Last week, the United States and the European Union agreed to recognize each other’s drug cGMP inspections. The agreement reached (see here and here) amends the Pharmaceutical Annex to the 1998 U.S. – E.U. Mutual Recognition Agreement, with a view to avoiding duplicative inspections and saving millions of dollars in repetitive inspections.

FDA has stated that they believe this “…initiative will result in greater efficiencies for both regulatory systems and provide a more practical means to oversee the large number of drug manufacturing facilities outside of the U.S. and EU.”

Until now, the EU and FDA sometimes would inspect some of the same facilities within a brief period of time. With this new agreement, such duplication is expected to be the exception, rather than the rule. “By utilizing each other’s inspection reports and related information, the FDA and EU will be able to reallocate resources towards inspection of drug manufacturing facilities with potentially higher public health risks across the globe. This will benefit patients and reduce adverse public health outcomes.”

Interestingly, many, if not most, products regulated by the Center for Biologics Evaluation and Research at FDA appear to fall outside the ambit of this agreement (as do veterinary immunologicals). “Current good manufacturing practices (CGMPs) inspections of facilities manufacturing vaccines and plasma derived products are not immediately included within the scope of the agreement. The possibility of including vaccines and plasma derived products will be re-evaluated no later than July 15, 2022. Human blood, human plasma, [and] human tissues are not included within the scope of the Amended Sectoral Annex.”

As some of our readers may recall, we blogged about the negotiations regarding the Mutual Reliance Initiative last summer, here, where we stated that the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA) allows FDA to enter into arrangements with foreign governments to recognize the inspection of foreign establishments that are registered under the FDCA “…in order to facilitate risk-based inspections…”

FDASIA section 712 (FDCA section 809):

(a) INSPECTION.—The Secretary—

(1) may enter into arrangements and agreements with a foreign government or an agency of a foreign government to recognize the inspection of foreign establishments registered under section 510(i) in order to facilitate risk-based inspections in accordance with the schedule established in section 510(h)(3);

(2) may enter into arrangements and agreements with a foreign government or an agency of a foreign government under this section only with a foreign government or an agency of a foreign government that the Secretary has determined as having the capability of conduction inspections that meet the applicable requirements of this Act; and

(3) shall perform such reviews and audits of drug safety programs, systems, and standards of a foreign government or agency for the foreign government as the Secretary deems necessary to determine that the foreign government or agency of the foreign government is capable of conducting inspections that meet the applicable requirements of this Act.

(b) RESULTS OF INSPECTION.—The results of inspections performed by a foreign government or an agency of a foreign government under this section may be used as—

(1) evidence of compliance with section 501(a)(2)(B) or section 801(r); and

(2) for any other purposes as determined appropriate by the Secretary.

[Emphasis added.]

The Mutual Recognition Agreement defines an inspectorate that is capable of conducting an inspection of a drug manufacturing facility that meets U.S. requirements, as one that:

• has the legal and regulatory authority to conduct inspections against a standard for GMP;
• manages conflicts of interest in an ethical manner;
• evaluates risks and mitigates them;
• maintains appropriate oversight of manufacturing facilities within its territory;
• receives adequate resources and uses them;
• employs trained and qualified inspectors with the skills and knowledge to identify manufacturing practices that may lead to patient harm; and
• possesses the tools necessary to take action to protect the public from harm due to poor quality drugs or medicinal products.

However, according to FDA, the term “capable” does not require that the inspectorate maintain procedures for conducting inspections and overseeing manufacturing facilities that are identical to the FDA’s procedures.

As we stated last summer, the notion of having a foreign inspectorate perform drug inspections on FDA’s behalf, when the inspections performed by FDA’s own investigators are already so inconsistent, is problematic at best. Indeed, FDA representatives have long acknowledged that the agency doesn’t have an objective method for measuring quality in the drug industry (for instance, at which facilities are cGMPs improving? By how much and in what way?) Nor do they have a reliable method for making cGMP comparisons between facilities manufacturing similar products, or for comparing the results from within a facility over multiple inspections. (This author will acknowledge that the agency has published a draft guidance on Quality Metrics, which has yet to be finalized, and it is also developing a New Inspection Protocol Project, both of which seek to remedy these weaknesses in the agency’s inspection process. However, these projects are in their earliest stages, they remain largely untested, and it is unclear at this point whether they will lead to more consistency in inspectional results.)

It would seem that rectifying these significant lacunae in FDA’s inspectional responsibilities should be the first order of business for the agency, prior to even considering delegating the responsibility for EU inspections to a foreign inspectorate which is not schooled in FDA’s precise cGMP requirements, and is not required to maintain the same procedures as FDA.

One final thought, would FDA take an enforcement action against a foreign facility in the absence of having its own FDA investigators gather the evidentiary basis for this enforcement action? This is indeed a brave new world.

We will continue to keep you posted on all developments in this regard.

In January 2017, FDA issued two Draft Guidance documents concerning communications made by medical device manufacturers about information not expressly contained within a product’s labeling:

• Medical Product Communications That Are Consistent With the FDA-Required Labeling – Questions and Answers: Guidance for Industry [Draft] (January 2017), hereinafter “Promotional Communication Guidance;”
• Drug and Device Manufacturer Communications With Payors, Formulary Committees, and Similar Entities – Questions and Answers: Guidance for Industry and Review Staff [Draft] (January 2017), hereinafter “Payor Communication Guidance.”

Below is our summary of these two Draft Guidances and an assessment of how it has changed the advice we provide our clients regarding promotional and payor communications.

Promotional Communication Guidance

Overview of the Guidance

FDA stated that medical product manufacturers have expressed an interest in communicating data and information concerning approved or cleared uses of their products that are not contained in such products’ FDA-required labeling—an understatement for sure, but a recognition of the views expressed in various fora over the past several years, including the recent public hearing on manufacturer communications regarding unapproved uses of approved or cleared medical products, held by FDA on November 9 and 10, 2016.

FDA’s position, as expressed in the Promotional Communication Guidance, is that product promotional communication by a pharmaceutical or medical device manufacturer that is consistent with its FDA-required labeling and truthful and not misleading in any particular would not subject a manufacturer to FDA enforcement action, even if such information were not expressly included in FDA-required labeling.  FDA defined “FDA-required labeling” as the “labeling reviewed and approved by FDA as part of the medical product marketing application review process,” such as the approved U.S. prescribing information for human drugs or biologics or approved labeling for medical devices.  While beauty may be in the eye of the beholder, consistency with FDA-required labeling seems to be only in the eye of the regulator.  However, FDA articulated a number of factors that the agency would use to determine whether a medical product communication is consistent with its FDA-required labeling.  These include:

• Factor 1: Different Conditions of Use; whether information in a medical product communication is different from the information in the FDA-required labeling regarding:
  • Indication,
  • Patient Population,
  • Limitations and Directions for Handling, Preparing, and/or Using the product,
  • The recommended dosage or use regimen or route of administration.
• Factor 2: Increases the Potential for Harm; whether the representations or suggestions in a medical product communication negatively alter the benefit-risk profile of the product.
• Factor 3: Prevents Safe and Effective Use; whether the medical product can still be used safely and effectively in accordance with the directions for use in the FDA-required labeling, given the representations or suggestions in a medical product communication.

If the analysis of a medical product communication results in the affirmative along any of these factors, then the communication is not consistent with FDA-required labeling. Examples of information included in a medical product communication that could be consistent with FDA-required labeling include:

• A head-to-head study comparing the safety or efficacy of a manufacturer’s medical product to another medical product approved/cleared for the same, approved indication, when such study does not appear in the FDA-required labeling;
• Additional context regarding adverse reactions listed in the FDA-required labeling and associated with the approved/cleared uses of the product;
• Onset of action for the product’s approved/cleared indication and dosing/use regimen;
• Long-term safety and/or efficacy for those products approved/cleared for chronic use (e.g., longer duration than the product was studied in the clinical trials described in the FDA-required labeling);
• Effects or use of a product in specific patient subgroups included in its approved/cleared patient population, even when such subgroup analyses were not included in the FDA-required labeling;
• Patient-reported outcomes when the product is used for its FDA-approved/cleared indication in its approved/cleared patient population;
• Convenience (e.g., convenient dosing schedule); and
• Additional context about the mechanism of action described in the FDA-required labeling.

On the other hand, FDA also provided examples of information included in a medical product communication that the agency would not consider consistent with FDA-required labeling. These include the use of the product for a different, unapproved:

• Indication;
• Patient population;
• Stage, severity, or manifestation of disease;
• Use alone versus in combination with other product(s);
• Route of administration;
• Strength, dosage, or use regimen; or
• Dosage form.

In addition to providing examples, FDA also clarified its position on the evidentiary support for medical product communications consistent with FDA-required labeling. FDA stated its view that representations or suggestions made by medical product manufacturers “need to be grounded in fact and science and presented with appropriate context” in order to be truthful and not misleading.  To that end, FDA made some additional recommendations for consideration when presenting information consistent with (but not included in) FDA-required labeling.  FDA stated that material aspects and limitations of study design and methodology should be “clearly and prominently” disclosed for those studies from which information is derived.  Similar to its Medical Reprint Guidance, FDA stated that communication of information consistent with FDA-required labeling “should accurately characterize and contextualize the relevant information about the product, including by disclosing unfavorable or inconsistent findings.” In addition, related information from FDA-required labeling should also be included in the communication.

Analysis

The Promotional Communication Guidance contains some helpful clarifications regarding FDA policy on communications consistent with FDA-required labeling (think “near-label” promotion) that industry should find helpful. Pursuant to the Promotional Communication Guidance, manufacturers may engage in certain types of communications, such as that regarding longer-term safety and efficacy and convenience, which are now subject to FDA enforcement discretion if they comply with the requirements imposed by this guidance.

However, given the recent spate of First Amendment litigation (see, e.g., here and here) concerning off-label promotion, it is unclear why any communications made by medical product manufacturers that are rendered truthful and non-misleading by being grounded in fact and science and appropriately contextualized would be unlawful, and thereby subject to enforcement in the first place. First Amendment issues were not addressed in this guidance, as FDA continues to vacillate on developing and implementing a workable policy (see our post here) in light of the relevant judgments and settlements that have not gone its way.

Overall, we think the Promotional Communication Guidance is helpful in understanding FDA’s current thinking regarding communication of information that is not included in a medical product’s labeling. We also believe the Promotional Communication Guidance will enable manufacturers to promote their products with additional types of product information (e.g., patient testimonials) compared to what they chose to disseminate previously.

We do not think the Promotional Communication Guidance goes far enough with respect to truthful and non-misleading medical product communications protected by the First Amendment. However, we recognize that many companies were hesitant to test the boundaries of FDA’s willingness to take enforcement action, even in light of First Amendment litigation that appeared to limit FDA’s ability to curb off-label promotion.

Payor Communication Guidance

Overview of the Guidance

Congress provided a statutory safe harbor for Health Care Economic Information (“HCEI”) communicated to payors, formulary committees, or other similar entities when exercising their responsibilities for selecting approved drugs for coverage or reimbursement. See Food and Drug Administration Modernization Act of 1997, Pub. Law No. 105-115, § 114, 11 Stat. 2312; 21st Century Cures Act, Pub. Law No. 114-255, § 3037, H.R. 34-73.  Pursuant to this safe harbor, claims by pharmaceutical manufacturers meeting the statutory definition of HCEI and presented to payors, formulary committees, or other similar entities were held to the “competent and reliable scientific evidence” standard, as opposed to the more stringent substantial evidence standard that FDA requires for safety and efficacy claims under the Federal Food, Drug, and Cosmetic Act.  The Payor Communication Guidance, issued twenty years after the original HCEI safe harbor was enacted, provides guidance regarding the communication of HCEI to payors about both approved drugs and investigational drugs and medical devices.

In the Payor Communication Guidance, FDA provided additional clarity regarding the audience for HCEI communications. First, FDA further explained that “payors” refers to any entity “responsible for the financing or reimbursement of costs associated with health care services.”  Second, FDA explained that formulary committees are “multidisciplinary committees [responsible] for the selection of drugs and the management of a drug formulary.”  These entities may range from a technology assessment panel to pharmacy and therapeutics committees that have responsibility for an entire hospital system.  Falling within this definition are committees “constituted to consider HCEI” and make decisions regarding drug selection, formulary management, and/or coverage and reimbursement determinations at the population level through a “deliberative process.”  In accordance with the statute, FDA has expressly excluded health care providers who make decisions for individual patients.

FDA also addressed the scope of HCEI protected by the safe harbor in the Payor Communication Guidance. One of two major changes to the HCEI statutory safe harbor enacted under the 21st Century Cures Act was the loosening of certain limitations to the analyses protected thereunder.  Broadly speaking, under 21st Century Cures, HCEI must “relate” (as opposed to “directly relate” in the original statutory text) to an on-label indication.  Furthermore, as long as an HCEI analysis does not only relate to an off-label indication, the analysis (and communications associated with the analysis) is protected under the safe harbor.

In the Payor Communication Guidance, FDA clarified its thinking, through various examples, on what “relates to an approved indication” means. Examples of HCEI that relate to an approved indication include:

• Duration of treatment; if approved for chronic use and no limitations on its use beyond the duration that the drug was studied in clinical trials, HCEI analyses considering use beyond the duration of such trials;
• Practice setting; use of a drug in a practice setting different than the setting in which clinical trials were conducted;
• Burden of illness;
• Dosing; HCEI analyses that include actual patient use (for approved indications) where the dosing regiment differs from the recommended dosing schedule in the FDA-required labeling;
• Patient subgroups; HCEI analyses of patient subgroups that were not analyzed in the pivotal clinical trials;
• Length of hospital stay;
• Validated surrogate endpoints; HCEI analyses derived from clinical study data using validated surrogate endpoints; and
• Clinical outcome assessments or other health outcome measures; HCEI analyses derived from studies with patient-reported outcomes or other health economic measures.

FDA stated that HCEI not considered to be related to an approved indication include analyses of disease modification when the drug is only approved for the treatment of disease symptoms and analyses conducted in patient populations that are not within the patient population covered by the approved indication for the drug.

One other important 21st Century Cures-related change to the safe harbor included clarification of what is included in HCEI. Prior to 21st Century Cures, FDA created confusion by suggesting that clinical outputs of a health economic analysis were held to the substantial evidence standard even though the economic outputs were held to the lower standard of competent and reliable scientific evidentiary standard.  21st Century Cures expressly included, within the definition of HCEI, the “clinical data, inputs, clinical or other assumptions, methods, results, and other components underlying or comprising the analysis.”  This significant change addressed what had been a fundamental problem with the safe harbor as originally enacted—health economic endpoints cannot be completely disentangled from clinical endpoints in an HCEI analysis and, now, both are protected.  In the Payor Communication Guidance, FDA acknowledged that the competent and reliable scientific evidence standard applies to “all components of HCEI,” including safety and efficacy.

FDA stated that when medical product manufacturers present HCEI in accordance with the safe harbor provisions, information regarding the study design and methodology, generalizability, limitations, sensitivity analyses, and other information “relevant to providing a balanced and complete presentation” should be clearly and conspicuously presented.

Concerning presentations by medical product manufacturers regarding investigational products, FDA stated that certain types of information may be presented to payors prior to approval or clearance of a drug or medical device. This information may include:

• Product information, such as drug class or device design;
• Indication sought, including the clinical endpoints studied and populations included in clinical investigations;
• Results of preclinical or clinical studies;
• Anticipated FDA approval timeframe;
• Product pricing information;
• Marketing strategies; and
• Product-related programs or services provided by the manufacturer, such as patient support programs.

Such information must be presented in an “unbiased, factual, accurate, and non-misleading” manner. When presenting such information, manufacturers must also provide a “clear statement that the product is under investigation” and information about the product development stage, such as the clinical trial phase.  FDA also suggests that follow-up information should be provided when the previously communicated HCEI becomes outdated.

It is important to note that FDA stated in the Payor Communication Guidance that it views HCEI as promotional and, therefore, expects that such information will meet FDA’s requirements for the submission of promotional materials, including submission on FDA Form 2253 at the time of first use.

Analysis

The most significant changes to a manufacturer’s ability to communicate HCEI to a payor or similar entity came with the passage of 21st Century Cures, which addressed certain fundamental problems with the safe harbor as originally enacted. That is, 21st Century Cures loosened the restrictions regarding whether aspects of an HCEI analysis could relate to off-label uses of the drug and whether the clinical outputs of an HCEI analysis were held to the lower evidentiary standard.  The Payor Communication Guidance acknowledges and operationalizes these changes, along with providing clarity on FDA’s thinking concerning various elements of the safe harbor.

We found the amendments to the HCEI safe harbor enacted under 21st Century Cures to provide welcome and necessary relief from issues created by the safe harbor as originally enacted. To a large extent, the Payor Communication Guidance furthers the legislative intent of 21st Century Cures and, therefore, not much has changed with respect to our advice to clients preparing these presentations.  The ability to expand the scope of HCEI analyses and include underlying clinical data and outputs in HCEI presentations under the protection of the safe harbor removes some of the risk in HCEI presentations carried out by manufacturers.

Arguably, the most significant change that the Payor Communication Guidance outlines is the opportunity for manufacturers to provide HCEI for investigational products. We see this as a big win for patients and hold out hope that earlier communications between manufacturers and payors may lead to earlier coverage determinations, which, in turn, may improve patient access.

As these are Draft Guidances, comments may be submitted to the docket at any time, but FDA requests that they be posted no later than April 19, 2017.

Well, that was quick! Only two weeks after filing, the U.S. District Court of Delaware dismissed Genentech’s Complaint under the Biologics Price Competition and Innovation Act (“BPCIA”) against Amgen.  As we explained here, Genentech sued Amgen for failure to comply with the patent dance provisions of the BPCIA when Amgen provided Genentech with a copy of its aBLA referencing Avastin within 20 days, but refused to provide any information on the manufacturing process as required under 42 U.S.C. § 262(l)(2)(A).

This action comes after Amgen Inc. v. Sandoz, in which Amgen sued Sandoz for refusing to participate in the exchange of patent information under the BPCIA. There, the Federal Circuit determined that the patent dance was voluntary (see our prior coverage here). Genentech argued vigorously to distinguish this case from the Sandoz case, stating that the Federal Circuit did not foreclose declaratory judgment actions to determine whether an applicant complied with its statutory obligations. In a Letter to the Court, Genentech argued that Amgen is trying to “escalate the stakes” by “forcing Genentech either to produce a list of potentially infringed patents under § 262(l)(3)(A), without the full production of materials or expert assistance that should have informed that list, or sue Amgen for infringement and wait and see whether that lawsuit was proper at some later time.”

Conversely, Amgen argued in a similar Letter to the Court that the case could not be distinguished from Amgen v. Sandoz, and that any attempt to do so would penalize Amgen’s good faith effort to comply with the BPCIA patent dance.  Amgen argues that Genentech’s only recourse here is a patent infringement lawsuit.

The District Court did not buy Genentech’s distinction and dismissed Genentech’s action without prejudice after an oral hearing. The Court’s decision implies that the only recourse Genentech has is a patent infringement action.  The court gave Genentech 45 days to amend its complaint.  The Supreme Court isn’t set to hear arguments in Amgen v. Sandoz until April 26, 2017, after the 45 days expires.  We’ll have to wait to see if Genentech goes full throttle with a patent infringement case based on the information Amgen has provided thus far.  But if the Supreme Court decides that the patent dance is mandatory, then the issue of how much information is necessary to fulfill the obligations will surely come up again swiftly.

The dismissal raises some questions about what it actually means to opt-into the patent dance under the BPCIA. If it’s not mandatory under Amgen v. Sandoz, and there’s no mechanism to challenge compliance for those aBLA applicants who choose to participate, how can reference product sponsors get the information necessary to bring an infringement suit?  Should they just bring an infringement suit and hope to find out more during discovery?  With 35 U.S.C. § 271(e)(2)(C), there’s a presumption of infringement should the aBLA applicant fail to engage in the patent dance, so pleading isn’t an issue, but it’s a costly decision to sue for patent infringement.  Until Amgen v. Sandoz is decided, we’re unlikely to have any answers to a multitude of questions.

In the absence of blogworthy FDA regulatory pronouncements (draft regulations, draft guidances, and oxymoronically named “tentative final rules”), material for FDA Law Blog posts is harder to come by these days (meaning, since President Trump’s inauguration, not coincidentally). Now comes across our computer screen a district court denial of a motion to dismiss filed by a defendant indicted for illegally selling herbal supplements, which, it is alleged, are illegal misbranded drugs.

Judge Danny Reeves of the federal district court in Lexington, Kentucky, issued a very brief order, but some of the defendant’s claims prompt sympathetic smiles from attorneys familiar with the Federal Food, Drug, and Cosmetic Act (“FDCA”). The Order, filed February 27, 2017, in United States v. Girod, Criminal Action No. 5:15-87-S-DCR (2017 U.S. Dist. LEXIS 26682), stated that the Defendant in the case basically claimed that the FDCA “lacks a rational basis and, therefore, violates his constitutional rights to equal protection and due process.” That argument failed.

Next, the defendant contended that “people of ordinary intelligence cannot understand what 21 U.S.C. § 352 means.” The prohibition on distribution of misbranded drugs has confounded many a person of extraordinary intelligence, in light of the interplay of the First Amendment with off-label promotion. But that argument failed, as well.

Finally, reflecting the frustration that we have heard from many clients, the defendant complained that he was being unfairly singled out. Others, according to the order, “are selling bloodroot and chickweed salve via the internet.” As had other judges in other courts, Judge Reeves rejected that argument, since the defendant had not shown that the “decision to prosecute the defendant was based on any impermissible reason.”

The decision can be accessed here.

Ten years ago, Congress commanded FDA to ease the burden of Medical Device Reporting (MDR) for most class I and class II devices. Four years ago, we blogged about it here. FDA still has not gotten it done.

Specifically, Section 227 of the Food and Drug Administration Amendments Act of 2007 FDAAA) amended Section 519 of the Federal Food, Drug, and Cosmetic Act (FDCA), directing that FDA “establish” summary quarterly reporting of malfunction MDRs for most class I and class II devices. It is not clear whether Congress expected FDA to establish the new requirements by amending the MDR regulation or by issuing guidance; the language seems open to either possibility.

This congressionally ordered change to MDR reporting is sensible. One of the most difficult aspects of MDR reporting is making a probabilistic determination as to whether a malfunction that did not cause a serious injury would be “likely” to do so if it were to recur. We blogged about some aspects of the problem here.

It is astonishing that FDA has flouted the law for ten years, and almost nothing is even said publicly about it. In such a situation, one is tempted to give up hope that change will ever come.

But new hope has arrived! On January 30, 2017, President Trump issued an Executive Order (EO) titled, “Reducing Regulation and Controlling Regulatory Costs.” As described in more detail in an earlier blog post, this EO puts the entire Executive Branch on a strict regulatory diet. Every new regulation must be accompanied by removal of two old regulations, and “regulation” includes significant guidance.

That is where the change to the MDR reporting comes in. Although FDA would technically be issuing a new regulation (or guidance), in doing so it would lift an existing burden rather than impose a new one. Therefore, FDA should easily be able to persuade OMB that issuing this change is deregulatory and gives FDA a credit toward new regulations.

Perhaps with this brand new incentive dangling in front of it, FDA will at last amend the MDR regulations as required by law. Hope springs eternal!

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.