Last week, FDA did something unprecedented (although not unexpected, at least by this blogger)! And based on the absence of any reporting in the trade press or online chatter, nobody seems to have taken note of FDA’s decision.  In a November 6, 2017 response to a June 9, 2017 Citizen Petition (Docket No. FDA-2017-P-3672) submitted by Millennium Pharmaceuticals, Inc. (“Millennium”) concerning the company’s drug product VELCADE (bortezomib) for Injection, 3.5 mg/vial (NDA 021602), FDA – apparently for the first time ever – ruled that the Agency will allow a generic drug manufacturer to “carve-up” brand-name labeling and “carve-in” to generic drug labeling a condition of use that no longer appears in brand-name labeling.

We won’t go page-by-page through Millennium’s 31-page Citizen Petition and various requests, or FDA’s 21-page Petition Decision. Instead, like Seinfeld’s Elaine Benes, we’re going to “yada, yada, yada” over most of the content of those documents and just get to the endgame. But first, a little background. . . .

In March 2017, we put up a post, titled “Orphan Drugs: The Current Firestorm, a Real Evergreening Issue, and a Possible Solution” We described the “Real Evergreening Issue” alluded to in the title of the post as follows:

[T]here may be a real evergreening issue that’s probably been overlooked by most folks. In some cases, a single orphan drug designation can result in multiple periods of orphan drug exclusivity. . . .

In most instances, multiple and staggered periods of orphan drug exclusivity stemming from the same designation do not stymie generic competition. For example, if FDA grants an orphan drug designation for Drug X for Disease Y and the sponsor first obtains approval of the drug for use in adults with Disease Y and then later for the same drug for use in children with Disease Y, FDA would grant two separate periods of orphan drug exclusivity – one for each approval.  An ANDA applicant may obtain approval of the drug for the adult population indication once the initial period of orphan drug exclusivity expires, and then later for the pediatric population indication once that second period of orphan drug exclusivity expires.

But not all cases are as easy as the one above. You see, indications, like Pokémon, can evolve into something new.  There appear to be a growing number of cases where FDA has granted multiple periods of orphan drug exclusivity based on the same original orphan drug designation, and where the drug’s indication evolves into something new, shedding and subsuming the previous indication statement.  This could occur, for example, as different disease stages or different lines of therapy are approved.  (Some possible examples of this might be in the cases of Ibrutinib, Cinacalcet, Bortezomib, and Bevacizumab.)  As the old labeling is shed, the new labeling may not allow for an ANDA (or biosimilar) applicant to easily (if at all) omit information protected by a new 7-year period of orphan drug exclusivity.

But is the solution to what may be a real evergreening problem opening up the Orphan Drug Act? This blogger thinks that there could be a better solution. . . . [One] possible remedy is for [the Office of Generic Drugs] to take a broader view of permissible labeling changes. That is, considering so-called labeling “carve-ins” that clarify the omission of other labeling information (and effectively return an indication to its previous state).  It’s a topic FDA raised a few years back (see our previous post here), but that the Agency ultimately decided not to address.

Curiously, Millennium’s Citizen Petition was submitted to FDA just a few weeks later and raised, among other things, the precise issue we described in our March blog post. Specifically, Millennium requested that FDA:

• Refrain from approving any ANDA or 505(b)(2) bortezomib product for any mantle cell lymphoma indication with labeling that omits information regarding the safe and effective conditions of use for treatment in previously untreated patients or labeling that adds new language to modify Velcade’s current mantle cell lymphoma indication.
• Seek public comment if FDA is considering allowing an ANDA applicant to revise Velcade’s current mantle cell lymphoma indication by adding new language, consistent with FDA’s prior action in a similar situation.

. . . and yada, yada, yada . . . FDA says in the Agency’s November Petition Decision that the Agency will, in fact, permit ANDA applicants to “carve-in” and “carve-up” brand-name labeling. Here are the important parts to note from FDA’s Petition Response (pages 12-15):

Velcade was approved as a second-line treatment for mantle cell lymphoma in 2006.  The indication was changed in 2014 to include previously untreated patients (i.e., first-line treatment), resulting in a revised indication “for the treatment of mantle cell lymphoma.”  The Petition states that the “approval of the revised mantle cell lymphoma indication resulted in multiple exclusivity periods, including orphan drug exclusivity.”  The Petition notes the following:

VELCADE was awarded orphan exclusivity in 2006 for “Treatment of patients with mantle cell lymphoma who have received at least 1 prior therapy.”  With regard to the current orphan exclusivity, FDA’s orphan database describes the “approved labeled indication” as “Treatment of patients with mantle cell lymphoma who have not received at least 1 prior therapy.”  That set of patients was incorporated into the labeling through the revised indication statement, which states that “VELCADE is indicated for the treatment of patients with mantle cell lymphoma.”

The Petition states that FDA may not approve “any bortezomib product for the treatment of patients who have not received at least 1 prior therapy” until the expiration of the orphan drug exclusivity period on April 8, 2022 and further states “[b]ecause VELCADE has only one broad mantle cell lymphoma indication, . . . FDA may not approve any ANDA or 505(b)(2) ‘for the treatment of mantle cell lymphoma.’”

The Petition argues that FDA should not allow ANDA applicants to carve out the protected first-line indication and to seek approval for the non-protected aspects of the treatment of mantle cell lymphoma indication.  The Petition states that “FDA’s carve-out authority and precedent make clear that the agency will permit only omissions and minor attendant changes” to approved labeling.  According to the Petition, “[i]t is not possible to omit words from the current mantle cell lymphoma indication and/or to make de mininus changes to arrive at an indication that does not disclose the exclusivity-protected use for first-line mantle cell lymphoma.”  The Petition states that an ANDA applicant “would have to add language to create a new indication for second-line treatment that is not part of VELCADE’s current labeling.”  In other words, because Velcade’s current labeling contains a broad indication “for the treatment of mantle cell lymphoma,” the Petition contends that applicants may not carve out the protected first-line indication without impermissibly changing the language of the indication or referencing a discontinued version of Velcade’s labeling.  The Petition asserts, however, that FDA lacks the authority to approve of such a change. . . .

FDA disagrees with the Petition’s assertion that FDA may not approve ANDAs or 505(b)(2) applications for bortezomib drug products that rely on Velcade and that propose to carve out Velcade’s protected first-line information regarding mantle cell lymphoma (i.e., the indication for “treatment of patients with mantle cell lymphoma who have not received at least one prior therapy”).  Prior to the approval of supplement 040 to NDA 021602, the labeling for Velcade included the following second-line treatment indication:  “VELCADE is indicated for the treatment of patients with mantle cell lymphoma who have received at least 1 prior therapy.”  The second-line treatment indication for mantle cell lymphoma currently is not protected by exclusivity.  Upon approval of supplement 040, the Indications and Usage section was revised to include a new patient population for mantle cell lymphoma, patients who have not received at least one prior therapy.  Thus, the revised indication included both patients who have received at least one prior therapy (the second-line treatment indication that is unprotected by exclusivity) and patients who have not received at least one prior therapy (the first-line treatment that is protected by exclusivity).  The current approved indication provides that “VELCADE is indicated for the treatment of patients with mantle cell lymphoma.”  It would be appropriate, in FDA’s view, to omit the exclusivity-protected information and retain the non-protected indication for the “treatment of patients with mantle cell lymphoma who have received at least 1 prior therapy.” . . .

In this situation, FDA may omit the first-line mantle cell lymphoma indication.  However, because of the way the indication is currently worded, the only way to omit the protected indication is to add words.  FDA could have approached the labeling for Velcade differently.  As described above, when the indication for “treatment of patients with mantle cell lymphoma who have not received at least one prior therapy” was granted exclusivity under the Orphan Drug Act, the indications for both first- and second-line treatment of mantle cell lymphoma were written as “treatment of patients with mantle cell lymphoma,” which FDA believes to be clear and concise.  We note that the mantle cell lymphoma indications could have been written as “treatment of patients with mantle cell lymphoma who have received at least one prior therapy and treatment of patients with mantle cell lymphoma who have not received at least one prior therapy.”  If the indications had been written as such, then omission of the words describing the protected indication would result in “treatment of patients with mantle cell lymphoma who have received at least one prior therapy” and would presumably be allowable under the Petition’s “only omissions” standard.  We do not believe it would be appropriate for the scope of exclusivity for Velcade to be broadened due to the writing of labeling in a clear and concise manner.  Further, we think this is consistent with our past practice.  FDA does not believe there is a need to solicit public comment on this change in labeling.

Based on some recent patent infringement litigation, it does not appear that FDA will be approving generic VELCADE any time soon.  As such, we are unlikely to see Millennium sue FDA with respect to the Petition Decision discussed above.  But the “carve-in”/“carve-up” issue is likely to come up again soon (perhaps in the coming months) in the context of another drug we identified in our previous post on the topic.  We’ll leave it to our readers to ponder what drug that might be.

Back in the day, there were some freaky-looking cosmetic contact lenses that could make people look like they had the eyes of a wolf, a fish, or an insomniac vampire (excuse the redundancy, please). The costume accessories were especially popular with the frightener, if not the frightened. But, this Halloween, it was the FDA that was striking fear into the hearts of its targets. Four days before Halloween, the U.S. Attorney’s Office for the Central District of California filed misdemeanor criminal charges (here and here) against two retailers, TS Group, Inc. with a “retail location” in Rowland Heights, California, and I-Takashima, Inc., with a “retail location” in Irvine, California. Both were charged with violating the Federal Food, Drug, and Cosmetic Act by holding for sale and then selling cosmetic contact lenses without a prescription, thereby causing the cosmetic contacts, classified as medical devices, to be misbranded (because they do not have adequate directions for use when not sold pursuant to a prescription).

This brought back to mind the issues surrounding cosmetic contacts years ago. Back in the early part of this millennium, arguments were made that cosmetic contact lenses did not fit within the definition of a medical device, because they were not intended to affect the structure or function of the body and were not intended to diagnose, mitigate, cure, prevent, or treat disease. But FDA still sought to regulate them, because, FDA argued, they could cause serious problems to the human eye (infections, scratched corneas, etc.), and, if regular contacts to assist vision were regulated as medical devices, why shouldn’t cosmetic contact lenses? In 2005, Congress voted overwhelmingly to end the debate and to categorize all contact lenses – including cosmetic lenses – as medical devices (Section 520(n) of the FDCA, codified at 21 U.S.C. Section 369j(n)), thereby requiring prescriptions and instituting strict manufacturing standards.

There have since been periodic government reminders and, we believe, other criminal actions. As reported in a blog post so old that the spider webs had to be swept away, we noted that FDA and the Federal Trade Commission issued a guidance document on the subject.

In that guidance, internet purveyors of cosmetic lenses were warned that selling the cosmetic contact lenses without a prescription was illegal. Apparently, not everyone got the message.

No listing on the docket sheet as to how the companies will respond to the charges.

In June, we reported on Nevada S.B 539, a new law that, among other things, requires manufacturers of “essential diabetes drugs” to report certain sensitive financial information concerning these drugs. On October 31, the Nevada Department of Health and Human Services took the first step to implement this requirement by issuing its list of “essential diabetes drugs.” The list contains over 35 insulin products and other drugs, both brand and generic, determined by DHHS to be those most often prescribed for diabetes. Beginning July 1, 2018, dozens of manufacturers and repackagers of these drugs will have to annually report the cost of production, marketing and advertising costs, profit, patient financial assistance costs, patient coupon costs, PBM rebates paid, and a history of WAC increases over the preceding five years with an explanation for each increase. A second list, containing the subset of drugs on the first list that have undergone an increase in wholesale acquisition cost (WAC) greater than inflation over a one-year or two-year look-back period (measured using a statutory methodology), has yet to be issued. Manufacturers of drugs on the latter list will have to submit a more detailed explanation for their WAC increases. Furthermore, because the new statute amends Nevada’s Uniform Trade Secrets Act so that information submitted in these reports is excluded from the definition of a trade secret, nothing prohibits DHHS from disclosing or publicizing confidential information included in these reports.

As we have also reported, PhRMA and BIO have challenged the Nevada statute in a lawsuit alleging constitutional infirmities stemming from its infringement on patent and trade secret protections. Their separate motions for a Temporary Restraining Order and a Preliminary Injunction have been denied, but the case is proceeding, and we are following it closely.

As we previously reported, the integrity of imported organic products has been questioned. International supply chains are becoming increasingly “complex” and frequently involve a number of businesses which may be certified under different programs.

Foreign organic operations are subject to the same requirements as domestic organic operations, and only organic products verified to be in compliance with these regulations or arrangements can be imported for sale into the United States. Foreign operations may export their organic products into the United States under one of three scenarios: 1) They are certified organic by USDA-accredited certifiers under USDA organic regulations; 2) They are organic certified under a foreign standard that NOP has determined to be equivalent to the USDA organic standard; or 3) They are certified organic by foreign certifiers accredited by a foreign government to USDA standards. Organic certifiers must assess whether the imported products comply with U.S. law. As has become clear, review of an organic certificate is not sufficient. What else is needed?

On October 25, 2017, the USDA AMS National Organic Program (NOP) announced the availability of a new interim instruction regarding import of organic products. According to the Federal Register notice, the instruction is intended to clarify and strengthen compliance with existing regulations applicable to imports.  Although NOP does not specifically say so, the interim instruction appears to be an effort by NOP to address at least some of the criticisms and weaknesses identified by OIG and other parties.

The interim instruction for certifiers describes what information and documentation organic certifiers should consider when evaluating the organic integrity of imported products. The instruction also alerts certifiers to procedures that federal and state agencies may require (e.g. fumigation and radiation) which may be inconsistent with organic standards.

NOP invites interested parties to submit comments. It is particularly interested in the parts of the instruction that “recommend best practices . . . to ensure compliance with the USDA regulations.” Comments must be submitted by December 26, 2017.

As we previously reported, the integrity of imported organic products has been questioned. International supply chains are becoming increasingly “complex” and frequently involve a number of businesses which may be certified under different programs.

Foreign organic operations are subject to the same requirements as domestic organic operations, and only organic products verified to be in compliance with these regulations or arrangements can be imported for sale into the United States. Foreign operations may export their organic products into the United States under one of three scenarios: 1) They are certified organic by USDA-accredited certifiers under USDA organic regulations; 2) They are organic certified under a foreign standard that NOP has determined to be equivalent to the USDA organic standard; or 3) They are certified organic by foreign certifiers accredited by a foreign government to USDA standards. Organic certifiers must assess whether the imported products comply with U.S. law. As has become clear, review of an organic certificate is not sufficient. What else is needed?

On October 25, 2017, the USDA AMS National Organic Program (NOP) announced the availability of a new interim instruction regarding import of organic products. According to the Federal Register notice, the instruction is intended to clarify and strengthen compliance with existing regulations applicable to imports.  Although NOP does not specifically say so, the interim instruction appears to be an effort by NOP to address at least some of the criticisms and weaknesses identified by OIG and other parties.

The interim instruction for certifiers describes what information and documentation organic certifiers should consider when evaluating the organic integrity of imported products. The instruction also alerts certifiers to procedures that federal and state agencies may require (e.g. fumigation and radiation) which may be inconsistent with organic standards.

NOP invites interested parties to submit comments. It is particularly interested in the parts of the instruction that “recommend best practices . . . to ensure compliance with the USDA regulations.” Comments must be submitted by December 26, 2017.

Last week, the Federal Trade Commission (“FTC”) announced the issuance of the Bureau of Competition’s annual summary of agreements filed with the Commission during the last fiscal year (Fiscal Year 2015) – Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  The FTC’s FY 2015 Staff Report is the second full fiscal year report issued since the U.S. Supreme Court’s June 17, 2013 decision in FTC v. Actavis, Inc., 133 S. Ct. 2233 (2013), which addressed the standards that courts should apply in drug patent settlement cases (also known as “pay-for-delay” or “reverse payment” cases) (see our previous post on the Actavis decision).

According to the FTC Staff Report, FY 2015 saw pharmaceutical companies file “170 agreements constituting final resolution of patent disputes between brand and generic pharmaceutical manufacturers,” but only 14 final settlements (involving 11 different brand-name products) “potentially involve pay for delay because they contain both explicit compensation from a brand manufacturer to a generic manufacturer and a restriction on the generic manufacturer’s ability to market its product in competition with the branded product.” That’s a drop from the 21 agreements reported in FY 2014, and a significant decrease from the record 40 agreements reported in FY 2012. In addition, only 39 of the 170 agreements reportedly involved ANDA sponsors eligible for 180-day exclusivity, of which 7 are identified by the FTC as “potential pay-for-delay settlements.”  The number of potential pay-for-delay settlements is the lowest since FY 2005 when there were two such agreements.

The downward trends in potential pay-for-delay settlements and settlements involving ANDA first-filers become quite apparent when we at the FDA Law Blog add percentages to the numbers supplied by the FTC and (as we have done in the past) illustrate the numbers in a table.

Last year, the FTC noted in a blog post that the Commission was hesitant to say that the declining number of concerning agreements showed a “lasting trend.” This year, the FTC did not comment much on the report other than noting that “[w]hile the number of reverse-payment settlements has declined in FY 2014 and FY 2015, Bureau of Competition staff continues to review each patent settlement it receives to identify potentially anticompetitive agreements.”

The declining number of potential pay-for-delay settlements and settlements involving ANDA first-filers begs the question: Is legislation still necessary to address patent settlement agreements? For the better part of a decade, we’ve seen bill after bill introduced in Congress, such as the “Preserve Access to Affordable Generics Act” (see our previous post here), to address a perceived problem in the pharmaceutical industry.  Well, despite the FTC’s last two reports (FYs 2014 and 2015), there’s still a perception among some Members of Congress that legislation is needed. . . .

On October 25, 2017, Rep. Lloyd Doggett (D-TX), along with several other co-sponsors, introduced H.R. 4117, the “Competitive DRUGS Act of 2017” (a.k.a., the “Competitive Deals Resulting in Unleashed Generics and Savings Act of 2017”). The Competitive DRUGS Act of 2017 borrows heavily from previous iterations of the Preserve Access to Affordable Generics Act.  For example, the new bill would amend the FTC Act to add a new section – Section 27 – to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 27] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product” if “an ANDA filer receives anything of value,” including an exclusive or even a non-exclusive license – apparently a new addition to the bill – and if “the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the ANDA product for any period of time.” Such agreements, if challenged, would be presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence” that “the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement,” or, if the value received “is compensation solely for other goods or services that the ANDA filer has promised to provide.”

A new aspect of H.R. 4117 that we don’t recall seeing before is Section 2 of the bill, titled “Clawback of research and development tax benefits for manufacturers engaging in pay-for-delay.” That section states, generally, that:

If the [FTC] determines under section 27 of the [FTC Act] that the taxpayer violated section 5 of such Act in connection with the sale of a drug product (as defined in such section), then the tax under [Section 41 of the Internal Revenue Code of 1986] for the taxable year which includes the date of such determination shall be increased by the sum of the product for each of the 2 relevant years of—

(A) the aggregate decrease in the credits allowed under section 38 for such relevant year which would have resulted solely from reducing to zero any credit determined under this section, multiplied by

(B) the sales ratio for such drug product for such relevant year.

Like past legislative attempts to address patent settlement agreements, the prospects that the Competitive DRUGS Act of 2017 will be enacted into law seem dim.

The Sixth Circuit recently dealt another blow to relators seeking damages under the False Claims Act (FCA) based on allegations of off-label promotion. In a 2-1 decision, the court, in United States ex rel. Ibanez v. Bristol-Myers Squibb Co., affirmed the district court’s dismissal of relators’ (the government declined to intervene) second amended complaint and denial of relators’ motion to file a third amended complaint because, inter alia, relators could not plead a false claim with the specificity required under Federal Rule of Evidence 9(b).

The court affirmed the dismissal of FCA conspiracy counts, explaining that, while alleged conduct involving off-label promotion to increase the number of drug prescriptions “may be condemnable” (if true), such an alleged plan “does not amount to a conspiracy to violate the FCA.” The court held:

Even if it was foreseeable that somewhere down the line off-label prescriptions of [the drug] would be submitted to the government for payment, that foreseeable consequence does not subsume the aim of the agreement. In other words, to adequately allege an FCA conspiracy, it is not enough for relators to show there was an agreement that made it likely there would be a violation of the FCA; they must show an agreement was made in order to violate the FCA.

Slip Op. at 10.

The court’s discussion regarding the heightened pleading standard under Rule 9(b) is also of particular note to drug and device manufacturers facing FCA complaints alleging off-label promotion. The court noted that pleading with specificity in such cases is “awkward” and requires a specific representative example demonstrating the following three elements:

1. The physician to whom manufacturer improperly promoted the product must have prescribed the medication for an off-label use;
2. The patient must have filled that prescription; and
3. The filling pharmacy must have submitted a claim to the government for reimbursement of that prescription.

Id. at 6-7.

The court also rejected several examples attached to the proposed third amended complaint, which relators claimed satisfied the heightened pleading standard:

• An exhibit identifying reimbursement for prescriptions paid by state Medicaid for pediatric patients before the drug had a pediatric indication (the court noted that nothing connected the prescribing physicians to defendants’ alleged improper promotion).
• Exhibits showing that a patient obtained prescriptions for an off-label use from a pharmacy (the court explained that there was no corresponding allegation that the prescriptions were presented to the government for payment, and no link to defendants’ alleged improper promotion).

The dissent rejected the notion that relators had not pled with sufficient specificity in their third amended complaint. Instead, the lone-dissenting judge noted that other circuits have found specificity when the relator alleges “particular details of a scheme to submit false claims” along with “reliable indicia that lead to a strong inference that claims were actually submitted.” Id. at 21. The judge wrote: “I cannot agree with the . . . majority opinion because the relators have pled facts sufficient to satisfy Rule 9(b) by identifying specific claims and supplementing those identifications with personal knowledge and statistical evidence.” Id. at 23.The Rule 9(b) pleading standards vary by circuit, particularly as to whether inferences supported by “reliable indicia” can constitute sufficiently plead allegations as they apply to CMS-related claims involving alleged violations of the FDC Act and FDA’s regulations (see our previous post here). The lack of a consistent standard among the circuits invites forum shopping by relators’ counsel and would benefit from Supreme Court review.

Despite relative inaction on drug pricing at the federal level so far this year, 2017 has been a banner year for state legislation involving pharmaceutical pricing, price reporting, and discounting. Because it is becoming increasingly difficult to keep track of these recent laws, we thought it might be helpful to our readers to identify them and briefly summarize their key provisions.

California

1.    Senate Bill 17 (enacted Oct. 9, 2017) (see our blog post here)

• Effective Jan. 1, 2018, requires a manufacturer of a prescription drug whose cost of therapy exceeds $40 to notify state purchasers and third party payors in writing 60 days in advance of a wholesale acquisition cost (“WAC”) increase if the increase, combined with WAC increases during the previous two calendar years, exceeds 16%.
• Effective Jan. 1, 2019, requires manufacturers described above to submit quarterly reports explaining the factors considered in making the WAC increase, a list of WAC increases over the previous five years, and other specified information. Information may be limited to that which is in the public domain or publicly available.
• Effective Jan. 1, 2019, requires manufacturers that introduce into the market a new drug that exceeds the Medicare Part D specialty drug threshold ($670/month in 2017 and 2018) to notify the state at least three days before the launch, and submit a report within 30 days thereafter describing the marketing and pricing plans used in the launch and other specified information. Submitted information may be limited to that which is in the public domain or publicly available.

2.    Assembly Bill 265 (enacted Oct. 9, 2019, effective Jan. 1, 2018)

• Prohibits prescription drug manufacturer from providing subsidy for an individual’s copayments or other out-of-pocket expenses if a lower cost, therapeutically equivalent (i.e., A-rated) drug is covered under the individual’s health insurance, or if the active ingredients in the drug are available in a lower cost OTC drug. Certain exceptions apply.

Louisiana:  Act 220 (enacted June 14, 2017, effective Aug. 1, 2017)

• Requires drug manufacturers marketing to Louisiana prescribers to report quarterly the current WAC of all of the manufacturer’s drugs marketed in the state.

Maryland:  House Bill 631 (enacted May 27, 2017, effective Oct. 1, 2017) (see our blog post here)

• Prohibits price gouging in the sale of an “essential or off-patent generic drug”
  • “Essential” off-patent generic drugs to be designated by Maryland Secretary of Health.
  • “Price gouging” means an “unconscionable increase.”
• If an essential or off-patent generic drug exceeding a specified cost threshold had a WAC increase of 50% or greater in a one-year period, or an increase that resulted in an increase of 50% or more in the amount that Maryland Medical Assistance paid within the preceding one-year period, the Maryland attorney may request, and the manufacturer must then submit, specified information justifying the price increase, as well as relevant documents requested by the Attorney General.
• The Attorney General may seek an order enjoining price gouging and requiring restitution to state health programs and consumers.

Nevada:  Senate Bill 539 (enacted June 15, 2017, effective Oct. 1, 2017) (see our blog post here)

• Nevada Department of Health and Human Services (DHHS) must compile a list of drugs “essential for treating diabetes” in Nevada, along with the WAC of each drug on the list (“List #1”), and a second list containing the subset of such drugs whose WAC has increased by a percentage equal to or greater than either the Consumer Price Index, Medical Care Component (“CPI Medical”) during the preceding calendar year or twice the CPI Medical during the preceding two years (“List #2”).
  • Annually by April 1, manufacturers whose drugs appear on list #1 must report information on cost of production, marketing and advertising, profit, aggregate PBM rebates, and other information.
  • Annually by April 1, manufacturers whose drugs appear on List #2 are required to report each factor that contributed to the increase in WAC along with the percentage of the increase attributable to each factor, the role played by each factor in the WAC increase, and any other information prescribed by DHHS regulation.
• Manufacturers must provide DHHS with a list of sales representatives marketing prescription drugs (not just diabetes drugs) to Nevada practitioners. Annually before March 1, sales representatives who are on the list must provide a report to DHHS of all HCPs that were provided with any type of compensation exceeding $10 in individual value or $100 in aggregate value during the preceding calendar year; as well as information on drug samples provided.

New York: A03007B/S02007-B (enacted April 20, 2017, effective April 1, 2017)

• If Medicaid drug expenditures exceed specified annual growth limitations, the NY Department of Health may identify drugs to be referred to the state drug utilization review board for a determination whether a supplemental Medicaid rebate should be requested from the manufacturer, and the target amount for such a rebate. If a target rebate is recommended and the manufacturer does not agree to provide it, the manufacturer must report to the Department information on costs of manufacturing, distribution, research and development, marketing and advertising, prices and rebates offered to purchasers, and other information.

Extending our survey to 2016, see also:

Vermont:  Senate Bill 216 (enacted and effective June 3, 2016) (see our blog post here)

• Each year, the Green Mountain Care Board, in collaboration with the Department of Vermont Health Access, will identify 15 drugs on which the state spends significant health care dollars, and for which the WAC has increased by 50% or more over the past five years or by 15% or more over the past 12 months. The Board will provide this list to the Vermont Attorney General (AG), which will require the manufacturer of each drug on the list to provide a justification that the AG determines to be “understandable and appropriate”. The list, and the respective WAC increases, will also be posted on the Board’s web site.

Numerous additional states are considering legislation or regulations affecting drug pricing, price reporting, discounting, and marketing (see, for example, our recent post on a New Jersey proposed regulation limiting gifts to practitioners).  We will continue to report on significant new state laws in this blog.

On October 31st, FDA made its long anticipated announcement recognizing the first European drug regulatory authorities capable of conducting inspections of manufacturing facilities that meet FDA requirements. The eight countries that were announced are: Austria, Croatia, France, Italy, Malta, Spain, Sweden and the United Kingdom.

The agency is expected to announce additional countries that meet FDA requirements in the first quarter of 2018, and believes that the progress made so far puts them on track to meet their goals of completing all 28 national capability assessments in the European Union (EU) by July 2019.

Commissioner Gottlieb explained the benefits to the program this way:

At a time in which medical product manufacturing is truly a global enterprise, there is much to be gained by partnering with regulatory counterparts to reduce duplicative efforts and maximize global resources while realizing the greatest bang for our collective inspectional buck…By partnering with these countries we can create greater efficiencies and better fulfill our public health goals, relying on the expertise of our colleagues and refocusing our resources on inspections in higher risk countries.

Historically, one of the main stumbling blocks to such an agreement has been the disparate regulatory structures between the U.S. and the EU, as the 28 EU member states have their own medicines authorities, in addition to the European Medicines Agency (EMA), which is the EU agency responsible for the protection of public health through the scientific evaluation and supervision of medicines. This web of overlapping state and super-state drug authorities had made it difficult for FDA to reach agreement with the EU.

Another stumbling block has been the sharing of trade secret information between FDA and the EMA. The EMA has been sending unredacted summaries of EU inspections to FDA for some time, however, the FDA’s reports to the EMA were redacted, as by law it was only allowed to share trade secret information with a foreign government if the FDA Commissioner certifies that the foreign government has the ability to protect the information from disclosure (Section 708 FDASIA).

What remains unclear from the October 31st announcement is when FDA will be sharing its inspectional reports with the EU, and which member states it will be sharing them with (see our previous post here). We will keep you posted on all developments.

I understand if this title made you think for a minute, did I read that right? You probably did. Another Citizen Petition regarding pyridoxamine was filed. This one asks that FDA essentially undo what it did in 2009.

Pyridoxamine is a form of vitamin B6. In July 1999, BioStratum Inc., a pharmaceutical company, filed an IND with FDA to study pyridoxamine’s potential use as a drug for diabetic nephropathy. In 2005, Biostratum Inc. filed a citizen petition asking that FDA stop the marketing of pyridoxamine as a dietary supplement, pursuant to section 201(ff)(3)(B) of the Federal Food, Drug, and Cosmetic Act, which excludes from the dietary supplement definition an ingredient that was subject to substantial clinical investigations and the existence of these clinical investigations had been made public before the ingredient was first marketed as a dietary supplement or food. In 2009, FDA agreed, concluding that there was no evidence that pyridoxamine was marketed as a food or dietary supplement before the IND was filed. Thus, the marketing of pyridoxamine as dietary supplement was illegal as the substance was excluded from the dietary supplement definition under FDC Act § 201(ff)(3)(B) (see our previous post here).

Eight years later, the INDs for pyridoxamine were withdrawn and a new joint venture, Vi Guard Health Inc. (Petitioner), now wants to market an oral formulation of pyridoxamine as a dietary supplement. In order to do so, action by FDA is required. Last week, Vi Guard Health Inc. submitted a citizen petition requesting that the Agency declare or issue a regulation that pyridoxamine is not excluded from the definition of, and may legally be marketed as, a dietary supplement.

Petitioner requests that FDA issue either a regulation declaring that pyridoxamine is no longer excluded from the definition of dietary supplement or a regulation authorizing that pyridoxamine may be marketed as a dietary supplement even though it was subject to clinical investigations prior to the first marketing of the substance as a food or dietary supplement.

The FDC Act, as amended by the Dietary Supplement Health and Education Act (“DSHEA”) of 1994, excludes from the definition of dietary supplement any article that is approved as a new drug and any article “authorized for investigation as a new drug . . . for which substantial clinical investigations have been instituted and for which the existence of such investigations have been made public” unless the article was “before such approval, . . . or authorization marketed as a dietary supplement or as a food.”  FDC Act § 201(ff)(3)(B). FDA has the authority to over-ride the exclusion by regulation.

The exclusionary clause provision is intended to protect investments by pharmaceutical companies; it prevents the marketing of a substance as a dietary supplement when these products are being developed into drugs. Petitioner claims that in the case of pyridoxamine, “the pharmaceutical industry’s interests are no longer at stake.” All clinical investigations on pyridoxamine have ceased and, according to Petitioner and available evidence, there is no drug industry interest in resuming them. In addition, because pyridoxamine has various beneficial effects that other forms of vitamin B6 may not have, “[g]ranting [the requested] exception would give consumers access to a beneficial article.”

To our knowledge, this is the second time FDA has been asked to issue a regulation authorizing the marketing of a substance as a dietary supplement even though the substance was the subject of an IND before it was marketed as a food or dietary supplement. A 2009 Petition by OVOS Natural Health, Inc. to allow the marketing of homotaurine as a dietary supplement was the first (see our previous post here). FDA denied that Petition because, according to FDA, homotaurine was not a dietary ingredient. FDA never reached the issue of its authority under FDC Act § 201(ff)(3)(B). Since pyridoxamine is a member of the vitamin B6 family, and thus falls well within the definition of a dietary ingredient under FDC Act § 201(ff)(l )(A), FDA cannot punt on that issue this time.

The 21st Century Cures Act (Cures), signed into law in December 2016, established a program to provide priority review and management attention for breakthrough devices. We discussed the new section of the law in our earlier post on Cures (here). The law required FDA to issue a draft guidance regarding this program by November 7, 2017. On October 25, 2017, CDRH issued the required draft guidance, nearly two weeks ahead of the statutory deadline.

The guidance outlines the elements of the breakthrough device program, the key components of which were set out in Cures. Cures set out the definition of a breakthrough device, and the guidance provided additional clarification regarding how it will interpret these definitions. For example, one prong of the definition is that a proposed device “provides for more effective treatment.” The guidance explains that the Agency cannot know for certain at the early stage of development when breakthrough status is requested if a device will in fact provide more effective treatment. Therefore, the Agency will consider “whether there is a reasonable expectation that a device could provide for more effective treating or diagnosis relative to the current standard of care.” Similarly, when assessing whether a device offers “significant advantages over existing approved or cleared alternatives,” the Agency will consider the “potential” as compared to commercially available alternatives.

Another element of the definition is that a device be a “breakthrough technology.” When considering this prong, the Agency will evaluate “the potential for a device to lead to a clinical improvement in the diagnosis, treatment (including monitoring of treatment), cure, mitigation, or prevention of life-threatening or irreversibly debilitating condition.” Combination products that include a device constituent part will also be eligible for breakthrough device designation.

To request breakthrough status, a sponsor should submit a pre-submission. The draft guidance provides an example of such a request. A request should explain how a proposed device meets the definition of a breakthrough device as set out in Cures. The draft guidance indicates that the Agency will review and respond to such a request within 60 calendar days. It is worth noting that this timeline is twice as long as the current EAP program. The Agency intends to interact with the sponsor by day 30 and may request additional information, if needed in order to make a decision regarding breakthrough status.

The guidance indicates that manufacturers participating in the program will have the option of several ways in which to interact with the Agency during the review process. These options include:

• Sprint Discussions. This type of interaction is essentially a high-speed pre-submission with the goal of resolving a disagreement in a pre-specified time period (a timeline is proposed by the sponsor in the meeting request). A sponsor requests a sprint discussion through the pre-sub process. It is intended to be a “highly interactive” process. The guidance provides an example of a sprint discussion including a timeline.

• Data Development Plan (DDP). A sponsor can request that the Agency review and come to an agreement on a DDP prior to execution. A DDP can cover all clinical and non-clinical testing planned for a proposed breakthrough device. Review of a DDP is requested through a pre-submission. The DDP is an optional element of the breakthrough device program whereas it was a key aspect of the Expedited Access Program (EAP), its predecessor.

• Clinical Protocol Agreement. A sponsor can request that the Agency review and agree to a planned clinical protocol for a breakthrough device prior to execution. The Agency agreement will be binding, with a few exceptions enumerated in the guidance. A clinical protocol agreement is requested through the pre-submission process.

• Regular Status Updates. A sponsor can request regular periodic updates with the Agency (presumably the reviewing Division, including management, but the guidance does not say specifically). Regular status updates will be scheduled by FDA and the sponsor; a pre-submission is not required.

The guidance also expands on a number of elements of the program. For example, the guidance specifies that CDRH staff working on breakthrough devices will undergo specific training and “will be experienced with innovative approaches to regulatory science and clearly communicating FDA’s expectations during the device development process.” There are no specifics as to what specific criteria breakthrough device reviewers will need, but it is a good sign that the guidance commits to using experienced reviewers for these novel, clinically meaningful devices.

The guidance also states that breakthrough devices will receive priority review. The guidance also acknowledges that breakthrough devices often take longer to review because of the novel elements contained in these devices. In order to expedite the review process for breakthrough devices, CDRH requests that sponsors equally commit to resolving scientific and regulatory issues expeditiously during the review process.

For PMA devices, the guidance indicates that based on FDA’s discretion, the Agency will allow sponsors to provide less manufacturing information for breakthrough devices. Specifically, the guidance says that it may forego a preapproval inspection in certain circumstances. The guidance indicates,

• Manufacturers with no inspectional history will require a preapproval inspection; and

• FDA may postpone a preapproval inspection to after approval for:

manufacturers inspected within two years prior to the PMA filing date if the inspection results were No Action Indicated (NAI) or Voluntary Action Indicated (VAI) and FDA deems the inspectional results relevant to the pending PMA; and

manufacturers inspected between two and five years prior to the PMA filing date if the inspection results were No Action Indicated (NAI) or Voluntary Action Indicated (VAI) and FDA deems the inspectional results relevant to the pending PMA so long as the manufacturer provides:

a declaration stating that all activities at the relevant manufacturing site comply with the QSR; and

risk management documentation (e.g., in compliance with ISO 14971) indicating that risks associated with the device under review have been reduced to acceptable levels.

Once finalized, this guidance will replace the current Expedited Access Pathway (EAP) program. The EAP program was only established two years ago, in 2015. The breakthrough device program is very similar to and contains significant features of the EAP program. However, the draft breakthrough guidance does not address what will happen to devices that have been granted EAP status under the existing program. Industry relied on the existing EAP program to gain appropriate priority status for novel devices. It would be unreasonable for CDRH to require that manufacturers with EAP status for devices under development to obtain a new breakthrough device status. We hope that CDRH will address this gap before the breakthrough guidance is finalized.

On October 2, 2017, the New Jersey Attorney General and Division of Consumer Affairs published Proposed New Rule N.J.A.C. 13:45J, Limitations On and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers.  According to the preamble, the proposed rule responds to a concern about the “exponential growth in the amount of money that is being paid to prescribers.”  The preamble cites information about payments to prescribers in New Jersey that is available in the federal Open Payments database.

In order to “minimize the potential for conflicts of interest between prescribers and pharmaceutical manufacturers [and] to ensure that patient care is guided by the unbiased, best judgment of the treating prescriber[,]” the proposed rule would amend New Jersey’s health care professional licensing regulations to limit the gifts that may be received from pharmaceutical manufacturers by New Jersey providers authorized to prescribe medications: physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists.

Under the proposed rule, New Jersey prescribers could not accept the following from pharmaceutical manufacturers:

• Any financial benefit or benefit-in-kind, including, but not limited to, gifts, payments, stock, stock options, grants, scholarships, subsidies, and charitable contributions.
• Any entertainment or recreational items, such as tickets to theater or sporting events, or leisure or vacation trips.
• Items of value that do not advance disease or treatment education, including, but not limited to,
  • Pens, note pads, clipboards, mugs, or other items with a company or product logo;
  • Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork; and
  • Items that may have utility in both the professional and non-professional setting, such as electronic devices.

Under the proposed rule, New Jersey prescribers could accept the following permitted gifts and payments from pharmaceutical manufacturers:

• Items designed primarily for educational purposes for the patients or prescriber that have minimal or no value to the prescriber outside of his/her professional responsibilities. Items that may have independent value to the prescriber may only be accepted if the items are used by patients and remain in the common area of the prescriber’s office.
• A subsidized registration fee at a continuing education event, if that fee is available to all participants.
• Modest meals, worth no more than $15 per prescriber, at a continuing education event.
• Modest meals, worth no more than $15 per prescriber, at a promotional activity, no more than four times in a calendar year.
• Compensation, based on fair market value, for providing bona fide services as a speaker or faculty organizer or academic program consultant for a continuing education event or promotional activity. A prescriber may also accept reasonable payment for travel, lodging, and other expenses associated with such services.
• Compensation, based on fair market value, for participation on advisory bodies or under consulting arrangements.
• Sample medications or devices intended to be used exclusively for the benefit of the prescriber’s patients.

The rule would impose a limit of $10,000 per calendar year on the amount of compensation that a single prescriber may receive in the aggregate from all pharmaceutical manufacturers for speaking at promotional activities, participation on advisory boards, and consulting. Payment for speaking at continuing education events would not be subject to the $10,000 cap.

The proposed rule is modeled on the Pharmaceutical Research and Manufacturers of America Code on Interactions with Health Care Professionals (“PhRMA Code”), but includes certain limitations that are more stringent than the PhRMA Code. For example, under the PhRMA Code, manufacturers may provide modest meals to physicians on an occasional basis, but “modest” is not defined and there is no dollar limit.  In contrast, the New Jersey rule would limit the value of meals to $15 per prescriber.

Similarly, the PhRMA Code permits fair market value compensation and expense reimbursement for consulting services with no specified cap, whereas the New Jersey proposed rule would impose a $10,000 aggregate limit on the amount a prescriber could receive from all pharmaceutical manufacturers in a calendar year for providing bona fide services as a speaker at promotional activities, for participation on advisory bodies, and under consulting arrangements.

Importantly, the proposed rule would not specifically exempt compensation for serving as an investigator in a clinical trial or otherwise conducting bona fide research. Even if such research payments were considered “consulting arrangements,” they would be subject to the $10,000 aggregate annual cap applicable to each prescriber.  Unless a specific research exemption is added to the final regulation, participation of New Jersey physicians in studies sponsored or funded by drug manufacturers will be severely restricted, and clinical trials in which New Jersey prescribers currently serve as investigators could be adversely affected.

The proposed rule would provide the various New Jersey prescriber licensing boards with authority to take enforcement action against prescribers who accept prohibited gifts or payments from pharmaceutical manufacturers. Although the proposed rule would not impose penalties on, or otherwise increase the state’s authority over, pharmaceutical manufacturers, the limitations in the proposed rule could dramatically impact how manufacturers interact with prescribers in New Jersey.

A public hearing about the proposed rule was held on October 19, 2017. Written comments may be submitted to the Division of Consumer Affairs by December 1, 2017.  We will continue to monitor this proposed regulation.

On October 26, 2017, Par Sterile Products, LLC and Endo Par Innovation Company filed a Complaint in the United States District Court for the District of Columbia against the Food and Drug Administration. At the heart of the Complaint is FDA’s Interim Policy addressing compounding using bulk drug substances by outsourcing facilities pursuant to Section 503B of the Federal Food, Drug, and Cosmetic Act (FDCA) (see earlier posts on FDA’s Interim Bulks Policy (here, here, and here). Generally, FDA’s Interim Policy permits outsourcing facilities to compound formulations using bulk substances that are on FDA’s “Bulks List 1.” FDA describes its Bulks List 1 to include those substances nominated with sufficient supporting information for FDA to consider them, and they do not appear on any other list. FDA’s Interim Policy states that it intends to finalize the policy via the statutorily required notice and comment rulemaking, but it implemented the Interim Policy to permit compounders to provide medications and not disrupt patient access pending completion of the mandated rulemaking process. The Complaint alleges, however, the FDA’s rulemaking concerning its Bulks List and FDA’s creation of what the Complaint deems the “Clinical Needs List” was moved to “inactive” status and “indefinitely” postponed. Complaint ¶ 50.

Not so fast, say plaintiffs. They allege in their three-count Complaint that FDA’s Interim Policy violates the Administrative Procedure Act. Among other things, plaintiffs allege that Section 503B requires that, to add a bulk drug substance to Bulks List 1, FDA must make a “record-based determination” about a clinical need for compounding of that particular bulk substance pursuant to specific statutory notice and comment procedures. (Complaint ¶ 88 (citing 21 U.S.C. § 353b(a)(2)(A)(i)). Plaintiffs also claim that Section 503B(a)(5) also prohibits compounding “essentially copies” of approved drugs. By compounding drug products using the bulk ingredient vasopressin (which FDA added to Interim Bulks List 1 in July 2017), Plaintiffs allege FDA is permitting not only compounding in violation of the statutory directive to engage in appropriate rulemaking proceedings concerning the list, but is also permitting compounders to compound “essentially copies” using that bulk ingredient without a requisite “clinical difference” determination for the particular compounded vasopressin product.   Plaintiffs’ three counts allege FDA is acting in violation of the APA because it has no legal authority to permit the marketing of an unapproved drug, and is not free to “create its own exceptions” via its interim bulks nomination policy to not engage in notice and comment rulemaking. They allege that the Interim Policy is “final agency action,” not a lawful exercise of FDA’s enforcement discretion, and is inconsistent with the plain langue of the FDCA, including the Act’s drug approval requirements. In addition, Plaintiffs allege that FDA’s review of the July 2017 vasopressin nomination was arbitrary and capricious concerning, among other thing, the failure to appropriately address the clinical need for the bulk substance prior to its inclusion on the list. Plaintiffs also seek attorneys’ fees. Note that Section 503B does specifically permit FDA to promulgate an “Interim Policy.” See Section 503B(c)(3)(A). But that interim policy provision does not cover bulk substances that may be used in compounding: Congress limited that statutory provision to include only those substances in subsection (a)(6) of section 503B – those that present “demonstrable difficulties” for compounding.

There are several (somewhat familiar) issues that make this case especially interesting for those following the ongoing drug compounding saga since the events leading to the enactment of the Drug Quality and Security Act in November 2013. First, FDA approved vasopressin pursuant to what press accounts have described as a “little known safety program:” FDA’s so-called “Unapproved Drugs Initiative.” In other words, use of vasopressin is far from a “newly used” drug, notwithstanding its relatively recent FDA new drug approval. (See here – “Thanks at least partially to the FDA program, the price of vasopressin, a drug useful in cases of cardiac arrest and often found on crash carts, has risen 10-fold.”)   Although FDA’s various guidance documents on compounding “essentially copies” explicitly do not permit copies based on the price of the approved drug alone, drug manufacturers’ “significant” (and well-reported) price hikes of long-used drugs such as vasopressin (and colchicine, pyrimethamine, and hydroxyprogesterone) likely creates an opportunity for compounders to formulate a product that they may demonstrate is in fact not essentially a copy of the approved drug — at a significantly less expensive cost to the health care facility or provider. Second, although the present litigation may ultimately prove successful and change the way FDA considers bulk substances for use in compounding pursuant to Section 503B, the Complaint makes no mention of compounding under Section 503A, which is compounding by “traditional” compounding pharmacies or physicians pursuant to individually identified patient prescriptions. Unlike Section 503B outsourcing facilities, these compounders may indeed compound formulations from bulk substances using components of approved drug products. Thus, because vasopressin – as a result of FDA’s relatively recent approval – is now a “component of an approved drug product,” the thousands of compounding pharmacies across the United States may compound using that ingredient, so long as they do so lawfully and in accordance with the other provisions of Section 503A.

Earlier this week, the U.S. District Court for the District of Columbia issued a Memorandum Opinion granting summary judgment to FDA in a lawsuit Lannett Company Inc. and Lannett Holdings, Inc. (collectively “Lannett”) filed in June 2016 challenging FDA’s rescission of Lannett’s ANDA 202750 for the oral chemotherapy drug Temozolomide Capsules, 5 mg, 20 mg, 100 mg, 140 mg, 180 mg, and 250 mg. (Copies of the briefs filed in the case are available here, here, here, and here.)

As we previously reported, on May 17, 2016 FDA issued a letter to Lannett rescinding the approval of ANDA 202750 for Temozolomide Capsules, which the Agency had approved on March 23, 2016. According to FDA, the Agency approved the ANDA in error.  ANDA 202750 identified Chinese company Chongqing Lummy Pharmaceutical Co. Ltd. (“Lummy”) as the manufacturer of the active pharmaceutical ingredient for the drug product.  FDA inspected Lummy in mid-March 2016, and on April 19, 2016, the Agency placed Lummy on Import Alert, pointing to concerns over the company’s Current Good Manufacturing Practices (“CGMPs”) as the reason for the Import Alert.  On June 21, 2016, FDA issued a Warning Letter to Lummy summarizing significant CGMP deviations.

Lannett alleged in a five-count Complaint that FDA’s rescission of ANDA 202750 violates the Administrative Procedure Act (“APA”) and the Fifth Amendment’s due process right to a hearing in connection with deprivation of a property right. Lannett asked the DC District Court to, among other things, set aside and declare as unlawful FDA’s ANDA approval rescission, and to enjoin FDA from revoking the approval of ANDA 202750 without a hearing and the procedures established at FDC Act § 505(e).

In a 17-page Opinion granting FDA’s Cross-Motion for Summary Judgment and denying Lannett’s Motion for Summary Judgment, Judge Reggie B. Walton concluded that FDA’s approval rescission of ANDA 202750 is not final agency action subject to APA judicial review, and that Lannett failed to exhaust available administrative remedies under 21 C.F.R. § 314.110(b) before filing its June 2016 Complaint.

FDA argued that Lannett’s lawsuit is essentially an attempt to bypass the administrative process, and that the doctrine of exhaustion of administrative remedies is a conclusive factor that should prevent the Court from consideration of Lannett’s claims at the present time. After all, argued FDA, the Agency “has not made a final, judicially reviewable decision on the manufacturing compliance status of the facilities named in Lannett’s ANDA,” because “[a]fter [the Agency] afforded Lannett due process and properly rescinded the ANDA approval, the application returned to pending status and was subject to regulatory requirements described in [FDA’s] Complete Response Letter.”

In response, Lannett argued that FDA’s ANDA approval rescission meets the test for a final agency action under the APA because it “was the consummation of the agency’s decision-making process to revoke the approval (not a tentative or interlocutory decision), and definitively adjudicated and revoked Lannett’s legal right to market Temozolomide capsules.” Lannett also asserted that the company “was not required to exhaust administrative remedies before filing this case” because FDA’s ANDA approval rescission “formally and definitively deprived [the company] of its legal entitlement to market Temozolomide capsules.”

After noting that “[a]An agency action is final if it ‘1) marks the consummation of the agency’s decision making process’ and 2) affects the ‘rights or obligations . . . [or the] legal consequences’ of the party seeking review,” and that whether “FDA’s rescission of a mistakenly approved ANDA and placement of that ANDA back into the review process queue is a final agency action” seems to be a case of first impression, Judge Walton proceeded with his analysis.

As to Lannett’s position that FDA’s action resulted in the “consummation of the agency’s decision-making process to revoke the approval” of ANDA 202750, Judge Walton said that that position “is too narrow for the Court to accept, primarily because Lannett’s position focuses solely on the rescission of the approval, which Lannett equates as a final agency action.”

Applying the principle that a court must look at the way in which an agency subsequently treats a challenged action when assessing whether a particular agency action qualifies as final for purposes of judicial review, Judge Walton concluded that “although the FDA did rescind Lannett’s ANDA approval, the FDA expressly advised Lannett that its ANDA was ‘now in pending status,’” among other things. As such, “FDA’s rescission action did not represent the conclusion of its decision-making process regarding the review process for Lannett’s ANDA or its ultimate decision to either approve or deny Lannett’s ANDA.”

And even if FDA’s ANDA approval rescission “could be perceived as the consummation of its decision-making process,” Judge Walton was not convinced that Lannett’s action satisfies the second prong of the finality doctrine above. Quoting from American Therapeutics v. Sullivan, 755 F. Supp. 1 (D.D.C. 1990) (here), a case that also involved FDA’s rescission of an ANDA approval because of CGMP concerns, Judge Walton wrote that Lannett “pictures itself, quite incorrectly, as having been deprived of a vested right.  [Rather, i]t had no right to put on the market a drug when facts were available indicating that the public health might be injured.”

Moving on to the doctrine of exhaustion of administrative remedies, Judge Walton concluded that “FDA’s rescission action cannot be considered final because Lannett has yet to exhaust all of its available administrative remedies.” Citing FDA’s regulation at 21 C.F.R. § 314.110(b) concerning Complete Response Letter actions, Judge Walton said that “Lannett was obligated to comply with the procedures provided in the FDA’s regulations by either resubmitting or supplementing its ANDA, withdrawing its ANDA, or requesting an opportunity for a hearing.”  But, instead of pursuing one of the specified actions, as the company should have done, “Lannett opted to file this action seeking judicial review.”