In late June, Pacira Pharmaceuticals informed the FDA, the European Medicines Agency, and Health Canada that the company had filed a notice with the U.S. Securities and Exchange Commission, advising of its intent to discontinue all future production of DepoCyt® due to “…persistent technical issues specific to the DepoCyt(e) manufacturing process…” suggesting that the company was having significant cGMP issues. Pacira added that the decision did not affect any product that had already been distributed to customers or administered to patients.

DepoCyt® (cytarabine liposome injection) (approved under NDA 021041) is indicated for the intrathecal treatment of lymphomatous meningitis, and has been manufactured at the Pacira facility in San Diego, California since approval was first obtained in 1999. That was an accelerated approval, and full approval followed in 2007.  The Orange Book lists other manufacturers of cytarabine, including Hospira, Mylan, West-Ward, and Fresenius-Kabi (Teva is known to have exited the cytarabine market relatively recently), though none of those products appear to be in exactly the same dosage form as DepoCyt, as none of them are “liposomal” cytarabine.

It is unclear whether this difference in dosage form will prevent physicians from using them to treat lymphomatous meningitis as, according to the U.S. National Library of Medicine, the other approved cytarabine products are indicated for use alone or with other chemotherapy drugs to treat other conditions, including certain types of leukemia, including acute myeloid leukemia, acute lymphocytic leukemia, and chronic myelogenous leukemia, and some are not approved for intrathecal use as was DepoCyt. That said, some medical sources list therapeutic alternatives to DepoCyt as including non-liposomal cytarabine (for example, the European Medicines Agency).

Cytarabine was on the CDER drug shortage list in 2010 and 2011 as some of the manufacturers had cGMP issues and another had difficulty obtaining enough of the Active Pharmaceutical Ingredient, all of which impeded manufacturing and distribution of the drug.

Regarding Pacira’s DepoCyt, the San Diego facility was inspected as recently as 2015 by FDA, and that inspection as well as the prior several are all listed as Voluntary Action Indicated (“VAI”) on FDA’s website. Furthermore, a review of the Pacira 483s from 2014 and 2012 does not provide much insight as to the types of “persistent technical issues” that Pacira might be referring to.   (We were unable to obtain the 2015 483 Inspectional Observations for review).

On the other hand, a July 2012 inspection carried out jointly by the United Kingdom and French medicines regulatory agencies identified a number of “manufacturing deficiencies.” According to the agencies, the more serious findings related to “a lack of adequate sterility assurance in the manufacturing process…” and these findings “posed a theoretical risk of sterility failure…”  As a result, the European Medicines Agency recalled DepoCyte from all European countries where suitable alternative treatments were available.

It is unclear whether the current problems also relate to a lack of sterility assurance. A Pacira spokesperson stated that “[g]iven that alternative therapies are available for patients with lymphomatous meningitis, Pacira believes that it is in the best interests of patients to permanently discontinue the product, rather than face the prospect of prolonged uncertainty about product availability.”

One can only hope that the cytarabine market is not headed towards another shortage situation.

In likely the first time since the United States Court of Appeals for the Fifth Circuit decided Medical Center Pharmacy v. Mukasey, 536 F.3d 385 (5th Cir. 2008) (see our previous post here), a federal court located in the Western District of Louisiana (within the Fifth Circuit) determined that compounded animal drugs are subject to – and thus not exempt from – the Federal Food, Drug, and Cosmetic Act (“FDCA”).  The case, United States v. Kohll’s Pharm. & Homecare Inc., 2017 U.S. Dist. LEXIS 105265, centers on an animal drug compounding pharmacy and a veterinarian.  The veterinarian and the pharmacist allegedly worked together provide a synthetic version of dermorphin to racehorses to influence the outcome of races (it purportedly makes racehorses more focused and helps them run faster).  The drug product is not approved for use by FDA in either humans or animals.  The indictment alleges that, when the pharmacy sent the drug to the veterinarian, it “falsely relabeled the dermorphin product that it had received from a chemical supply company to make it appear” that the dermorphin was a drug compounded by the pharmacy pursuant to a veterinarian prescription.  As such, although the product would not fall under any definition of “compounded drug,” defendants argued the product was a “compound” purportedly exempt from the new drug and other requirements in the FDCA.

The indictment alleged, among other counts, that the veterinarian and pharmacy conspired to introduce, deliver and receive for pay misbranded and adulterated drugs with the intent to defraud FDA, the Louisiana Racing Commission, and State Police (21 U.S.C. § 331(a) and (c)); and alter or remove the drugs’ label, thereby making them misbranded and adulterated (§ 333(a)(2)). Reviewing the pertinent sections of the FDCA to support its position that dermorphin is a “new animal drug” because it allegedly affects the function of the racehorses, the court stated that under Section 360(b) a new animal drug is unsafe unless it is approved by FDA or the subject of an exception.

Enter “compounding” as that “exception.” Defendants argued that drug compounding by veterinarians is exempt from the FDCA, and compounded animal drugs can’t be considered either adulterated of misbranded because they are not “new animal drugs.”  Not buying the defendants’ legal position, the district court stated:

[T]o the extent that defendants argue that an entity which holds itself out as a veterinary compounder is exempt from compliance with the FDCA, that argument fails. The FDCA’s application hinges on the substances in question not who created the substance. Therefore, if a compounded animal drug exception existed under the FDCA, the exception would only apply when the drug in questions was actually compounded.

2017 U.S. Dist. Lexis 105265 *8 (Med. Center Pharmacy).  In fact, the indictment did not even allege that any act of compounding occurred by either the pharmacy or the veterinarian.  It instead described the criminal actions as only “relabeling” by the pharmacy to “make it appear” as if the drug was a compounded drug, from which the veterinarian created a liquid suspension out of powdered dermorphin.  The court went further, however, and found that, even if the product were compounded, the FDCA would still apply.  Being bound by the Medical Center Pharmacy decision in the Fifth Circuit, the district court stated that compounded animal drugs are indeed “new animal drugs” subject to 21 U.S.C. § 321(v)(1) (new animal drug defined).  Because dermorphin allegedly has not been recognized as safe and effective for use in animals (i.e., it is unapproved), it is considered a new animal drug subject to FDCA’s new animal drug approval and other requirements.  The court also noted that the product was adulterated under § 351(a)(5) because the pharmacy allegedly did not sell the product to the veterinarian pursuant to an order in the context of an appropriate vet-patient-client relationship, because no prescription was provided and the underlying application of the drug was illegal under state law.  As to the misbranding allegation, the court stated that it was mislabeled or unlabeled, and did not contain adequate directions for use, in violation of the FDCA, 21 U.S.C. § 352(a)(1), (b), and (c), and (f)(1).

Does the Food and Drug Administration’s review of medical devices in the 510(k) program involve a substantial review of safety and effectiveness? FDA says it does (p. 44). Device makers and those of us who practice in this area know how burdensome and extensive this process can be. It requires device makers to provide extensive preclinical safety and effectiveness data for FDA’s review. Depending upon the type of device, FDA may also require clinical data. We wrote a Food and Drug Law Journal (FDLJ) article in 2014 describing the evolution of the 510(k) program and its current‑day rigor.

Nonetheless, the federal courts continue to view the 510(k) process as a nothing‑burger. The latest example comes in a case against Johnson & Johnson (J&J) involving the TVT‑O pelvic mesh. The trial court refused to allow the defendants to present any FDA‑related evidence, including the fact that this device received 510(k) clearance. The trial court insisted that the 510(k) review did not address the safety of the TVT‑O pelvic mesh. On appeal from a $3.3 million dollar jury verdict, the Fourth Circuit affirmed. A petition for certiorari has been filed in the Supreme Court. Friend of the court briefs were filed by the Advanced Medical Technology Association (Advamed) and Product Liability Advisory Council (PLAC). (Full disclosure: The petition for certiorari and the amicus briefs all cite and quote our FDLJ article.)

What is the origin of the trial court’s view of the 510(k) process? In Medtronic v. Lohr, 518 U.S. 470, 479 (1996), the Supreme Court described 510(k) equivalence review as very limited. In that case, the Court was reviewing a products liability claim against a medical device cleared in 1982. The basic problem is that the lower courts have overlooked the changes to the 510(k) program. The 510(k) program was a temporary grandfathering provision, but over the decades became the dominant regulatory pathway to market for medical devices.

The changes to the 510(k) program include both an important statutory change in 1990, as well as extensive administrative changes over the past few decades. The Supreme Court’s view of the 510(k) process as it existed in 1982 was accurate at the time, but it is obsolete today. There is no question that, as both a legal and as a factual matter, the 510(k) process includes a review of safety and effectiveness. It is simply error for the lower courts to deny it.  Or to insist that a 510(k) review only takes FDA 20 hours on average.

Still, the federal courts continue as if the 510(k) program has not changed since 1982. Every year they recycle the same mischaracterizations of the 510(k) process. There seems to be no end in sight, unless perhaps the Supreme Court accepts the TVT‑O case (or another similar case) for review. The Court could then use the opportunity to steer the lower courts to a proper understanding of the 510(k) review process and the role it should play in court cases. It is unfair to the defendant when, as in the TVT‑O case, a judge excludes obviously relevant evidence based upon a severe misunderstanding of the government’s own regulatory process. The time is long past due for the Supreme Court to fix this problem.

We previously blogged (here) about Maryland’s law prohibiting “price gouging” by generic pharmaceutical manufacturers.  That bill, 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 Maryland Governor Larry Hogan stated, on May 26, that he would allow the bill to become law without his signature.  HB 631 takes effect on October 1, 2017, unless it is struck down by the courts.  To that end, the Association for Accessible Medicines (“AAM”), the generic drug manufacturers’ trade association, filed suit on July 6, 2017, seeking declaratory and injunctive relief against the implementation and enforcement of HB 631. Ass’n for Accessible Meds. v. Frosh, No. 1:17-cv-1860 (D. Md. July 6, 2017).

In summary, HB 631 aims to limit 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 Attorney General (“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.

HB 631 also arms the AG with civil remedies for violations of the above provisions, including injunctive and monetary relief as well as civil penalties.

AAM’s complaint challenges HB 631 on two constitutional grounds. First, AAM alleges that HB 631 violates the dormant Commerce Clause of the Federal Constitution because it regulates commerce wholly outside of Maryland.  Compl. at 2, 23-27, Ass’n for Accessible Meds. 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 argues 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, the transactions themselves, including pricing determinations, are made on a national basis and do not take place within the State of Maryland.  AAM states 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 goes on to argue that price restraints imposed by Maryland would “inevitably affect commercial transactions, pricing, and commerce in other states.” Id. at 13.

To illustrate its point on this issue, AAM provides an example of the extra-territorial reach of HB 631. In the example, a New Jersey-based generic drug manufacturer that has no operations in Maryland sells a product otherwise subject to the provisions of HB 631 to a wholesaler in Pennsylvania, which also has no operations in Maryland.  The wholesaler then sells the product to a local pharmacy in Maryland where an intra-state sale from the pharmacy to the patient is made.  If the intra-state sale results in an excessive price paid by the patient, HB 631 authorizes the AG to seek civil remedies for the violation from the manufacturer (and/or the wholesaler, unless the wholesaler’s excessive price was attributable to the costs imposed by the manufacturer).  According to AAM, in this chain of transactions, HB 631 regulates “every transaction outside of Maryland, but does not govern the primary transaction inside its borders.”  Mem. of Law in Supp. Pl.’s Mot. Prelim. Inj. at 29-30, Ass’n for Accessible Meds. v. Frosh, No. 1:17-cv-1860 (D. Md. July 6, 2017).

Second, AAM argues that HB 631 is impermissibly vague and, therefore, violates the Fourteenth Amendment Due Process Clause. See U.S. Const. amend. XIV, § 1.  Due Process requires that laws must be drafted to provide the average person a reasonable opportunity to understand what the law says and, importantly, what conduct the law proscribes.  HB 631 prohibits price gouging, which is an “unconscionable increase” in the price of such prescriptions drugs.  HB 631 defines this term as a price increase that is “excessive and not justified” by the manufacturing cost or costs associated with expanding access to the drug for the purpose of promoting public health, and which results in patients having “no meaningful choice” as to whether or not to purchase the drug because of its importance to their individual health and insufficient market competition.  AAM argues that HB 631 does not provide any guidance on how these terms should be interpreted or applied.  Specifically, AAM states in its complaint, “[m]anufacturers and distributors have no way to determine whether a given price is ‘excessive,’ whether a given market expansion is ‘appropriate,’ or whether a given consumer’s option set is ‘meaningful.’”  Compl. at 28.  Given that these terms have not been defined in HB 631 and cannot be reasonably interpreted absent additional guidance from the legislature, AAM contends that HB 631, as drafted, fails to provide requisite fair notice to those subject to its prohibitions, in violation of the Fourteenth Amendment’s Due Process requirements.

A similar Commerce Clause challenge was successfully litigated, by the Pharmaceutical Research and Manufacturers of America (“PhRMA”), in a lawsuit brought in federal court against the District of Columbia. In this case, PhRMA sought to enjoin the District of Columbia from enforcing a law that made it unlawful for a pharmaceutical manufacturer to sell a patented prescription drug for an “excessive price.” PhRMA v. District of Columbia, 406 F. Supp. 2d 56, 60 (D.D.C. 2005), aff’d sub nom. Biotechnology Indus. Org. v. District of Columbia, 496 F.3d 1362 (Fed. Cir. 2007).  The district court held that the D.C. law was per se invalid because of, among other things, its “extraterritorial reach in violation of the Commerce Clause as applied to transactions between manufacturers and wholesalers that occur wholly out of state.” Id. at 68.  On appeal the District of Columbia did not challenge the district court’s decision on the Commerce Clause issue, but the Court of Appeals upheld the district court’s decision on other grounds. Biotechnology Indus. Org., 496 F.3d at 1366, 1374.We will continue to monitor the Maryland case and provide updates as it progresses.

Individual practitioners represent more than ninety percent of the approximately 1.6 million DEA registrants. We believe it fair to say that of all the types of DEA registrants (e.g., manufacturers, distributors, importers, etc.), individual practitioners have less opportunity to read the Federal Register for notices related to new duties and responsibilities.  Yet the DEA continually buries new duties and responsibilities related to prescribers in its administrative decisions rather than utilizing other methods such as guidance documents and notice-and-comment rulemaking to inform practitioners of the expanding duties.  Worse yet, as reflected in the recent case of Peter F. Kelly, D.P.M., 82 Fed. Reg. 28676 (June 23, 2017), DEA has created a litany of new duties on questionable statutory or regulatory basis. We also question whether the punishment fits the alleged misconduct of the registrant in this case.

In Kelly, DEA alleged, inter alia, that one of the physician’s employees had misused the physician’s state registration by creating fraudulent prescriptions for state-controlled substances and then diverting those controlled substances into “illegitimate channels.”  Despite evidence that the physician cooperated with state officials when this activity was discovered and took steps to ensure it did not happened again, DEA appears to believe that physicians also need to become private investigators to fulfill their role as DEA registered physicians.  In the opinion, the DEA Acting Administrator addressed these allegations by identifying the following set of duties that apply:

• “[W]here a registrant is provided with credible information that his state prescribing authority is being used to divert a state-controlled (but not federally controlled) drug, such information triggers the duty to investigate whether his DEA registration is also being used to divert federally controlled substances.”
• Additionally, in such a situation, and if the state prescription monitoring program (PMP) “permits a practitioner to obtain information as to his controlled substance prescribings,” the practitioner “has a duty to obtain that information and to determine whether unlawful prescriptions for federally controlled substances are also being dispensed under his registration.”
• If state law does not authorize a practitioner to obtain a PMP report of “dispensings which have been attributed to him,” the practitioner “is obligated to obtain that information from a pharmacy that reports a fraudulent prescription to him.”
• The practitioner “must report” to DEA and local enforcement authorities any information obtained from the practitioner’s investigation that shows a misuse of the registration.
• The practitioner also “has a duty to conduct a reasonable investigation to determine whether his employees are involved in the misuse of his registration” upon receipt of “credible information” that the practitioner’s registration “may be the subject of misuse.”

Id. at 28686.

Moreover, the Administrator basically implied that there is also a duty to terminate employees found to have engaged in wrong doing, and threatened “serious consequences” for failing to take such action. Id. at 28691.

In support of establishing these new duties, the Administrator referenced the relatively obscure case of Rose Mary Jacinta Lewis, M.D., 72 Fed. Reg. 4035 (Jan. 29, 2007). That case involved a physician taken advantage of by a non-profit that allegedly supplied medical supplies for AIDS patients in Nigeria.  DEA alleged that individuals at the non-profit used the physician’s DEA registration to order mass quantities of controlled substances and diverted them into non-lawful channels.  Though the physician had some limited knowledge that her registration was being used unlawfully, DEA found that she “fail[ed] to take even the most rudimentary steps to investigate the misuse of her registration.” Id. at 4042.

The Administrator in that case held that the physician had a “duty” to perform an investigation:

Consistent with a registrant’s obligation to “provide effective controls and procedures to guard against theft and diversion of controlled substances,” 21 C.F.R. 1301.71(a), every registrant has a duty to conduct a reasonable investigation upon receiving credible information to suspect that a theft or diversion has occurred.

Id.

In the present Kelly decision, the Administrator again reiterated the alleged “duty” in Jacinta Lewis, and based the new obligations on this “duty.” Kelly, 82 Fed. Reg. at 28685-86.  Yet as outlined above, the breadth and scope of these new duties goes far beyond any reasonable interpretation of the existing law or regulations.

In Jacinta Lewis, DEA cited the first portion of 21 C.F.R. § 1301.71(a), which states that all registrants “shall provide effective controls and procedures to guard against theft and diversion of controlled substances.”  However, it neglected to cite the next sentence:

In order to determine whether a registrant has provided effective controls against diversion, the Administrator shall use the security requirements set forth in [21 C.F.R. §§ 1301.72-1301.76] as standards for the physical security controls and operating procedures necessary to prevent diversion.

21 C.F.R. § 1301.71(a) (emphasis added). Sections 1301.75 and 1301.76 apply to practitioners and list out the duties placed on practitioners to ensure effective controls against diversion.  These duties include storage of controlled substances, employee screening, and reporting upon discovery of theft or loss of controlled substances.  These specific regulations contain the universe of duties placed on practitioners to fulfill their obligation under 21 C.F.R. § 1301.71(a) to “provide effective controls and procedures to guard against theft and diversion of controlled substances.”

The duty the Administrator raised in Jacinta Lewis, and now the expanded duties  in Kelly, do not reasonably flow from DEA’s regulations.  In fact, they effectively amend the existing finite list of obligations placed on practitioners in the regulations.  In our opinion, DEA is shirking its responsibilities as a federal agency to engage in proper rulemaking by creating new investigatory obligations for practitioners.  It also appears to be another example where DEA believes registrants are required, if not qualified, to be expert investigators capable of rooting out diversion schemes.

To DEA’s credit, it did not enforce the new obligations announced in Kelly on the practitioner in that case (note, though, that the practitioner in Jacinta Lewis was not so fortunate).  The Administrator held that

as this is a new and additional duty beyond that which was announced in Jacinta Lewis, which applies only to a practitioner’s receipt of information that his DEA registration is being misused, I conclude that it cannot be retroactively imposed on Respondent.

Kelly, 82 Fed. Reg. at 28686.

Finally, the Administrator imposed a one-year suspension on the prescriber. This punishment does not seem warranted particularly where there is no allegation that the physician was not otherwise inappropriately prescribing and dispensing controlled substances.  In our opinion, a suspension or probation would be more appropriate in cases where a practitioner is required to complete some type of treatment program.  In this case, while the registrant certainly needed to maintain better records and security, remedial training would be helpful if it does not warrant a one-year suspension from being able to practice medicine with controlled substances.*

Our advice, in short, is that DEA registered practitioners consider boning up on their investigative skills, or at minimum, binge watch episodes of NCIS.

*We note that the Administrator ordered that if the physician intended to “dispense” controlled substances after the suspension, the physician would need to show evidence of having completed a “prescribing” course.   We suspect this was in error and that the Administrator meant that the physician would have to complete a controlled substance dispensing course.

On June 23, 2017 FDA published a notice in the Federal Register entitled: “Submission of Proposed Recommendations for Industry on Developing Continuous Manufacturing of Solid Dosage Drug Products in Pharmaceutical Manufacturing; Establishment of a Public Docket”. This notice relates to a workshop FDA hosted on the future of pharmaceutical manufacturing in 2015, where FDA had recommended that interested parties submit draft guidance or other materials discussing best practices related to so-called “continuous manufacturing.”

Since then, the Center for Structured Organic Particulate Systems (C-SOPS) submitted to FDA an industry coordinated best practices document on continuous manufacturing, entitled “Current Recommendations for Implementing and Developing Continuous Manufacturing of Solid Dosage Drug Products in Pharmaceutical Manufacturing”. FDA is now interested in receiving public comments about the practices discussed in the C-SOPS document and hence has opened a docket for that purpose.  FDA is also interested in receiving comments and other recommendations regarding continuous manufacturing, particularly on control strategy, facility, and process validation considerations for continuous manufacturing of solid oral dosage forms.

Pharmaceutical manufacturing can be classified into one of three categories, all based on how the materials enter and leave the manufacturing process: batch, semi-continuous and continuous. Historically, pharmaceutical operations have been performed by the batch process, known as batch manufacturing, which involves sequentially loading a fixed amount of material into the first part of the manufacturing process, processing that material, and then discharging that material in preparation for the next phases of manufacturing, which could take place weeks, or months, later.

Continuous manufacturing, on the other hand, involves material constantly being loaded, processed and unloaded without interruption through the various phases of the manufacturing process. Semi-continuous manufacturing has elements of both batch and continuous manufacturing in that materials are either constantly loaded or constantly removed from the manufacturing process, though not without interruption (for more information on these processes please see C-SOPS’ “Current Recommendations for Implementing and Developing Continuous Manufacturing of Solid Dosage Drug Products in Pharmaceutical Manufacturing”).

For years now, FDA has been encouraging manufacturers to switch from traditional batch manufacturing to continuous manufacturing, based on the premise that batch manufacturing processes are outdated (they have not changed in well over fifty years), and that continuous manufacturing is more reliable, safer, more efficient (i.e., can drive down manufacturing costs), and allows manufacturers to respond much quicker to changes in demand, thereby theoretically reducing the likelihood of drug shortages (see, for example, FDA’s slide presentation from January 2012, at the IFPAC Meeting in Baltimore, Maryland, entitled “FDA Perspective on Continuous Manufacturing”).

Indeed, the agency has had a couple of successes in this regard. For instance, in July 2015, FDA approved Vertex’s cystic fibrosis drug called Orkambi (lumacaftor/ivacaftor) on the basis of the firm’s continuous manufacturing process and, in April of 2016, for the first time, FDA approved a manufacturer’s change in its production method from batch to continuous manufacturing for its previously approved product – Janssen’s HIV drug Prezista (darunavir).

However, despite many years of FDA encouragement, much of the pharmaceutical industry has seemed reluctant to jump head first into the realm of continuous manufacturing. There appear to be at least a couple of reasons for this.  For previously approved products, manufacturers might be reluctant to submit a supplement to modify the existing type of manufacturing in order to produce the same product the firm is already marketing lest the agency raise concerns with the new continuous manufacturing process, and thereby short circuit the planned phase-out of the old method of manufacturing (i.e., regulatory uncertainty).

For products yet to be approved by FDA, there is the impediment of a significant capital investment in the new equipment specifically designed for continuous manufacturing, particularly when the benefits, described above, appear speculative and, to the extent they are not speculative, the monetary rewards may not allow for the recouping of the capital investment (i.e., uncertain economic benefit).

One question that has been frequently raised within industry circles is whether FDA’s cGMP regulations at 21 CFR Part 210 and 211 are entirely compatible with the concept of continuous manufacturing and, hence, whether this could create a regulatory problem for firms that switch to continuous manufacturing. FDA has long maintained that the regulations are entirely compatible with this new form of drug manufacturing, despite the fact that the regulations are built around the concept of a “batch” (for instance, see the FDA slide presentation from the IFPAC meeting mentioned above).  Examples of cGMP regulations in the 211s that reference important concepts related to batch or lot manufacturing include 21 CFR 211.150(b), 211.165(a), 211.188, and 211.192.

Indeed, FDA has stated that the term “batch” in the regulations refers to the “quantity of material” and not the “mode of manufacture” and has added that FDA’s quality by design efforts would benefit to a greater extent from the more modern manufacturing approach, as it has a greater potential to improve the quality assurance of drug manufacturing.

In terms of Federal action in this area thus far, FDA published a guidance document in December 2015, which tangentially relates to this issue, entitled “Advancement of Emerging Technology Applications to Modernize the Pharmaceutical Manufacturing Base.” It provides recommendations to pharmaceutical firms interested in participating in a program involving the submission of CMC information containing emerging manufacturing technology to FDA.  Also, the 21st Century Cures Act authorizes HHS to award grants to academic institutions and nonprofit organizations to study and recommend improvements to the process of continuous manufacturing of drugs and biologics (section 3016).

We will continue to update our readers on this emerging area of pharmaceutical manufacturing, and will soon publish an overview of the recommendations that were made by C-SOPS.

As we reported a couple of months ago, the naming of plant-based products continues to be an issue. For at least two decades, there has been uncertainty as to the use of the term “milk” and other dairy terms for products derived from plant material rather than from animals. Most recently, a California court put the issue squarely on FDA’s plate, declining to hear a case on the merits pending the Agency’s determination on the use of the term “imitation” on products such as soymilk and almond milk.

The case at issue arose when Plaintiffs brought an action claiming that plant-based milks were “imitation” products and should be so identified on the label. This argument represented a change in Plaintiffs’ strategy after Courts appeared to side with defendants in previous cases in which plaintiffs had alleged that terms such as “soymilk” or “almond milk” were misleading. In early June, the District Court of the Eastern District of California concluded that the “imitation” question was an issue of first impression and should be left to FDA rather than to the Court(s).  The Court concluded that the doctrine of primary jurisdiction applied.

As explained by the Court, the FDC Act was enacted to create a uniform and comprehensive labeling scheme. The issue raised in the litigation, i.e., that plant-based milk products are nutritionally inferior substitutes for cow milk and therefore must be identified as “imitation” product, has not been addressed by FDA. Rather than leaving this to the Courts risking inconsistent and contradictory decisions, the determination of labeling these products should be left to FDA; the issue falls squarely within FDA’s jurisdiction and expertise.

Further, the Court noted that the issue is on FDA’s radar: in December 2016, Congress requested that FDA more aggressively police the use of the term “milk” in naming of non-dairy foods and in March 2017, the Good Food Institute submitted a Citizen Petition asking that FDA issue guidance and a regulation concerning the naming of foods by referencing other “traditional” foods (see our previous post here) Thus, the Court stayed the action and referred the matter to FDA.

A few weeks earlier, another California Court in a similar action outright rejected the argument that the label should identify the product as “imitation” because the likelihood for confusion was “patently implausible.”  According to the Court, any consumer “concerned about the nutritious quality of the product” could read the nutrition label. That case was dismissed with prejudice.

The issue of naming plant based foods is not limited to the United States. On the 14th of June, the Court of Justice of the European Union ruled that purely plant-based products cannot be marketed with designations such as “milk,” “cream,” “butter,” “cheese” or “yogurt,” unless specifically exempt under regulation (EU) No 1308/2013.  The relevance of that decision for the U.S. remains to be seen.

In the aftermath of the Sandoz v. Amgen Supreme Court decision, both sides should be happy that some of the procedural uncertainty surrounding the Biologics Price Competition and Innovation Act (“BPCIA”) patent dance has been resolved.  But that would be too easy.

Even though U.S. Supreme Court was needed to determine that the BPCIA requires aBLA sponsors to provide notice 180 days prior to commercial marketing before or after FDA approval, there has been little argument that the 180-day notice is mandatory.  But on June 29, 2017, Amgen raised questions of what actually constitutes such notice.  Amgen filed a redacted copy of its revised opening brief in Amgen v. Hospira, Case 1:15-cv-00839 (D. Del.), supporting a motion for preliminary injunction alleging that Hospira refuses to provide valid notice of intent to market a biosimilar version of Amgen’s Epogen (epoetin alfa).  As we previously blogged, in September 2015, Amgen filed in its initial complaint against Hospira alleging patent infringement and failure to comply with various provisions of the BPCIA with respect to a biosimilar version of Epogen.  Relevant to this revised complaint, Hospira filed notice of intent to market with Amgen in April 2015.  However, Amgen now argues that because Hospira received a Complete Response Letter from FDA in October 2015 and refiled in December 2016, the initial April 2015 notice was invalid.

This revised complaint raises new questions: What actually constitutes sufficient notice? Will an intervening Complete Response Letter negate initial notice?  And if so, what recourse does a reference product sponsor have if the aBLA applicant refuses to provide notice?  If no private right of action is available, how can the reference product sponsor assert its patents prior to aBLA launch?  This is a particularly pertinent question in Amgen v. Hospira, as Hospira has refused to provide manufacturing information under PHS Act § 262(l)(2)(A), and the district court denied Amgen discovery of manufacturing information because the information was not relevant to the patents-in-suit (interlocutory appeal to the Federal Circuit has been pending on this issue since July 2016).

This is probably one of many unforeseen questions arising from the BPCIA. As with the Hatch-Waxman Act, as new scenarios continue to arise, more questions will pop-up.  We’re just going to keep watching the dockets to see what happens next!

We’re tickled pink here at the FDA Law Blog when we see an issue raised in one of our posts addressed in legislation. That happened last week when Senators Orrin Hatch (R-UT) and Robert Menendez (D-NJ) introduced the latest iteration of the Orphan Products Extension Now Accelerating Cures and Treatments Act (“OPEN Act”).

The OPEN Act, which draws inspiration from both the Best Pharmaceuticals for Children Act (“BPCA”) (FDC Act § 505A) and the Generating Antibiotic Incentives Now Act (“GAIN Act”) (FDC Act § 505E), would amend the FDC Act to add Section 505G, titled “Extension of Exclusivity Periods For A Drug Approved For A New Indication For A Rare Disease Or Condition,” to authorize FDA to designate a drug (including a biological product) “as a drug approved for a new indication to prevent, diagnose, or treat a rare disease or condition,” provided, among other things, that “prior to approval of an application or supplemental application for the new indication, the drug was approved or licensed for marketing under [FDC Act § 505(c)] or [PHS Act § 351(a)], but was not so approved or licensed for the new indication.”  The designation of a drug approved for a new indication for a rare disease or condition would result in a 6-month extension of various exclusivities provided for under both the FDC Act and the PHS Act.

The OPEN Act of 2017 (S. 1509), is largely a rehash of previous versions of the bill . . . . except for Sections 3 and 4 of the bill.  Of particular interest to this blogger is Section 4 of the OPEN Act of 2017. In March 2017, we put up a post, titled “Should the Best Pharmaceuticals for Children Act be Amended to Accommodate 505(b)(2) NDA Labeling Carve-outs?”  We noted that the BPCA, and FDC Act § 505A(o) in particular, does not address 505(b)(2) NDAs.  “The BPCA neither addresses the carve-out or retention of protected pediatric information from 505(b)(2) product labeling, nor does the BPCA address the use of disclaimers for protected pediatric use information that is carved-out of 505(b)(2) product labeling,” we stated.  This leads to an inequity:

FDC Act § 505A(o) . . . allows an ANDA applicant to omit from its labeling certain patent- and/or exclusivity-protected information concerning the pediatric use of a drug, and to include a disclaimer with respect to the omitted information. . . .

If FDA determines that the protected pediatric information is important safety information, and therefore, must be retained in 505(b)(2) product labeling for reasons of safe use, then a full approval for the affected 505(b)(2) product cannot be issued until pediatric exclusivity has expired. Instead, FDA could issue only a tentative approval, with final approval dependent on the expiration of exclusivity applicable to pediatric labeling information.  This is true regardless of how close a 505(b)(2) NDA product may be to an ANDA drug product (and which ANDA could be approved by operation of FDC Act § 505A(o)).

Section 4 of the OPEN Act of 2017 would remedy the inequity among ANDA and 505(b)(2) applicants that we pointed out by amending FDC Act § 505A(o) to include 505(b)(2) NDAs. Here’s how those proposed changes would appear in the statute if Section 4 of the OPEN Act of 2017 is enacted (deletions shown in strikethrough typeface and additions in bolded and italicized red typeface):

(o) PROMPT APPROVAL OF DRUGS UNDER SECTION 505(j) WHEN PEDIATRIC INFORMATION IS ADDED TO LABELING.—

(1) GENERAL RULE.— A drug for which an application has been submitted or approved under section 505(j) under subsection (b)(2) or (j) of section 505 of this title shall not be considered ineligible for approval under that section or misbranded under section 502 of this title on the basis that the labeling of the drug omits a pediatric indication or any other aspect of labeling pertaining to pediatric use when the omitted indication or other aspect is protected by patent or by exclusivity under clause (iii) or (iv) of section 505(j)(5)(F) of this title , or by exclusivity under clause (iii) or (iv) of section 505(j)(5)(F), clauses (iii) and (iv) of section 505(c)(3)(E), or section 527(a), or by an extension of such exclusivity under this section or section 505E.

(2) LABELING.— Notwithstanding clauses (iii) and (iv) of section 505(j)(5)(F), clauses (iii) and (iv) of section 505(c)(3)(E), or section 527 of this title, the Secretary may require that the labeling of a drug approved under section 505(j) drug approved pursuant to an application submitted under subsection (b)(2) or (j) of section 505 of this title that omits a pediatric indication or other aspect of labeling as described in paragraph (1) include—

(A) a statement that, because of marketing exclusivity for a manufacturer—

(i) the drug is not labeled for pediatric use; or

(ii) in the case of a drug for which there is an additional pediatric use not referred to in paragraph (1), the drug is not labeled for the pediatric use under paragraph (1); and

(B) a statement of any appropriate pediatric contraindications, warnings, or precautions that the Secretary considers necessary.

(3) PRESERVATION OF PEDIATRIC EXCLUSIVITY AND OTHER PROVISIONS.— This subsection does not affect—

(A) the availability or scope of exclusivity under this section;

(B) the availability or scope of exclusivity under section 505 for pediatric formulations;

(C) the question of the eligibility for approval of any application under section 505(j) that omits any other conditions of approval entitled to exclusivity under clause (iii) or (iv) of section 505(j)(5)(F); or 

(D) except as expressly provided in paragraphs (1) and (2), the operation of section 505.

(A) the availability or scope of exclusivity under—

(i) this section;

(ii) section 505 for pediatric formulations; or

(iii) section 527;

(B) the question of the eligibility for approval of any application under subsection (b)(2) or (j) of section 505 that omits any other conditions of approval entitled to exclusivity under—

(i) clause (iii) or (iv) of section 505(j)(5)(F);

(ii) clauses (iii) or (iv) of section 505(c)(3)(E); or

(iii) section 527; or

(C) except as expressly provided in paragraphs (1) and (2), the operation of section 505 or section 527.

We’re honored that Senators Hatch and Menendez incorporated our suggestion into legislation, and we’ll be watching closely to see if Section 4 of the OPEN Act of 2017 makes it into FDARA and is enacted into law.

The FDA just released Draft Guidance affecting the implementation of the Drug Quality and Security Act’s (DQSA) November 27, 2017 “serialization” requirements for finished dosage form pharmaceutical prescription drug products (as defined by the DQSA). Among addressing other issues, the newly released Draft Guidance states that FDA will extend the manufacturer serialization and product verification deadlines for a year – to now take effect November 27, 2018.

Recall that the Title II of the DQSA, the Drug Supply Chain Security Act (DSCSA) requires in FDCA Section 582(b)(2) that manufacturers “affix or imprint a product identifier” to each package and homogenous case of a product “intended to be introduced into commerce” beginning not later than November 27, 2017, and to verify that identifier in accordance with statutory requirements set forth in Section 582(b)(4). Drugs not including the product identifier after that date would have been deemed “misbranded” pursuant to the terms of the statute, and manufacturers who did not verify products would have been subject to enforcement action. See Draft Guidance at 5.

Recall that the DSCSA also requires FDA to issue guidance defining “grandfathering” and how to obtain a “waiver, exception and exemption” of the so-called “serialization” requirement – by 2015. See FDCA Section 582 (a)(3), (a)(5). Notwithstanding the statutory deadline, FDA did not issue the guidance, leaving manufacturers to wonder in the years and months leading to the looming November 27, 2017 deadline what “grandfathering” was supposed to mean, whether it would apply to their drug products in the distribution chain or not yet in the distribution chain, and exactly what FDA would deem that distribution chain to be. FDA addresses the “grandfathering” conundrum on the last page of the Draft Guidance (page 8), stating it intends to issue additional guidance “that will outline FDA’s current thinking on the “grandfathering product” provision. (We will eagerly blog on that guidance when FDA releases it.)

In addition, manufacturers questioned whether they would otherwise be able to apply for a “waiver” of,   “exemption,” or ”exception” to the serialization requirement (because, for example, of a manufacturer has a small production or orphan drug, limited distribution channel, an inability to meet the requirement because of economic constraints, or an inability to meet the requirement because of a pending drug product approval near the November 2017 deadline). However, FDA remains silent in the Draft Guidance concerning whether or when it will issue much needed (and statutorily required) guidance on when and how to obtain waivers, exceptions, or exemptions of DSCSA serialization requirements for certain products.

FDA notes that it received comments from manufacturers and other trading partners expressing concerns with industry-wide readiness for implementation of the serialization requirement. It issued the Draft Guidance to minimize potential market disruptions in the United States.

Importantly, FDA’s Draft Guidance does further define what “introduced in a transaction into commerce” means. This language has caused consternation among manufacturers given the lurking serialization deadline because manufacturers have struggled to understand exactly “when” a product “enters commerce” and thus when a product must serialized (i.e., when manufactured? when delivered to a warehouse? what if the manufacturer owns the warehouse?) Industry also was confused by the statute’s use of the word “intended to be introduced in a transaction into commerce” in the statute’s “Product Identifier” provision in FDCA Section 582(b)(2)(A).   Seemingly ignoring the preface “intended,” FDA now clarifies that it considers “a product to be ‘introduced in a transaction in commerce’ when the manufacturer first engages in a transaction involving the product.” The DSCSA defines “transaction” as the “transfer of product between persons in which a change of ownership occurs.” (Section 581 (24) (note exceptions)). Thus, in simpler terms, it now seems clear that a product must be serialized if a change of ownership from the manufacturer of the “product” occurs after November 27, 2018.

Most importantly, for those manufacturers that have engaged in the serialization process and have product identifiers on their products that are introduced in a transaction in commerce after November 27, 2017, your efforts are not lost on FDA. FDA expects both “manufacturers and downstream trading partners to use it in verification” as required under the DSCSA. See Draft Guidance at 5. (Lines 165-67)

Effect on Downstream Trading Partners (i.e., Wholesalers, Repackagers, Dispensers)

FDA’s Draft Guidance also addresses the trickle down effect of the additional year until enforcement on other participants in the drug distribution chain. Prior to the release of the Draft Guidance, repackagers would be required to engage in transactions with only those products bearing a product identifier by November 27, 2018. Wholesalers and dispensers had parallel requirements, effective November 27, 2019 and November 27, 2020, respectively. In addition, repackagers, wholesalers and dispensers would be required to verify product, including product identifiers at the package level (in certain circumstances) along this same timeline.   FDA states at page 6 of the Draft that it will not take enforcement action for these downstream partners for accepting ownership of unserialized product between November 27, 2017 and November 26, 2018. Draft Guidance at 6.

Repackagers and Product Identifiers: No Extension of Serialization Requirement

FDA’s requirement beginning on November 27, 2018, that repackagers “affix or imprint a product identifier on each packager or homogeneous case of product intended to be introduced into commence” still remains on target. Thus, beginning on November 27, 2018, wholesalers and dispensers that purchase from repackagers should ensure that the products they purchase have product identifiers. Id.

Verification requirements for Repackagers, Wholesalers, and Dispensers

The Draft Guidance states that FDA recognizes that products introduced in a transaction in interstate commerce between November 27, 2017 and November 26, 2018, without an identifier will not be capable of verification at the package level via a product identifier. Therefore, FDA will not take action against repackagers, wholesalers, and dispensers that do not use a product identifier to verify product at the package level until November 27, 2018, November 27, 2019, and November 27, 2020, respectively. Draft Guidance at 7. Notwithstanding, they still must validate applicable transaction history and transaction information for product in their possession to determine whether it is suspect product, and the Guidance “does not extend the deadline for this requirement.” And, if the product does in fact contain an identifier, it must be used to verify the product.

Saleable Returns Intended for Further Distribution

With respect to saleable returns of product by a repackager or distributor intended for further distribution, the Draft Guidance states that they may receive a return of a product that does not include an identifier if the returned product was introduced in a transaction into commerce by a manufacturer before November 27, 2018. Draft Guidance at 7.

Documentation of the “Date of Introduction in a Transaction into Commerce”

FDA also offers guidance for trading partners to determine whether the product at issue introduced by a manufacturer into commerce without a product identifier between November 27, 2017 and November 26, 2018 is covered by the compliance policy outlined in the Draft Guidance. In other words, how do trading partners ensure that a product was in fact introduced in a transaction in commerce before November 27, 2018 (and thus does not require serialization and verification)?

FDA states that trading partners should make a determination (presumably after November 27, 2018) based on whether: (1) At least one of the transaction information documents (the transaction history) for the product describes an initial transaction date from the manufacturer as one that occurs between November 27, 2017 and November 26, 2018; or (2) there is other documentary evidence created by a trading partner “in the ordinary course of business” that contains a product description matching the product at issue that does not contain a product identifier. This type of documentation should contain a date from which it can be determined that the product was introduced in a transaction into commerce by the manufacturer between November 27, 2017 and November 26, 2018. Examples include “bills of lading, commercial invoices, and shipping invoices.”

Earlier this week, USDA/AMS posted “Proposed Rule Questions Under Consideration” on its web page dedicated to the establishment of a National Bioengineered Food Disclosure Standard.  The posting asks for comment on 30 questions relating to different aspects of what such a standard might entail.  Most of the questions will doubtless be of great interest to industry and consumer advocates, and can be expected to generate a significant volume of comments.  For example, AMS asks for input on allowable terminology; types of modifications that should be exempt from disclosure; what the threshold for disclosure should be; how disclosures should be made for bulk, vending machine, and online purchases; how AMS should define very small or small packages for purposes of special provisions on disclosure; how AMS should define which retail food establishments are “similar” to restaurants; and what types of records should be required for compliance purposes.

AMS’s latest move is also interesting from a procedural standpoint.  At least some of the questions in the web posting may have originally been included in an Advanced Notice of Proposed Rulemaking (ANPRM) that was submitted to OMB/OIRA for regulatory review on January 18, 2017 – only to be withdrawn less than a week later, a few days after the presidential inauguration.   At that point, the rulemaking was already running behind the schedule that had been forecast in the unified agenda, which called for the ANPRM to be issued in November 2016.  Given that a proposed rule was forecast to be issued in November 2017, the recent web posting appears to be an effort to obtain the type of input that would otherwise have been obtained through the ANPRM – but without the associated delay.  Indeed, the posting states that “USDA will use this input in drafting a proposed rule.”  Because the web posting asks that comments be submitted to the agency via email, it’s not clear how or when those comments will be made accessible to the public.  In any case, an email notification of the posting states that “feedback related to the questions should be submitted to GMOlabeling@ams.usda.gov by July 17, 2017.”

Last month we reported that FDA decided to delay the compliance date for restaurant menu labeling from May 5, 2017 to May 7, 2018 while it reconsiders certain aspects of the final menu labeling rule. The Agency requested comments from industry and other stakeholder about how the rule should be revised to reduce the regulatory burden on restaurants and other covered establishments: FDA said that only comments submitted within 60 days (by July 3, 2017) would be considered. Now, FDA is adding 30 days to the comment period.

The extension comes in response to a request from the National Restaurant Association (NRA). About halfway into the original comment period, NRA told FDA that it would be “nearly impossible” to prepare and submit its comments without an additional 60-day extension. Yesterday, with the deadline right around the corner, FDA stated in a letter to NRA that the Agency will extend the comment period by 30 days. Although it isn’t the full 60-day extension that NRA requested, restaurants and other interested parties will now have (by our count) until August 2, 2017 to submit comments. An official announcement of the extension (in the Federal Register) is forthcoming. FDA’s decision does not change the May 7, 2018 compliance date.

The second iteration of the Generic Drug User Fee Amendments (“GDUFA II), which is contained in Title III of the FDA Reauthorization Act of 2017 (“FDARA”) (S. 934 and H.R. 2430) currently pending in Congress, will, if enacted, significantly change the current user fee system and structure that have been in place the past five fiscal years under GDUFA I.  Not only will FDA collect a greater amount of user fee funding each year ($493.6 million annually adjusted for inflation), but one fee type will be eliminated (i.e., the Prior Approval Supplement fee), while others fees would be modified (e.g., a new Finished Dosage Form (“FDF”) facility fee for Contract Manufacturing Organizations (“CMO”)).  GDUFA II will also introduce a new fee type – the ANDA Holder Program Fee – that will account for 35% of annual fee funding.  The annual ANDA Holder Program Fee, along with the annual CMO FDF facility fee, are proposed as “small business considerations,” according to FDA.

Under the GDUFA II fee structure, the ANDA Holder Program Fee is set up as follows: a firm and its affiliates will pay one program fee each fiscal year commensurate with the number of approved ANDAs (both active and discontinued ANDAs) that the firm and its affiliates collectively own. The program fee to be paid each year depends on the number of ANDAs owned.  Firms will not pay a per-ANDA fee.  Instead, the program fee will be split into three tiers that represent different positions held by the firms and their affiliates within the market.  Specifically, FDARA would amend the FDC Act to add Section  § 744B(b)(2)(E) to state:

(i) Thirty-five percent shall be derived from fees under subsection (a)(5) (relating to generic drug applicant program fees). For purposes of this subparagraph, if a person has affiliates, a single program fee shall be assessed with respect to that person, including its affiliates, and may be paid by that person or any one of its affiliates.  The Secretary shall determine the fees as follows:

(I) If a person (including its affiliates) owns at least one but not more than 5 approved [ANDAs] on the due date for the fee under this subsection, the person (including its affiliates) shall be assessed a small business generic drug applicant program fee equal to one-tenth of the large size operation generic drug applicant program fee.

(II) If a person (including its affiliates) owns at least 6 but not more than 19 approved [ANDAs] on the due date for the fee under this subsection, the person (including its affiliates) shall be assessed a medium size operation generic drug applicant program fee equal to two-fifths of the large size operation generic drug applicant program fee.

(III) If a person (including its affiliates) owns 20 or more approved [ANDAs] on the due date for the fee under this subsection, the person (including its affiliates) shall be assessed a large size operation generic drug applicant program fee.

(ii) For purposes of this subparagraph, an [ANDA] shall be deemed not to be approved if the applicant has submitted a written request for withdrawal of approval of such [ANDA] by April 1 of the previous fiscal year.

The statute (FDC Act 744B(g)(5)) would also be amended to include certain penalties for failure to pay the new ANDA Holder Program Fee:

(A) IN GENERAL.—A person who fails to pay a fee as required under subsection (a)(5) by the date that is 20 calendar days after the due date, as specified in subparagraph (D) of such subsection, shall be subject to the following:

(i) The Secretary shall place the person on a publicly available arrears list.

(ii) Any abbreviated new drug application submitted by the generic drug applicant or an affiliate of such applicant shall not be received, within the meaning of section 505(j)(5)(A).

(iii) All drugs marketed pursuant to any abbreviated new drug application held by such applicant or an affiliate of such applicant shall be deemed misbranded under section 502(aa).

(B) APPLICATION OF PENALTIES.—The penalties under subparagraph (A) shall apply until the fee required under subsection (a)(5) is paid.

We don’t yet know exactly how much the annual ANDA Holder Program Fee will be for Fiscal Year 2018, but at 35% of the overall GDUFA user fee funding, we assume it could be a decent amount of cash for some companies to lay out. And for some companies with a small number of ANDAs, they’ll be laying out cash for drug products that they don’t currently market, because their ANDAs are in stasis, as identified in the Discontinued Drug Product List section of the Orange Book.

FDA is currently collecting information from ANDA sponsors – see here and here – in an effort to set the fee.  In the meantime, our friends over at the Lachman Consultants Blog recently provided a “back of the envelope”  calculation based on the total fees FDA will collect under the ANDA Holder Program Fee initiative.  They estimate that companies in the small tier will pay $130,780; companies in the medium tier will pay $523,120; and that companies in the large tier will pay $1,307,800.

A new venture might offer some user fee relief and a solution to companies that have discontinued ANDAs for drug products not currently marketed. A company called ANDA Repository, LLC (info@andarepository.com) is offering what we can only characterize as “ANDA arbitrage.”  Imagine, if you will, a parking lot.  The owner of a car that is not being used on a daily basis needs a parking space for that car.  In exchange for that parking space (and an annual fee) the car’s owner transfers title of the automobile to the parking lot owner.  The old owner of the car can, with appropriate notice, take back ownership when he decides that he wants to use the automobile again.  Provided the parking lot owner has enough cars, this can be a beneficial venture for all of the parties involved.

In the imagery above, the automobile owner is an ANDA sponsor, and the parking lot owner is ANDA Repository, LLC. If ANDA Repository, LLC is able to obtain title to 20 or more ANDAs, then the company will be identified as a “large size operation” and will pay a full generic drug applicant program fee regardless of how may additional ANDAs are owned. In exchange for its services, ANDA Repository, LLC will charge an ANDA sponsor an annual fee, which would be significantly less than the ANDA Holder Program Fee such ANDA sponsor would otherwise pay as a small or medium size operation.  Not a bad idea!

UPDATE:

On August 29, 2017, FDA published the Generic Drug User Fee Rates for Fiscal Year 2018. The Generic Drug Applicant Program Fee rates for Fiscal Year 2018 were set as follows:

• Large size operation generic drug applicant:  $1,590,792
• Medium size operation generic drug applicant:  $636,317
• Small business operation generic drug applicant:  $159,079

Fees are due to FDA no later than October 1, 2017.  ANDA Repository, LLC can be reached at: info@andarepository.com

As a prelude to FDA’s Hatch-Waxman Act public meeting next month, FDA announced today an updated a Manual of Policy and Procedures (MAPP) for review of generic drug applications and a public list of off-patent and off-exclusivity NDA products without ANDA competition.

Effective June 27, 2017, MAPP 5240.3 Rev. 3, Review Order of Original ANDAs, Amendments, and Supplements, updates FDA’s system of priority for review of generic drug applications at all stages of review.  While FDA’s ranking system of types of submissions that will have review priority for OGD has not changed, the MAPP adds as a top review priority generic products for which there are no blocking patents (carved-out patents are not considered blocking) or exclusivities and fewer than three approved ANDAs for the RLDs.  This is a change from the previous MAPP, which only prioritized the review of “first generic products” for which there are no blocking patents or exclusivities for the RLD.  According to FDA’s press release, the policy revision is “based on data that indicate that consumers see significant price reductions when there are multiple FDA-approved generics available.”

To encourage more competition, FDA also published today a List of Off-Patent, Off-Exclusivity Drugs without an Approved Generic.  This list basically serves as a “hit list” for generic manufacturers.  FDA announced in its press release that, in accordance with the revised MAPP, it intends to expedite review of any generic drug application on this list.  Part I of the list identifies products for which FDA could immediately accept an ANDA without prior discussion with FDA, while Part II identifies drug products that may raise legal, regulatory, or scientific issues that should be addressed with FDA prior to ANDA submission (these could be drugs for which a 505(b)(2) is more appropriate or drugs with complex bioequivalence profiles).  Products are identified based on the Orange Book-listed active ingredient, and the list does not differentiate between strength or dosage forms of the same active ingredient.

The list was compiled based on Orange Book Data files accessed May 30, 2017 and will be updated approximately every six months.  NDAs approved in the last year were omitted.

Both of these efforts combined are part of Commissioner Gottlieb’s Drug Competition Action Plan, designed to address competition and pricing in the generic drug market.  It’s clear that this endeavor is a priority for Commissioner Gottlieb, so we expect more on this initiative soon.

In a new report issued earlier this week, titled “Generic Drug User Fees: Application Review Times Declined, but FDA Should Develop a Plan for Administering Its Unobligated User Fees,” the U.S. Government Accountability Office (“GAO”) examines several aspects of FDA’s implementation of the first iteration of the Generic Drug User Fee Amendments (“GDUFA”). Responding to an inquiry from the U.S. Senate Committee on Health, Education, Labor, and Pensions, the GAO: (1) examines how user fees supported FDA’s generic drug program; (2) describes FDA’s improvements to the generic drug application review process; and (3) analyzes changes in generic drug application review times.  In an appendix to the report, GAO also includes a discussion of the various regulatory science initiatives funded under GDUFA and identified in the GDUFA I Commitment Letter.

Overall, the GAO found that GDUFA user fee funding has been used well to improve FDA’s generic drug program. “FDA has used its user fee funding to enhance OGD’s ability to increase hiring, and undertake numerous activities to improve and speed-up the review of generic drug applications,” says the GAO.  These improvements are apparent in decreased first cycle ANDA and Prior Approval Supplement (“PAS”) review times:

With respect to ANDA review times, the average time for FDA to complete the first review cycle decreased from 26 months for ANDAs submitted in fiscal year 2013 to about 14 months for those submitted in fiscal year 2015. . . . However, as of December 31, 2016, 929 ANDAs (34 percent) submitted since the start of the generic drug user fee program in fiscal year 2013 were still pending review.  As these applications are reviewed, the average review time . . . for each fiscal year will increase since all of the applications that remained to be acted on are at least 15 months old.  As of December 31, 2016, FDA had also acted on 89 percent of all ANDAs submitted in fiscal year 2015 within 15 months of receipt, exceeding its GDUFA goal of acting on 60 percent of ANDAs received in fiscal year 2015 within 15 months. . . .

For PASs, the average time for FDA to complete the first review cycle also declined from 12 months in fiscal year 2013 to 4.5 months in fiscal year 2015.

Despite the decrease in original ANDA and PAS first cycle review times, where the rubber meets the road is in approvals. As Office of Generic Drugs Director Kathleen “Cook” Uhl noted earlier this year only 9% of ANDAs in the Fiscal Year 2015 application cohort were approved (or tentatively approved) during a first cycle review, while 71% were the subject of a Complete Response Letter.  The anemic approval figure improved to 42% (and 56% for Complete Response Letters) on a second cycle review.

The GAO’s biggest criticism of FDA’s implementation of GDUFA concerns the Agency’s lack of a plan for dealing with user fee carryover. “FDA has accumulated a large unobligated user fee carryover balance, which it uses as an operating reserve,” says the GAO. “At the beginning of fiscal year 2017, FDA had a carryover of approximately $174 million.”  That figure is way down from the staggering $278 million carryover FDA had amassed by the end of Fiscal Year 2014.  Nevertheless, it’s “an amount nearly as great as the annual, inflation-adjusted user fee collection amount of $299 million” established under GDUFA I, notes the GAO.

Despite the large carryover amounts, FDA has not developed a planning document on how it will administer its carryover—one that includes a fully documented analysis of program costs and risks to ensure that its carryover reflects expected operational needs and probable contingencies. Although FDA uses an internal management report to show GDUFA collection amounts, obligations, and end-of-year carryover amounts, the agency was unable to produce evidence describing whether the carryover of $174 million at the beginning of fiscal year 2017 (or carryover amounts in other years) was within a targeted goal, and it does not have targets for future years in general.

To deal with this lingering issue, and to “ensure efficient use of generic drug user fees, facilitate oversight and transparency, and plan for risks,” the GAO recommends that FDA Commissioner Gottlieb “develop a plan for administering user fee carryover that includes analyses of program costs and risks and reflects actual operational needs and contingencies.”