On July 11, 2017, the Department of Justice and the Drug Enforcement Administration (“DEA”) announced that Mallinckrodt LLC, a pharmaceutical manufacturer, agreed to pay $35 million to settle allegations related to the adequacy of its efforts to detect and inform DEA of suspicious orders of controlled substances.  Although DEA has reached similar settlements with distributors and pharmacy chains (see, e.g., here), this is the first settlement of its kind with an opioid manufacturer.  DOJ’s press release states that the settlement reflects manufacturers’ obligation to monitor orders not only from their own customers, but also between distributors and pharmacies and clinics downstream in the distribution chain.  However, this statement appears  inconsistent with the language in the settlement document, marks a stark shift in the prevailing understanding of manufacturers’ suspicious order monitoring obligations and raises serious questions about the legal basis and workability of such a requirement.

For years, DEA has been criticized for failure to provide guidance on the suspicious order monitoring regulation, 21 C.F.R. § 1301.74(b).  The language in that section has remained unchanged since its enactment in 1971 and while DEA issued informal guidance letters to certain industry groups in 2006, 2007 and 2012,  DEA’s interpretation of that regulation has evolved significantly beyond that guidance.  More important, a fundamental deficiency in the regulation is that it fails to recognize the differences between manufacturers and distributors, including the level of data available to each concerning sales between distributors and pharmacies.  Thus, the lack of a clear regulation has continued to hinder industry’s ability to meet DEA’s expectations.

Unfortunately for industry, in the last several years, DEA has set forth its evolving view of the regulation primarily in presentations at conferences, through Memoranda of Agreement (“MOAs”) related to enforcement actions and in the Southwood and, more recently, the Masters decisions. (see, e.g., here and here).  While this approach has allowed DEA to avoid the notice and comment rulemaking requirement under the Administrative Procedure Act (“APA”), it has also left industry with little clarity about their obligations around the reporting of suspicious orders. A critical element of notice and comment rulemaking is for an agency to solicit important industry input on the impact of potential rulemaking, with the ultimate goal being effective and clear regulations.  Such clarity would result in a more secure supply chain for controlled substances, which would better serve the public interest as the U.S. continues to struggle with the issue of opioid diversion and abuse.

The press release concerning the Mallinckrodt settlement, which purported to set out “groundbreaking” new rules, is another example of DEA establishing a new standard while avoiding notice and comment rulemaking.

The problem revolves around DEA’s discussion of chargebacks (which are a common pharmaceutical pricing feature), for the first time, and a critical discrepancy between the language set forth in the government’s press release and the obligation outlined in the MOA with Mallinckrodt.  (In general, a chargeback is a payment made by a manufacturer to a distributor to make the distributor whole when it sells the manufacturer’s product at a price below a specified rate. After a distributor sells a manufacturer’s product to the pharmacy, for example, it requests a chargeback from the manufacturer and to support that request for payment, the distributor identifies the product, volume and the pharmacy to which it sold the product.) In its press release, the government stated that, “[t]he groundbreaking nature of the settlement involves requiring a manufacturer to utilize chargeback and similar data to monitor and report to DEA suspicious sales of its oxycodone at the next level in the supply chain, typically sales from distributors to independent and small chain pharmacy and pain clinic customers.” (emphasis added). This appears to set forth DEA’s position that manufacturers must review chargebacks and report the underlying sales from the distributor to downstream pharmacies as suspicious orders.

However, we have reviewed Mallinckrodt’s MOA and it does not require reporting downstream transactions as suspicious orders.  Rather, the MOA provides that Mallinckrodt review chargeback data and alert DEA of pharmacies (not orders) that may be concerning.   The clear focus of the language is a reporting of pharmacies as a condition of the MOA, not the reporting of chargebacks as suspicious orders under 21 CFR 1301.74(b). Note, as of this writing, the MOA has not been posted to the government’s websites.

As an initial matter, it is not clear that DEA can create such a new requirement by announcing it in a press release. First, nothing in the language of 21 C.F.R. § 1301.74(b) suggests that a manufacturer must review orders between two downstream third parties and report them as suspicious. Second, we could find no prior public statement from DEA that a manufacturer must report such third party transactions as suspicious under 21 C.F.R. § 1301.74(b). Finally, if this really is “groundbreaking” – to use the government’s own word – surely such a change should warrant notice and comment rulemaking.

Moreover, there is no indication manufacturers’ attempts to monitor downstream transactions would be productive. It appears instead that manufacturers will be expected to second guess distributors’ decisions to fill orders from pharmacies (well after those sales have been completed), even though the manufacturers have far less information than the distributors have about those pharmacies. Distributors often have longstanding relationships with their pharmacy customers and sophisticated monitoring programs to evaluate pharmacy orders.  In contrast, a manufacturer can only see – after the fact – the manufacturer’s products a distributor sells to a pharmacy and for which the distributor submits a chargeback request. With such limited visibility, a simple and perfectly legitimate switch by a pharmacy from one manufacturer’s product to another’s, for example, could look like a suspicious “increase” in the distributor’s sales to that pharmacy.

DEA’s position raises many additional practical questions. If the manufacturer and distributor disagree about which orders are suspicious, will DEA hold manufacturers’ reports of suspicious orders against the distributor, even if the distributor is better positioned to assess those orders?  How many orders that appear “suspicious” to a manufacturer can be filled by a distributor before the manufacturer must stop selling to that distributor?  And how should a manufacturer structure a program designed to monitor distributor sales to tens of thousands of pharmacies with which the manufacturer has no contact?

Manufacturers will likely be struggling with these issues for years to come. That ongoing confusion and its negative impact on the security of the supply chain emphasizes, once again, the need for DEA to make clear the obligations of manufacturers through notice and comment rulemaking on this critical issue, especially as the country continues to struggle with the problem of opioid diversion and abuse.

On July 11, 2017, in the Federal Register, FDA published the finalized list of Class II devices that are now exempt from the 510(k) requirements. This list is identical in substance to the proposed list published on March 14, 2017 (see our prior post here). The only change noted is that FDA grouped those products that contain a limitation on the exemption, and those that do not. Companies with products in the former category are well advised to carefully read the limitations that apply to their product to make sure that they do not fall within a limitation. If they do, a premarket notification will be required. The limitations vary, including, for example, a partial limitation for enzyme immunoassays for amphetamine. For those immunoassays, the exemption applies only where the test system is intended for employment or insurance testing. The same test system used for other purposes, for example Federal drug testing programs, would not be subject to the exemption.

Notably, all products are subject to the .9 limitations, which require a manufacturer to obtain 510(k) clearance for an exempt device type, if either: (i) the device is intended for a use different from the intended use of a legally marketed device in that generic type of device; (ii) the device operates using a different fundamental scientific technology than a legally marketed device in that generic type of device; or (iii) if it falls within an enumerated list of IVDs, such as those used in the screening or diagnosis of familial or acquired genetic disorders.

Lastly, FDA notes in the Federal Register that companies with pending 510(k) submissions for devices now exempt from premarket notification, when taking into consideration any applicable limitations on those exemptions, should withdraw their submissions.

*Rachel Hunt not admitted in the District of Columbia.

On July 11, 2017, the Government Accountability Office (GAO) provided Congress with an assessment report on FDA’s Expanded Access (“EA”) program. EA programs allow patients with serious or life-threatening diseases and no satisfactory therapy available to access investigational drugs outside of a clinical trial (report available here). Among other things, GAO was asked to examine the following:

1. What is known about the number, type, and time frames of EA requests received by FDA;
2. What actions FDA and other stakeholders have taken to improve EA; and
3. How FDA uses data from EA in the drug approval process.

As part of its investigation, GAO reviewed FDA’s regulations, audited FDA documents, and analyzed FDA data on EA requests from FY2012 through 2015. GAO also interviewed FDA officials and other stakeholders, including nine manufacturers, as well as patient and physician representatives.

FDA’s Improvements and Successes

GAO found the following improvements and successes with regard to FDA facilitating access under its EA program:

Simplifying EA Requests

• FDA published a simplified website, guidance, and form required for the most common types of EA requests;
• FDA asked the Reagan-Udall Foundation to develop a web-based Expanded Access Navigator to help physicians and patients find relevant information about the process, including a directory of manufacturer’s EA policies; and
• FDA is assisting WCG Foundation in developing a project to streamline the IRB process and educate IRBs in single-patient IND situations.

Efficient Review of EA Requests Received

Of the nearly 5,800 EA requests that were submitted to FDA in FY 2012-2015 (96% of which were for single patients), the Agency allowed 99% to proceed. FDA typically responded to emergency single-patient requests within hours, and all other requests were considered within the allotted 30 days under its regulations (see table below).

Room for Improvement in the EA Program

While FDA grants requests for EA, the patient must first receive permission to access the investigational drug from the manufacturer. Despite FDA’s achievements, GAO found a remaining barrier to access: industry’s well-founded concern that adverse events experienced by EA patients in uncontrolled settings could compromise the drug development program despite the fact that patients are often very sick, out of treatment options and outside clinical trial inclusion/exclusion criteria, and often have conditions outside of the use being studied. Because the investigational drug is being administered in an uncontrolled setting, any data reported to FDA from such adverse events could (a) result in a clinical hold of ongoing clinical trials and/or (b) complicate the safety findings for that drug during FDA’s review and contribute to a decision to not approve the drug (or take other measures to mitigate the risk).

FDA must, of course, use knowledge generated from any and all patient exposures to an investigational drug to help characterize the safety profile. However, that view is at odds with GAO’s assessment on the issues, which finds FDA is not clear on how EA adverse event data are used in the review process. In the Agency’s only policy statement on this topic, its own EA guidance has acknowledged that this exact situation has occurred:

There are a small number of cases in which FDA has used adverse event information from expanded access in the safety assessment of a drug. However, FDA reviewers of these adverse event data understand the context in which the expanded access use was permitted (e.g., use in patients with serious or immediately life-threatening diseases or administered in a clinical setting (not clinical trial) and will evaluate any adverse event data obtained from an expanded access submission within that context. (see FDA guidance at p. 18 here).

GAO notes that FDA’s statement, while an improvement over no communication on the issue, is vague in that it contains few details and no specific examples.

GAO’s Recommendation & FDA’s Response

GAO’s report expresses concern that FDA’s lack of clear information may deter manufacturers from giving patients access to their drugs, rather than facilitating appropriate EA drugs to patients with serious or life-threatening diseases. This led to GAO providing a sole recommendation in its report to Congress: FDA should clearly communicate how the Agency will use adverse event data from EA use when reviewing drugs and biologics for approval.

While FDA agreed that “the review of adverse event reports that result from [EA] use must be interpreted with caution,” the Agency found the industry’s concerns related to FDA using such data to influence final approval decisions unfounded. In its response, FDA cited that there have only been two instances in which adverse event events from EA contributed to a decision to put a drug on clinical hold and in both instances the holds were lifted after issues were addressed.  Ultimately FDA agreed with GAO’s recommendation, recognizing that additional clarity on how the Agency uses adverse event data may help allay industry’s concerns.

We disagree with both GAO and FDA. While additional information from FDA is always helpful, the very notion that unexplained adverse events may occur disincentivizes companies from offering EA. FDA has no power to alter that reality. FDA’s confirmation in its own EA guidance and in its response to the GAO report that adverse events from EA patients can lead to a clinical hold or otherwise impact drug development – even if rarely – must be taken into account by responsible sponsors when deciding whether to offer EA.

With headlines focused on the Affordable Care Act (ACA) and the rapidly unfolding drama surrounding the repeal and replace efforts, one aspect of the ACA that could easily fly under the radar has been the subject of its own ongoing legal battles: menu labeling. To borrow a phrase from one recent political commentator, “It’s an unbelievably complex subject” that “nobody knew . . . could be so complicated.”

So where are we exactly with menu labeling? Here’s a brief recap of the last seven years: when the Affordable Care Act was enacted in 2010, it added to the Federal Food, Drug, and Cosmetic Act (FDC Act) calorie posting and other menu labeling requirements for chain restaurants and similar retail food establishments. FDA issued final regulations to implement those requirements in 2014. Enforcement was delayed – first by FDA at the request of industry, then by Congress – and eventually FDA established May 5, 2017 as the deadline for compliance. But on May 4, in an eleventh hour twist, FDA extended the compliance date to May 2018 to give the Agency time to reconsider certain aspects of and ambiguities in the rule. In response, two consumer advocacy groups sued FDA in an attempt to bring about a more immediate compliance date. That litigation is ongoing. In addition, just two weeks after FDA announced the extension, New York City announced that it would begin enforcing its own menu labeling requirements on May 22, 2017, with fines and notices of violation beginning on August 21, 2017.

Now, trade associations that represent convenience stores, grocery stores, and restaurants are asking a federal court to stop the City of New York from enforcing its menu labeling regulations. In a Complaint and Motion for Preliminary Injunction filed on July 14 in the U.S. District Court for the Southern District of New York, the National Association of Convenience Stores, New York Association of Convenience Stores, Food Marketing Institute, and the National Restaurant Association’s Restaurant Law Center argue that the City’s enforcement of menu labeling requirements before FDA’s May 2018 compliance date violates federal law.

The plaintiffs argue that the City is expressly and impliedly preempted from enforcing its menu labeling regulations on establishments subject to the federal requirements until FDA’s compliance date. The FDC Act expressly preempts states and localities from enforcing non-identical menu labeling requirements on establishments that are subject to the federal requirements (i.e., establishments with 20 or more locations or that voluntarily comply with the federal requirements): “[N]o State or political subdivision of a State may directly or indirectly establish under any authority or continue in effect . . . any requirement for nutrition labeling of food that is not identical to” the federal statutory menu labeling requirements. FDC Act § 403A(a)(4). New York City has said that its requirements are “identical to the federal requirements.” The plaintiffs assert that though the City may have intended for the substantive requirements of its regulations to be identical to the federal requirements, “requiring compliance a year in advance of the federal requirements” is an additional, non-identical obligation. (In addition, whereas the federal requirements apply to chains with 20 or more locations in the United States, the City’s requirements apply to chains with 15 or more.)

In support of their preemption argument, the plaintiffs cite a string of recent cases in which U.S. District Courts in California rejected consumer plaintiffs’ attempts to seek immediate enforcement – under California State law – of FDA’s requirement that food companies remove partially hydrogenated oils from their products by 2018. “Following the reasoning of these cases,” the plaintiffs argue, “the immediate enforcement of [New York City’s menu labeling rules] would greatly disrupt the FDA’s carefully considered compliance date of May 2018 by requiring immediate compliance with the federal standard in New York City.”

Absent an injunction, convenience stores, restaurants, and other covered establishments will face a risk of irreparable harm in at least two ways, according to the complaint: “(i) they face enormous and ultimately unrecoverable costs to comply with a regulatory regime now that is likely to change by May 2018, and (ii) they face fines, business disruptions and other harms from having to comply with regulatory rules that are so unworkable that the FDA saw fit to delay their implementation.”

On July 18, 2017, FDA held a highly anticipated public meeting discussing the balance between pharmaceutical competition and innovation. Titled “Administering the Hatch-Waxman Amendments: Ensuring a Balance Between Innovation and Access,” the meeting drew a tremendous response from industry with dozens of non-FDA or FTC speakers, and scores of other attendees who packed into the “Great Room” in Building 1 on FDA’s White Oak Campus. Academics, payors and providers, pharmaceutical developers and associated representatives, and representatives of the consumer and patient perspective all provided input to a panel of FDA and Hatch-Waxman all-stars (picture below).

FDA Commissioner Scott Gottlieb opened the meeting with a discussion of the Agency’s position and the announcement of the intended 2017 release of two new documents to improve the generic approval process as part of his Drug Competition Action Plan announced earlier this year. The first document, a Good ANDA Assessment Manual of Policy and Procedures (MaPP), will be an internal CDER policy to streamline the ANDA review process inside FDA without lowering approval standards. As part of this MaPP, Complete Response Letters will make clear what aspect of the application needs improvement to obtain approval. The second document is a Good ANDA Submission Practices Guidance, which will point out common recurring deficiencies in ANDA and provide advice on avoiding them in an effort to ensure better higher quality submissions.

Dr. Gottlieb explained that his goal for the Drug Competition Action Plan is to ensure that the competition Congress intended when it passed the Hatch-Waxman Amendments actually occurs. While FDA doesn’t have a direct role in drug pricing, Dr. Gottlieb explained that the acceleration of drug development should lead to a reduction in drug prices. To that end, Dr. Gottlieb said that FDA needs to address “gaming” the system to keep generics off the market, which undermines the balance between affordability and innovation. FDA is therefore looking to identify rule changes that will help ensure competition, alleviate scientific or regulatory obstacles to generic entry, and improve efficiency of generic drug evaluation.

CDER Director Janet Woodcock also discussed FDA’s role in preserving the balance set forth by Congress in the Hatch-Waxman Amendments. Dr. Woodcock highlighted the progress CDER has made in the last five years in addition to new challenges that have arisen: establishing “sameness” of non-traditional complex drugs, drug-device combinations, and setting up a biosimilar pathway. While FDA is addressing these issues, Dr. Woodcock emphasized the importance of establishing the “root cause” of the lack of competition to avoid shortages or price spikes. Markus Meier, of the Bureau of Competition at the FTC also spoke, highlighting the intersection between FDA and FTC.

Most of the presentations addressed the questions posed by FDA in the Agency’s Federal Register notice announcing the meeting and as discussed in our previous blog post. Patient advocates and generic drug industry representatives who spoke focused on:

• the potential use of REMS to block generic competition through protracted shared REMS negotiations;
• innovators’ refusal to provide samples to generic manufacturers;
• the practice of introducing new patented products with minor improvements and subsequent withdrawal of the original (called “product hopping,” incremental innovation, or the seemingly repurposed term “evergreening”);
• the potential to misuse the citizen petition process to delay generic drug approval; and
• pay-for-delay arrangements.

Conversely, innovators maintained that “incremental innovation” is the heart of further development and cited the fear of liability for refusal to provide samples. Meanwhile, they lamented the deterioration of patent and market exclusivity and cited articles (e.g., “Do Fixed Patent Terms Distort Innovation?: Evidence from Cancer Clinical Trials”) indicating a need for revised incentives. (As we previously reported, Professor Erika Lietzan of the University of Missouri School of Law has been looking into this issue, dubbed the “Drug Innovation Paradox.”)

In addition to comments from meeting participants, several written comments have already been submitted to the docket (Docket No. FDA-2017-N-3615).  In fact, former Representative Henry Waxman, of Hatch-Waxman notoriety, even submitted comments! His comments provided FDA with a copy of a recent Commonwealth Fund Report, titled “Getting to the Root of High Prescription Drug Prices.” In addition to the areas highlighted in the Federal Register notice, Rep. Waxman suggested that FDA permit the reimportation of single-source drugs, monitor the drug market to identify conditions that could lead to shortages or other reasons for significant increases in price, expedite review, and allow for early disclosure of patents to generic and biosimilar manufacturers. Consumer groups that spoke at the meeting also submitted comments in advance, as did some individuals. FDA will be accepting comments until September 18, 2017.

Unsurprisingly, quite a few presentations left the Hatch-Waxman track to discuss biosimilars. And others talked more about competition in the market generally and focused on areas in which FDA really can’t do anything, such as the consolidation of purchasers. But FDA panelists tried hard to redirect the conversation back to the issues under consideration and that FDA could actually address.

In fact, FDA panelists actively participated in the discussion with questions for many of the meeting speakers. FDA seems focused on tangible answers to the questions the Agency posed rather than theoretical competition policy or a list of problems in the industry. It seemed clear from the questions raised that FDA is looking for specific tools to address these competition issues while not sacrificing incentives for innovation. None of the speakers offered the magic bullet, but FDA seems to hope that reviewing all of the comments will at least set it on the right track.

FDA panelist questions, combined with Commissioner Gottlieb’s opening remarks, indicates just how serious FDA sees this issue. FDA panelists pushed some of the presenters on their suggestions to determine whether they were actually practical, such as requiring a preliminary finding that Citizen Petitions are likely to be granted or a finding that a reformulated product should prove a benefit in a Prior Approval Supplement.

FDA appears very open to concrete, well-thought out suggestions. Make sure you get yours in by September 18th!

Courts continue to wrangle over last year’s Supreme Court decision in United Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), and as reported here and here, there appeared to be an emerging trend of courts narrowing the types of False Claims Act (FCA) theories that could survive the more stringent test for materiality established by Escobar.  On July 7, 2017, the Ninth Circuit bucked the trend, reversing the lower court’s dismissal of an FCA case against Gilead Sciences, Inc.

In United States ex rel. Campie v. Gilead Sciences, Inc., the Ninth Circuit revived a complaint that the district court had twice dismissed in 2015 for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).  The United States had declined to intervene in the matter, but submitted an amicus curiae brief supporting reversal of the district court decision.  In its opinion, the Ninth Circuit set forth an in-depth interpretation of the Escobar materiality standard, which was issued post-dismissal, but declined to decide whether the complaint satisfied the heightened pleading standard under Rule 9(b).

The relators alleged that their former employer, Gilead, made false statements to FDA about its compliance with regulations for its HIV drugs. Namely, the allegations concerned Gilead’s concealed use of unapproved ingredients in its drugs, and a failure to report manufacturing problems to FDA.  According to the relators, had FDA been aware of these regulatory violations, it would not have permitted Gilead to market these products.

The court analyzed the three alleged bases for potential FCA liability and determined that the relators alleged sufficient facts to state a claim for relief under all three theories. First, relators alleged that Gilead made false statements that its products were FDA-approved when they were not in fact FDA-approved (“factually false certification” theory); the court confirmed that “a claim for nonconforming goods must include an intentionally false statement or fraudulent course of conduct that was material to the government’s decision to pay.”

The second theory, “implied false certification,” was based on relators’ allegations that by submitting, or causing others to seek, claims for reimbursement for its drugs, Gilead represented that it provided medications approved by FDA that were manufactured at approved facilities and were not adulterated or misbranded. Under Escobar, this theory can be a basis for FCA liability only if (1) the claim makes specific representations about the goods or services provided, and (2) the failure to disclose noncompliance with material requirements makes those representations misleading half-truths.  In determining the first prong, the Ninth Circuit confusingly equated the company’s use of the drug’s names in its reimbursement claims as a representation of regulatory compliance (“these drug names necessarily refer to specific drugs under the FDA’s regulatory regime”).  The court also “assuaged to some degree” the lower court’s concern that the fraud was directed at the wrong agency (FDA rather than the payor agency, CMS), by noting that both agencies fall under the Department of Health and Human Services so that “the fraud was, at all times, committed against [HHS].”

It was undisputed that the government continued to make direct payments and provide reimbursement for the drugs after knowledge of the manufacturing issues. Nevertheless, in determining whether FDA approval was material to the payment decision, the court was persuaded by the United States and relators’ arguments that it should not read too much into FDA’s continued approval of the drugs, and concluded that the issues are matters of proof, not legal grounds for dismissal.  In doing so, the Ninth Circuit reached the opposite conclusion from the First Circuit, which also recognized the practical problems for proof regarding FDA’s actions or inactions, but dismissed the FCA case for a lack of materiality.

The court characterized the relators’ third theory as “promissory fraud,” also known as a “fraud-in-the-inducement” theory. Relators alleged that FDA approval for the HIV drugs was obtained through false statements or fraudulent conduct (i.e., that Gilead lied to FDA regarding manufacturing issues), and thus that each subsequent claim submitted was false due to the original fraud.  The court cursorily concluded that the allegations contained in the complaint supported this theory.

This decision was only the second time the Ninth Circuit has had occasion to apply Escobar; earlier this year, the court affirmed summary judgment in United States ex rel. Kelly v. Serco, Inc., 846 F.3d 325 (9th Cir. 2017) (here), on the grounds that the alleged regulatory violations were not material to the government’s decision to pay.  The Gilead court sought to justify its departure from precedent by describing Gilead’s alleged regulatory violations as affirmative false statements that were intended to conceal noncompliance (altering inventory codes, mislabeling or altering shipping and tracking information) or to obtain FDA approval.  In Kelly, the court was convinced that “there [was] no evidence that [the defendant’s] public vouchers contained any false or inaccurate statements.”  The Kelly court concluded that there was no false claim on which FCA liability could attach.

The Gilead case may be an outlier in the post-Escobar world that can be distinguished by the bad facts alleged in the Complaint.  The standard of review applied by the Ninth Circuit required the court to assume the facts as alleged to be true.  Gilead had no opportunity to respond or rebut these allegations.  It remains to be seen whether those facts are pled with the requisite specificity required for FCA cases, no less proved at trial.

Back in mid-May 2017, when FDA issued the fourth cumulative supplement to the 37th edition of the Orange Book, observant readers may have noticed a couple of interesting entries on page A-7 of the publication. There, in the “PATENT AND EXCLUSIVITY DRUG PRODUCT LIST,” FDA showed the additon of several patents and two periods of exclusivity for Teva Pharmaceuticals, Inc.’s “(Teva’s”) AUSTEDO (deutetrabenazine) Tablets: (1) a period of New Chemical Entity (“NCE”) exclusivity expiring on April 3, 2022; and (2) a period of orphan drug exclusivity expiring on April 3, 2024.

FDA approved AUSTEDO on April 3, 3017 under NDA 208082 for the treatment of chorea associated with Huntington’s disease. What makes AUSTEDO particularly interesting is that it is the first deuterated drug product approved by FDA.  And it is a deuterated version of a previously approved drug: XENAZINE (tetrabenazine) Tablets, which FDA approved on August 15, 2008 under NDA 021894 for the treatment of chorea associated with Huntington’s disease.

What is a deuterated drug? Deuterium (containing one neutron, one proton, and one electron) is a non-radioactive isotope of hydrogen that is a different atom than hydrogen (containing one proton and one electron).  A deuterium atom may be covalently linked to a carbon atom and cannot be removed from the carbon or exchanged with hydrogen.  A deuterated compound can have significantly different metabolic stability and/or pharmacokinetics compared to the non-deuterated version of the compound.

A couple of years ago we speculated that because of FDA’s structure-centric interpretation of “active moiety” (rather than an activity-based interpretation) (see here), under which a drug is classified as a NCE regardless of which portions of the active ingredient contribute to the overall therapeutic effect of the drug, FDA would likely determine that deutetrabenazine (known then as SD-809) is an NCE eligible for 5-year exclusivity. We also speculated that, as a designated orphan drug, FDA would grant a period of 7-year orphan drug exclusivity upon the approval of deutetrabenazine without requiring the NDA sponsor to demonstrate that the drug is “clinically superior” to XENAZINE on the basis that deutetrabenazine and tetrabenazine are not the “same drug.”  (Under FDA’s orphan drug regulations at 21 C.F.R. § 316.3(b)(13)(i), the term “same drug” means, in part, “a drug that contains the same active moiety as a previously approved drug and is intended for the same use as the previously approved drug. . . .”)

While FDA’s Orange Book entries show that Teva was, in fact, awarded both NCE and orphan drug exclusivity, we thought there might be a more robust analysis explaining the Agency’s decision. And there is!  But it’s not in FDA’s Approval Package for AUSTEDO NDA 208082.  It’s in a July 31, 2015 memorandum from the CDER Exclusivity Board that we were able to obtain. That memorandum from the CDER Exclusivity Board documents the recommendation of the CDER Exclusivity Board regarding whether dutetrabenazine has a different active moiety from tetrabenazine:

The Board concluded that tetrabenazine and dutetrabenazine are not the same active moiety under FDA’s regulations and precedent. Therefore, dutetrabenazine and tetrabenazine are not the “same drug” under the statute and regulations governing orphan drugs and it is appropriate to grant orphan drug designation to dutetrabenazine without a plausible theory of superiority to tetrabenazine.  In addition, we concluded that the active moiety dutetrabenazine has not yet been previously approved in any new drug application (NDA).

FDA’s rationale for determining that tetrabenazine and dutetrabenazine are not the same active moiety comes down to a single, simple paragraph in the 5-page memorandum:

The Board applied FDA’s “structure-based” approach to determine the active moiety for each molecule and considered whether there are any structural differences between tetrabenazine and dutetrabenazine that involve non-ester covalent bonds. The only structural difference between tetrabenazine and dutetrabenazine molecules is that the latter contains deuterium instead of hydrogen on the two methyl groups present in tetrabenazine.  The deuterium atoms in dutetrabenazine are covalently bonded to the carbon atom.  Thus, based on the different structures of the two molecules and FDA’s structural approach to determining “active moiety,” tetrabenazine and dutetrabenazine are different active moieties, and thus not the “same drug” under the statute and regulations governing orphan drugs.

There you have it! FDA’s form over function approach means that relatively small changes to a molecule, including deuterium analogues, qualify for NCE exclusivity, while more significant changes that improve the activity of a drug, but that do not change the molecule that is the active moiety, don’t result in NCE exclusivity.

The American Conference Institute’s (“ACI’s”) 5th annual “FDA Boot Camp: Devices Edition” conference is less than two weeks away! The conference will take place from July 26-28, 2017 in Chicago, Illinois. 

Jonette Foy, Ph.D., Associate Director for Policy (acting), CDRH, FDA will be presenting a keynote address, and Hyman, Phelps & McNamara, P.C.’s Jeffrey N. Gibbs will be speaking at a session titled “Low to Moderate-Risk Devices: Weighing the Pros and Cons of 510(k) Clearance vs. De Novo Pathways.” FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount.  The discount code is: P10-670-FDALB17.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference.

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.