The American Conference Institute’s (“ACI”) popular FDA Boot Camp, now in its 29th iteration, is back in New York at the Millennium Broadway Hotel on March 22-24, 2017. The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.

This year’s FDA Boot Camp will provide you not only with the essential background in FDA regulatory law to help you in your practice, but also key sessions that show you how this regulatory knowledge can be applied to situations you encounter in real life.  Back by popular demand, this year’s “Ripped from the Headlines” session that will provide you with updates on the key developments in the FDA regulatory bar, including post-election developments and the impact of the new administration on FDA practice.

A distinguished cast of presenters will share their knowledge and provide critical insights on a host of topics, including:

• The organization, jurisdiction, functions, and operations of FDA
• The essentials of the approval process for drugs and biologics, including: INDs, NDAs, BLAs, OTC Approval, the PMA process and the Expedited Approval Process
• Clinical trials for drugs and biologics
• Unique Considerations in the approval of combination products, companion diagnostics, and stem cell therapies
• The role of the Hatch-Waxman Amendments in the patenting of drugs and biologics
• Labeling in the drug and biologics approval process
• Off-Label use and a New World Order
• cGMPs, adverse events monitoring, risk management and recalls

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst, will present with a panel of experts and provide an overview of the Hatch-Waxman Amendments and the Biologic Price Competition and Innovation Act (“BPCIA”).  Mr. Karst will also head one of leading workshops on the program: “Hatch-Waxman and BPCIA in the Trenches: Deconstructing and Constructing an Exclusivity Dispute,” Mr. Karst will deconstruct, in a step-by-step manner, a complex exclusivity dispute, analyzing FDA’s and the disputing parties’ various (and sometimes evolving) positions on exclusivity.  Relevant court decisions will also be analyzed and their practical and future effects discussed.  After the exclusivity case analysis is completed, attendees will have the opportunity to construct their own exclusivity dispute by choosing from various base facts.  Once the case is constructed, Mr. Karst will lead attendees through the exclusivity analysis. 

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: P10-999-FDAB17.  You can access the conference brochure and sign up for the event here. We look forward to seeing you at the conference.

On February 15, FDA announced a public meeting to give interested persons an opportunity to discuss the use of the term “healthy” in the labeling of human food.

As described in previous blog posts, since FDA’s issuance of a warning letter to Kind LLC in March of 2015, healthy claims as nutrient content claims have become a topic of discussion. On September 28, 2016, FDA published a request for comments in the Federal Register.  FDA also issued guidance concerning the “Use of the Term ‘Healthy’ in the Labeling of Human Food Products.” As of February 22, FDA had received more than 850 comments. The comment period closes on April 26, 2017.

On January 27, 2017, the Union of Concerned Scientists submitted a Citizen Petition urging the FDA to establish “disqualifying levels” for added sugars for health and nutrient content claims on food and beverages in sections 21 C.F.R. §§ 101.13 and 101.14. FDA opened a separate docket for the Petition.

The upcoming public meeting could help inform FDA on rulemaking. Whether any such activity goes forward will depend, in part, on how the Trump administration interprets and applies the recent Executive Order curtailing rulemaking.   The meeting will be held at the Hilton Washington DC/Rockville Hotel, 1750 Rockville Pike, Rockville, MD 20852. There also will be an opportunity for parties who are unable to participate in person to join the meeting via Webcast.

FDA recently released a report summarizing its enforcement activities for FY 2016 (October 1, 2015 to September 30, 2016). It shows, among other things, that the number of warning letters from the Center for Drug Evaluation and Research doubled (76 in FY 2015 to 151 in FY 2016), in contrast to the halving of the letters sent by the Center for Devices and Radiological Health (168 in FY 2015 versus 85 in FY 2016). This blog post, however, is focused on a lesser used, but arguably more powerful, enforcement tool: debarment. The FDA report claims that in FY 2016 there was only 1 drug product debarment. Perhaps this low number motivated FDA to kickstart debarment actions because we are only a few months into FY 2017, and there already have been at least three debarment notices posted in the Federal Register.

What is debarment? Debarment is an enforcement proceeding that bars an individual from working “in any capacity” in the drug industry. Courts have interpreted debarment to be a complete bar, such that “[a]ll direct employment by a drug company, whether in the board room or the cafeteria or somewhere in between” is forbidden. See, e.g., DiCola v. FDA, 77 F.3d 504, 509 (D.C. Cir. 1996). FDA is required by statute to debar an individual who has been convicted of a felony relating to the development or approval of any drug product, or other conduct otherwise relating to the regulation of any drug product under the FDC Act. 21 USC § 335a(a)(2). There are other bases for debarment not discussed in this post.

Debarment frequently is confused with exclusion, which has a similar concept but is imposed by the HHS Office of Inspector General (OIG) under authority of the Social Security Act. OIG has the authority to exclude individuals from participating in federal health care programs, such as Medicare, Medicaid, and Tricare. No payment can be made for items or services furnished by an excluded individual or entity, which effectively can put that person out of business in the healthcare industry. Exclusion can be triggered for a number of reasons enumerated by statute, some of which require mandatory exclusion and some over which OIG has discretion, and most of which require a showing of fraud. Just last year, however, a court upheld the exclusion of a pharmaceutical executive convicted of a misdemeanor FDC Act violation, even though the elements of the violation did not include evidence of an intent to defraud or mislead. See Bohner v. Burwell, No. 2:15-cv-04088-CDJ, 2016 U.S. Dist. LEXIS 167590 (Dec. 2, 2016).

But back to debarment and FDA’s use of it. The most recent debarment proceedings are summarized below:

• 18, 2016: FDA permanently debarred Wesley A. McQuerry related to his role as a clinical trial study coordinator. Mr. McQuerry was responsible for administering the clinical trial and ensuring that trial participants received appropriate remuneration. He was convicted of a felony in February 2015 for knowingly and willfully falsifying data for at least four patients, and he used his own blood, stool, and EKG results, in the stead of fictional patients. His conduct resulted in a loss of over $200,000 to a pharmaceutical company. In October 2015, FDA sent a notice proposing to permanent debar Mr. McQuerry, he waived his right to a hearing by failing to respond, and he was permanently debarred effective March 18, 2016.

• 14, 2016: FDA permanently debarred Edward Manookian based on his felony conviction for conspiracy to defraud the United States by selling an unapproved drug product. Mr. Manookian was the president of a company that marketed Melanotan II (MII), a peptide used as an injectable tanning product. Despite repeated warnings from FDA to cease sales because MII was unapproved, Mr. Manookian persisted, and thus was convicted in August 2015. He received notice of the debarment action in August 2016, waived his opportunity for a hearing, and was debarred as of November 14, 2016.

• 15, 2016: FDA permanently debarred Louis Daniel Smith for his conduct related to the sale of a health-related product billed as a Miracle Mineral Solution (MMS), which was composed of sodium chlorite, an industrial chemical used as a pesticide and not intended to be used for human consumption. Mr. Smith obtained chemicals to manufacture MMS and sold MMS as a drug product. He was convicted in 2015 for one count of conspiracy, three felony counts of introducing misbranded drugs into interstate commerce, and one count of smuggling. In August 2016, FDA sent a notice proposing to permanently debar Mr. Smith, and he also waived his right to request a hearing.

• 15, 2016: On the same day as the notice of Mr. Smith’s debarment, FDA also published notice of the debarment of Paul S. Singh. Dr. Singh was convicted in July 2015 for providing patients with an unapproved birth control method, a copper intrauterine device (IUD), even though Dr. Singh knew of the risk and failed to inform patients of the unapproved nature of the IUD. Dr. Singh received over $83,000 in reimbursement from health care benefit programs by misrepresenting the type of IUD he had inserted. He was convicted on a single count of felony mail fraud. After notice in August 2016 of the debarment proceeding, Dr. Singh failed to request a hearing and thus was debarred effective November 15, 2016.

Notably all four individuals were debarred after constructive or actual waiver of hearings, and after felony convictions. It is hard to make heads or tails of FDA’s historic reliance on debarment as an enforcement tool.

The uptick at the start of FY 2017 serves as a reminder to industry of the collateral consequences of a conviction involving drug regulation. The facts underlying these debarment decisions also may support exclusion by HHS-OIG, as was the case for Mr. Bohner, cited above. Counsel for defendants in criminal cases should be cognizant of these implications in negotiating any resolution with the government.

Last month we reported that the Hemp Industries Association (“HIA”) petitioned the U.S. Court of Appeals for the Ninth Circuit to block the Drug Enforcement Administration’s (“DEA’s”) implementation of its recent final rule on marijuana extracts. On February 6, 2017, HIA filed another action with the Ninth Circuit; this one seeking to direct DEA to show cause why it should not be held in contempt, for failure to comply with the Court’s 2004 order that permanently enjoined DEA from regulating hemp fiber, stalk, sterilized seed and oil as controlled substances. The federal Controlled Substances Act (“CSA”) specifically excludes these parts of the plant from its definition of “marihuana.” 21 U.S.C. § 802(16).

As we mentioned previously, DEA issued two final rules in March 2003: one that expanded the Schedule I listing of synthetic tetrahydrocannabinols (“THC”) to include THC “naturally contained in a plant of the genus Cannabis (cannabis plant),” DEA, Clarification of Listing of “Tetrahydrocannabinols” in Schedule I, 68 Fed. Reg. 14,114, 14,119 (Mar. 21, 2003), and one that exempted hemp fiber, seed and oil products containing THC not intended for human consumption (e.g., for use as animal feed and cosmetic use) from control, DEA, Exemption From Control of Certain Industrial Products and Materials Derived From the Cannabis Plant, 68 Fed. Reg. 14,119 (Mar. 21, 2003). The rules together classified all naturally-occurring THC intended for human consumption as a Schedule I controlled substance.

HIA challenged the DEA final rules and, in 2004, the Court of Appeals of the Ninth Circuit found that the rules were “inconsistent with the unambiguous meaning of the CSA definitions of marijuana and THC,” and that “DEA did not use the appropriate scheduling procedures to add non-psychoactive hemp to the list of controlled substances.” Hemp Industries Ass’n v. DEA, 357 F.3d 1012, 1018 (9th Cir. 2004) (here). The Court permanently enjoined enforcement of the two rules “with respect to non-psychoactive hemp or products containing it.” 357 F.3d at 1019.

However, DEA never took any action as a result of the court’s action including not amending its listing of THC in Schedule I, maintaining the “naturally-occurring THC” provision in its regulations. 21 C.F.R. § 1308.11(d)(31). Furthermore, DEA continues to post the 2001 press release clarifying the Schedule I status of any THC product ingested by humans. At no time did DEA indicate that it would not regulate naturally occurring THC under the enjoined regulations. Thus, parties unaware of the Ninth Circuit injunction would otherwise understand hemp oil and other hemp products for ingestion by humans to be controlled substances. Also, no other circuit has decided the issue.

Until recently, DEA does not appear to have taken enforcement action under the enjoined regulation. As described in the HIA motion, in a December 2016 communication, the North Dakota Department of Agriculture (“NDDA”) advised a state-licensed farmer/producer that a planned shipment of hempseed oil out of the state would require a DEA registration, citing the federal CSA. This appears to have triggered HIA to file a motion for contempt.

The issue remains that despite the Ninth Circuit’s 2004 ruling, DEA’s position is that naturally-occurring THC for human consumption is a Schedule I controlled substance while HIA and others believe otherwise.

A few months ago, we blogged on the DEA Acting Administrator’s use of official notice in final orders. Specifically, we questioned the Acting Administrator’s recent practice of relying on facts outside of the record (typically publically available state pharmacy board records) without taking official notice and providing the respondent an opportunity to challenge those findings.  We asserted that this practice violates the Administrative Procedure Act’s (APA) minimal notice requirements and deprives aggrieved parties of due process.  We note that in a final order published last Friday, Paul E. Pilgram, M.D., 82 Fed. Reg. 11,058 (Feb. 17, 2017), the Acting Administrator opted to follow the proper APA procedures for taking official notice of state pharmacy board records.

The case involved a loss of state authority (see also our recent post here) in which the Acting Administrator relied on the results of a search of Utah’s licensing agency’s website confirming that the registrant’s state license remained revoked before revoking the registrant’s DEA registration. The Acting Administrator properly noted that he was taking official notice of the state board record, and provided the registrant with fifteen days to challenge his finding:

In accordance with the Administrative Procedure Act (APA), an agency “may take official notice of facts at any stage in a proceeding-even in the final decision.” U.S. Dept. of Justice, Attorney General’s Manual on the Administrative Procedure Act 80 (1947) (Wm. W. Gaunt & Sons, Inc., Reprint 1979).  In accordance with the APA and DEA’s regulations, Respondent is “entitled on timely request to an opportunity to show to the contrary.”  5 U.S.C. § 556(e); see also 21 CFR 1316.59(e).  To allow Respondent the opportunity to refute the facts of which I take official notice, Respondent may file a motion for reconsideration within 15 calendar days of the date of service of this Order which shall commence on the date this Order is mailed.

Pilgram, 82 Fed. Reg. at 11,059 n.4.

While this practice still does not clear up other concerns with DEA administrative practice we discussed in our previous blog post (such as DEA employees engaging in both investigative functions for the agency and subsequent participation in agency review of those investigatory functions, see 5 U.S.C. § 554(d)), we are encouraged that DEA indeed is recognizing in certain instances due process rights of the parties that appear before the agency in administrative proceedings.

It was just a couple of weeks ago that we published a post titled “Abuse-Deterrence and 3-Year Exclusivity: FDA Decisions Further Elucidate Scope and a ‘Route of Abuse’ Approach to Exclusivity.” Among other things, we discussed Egalet US, Inc.’s ARYMO ER (morphine sulfate) Extended-release Tablets, which FDA approved on January 9, 2017 under NDA 208603, and FDA’s statement accompanying the ARYMO ER NDA approval, titled “Impact of Exclusivity on Approval of Arymo ER.”  In that statement, FDA briefly explains that although intranasal route of abuse clinical studies were conducted with ARYMO ER (as well as intranasal route of abuse clinical studies), 3-year exclusivity FDA granted in connection with the approval of Inspirion Delivery Technologies, LLC’s MORPHABOND (morphine sulfate) Extended-release Tablets (NDA 206544) – identified in the Orange Book with a M-189 exclusivity code (i.e., “LABELING DESCRIBING THE EXPECTED REDUCTION OF ABUSE OF SINGLE-ENTITY EXTENDED-RELEASE MORPHINE BY THE INTRANASAL ROUTE OF ADMINISTRATION DUE TO PHYSICOCHEMICAL PROPERTIES”) – prevented the Agency from approving ARYMO ER with labeling describing abuse-deterrence via the intranasal route of abuse.  To make that determination, however, FDA must have previously determined the metes and bounds of 3-year exclusivity for MORPHABOND.  To that end, we stated in our February 9th post: “We’re pretty certain that FDA (and the CDER Exclusivity Board) put together a Letter Decision on the ARYMO ER-MORPHABOND exclusivity issue, but we’re still waiting to get a copy of that determination.  We’ll post it once we get it.”  Well, that time is now . . . . And the memorandum prepared by the CDER Exclusivity Board is probably the most interesting read yet on 3-year exclusivity and abuse deterrence.

Titled “Scope of 3-Year Exclusivity for MorphaBond (NDA 206544),” the November 16, 2016 CDER Exclusivity Board Memorandum delves into not only FDA’s views on the scope of 3-year exclusivity granted in connection with the approval of NDA 206544, but also details FDA’s decision-making process on how to handle abuse-deterrence exclusivity more generally. As to the former issue, FDA concludes (on page 12 of the memorandum) that “the scope of Morphabond’s exclusivity is limited to the condition of approval supported by Study M-ARER-002: labeling describing the expected reduction of abuse of a single-entity ER morphine by the intranasal route of administration due to physicochemical properties.”  But it’s the discussion that follows after the next sentence – i.e., “We describe below the reasons for adopting this approach” – that’s the most important part of the memorandum.  There, FDA describes how the Agency came to adopt a so-called “route of abuse” approach to 3-year exclusivity after wrestling with other possible approaches.

Below are the relevant paragraphs from the CDER Exclusivity Board Memorandum that sum up the Agency’s thinking on the matter. We’ve omitted the footnotes, but we’ll return to one of them in a moment.

Although neither the regulation, nor the preambles to the 1989 [Hatch-Waxman] Proposed Rule or the final rule governing exclusivity63 expressly contemplated how exclusivity would be determined for AD opioids, the preamble to the 1989 Proposed Rule states that, “[i]f the innovation is a new use, then exclusivity protects only that labeling claim and not the active ingredients, dosage form, or route of administration.” The Board believes that the circumstances of the MorphaBond approval, while not the same, may be analogized to the approval of a “new use” where the Agency represents in approved labeling its finding that a drug product, for example, is safe and effective to treat a new indication.  Similarly, in this instance, approved labeling for MorphaBond represents the Agency’s finding that MorphaBond is expected to reduce abuse of single-entity ER morphine by the intranasal route of administration due to physicochemical properties.  Accordingly, the Board believes that the exclusivity for MorphaBond should protect labeling describing this claim.

This scope of exclusivity is defined by two primary characteristics: (1) the abuse route (intranasal); and (2) the type of abuse deterrence employed (physicochemical properties). The Board notes that these characteristics are consistent with concepts discussed in the AD Opioids Guidance, which describes the categories of AD products (e.g., physical/chemical barriers, antagonist) and types of abuse routes (e.g., intranasal, intravenous, oral). The Board believes that this scope of exclusivity is also consistent with the applicable statutory and regulatory provisions, and it balances the goals of the Hatch-Waxman Amendments’ 3-year exclusivity provisions.

We note that the statute does not expressly describe the scope of exclusivity for 3-year exclusivity, providing FDA discretion to make exclusivity determinations in a manner consistent with the statutory language and intent of Congress. In making its determination that the scope of exclusivity in this instance should be defined as described above, the Board nonetheless considered but declined to adopt both broader and narrower potential approaches to the scope of exclusivity.

A broader scope of exclusivity (for example, one covering abuse deterrence generally) would be inconsistent with the scope of Study M-ARER-002, which was intended only to measure the ability to deter abuse of single-entity ER morphine via the intranasal route due to the drug’s physicochemical properties. Likewise, this broader approach to exclusivity would be inconsistent with the MorphaBond labeling, which (consistent with the AD Opioids Guidance) describes the specific AD properties and the specific routes of abuse that the product has been demonstrated to deter.

A narrower approach to the scope of exclusivity – for example, exclusivity limited to the specific formulation in MorphaBond, or the specific technology MorphaBond uses to deter intranasal abuse – would be inappropriate in this circumstance. As noted above, this approach to exclusivity is not compelled by the statute: FDA generally has taken the position that exclusivityprotected “conditions of approval” may nevertheless overlap between drugs despite certain differences in formulation or other aspects.  Thus, FDA has recognized that the scope of exclusivity for the innovation(s) represented by the approval and supported by clinical studies may reach beyond the specific formulation of the drug product approved in an application or supplement.

Importantly, the Board believes that a specific-formulation or specific-technology scope of exclusivity would be inconsistent with the scope of Study M-ARER-002. In this case, Study MARER-002 supported approval of MorphaBond as the first single-entity ER morphine product with labeling describing intranasal AD properties.  Thus, the labeling describing the expected reduction of abuse of single-entity ER morphine by the intranasal route of administration due to physicochemical properties is the “innovation” represented by the approval of MorphaBond and supported by a new clinical investigation (Study M-ARER-002, the only clinical investigation (that is not a bioavailability study) submitted to MorphaBond’s NDA).  In addition, a narrow specific-formulation or specific-technology scope of exclusivity potentially would have a very limited effect on subsequent 505(b)(2) applications and ANDAs (which might propose different formulations and excipients than MorphaBond), potentially undermining the purpose of 3-year exclusivity.

Footnote 69 in the Memorandum is inserted as part of FDA’s discussion of why a narrower and formulation-specific approach to the scope of 3 year exclusivity is inappropriate (at least in the context of MORPHABOND).  That footnote states:

The Board previously considered the scope of exclusivity recognized for NDA 022272/S-14 requesting approval of labeling describing AD properties of reformulated OxyContin. Although the Board drafted a memorandum and recommendation for the scope of  exclusivity of OxyContin, no ANDA or 505(b)(2) application potentially affected by this exclusivity was ready for final approval during the exclusivity period.  Further, the Board’s thinking on the issues related to 3-year exclusivity for AD opioids has evolved as reflected in this memorandum.

We suspect that FDA drafted a memo detailing why a formulation-specific approach to abuse-deterrence exclusivity might be appropriate. (At least that’s how we interpret FDA’s reference to evolved thinking.)  And we further suspect that such memorandum was prepared in the context of FDA’s consideration of the approval of Collegium Pharmaceuticals, Inc.’s NDA 208090 for XTAMPZA ER (oxycodone) Extended-release Capsules.  But because of another block on the approval of NDA 208090 (i.e., a 30-month litigation stay), and perhaps some foot-dragging along the way, FDA ultimately did not have to deal with the potential effect of a period of 3-year exclusivity applicable to OXYCONTIN on the approvability of XTAMPZA ER.  That M-153 exclusivity applicable to OXYCONTIN expired on April 16, 2016, shortly before FDA approved NDA 208090 for XTAMPZA ER on April 26, 2016.

Although FDA ultimately adopted a “route of abuse” approach to 3-year exclusivity over a more narrow formulation-specific approach, there’s some history to support a more narrow approach. Consider, for example, DIPRIVAN (propofol injectable emulsion), 1% (10 mg/mL).  On January 4, 1999, FDA approved ANDA 075102 for Propofol Injectable Emulsion, 1% (10 mg/mL), notwithstanding a period of 3-year exclusivity applicable to DIPRIVAN that was scheduled to expire on June 11, 1999.  The period of 3-year exclusivity applicable to DIPRIVAN was based on FDA’s approval of a supplemental NDA for a version of the drug product formulated with EDTA as a preservative.  FDA determined that the ANDA sponsor, whose drug product was formulated with sodium metabisulfite as the preservative in place of EDTA, was not subject to the exclusivity applicable to the EDTA-formulated version of DIPRIVAN because the scope of 3-year exclusivity was limited to the drug product formulation.

FDA’s decision was unsuccessfully challenged in court. In upholding FDA’s grant of 3-year exclusivity as relating only to the clinical investigations for EDTA, and not to preservatives in general, the court ruled that the 3-year exclusivity FDA granted:

extends only to the change approved in the supplement. Zeneca’s NDA supplement sought authority to add EDTA to Diprivan.  The clinical investigations it submitted to the FDA with that supplement were necessitated by specific concerns related to EDTA, not to preservatives in general.  Thus, the exclusivity applies to propofol products including EDTA, not to propofol products with other preservatives.

Zeneca Inc. v. Shalala, No. 99-307, 1999 WL 728104, at *13 (D. Md. Aug. 11, 1999), aff’d, 213 F.3d 161 (4th Cir. 2000) (internal quotes omitted).

More recently, FDA approved multiple 505(b)(2) NDAs for pharmaceutically equivalent testosterone gel drug products containing different penetration enhancers, and granted each sponsor a period of 3-year exclusivity. FDA’s decision that the first 505(b)(2) application approved with a period of 3-year exclusivity – i.e., NDA 202763, approved on February 14, 2012 with a period of “new product” exclusivity that expired on February 14, 2015 – did not block the approval of a subsequent 505(b)(2) application – i.e., NDA 203098, approved on January 31, 2013 with a period of “new product” exclusivity that expired on January 31, 2016 – appears to be due to the Agency’s determination that the scope of each applicant’s 3-year exclusivity was limited to the clinical trial data supporting approval of the particular penetration enhancer formulation tested.

Absent a successful challenge to FDA’s rejection of a formulation-specific approach to 3-year exclusivity in favor of a “route of abuse” approach to 3-year exclusivity, this all now seems to be water under the bridge. Nevertheless, it would be enlightening to see how FDA (perhaps in a memorandum not yet made public) squares these examples with the Agency’s current position.  But like trying to find out how many licks it takes to get to the center of a Tootsie Pop, the world may never know.

On Inauguration Day (January 20, 2017) President Trump’s assistant Reince Priebus circulated a regulatory “freeze order” blogged here affecting regulations and guidance published in the Federal Register but that had not yet taken effect, postponing their effective date for 60 days (from January 20, 2017). The purpose of the regulatory freeze is to permit the agency or department to “consider potentially proposing further notice-and-comment rulemaking” and whether further action is appropriate.  Several compounding guidance documents (see chart below) were published within Priebus “window” because they are still within their comment period, thus leaving industry to wonder whether and when they will become effective.  In addition, similar questions also linger surrounding the impact of the regulatory freeze on other earlier draft guidance documents.  The chart at the end of this blog contains a list of compounding guidances, policies and proposed regulations, and, for recently published drafts, when their comment period expires.

Compounding the confusion, on January 30, 2017, President Trump issued the Executive Order (“E.O.”) titled, “Reducing Regulation and Controlling Regulatory Costs,” to create a policy of the executive branch “to be prudent and financially responsible in the expenditure of funds, from both public and private sources…” as well as “to manage the costs associated with governmental imposition of private expenditures required to comply with Federal regulations” (see E.O. here).  While this E.O. has generated a great deal of interest across regulated industries, the regulatory framework for prescription drug compounding is relatively new and still being actively considered by FDA (i.e., with at least 2 proposed rules and 13 draft guidance documents still outstanding, and likely more to follow).  This raises the question of whether – and what – effect the E.O. will have on compounders.

Requirements of the E.O. & OMB’s Implementation

The E.O. establishes two primary requirements. The first requirement is that, “[u]nless prohibited by law, whenever an executive department or agency…publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed”.  The second requirement of this “1-in-2-out” E.O. is that the total incremental costs of all new regulations, including repealed regulations, finalized this fiscal year must be no greater than zero, unless otherwise required by law or consistent with advice provided in writing by the Office of Management and Budget (“OMB”).  To aid executive departments and agencies in complying with these two requirements, the E.O. directs OMB to issue guidance.  Among other things, OMB’s guidance is to cover emergencies and other circumstances that might justify individual waivers from this regulatory cap.

On February 2, 2017, OMB’s Office of Information and Regulatory affairs issued Interim Guidance on implementation of the E.O. (available here).  The key question that the Interim Guidance addresses is: which new regulations are covered?  OMB appears to have narrowed the scope of the E.O.’s coverage by limiting it to only those “significant regulatory actions,” which are defined as those that have an annual effect on the economy of $100 million or more or adversely affect the economy in a material way.  With regard to guidance and other interpretive documents (which are the most significant roots of the policies affecting compounding), OMB stated that whether they are significant “will be addressed on a case-by-case basis.”

Regarding the circumstances where a waiver might be available, OMB’s Interim Guidance provides that emergencies addressing, among other things, critical health and safety matters may qualify for a waiver from some or all of the requirements of the E.O. In addition, where a significant regulatory action needs to be finalized in order to comply with a statutory or judicial deadline, OMB states that agencies may proceed with those actions even if they are not able to identify offsetting regulatory actions by the time of issuance.  However, in all cases, OMB provides that agencies should identify additional regulatory actions to be repealed in order to offset the cost of the new significant regulatory action, even if it is required by law.

Effect of the Regulatory Cap on Compounding

The framework for the regulation of prescription drug compounding has been in flux, with at least 26 draft or final guidance documents and rules having been published since mid-2014. While many of these regulatory actions have already been finalized, 2 proposed rules and 13 draft guidance documents are still outstanding (see table below). Now that the E.O. is in effect, to finalize these regulatory actions, FDA will have to determine if they are within the E.O.’s scope.  If they are subject to the E.O., FDA will have to take two “deregulatory” actions, as well as factor the regulatory and deregulatory actions into its incremental cost calculation for the fiscal year.  To make such a determination, FDA will need to answer the following questions:

• Does the guidance/rule address a critical health and safety matter?
• Is the guidance/rule significant?
• Is the guidance/rule required by a statutory or judicial deadline?

FDA might first consider whether the regulation of prescription drug compounding is a critical health and safety matter, and therefore might allow for finalizing of guidance documents and rules under a waiver. FDA and other executive branch agencies have historically considered compounded drugs to serve an important medical need for patients, as well as presenting a potential risk to patients (especially post NECC).  Therefore, FDA may be able to justify that drug compounding regulations and guidance address an “emergency,” and that unsafe, ineffective, and poor quality compounded drugs are a critical health and/or safety matter.  If OMB agrees, FDA may be able to finalize the proposed rules and draft guidance documents without needing to offset those regulatory actions.  In addition the relevant statutes do require implementation of regulations at least in the context of creating the so-called “bulks” lists of drugs that may and may not be used in compounding under Sections 503A (Section 503A(b)(1)(A)(III)) and 503B (Section 503B(a)(2),(6)).

For the questions of whether the regulatory actions would be significant or are required by a statutory or judicial deadline, we have provided a preliminary analysis in the table below. Notwithstanding this analysis, we likely will need to take a “wait and see” approach concerning FDA’s development of finalization of guidance and regulations addressing compounding under Sections 503A and 503B.

In 2015, FDA proposed revising the so-called intended use regulation (21 CFR 201.128; id. § 801.4) to remove the famous “knowledge” sentence: “But if a manufacturer knows, or has knowledge of facts that would give him notice, that a [drug or device] introduced into interstate commerce . . . is to be used for conditions, purposes, or uses other than the ones for which he offers it, he is required to provide adequate labeling for such a drug/device which accords with such other uses to which the article is to be put.”

In the proposed rule, FDA indicated that removing the sentence was nothing more than a clarification “to better reflect FDA’s interpretation and application of these regulations.” At the time, we blogged very favorably on this change, describing it as long overdue.

On January 9, 2017, FDA issued the final rule. Shockingly, it does not delete the “knowledge” sentence as expected. On the contrary, it “amends” the sentence to create an entirely new sentence that FDA had not mentioned in original proposal. Now the sentence incorporates a brand new “totality of the evidence” standard:

And if the totality of the evidence establishes that a manufacturer objectively intends that a device [or drug] introduced into interstate commerce by him is to be used for conditions, purposes, or uses other than ones for which it has been approved, cleared, granted marketing authorization, or is exempt from premarket notification requirements (if any), he is required, in accordance with section 502(f) of the Federal Food, Drug, and Cosmetic Act, or, as applicable, duly promulgated regulations exempting the device from the requirements of section 502(f)(1), to provide for such device [or drug] adequate labeling that accords with such other intended uses.

It appears that FDA has now written itself a blank check to find whatever intent it wishes to find, using an unconstrained calculus as to what the “totality of the evidence” shows. Worse, the manufacturer’s knowledge can be part of this evidentiary mix, thus negating the long overdue proposal to eliminate “knowledge” as an element of intended use.

On February 8 a trio of pharmaceutical industry groups filed a Petition to Stay and for Reconsideration (Petition), asking FDA not to move forward with this final rule. The Petition points out that when FDA veered off in an entirely new direction in the final rule, as compared to the original proposal, it violated the requirements of the Administrative Procedure Act (APA). The APA requires “fair notice” and an opportunity to comment on a regulatory proposal. In this case, no one has had a fair opportunity to comment on the new regulatory language. As the Petition puts it (quoting a court case), a federal agency may not use a rulemaking “to pull a surprise switcheroo” (p. 12, internal quotation marks and citation omitted). If anything qualifies as a “surprise switcheroo” it is this final rule.

The Petition has an extended discussion of the history and language of the intended use regulation, and shows convincingly that the new language is a departure from existing law. The Petition also explains why the new proposal is a bad idea that would negatively impact the public health by chilling valuable scientific speech, raising a First Amendment concern. The Petition argues that the totality of the evidence standard is so vague that it may even raise due process concerns under the Fifth Amendment per recent Supreme Court cases such as FCC v. Fox Television Stations, Inc., 132 S.Ct. 2307 (2012).

What is likely to happen? It is a safe bet that FDA will not grant this petition. If FDA persists, it may find itself in court defending the new final rule. The outcome of litigation is never a sure thing, but this new rule is definitely vulnerable, on APA grounds if nothing else.

One wildcard is the new Trump administration. It is not clear how new management will view the new rule or what they might do to stop it, especially if it goes into effect while the Obama holdovers continue to run FDA. (The final rule was supposed to become effective on February 8, but it was caught up in the regulatory freeze imposed by the Trump administration. The new implementation date is March 21.)

In our view, the intended use regulation is a root cause of FDA’s First Amendment problems. In the next few weeks, we will post additional commentary analyzing the adverse effects of this regulation. We will suggest how it can be revised to comport with the First Amendment without impeding FDA’s public health mission. Our proposed fix will go beyond just eliminating the knowledge sentence, but that would have been a good start. It is too bad that FDA’s final rule did not follow through fair and square on the proposed rule.

2017 is already shaping up to be a big year in court for Amgen and the Biologics Price Competition and Innovation Act (“BPCIA”). As regular readers know, Amgen’s challenge to Sandoz’s refusal to participate in the patent dance after filing of an aBLA relying on Amgen’s Neupogen is heading to the Supreme Court this term (see our previous coverage here, here, here, and here). In a twist, Amgen will be headed back to court to litigate the BPCIA, but this time as the aBLA sponsor.

On Wednesday February 15, Genentech brought an action for declaratory judgment against Amgen for failure to comply with the patent dance provisions of the BPCIA. In November 2016, Amgen submitted an aBLA to FDA relying on Genentech’s cancer drug Avastin as the reference product.  The aBLA was accepted for review on January 4, 2017, triggering the patent dance (should Amgen choose to participate).  In an interesting footnote, Genentech distinguished this case from the aforementioned Amgen Inc. v. Sandoz because Amgen did, indeed, choose to participate rather than attempt to opt out of the BPCIA patent dance altogether.

According to Genentech, Amgen started the patent dance and provided Genentech a copy of its aBLA within 20 days, but refused to provide any information on the manufacturing process as required under 42 U.S.C. § 262(l)(2)(A).  Additionally, Amgen allegedly insisted that Genentech’s patent counsel could evaluate proposed infringement and withheld consent to expert participation in violation of 42 U.S.C. § 262(l)(1)(C).

With only 60 days to deliver a list of patents that “could reasonably be asserted” against Amgen’s proposed aBLA, Genentech stresses in its complaint that it needs the “other information” under § 262(l)(2)(A) to preserve its applicable patent rights.  For this reason, Genentech requests a declaratory judgment as well as an order declaring that Amgen has failed to comply with its obligations under 42 U.S.C. § 262(l)(1)(C) and § 262(l)(2)(A), directing Amgen to comply, resetting the BPCIA deadlines for resolving patent disputes, and prohibiting Amgen from selling its proposed biosimilar until the statutory process is complete.

In a clever bit of lawyering, Genentech uses Amgen’s own words in a similar matter to make its points. In 2015, Amgen sued Hospira when Hospira pulled the same stunt in the Epogen case (the complaint is here, and our prior coverage is here). The case is still ongoing, but it looks like Amgen took a page from the Hospira playbook.

On January 18, 2017, the U.S. Department of Health and Human Services along with 15 other federal agencies issued the Final Rule to revise the Federal Policy for the Protection of Human Subjects, known as the “Common Rule.”  This 1991 set of regulations created a uniform set of human subject protections which are codified in each department or agency’s title or chapter of the Code of Federal Regulations (CFR) based on HHS’ regulations at 45 CFR part 45, subpart A.

This announcement comes just a little over a year since the public comment period ended for the proposed rule, which posed a number of questions to stakeholders and generated over 2,100 comments (see our coverage of the NPRM here).  As a result of these comments, HHS and the other federal agencies made a number of significant changes from the proposed rule.  This blog post will explore some of the most significant changes from the NRPM.

While FDA-regulated research is not subject to the Final Rule, the NPRM received a large number of comments about harmonization and had input from FDA, in addition to longstanding efforts between HHS and FDA to achieve harmonization. The preamble to the Final Rule discusses the link between the Common Rule and FDA regulations, noting that the 21st Century Cures Act (“Cures Act”), enacted December 2016, “requires that the Secretary of HHS, to the extent practicable and consistent with other statutory provisions, harmonize the differences between 45 CFR part 46, subpart A, and FDA’s human subject regulations.”  For example, it directs FDA to allow multisite and cooperative research projects to use single IRB review, which is consistent with HHS’s policy under the Final Rule.  In addition, another provision of the Cures Act amends the Federal Food, Drug, and Cosmetic Act to alter the informed consent requirements for both drugs and medical devices such that a waiver of informed consent may now be granted for “proposed clinical testing [that] poses no more than minimal risk to…human beings and includes appropriate safeguards…” so that it is more aligned with how minimal risk is handled under the Common Rule.  The consideration of public comments to the Common Rule NPRM, and changes made in the last year between the NPRM and the Final Rule, may reflect the direction of harmonization as we move toward a potential “reopening” of FDA’s regulations under the Cures Act.

Regulating Research Use of Biospecimens

The NPRM proposed to revise the definition of “human subject” to include research in which an investigator obtains, uses, studies or analyzes biospecimens, regardless of identifiability. This would have required informed consent for research involving biospecimens in most circumstances (e.g., unless an IRB determined strict waiver requirements were met).  Such consent would have been able to be obtained through “broad consent” for future unspecified research.  This proposal received intensive public comment about the need for obtaining consent before using such biospecimens for research, and the potential negative impacts of implementing that proposal on the ability to conduct research.  Therefore, the Final Rule does not include this proposal, maintaining the current practice with respect to oversight of these biospecimens.  Instead, the Final Rule includes added requirements to the informed consent process to increase transparency so that potential subjects will have more information about how their biospecimens or private information may be used (e.g., that identifiers might be removed and used for future research, that the biospecimens might be used for commercial profit).

For studies on stored identifiable data or identifiable biospecimens, researchers will have the option of relying on broad consent obtained for future research as an alternative to seeking IRB approval to waive the consent requirement. Researchers will still not have to obtain consent for studies on non-identified stored data or biospecimens.

Recalibrating the Review Process: Exemptions But Not Exclusions

The NPRM proposed creating an “exclusions” section and adding new “exemptions” that would specify activities that would be outside the scope of the Common Rule that would make the level of review more proportional to the seriousness of the harm or danger to be avoided, with some activities being not subject to any level or review.

Due to public comments expressing concerns with an added layer of unnecessary complexity (e.g., the overlapping categories of exclusions and exemptions) and the lack of requirements on who would decide whether an activity met the criteria for an exclusion, the Final Rule did not adopt the NPRM’s general approach that would have added an “exclusions” section. Instead, the Final Rule reverts to the general structure of the pre-2018 rule and integrates some categories proposed for exclusion in the NPRM into that structure.  Certain categories of activities (that were proposed as exclusions in the NPRM) were removed from the definition of research in the Final Rule: (a) scholarly and journalistic activities, (b) public health surveillance activities, (c) criminal justice activities, and (d) authorized operational activities in support of national security missions.  In addition, four categories of activities that were determined to be low-risk and already subject to independent controls were incorporated into the Final Rule.

The addition of new “exemptions” of research based on the level of risk they pose to participants was retained in the Final Rule, largely for categories of social and behavioral research. For example, to reduce unnecessary regulatory burden and allow IRBs to focus their attention on higher risk studies, there is a new exemption for secondary research involving identifiable private information if the research is regulated by and participants protected under the HIPAA rules.

Changes to IRB Operational Requirements

The NPRM proposed a number of changes to the criteria for IRB approval of research, as well as IRB operations, functions, and membership, that were retained in the Final Rule, including:

• To have IRBs consider the equitable selection of subjects focus on issues related to coercion or undue influence in research with vulnerable populations;
• Inclusion of special considerations related to the involvement of vulnerable populations;
• Removal of the requirement to conduct continuing review of ongoing research studies in certain instances where such review does little to protect subjects.

Mandating Single IRBs

The Final Rule adopts the NPRM proposal of mandating that all institutions located in the United States engaged in cooperative research rely on a single IRB for that study, with some exceptions (e.g., where more than single IRB review is required by law, such as FDA-regulated medical devices). However, public comments recommended a greater role should be provided for grantee input on choosing the IRB of record, so the Final Rule includes modified language that allows lead institutions to propose the reviewing IRB.

Reforming the Informed Consent Process

Although the regulatory language is structured differently in the Final Rule, it largely contains the major revisions to the requirements for informed consent proposed in the NPRM, including:

• All the proposals to improve and clarify the general requirements of informed consent;
• That prospective subjects and legally authorized representatives must be provided with key information that is most likely to assist a prospective subject or legally authorized representative in making a decision about participating in research, and to provide an opportunity to discuss that information;
• The proposal to inform potential subjects about the possible use of their identifiable private information and the potential for commercial profit (as described above);
• Additional elements of consent: (a) a statement regarding whether clinically relevant research results, including individual research results, will be disclosed to subjects and, if so, under what conditions; and (b) which was not in the NPRM: when appropriate for research involving biospecimens, subjects be informed of whether the research will (if known) or might include whole genome sequencing;
• An option to obtain broad consent for storage, maintenance, and secondary research use of identifiable private information or identifiable biospecimens (although such consent is not required for non-identifiable secondary research use as it was under the NPRM as discussed above), however the Final Rule does not include broad consent templates to be established by HHS;
• The language proposed providing that if an individual was asked to consent to the storage or maintenance for secondary research use of identifiable private information or identifiable biospecimens in accordance with the broad consent provisions and such individual refused to consent, the IRB would be prohibited from waiving consent of such biospecimens or information;
• Waiver criterion mandating that for research involving access to or use of identifiable private information or identifiable biospecimens, the requirements of of informed can be waived or altered only if the research could not be practicably carried out without using such information or biospecimens in an identifiable format;
• The provision that would authorize an IRB to approve a research proposal in which investigators obtain identifiable private information without individuals’ informed consent for the purpose of screening, recruiting, or determining the eligibility of prospective human subjects of research (but without a requirement that investigators adhere to the NPRM’s proposed privacy safeguards, since they were not included in the Final Rule); and
• The provision that would require that a copy of the final version of the consent form (absent any signatures) for each clinical trial conducted or supported by a Common Rule department or agency be posted on a publicly available Federal website that will be established a repository for such consent forms.

Diverging from the NRPM, the Final Rule includes an approach that emphasizes efforts to foster understanding overall rather than imposing specific length limitations on the entire consent forms. In addition, the Final Rule does not adopt a requirement that certain information be included only in appendices; will the same goal of facilitating comprehension, the Final Rule instead establishes a “beginning section” to the informed consent document.

The Scope of the Regulations Not Extended

The Final Rule does not extend the Common Rule to cover clinical trials that are not federally funded, as was proposed in the NPRM.

Effective Date and General Compliance Date

The Final Rule adopts an effective date and general compliance date of 1 year from the publication of the Final Rule, which would be on January 19, 2018. As such, ongoing research studies that were initially approved by an IRB, waived, or determined to be exempt before this date will not be required to comply with the changes in the Final Rule.  However, the Final Rule allows institutions to voluntarily comply with the Final Rule on a study-by-study basis.  The single IRB requirement for cooperative research (discussed above) adopts a separate 3-year compliance date for this requirement to allow institutions sufficient time to develop institutional policies and procedures to implement this requirement.

DEA’s administrative docket is off to a quiet start this year. Since January, the Administrator has issued five final orders, all of which are so-called “loss of state authority” cases. In these cases, the Administrator adjudicates, as a matter of law, that a practitioner’s DEA registration must be revoked on the basis that the practitioner has lost his or her state authority to prescribe controlled substances. These cases are simple, requiring only that the DEA prove that a state agency has revoked or suspended a practitioner’s state license to prescribe controlled substances or that such license has expired without renewal. DEA’s current thinking and practices on this matter, however, are not without concern.

Under agency precedent, the Administrator must revoke a practitioner’s registration as a matter of law if a practitioner has lost state authority to prescribe controlled substances. Accordingly, when a practitioner requests an administrative hearing before a DEA administrative law judge (ALJ) upon receipt of an Order to Show Cause (OSC) seeking to revoke the practitioner’s registration and alleging a loss of state authority, the ALJ will typically decide the matter on summary disposition (similar to summary judgment). The ALJ will recommend that the practitioner’s DEA registration be revoked based on undisputed evidence that a state has suspended or revoked the practitioner’s authority to prescribe controlled substances in that state.

Each of DEA’s 2017 cases to date involves a loss of state authority:

• Gentry Reeves Dunlop, M.D., 82 Fed. Reg. 8432 (Jan. 25, 2017)
• Donald W. Lamoreaux, M.D., 82 Fed. Reg. 8434 (Jan. 25, 2017)
• Richard W. Walker, Jr., M.D., 82 Fed. Reg. 9223 (Feb. 3, 2017)
• Janet Carol Dean, M.D., 82 Fed. Reg. 9224 (Feb. 3, 2017)
• John P. Moore, III, M.D., 82 Fed. Reg. 10398 (Feb. 10, 2017)

All but the Moore case were decided solely on the issue of loss of state authority. In terms of their difficulty, loss of state authority cases are DEA’s “low-hanging fruit.” They require almost no investigative effort on behalf of DEA. Rather, DEA can rely on state agencies to investigate and adjudicate a practitioner’s state license. When DEA learns that a state agency has suspended or revoked a practitioner’s state license, DEA can bring an OSC against the practitioner alleging loss of state authority and seek summary disposition if the practitioner requests a hearing. The only evidence DEA needs to gather is a copy of the state agency’s suspension or revocation order or some other proof that the practitioner can no longer prescribe controlled substances in that state. Because the practitioner no longer meets the state license criteria necessary to hold a DEA registration, the cases require presentation of no other evidence.

In 2016, DEA issued final orders in twenty-eight cases. Over half (fifteen) of these cases were decided solely on the issue of loss of state authority, and the majority of those cases were decided by an ALJ on summary disposition (the other cases lacked a request for hearing, and were decided by the Administrator). At a time when DEA is coming under heavy scrutiny and criticism for its diversion enforcement efforts (see here and here), the fact that the Administrator only issued final orders in thirteen cases last year on grounds other than loss of state authority is surprising.

But DEA’s reasoning in these cases, especially when these cases are decided on summary disposition—almost always over the protest of the practitioner—is also troubling.

Under agency precedent, the Administrator must revoke a practitioner’s DEA registration upon a loss of state authority. This rule is derived from two provisions of the Controlled Substances Act (CSA). First, the CSA defines a practitioner as:

a physician, dentist, veterinarian, . . . or other person licensed, registered, or otherwise permitted, by the United States or the jurisdiction in which he practices . . . to distribute, dispense, [or] administer . . . a controlled substance in the course of professional practice.

21 U.S.C. § 802(21) (emphasis added).

Second, the agency points to 21 U.S.C. § 823(f), which provides that the Administrator shall “register practitioners . . . if the applicant is authorized to dispense . . . controlled substances under the laws of the State in which he practices.” Id. § 823(f) (emphasis added).

According to agency precedent, these two provisions support the position that a practitioner’s DEA registration must be revoked as a matter of law upon a loss of state authority:

Because Congress has clearly mandated that a practitioner possess state authority in order to be deemed a practitioner under the [CSA], DEA has held repeatedly that revocation of a practitioner’s registration is the appropriate sanction whenever he is no longer authorized to dispense controlled substances under the laws of the State in which he practices medicine.

Dunlop, 82 Fed. Reg. at 8433.

While DEA’s interpretation of the CSA that every practitioner applicant it registers must hold state authority to prescribe controlled substances may be correct, its conclusion that these provisions require that the Administrator suspend or revoke a practitioner’s registration upon loss of state authority as a matter of law seems to be contradicted by the CSA itself.

21 U.S.C. § 823(f) (one of the two provisions relied on by DEA) governs whether the Administrator should grant a registration upon an application by a practitioner. 21 U.S.C. § 824(a) lists the discretionary factors that the Administrator “may” consider when determining whether to suspend or revoke an existing registration. Under this provision, the Administrator “may . . . suspend[] or revoke[]” a practitioner’s registration upon a finding that the registrant has:

had his State license or registration suspended, revoked, or denied by competent State authority and is no longer authorized by State law to engage in the . . . dispensing of controlled substances . . . .”

21 U.S.C. § 824(a)(3).

The plain reading of this provision appears to say that a loss of state authority is only one of several factors that may result in suspension or revocation of a practitioner’s DEA registration—not an automatic basis as a matter of law. But DEA’s interpretation contradicts this plain reading of the CSA. A reasonable interpretation of the provisions in question would be that § 802(21) and § 823(f) require state authority in order for the Administrator to grant an application for registration, but that § 824(a)(3) only renders a loss of state authority a discretionary factor in determining whether to suspend or revoke an existing registration. To hold otherwise would violate one of the canons of statutory interpretation by making the language of § 824(a)(3) of absolutely no “effect.” Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 100 (1992) (holding that it is the Court’s “duty to give effect, if possible, to every clause and word of a statute” (quoting United States v. Menasche, 348 U.S. 528, 538-39 (1955))).

While the Administrator can certainly suspend or revoke a practitioner’s registration due to loss of state authority as one of the discretionary factors of § 824(a), and DEA’s website guidance plainly states that state authority is required to maintain a registration, the Agency’s interpretation permitting a summary disposition on this issue is arguably inconsistent with the CSA. One could argue that DEA’s practice of deciding these cases on summary disposition without giving a practitioner the opportunity to present other evidence supporting continued registration may violate the CSA and the practitioner’s due process rights spelled out in the Administrative Procedure Act.

Notwithstanding, in support of its position that these practitioner summary dispositions are appropriate, DEA often points to two unpublished federal appeals decisions, Hooper v. Holder, 481 Fed. App’x 826 (4th Cir. 2012), and Maynard v. DEA, 117 Fed. App’x 941 (5th Cir. 2004), that deny petitions for review and discuss the issue of loss of state authority. While both cases appear to support the agency’s position, neither addresses the statutory interpretation concerns or the potential constitutional implications of summary disposition.

What does any of this mean, in reality? The ALJ and the Administrator have significant discretion in determining the weight of the factors they must consider when determining to suspend or revoke a registration. Even if the Administrator determines not to suspend or revoke a practitioner’s registration as a matter of law on summary disposition based solely on loss of state authority, it is likely that the Administrator could easily find, on his own, this factor to be a discretionary basis for suspension or revocation. Is it also highly likely that a practitioner that has lost state authority to handle controlled substances will lose his or her DEA registration as well? Of course. Nonetheless, in order to protect the due process rights of practitioners facing an OSC, DEA could consider observing the nuances of the CSA and giving meaningful effect to each of its provisions by evaluating loss of state authority as just one of several factors that the ALJ and Administrator may consider when determining whether suspension or revocation is appropriate under 21 U.S.C. § 824(a).

FDA’s Field Alert Report (or FARs) reporting requirements are authorized under 505(k) of the Federal Food, Drug, and Cosmetic Act. The requirements have been in effect since the agency promulgated the regulatory provision at 21 CFR 314.81(b)(i) in 1985. The regulatory provision states, in part, that:

The applicant shall submit information of the following kinds about distributed drug products and articles to the FDA district office that is responsible for the facility involved within 3 working days of receipt by the applicant. The information may be provided by telephone or other rapid communication means, with prompt written followup. The report and its mailing cover should be plainly marked: “NDA – Field Alert Report.”

(i) Information concerning any incident that causes the drug product or its labeling to be mistaken for, or applied to, another article.

(ii) Information concerning any bacteriological contamination, or any significant chemical, physical, or other change or deterioration in the distributed product, or any failure of one or more distributed batches of the drug product to meet specifications established for it in the application.

The purpose of the FAR is to quickly identify drug products in the field that pose a potential health hazard to the public. All drug manufacturers with approved NDAs and ANDAs are required to submit a FAR to the FDA if they find any significant problems with an approved drug. In the preamble to the final rule in 1985, the agency stated that “…because these reports can lead to preventing potential safety hazards from products already in distribution, the agency emphasizes that the reports are required for both confirmed and unconfirmed problems.”

Manufacturers are to submit their FARs via Form 3331. Also, in contrast to postmarket adverse drug experience reporting under 21 CFR 314.80, FARs potentially involve one of a variety of drug quality issues that could be of interest or concern to both the field office and CDER.

According to the Compliance Program Guidance Manual 7356.021 (CPG), which was updated within the past year and upon which much of the information below is based, the three working days begins when the applicant becomes aware of a problem either through a complaint or internal testing, such as during stability testing or testing of reserve samples. It does not begin the day that the applicant confirms or invalidates a problem. The CPG further states that dissolution failures, impurity level problems, mislabeling issues (including possibly obscured labels, missing labels and incorrect labels) and sub-potency and super-potency issues concerning distributed products all fall within the ambit of 314.80(b)(ii).

FDA has previously stated that the following situations also meet the reporting threshold under 314.80(b)(ii): problems with appearance or particulates, dissolution failures, broken, or split tablets, unknown spots on tablets, as well as lyophilization problems such as finding moisture in the vialed product. Even if the product is at its expiration date, FDA still expects the firm to report these problems.

However, if the manufacturer can invalidate the problem (such as a problem that ends up being due to a lab error) within the three working days allotted under the regulation, then a FAR is not required. If further investigation is required and goes beyond the three working days, then a FAR must be submitted to FDA. FDA recommends reviewing the Guidance on Investigating Out-of-Specification Test Results for Pharmaceutical Production for assistance with investigating out-of-specification (OOS) test results.

Not surprisingly, foreign holders of NDAs or ANDAs must follow these FARs requirements as well, however, the foreign application holders’ U.S. agents are responsible for reporting the FARs to FDA, and the foreign agent is required to submit the FARs to the district office where they are located. What is interesting, and indeed somewhat suspect, is the statement in the CPG that drugs “distributed in foreign markets” must also follow these requirements. It is unclear what statutory authority FDA would cite for requiring firms with drugs distributed in foreign markets to file field alerts, since these products, by definition, are not under an NDA/ANDA.

For FARs that affect more than one product, firms should submit one FAR per NDA/ANDA of distributed product. Multiple lots of the same product may be submitted in one form.

Most district offices have a Drug Quality Reporting System/FARs email box dedicated to receiving FARs from the firms in their districts. Firms are generally instructed to send all FARs to this one mailbox. Usually the district coordinator serves as the district’s contact point to facilitate communication with the drug manufacturer on matters pertaining to the status of a FAR.

The district office performs assessments on all FARs (whether initial, follow-up or final) and provides them to CDER. It is the district office’s responsibility to determine whether the firm’s root cause analysis and CAPAs are adequate to mitigate the risk and to comply with FDA regulations, as well as to request a timeline for the firm’s completion of their investigation.

The district office that is the recipient of a FAR is supposed to send its report on the FAR (this includes the initial, follow-up and final FAR) to CDER’s Drug Quality Reporting System (DQRS) within five working days after receipt from the firm.

As part of the district’s preparation for inspections, they are expected to review any FAR to be covered while on inspection. The district is expected to request from CDER DQRS the FAR history associated for a specified firm and drug product. So, whatever the firm has done internally to close out the issues related to their FARs since the last inspection, these are likely to be reviewed on a subsequent FDA inspection.

Indeed, when reviewing firm SOPs during an inspection, the investigators are to note the firm’s handling and reporting of NDA FARs to ensure their compliance with FDA regulations. The failure of a firm to submit a FAR for a distributed and violative product is reportable as an FDA-483 observation.

The CPG further recommends that significant violations related to a FAR, as well as under-reporting or lack of FAR reporting, should be included in recommendations for advisory actions (i.e., the issuance of an untitled or warning letter, among other possibilities).

Therefore, this serves as a reminder to firms that even when you have closed out your FARs with the district, and even if you have not received any comments or concerns regarding your filing, FDA investigators will be reviewing the firms’ internal documents to all FARs on the subsequent inspection. Forewarned is forearmed, as the proverb goes.

Just a few days before the presidential inauguration, FDA published a revised draft guidance on control of Listeria monocytogenes (Lm) in ready-to-eat (RTE) foods.  The significance of the guidance to the food sector is difficult to overstate.  Since FDA published the original draft guidance in February 2008, the modernized CGMP and preventive controls regulation issued under the authority of FSMA has come into effect (see 21 CFR Part 117).  The revised draft guidance is intended to help manufacturers of RTE foods comply with the requirements of that regulation, and takes into account recommendations made by FDA’s Food Advisory Committee in December 2015 (see here and here).

Lm contamination accounts for a significant percentage of Reportable Food Registry incidents (@17% in the most recent year for which data are available), and has been at the heart of a number of notable Class I recalls, not to mention a few criminal investigations and prosecutions.  That, together with the advent of FDA “swabathons” during inspections and the agency’s increasing use of whole genome sequencing, has aroused consternation about the appropriate implementation of sanitation and environmental monitoring programs to control environmental pathogens such as Lm.  The revised draft guidance addresses that topic (among many others) in considerable detail, and should be read in its entirety by any producer of RTE foods.  Although the guidance is in draft form, it would be prudent to assume that it reflects FDA’s current thinking – something to bear in mind as FDA begins carrying out inspections for compliance with Part 117.  Comments on the guidance are due by July 26, 2017.

It has become almost commonplace to see a weekly announcement of a False Claims Act settlement by a major pharmaceutical or medical device manufacturer. Perhaps that is why last month’s settlement by Baxter Healthcare Corporation flew under the radar of the FCA bar.  Or perhaps it was because the civil settlement amount was small ($2.158 million) in comparison to the multi-million dollar figures paid by other healthcare companies.  Or maybe the civil settlement escaped notice because the criminal component was more interesting.  Although not the subject of this blog post, the criminal resolution involved a Deferred Prosecution Agreement (DPA), enhanced compliance measures, and a $16 million payment, despite no adverse events reported, no harm to patients, and no impact on the products by the alleged conduct.

But a close look at the False Claims Act settlement reveals something unusual. The covered conduct is not the off-label promotion or kickback activity we usually see in these resolutions.  Instead the Baxter case was based on an allegation that Baxter manufactured products in violation of current good manufacturing practices (cGMP), which violates the Federal Food, Drug, and Cosmetic Act (FDC Act).  Because Baxter sold these products to the Department of Veterans Affairs (VA) under contracts that required compliance with the FDC Act, the government alleged that Baxter submitted false claims to the government and violated the FCA.

The products at issue are large-volume sterile intravenous (IV) solutions. Baxter manufactured these IV solutions in clean rooms that were installed with high-efficiency particulate absorption (HEPA) filters. Baxter regularly scheduled inspection and testing of the HEPA filters, and was required by company procedure to replace any that failed testing.  It appears the entire case hinged on whether the company addressed an employee’s complaints about whether 5 of 120 of these filters needed replacement; the employee ultimately became the whistleblower and recovered over $400,000.  The company conducted testing throughout the time period on how much mold was present in the air and on surfaces in the clean room.  There were no “out of limits” results.  Nor did testing of the products themselves identify any “out of limits” mold in the IV solutions before sterilization; because the products all were sterilized before release, there was no mold contained in products distributed from the company.  Indeed the Statement of Facts attached to the DPA includes what likely was a highly negotiated final sentence: “There was no evidence of impact on the IV solutions manufactured at North Cove from the mold found on the HEPA filters above the Line 11 clean room.”

A basic cornerstone of FDA’s authority is to ensure that the drugs it regulates are manufactured in accordance with cGMP. Under the FDC Act, a drug is adulterated if “the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements of this chapter as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess.”  21 U.S.C. 351(a)(1)(B).  The focus is not on an actual deviation from the product’s quality and purity, but simply that the methods used to make the product are not cGMP compliant.  Every year, FDA inspects hundreds of facilities and cites them for failing to follow cGMP in manufacturing FDA-regulated products.  FDA has the authority to issue Warning Letters, ban products from importation, or enjoin companies from making product until FDA is satisfied with the company’s cGMP compliance.

Thus it is disturbing to see another governmental agency reviewing and enforcing the same conduct. We can only recall two other FCA settlements that involved cGMP violations, and both involved product that was negatively impacted by the company’s failure to follow cGMP. The settlement by GlaxoSmithKline in 2010 involved product that had no active ingredient or no controlled release mechanism, higher or lower amounts of the active ingredient, non-sterile product, or product that contained microorganisms.  Similarly, the FCA settlement with Ranbaxy involved the manufacture of drugs “the strength of which materially differed from, or the purity or quality of which materially fell below, the strength, purity, or quality which they purported or were represented to possess.”  Yet in this most recent settlement with Baxter, there was “no evidence of impact” on the products and no harm to patients.

We hope FCA cases based on cGMP compliance remain a rarity. At any given time, a company can be cited for not satisfying the requirements of cGMP; by its very nature, “current” practices are constantly evolving.  This is FDA’s statutory purview under the FDC Act, not the FCA.

Questions about the scope of 3-year exclusivity granted by FDA for an abuse-deterrent opioid have been on the rise over the past few years. Initially, FDA was able to punt on some decisions, either because companies exchanged waivers of 3-year exclusivity (e.g., single-entity, extended-release hydrocodone drug products – see here), or because another obstacle, such as a 30-month litigation stay, provided FDA with an excuse for having to address exclusivity.  (Here, we would have included a link to the tentative approval letter for NDA 208090 for XTAMPZA ER (oxycodone) Extended-release Capsules, where FDA states in a footnote that the Agency doesn’t need to address the scope of another sponsor’s 3-year exclusivity because of a 30-month litigation stay; however, as we recently reported, some drug approval information is disappearing from FDA’s website.)  But with the passage of time (and NDA approvals), FDA is being forced to address 3-year exclusivity issues head-on.  And with those decisions, we are learning more about FDA’s interpretation of the scope of 3-year exclusivity in the context of abuse-deterrent opioid drug products, and the development of what we’ll call a “route of abuse exclusivity approach.”

First, there was a March 3, 2015 Memorandum from the CDER Exclusivity Board explaining FDA’s decision to grant a period of 3-year exclusivity with respect to the April 16, 2013 approval of NDA 022272/S014 for OXYCONTIN (oxycodone HCl) Controlled-release Tablets (see our previous post here).  That exclusivity was coded in the Orange Book as “M-153,” which is defined as: “ADDITION OF INFORMATION REGARDING THE INTRANASAL ABUSE POTENTIAL OF OXYCONTIN.”  With the assignment of this exclusivity code, the CDER Exclusivity Board noted that “the scope of 3-year exclusivity in this instance is limited to the addition of information to the [OXYCONTIN] labeling regarding the reduction of abuse via the intranasal route.”

Then there was an October 1, 2015 Exclusivity Letter Decision from the CDER Exclusivity Board examining whether or not a period of 3-year exclusivity the Agency granted after approving a Supplemental NDA (S-016) for AlPharma Pharmaceuticals, LLC’s EMBEDA (morphine sulfate and naltrexone HCl) Extended-release Capsules (NDA 022321) should block the approval of Inspirion Delivery Technologies, LLC’s MORPHABOND (morphine sulfate) Extended-release Tablets (NDA 206544) (see our previous post here).  FDA explained that “the change approved in the [EMBEDA] supplement only bars approval of other 505(b)(2) NDAs for drugs containing the combination of active moieties approved in Embeda and that otherwise seek approval for the same exclusivity-protected conditions of approval as Embeda,” and that “[b]ecause MorphaBond does not contain the combination of active moieties approved in Embeda, any approval of MorphaBond is not an approval for the “change approved in the supplement” (i.e., S-016) for which Embeda currently has exclusivity and no additional inquiry is required.”  As such, the CDER Exclusivity Board recommended “that the exclusivity awarded to Embeda for S-016 should not block approval of MorphaBond.”  (Curiously, FDA still has not updated the Orange Book to show a period of 3-year exclusivity granted in connection with the October 17, 2014 approval of S-016 for EMBEDA.)

After approving NDA 206544 for MORPHABOND, FDA updated (eventually) the Orange Book to reflect the grant of a period of 3-year exclusivity expiring on October 2, 2018 and coded as “M-189.” That M-189 code is defined in an Orange Bood addendum as: “LABELING DESCRIBING THE EXPECTED REDUCTION OF ABUSE OF SINGLE-ENTITY EXTENDED-RELEASE MORPHINE BY THE INTRANASAL ROUTE OF ADMINISTRATION DUE TO PHYSICOCHEMICAL PROPERTIES.”  We’ll return to this shortly . . . .

The next exclusivity challenge FDA (i.e., the CDER Exclusivity Board) faced was whether a period of 3-year exclusivity coded in the Orange Book as “NC” (New Combination) for TARGINIQ (oxycodone HCl and naloxone HCl) Extended-release Tablets (NDA  205777) blocked the approval of the 505(b)(2) NDA for TROXYCA (oxycodouc HCl and naltrexone HCl) Extended-release Capsules (NDA 207621).  In an August 19, 2016 Memorandum, the CDER Exclusivity Board concluded as one might expect: “Targiniq’s 3-year exclusivity for the conditions of approval of NDA 205777 is ticd to its specific combination of active moieties, oxycodone and naloxone.  The Board thus recommends that any 3-year exclusivity for Targiniq should not block the approval of Troxyca because Troxyca has a different combination of active moieties, oxycodone and naltrexone.”  Thus, FDA approved NDA 207621 for TROXYCA and granted the sponsor, Pfizer Inc., its own period of 3-year exclusivity (also coded in the Orange Book as “NC”).

As an interesting side note, during FDA’s review of the TROXYCA NDA, several Citizen Petitions were submitted to to the Agency concerning either the approval of TROXYCA (specifically, 505(b)(2) NDA “listed drug” issues) – see Docket No. FDA-2015-P-5108 – or FDA’s approval of abuse-deterrent drug products – see Docket No. FDA-2016-P-1946.  FDA denied both Citizen Petitions – one without comment (here), and another because of the Agency’s inability to resolve “complex scientific issues” (here) – in Letter Decisions included in the relevant petition dockets.  But those denials aren’t the last words from FDA on each petition.  In other memoranda FDA prepared in connection with the approval of TROXYCA, the Agency provides a more fulsome response to the two Citizen Petitions.  Copies of those memos are available here and here.  FDA’s memo concerning Docket No. FDA-2015-P-5108 in particular is worth a read.  There, FDA expands on and clarifies previous Agency statements and decisions concerning a 505(b)(2) applicant’s choice of listed drug.  We’ve discussed some of those previous decisions in posts here and here.

Moving on (and with reference back to our placeholder comment on the exclusivity FDA granted for MORPHABOND), FDA provided further clarification and insight into the Agency’s view of the scope of 3-year exclusivity granted in the context of abuse-deterrent drug products when the Agency approved NDA 208603 on January 9, 2017 for Egalet US, Inc.’s ARYMO ER (morphine sulfate) Extended-release Tablets for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.

With that ARYMO ER NDA approval, FDA issued a statement, titled “Impact of Exclusivity on Approval of Arymo ER.” For the sake of posterity (and because we don’t know what information will eventually be scrubbed from FDA’s website), we provide below the text of that FDA statement:

Today, the FDA approved Arymo ER (morphine sulfate extended-release tablets), a new extended-release opioid with abuse-deterrent properties. Arymo ER is approved to treat pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.  Arymo ER is formulated to give it physicochemical properties expected to make abuse by injection difficult. However, abuse by the intravenous, intranasal, and oral routes is still possible.

Expanding access to abuse-deterrent opioids to discourage misuse and abuse is part of the FDA’s Opioid Action Plan, and the pharmaceutical industry has shown significant interest in the development of abuse-deterrent products. Technology is progressing rapidly, and these medications hold promise as their abuse-deterrent qualities continue to improve and as they become more widely available.

As the FDA reviews new drug applications, the agency works through various issues that may arise, including exclusivity. Another product, MorphaBond (morphine sulfate extended-release tablets), has marketing exclusivity for labeling describing the expected reduction of abuse of single-entity extended-release morphine by the intranasal route due to physicochemical properties.  Due to MorphaBond’s marketing exclusivity, no other single-entity extended-release morphine product submitted in an abbreviated new drug application or 505(b)(2) application can be approved for that use at this time.

Because the science of abuse deterrence is still evolving and the agency does not yet know which technologies will ultimately prove most effective in deterring opioid abuse, the agency believes that it is in the interest of public health to encourage development of multiple abuse-deterrent alternatives while continuing to promote and protect innovation.

The details of the FDA’s scientific review of the clinical evidence that supported the approval of Arymo ER are available in the FDA Review Summary, which will be posted to Drugs@FDA following approval. Additional information about Arymo ER is available in the briefing materials from the August 4, 2016, joint meeting of the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory Committee.

What FDA explains above is the Agency’s “route of abuse exclusivity approach.” Although intranasal route of abuse clinical studies were conducted with ARYMO ER (as well as intranasal route of abuse clinical studies), FDA determined that MORPHABOND’s 3-year exclusivity – applicable to “LABELING DESCRIBING THE EXPECTED REDUCTION OF ABUSE OF SINGLE-ENTITY EXTENDED-RELEASE MORPHINE BY THE INTRANASAL ROUTE OF ADMINISTRATION DUE TO PHYSICOCHEMICAL PROPERTIES” (M-189) – prevented the Agency from approving ARYMO ER with labeling describing abuse-deterrence via the intranasal route of abuse.  We’re pretty certain that FDA (and the CDER Exclusivity Board) put together a Letter Decision on the ARYMO ER-MORPHABOND exclusivity issue, but we’re still waiting to get a copy of that determination.  We’ll post it once we get it.

Finally, we note FDA’s January 17, 2017 approval of Teva Branded Pharmaceutical Products R & D, Inc.’s NDA 207975 for VANTRELA ER (hydrocodone bitartrate) Extended-release Tablets. FDA approved VANTRELA ER for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.  That’s the same indication for which other single-entity hydrocodone bitartrate drug products are approved, and, in particular, HYSINGLA ER (hydrocodone bitartrate) Extended-release Tablets (NDA 206627) and ZOHYDRO ER (hydrocodone bitartrate) Extended-release Capsules (NDA 202880).  FDA granted a period of 3-year exclusivity – coded as “NP” (New Product) – with the October 25, 2013 approval of ZOHYDRO ER.  FDA approved HYSINGLA ER on November 20, 2014, prior to the expiration of exclusivity for ZOHYDRO on October 25, 2016, by virture of a waiver of exclusivity agreed to by the two NDA sponsors (see here).

But what about 3-year exclusivity for HYSINGLA ER? And wouldn’t such exclusivity serve to block the approval of NDA 207975 for VANTRELA ER? After all, FDA’s Exclusivity Summary for NDA 206627 indicates that the Agency should grant a period of 3-year exclusivity based on three clinical studies, including two abuse potential studies (HYD1013 and HYD1014), Purdue conducted to obtain approval of HYSINGLA ER.

Well, FDA has not yet updated the Orange Book to reflect any award of 3-year exclusivity for HYSINGLA ER. The issue is probably still under review at the Agency.  And it could  remain under review until (or if) another single-entity hydrocodone bitartrate drug product comes up for an FDA approval decision.  You see, FDA did not have to make an exclusivity decision when approving  VANTRELA ER because the approval of NDA 207975 was not affected by any exclusivity applicable to HYSINGLA ER.  VANTRELA ER is a 505(b)(1) NDA by virture of a right of reference obtained to certain carcinogenicity data generated for the approval of ZOHYDRO ER.  Because 3-year exclusivity applies with respect to second-in-time 505(b)(2) NDAs (as well as ANDAs), but not 505(b)(1) NDAs, any 3-year exclusivity applicable to HYSINGLA ER could not serve as an obstacle to the approval of NDA 207975 for VANTRELA ER.