little effect, other than drawing renewed attention to the issue of sesame allergies.

Over the last few years, FDA has clearly prioritized efficient generic development (see, for example, the Drug Competition Action Plan).  While FDA hosted public meetings, published MAPP revisions, and compiled lists of off-patent/off-exclusivity drugs, Congress reauthorized the Generic Drug User Fee Act in 2017 and included a provision requiring GAO to study issues regarding approval of a generic drug applications in the first review cycle.  Further, as part of GDUFA II, FDA committed make changes in an effort to minimize the number of review cycles necessary for applicants to attain approval.    This month, the GAO released its report commenting on both the first review cycle statistics and FDA’s efforts to minimize review cycles thus far.

The GAO Report looked at generic drug approvals between FY 2015 and 2017 – before implementation of the GDUFA II commitments – as well as documentation from the first review cycle for 35 applications from FY 2017 and 2018.  GAO identified several factors that may impact approval in the first cycle, including the sufficiency of the application, deficiencies in drug quality, the type of drug reviewed, and the application’s priority status.  Ultimately, GAO made two recommendations: FDA should improve consistency in communication between reviewers and sponsors, and FDA should assess the effect of brand-name labeling changes on approval of generic drugs.

Given the timeframe of the approvals reviewed, the Report tells us little about FDA’s success in achieving its GDUFA II commitment with respect to first cycle reviews.  The Report also relies on a small sample size of detailed application review (35) and interviewees (15).  But the Report is nonetheless enlightening.  Notably, of the 2030 generic drug applications reviewed by FDA from FY 2015 through 2017, only 12 percent (or approximately 244) applications were approved in a first review cycle.  That means that 1786 ANDAs went through subsequent review cycles to obtain approval, potentially delaying approval for years.  On average, from 2013 through 2017, it took three review cycles for ANDAs to attain approval.

Some of the GAO’s findings were neither surprising nor attributable to FDA:  some applications, particularly those of unsophisticated sponsors, simply were not sufficient.  Either the application was not complete or the applicants did not fully understand and fulfill application requirements, directly impacting the likelihood of receiving approval during the first review cycle.  Applications that FDA initially Refused to Receive were slightly less likely to be approved in the first review cycle.  All of this makes sense if one assumes that the RTRs and insufficient applications were filed by relatively inexperienced filers.  An inexperienced filer is more likely to get tripped up than a sponsor that has been through the process before.  Additionally, drug complexity factored into likelihood of approval during the review cycle.  Again, this makes sense: route of administration, formulation, combination drugs, complex APIs, and like factors impact the sufficiency and complexity of the data needed for approval.   Drug quality deficiencies, like the drug manufacturing facilities, were also responsible for large share of failure to attain approval during the first review cycle.

Interestingly, the GAO also noted that the type of Priority Review designation a product receives may be correlated with first cycle failures.  According to the GAO analysis, rates of approval in the first cycle were lower for first generics than for applications with no priority designation.  Meanwhile, first-cycle approval rates for other types of priority designations (i.e. drug shortages or public health emergencies) were higher than for applications with no priority designation.  The GAO report hypothesized that rushing to submit applications to get first generic status may result in lower quality applications.

The Report does highlight some of the changes that FDA has adopted since 2013 to enhance communication with applicants and improve reviewer consistency.  FDA has issued 993 new and revised product-specific guidance documents since 2013, in addition to other regulatory guidance to facilitate approval and reduce deficiencies.  378 of the product-specific guidances have been focused on complex drugs.  At the GAO’s suggestion, FDA now publicly announces its plans for issuing new and revised product-specific guidances.  Additionally, FDA now encourages reviewers to communicate with applicants about issues and issue discipline review letters at the mid-point of the review cycle rather than at the end of the cycle to provide applicants with an opportunity to address issues before issuing a Complete Response Letter.  FDA has also taken steps to enhance consistency from FDA reviewers, including review templates and adopting common phrases for communicating deficiencies.

The GAO Report notes that, even with FDA’s enhancements, inconsistency among generic drug application reviewers persists.  These inconsistencies may play a big role in approval during the first review cycle because reviewers may provide substantively different assessments of similar generic applications.  Some reviewers provide suggestions on how to remedy a deficiency while others do not even specify what further information may be required.  This inconsistency could mean the difference between addressing deficiencies in a timely manner during the first review cycle and a Complete Response Letter.  As such, inconsistency in reviewer communication is a major focus of the GAO’s recommendations to FDA.

Further, based on interviews, the Report posits that brand-name drug labeling changes occurring mid-cycle may impact first review cycle approvals.  Because the generic sponsor must change the labeling to match the Reference Listed Drug, such a change midway through the review cycle may require the ANDA sponsor to revise its labeling.  FDA thought that gamesmanship in labeling changes to delay generic competition would be challenging to coordinate but acknowledged that such a scenario was a possibility.  However, because the Office of Generic Drugs does not coordinate on timing of approval of brand-name drug label changes with the Office of New Drugs, the Agency could not speak to this directly.  As such, GAO recommended that FDA assess the extent to which brand-name label changes impact first review cycle approval of generic drugs.

On the whole, the Report was not too critical of FDA considering the statistics.  With a paltry 12 percent of ANDAs approved in the first review cycle, one would think that GAO would have a myriad of recommendations.  But it didn’t, which may indicate that FDA’s changes are helping ANDA review trend in the right direction.  But for now, as FDA further implements these changes to meets its GDUFA II goals, those ANDA sponsors who don’t attain that elusive first review cycle approval must continue to try.  In the words of the late Aaliyah: If at first you don’t succeed (first you don’t succeed), dust yourself off, and try again.

California

Last week, U.S. District Court Judge Morrison C. England Jr. denied the state of California’s motion to dismiss PhRMA’s lawsuit challenging SB 17, which was signed into law in October 2017 and became effective on January 1, 2018.  (Our summary of SB 17 is available here.)  As we previously reported (see here, here, and here), PhRmA challenged the implementation and enforcement of SB 17 on the grounds that the law’s notice, reporting and justification obligations are unconstitutional.  More specifically, PhRMA has argued that SB 17 violates the First Amendment, the Commerce Clause, and the Fourteenth Amendment’s Due Process Clause.  The state sought to dismiss the lawsuit, but Judge England found that PhRMA’s “non-conclusory” allegations could proceed.

Colorado

As we previously reported (here), Colorado recently enacted HB 19-1131, which requires drug manufacturers to provide prescribers with a drug’s wholesale acquisition cost (WAC) during marketing activities.  Drug manufacturers must also provide prescribers with the names of at least three generic prescription drugs from the same therapeutic class.  Although the state has not yet issued regulations or guidance regarding these “Prescription Drug Cost Education” requirements, the new law took effect on Friday, August 2, as no referendum petition was filed with the Colorado Secretary of State.

We will continue to monitor and report on state price reporting and transparency efforts.

Hyman, Phelps & McNamara, P.C. is pleased to publish this second issue of the FDA Law Alert, a newsletter highlighting key postings from our nationally acclaimed FDA Law Blog.  Please subscribe to the FDA Law Blog to receive contemporaneous posts on government regulatory and enforcement activities affecting the broad cross-section of FDA-regulated industry.   As the largest dedicated FDA law firm, we are happy to help you or your clients navigate the nuances of the laws and regulations affecting the industry.

Cross-Cutting Issues

• Disclosure of Confidential Information
  • A recent Supreme Court decision lowers the standard for the government to withhold from disclosure confidential commercial or financial information it receives from regulated industry.  In their post, Anne Walsh and Ricardo Carvajal describe the impact that the Court decision will have on FDA-regulated entities who routinely submit this type of information to FDA.
• Enforcement Discretion
  • Douglas Farquhar discusses FDA’s power to exercise enforcement discretion.  His post focuses on a recent court decision holding that FDA cannot delay or relax enforcement requirements mandated by the Tobacco Control Act, and must require manufacturers of tobacco and other nicotine products to submit applications to market those products.

Drugs

• Drug Development
  • In this post by Frank Sasinowski and James Valentine, they highlight the approval of the first systemically administered somatic gene replacement therapy. The approval of Avexis’s Zolgensma (onasemnogene abeparvovec-xioi), for treatment of spinal muscular atrophy (SMA), is a milestone for personalized medicine that targets the root causes of genetic diseases using gene replacement.
• Biosimilars
  • FDA finalized its guidance to assist biosimilar manufacturers to demonstrate interchangeability with a reference product.  Sara Koblitz writes about activities since the draft guidance was issued in 2017 and the potential impact the final guidance will have on drug manufacturers seeking to establish interchangeability.

Devices

• PMA Panels
  • Jeff Gibbs and McKenzie Cato take a close look at the relationship between the outcomes of FDA advisory panels to review pre-market applications (PMAs) and the ultimate outcomes and time to resolution of PMAs.  Their post discusses why the relationship may not be clear cut.
• Unique Device Identification (UDI)
  • FDA finalized its guidance for industry on UDI labeling requirements applicable to convenience kits (two or more medical devices packaged together for the convenience of the user).  Rachael Hunt compares the draft guidance with the final version and describes scenarios to illustrate its application.
• Off-Label Promotion and Reporting Violations
  • Anne K. Walsh and Adrienne Lenz describe the woes of a device manufacturer held accountable for civil and criminal violations related to its wound dressing product.  Not only does this case highlight the steep penalties associated with reporting violations — a $3 million criminal fine in this case – but it also shows that off-label promotion remains a targeted area of interest for the government.

Hatch-Waxman

• 180-Day Exclusivity
  • Kurt R. Karst continues his coverage of the BLOCKING Act, legislation that could make 180-day exclusivity eligibility unpredictable for ANDA applicants.  In this latest post, Karst details two alternative versions of the bill that could maintain the 180-day incentive, but would address FDA’s concerns about competition and pricing for drugs.

Healthcare

• Fraud and Abuse
  • In response to objections that the restrictions were too prohibitive, New Jersey amended its rules regarding the acceptance of remuneration by prescribers from pharmaceutical manufacturers.  Alan Kirschenbaum summarizes the significant changes from the original rule in his post.

Foods and Dietary Supplements

• Product Labels
  • Riёtte van Laack writes in her post about FDA’s letter to industry supporting the inclusion of a “Best if Used by” statement on food products, but notes that FDA cannot enforce this requirement on foods.
• DMHA Regulation
  • Hi-Tech Pharmaceuticals, Inc. recently sued FDA to stop enforcement activities around DMHA-containing products, arguing FDA has not undergone formal rulemaking as required by the Administrative Procedure Act.  Ricardo Carvajal and JP Ellison are following this litigation here.

DEA and Cannabis

• Medical Cannabis  
  • John Gilbert and Larry Houck describe proposed legislation that would compel DEA to issue more marijuana manufacturer registrations for research.  Their post walks through federal regulation of studies involving the potential medical utility of marijuana and the current requirements for these manufacturers.

The American Conference Institute’s (“ACI’s”) popular “Paragraph IV Disputes Master Symposium” is coming up again! The conference will take place from October 3-4, 2019 at the W Chicago in City Center, Chicago, IL.

ACI has put together an excellent program for conference attendees that include presentations from esteemed Judges and key representatives from the PTO, and FTC. In addition, attendees will get to hear from a virtual “who’s who” of Hatch-Waxman litigators and industry decision makers.  Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst, will be speaking at a “Regulatory Think Tank” session titled “Analyzing The Effect of the Latest FDA Initiatives on Generic Drug Access and ANDA Litigation.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a 10% discount off the current price tier.  The discount code is: D10-815-815AX01.  You can access the conference brochure and sign up for the event here.

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In a much-anticipated decision for those that have been following the saga of whether FDA has appropriately set the test for determining how it may include bulk substances on its list of substances that may be used in compounding under Section 503B of the Federal Food, Drug, and Cosmetic Act, the D.C. District Court provided its answer in a decision handed down late last week.  The closely watched matter involves a fierce battle between big pharma and compounders that started in the summer of 2017  and has been documented on this blog here and here.  Recall briefly that, back in 2017, FDA approved Vasostrict®; certain outsourcing facilities had nominated – and FDA approved – the addition of the bulk active pharmaceutical ingredient vasopressin to its interim list of bulk drug substances that may be used in compounding.  After a flurry of litigation activity in the fall of 2017 and early 2018, FDA resolved to revise its process for reviewing nominations to its bulk substances list, which effectively stayed the pending litigation against the Agency brought by Endo Pharmaceuticals, maker of Vasostrict®.  In early 2019, FDA announced its revised process for determining whether to include substances on its bulks list. FDA’s new process, described here, ultimately resulted in FDA’s determination to remove vasopressin from the bulks list, and, unsurprisingly brought about more litigation.

All of this leads us to the United States District Court for the District of Columbia’s recent decision.  Recall that Athenex sued FDA over the Agency’s interpretation of the bulks nomination process and subsequent removal of vasopressin from the bulks list.  See Athenex, et al. v. Alex M. Azar II, et al., Civ. No. 19-cv-00603 (APM) (D.D.C. 2019), here.  In a detailed 31-page memorandum opinion, the District Court ruled in favor of FDA, considering the text, structure and legislative history of Section 503B.  While the ultimate outcome may not be all that surprising given the deference shown to federal agencies under the Supreme Court’s landmark Chevron administrative deference standard, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), what is somewhat surprising to those that have been following the matter is that the Court decided the issue based on the first prong of Chevron.  This means that the Court found unambiguous the underlying statutory text, structure, and legislative history of Section 503B;  thus, FDA’s interpretation of the same gave effect to the “unambiguously expressed intent of Congress.” The Court also determined that FDA’s exclusion of vasopressin from the bulks list was not arbitrary and capricious.

The Court reviewed the new test for nominations that FDA first published in March 2018 and finalized a year later.  The new guidance considers, as a threshold matter, whether the bulk substance is a component of an FDA-approved drug produc.  It also considers whether that FDA-approved product has an attribute that makes it medically unsuitable to treat certain patients, which attribute the proposed compounded formulation will address.  FDA then considers whether there is a basis to conclude that the proposed compounded drug product must be produced from a bulk substance rather than an FDA-approved drug.

Reviewing the “plain meaning” of the statute, the Court disagreed with Athenex’s interpretation of “clinical need” for use of a bulk substance.  Athenex argued that the Agency’s framing of “clinical need” improperly replaces “bulk drug substances” as the term appears in Section 503B(a)(2)(A), with the term “compounded drug product,” thus making FDA’s nomination process a review of approved products and not the bulk substances in those products.  Not buying Athenex’s reason, the Court held Athenex’s interpretation would produce an unreasonable result –– as there is a “clinical need” for every bulk substance because, by definition, a bulk drug substance is one “intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease….”  Mem. Op.  at 14.  The Court noted that Athenex’s interpretation draws “no actual distinction among bulks substances- there is a ‘clinical need’ for all.”  Id.  The Court further found (among other reasons for ruing against Athenex under Chevron’s first prong) that Congress knew how to permit compounding with FDA-approved drug products, because that provision is included in Section 503A’s provision permitting compounding with components of FDA-approved drug products.  A similar provision is non-existent in Section 503B.

Athenex also pointed to the statute’s “essentially copies” provision, arguing that FDA’s interpretation of “clinical need” makes that provision redundant.  Specifically, the “essentially copies” provision ensures that compounders “will not compound drug products that rival FDA-approved drugs, so the clinical need provision cannot fulfill the same purpose.”  Mem. Op. at 23.  Refusing to take Plaintiff’s bait, the Court stated that Section 503B’s redundancies reflect the broader purpose of creating a clear market advantage for approved drugs, and that compounded drug products are used essentially to fill the gaps left by FDA-approved drug products.  Specifically, the Court held that both the “essentially a copy” provision and the “clinical need” inquiry are directed at identifying “whether the compounded product is one that fills a therapeutic purpose unmet by the approved drug.”  Notwithstanding the sparse legislative record reflecting the passage of the Drug Quality and Security Act, the Court also found that FDA’s method of determining “clinical need” comports with Congress’s mission of protecting the public health in the wake of the 2012 New England Compounding Center tragedy.

As if the Court’s Chevron step one reasoning was not clear enough, in the “interest of completeness” Judge Mehta also held that FDA would prevail at Chevron step two.  In brief, the Court held that FDA offered a “reasoned explanation” for its interpretation of Section 503B.  Lastly, the Court found that FDA’s decision to exclude vasopressin from the bulk substances list was not arbitrary and capricious.  Noting that its review of the Agency’s decision making was “narrow,” the Court found that the Agency’s rejection of Plaintiff’s “clinical need” arguments – namely its “advantageous” ready-to-use and chlorobutanol-free formulation – were not arbitrary.

It remains to be seen what effect if any, the Court’s decision will have on the Section 503B bulks list generally, especially for those listed substances that are components of approved drug products.

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.