Hyman, Phelps & McNamara, P.C. (“HP&M”) has once again been ranked as a “Tier 1” law firm in the area of “FDA Law” (both nationally and in Washington, D.C.) by the folks over at U.S. News & World Report, who teamed up with Best Lawyers for the 2019 “Best Law Firms” rankings.

Actually, it’s better than that! HP&M was handed the “Law Firm of the Year in FDA Law” award by both organizations!  We’re truly honored.

“This year we reviewed 14,643 law firms throughout the United States – across 75 national practice areas – and a total of 2,118 firms received a national law firm ranking. We are proud that the ‘Best Law Firms’ rankings continue to act as an indicator of excellence throughout the legal industry,” according to U.S. News.  National and metro rankings are based on a rigorous evaluation process.  Evaluators collect client and lawyer evaluations, conduct peer review from leading attorneys in their field, and review additional information provided by law firms.

In the world of FDA, there is a stark divide between the regulatory treatment of drugs and medical devices. A product intended to diagnose or treat disease, or to alter the structure or function of the body, is within the definition of a drug under the Federal Food, Drug, and Cosmetic Act (FDCA). If, however, the product has these intended objectives but does not achieve its primary intended purposes via chemical action on or within the body, or via metabolization, then it meets the statutory definition of a device.

The drug/device distinction drives enormous differences in premarket review and postmarket compliance requirements under the FDCA and implementing regulations. The differences are so significant that FDA long ago established separate bureaucratic centers devoted to each category — the Center for Drug Evaluation and Research (CDER) to regulate drugs and the Center for Devices and Radiological Health (CDRH) to regulate devices. Each center administers different statutory provisions (for the most part) and separate sets of implementing regulations.  No one would dispute that a product regulated by CDER must meet very different requirements than one regulated by CDRH.  No one would dispute, either, that user fees charged by FDA for drugs are far higher than for medical devices.  For instance, in fiscal year 2019, a New Drug Application (NDA) for a prescription drug (with clinical data) has a user fee of $2,588,478, while a 510(k) submission for a device has a user fee of $10,953.

REGULATING DEVICES AS DRUGS

Some may be surprised to learn, therefore, that FDA occasionally regulates devices under the drug authorities. We are not speaking of products where it is a close call scientifically whether it meets the definition of a device.  Nor are we concerned with combination products consisting of both drugs and a devices.  Rather, we are addressing products that unequivocally meet the definition of a device, but FDA regulates them as drugs anyway.

An example is barium sulfate intended for use as a radiological contrast agent. Barium sulfate is an inert metal salt that absorbs X-rays to improve visualization of the gastrointestinal tract.  It passes through the gastrointestinal tract without being absorbed or altered.  All would agree – including FDA – with the fundamental science which says that the contrast agent function is not performed via either chemical action or metabolization.

Therefore, barium sulfate as a radiological contrast agent meets the definition of a device. For decades, FDA regulated these products as medical devices, granting 510(k) clearance to several products.  Then, in a dramatic shift, FDA began regulating them as drugs.  There are now numerous barium sulfate products for use as radiological contrast agents that have NDA approval instead of 510(k) clearance.  A warning letter issued just last year said that a barium sulfate product is required to have approval under the drug authorities.

Another example is over‑the‑counter (OTC) skin protectants. These products are regulated as drugs under a final monograph (codified at 21 C.F.R. Part 347). Many of the permitted active ingredients and indications appear to meet the definition of a device.  For example, consider the monograph-approved use of petrolatum for the permitted indication of preventing chapped or cracked lips due to the drying effects of wind and cold weather.  It seems fairly obvious that this use of petrolatum does not rely upon chemical action or metabolization.  Rather, the petrolatum serves as a barrier that covers the skin against the wind and helps it retain moisture.  That is a classic device function.

FDA’S CORE ARGUMENT

There is plenty of administrative history and lore explaining how FDA assigned barium sulfate and skin protectants to CDER. But the purpose of citing these examples is to spotlight FDA’s general position.  It is the agency’s assertion that any medical device can be regulated under the drug authorities for reasons of administrative policy and convenience.  Yet, it seems clear that Congress has drawn a bright dividing line between drugs and devices, and has decreed that they are to be regulated differently.  On what basis does FDA believe it is authorized to ignore the distinction and regulate devices as if they were drugs?  FDA may only take such actions authorized by Congress, so the agency must establish that it has authority under the FDCA to regulate devices as drugs.

FDA’s core argument is based on the statutory definition of drugs and devices. FDA observes that the definitions, read literally, are not mutually exclusive.  Rather, the drug definition encompasses any “article” intended to diagnose / treat disease or alter the structure or function of body.  A device is an “article” for the same intended use, per the first part of the device definition.  A device therefore meets the definition of a drug.  It is true, FDA would agree, that the device definition has an added requirement that it may not utilize chemical action or metabolization to achieve its primary intended purposes.  But, that simply means that not all drugs can be devices.  According to FDA, it does not prevent all devices from being drugs.  When it comes to devices, FDA says, the drug and device definitions overlap and FDA therefore has full discretion to classify a device as a drug.  It is, therefore, by the grace of the agency that any particular medical device is not regulated as a drug.

IS FDA RIGHT ABOUT THE FDCA?

FDA’s “overlap” argument arguably comports with the literal words of the drug and device definitions. But, once one steps back and looks at the big picture, FDA’s argument is not supported by the basic scheme and operation of the FDCA, and is even contradictory to it.  Let us look at the problems with FDA’s argument:

The dog that did not bark.  Start with the fact that there is no provision in the FDCA expressly authorizing FDA to regulate products meeting the definition of a device as drugs.  Given the lengths to which Congress went to set up completely separate regulatory schemes for devices and drugs, it is counterintuitive, to say the least, that Congress did not signal a grant of authority to FDA to regulate devices as drugs when it chooses to do so.  If this authority truly had been granted to FDA, one would have expected Congress to set some parameters around it.

By way of contrast, there is a statutory provision allowing FDA to choose a lead center for combination products (FDCA § 503(g)). If a product combines a device and a drug, FDA is authorized to choose whether to regulate it in CDER or CDRH.  But Congress did not leave the choice to FDA’s unfettered discretion.  Rather, Congress requires that FDA make the decision based upon a determination of the “primary mode of action” of a combination product.  In contrast, according to FDA, the agency has complete discretion for the equally significant decision to regulate a device in CDER.  Why is there no analogous provision specifying the boundaries of FDA’s discretion in this regard?  The most straightforward answer is that Congress did not grant such discretion in the first place and so had no occasion to specify the factors to be considered in making the decision.

“Congress does not hide elephants in mouseholes.”  In FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000), FDA had claimed authority under the FDCA to regulate cigarettes and smokeless tobacco, on the ground that nicotine was a drug and cigarettes and smokeless tobacco were drug delivery devices. The Court did not dispute these products literally fit within the FDCA’s definitions of drugs and devices. Nonetheless, the Court concluded that FDA did not have the claimed authority. The Court declared “we are confident that Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion.” Id. at 160. A year later, in a different case, the Supreme Court put the same thought this way: “Congress … does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions — it does not, one might say, hide elephants in mouseholes.” Whitman v. American Trucking Association, 531 U.S. 457, 468 (2001).

Here, once again, FDA has found an elephant hiding in a mousehole. It finds that a partial overlap in statutory definitions supports the rather spectacular authority to regulate all devices as if they were drugs.  This authority has wide implications for the pathway to market for devices, the attractiveness of investment in device technology, and the cost and scope of life‑cycle regulation of devices.  Surely, Congress would have said something somewhere in the FDCA about the exercise of this momentous decision‑making authority if FDA were intended to have it.  Once again, the rational conclusion is that Congress did not grant FDA this authority and so did not mention it anywhere in the FDCA.

FDA’s position contradicts the plain language of Section 563. This provision is focused on the very topic under discussion, the classification of products as drugs or devices. It requires FDA, upon request, to uniquely classify each product “as a drug, biological product, device, or a combination product.”  (Emphasis added.)  It is plain from this language that Congress envisions that every product FDA regulates is uniquely either a drug, biological product, device, or a combination product.  There is no option for classifying a product as a device “and” a drug.  Yet, FDA claims that every device is simultaneously a drug.  FDA’s position is contradictory to plain language of Section 563.

Section 563 also provides that a classification decision is binding on the agency and cannot be altered “except with the written consent of the person, or for public health reasons based on scientific evidence.” That allows a person to reliably know whether the product will be regulated as drug or device (or something else), with all the attendant differences between the two regimes.  Yet, FDA’s position implies that the agency is authorized to override a Section 563 decision classifying a product as a device and to instead regulate it as a drug.  If FDA may disregard a Section 563 classification decision without written consent, it obliterates the protection of Section 563.  Hence, FDA’s position contradicts this aspect of Section 563 as well.

FDA’s position renders the device definition optional. A basic interpretative canon of statutory construction holds that “[a] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.” Corley v. United States, 556 U.S. 303, 314 (2009) (internal citations omitted).  FDA’s theory of the overlapping definitions violates this canon.  Under FDA’s approach, when a product meets the specific definition of a device, the agency may still regulate it as a drug.  A decision to regulate a product meeting the definition of a device as if it were a drug renders the device definition inoperative in that case.

More generally, FDA’s position renders the device definition superfluous in all cases, by treating it as merely a suggestion from Congress, a starting point for decision‑making, while retaining for the agency discretion to disregard it. This construction of the statute should be rejected in favor of one that gives full meaning and effect to the device definition.  Congress has made it clear that a product that does not utilize chemical action or metabolization to realize its primary intended purposes is to be regulated very differently than one that does.  FDA does not have authority to breach this dividing line with a contrary decision.

FDA’s reliance on Bracco Diagnostics v. Shalala is misplaced.  Finally, FDA sometimes supports its position by quoting Bracco Diagnostics v. Shalala, 963 F. Supp. 20, 28 (D. D.C. 1997).   FDA always quotes the district court’s statement that:  “The MBI products and plaintiffs’ products all likely meet both the definition of a drug and the definition of a device under the Federal Food, Drug and Cosmetic Act, and the FDA therefore has discretion in determining how to treat them.” Id. at 28.

FDA never quotes the next sentence, which states the court’s authority: “See 21 U.S.C. § 353(g) (‘The Secretary shall designate a component of the Food and Drug Administration to regulate products that constitute a combination of a drug, device, or biological product.’)” The court’s reliance on Section 503(g), relating to the assignment of combination products to a lead center, suggests that the district court viewed the products in question as “likely” combination products, with both device and drug modes of action.  In fact, the specific holding of the court in Bracco Diagnostics was that FDA was required to treat functionally similar combination products the same way – putting them all in either CDER or CDRH.  The court was not called upon to rule whether FDA may regulate devices under the drug authorities.  Even if the statement could be read to support FDA’s position, it would be dicta, i.e., an incidental expression of a judge’s opinion, not essential to the decision and not establishing precedent.

BOTTOM LINE

FDA’s position that it may regulate devices as drugs is plainly not authorized under the FDCA. To the contrary, if a product is within the definition of a device, Congress has decreed that it must be regulated under the device authorities.  That is so even when it would be administratively convenient to do otherwise.  Only an amendment to the FDCA could give FDA the authority it claims.  FDA should act promptly to bring itself into conformity with the statute.

On October 30, 2018, the Centers for Medicare and Medicaid Services (CMS) issued an Advanced Notice of Proposed Rulemaking (ANPRM) soliciting public feedback on a potential International Pricing Index (IPI) Model for payment of certain drugs covered under Medicare Part B. 83 Fed. Reg. 54546 (Oct. 30, 2018).  This is not the first time that CMS has attempted to test a new Part B payment model during recent years. In 2016, the Obama Administration proposed a rule to test a two-phase Part B payment reform model, which we blogged about here.   After receiving 1,350 comments on the proposed model, CMS scrapped the proposed rule in 2017 following the change in administration (see our follow up blog post here).

This ANPRM was issued to further the objectives of the Trump Administration’s goal of reducing drug prices and patient out-of-pocket costs. CMS states that it is considering issuing a proposed rule for the IPI Model in the Spring of 2019 and implementing the IPI Model beginning in the Spring of 2020. The IPI Model would run for five years, through the Spring of 2025.

Generally, the proposed IPI Model seeks to ensure that the federal government is paying prices for drugs that are comparable to those paid by other countries. CMS refers to a Department of Health and Human Services (HHS) analysis that compared acquisition costs for 27 separately payable Part B physician-administered drugs to the prices of those drugs in sixteen other developed economies (Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and United Kingdom). The HHS analysis found that, on average, the cost of those drugs in the U.S. was 1.8 times higher than in the cost for those drugs in the comparison countries and that the United States paid the highest prices for 19 of the 27 products.

The IPI Model focuses on drugs covered by Medicare Part B, which are administered in a physician’s office or hospital outpatient setting, rather than drugs covered by Part D, which covers outpatient drugs dispensed by pharmacies.  Most Part B drugs are currently covered through a “buy and bill” system under which healthcare providers buy Part B drugs first and then bill for the drug after it is administered to the patient. Medicare’s statutory reimbursement for Part B drugs is currently the average sales price (ASP) plus 6% (under sequestration, the actual payment is ASP plus 4.3%). The 6% add-on payment is intended to help physicians and hospitals cover the costs of drug ordering, handling, and storage, but CMS has long been concerned that a percentage-based add-on payment may encourage overutilization of high-cost drugs.

The proposed IPI Model draws from the former Competitive Acquisition Program (CAP). A physician participating in CAP would place a patient-specific drug order with a CAP vendor that would provide the drug to the physician and then bill Medicare and collect the cost-sharing amount from the patient. The CAP was operational from 2006 through 2008 but has been suspended since January 1, 2009.

The IPI Model would be tested under the umbrella of the Center for Medicare and Medicaid Innovation (CMMI).  The CMMI was created by an amendment to the Social Security Act (SSA) by the Affordable Care Act. See SSA Sec. 1115A; 42 U.S.C. § 1315a. The purpose of the CMMI is to “test innovative payment and service delivery models to reduce program expenditures under [Medicare or Medicaid] while preserving or enhancing the quality of care furnished to individuals under such [programs].” 42 U.S.C. § 1315a(a)(1). CMMI is a vehicle for CMS to test novel payment methodologies that meet certain statutory selection and implementation criteria. See 42 U.S.C. § 1315a(b)(2), (d).

The IPI Model participants would include all physician practices and hospital outpatient departments that supply the included drugs in the selected model geographic area. Model participation would be mandatory for these providers. CMS is also considering whether to include other Part B providers that furnish the included drugs, such as durable medical equipment suppliers and ambulatory surgical centers. The IPI Model would, for those geographic locations and providers selected for implementation, eliminate the “buy and bill” drug acquisition system and replace it with drug acquisition through CMS-selected model vendors. CMS would pay the model vendors for included drugs, based on international pricing benchmarks. Physicians and hospitals would pay the model vendor for distribution costs associated with included drugs and would collect beneficiary cost-sharing, including billing supplemental insurers. Model vendors’ responsibilities would include negotiating acquisition prices with manufacturers and submitting claims for included drugs to Medicare in accordance to model billing instructions established by CMS.

Under the proposed IPI Model, model vendors would purchase and take title to the included drugs, but would not be required to take physical possession. Medicare would pay the vendor for the included drugs based on international prices, rather than the current payment rate of ASP plus 6%. Unlike the CAP, where only specialty pharmacies could serve as vendors, the IPI Model would permit group purchasing organizations, wholesalers, distributors, specialty pharmacies, individual or groups of physicians and hospitals, manufacturers, and Part D sponsors to serve as model vendors. Model vendors would be selected by CMS based on a competitive selection process. CMS is proposing to select three model vendors so as to facilitate competition among the vendors based on “customer service and cost,” but is soliciting feedback on whether three vendors is an appropriate number for the model.

The IPI Model would initially focus on single source drugs and biologics that encompass a high percentage of Part B drug spending. CMS plans to prioritize single source drugs and biologics, which accounted for most drugs used by most physician specialties and represented over half of Part B drug spending in 2017. Certain drugs would be excluded from the IPI Model, including drugs on the FDA drug shortage list, drugs paid under miscellaneous or “not otherwise classified” codes, compounded drugs, radiopharmaceuticals, drugs to treat end-stage renal disease, and drugs dispensed by a hospital outpatient department.

Instead of paying ASP plus 6%, Medicare would pay model vendors for included drugs based on international pricing. CMS has proposed the following calculation steps in the ANPRM:

• CMS would calculate an average international price for each Part B drug included in the model based on a standard unit that is comparable to that in the drug HCPCS code.
• CMS would then calculate the ratio of Medicare spending using ASP prices for all Part B Drugs included in the model to estimated spending using international prices for the same number and set of drugs. In order to do this calculation, CMS would multiply Part B volumes by the ASP prices and then by the international prices. The resulting ratio of Medicare spending under ASP to Medicare spending under the international prices, holding volume and mix of drugs constant, would represent the IPI.
• CMS would also establish the model Target Price for each drug by multiplying the IPI by a factor that achieves the model goal of more closely aligning Medicare payment with international prices, which would be about a 30 percent reduction in Medicare spending for included Part B drugs over time, and then multiplying that revised index (IPI adjusted for spending reduction) by the international price for each included drug. CMS would calibrate the revised index to account for any drugs with ASP below the Target Price. The percentage reduction between ASP and Target Price would vary for each drug. CMS would monitor price changes and recalibrate as needed.
• CMS would phase-in the Target Price over the 5 years of the model, as a blend of ASP and the Target Price. For each calculation, if ASP is lower than the Target Price for an included drug, the model would set the payment amount to ASP for that drug.

In making price calculations, CMS is considering using pricing data from the following countries: Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, and the United Kingdom. CMS proposes to use data provided by private companies or obtained through review of publicly filed materials by manufacturers in other countries. CMS also proposes requiring manufacturers to report to CMS quarterly their international drug sales data to support the calculation of the IPI and the Target Price for each drug. The quarterly reporting of international sales data would be in addition to existing ASP reporting requirements. For newly approved drugs that may not have any international pricing data, CMS could still calculate a model payment amount by applying a standard factor. For example, CMS may assume the same ratio for the new drug as the IPI, which would be the average volume-weighted payment amount across all Part B drugs included in the model.

CMS anticipates that model vendors would negotiate drug purchase prices that are lower than the IPI-based Medicare payments in order to avoid financial loss. These lower prices would have a cascade effect on other government discounting requirements. Although CMS could use its Medicare waiver authority under Social Security Act § 1115A to exclude prices offered to model vendors from ASP, the waiver authority does not extend to Medicaid. Therefore, manufacturer prices to model vendors would have to be taken into account in Medicaid rebate best price. Since foreign prices are generally lower than U.S. prices, best price would often be reduced, resulting in higher Medicaid rebates and lower ceiling prices under the 340B drug discount program.

Comments on this ANPRM are due to CMS no later than 5:00 pm on December 31, 2018. We will be tracking developments regarding this rule-making and other federal drug pricing legislation and rule-makings.

Last week during the 34th annual National Association of State Controlled Substances Authorities (“NASCSA”) conference in Scottsdale, Arizona, Hyman, Phelps & McNamara, P.C. (“HP&M”) Director Larry Houck was honored with the organization’s 2018 President’s Award. NASCSA provides a forum for state, federal and local regulators, healthcare professionals, law enforcement and industry to address the misuse, abuse and diversion of controlled substances. NASCSA presents the President’s Award annually for notable service contributions to NASCSA’s mission.  Larry is a longtime member of NASCSA’s Resolutions and Bylaws Committee.

Larry, along with the rest of HP&M’s Controlled Substances team, provides counsel on a wide-range of controlled substance issues, including regulatory and enforcement actions by the DEA, along with helping clients navigate federal and state licensing, registration, and compliance issues.

NASCSA will hold next year’s conference in Richmond, Virginia, on October 21-24, 2019.

On November 2, 2018, the Health Resources and Services Administration (“HRSA”) released a proposed rule to move up to January 1, 2019 the effective date of implementation and enforcement of the previously delayed final rule implementing the 340B Drug Discount Program (“Final Rule”). The Final Rule, which was originally published on January 5, 2017, established the methodology for calculating the 340B ceiling price (including the so-called penny pricing policy) and civil monetary penalties (“CMPs”) for knowing and intentional overcharges of 340B covered entities. (See our original post regarding the Final Rule here.) There were five delays of the effective date of the Final Rule, the most recent of which delayed the effective date until July 1, 2019 (see our post here). However, if the rule is finalized, the implementation date and the effective date would both be January 1, 2019. The proposed rule requests comments on the new effective date by November 23, 2018.

In its most recent decision to delay the effective date, HRSA attributed the need for the delay to the fact that the government was developing comprehensive policies “to address the rising costs of prescription drugs . . . in government programs, such as Medicare Parts B & D, Medicaid, and the 340B Program.” 83 Fed. Reg. 25943, 25944 (June 5, 2018). In explaining the decision to now move up the effective date, HRSA stated that the Department of Health and Human Services (“HHS”) “has determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with the Department’s development of these comprehensive policies. Accordingly, the Department no longer believes a delay in the effective date is necessary and is proposing to change the effective date of the rule from July 1, 2019, to January 1, 2019.” 83 Fed. Reg. 55135 (Nov. 2, 2018).

HHS’s decision to advance the effective date of the Final Rule was likely influenced by a lawsuit filed on September 11, 2018 by the American Hospital Association (“AHA”) and other organizations. See American Hospital Association et al. v. the Department of Health and Human Services et al., Case 1:18-cv-02112 (D.C.D.C. 2018). The plaintiffs allege that HRSA’s repeated delays in finalizing the Final Rule are arbitrary and capricious and constitute unreasonably delayed agency action under the Administrative Procedure Act. Plaintiffs request injunctive relief to require HHS to make the Final Rule effective within 30 days after judgment on the suit. On October 15, 2018, HHS moved to stay the suit on the basis that it intended to propose advancing the effective date to January 1, 2019. However, on November 2, 2018, the Court issued an order declining to stay the case, reasoning that HHS cannot guarantee that the proposed new January 1 effective date will be finalized, nor is it certain that, even if it is finalized, it will become final by that date. Order at 3. If the Final Rule does become effective on January 1, 2019, as proposed, the lawsuit will likely be withdrawn or dismissed. However, for now, the parties have been ordered to brief the case.

Waaaaayyyy back in 2012, when life (and practicing food and drug law) was simpler, something caused us to study and evaluate the year-over-year change (i.e., the change in girth by the number of pages) in Title 21 of the Code of Federal Regulations (“CFR”) from 1999-2012 and the year-over-year change in Title 21 of the United States Code from 1994-2011.  Our data showed that between the period of 1999 and 2012, the CFR grew by a total of 423 pages (10%), and that between 1994 and 2011, the FDC Act grew by a whopping 324 pages (83.72%).

Well, here we are in Fall 2018, a little more than 6 years after our original “waistline” post, and the world has changed a lot (according to BuzzFeed at least).   Practicing food and drug law – and just keeping track of FDA’s day-to-day actions – has become more difficult and complicated.  (But that’s what keeps things fresh and exciting for us!)  So when we pulled up a copy of the most recent version of the FDC Act published by the House of Representatives (as amended through Public Law No. 115-234, enacted on August 14, 2018), and realized that the statute was once again changed with the President’s recent enactment of the “Substance Use–Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” (“SUPPORT for Patients and Communities Act”), we decided to revisit and update our old “waistline” post numbers.

With all of the legislation enacted over the past 6 years and with the number of rules promulgated by FDA (and notwithstanding the Trump Administration’s so-called “2-for-1” Executive Order), we knew before our reassessment that there would be growth in both the CFR and the FDC Act. But by how much remained to be answered.

As shown in the tables below, between 1999 and 2018, the CFR grew by a total of 760 pages (18.68%); and between 2012 and 2018, the CFR grew by 337 pages (7.5%). Meanwhile, between 1994 and 2017, the FDC Act grew by 499 pages (128.94%); and between 2011 and 2017, the FDC Act grew by 175 pages (24.61%).  It is no wonder, then, that food and drug law is such a hot area of the law!  While most of the CFR volumes had modest growth between 2012 and 2018, and a couple that decreased in size, Volume 2 (foods) experienced the greatest growth percentage-wise (20%), while Volume 8 (medical devices) experienced the greatest growth in pagination-wise (131) (by just by a single page over the page growth in Volume 2).

We noted back in 2012 that “our study shows that although there has been significant growth in the FDC Act, the CFR, which implements the law, has not kept up,” and that there’s “a theory for this seemingly odd result: FDA has been issuing far fewer regulations, and instead, has been implementing the law through guidance and other policy documents.” That’s still true today; however, there’s a twist.

We don’t have enough time on our hands to count the number of pages of FDA guidance documents; but we can look into the total number of guidance document FDA has issued over the years. According to our data (obtained through the Internet Archive), in January 2015, FDA’s “Search for FDA Guidance Documents” webpage, identified 2,995 entries. Today that same website lists only 2,672 entries to search through.  That’s a 10.78% decrease in the number of guidance documents in nearly 4 years.  We’re not entirely sure why there’s been an apparent drop in the number of guidances, but it may be the case that FDA has withdrawn old and no longer relevant guidances (and perhaps as a result of the “2-for-1” Executive Order – see here).

We’ll probably revisit all of these numbers again in several years. And just as we look back on 2012 from the vantage point of 2018 and reminisce about a simpler time, we’ll probably look back on 2018 as a simple time from the vantage point of . . . let’s say 2024.

It’s been about two months since FDA issued its Technical Assistance (TA), and the buzz around FDA’s draft legislation has not died down. In fact, FDA has continued to promote the proposal, including a speech by Commissioner Gottlieb’s Chief of Staff, Lauren Silvas, in late September at the Precision Medicine World Conference, in which she said the proposal came “from a thoughtful exercise where we carefully considered what works well for diagnostics.”  After having received many questions as to what we thought of the draft, we thought it was about time that we weighed in again.

As we noted in our original blog post (here), a legislative approach holds promise.  With some of the large labs and IVD manufacturers having bought into the concept of LDT/IVD reform, it is now more likely (more so than back in 2014 with the draft guidances) that we will see sweeping changes for the IVD regulatory framework.  That said, we agree with ACLA and AdvaMed that additional, significant clarity is needed before this or any other legislation is passed.

While most commenters have focused on why are there no longer moderate risk tests and how will Pre-Cert work and a few larger topics, we wanted to highlight a few smaller issues that could also present significant confusion. This underscores a key concern over any legislation that is enacted: details matter.  The nuts-and-bolts of regulation will have a critical impact on the real-world impact of any legislation.  A few of these issues we observed in the TA are noted below, but these same concepts would apply to any future legislation.

Test Platforms

The proposed TA provides little to no information as to how general purpose test platforms will be regulated. Test systems, like DNA genetic analyzers, liquid chromatography, and mass spectrometry, are the hardware on which most LDTs are run.  These platforms are typically analyte/test agnostic and are, therefore, currently 510(k)-exempt.  If and when these instruments are bundled with reagents for a specific clinical application they typically become subject to premarket clearance or approval requirements.  Test platforms are included within the new definition of an in vitro clinical test, and there appears not to be any exemption from pre-market review for these systems.  There are limited premarket exemptions for components and 510(k)-exempt devices, but these exemptions specifically exclude test platforms.

So what does this mean for instrument manufacturers under the draft TA? Must they obtain premarket approval for their instrument and would the standard for approval of a generic instrument be different from a full test? It is unclear.  The TA implies that test platforms may require premarket approval.  In one of the final sections of the TA, it states that test developers using test platforms that “was not cleared, authorized, or approved” by FDA may continue to do so for five years after enactment of the legislation.  (Section 4(f)).  Beginning five years after enactment, test developers must use test platforms that comply with the Act.  Again, what it will mean to comply is unclear.  If the intention is that the current exemption for test platforms would satisfy the “cleared, authorized, or approved” requirement, that should be explicitly stated.

Components, Parts, and Accessories

Like test platforms, many components, parts, and accessories are currently 510(k)- exempt because they, themselves, are not the test – they are merely the building blocks that a developer could use to build a test. The TA appears to acknowledge this fact and included an exemption for “components, parts, and accessories” that are subject to further development (Section 3, Section 587A(b)).  The definition of an in vitro clinical test appears to specifically carve out certain components, parts, and accessories in Section 201(ss)(1)(F).  In the pertinent section of the proposed regulations, however, the definition of “components, parts, and accessories,” points to Section 201(ss)(1)(E) (not F), which according to the draft TA, is limited to software only.  It is possible that this is a typographical error, but it might also be a signal that FDA would like to take a more limited approach to the types of components, parts, and accessories that would be exempt from the premarket requirements.

Research Use Only

FDA has not been fond of the way some RUO products have been promoted and used. While FDA specifically excludes other non-clinical products, such as tests for law enforcement, from the proposed requirements, there is no similar exemption for RUO products.  The TA’s labeling provision (Section 2, Section 587K(d)(4)) does include an exemption from the labeling requirements and performance standards (21 C.F.R. Part 861) only for RUO products.  This section also notes that FDA should modify the applicable regulations as needed.  It is unclear how or why the RUO regulations would need updating if FDA’s position regarding RUOs is not changing.  The limited exemption and the statement that FDA will update the regulations leave open the question of whether and how FDA may modify its position regarding RUOs.  RUOs are important elements of in vitro clinical tests and it could be detrimental to the industry if FDA were to begin over-regulating RUOs.

Grandfathered Tests

Grandfathering may be one of the most important concepts in the entire draft. The provision is somewhat awkwardly worded, however, and limited.  An LDT is exempt, under the proposal, if (1) it was developed by a CLIA-certified high-complexity lab; (2) it is “for use only within that certified laboratory;” (3) it has not been cleared or approved; (4) it was offered more than 90 days before enactment of the legislation; and (5) it has not been modified within 90 days prior to enactment.  (Section 2, Section 587A(c)(2)).  Criteria one and two align with FDA’s definition of an LDT.  The problem with these two criteria, however, is that FDA has acknowledged that many important LDTs may not meet these narrow, strict criteria (See FDA’s draft LDT Guidance at 5-6).  For example, a company that developed a test in its small development lab and then moved to a commercial lab for validation prior to commercial launch would not meet FDA’s criteria (1) and (2).  We have not, however, seen FDA object to such a test that was developed and owned by a single company as not being an LDT, but according to the draft statute such a test would not be grandfathered.  Criterion 5 could also be particularly far-reaching, by seemingly freezing any changes.  Given the nature of laboratory assays, that criterion may be difficult to meet, and also counter-productive if it allows no flexibility to labs to make any adjustments.  What would happen to these tests is an important question which should be clarified prior to enactment.

While we view the draft TA as a creative approach, significant additional clarification is needed. Even if additional clarification is added to the legislation, even more detail will be needed in the form of regulations and guidance.  While these are developed, there should be a significant phase-in time for companies to come into compliance.  As worded, the draft TA would take effect immediately and encompasses tests that entered the market within 90 days prior to enactment.  (Section 2, Section 587A(c)(2)(A)).  This could potentially remove important tests from the market as they will have inadequate time to come into compliance with the new requirements – in fact, they may not even understand what those requirements are.  It is important to recall that FDA’s draft LDT guidance included phase-in requirements that lasted years, similarly the Quality System Regulation had a two-year phase in to allow for companies to come into compliance.  Any proposed LDT legislation should include ample time to allow labs and manufacturers to come into compliance.

What will ultimately happen to the TA or other IVD legislation is uncertain. Clearly, a new law will not be enacted this year.  Given the competing perspectives on IVD regulation and the different stakeholders, the fate of future legislation is a large question mark.  But what should not be a question mark is that if legislation does emerge, the details will be critically important.

Only ten years after initiating the withdrawal process, FDA approval for prescription PEG-3350 is officially withdrawn. The D.C. Circuit issued an unpublished opinion this week affirming FDA’s April 2018 Order withdrawing approval for several PEG-3350 ANDAs and denying requests for a hearing by the affected ANDA holders. While FDA initially aimed to withdraw all prescription ANDAs for PEG-3350, which is indicated for use as a laxative, by May 2, 2018, FDA issued a stay extending the withdrawal date to November 2, 2018 to give sponsors time to wind down their sales programs. This D.C. Circuit decision comes just before this deadline – right in time for the withdrawal to take effect as scheduled.

As we explained in a 2014 blog post, FDA initiated these proceedings in 2008 with a Notice for an Opportunity for a Hearing on its proposal to withdraw approval of ANDAs for PEG-3350 due to FDA’s policy prohibiting simultaneous marketing of the same drug as prescription and OTC. FDA approved an OTC version of PEG-3350, MiraLAX, in October 2006, and subsequently sent letters to ANDA sponsors of PEG-3350 stating that section 503(b)(4) of the FDC Act “does not permit both Rx and OTC versions of the same drug product to be marketed at the same time.” As such, the letters state that the prescription PEG-3350 products are misbranded and may not be legally marketed. In 2008, FDA issued its Notice for an Opportunity for a Hearing on the issue, which explained FDA’s position that the same drug product may not be marketed as both a prescription and an OTC drug product unless some meaningful differences between the two products exist. FDA specified that a meaningful difference includes differences in the active ingredient, dosage form, strength, route of administration, indications, or patient population. With no “meaningful difference” between the prescription and OTC version of PEG-3350, FDA determined that the prescription version is now considered misbranded (based on the inclusion of the “Rx Only” statement in its labeling, as is legally required for prescription drug products).

FDA issued its Notice of Opportunity for a Hearing and several sponsors requested a hearing, but FDA did nothing until May 2014. In May 2014, FDA denied the requests for a hearing and issued an order withdrawing approval of the PEG-3350 ANDAs. But FDA didn’t finalize that Order for another 4 years. That’s why this constipation controversy didn’t reach the courts until 12 years after the OTC drug was approved.

In April 2018, FDA issued a final Order denying the requests for a hearing and withdrawing approval for the PEG-3350 ANDAs, and the ANDA holders promptly challenged that Order in the D.C. Circuit.   Hyman, Phelps & McNamara, P.C. represented one of the ANDA holders. The ANDA holders challenged FDA’s determination that “no meaningful difference” exists between the prescription and the OTC versions of the PEG-3350, as well as the procedures FDA used to adopt such an order. The ANDA holders argued that differences in dose duration constitute meaningful differences. The OTC version recommends a one-week period of use while the prescription version recommends a two-week period. The ANDA holders argued that there are safety differences between these two periods of use resulting from misdiagnosis or the masking of more serious conditions, but because patients should be in a doctor’s care by day 8, the Court upheld FDA’s determination that it is not a meaningful difference. The ANDA holders also urged the Court to consider off-label use of the OTC product (i.e. use for more than a week), but the Court held that FDA “properly carried out its analysis within the context of on-label use.”

With respect to the procedural issues raised, the Court held that FDA did not arbitrarily or capriciously decline to give weight to sponsors’ submissions and that they were not entitled to a hearing. Further, the “meaningful difference” standard did not need to be set forth through rulemaking. Indeed, FDA had given petitioners adequate notice of the standard through the initial 2008 Notice.

While the unpublished per curiam decision is not precedential, it does—to our knowledge— represent the first federal appellate court consideration of FDA’s meaningful difference standard. Other issues, such as whether FDA’s interpretation of the prescription and OTC labeling provisions to preclude simultaneous marketing may have First Amendment implications, were not raised in this litigation and may continue to arise and move through the court system. Fortunately, we probably won’t be providing many more laxative puns—at least with respect to this issue—for a while.

On October 18, FDA issued a new draft guidance document, Content of Premarket Submissions for Management of Cybersecurity in Medical Devices (“Draft Guidance”). When final, it will supersede the 2014 guidance document of the same name (“Current Guidance”). The guidance comes shortly after release of the MITRE’s  Medical Device Cybersecurity Regional Incident Preparedness and Response Playbook, a document FDA contributed to intended to guide healthcare delivery organizations in preparedness and response related to medical device cybersecurity incidents.

We previously posted on the Current Guidance here, here and here. The topics we blogged about back then, including premature enforcement of a draft guidance and heightened requirements for establishing substantial equivalence of software devices reviewed in the 510(k) program, are concerns we have again with release of the Draft Guidance.

Back in 2013, we wrote that FDA appeared to be requesting cybersecurity information for software devices while the guidance was still a draft. We are again aware of recent additional information requests asking for more detailed cybersecurity information, beyond that described in the Current Guidance, and similar to that recommended in the Draft Guidance.  We also previously wrote that, for 510(k) devices, regardless of the predicate device’s design or supporting documentation, FDA would expect to see substantial documentation related to the device’s cybersecurity.

The Draft Guidance expands significantly the recommendations for cybersecurity design expectations, level of detail used in describing a device’s cybersecurity considerations and the amount and type of documentation required in a premarket submission. It appears that 510(k) devices may again need to start meeting an even higher standard of cybersecurity to be considered substantially equivalent.

The Draft Guidance clarifies that it is applicable for “devices that contain software (including firmware) or programmable logic as well as software that is a medical device.” Draft Guidance at 5. It further defines two tiers of devices according to the cybersecurity risk, noting that the device’s cybersecurity risk is different from the device’s overall risk in determining its classification. Tier 1 is for devices with higher cybersecurity risk, defined as devices where the following criteria are met:

1) The device is capable of connecting (e.g., wired, wirelessly) to another medical or non-medical product, or to a network, or to the Internet; AND

2) A cybersecurity incident affecting the device could directly result in patient harm to multiple patients.

Id. at 10.

A Tier 2 device is one that does not meet the Tier 1 criteria. For Tier 2 devices, the Draft Guidance recommends that sponsors include the documentation discussed for Tier 1 devices or “provide a risk-based rationale for why specific cybersecurity design controls” are not appropriate. Id. at 11.  The concept of an incident resulting in harm to “multiple patients” is new and not provided with any discussion.  It will be interesting to see if FDA and sponsors reach different conclusions in terms of identifying types of cybersecurity incidents that could directly result in patient harm to multiple patients and thus whether a rationale will be acceptable or detailed design documentation will be needed in their premarket submission.

Like the Current Guidance, the Draft Guidance provides definitions, discussion of general principles related to cybersecurity controls and cybersecurity functions and cybersecurity documentation to be submitted in a premarket submission. However, the Draft Guidance expands in pages (from 7 to 24) and in detail related to device cybersecurity design, perhaps even being considered prescriptive. Likewise, new information is recommended in device labeling related to cybersecurity and more detailed design and risk management documentation related to cybersecurity should be submitted in a premarket submission.

While there is a lot of new information in the Draft Guidance that could be discussed, two areas stand out: (i) the cybersecurity bill of materials (CBOM) and (ii) system diagrams.

The Draft Guidance defines a CBOM as “a list that includes but is not limited to commercial, open source, and off-the-shelf software and hardware components that are or could become susceptible to vulnerabilities” and recommends that the CBOM be included in the device labeling and submitted in premarket applications. The Draft Guidance further recommends that the “device design should provide a CBOM in a machine readable, electronic format to be consumed automatically.” Id. at 17.  It is not clear whether some sponsors may consider this a disclosure of proprietary design information.

The Draft Guidance recommends that premarket submissions include:

System Diagrams sufficiently detailed to permit an understanding of how the specific device design elements (from section V) are incorporated into a system-level and holistic picture. Analysis of the entire system is necessary to understand the manufacturer’s threat model and the device within the larger ecosystem.

Id. at 21.

For a large, complex software system, the amount of documentation will be extensive. Diagrams, however, may not necessarily be the best method of communicating the information. Unlike many recent guidance documents, the Draft Guidance does not include examples of diagrams to show what they should look like or how they might be used.  Such examples might have been helpful to sponsors evaluating how best to incorporate the recommendations into their design control procedures and design documentation.

As the recommendations in the Draft Guidance apply to the design of the device, sponsors will hopefully be provided a transition period to implement and validate recommended design expectations once the Draft Guidance is finalized. Unfortunately, no such transition is mentioned.  To the contrary, as noted above, we are already aware of requests for more detailed cybersecurity information in premarket submissions.  On that note, one recommendation in the Draft Guidance that sponsors may want to implement immediately is use of the pre-submission process to “discuss design considerations for meeting adequacy of cybersecurity risk management throughout the device life-cycle.” Id. at 11.

* Senior Medical Device Regulation Expert

On September 14, 2018, FDA issued two new guidance documents on voluntary consensus standards used in medical device premarket submissions: (1) a draft guidance titled “Recognition and Withdrawal of Voluntary Consensus Standards” (Draft Guidance); and (2) a final guidance titled “Appropriate Use of Voluntary Consensus Standards in Premarket Submissions for Medical Devices” (Final Guidance).

Voluntary consensus standards are standards developed by voluntary consensus standards bodies, such as the International Organization for Standardization (ISO) or the International Electrotechnical Commission (IEC).  The Food and Drug Administration Modernization Act of 1997 (FDAMA) (Pub. L. No. 105-115) and the 21st Century Cures Act of 2016 (Pub. L. No. 114-255) amended section 514(c) of the Federal Food, Drug, and Cosmetic Act (FDC Act), requiring FDA recognition of voluntary consensus standards.

The purpose of FDA’s formal recognition of consensus standards is to streamline the premarket review process for medical devices. FDA-recognized consensus standards are standards that FDA has vetted and determined are appropriate to support clearance or approval of a device. This formal recognition allows companies to submit a declaration of conformity with a recognized standard in a premarket application, rather than submit complete data and test reports demonstrating conformity with a standard.

These guidance documents consolidate and supersede earlier guidance documents on the topic of voluntary consensus standards.  The Draft Guidance, when final, will supersede a document titled “CDRH Standard Operating Procedures for the Identification and Evaluation of Candidate Consensus Standards for Recognition,” issued in September 2007.  The Final Guidance supersedes three earlier guidance documents: “Recognition and Use of Consensus Standards” (issued in September 2007), “Frequently Asked Questions on Recognition of Consensus Standards” (issued in September 2007), and “Use of Standards in Substantial Equivalence Determinations” (issued in March 2000).

Draft Guidance

The Draft Guidance describes FDA’s process for choosing to recognize voluntary consensus standards and to withdraw recognition of standards.

The 2007 document the Draft Guidance is intended to replace, “CDRH Standard Operating Procedures for the Identification and Evaluation of Candidate Consensus Standards for Recognition,” is more akin to an internal FDA procedure, even though it is labeled as “Guidance for Industry.”  The 2007 document described FDA’s internal workflow for identifying standards for recognition and reviewing proposals by outside persons for FDA recognition.

The Draft Guidance shifts the focus, addressing FDA’s recognition and withdrawal processes from the perspective of industry.  It is largely simplified compared to the 2007 document, and describes industry’s interaction with FDA regarding FDA-recognized consensus standards.

The Draft Guidance outlines the process for requesting recognition of a standard. It lists certain elements required to be included in a request for recognition, such as the title of the standard, a proposed list of devices for which a declaration of conformity should routinely apply, and identification of the testing, performance, or other characteristics of the device that would be addressed by the declaration of conformity.

Notably, the list of required elements in the Draft Guidance includes a “basis for recognition, e.g., including the scientific, technical, regulatory, or other basis for such request.” The 2007 document does not require requests for recognition to include an explanation of the basis for the request.

The Draft Guidance notes that when FDA receives a request for recognition of a standard, it will send an acknowledgment letter to the requester. The letter will identify a contact person at FDA who is assigned to oversee the recognition request. As FDA conducts its assessment of the recognition request, it may contact the requester for clarification or additional information about the request. The 2007 document, in contrast, did not describe any mechanism for follow-up or additional communication with the Agency about a request.

The Draft Guidance states that FDA’s goal is to issue a decision of complete recognition, partial recognition, or non-recognition no later than 60 calendar days after a request is received. The Agency will then issue a decision letter to the requester and announce decisions to recognize a standard in the Federal Register.  The list of recognized consensus standards is also reflected in FDA’s online database: Recognized Consensus Standards.

The Draft Guidance explains that there are two “primary situations” where FDA may decide to withdraw recognition of a standard: (1) when a new edition of the standard is issued; and (2) when FDA determines that the recognized standard is “no longer appropriate for meeting a requirement regarding devices” (as stated in section 514(c)(2) of the FDC Act). The Draft Guidance does not provide any detail about the criteria FDA may use to determine when a recognized standard is “no longer appropriate.”

Final Guidance

The Final Guidance describes appropriate use of voluntary consensus standards in device premarket submissions, largely consolidating the information in the three superseded guidances. It describes the appropriate use of both FDA-recognized and non-recognized consensus standards in device premarket submissions.

The guidance outlines two appropriate uses for voluntary consensus standards in premarket submissions: (1) submission of a declaration of conformity (DOC) and (2) “general use” of the standard. A DOC may only be submitted for FDA-recognized standards. “General use” of a consensus standard refers to “situations where a submitter chooses to conform to a consensus standard, in part or in whole, but does not submit a DOC.”

The guidance lists the required elements of a DOC. The list of required elements is shortened compared to list in the superseded guidance, “Recognition and Use of Consensus Standards.” It only requires a statement of conformity with the standard and information about the sponsor, standard, and device. The list of required DOC elements also includes information about any limitation on the validity of the DOC, such as how long the declaration is valid, what was tested, and/or concessions made about testing outcomes.

The superseded guidance included in its list of required DOC elements descriptions of alternative testing performed, inapplicable portions of the standard, and deviations from the standard. The Final Guidance does not include these elements in its list of required DOC elements.

The Final Guidance states: “A DOC to a consensus standard may be used when a submitter certifies that its device conforms to all of the requirements of a consensus standard that FDA has recognized . . . . In a DOC, the submitter may not deviate from the consensus standard that FDA has recognized or decided to recognize.” This seems to indicate a change in approach from the superseded guidance, in that a DOC is no longer appropriate if there are any deviations from the standard, whereas under the previous guidance such deviations could be included in the DOC itself.

The Final Guidance includes a helpful chart outlining when a sponsor should submit supplemental information with a DOC, such as a summary of acceptance criteria, results, or a complete test report. Generally, the guidance indicates that supplemental information is necessary when the standard does not include specific acceptance criteria or when the standard is too general or broad in scope for FDA to determine whether conformance to the standard is sufficient support to make a regulatory decision. The guidance provides ISO 14971 (Medical devices – Application of risk management to medical devices) as an example of a consensus standard that would require submission of supplementary information, because this standard is broad in scope, process-oriented, and does not include specific acceptance criteria.

The Final Guidance explains that “general use” of a consensus standard, instead of submission of a DOC, is appropriate when FDA has not recognized a standard or the submitter deviates from a recognized standard. FDA recommends that sponsors, when citing general use of a standard, include the basis for the use of the standard, along with the underlying data and documentation that supports conformance with the standard. The guidance does not provide any information about the utility of citing general use of a standard in a premarket submission, given that a sponsor would cite general use of a standard in situations where FDA has not recognized a standard or the sponsor has deviated from a recognized standard.

The Final Guidance describes the transition period when FDA has withdrawn an older consensus standard that has been replaced with a new edition. This is a common issue that sponsors face while drafting device premarket submissions. The guidance explains that FDA’s online recognized consensus standard database includes a “Supplemental Information Sheet” (SIS) for each recognized standard. In situations where a recognized standard is replacing an earlier recognized standard, the SIS will include information about the transition period. If a transition period expires before submission, a sponsor will need to retest to the new standard prior to submission. The guidance notes that if a standard changes during active review of a premarket submission, the Agency will continue to review the submission based on the previously recognized standard. Similarly, if a standard changes after clearance, the sponsor will not have to retest to the new standard.

The Final Guidance describes the use of promissory statements (i.e., a statement in which a sponsor indicates that it is not yet known whether a device conforms to a consensus standard, but that the device will conform to the standard prior to marketing). FDA indicates in the guidance that promissory statements are usually not appropriate to support a premarket submission, and a promissory statement cannot be submitted along with a DOC.

Finally, the Final Guidance discusses the limitations of consensus standards. The guidance cautions that a device may raise issues not addressed by consensus standards. A premarket submission may require animal or clinical studies, additional performance specifications, and other additional information to support clearance or approval, even if it conforms to relevant consensus standards.

The new Draft Guidance and Final Guidance provide condensed and consolidated information about voluntary consensus standards. These two guidances cover the two major areas where industry interacts with the Agency on the topic of voluntary consensus standards: requests for recognition of standards and use of standards in premarket submissions. At the very least, sponsors will likely be grateful that they can find the key information about voluntary consensus standards in two guidance documents that was originally spread across four separate guidances.

The Food and Drug Administration’s (FDA) Center for Devices and Radiological Health (CDRH) recently announced a new voluntary pilot program to streamline review of 510(k) submissions for ophthalmic optical coherence tomography (OCT) devices.

OCT devices are devices that are used for viewing, imaging, measurement, and analysis of ocular structures and may be used to aid in the detection and management of various ocular diseases. These Class II devices require premarket notification (510(k)) prior to marketing and must demonstrate substantial equivalence to a legally marketed predicate.  However, there are no currently available FDA-recognized standards or published guidance that describe performance testing for OCT devices.  Consequently, 510(k) applicants have a hard time knowing what information FDA wants, resulting in FDA requests for additional information.

The pilot program aims to improve consistency and predictability in 510(k) submissions for OCT devices. FDA intends to use the program to evaluate whether, through the pre-submission process, individual testing recommendations, regarding non-clinical and clinical evaluation of OCT devices, and increased interactive engagement improve the process and reduces overall total time to decision.

Requests for participation in the voluntary OCT 510(k) Pilot Program will remain open for one year or until a total of nine participants have been enrolled. Participants must intend to submit a traditional 510(k) within one year of acceptance into the program, commit to supporting an interactive review process, and commit to incorporating FDA feedback, including recommendations provided on the testing plan. Participants will have to state how or where in the 510(k) this prior feedback was addressed. FDA will notify manufacturers of their eligibility and enrollment status.

Upon completion of the program, manufacturers will have the opportunity to provide individual feedback on the voluntary OCT 510(k) Pilot Program.

This marks at least the third 510(k) focused pilot introduced in the last several weeks (we previously blogged about the Special 510(k) Program and the Quality in 510(k) Review Program.) and eighth pilot in four years. It is hard to predict whether there will be any other new initiatives to keep up with as we close 2018, but we look forward to seeing whether this OCT 510(k) pilot will yield a consistent and predictable process that results in lower overall total time to decision and, if so, whether it can be translated to other devices that lack clear testing recommendations.

* Senior Medical Device Regulation Expert

Maryland Attorney General (“AG”) Brian Frosh is not going down without a fight in his bid to defend a Maryland law prohibiting “price gouging” by generic pharmaceutical manufacturers. H.B. 631, 437th Gen. Assemb., Reg. Sess. (Md. 2017) (hereinafter, “HB 631”), was passed by the Maryland General Assembly on April 20, 2017 and was set to take effect on October 1, 2017, but for the lawsuit filed by the generic drugs trade association, Association for Accessible Medicines (“AAM”).  See our previous blog posts on HB 631 here and the AAM lawsuit here.

Briefly, HB 631 aims to curb increases in generic drug pricing in two ways. First, it prohibits a generic drug manufacturer or wholesale distributor from making “unconscionable increases” in the price of an “essential off-patent or generic drug.”  HB 631 defines an “unconscionable increase” as “an increase in the price of a prescription drug that:

(1)  is excessive and not justified by the cost of producing the drug or the cost of appropriate expansion of access to the drug to promote public health; and

(2)  results in consumers for whom the drug has been prescribed having no meaningful choice about whether to purchase the drug at an excessive price because of:

(I.)  the importance of the drug to their health; and

(II.)  insufficient competition in the market for the drug.”

Second, HB 631 authorizes the Maryland Medical Assistance Program (“MMAP”) to notify the Maryland AG of a price increase when the Wholesale Acquisition Cost (“WAC”) of a prescription drug increases by at least 50% from the WAC within the preceding one-year period or when the price paid by MMAP would increase by at least 50% from the WAC within the preceding one-year period and the WAC for either a 30-day supply or a full course of treatment exceeds $80.

AAM, in its original complaint, challenged HB 631 on two constitutional grounds. First, AAM alleged that HB 631 violates the dormant Commerce Clause of the U.S. Constitution because it regulates commerce wholly outside of Maryland.  Compl. at 2, 23-27, AAM v. Frosh, No. 1:17-cv-1860 (D. Md. July 6, 2017).  The Commerce Clause empowers Congress to regulate commerce “among the several states,” and thereby prohibits states from discriminating against or unduly burdening interstate commerce.  U.S. Const. art. I, § 8, cl. 3; see, e.g., Philadelphia v. New Jersey, 437 U.S. 617, 623-624 (1978).  AAM argued that HB 631 violates the dormant Commerce Clause by targeting transactions between pharmaceutical manufacturers and wholesale distributors or retail pharmacy chains with centralized warehouses, none of which are within Maryland.  Furthermore, AAM alleged, the transactions themselves, including pricing determinations, are made on a national basis and do not take place within the State of Maryland.  AAM stated that “next to none of the largest generic drug manufacturers . . . reside in Maryland, so the only involvement a manufacturer has in the overwhelming majority of off-patent and generic prescription drug sales in Maryland is via an upstream sale that occurred entirely outside of the state.”  Compl. at 2.  AAM went on to argue that price restraints imposed by HB 631 would “inevitably affect commercial transactions, pricing, and commerce in other states.” Id. at 13.

Second, AAM argued that HB 631 is impermissibly vague and, therefore, violates the Fourteenth Amendment Due Process Clause. See U.S. Const. amend. XIV, § 1.

The U.S. District Court for the District of Maryland granted the State of Maryland’s motion to dismiss AAM’s challenge based on the dormant Commerce Clause, but allowed the vagueness claim to proceed. The district court also denied AAM’s motion for injunctive relief.

On appeal by AAM, the United States Court of Appeals for the Fourth Circuit reversed the district court’s ruling and remanded the matter to the district court with instructions to enter a judgment in favor of AAM. Despite a vigorous dissent by Judge Wynn, the majority held that HB 631 is unconstitutional under the dormant Commerce Clause “because it directly regulates transactions that take place outside Maryland.”  Op. at 19, AAM v. Frosh, No. 1:17-cv-2166 (4th Cir. Apr. 13, 2018).  Because the court found HB 631 unconstitutional under the dormant Commerce Clause, it did not reach the merits of the void for vagueness claim. The Fourth Circuit majority stated, “[HB 631] attempts to dictate the price that may be charged elsewhere for a good.  Any legitimate effects [HB 631] may have in Maryland are insufficient to protect the law from invalidation.” Id. at 15.  The court went on to say that the “practical effect” of HB 631, like those state laws struck down previously under the dormant Commerce Clause by the Supreme Court, “is to specify the price at which goods may be sold beyond Maryland’s borders.” Id. at 17; see also Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935); Healy v. Beer Inst., Inc., 491 U.S. 324 (1989).  For additional details on the Fourth Circuit’s opinion, see our blog post here. The State of Maryland subsequently filed a petition with the Fourth Circuit for rehearing en banc, which was denied on July 24, 2018.

On October 19, 2018, the State of Maryland filed a Petition for a Writ of Certiorari, seeking review of the Fourth Circuit’s decision by the Supreme Court of the United States. The question presented to the Supreme Court is “whether the states’ sovereign power to regulate in-state commerce includes the power to impose consumer-protection requirements on both in-state and out-of-state manufacturers of goods destined for sale in the state.”  Petition for a Writ of Certiorari at 2, Frosh v. AAM, No. 18-______ (Oct. 2018). Criticizing the Fourth Circuit’s opinion, the State of Maryland contends that the “majority’s opinion rests on a reading of this Court’s precedent that would deprive a state of power to protect consumers from predatory commercial practices that originate out of state, even though they are directed into the state and will directly harm its citizens.” Id. at 11.  Relying on Judge Wynn’s dissenting opinion, Maryland argues that HB 631 “does not regulate wholly out-of-state commerce even if it affects the price of some out-of-state sales.” Id. at 12.  Maryland emphasizes the Court’s holding in Pharm. Research & Mfrs. of America v. Walsh, 538 U.S. 644 (2003), a dormant Commerce Clause case in which the Court held that, “unlike price control or price affirmation statutes,” state laws that neither regulate the price of an out-of-state transaction nor tie the price of in-state products to out-of-state prices do not fail on constitutional grounds. Walsh, 538 U.S. at 669-670; see also Petition for a Writ of Certiorari at 15-17. Walsh concerned a state law that required prescription drug manufacturers to enter into rebate agreements, in addition to rebate agreements required under the Medicaid Drug Rebate Program, for drugs offered through a state discount prescription drug program open to all state residents. The Court found that this requirement did not impose a “disparate burden” on out-of-state versus in-state drug manufacturers and that manufacturers could not avoid this requirement by operating entirely within the state. Walsh, 538 U.S. at 670.  On that basis, the Court upheld the state law, even though it had some extraterritorial impacts.  At issue then, in Frosh, is the breadth of this “extraterritoriality doctrine,” a judicial construct embedded in the dormant Commerce Clause, and whether a state may regulate commerce that begins outside its borders but, as with HB 631, ends within the state.

Regardless of its decision, if the Supreme Court takes up the State of Maryland’s appeal, the impact of the Court’s decision could be far-reaching, given that several states have enacted drug pricing transparency laws aimed at shaming drug manufacturers into limiting price increases. We also note that regulations directed at increasing drug pricing transparency have now emerged at the federal level as well, in a Centers for Medicare and Medicaid Services’ proposed rule that would require WAC to be disclosed in direct-to-consumer television advertisements (see our blog post about this here).  We will continue to track the progress of Maryland’s cert. petition, other litigation in this area, and state and federal drug pricing legislation and rulemaking.

A biotech company facing a complete response letter (CRL) action on its NDA/BLA has no greater goal than to quickly and fully understand the deficiencies that FDA has identified in the application.  Such an understanding is critical to addressing the review division’s findings through additional data or analyses, and is even more essential should the company choose to appeal those findings through Formal Dispute Resolution (FDR).

The purpose of a CRL is to communicate to the applicant that FDA will not approve the application in its present form, and, with limited exception, the CRL describes all of the deficiencies that must be satisfactorily addressed before the application can be approved.  21 C.F.R. § 314.3.  A CRL is, by its nature, a summary document that abbreviates the many months of review and independent analyses performed by a number of FDA disciplines such as medical, statistical, and clinical pharmacology, into a handful of pages.  The actual detailed work performed by the FDA reviewers is embodied in various highly informative review documents that, by contrast, typically span several hundred pages.

The applicant receives the CRL but is not provided the more instructive underlying reviews.
Because of its typical brevity, the CRL is limited to a high-level description of deficiencies and suggested actions for addressing them.  It cannot encompass all of the nuanced information needed to fully appreciate the division’s view or the basis for that view.  FDA regulations offer the opportunity for a subsequent End-of-Review (EOR) meeting, which the Center for Drug Evaluation and Research (CDER) requires an applicant to attend as a prerequisite for appeal under the FDR process.  Despite consuming significant Agency resources that are already stretched thin, these meetings are also often just too short to satisfactorily communicate the details of what may be more than one complex issue.  FDA reviewers simply cannot be expected to articulate hundreds of pages of reviews, including the methods and results of any statistical or pharmacokinetic modeling, in one hour.  In addition, the Q&A format of CDER meetings hampers the exchange, making it dependent on the applicant having sufficient understanding from the CRL to articulate questions that will elicit detailed responses about critical issues.

The lack of clarity can result in deep frustration and misunderstanding as applicants address what they have understood to be the basis of FDA’s concern, only to learn that there are one or more additional bases.  Regulated companies, having spent months attempting to address a deficiency, can feel as though FDA is constantly “moving the goalposts.”  The reviewers for their part can become frustrated with a company that “just doesn’t get it.”  In our experience, these perceptions often don’t reflect reality.  Instead, the FDA reviewers are acting in good faith, but the clarity of the direction they can provide (and therefore the ability of the applicant to understand it) is hampered by the brevity of the CRL and EOR meeting.  While not the FDA reviewers’ intent, the applicant may find itself trapped in a game of regulatory whack-a-mole at a moment when resources are dwindling, and investors are losing faith.

What an applicant really needs, in addition to the CRL, are the FDA reviews themselves which, conveniently, have already been drafted and finalized and which are likely the only documents that can communicate exactly what FDA is seeing in the data.  Failure to gain access to these comprehensive reviews necessarily handicaps an applicant’s appeal.  Access to the reviews could aid some would-be appellants in more fully appreciating the reviewer’s point and choosing not to appeal.  In other cases, such access would aid the appellant in understanding the emphasis being placed on various analyses and pointing out any flaws in those assessments.

Without being overly dramatic about it, failure to provide the reviews to the applicant strikes us as fundamentally unfair in addition to being inefficient.  As a general legal matter, it is a well-accepted principle of administrative law that when an agency relies on scientific and technical data, it must provide adequate information regarding those data to allow critique of them.  Banner Health v. Price, 867 F.3d 1323, 1335 (D.C. Cir. 2017); United States Lines, Inc. v. Federal Maritime Com., 584 F.2d 519, 534 (D.C. Cir. 1978).  For that reason, when the Agency elects to rely on, for instance, a statistical simulation or a correlation it discovered among different adverse events, it must disclose the details of it.  Unlike a citation to a publicly available study, a reference in the CRL or EOR minutes to an FDA-conducted analysis which exists only in FDA’s files provides inadequate notice and is improper and unlawful.  National Classification Comm. v. U.S., 779 F.2d 687, 695 (D.C. Cir. 1985) (“The agency cannot, however, rely on data known only to the agency . . . .”).

The point is perhaps best made by considering CDER written responses to FDR requests (whether granted or denied) which uniformly list those documents that form the basis of the appellate officer’s thinking.  In our experience, those responses contain a near boilerplate sentence that reads something like this: “I have carefully reviewed the materials you submitted in support of your appeal, as well as the reviews, meeting minutes, and decision memoranda prepared by FDA staff along with the CRL” (emphasis ours).  To be clear, this indicates that the deciding official has been presented information about the case from one side in the dispute and that the opposing side has not been granted access to that material.  By its very nature, this suggests that all facts needed to understand whether the review division appropriately denied approval were not housed in the CRL and EOR minutes and were not made available to the applicant.

Our understanding (based to some extent on Agency lore) is that CDER does not share the underlying reviews with the applicant because it believes that disclosing them to the applicant would make the documents disclosable, at least in some respects, to third parties, under the requirements of the Freedom of Information Act (FOIA). We believe such an interpretation is incorrect, and that FOIA case law does not require that outcome. Moreover, we struggle to understand this interpretation by the Agency and to distinguish how it applies to other CDER-generated documents such as, for instance, the summary minutes of the EOR meeting which are uniformly provided to the applicant and not to the broader public.  Both the FDA summary reviews and the minutes seem to fall within 21 C.F.R. § 314.430 and yet their release to the applicant is handled differently.

Without the benefit of access to the complex analyses and thinking that underlie a CRL, an applicant may be denied the ability to efficiently move its program forward, and may spend significant time and money, or make the decision to abandon a program, based on incomplete information – despite the existence of fully developed and internally vetted detailed reviews.  FDA’s public health mission is not promoted by unnecessarily withholding information that could be used to more efficiently move new drugs into an approvable position (or have sponsors make fully informed decisions to halt programs for products that are destined to not be approved).

We believe that a modification in CDER policy to allow the applicant access to the underlying reviews could change the post-CRL process for the better for CDER and for the CRL recipients.  At a minimum, that information would reduce the multiple requests to review divisions to provide further clarification, thereby reducing the drain on resources.

We would welcome a public dialogue regarding such a potential policy change as part of the Agency’s thinking on increased transparency.

Last week, the President signed into law a bill that gives the FTC greater authority to police agreements between biologic license holders and biosimilar applicants – so-called “pay-for-delay” settlements.  The FTC has been focused on these settlements in the pharmaceutical space for years, but until now lacked the same tools for review of biosimilar settlements.

Earlier this year, U.S. Senators Chuck Grassley and Amy Klobachar urged the FTC to examine “pay-for-delay” settlements in the realm of biosimilars, specifically arguing that the same problem that has “plagued generic pharmaceutical markets for years . . . may be being utilized for settlements regarding biologic medicines.” The Senators’ letter cited AbbVie Inc.’s settlement agreements with Amgen Inc. and Samsung Bioepsis over the blockbuster biologic Humira, which have been the subject of concern for patients groups as well. The persistent dearth of competition in the biologics space following passage of the Biologics Price Competition and Innovation Act in 2009 has been a topic of discussion among policy wonks and regulators, and the FTC has been paying close attention to the biosimilars market.

Now, the Patient Right to Know Drug Prices Act, which we previously blogged about here, has amended the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) such that biologic reference product license holders and biosimilar applicants are subject to the same FTC notification requirements applicable to branded pharmaceutical manufacturers and ANDA applicants under that law. Specifically, the FTC must be notified of any agreement between a branded drug/biologic company and a generic/biosimilar company, or between two generic companies or two biosimilar companies, that relates to (1) “the manufacture, marketing, or sale” of either the branded or generic/biosimilar product, or (2) the period of statutory exclusivity for a first generic or first biosimilar applicant. See MMA §§ 1111-1112.  The FTC’s instructions for notification in the pharmaceutical context can be found here. They will likely apply in the biologic context as well.

Although the market for biosimilars is not yet competitive enough to inspire numerous “pay-for-delay” settlements, alleged anti-competitive tactics are already a concern – as explained in Pfizer’s recent FDA Citizen Petition. Moreover, the powers-that-be appear confident that robust competition in the biosimilars market is forthcoming.  As seen from the adoption of the Biosimilars Action Plan, FDA is actively preparing for a highly competitive biosimilars market.

With 30 years of experiences with alleged anti-competitive efforts in the generic drug market under their belts, regulators are implementing proactive measures like FTC review of potentially anticompetitive settlements to attempt to curb potential abuses in the biosimilar market before they can start. Preventing such abuses has clearly been on Commissioner Gottlieb’s mind, as he remarked when rolling-out the Biosimilars Action Plan that

We’re falling into some of the same doubts and policy constraints that were used to deter competition from generics in the years after the Hatch Waxman Act.

But we’re not going to play regulatory whack-a-mole with companies trying to unfairly delay or derail the entry of biosimilar competitors. We’re not going to wait a decade or more for robust biosimilar competition to emerge.

This type of anticipatory policy-making underscores FDA’s, the FTC’s, and Congress’s commitment to creating a functioning, competitive, and ultimately accessible market for lower cost biologics.

Yet another collaboration between FDA and the FTC also provides some insight into FDA’s priorities. While the two agencies have worked together on promotion and substantiation issues since the 1950s, it is only more recently that FDA has been active in addressing potential anticompetitive issues in the drug industry. Just two weeks ago, FDA published a revised guidance indicating that it would refer citizen petitions with the primary purpose of delaying applications to the FTC. Timely authoritative referrals could mean increased success by the FTC in bringing antitrust actions against abusers of the citizen petition process.  Maybe it’s the backlash from the Daraprim and EpiPen extreme price hikes, but regulators seem to be looping in the FTC more than ever.  Regardless of the impetus, this reliance on FTC so early in the development of the biosimilar market could succeed in accelerating competition in the biologic space.

As many of our readers know, slack fill litigation has increased within the food and beverage industry over the past several years. Approximately 300 slack fill cases were filed between 2016 and 2017, principally in California and New York.

By definition, “slack fill” is the difference between the actual capacity of a container and the volume of product contained inside. A container with slack fill that serves no functional purpose, i.e. “nonfunctional slack fill,” could be subject to lawsuits under the Federal Food, Drug, and Cosmetic Act (FDC Act) and relevant state regulations. The basis for these claims is that nonfunctional slack fill allegedly renders the product packaging misleading to consumers, because it causes them to think that they are getting more of the product than they actually are.

A crucial question in slack fill litigation is whether the slack fill in question is truly “nonfunctional.” Under federal law, empty space in food containers is considered “nonfunctional” unless it falls within one of six exceptions:

• Protection of the contents inside the package
• Result of the machines used to enclose the contents
• Result of unavoidable product settling
• Necessary to perform a specific task (e.g. cake mix packaged in a bowl that is to be used in mixing the cake batter)
• Food packaged in a reusable container where the container is a part of the presentation and also serves a useful purpose independent of the function to hold food
• The inability to increase the contents or reduce the package size (e.g. a certain size package is necessary to carry all the required label statements, discourage shoplifting, or facilitate handling the product).

21 C.F.R. § 100.100. California law includes similar exceptions for food containers.

On September 19, 2018, California Governor Jerry Brown signed an amendment to the slack fill law that provides additional protection to manufacturers facing specious slack-fill allegations. The amendment added the following circumstances in which slack fill will not be considered “nonfunctional”:

• Where the consumer can see the dimensions of the product or immediate product container through the packaging.
• Where a clear and conspicuous depiction of the actual size of the product or immediate product container appears anywhere (except on the bottom) on the outside container
• Where a product fill line or other indication on the container demonstrates the minimum amount of product (i.e., fill line after maximum settling)
• Where “[t]he mode of commerce does not allow the consumer to view or handle the physical container or product.”

This last exception logically recognizes that a consumer cannot be misled by slack fill when the consumer does not see the package size at the time of purchase, and appears to exempt on-line sales from application of California’s law prohibiting nonfunctional slack fill

Similar amendments were made to the statute regarding slack fill for non-food containers. Hopefully, these much needed additional safe harbors will reduce the number of actions filed against manufacturers.