By Karla L. Palmer –

FDA posted a “Notice” on July 12, 2016, advising compounding pharmacies regulated under Section 503A that, effective August 1, 2016, FDA is changing inspection procedures for Section 503A pharmacies (see Notice here). FDA announced that it now will make a “preliminary assessment” whether compounders are compounding in accordance with the conditions in Section 503A.  If a FDA Form 483 is issued upon completion of the inspection, then FDA will not include those observations including a violation of FDA’s current good manufacturing practices (“cGMP”), unless (importantly), based on the investigator’s preliminary assessment, the pharmacy is operation outside the scope of Section 503A.  In past inspections, FDA has more often than not inspected compounding pharmacies (deemed a “producer of sterile drug products”) in accordance with a cGMP standard used for drug manufacturers and from which (lawful) compounders are statutorily exempt.  FDA has at times held a compounder to this standard because, for example, it (unlawfully) compounded preparations for office use, or not solely for individually identified patients.  For other compounders, FDA determined that they were not exempt from cGMP for the circular reason that they may have engaged in compounding under allegedly insanitary or filthy conditions in violation of Section FDCA Sections 501(a)(1) and (a)(2) — based on an inspection conducted pursuant to cGMP.  For still other compounders, FDA would not articulate at the exit interview exactly what standard – USP<795>, USP<797>, cGMP or any other standard – it had relied on during the pharmacy inspection. 

FDA states that it is changing its inspection procedures based on “stakeholder input.”  That “input” could be the position set forth in the 2017 House Agriculture Appropriations Committee Report (April 2016) related to inspections.  The statement directed FDA not to inspect state licensed pharmacies under cGMP.  The text of that directive is as follows: 

Drug Compounding Inspections.—The Committee understands that the FDA is interpreting provisions of Section 503A of the FDCA to inspect state-licensed compounding pharmacies under current Good Manufacturing Practices (cGMPs) instead of under the standards contained in the United States Pharmacopeial Convention (USP) for sterile and non-sterile pharmaceutical compounding or other applicable pharmacy inspection standards adopted by state law or regulation. The Committee reminds the FDA that compounding pharmacies are not drug manufacturers, but rather, are state licensed and regulated health care providers that are inspected by state boards of pharmacy pursuant to state laws and regulations that establish sterility and other standards for the pharmacies operating within their states. Compounding pharmacies are more appropriately inspected using USP standards or other pharmacy inspection standards adopted by state law or regulation in the state in which a pharmacy is licensed.          

Notwithstanding this directive,  FDA states at page 2 of the Notice that, “Importantly,” drug compounders remain subject to all other FDCA provisions “that apply to conventional drug manufacturers.  Because FDA “does not contain an exemption from the prohibition on insanitary conditions,” investigators will continue to include observations related to these conditions without regard to the preliminary assessment of the firm’s “status” under Section 503A.  But what remains unclear from FDA’s Notice is whether FDA’s “preliminary assessment” of “insanitary conditions” itself will be pursuant to cGMP, USP, or standards otherwise applicable to a compounding pharmacy.  It is similarly unclear exactly what standard, other than cGMP, FDA investigators will use for pharmacy inspections generally after August 1.  For example, will FDA hold pharmacies to certain state board of pharmacy requirements, USP<795> and USP<797>, or another inspection standard?  We are curiously awaiting the wave of FDA Form 483 observations issued after August 1, 2016 to see whether the changed inspection standard actually results in changes in FDA’s Form 483 observations issued to Section 503A pharmacies. 

By Riette van Laack and Ricardo Carvajal –

On Thursday July 14, the House approved legislation authorizing USDA to establish and administer a National Bioengineered Food Disclosure Standard. The bill, S.764, was previously approved by the Senate.  The bill had been promoted as an urgent and necessary compromise by its supporters.  Upon enactment, it will immediately preempt any state GMO disclosure laws, thereby preventing a state-by-state patchwork of such requirements.  Among the state laws preempted will be Vermont’s Act 120, which went in effect on July 1, 2016. 

The disclosure requirement will apply to many food products for human consumption, except for food served in restaurants or similar retail establishments.  The disclosure requirement appears to apply broadly to food subject to FDA labeling requirements; there is no explicit exemption for subcategories of food such as dietary supplements and infant formula.  The disclosure requirement will also apply to foods subject to FSIS labeling requirements if (1) the most predominant ingredient in the food is subject to FDA labeling requirements, or (2) the most predominant ingredient is broth, stock, water, or a similar solution, and the second most predominant ingredient is subject to FDA labeling requirements.  Thus, products that contain meat, poultry, or egg products as the most predominant ingredient will not be subject to the disclosure requirement.  Not surprisingly, this can be expected to result in anomalies familiar to anyone accustomed to navigating the dividing line between FDA and FSIS jurisdiction (e.g., a cheese pizza containing bioengineered ingredients may be required to bear a disclosure, whereas a similar pizza containing meat as the most predominant ingredient would not be required to bear the disclosure). 

Although FDA and USDA-FSIS are the two federal agencies that generally regulate mandatory labeling requirements for foods, the bill gives the USDA Agricultural Marketing Service (AMS) the responsibility for establishing the disclosure standard within 2 years of enactment.  Among other things, AMS will be charged with determining the threshold of bioengineered content that triggers the disclosure requirement, establishing a process for determining whether a product is bioengineered, and defining “small food manufacturers” and “very small food manufacturers” (the latter would be exempt).  The AMS regulations must provide various options for disclosure, including the use of a symbol denoting genetically engineered ingredients, a “quick response” (Q.R.) code that people with smartphones can scan to retrieve the information, and for certain labels, a 1-800 number.  The regulations must also provide other reasonable disclosure options for food in small or very small packages.   

With respect to enforcement, the bill makes it a prohibited act to knowingly fail to make a required disclosure.  Also, the bill requires a company subject to the disclosure requirement to keep records demonstrating compliance, and authorizes USDA to examine or audit those records.  USDA must provide the company notice and an opportunity for a hearing on the results of any examination or audit, after which USDA must make public a summary of that examination or audit.  Thus, companies that fail to comply can expect to have that failure made public.  Also, the bill disclaims preemption of “any remedy created by a State or Federal statutory or common law right.”  However, recalls are off the table; the bill makes clear that USDA has no authority to recall a food that does not provide a required disclosure. 

In comments to Congress, FDA and USDA put forward different interpretations of certain provisions in the bill. See FDA’s comments here and USDA’s comments here.  For example, FDA commented that the definition of bioengineering seems to be limited to foods that include genetic material, and therefore would not apply to foods from which all such material has been removed, such as soybean oil.  In apparent disagreement – but without explanation – USDA stated that the definition authorizes the inclusion in the national disclosure program “all of the commercially grown GMO corn, soybeans, sugar, and canola crops used in food today and reviewed and approved by USDA’s Biotechnolgy Regulatory Service.”  USDA also asserted that the definition authorizes inclusion in the national disclosure program of “products of certain gene editing techniques,” including “novel gene editing techniques such as CRISPR when the are used to produce plants or seeds with traits that could not be created with conventional breeding techniques.”  However, FDA noted that “[i]t may be difficult to demonstrate that a particular modification could not be obtained through conventional breeding” (emphasis in original).

Once the bill becomes law, USDA will have the opportunity to put forward its interpretations in the context of rulemaking to establish the national disclosure standard.  That rulemaking is likely to be contentious, given the tenor of the GMO labeling debate over the past couple of years.  Thus, the Congressionally mandated 2-year timeframe for establishment of the disclosure standard could prove unduly optimistic. 

By Mark I. Schwartz –

The Mutual Reliance Initiative was announced by FDA a couple of years back.  It has as its goal “…to increase…[FDA’s]…exchange, with the European Commission and the European Medicines Agency, of information that is critical to making decisions that protect our public health.” 

What this cryptic statement is actually describing is FDA’s interest in exploring the possibility of relying on Europe’s inspections of EU drug facilities so that the agency will not have to inspect these facilities themselves, in the hope of economizing a significant fraction of its inspection budget.  According to Howard Sklamberg, FDA’s Deputy Commissioner for Global Regulatory Operations and Policy, “…we cannot be the inspectors for the world.  Hence, we need to effectively direct our resources in a risk-based manner as we grapple with this tremendous volume of imported goods.”

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.]

For well over a decade now (in other words, this predates the explicit grant of authority under FDASIA) the EU and FDA have been interested in reaching an agreement on cGMP inspections that would allow the regulatory bodies to avoid duplication of their surveillance activities and lower the overall costs of their respective programs.  And the savings would not be negligible, as close to half of FDA’s drug inspections (43% to be precise) are performed in EU countries, according to Dara Corrigan, FDA’s Associate Commissioner for Global Regulatory Policy.  It should be noted that Ms. Corrigan provided this estimate prior to the United Kingdom’s Brexit vote, which will carve out a number of UK drug facilities from EU oversight over the coming years.

In a recent interview, Ms. Corrigan said that $18.5 million in inspection costs could be used elsewhere if FDA did not inspect facilities in the EU.  And these costs are only going to increase as the number of domestic inspections over the past several years has gone down while the number of foreign inspections has increased commensurately.  That trend is expected to continue.

Historically, one of the main stumbling blocks has been the disparate regulatory structures between the U.S. and the EU, as the EU has 28 member states and most, if not all, of these states have their own medicines authorities, in addition to the European Medicines Agency (EMA), which is the EU agency responsible for the protection of public health through the scientific evaluation and supervision of medicines.  This web of overlapping state and super-state drug authorities has made it difficult for FDA to reach agreement with the EU.

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

The EMA already has bilateral mutual reliance agreements with other regulatory authorities but, for years, has been most interested in securing one with the U.S., its most important trading partner.

Ms. Corrigan has stated that the agency expects to make a decision this year as to whether an EU member state is capable of performing drug facility inspections to FDA’s satisfaction, and whether the agency can confidently rely on those findings.

However, 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.[1]

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.

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

[1]  This author will acknowledge that, last year, the agency 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.

by Alan Kirschenbaum and Michelle Butler

On July 14, 2016, CMS issued a release to manufacturers regarding value-based purchasing (VBP) arrangements.  The purpose of the release is to (1) inform manufacturers how to seek guidance from CMS regarding the impact such arrangements might have on the determination of best price and (2) encourage states to consider entering into VBP arrangements.

Regarding the effect on best price, CMS states that it has received a number of specific requests from manufacturers regarding the effect VBP arrangements might have on the determination of best price.  CMS has concluded that the impact on best price “will differ depending on the structure of the VBP arrangement.”  If manufacturers have questions about specific VBP arrangements, CMS encourages manufacturers to submit questions to CMCS Division of Pharmacy at RxDRUGPolicy@cms.hhs.gov.  CMS also states that it “will seek to generalize lessons learned regarding common questions and arrangements in subsequent guidance.”  As always, manufacturers should continue to consult the statute and regulations and document any reasonable assumptions for the determination of best price.

CMS also uses this release to encourage states to consider entering into VBP arrangements, including through the collection of supplemental rebates.  CMS notes that, to the extent a VBP arrangement provides supplemental rebates pursuant to a CMS-approved supplemental rebate agreement with a state Medicaid agency, such rebates would be excluded from best price.  While that does not solve the problem of the impact of a commercial VBP arrangement on best price, it does show that CMS is continuing to think about ways to implement VBP arrangements for government payors.  Earlier this year, we posted on a CMS proposed rule to test new models for payment of drugs and biologicals under Medicare Part B, which included in Phase II testing of the effect of four VBP arrangements.

These initiatives by CMS are occurring as commercial payors such as Cigna Corp., Harvard Pilgrim Health Care, and others are announcing VBP arrangements that they are entering into with manufacturers.  For example, Cigna recently announced that it has entered into VBP arrangements for both of the PCSK9 inhibitors (a new class of cholesterol-lowering drugs) currently on the market.  Similarly, Harvard Pilgrim recently announced VBP arrangements with Novartis for its new heart failure drug, Entresto, and Eli Lilly for its type 2 diabetes drug, Trulicity.

As both commercial and government payors continue to look for ways to bring down the cost of drugs, we can expect to see more innovative contracting mechanisms, such as VBP arrangements.

By Karla L. Palmer

FDA published for comment two non-binding draft guidance documents addressing compounding of commercially available drug products by traditional pharmacies under FDCA Section 503A and outsourcing facilities under Section 503B.  [Section 503A Draft Guidance is HERE, blogged separately] and Section 503B Guidance is [HERE].  These non-binding draft guidance documents reflect FDA’s latest attempt to restrict what may be compounded by narrowly construing what is and is not essentially a copy of a commercially available drug product.  If finalized, the Section 530B guidance would affect, by FDA’s estimates, approximately 40 outsourcing facilities.  The deadline for submitting comments on the draft guidance documents is October 11, 2016.

Section 503B Draft Guidance      

            Under Section 503B, outsourcing facilities may compound “essentially a copy of an approved drug” in limited circumstances.  Section 503B(d)(2).  Section 503B defines “essentially” copies somewhat differently than Section 503A, including referencing non-prescription marketed drugs, whether the compounded and commercially available substances are “identical,” and, if compounded from bulk substances, whether the compounded version produces a “clinical” difference for the patient (which FDA generally describes the same as the “significant” difference requirement under Section 503A).  FDA attaches to its draft Section503B guidance at Appendices A and B a very handy flow chart HERE to assist outsourcing facilities in determining whether a drug is essentially a copy of an approved drug.  Under the statute, and as depicted on FDA’s chart, essentially copies have two components: (1) A drug that is identical or nearly identical to an approved drug or an unapproved non-prescription drug is evaluated under Section 503B(d)(2)(A); and, (2) all other compounded drugs are evaluated under Section 503B(d)(2)(B).  FDA also defines “covered OTC drug products” in the draft guidance as a marketed drug not subject to Section 503(b) (prescription requirements) and not subject to approval under Section 505 to mean any non-prescription drug product marketed without an approved application; it includes monograph and non-monograph products as well. 

The draft guidance describes how FDA intends to apply its definition of “essentially a copy” of a compounded drug when applied to an approved drug (unless it appears on FDA’s shortage list) and how it intends to apply that definition when the compound is compared to a covered OTC product.  Some of the draft’s salient points are as follows:

Compounded drugs “nearly identical” to approved drugs: Referring to Box 1 of Appendix A, FDA will consider whether the compounded and approved drug have the same:  

(1) Active ingredients;

(2) Route of administration;

(3) Dosage form;

(4) Dosage strength; and

(5) Excipients (if excipients of the approved drug are known).   .    

If these characteristics between the two products are the same, then FDA will consider the products identical or nearly identical, and they may not be compounded.  Importantly, unlike in Section 503A, FDA will NOT exempt products from this restriction based on a determination by a prescriber that the compound produces a “clinical difference” for the patient (addressed below). However, in shortage situations, it expects compounds to be identical or nearly identical to the approved drug on FDA’s published shortage list. FDA does not intend to take action concerning compounding a shortage drug if it was on the list at the time the facility received the order, or within “60 days of … distributing or dispensing the drug.”  FDA notes there will be some regulatory flexibility, but if an outsourcing facility continues to fill orders more than 60 days after the drug is removed from the list, it may take regulatory action.   

If the compound differs in one or more of the above characteristics, then FDA would not consider it generally to be “identical or nearly identical.”  FDA would then turn to Section 503B(d)(2)(B) (see Appendix A) to determine whether the compound is appropriate. 

 Section 503B(d)(2)(B) states that a compounded drug is “essentially a copy” of an approved drug if a component of the compounded product is also a component of an approved drug, unless there is a change that produces a “clinical difference” for the patient as determined by the practitioner.  FDA further defines this section as follows:

Using the same bulk substance as the approved drug (Box 3):  FDA states that if the compounded bulk substance and approved drug products are the same, then the compound is essentially a copy, unless there is a determination of “clinical difference.” These provisions apply to a compound whether compounded from bulk substances or from drugs in finished form.    

Prescriber determination of clinical difference (Box 4):  To rely on a prescriber determination of “clinical difference,” the outsourcing facility should ensure that the determination is stated (in no particular format) on either the non-patient specific order or the patient specific prescription.  For non-patient specific orders, the facility should obtain a practitioner statement that specifies the change, and that the compound will only be provided to a patient “for whom the change produces a clinical difference.”  The facility may make the notation, if confirmed by the health care facility or prescriber (including date of the conversation).  FDA provides examples on pages 9-10 of the draft guidance, and elaborates on written statements that may suffice for non-patient specific orders:  

• “Liquid form, compounded drug will be prescribed to patients who can’t swallow tablet” (if the comparable drug is a tablet)
• “Dilution for infusion solution to be administered to patients who need this formulation during surgery” (if the comparable drug is not available at that concentration, pre-mixed with the particular diluent in an infusion bag)
• “1 mg, pediatric patients need lower dose” (if the comparable drug is only available in 25 mg dose).

And for patient-specific prescriptions:

• “No Dye X, patient allergy” (if the comparable drug contains the dye)
• “Liquid form, patient can’t swallow tablet” (if the comparable drug is a tablet)
• “150 mg drug X in 120 ml cherry-flavored Syrup USP, patient needs alcohol-free preparation (if the comparable drug is only available in formulations that contain alcohol)

An order or a prescription containing only a formulation will not suffice.  FDA adds that “lower price” is not sufficient to establish that the compound is not essentially a copy of the approved drug.  FDA does not intend to “question” the determinations of “clinical difference;” it will consider whether such determination is documented.

            Essentially a copy of one or more approved drug products:  FDA’s draft guidance also focuses on that statute’s statement that the compound must not be essentially a copy of “one or more” approved drug products.  FDA intends “to consider a compounded drug product that has bulk substances that are components of one or more approved drugs to be essentially a copy of an approved drug product” unless the change produces a “clinical difference.” 

            FDA’s application of the “essentially a copy” definition when the compounded drug is compared to a covered OTC product:  The Agency sets forth at Appendix B a flow chart for determining whether compounding copies of covered OTC drug products is appropriate. If the compounded drug is nearly identical to a covered OTC drug, FDA intends to apply the policy described above for “nearly identical” prescription drugs.  If it is not identical or nearly identical to the covered OTC drug, then

FDA will not permit compounding, if a component of the compounded drug is a bulk drug and is also a component of a covered OTC, unless there “is a change that produces for an individual patient a clinical difference,” as determined by the practitioner, between the compound and the comparable approved drug.  FDA leaves unanswered the result if there is no comparable “approved” drug (and what exactly is a “comparable approved drug to an OTC product).   FDA notes that a “clinical difference between the compounded drug and an unapproved drug (such as a covered OTC drug) does not exempt the compounded drug from the definition in section 503B(d)(2)(B).”  FDA should also clarify in final guidance whether this means that a compounder may not compound essentially copies of covered OTC drugs under any circumstance, or what documentation, if any would suffice to permit compounds of essentially copies of covered OTC drugs.  FDA also states that the statute does not provide an “essentially a copy” exemption for covered OTC drugs that may appear on FDA’s shortage list; thus copies of these OTC drugs may not be compounded in shortage situations. 

            Lastly, like with Section 503A’s draft guidance, FDA emphasizes that outsourcing facilities must keep good records to demonstrate compliance.     

By David C. Gibbons & Jeffrey N. Wasserstein –

The United States Court of Appeals for the Seventh Circuit recently issued an unpublished Opinion in United States v. LeBeau, No. 16-1289, 2016 WL 3619838 (7th Cir. July 5, 2016), a case in which the pro se defendant-appellant raised a First Amendment defense after pleading guilty to a misdemeanor violation of the federal Food, Drug, and Cosmetic Act (“FD&C Act”) for introducing an unapproved new drug into interstate commerce. 

In LeBeau, the defendant was charged with four misdemeanor counts of violating the FD&C Act for selling his product, “Perfect Colon Formula #1,” for use in the cure, treatment, prevention, or mitigation of a variety of conditions, which had not previously been generally recognized as safe and effective nor approved by FDA for such uses.   Ultimately, LeBeau pled guilty to one of those counts, that is, for distributing his product for use in the treatment of food allergies.  LeBeau at 2; Brief of Plaintiff-Appellee, United States v. LeBeau, No. 16-1289, at 3-4 (May 5, 2016).  LeBeau’s plea agreement permitted him to preserve certain legal issues for appeal.  Brief of Plaintiff-Appellee, at 4.

The appellant-defendant raised several issues on appeal, one of which was that the promotion of Perfect Colon Formula #1 for its intended uses was protected commercial speech under the First Amendment.  LeBeau at 1.  The government argued that LeBeau was not being prosecuted for his speech, but rather his speech was used as evidence of his intent to introduce an unapproved new drug into interstate commerce.  The district court agreed with the government on this point and gave no relief to LeBeau.  On appeal, the Seventh Circuit affirmed the lower court’s conclusion that “the government is not prosecuting LeBeau for having made claims about his products.  Rather, it is prosecuting LeBeau for his acts—his attempts to profit from the sale of a product—which he represented to have palliative properties—without having received [FDA] approval to do so.”  Id. at 3.  Specifically regarding LeBeau’s First Amendment defense, the Seventh Circuit went on to say that, “[b]ecause LeBeau’s statements promoted the unlawful sale of an unapproved drug, they were not entitled to [First Amendment] protection.”  Id.

Although this Seventh Circuit opinion arises from an unpublished Opinion, it is important to consider the proposition for which this case stands, which was not at issue in Caronia, and its progeny, nor the more recent settlements in Amarin and Pacira.  That is, First Amendment protection does not extend to commercial speech regarding an unapproved product—that is, a product for which there are no “lawful” uses—even if that speech is truthful and not misleading.  Seventh Circuit precedent in United States v. Caputo, 517 F.3d 935, 940-941 (7th Cir. 2008), cited by the court in LeBeau, elucidates this point.  In Caputo, the Seventh Circuit stated that First Amendment protection for the promotion of off-label uses of a medical product rests on the “assumption” that a manufacturer can lawfully promote the product at all.  Id. at 940.  The Court stated, “[u]nless the [product] itself could be sold lawfully, there were no lawful off-label uses to promote.”  Id.  Thus, it appears that the Seventh Circuit would draw a distinction between commercial speech promoting unapproved uses of FDA-approved products and the promotion of unapproved products.  First Amendment protection for truthful and non-misleading speech may apply to the former, but not the latter, according to the Seventh Circuit.

There are some important limitations of the LeBeau opinion to consider.  First, as noted above, LeBeau is an unpublished opinion, thus, with limited precedential value.  However, the principles articulated by the court in Caputo carry weight, at least in the Seventh Circuit, and were relied on, in part, by the court in LeBeau.  Second, the pro se defendant-appellant’s arguments in his appellate brief were, at best, unartfully rendered and made without a sufficient understanding of the FD&C Act, the substantial jurisprudence concerning First Amendment protection for truthful and non-misleading commercial speech, and appellate practice.  Finally, the promotional statements at issue in LeBeau were related to labeling statements associated with an unlawfully marketed drug.  It is important to recall FDA regulations regarding preapproval promotion of unapproved, investigational drugs, which permit commercial speech in the context of scientific exchange and are intended only to restrict “promotional claims of safety or effectiveness of the drug for a use for which it is under investigation and to preclude commercialization of the drug before it is approved for commercial distribution.”  21 C.F.R. § 312.7(a).

By Karla L. Palmer –   

On July 11, 2016, FDA published for comment two draft guidance documents addressing compounding of commercially available drug products by traditional pharmacies under FDCA Section 503A and outsourcing facilities under Section 503B (the Section 503A Draft Guidance is available here and the Section 503B Guidance is available here, blogged separately).  This non-binding, draft guidance documents reflect FDA’s latest attempt to significantly restrict what may be compounded by narrowly construing what is and is not essentially a copy of a commercially available drug product.  If finalized, the Section 530A guidance would affect, by FDA’s estimates, approximately 6,900 pharmacies.  The deadline for submitting comments on the draft guidance documents is October 11, 2016.

Section 503A Draft Guidance      

Under the plain language of Section of Section 503A, traditional compounders may compound essentially copies of commercially available drug products so long as not “regularly or in inordinate amounts.”  FDA’s draft guidance attempts to define the scope of “regularly or in inordinate amounts.”  FDA’s draft also defines “commercially available” and “essentially a copy of a commercially available” drug.  These terms have become increasingly important in the wake of FDA’s attempts to curtain how and what drugs may be compounded compounders may 

“Commercially Available” – FDA defines “commercially available” as a marketed drug product.  It will not consider a drug “commercially available” if it is discontinued and no longer marketed or it appears of FDA’s published shortage list.      

“Essentially a copy” – A compound is “essentially a copy” of a commercially available drug if: (1) it has the same active pharmaceutical ingredient (“API”); (2) the APIs have the same, similar or easily substitutable dosage strength; and (3) the commercially available drug can be used by the same route of administration as the compounded drug – UNLESS a prescriber determines there is a “change, made for an identified individual patient, which produces for that patient a significant difference.” 

FDA describes what may cause a compounded drug to be “essentially a copy” and thus violative of Section 503A:

“Same API” – FDA intends to consider drugs with the same API to be “essentially a copy” unless a prescriber determines there is a change between the compounded and manufactured drug product that will produce a significant difference for the patient for whom it is prescribed. 

“Same, similar or easily substitutable strength” – Two drugs will have similar dosage strength if the strength of the compound is within 10% of the commercial product.  FDA would consider dosages easily substitutable if a patient could take, for example two 25mg manufactured doses, instead of one 50 milligram compounded dose. 

“Same route of administration” (i.e., topical, intravenous, oral) – FDA states it does not intend to consider a product with the same API and similar/substitutable strengths to be essentially copies if they have different routes of administration.  FDA includes an important “however:” if the compound and manufactured drug have the same API and same/substitutable strengths, and the commercially available drug can be used “(regardless of how it is labeled)” by the route of administration prescribed for the compound, FDA considers the compound to be a copy of a commercially available drug.  FDA, Draft Guidance at 7, lines 250-59.  FDA uses as an example an injectable drug labeled for intra-muscular use, but can be drawn from the vial by a smaller needle for other administration.  If the doctor preferred a compound to be used in this situation, he or she must document the significant difference between the compound and the commercially available drug.  As another example, FDA states that if X and Y are two commercially available oral drugs, FDA intends to consider a compounded formulation of X and Y in strengths within 10% of the commercially available drugs to be essentially a copy, unless the prescriber determination of significant difference has been documented.  

“Statement of Significant Difference” – FDA proposes that any determination of a significant difference in the compounded preparation from the commercially available product should be documented on the prescription.  FDA states there would be no required format, but gives examples of acceptable statements. Just a patient name and formulation would not be sufficient, states FDA.  Importantly, FDA adds that the “significant benefit that the prescriber identifies must be produced by the change” the compounder makes to the commercially available product.  FDA specifically states that “lower prices” are not sufficient to establish something is not essentially a copy.  If the prescriber does not make clear the significant difference, then the compounder should contact the prescriber and make a specific notation of the difference, including date, on the prescription.

FDA’s Shortage List: Documentation Required – For compounding drugs on FDA’s shortage list, FDA states the compounder or prescriber should include a notation on the prescription that the drug is on the shortage list (including an indication of the date the list was checked). 

“Regularly or in Inordinate Amounts” – As required by the statute, FDA’s draft  defines the vague statutory phrase “regularly or in inordinate amounts.”  The statute permits compounders to compounding essentially copies of commercially available drugs so long as not “regularly or in inordinate amounts.”  FDA suggests “regularly” or “inordinate amounts” means if a drug “is compounded more frequently than needed to address unanticipated, emergency circumstances or in more than the small quantities needed to address unanticipated, emergency circumstances.”  As examples of other non-exhaustive factors FDA will consider:

1. Compounding copies of more than a small number of prescriptions;
2. The compounder routinely substitutes compounds that are essentially copies;
3. The compounder offers pre-printed prescription pads that a prescriber may complete without making a “significant difference” determination;
4. The drug is not compounded on an “as needed basis”, but on a routine or preset schedule. 

FDA states that, at this time, it does not plan to take action against a compounder that fills 4 or less prescriptions of essentially copies of the relevant drug product in a month.  If the prescription appropriately documents the significant difference, FDA would not count it in the four “permitted” prescriptions.

Recordkeeping

FDA’s draft states that a physician or pharmacist seeking to compound a drug under 503A should maintain records to demonstrate compliance with the statute.  This would include notation on prescriptions of “significant difference,” and records of the frequency of compounding “essentially copies” to that they can demonstrate such compounding is not “regularly or in inordinate amounts.” 

Given repeated emphasis of the importance of documentation, and maintaining the documentation, FDA plainly believes documentation is critical to establishing whether the compounded product is appropriate.  It will be interesting to see how compounders and drug manufacturers react to FDA’s draft guidance.

By Kurt R. Karst –      

It’s been a while since we posted on a 180-day exclusivity forfeiture issue, though we suspect that we’ll be doing it more in the coming months with some interesting issues on the horizon. But for now, FDA Blog Readers will have to be content with an oldie but a goodie (at least insofar as 2015 is consider old in Hatch-Waxman time).

We recently got our hands on a Memorandum prepared by FDA’s Office of Generic Drugs concerning the Agency’s December 3, 2015 approval of Sun Pharma Global FZE’s (“Sun’s”) ANDA 078340 for generic versions of Novartis Pharmaceuticals Corporation’s GLEEVEC (imatinib mesylate) Tablets, 100 mg and 400 mg, that we though was worth sharing with folks. The ANDA, which contained a Paragraph IV certification qualifying Sun as a first applicant eligible for 180-day exclusivity, was considered received (i.e., filed) by FDA as of March 12, 2007, and was tentatively approved about 32 months later, on November 13, 2009. 

By way of background, under FDC Act § 505(j)(5)(D)(i)(IV), one of the six 180-day exclusivity provisions added to the FDC Act by Title XI of the 2003 Medicare Modernization Act (“MMA”), 180-day exclusivity eligibility is forfeited if:

The first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.

The 2007 FDA Amendments Act (“FDAAA”) clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition, the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .” (FDC Act § 505(q)(1)(G)). The 2012 FDA Safety and Innovation Act (“FDASIA”) made further changes with respect to the application of FDC Act § 505(j)(5)(D)(i)(IV) to certain ANDAs (see our previous post here).  Neither the FDAAA, nor the FDASIA provisions came into play with Sun ANDA 078340, but we note them nevertheless.

FDA’s letter approving ANDA 078340 says, with respect to 180-day exclusivity, that:

Sun was the first ANDA applicant to submit a substantially complete ANDA for Imatinib Mesylate Tablets, 100 mg (base) and 400 mg (base) with a paragraph IV certification to the ‘051 patent. Therefore, with this approval, Sun is eligible for 180-days of generic drug exclusivity for Imatinib Mesylate Tablets, 100 mg (base) and 400 mg (base).  This exclusivity, which is provided for under section 505(j)(5)(B)(iv) of the FD&C Act, will begin to run from the date of the commercial marketing identified in section 505(j)(5)(B)(iv).  Please submit correspondence to this ANDA informing the agency of the date the exclusivity begins to run.

Although FDA sometimes drops a footnote in an approval letter to explain that an applicant who failed to obtain timely tentative approval neverless remains eligible for exclusivity because of some excuse excepting the applicant from the statutory 30-month period (e.g., ANDA 200156 for Armodafinil Tablets, 100 mg and 200 mg), FDA did not do so in the case of ANDA 078340.  But there’s a story there nevertheless. 

According to FDA’s July 1, 2015 Memorandum, despite Sun’s failure to obtain timely tentative approval by September 12, 2009, the company avoided forfeiting eligiblity for 180-day exclusivity because of a chemistry discipline review issue that remained pending on September 12, 2009.  The specifics of the chemistry review issue are redacted from FDA’s July 1, 2015 Memorandum; however, FDA explains that:

On September 8, 2009, FDA and Sun held [a] chemistry teleconference, during which FDA asked the firm, among other things, to provide a commitment to provide [the requested chemistry information] after tentative approval. Sun responded to this request on September 9, 2009, and provided a commitment to provide [the requested chemistry information] within 15 days of receiving tentative approval.  FDA’s review of Sun’s September 9, 2009 amendment, including the commitment to submit [the requested chemistry information], extended past the 30-month date. . . .  FDA reviewed Sun’s amendment and found chemistry to be acceptable on October 9, 2009, approximately one month after the 30-month forfeiture date.  Based on the above facts, we have determined that there was a change in requirements for approval related to [chemistry information] which FDA was actively addressing at the 30-month forfeiture date, and that this change was a cause of Sun’s failure to obtain tentative approval by the 30-month forfeiture date.

Although FDA could have ended the Agency’s analysis there, the Agency went on to address an argument from Sun that there was a change in ANDA bioequivalence requirements that caused the company to miss the 30-month tentative approval deadline. Specifically, Sun argued that after the submission of ANDA 078340, “FDA required for the first time that the [bioequivalence] studies for [imatinib mesylate tablets] be performed on a patient population” instead of a health volunteer population. FDA identified this as a bioequivalence deficiency in November 19, 2007 correspondence to Sun.  Sun performed new studies and amended ANDA 078340 on April 2, 2009, and again on July 29, 2009. FDA reviewed Sun’s submissions and found bioequivalence to be acceptable on August 27, 2009, about two weeks prior to the September 12, 2009 30-month forfeiture event date.  “Sun’s bioequivalence data was determined to be acceptable prior to the 30-month forfeiture date; therefore, any changes in bioequivalence requirements could not have caused Sun’s failure to obtain tentative approval within 30 months,” says FDA in the July 1, 2015 Memorandum.

Although FDA’s memorandum doesn’t relay the most scintillating 180-day exclusivity forfeiture story we’ve seen, the case provides greater visibility into FDA’s thinking on 180-day exclusivity forfeiture. In addition, it serves as a reminder that just because an ANDA approval letter is silent with respect to 180-day exclusivity forfeiture for failure to obtain timely tentative approval (or with respect to any of the other forfeiture provisions for that matter) doesn’t mean there’s not something else lurking out there providing an explanation. 

By Riette Van Laack –

On June 30, as required under the consent decree in the action by the National Resource Defense Council against FDA (see our previous post here), FDA published the amended tentative final monograph for consumer antiseptic rubs, also referred to as consumer rubs, leave on products or hand sanitizers. This category of products includes antiseptic wipes.

As we previously reported here and here, FDA has published two other proposed rules pursuant to the consent decree: a proposal to classify all consumer antiseptic hand wash products non-GRASE and a proposal to reclassify the health care antiseptics as category III (i.e., additional data are needed for safety or effectiveness). 

In the most recent action, FDA proposes to (re)classify alcohol (60-95 percent), isopropyl alcohol (70 to 91.3 percent) and benzalkonium chloride as category III because the Agency has determined that it currently has insufficient data to conclude that these active ingredients are Generally Recognized as Safe and Effective (GRASE) under FDA’s updated standards.  Unless additional data are submitted to support GRASE under the updated standards, FDA will declare them non-monograph ingredients in the final monograph.  FDA hastens to note that this proposal should not be interpreted as FDA’s determination that the consumer antiseptic rubs on the market are not safe or effective.  

It likely will come as welcome news for industry that the Agency does not propose to require clinical outcome data to support Generally Recognized as Effective (GRAE) status for the consumer antiseptic rubs.  FDA previously required such data for the consumer hand wash products in light of the easily available alternative of washing with soap and water.  However, antiseptic rubs are intended to be used by consumers when soap and water are not available, and there is no readily available alternative for antiseptic rubs.

Studies needed to support GRAE status for consumer antiseptic rubs include in vitro testing and in vivo studies.  The in vitro test consists of a determination of the antimicrobial activity against potential pathogens; including 25 representative clinical isolates and 25 reference strains of specified organisms.

The in vivo study consists of a clinical simulation test.  FDA continues to propose a bacterial log reduction as evidence that a consumer antiseptic rub is GRAE.  As with the health care antiseptics, FDA proposes a log reduction standard for one-time use application only; for an active ingredient to be GRAE, a single application must result in a 2.5 log reduction on each hand within 5 minutes after application.

FDA also is asking for data and information about the impact of product use factors, e.g., the impact of volume of product per application on the efficacy of the product.  FDA plans to use this information when developing the requirements for final formulation testing and labeling for the final formulations.

All three ingredients included in this proposed regulation are also included in the proposed regulation for health care antiseptics, so the requirements for additional safety data should not come as a surprise, as FDA’s considerations are largely identical for both categories of products.

FDA’s proposal does not address labeling and testing of final formulations because, at this time, no active ingredients are considered GRASE.  The Agency indicates that, if any of the three ingredients are determined to be GRASE, the final rule will address requirements for final formulations, including efficacy testing.

The proposed rule is open for comments for 180 days.  In addition, companies will have one year to submit new data and information, and comments on any new data or information may then be submitted to the docket for an additional 60 days. 

Hyman, Phelps & McNamara, P.C., the nation’s largest boutique food and drug regulatory law firm, seeks two attorneys to help with our fast-growing and robust practice. 

The ideal candidate for one position is an attorney with substantive expertise in medical device regulation.   

The other attorney is a junior to mid-level associate with excellent credentials, strong verbal and writing skills, and a demonstrated interest in food and drug law and regulation.

Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

By Andrew J. Hull & Mark I. Schwartz

On Tuesday, the U.S. Court of Appeals for the Federal Circuit affirmed a preliminary injunction against Apotex Inc. and Apotex Corp. (collectively, “Apotex”) related to Apotex’s biosimilar version of Amgen Inc. and Amgen Manufacturing Limited’s (collectively, “Amgen’s”) NEULASTA (pegfilgrastim).  Last December, the U.S. District Court for the Southern District of Florida had enjoined Apotex from entering the market with its biosimilar product until 180 days after Apotex provided Amgen with notice of FDA licensure of its biosimilar product (referred to as a “Section 351(k) BLA,” or as an “abbreviated BLA” or “aBLA”) (see our previous post here).  Apotex immediately appealed the decision to the Federal Circuit.

 As many of our readers are aware, the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) set up an intricate multi-stage process for litigating potential patent disputes between the reference product sponsor and the biosimilar product applicant before the biosimilar product reaches the market (otherwise referred to as the “patent dance”).  While the parties are not required to participate in all of these steps, there are various statutory provisions that incentivize the parties to engage at each stage. 

 Specifically, the notice provisions of Public Health Service Act (“PHS Act”) § 351(l)(8)(A) (“Paragraph (8)(A)”) require an applicant to give the reference product sponsor notice at least 180 days before commercially marketing its “licensed” product (“Paragraph (8)(A) notice”).  PHS Act § 351(l)(8)(A).  The reference product sponsor can then seek a preliminary injunction against the applicant marketing the newly licensed aBLA within those 180 days based on alleged patent infringement of certain patents held by the reference product sponsor.  Id. § 351(l)(8)(A).

 Apotex engaged in the earlier steps of the patent dance with its biosimilar version of Amgen’s NEULASTA, and, in April 2015, provided Amgen with notice (identical to the information required in a Paragraph (8)(A) notice) of its future intent to commercially market the product, even though Apotex had not yet obtained an FDA license for the product.

 Subsequent to Apotex’s pre-licensure notice to Amgen, the Federal Circuit issued its decision in Amgen, Inc. v. Sandoz, Inc., 794 F.3d 1347 (Fed. Cir. 2015) (see our previous post here), in which the Court held that the Paragraph (8)(A) notice must be provided after, not before, FDA licensure of the biosimilar, id. at 1358.  The Court also concluded that Paragraph (8)(A) is “mandatory” for the applicant.  Id. at 1359.

 After the Sandoz decision, Amgen sought the underlying preliminary injunction that would require Apotex to provide Amgen with Paragraph (8)(A) notice upon licensing of its biosimilar, and that would enjoin Apotex from marketing that product until 180 days from such notice.  The district court agreed with Amgen’s assessment that Sandoz required an applicant to make a Paragraph (8)(A) notice, and granted the preliminary injunction.

 On appeal, the issue before the Federal Circuit was whether the 180-day notice provision of Paragraph (8)(A) is mandatory for all applicants upon licensure and, if so, whether that requirement is enforceable by a preliminary injunction.

 The Federal Circuit rejected Apotex’s argument that the Paragraph (8)(A) notice was not a requirement to an applicant that had previously provided notice under Paragraph (2)(A) (an earlier patent dance step):

 Paragraph (8)(A) provides that “[t]he subsection (k) applicant shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).” § 262(l)(8)(A) (emphasis added).  The word “shall” generally indicates that the directive is mandatory.  See Nat’l Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 661–62 (2007); Lopez v. Davis, 531 U.S. 230, 241 (2001); Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998).  We ruled in Amgen v. Sandoz that this language is, indeed, “mandatory,” and we did not say that it was mandatory only in no- (2)(A)-notice circumstances.  794 F.3d at 1359.  Decision at 15.

 The Court also rebuffed Apotex’s argument that requiring the 180-day notice period would effectively provide the reference product sponsor with an additional 180 days of exclusivity.  The Court understood Paragraph (8)(A) to require notification upon issuance of the license, and not necessarily upon the date the license is effective.  Id. at 17.  Additionally, the Court explained that the purpose of Paragraph (8)(A)’s 180-day notice requirement is to give the parties adequate time for fair and accurate decision-making regarding potential patent litigation, and to give parties and the courts, in the event of litigation, appropriate time to litigate and adjudicate these matters:

 As this court explained in Amgen v. Sandoz, the purpose is to ensure that, starting from when the applicant’s product, uses, and processes are fixed by the license, the necessary decision-making regarding further patent litigation is not conducted under time pressure that will impair its fairness and accuracy.  Id. at1358, 1360.  At the least, the reference product sponsor needs time to make a decision about seeking relief based on yet-to-be litigated patents, and a district court needs time for litigants to prepare their cases, in a complicated area, to provide a reliable basis for judgment.  While that may not be true in every single case, Congress clearly made a categorical fixed-period judgment in (8)(A)—as it did elsewhere in the Biologics Act—and we have explained that the “statute must be interpreted as it is enacted, not especially in light of particular, untypical facts of a given case.” Id. at 1358.  Decision at 17-18.

 Finally, the Court rejected Apotex’s argument that a declaratory judgment was the only relief available to aggrieved reference product sponsors.  Noting the lack of a “clear and valid legislative command” limiting the federal courts’ equitable jurisdiction over violations of Paragraph (8)(A), the Court held that the reference product sponsor could seek a preliminary injunction to enjoin an applicant to comply with the notice provisions of Paragraph (8)(A).  Id. at 21.

 As we mentioned in our earlier post, we believe that the Federal Circuit’s decision in this matter may not be the final song played at this dance.  We would not be surprised to see Apotex petition the Supreme Court for writ of certiorari, especially in the event that the Supreme Court chooses not to take up this issue on a different appeal (see our previous post here for the most recent developments in the Sandoz case).  We will keep you posted on any developments.

By Allyson B. Mullen, Jeff N. Gibbs, McKenzie E. Cato* –

Technological advances have resulted in Next Generation Sequencing (NGS) being used more and more frequently by diagnostic laboratories.  NGS in vitro diagnostics (IVDs) present a new set of regulatory and technical challenges for FDA and the lab community because, unlike traditional IVDs which are generally focused on a small number of specific analytes, NGS can produce volumes of data regarding millions of base pairs.  Moreover, the significance of the resulting data may not be immediately known (e.g., the clinical value of a mutation may not be known for years). 

For years, FDA and the lab community have been contemplating how best to regulate NGS-based IVDs.  In November 2013, FDA cleared the first NGS instrument platform through the de novo process (K123989) signaling the formal entry of NGS into the world of clinical diagnostics.  FDA’s registration and listing database shows that since this original clearance, only two other companies have listed NGS instruments.

FDA has also held three public meetings (September 2014, February 2015, and November 2015) regarding regulation of and standards relating to NGS IVDs.  As part of the most recent meeting, in November 2015, FDA published a discussion paper entitled “Use of Databases for Establishing the Clinical Relevance of Human Genetic Variants.”  The combined efforts of FDA and the lab community through these meetings led to FDA’s issuance of two draft guidances relating to NGS IVDs.  The first, “Use of Standards in FDA Regulatory Oversight of Next Generation Sequencing (NGS)-Based In Vitro Diagnostics (IVDs) Used for Diagnosing Germline Diseases,” provides recommendations for designing, developing, and validating NGS IVDs and discusses use of standards as part of the regulatory controls.  The second, “Use of Public Human Genetic Variant Databases to Support Clinical Validity for Next Generation Sequencing (NGS)-Based In Vitro Diagnostics,” describes how publicly available databases can be used as a source of valid scientific evidence to support the clinical validity of an NGS IVD.  Both aspects are important to a clear regulatory pathway for NGS IVDs.

We will be posting a detailed analysis of these draft guidances next week.  These draft guidances currently only apply to IVDs subject to regulatory oversight by FDA.  Should FDA’s efforts to regulate laboratory developed tests (LDTs) come to bear, these draft guidances would also apply to the numerous NGS-based LDTs. FDA will be accepting comments on the draft guidances through October 5, 2016.

*Summer Associate

Hyman, Phelps & McNamara, P.C., the nation’s largest boutique food and drug regulatory law firm, seeks two attorneys to help with our fast-growing and robust practice. 

The ideal candidate for one position is an attorney with substantive expertise in medical device regulation.   

The other attorney is a junior to mid-level associate with excellent credentials, strong verbal and writing skills, and a demonstrated interest in food and drug law and regulation.

Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

By Jennifer M. Thomas & John R. Fleder –

On July 6, 2016, the Eighth Circuit upheld a district court ruling in United States v. DeCoster that imposed three-month prison sentences and $100,000 fines on Austin “Jack” and Peter Decoster, the owner and chief operating officer, respectively, of Quality Egg, LLC.  We have previously blogged about the Quality Egg case here, and written about it in FDLI’s Top Food and Drug Cases of 2015.

This case is among the first in decades to analyze the limits of the Park Doctrine (also known as the “Responsible Corporate Officer” doctrine).  The significance of the Decosters’ case is highlighted by the involvement of numerous amici:  The Washington Legal Foundation, Cato Institute, Chamber of Commerce of the United States, Pharmaceutical Research and Manufacturers of America, and the National Association of Manufacturers all submitted briefs to the Eighth Circuit on behalf of the Decosters.  And the Decosters’ legal war is unlikely to end with their defeat in this battle.  Three Eighth Circuit judges wrote three different opinions in this case, making it highly likely that the Decosters will seek en banc review of the decision and/or petition the Supreme Court for a writ of certiorari.

Despite the fractured nature of the Eighth Circuit’s ruling and the likelihood of further appeal, the multiple opinions issued today are of interest and worth reading in their entirety.  Importantly, while they wrote separately and reached different conclusions, the three Eighth Circuit judges appeared unanimous in finding that a penalty of imprisonment for a misdemeanor violation of the FDC Act would violate principles of due process if the offense is merely one of “vicarious liability,” defined as liability “for the actionable conduct of a subordinate . . . based on the relationship between the two parties.”  United States v. Austin Decoster, No. 15-1890, slip op. at 8 (8th Cir. Jul. 6, 2016).

Judge Murphy, writing on behalf of the court, addressed the problem of “vicarious liability” by clarifying that Park liability under the FDC Act does not impose vicarious liability, but rather recognizes the “blameworthiness” of a corporate officer that “fail[s] to prevent or remedy the conditions which gave rise to the charges against him.”  Id.  (internal quotations omitted) (citing United States v. Park, 421 U.S. 658, 673, 675 (1975)).  Judge Gruender, in concurrence, further distinguished the present case from one involving “vicarious liability,” pointing to the fact that the district court had found the Decosters negligent.  See United States v. Austin Decoster, No. 15-1890, slip op. at 14 (8th Cir. Jul. 6, 2016).  He wrote separately from Judge Murphy to emphasize that, pursuant to the Supreme Court’s reasoning in Park, negligence is an absolute prerequisite to imposing a sentence of imprisonment on a responsible corporate officer under the FDC Act.  Id. at 14-18.  Finally, Judge Beam in dissent did not disagree with the other two judges that “vicarious liability” could not justify the imposition of imprisonment for a violation of the FDC Act, but he went further to conclude that a finding of negligence was also insufficient.  To impose a sentence of incarceration under the FDC Act, he opined, the government would have needed to demonstrate that the Decosters had the necessary mens rea or “guilty minds” – in other words, that they knew they were violating the law.  Judge Beam reasoned that the mens rea requirement applies to FDC Act violations because that statute contains no “express congressional statement to the contrary.”  Id. at 22-23.  Thus, he dissented from the majority opinion in favor of upholding the Decosters’ sentence.

We will continue to follow this case and keep blog readers informed, and may follow with further analysis of this Eighth Circuit holding at a later date.

By Kurt R. Karst –      

We like hunting down orphan drug clinical superiority precedents. And although it’s been said that “the thrill is in the chase, never in the capture” (by a Doctor Who character at least), we enjoy the capture just as much as the chase. Earlier this year we put our a scorecard of precedents where FDA determined that an orphan drug is clinically superiority to another drug that is otherwise the same drug for the same orphan condition.  We have two more precedents to add to the scorecard.  Both concern “greater safety” clinical superiority, and put that clinical superiority basis on par with the number of precedents we know of for the so-called Major Contribution to Patient Care (“MC-to-PC”) basis (now seven each). Today, we’re posting on one of those decisions.  We’ll post on the second – and perhaps more interesting precedent – in the coming days. 

We refer to our previous post for a more detailed discussion of orphan drug clinical superiority, but remind folks here that FDA’s orphan drug regulations (21 C.F.R. Part 316) define a “clinically superior” drug as “a drug . . . shown to provide a significant therapeutic advantage over and above that provided by an approved orphan drug (that is otherwise the same drug)” in one of three ways: (1) greater effectiveness as assessed by effect on a clinically meaningful endpoint in adequate and well controlled trials; (2) greater safety in a substantial portion of the target population; or (3) demonstration that the drug makes a major contribution to patient care. By virtue of showing clinically superior, a drug is not considered the same as a previously approved drug (even if it contains the same active moiety and is approved for the same orphan indication as the previously approved drug), and can be approved notwithstanding a period of orphan drug exclusivity applicable to the previous drug and may obtain its own period of 7-year orphan drug exclusivity.

On August 20, 2012, FDA designated Nova Laboratories Limited’s (“Nova’s”) Mercaptopurine Oral Solution as an orphan drug for the treatment of Acute Lymphoblastic Leukemia (“ALL”) in pediatric patients. Pediatric ALL, which peaks between the ages of 1 and 4 years, is reportedly the most common malignancy diagnosed in children, representing about 23% of childhood cancers.  Nevertheless, in 2012, when Nova requested orphan drug designation, the United States prevalence of pediatric ALL, and, indeed adult and pediatric ALL together, was well below the statutory 200,000 prevalence threshold: about 66,000, according the National Cancer Institute’s Surveillance, Epidemiology, and End Results Program database.

With a drug for a disease that is clearly a rare (orphan) disease, the only obstacle for Nova to overcome seemed to be providing a plausible hypothesis of clinical superiority. You see, FDA previously approved mercaptopurine for the treatment of ALL, including pediatric ALL.  Specifically, FDA approved PURINETHOL (mercaptopurine) Tablets on September 11, 1953 under NDA 009053, which is currently held by Stason Pharmaceuticals.  But the tablet dosage form raised issues for pediatric patients.  According to Nova: 

Presently, a single 50mg strength tablet formulation of [mercaptopurine] is marketed in the United States. Tablet formulations are not acceptable to nearly all pre-school (less than 5 years of age) children and the majority of school-aged children 6-12 years.  As a consequence, children are often given unlicensed liquid formulations of [mercaptopurine] prepared extemporaneously in pharmacies. Alternatively, parents and carers of children are dispensed the tablet form of [mercaptopurine] and therefore have to resort to splitting or crushing the tablet(s) before mixing it into water or food prior to administration.

FDA’s Office of Orphan Products Development agreed with Nova in a July 18, 2012 Memorandum:

The approval by the FDA of mercaptopurine (MF) tablets for the treatment of ALL provides a more than adequate scientific rationale. The issue with this application then becomes whether an oral liquid formulation is clinically superior (i.e., safer or more efficacious) than the approved tablet formulation or a major contribution to patient care. As noted in the November 30, 2009 review of application 09-2863 [from Orbona Pharma Ltd.] for another oral liquid formulation of MP for ALL, there are significant safety issues associated with the use of MP for the treatment ofALL and these safety issues can be compounded when the tablets are manipulated in order to dose pediatric patients.  It is certainly feasible that parents attempting to prepare a dose of MF could accidentally over or underdose their child with serious consequences.  Consequently, an oral iquid formulation of MF would be a “safer” product than the approved tablet formulation by eliminating the need for compounding procedures and thus reducing or avoiding potential serious medication errors. Therefore, for purposes of orphan designation, the sponsor has provided a plausible hypothesis for expecting an oral liquid formulation of MP to be a safer product than the approved tablet formulation of the drug.

FDA ultimately approved Nova’s mercaptopurine drug product for pediatric ALL. In fact, FDA approved the drug for all ALL patients.  Specifically, on April 28, 2014 FDA approved Nova’s NDA 205919 for PURIXAN (mercaptopurine) Oral Suspension, 20 mg/mL, “ for use in pediatric, children, and adult patients for maintenance therapy of [ALL] as part of a combination regimen.” Although PURIXAN was approved for a use broader than the orphan drug designated use (but still an orphan use), FDA granted Nova a period of orphan drug exclusivity that expires on April 28, 2021.