By James C. Shehan –

On August 27, 2015, FDA published its much–anticipated views on the non-proprietary naming of biological products.   Set forth in a proposed rule, a draft guidance, and a blog post, FDA proposes that a four letter suffix “devoid of meaning” be part of the name of all biological products, including reference products and biosimilar biologics.  The proposal solicits public feedback on whether in the alternative the suffix should not be meaningless but instead be derived from the name of the license holder.  The proposal also states that the four letter suffix will be different for each product except perhaps interchangeable products.  For interchangeable products, FDA declines to make a naming decision but instead solicits feedback on two alternatives: whether interchangeable products should also have distinct suffixes or share the same one.   By largely taking the position advocated by the makers of reference products, the proposal has already elicited negative comments in some quarters.

How a biosimilar should be named has been one of the hottest issues in biosimilars (see our previous posts here, here, here, and here), despite it being an issue upon which the BPCIA is silent.  Advocates for unique non-proprietary names insist that they are necessary to ensure safety, accurate adverse event reporting and the preservation of physician and patient choice.  On the other hand, advocates for use of the same name argue that the safety and pharmacovigilance concerns are minimal and that different names will be a major barrier to marketplace acceptance of biosimilars.  The European Union long ago decided that distinct names were necessary, and the issue has been squarely in front of FDA since the BPCIA’s passage.   In addition, FDA has on two occasions approved biologics with unique non-proprietary names: (1) tbo-filgrastim for a Teva product approved before the BPCIA was passed; and (2) filgrastim-sndz, approved in March for Sandoz’s Zarxio but with a specific FDA notation that the non-proprietary name was a placeholder subject to change.

The draft guidance leads off with a simple summary of the Agency’s position: “FDA’s current thinking is that shared nonproprietary names are not appropriate for all biological products. There is a need to clearly identify biological products to improve pharmacovigilance and, for the purposes of safe use, to clearly differentiate among biological products that have not been determined to be interchangeable.”  FDA further explains that it hopes to avoid “inadvertent substitution” of products, facilitate pharmacovigilance “when other means to track a specific dispensed product are not readily accessible,” encourage routine use of suffixes in ordering, prescribing, dispensing, and recordkeeping,  and “avoid inaccurate perceptions of the safety and effectiveness of biological products based on their licensure pathway.”

Under the new system, FDA’s naming convention for biological products will be to assign a proper name that will include a “core name” and a designated suffix.  For originator biological products, FDA will make the core name the name adopted by the USAN Council  for the drug substance.  For other biological products (e.g., “related,”  biosimilar, and interchangeable products), the core name will be the name of the drug substance contained in the relevant previously licensed product.

FDA believes that use of a shared core name will indicate a relationship among products.  FDA chose to use a suffix instead of a prefix so that products with the same core name will be grouped together in electronic databases and thereby to help health care providers identify products.

FDA intends to apply this naming convention to both newly licensed and previously licensed biological products. 

A few products will be exempt: biological products for which a proper name is provided in the regulations (e.g., 21 C.F.R. part 640), and “certain categories of biological products for which there are well-established, robust identification and tracking systems to ensure safe dispensing practices and optimal pharmacovigilance (ISBT 128 for cord blood products).”  For previously licensed products, in most cases FDA will simply attach a hyphen and the four letter suffix to the product’s original proper name, one exception being the tbo-filgrastim product mentioned earlier, which will lose its prefix and gain a suffix.

As for the selection of those suffixes “devoid of meaning,” for new products FDA wants the sponsors of full BLAs to propose a suffix during the IND phase.  For existing products, FDA is considering the most effective regulatory approach and intends to provide will provide additional information.  In the near term, however, FDA is using the proposed rule to assign distinguishing suffixes to six products, including the Amgen, Teva and Sandoz filgrastims, Neulasta, Epogen, Procrit and Remicade.  These products were selected because either they are referenced by approved or publicly announced pending biosimilar applications, or are related products to those reference products.  FDA advises applicants for new biosimilar products to also propose a four letter suffix. 

FDA mandates that the proposed suffix should be four lowercase letters, be unique and be “devoid of meaning.”  The proposed suffix should not be promotional, “such as by making misrepresentations with respect to safety or efficacy,” not include abbreviations commonly used in clinical practice and therefore subject to misinterpretation,  not contain or suggest any drug substance name or core name, not look similar to the name of a currently marketed product or to any other product’s suffix.  FDA encourages applicants to conduct due diligence on their proposed suffixes.

FDA’s non-decision on interchangeables is set forth very simply:

FDA intends to apply the naming convention described in this guidance to interchangeable products licensed under section 351(k) of the PHS Act in an original application or a supplement and is considering two alternative approaches:

1. Distinct from the reference product: An applicant for a proposed interchangeable product submitted in an original application under section 351(k) of the PHS Act would propose a unique suffix composed of four lowercase letters for use as the distinguishing identifier included in the proper name designated by FDA at the time of licensure (see section V of this guidance). An applicant seeking a determination of interchangeability in a supplement to its 351(k) application would keep the existing suffix.

2. Shared with the reference product: An applicant for a proposed interchangeable product submitted in an original application or a supplement under 351(k) of the PHS Act would be assigned the same proper name and suffix as its reference product.

FDA's proposal elicited at least one immediate negative reaction.  In a statement, Dr. Bertrand C. Liang, Chairman of the Biosimilars Council (a division of GPhA), stated: “The FDA’s proposals today on naming conventions for biosimilars warrant serious scrutiny for their potential to erect barriers to patient access to new, more affordable medicines, and jeopardize their safety.  Because the Biosimilars Council shares the agency’s deep commitment to patient safety, we believe that biologics and biosimilars should be required to have the same International Nonproprietary Name (INN) with no added 'FDA-designated suffix.'”

The comment period on the draft guidance is open for 60 days, and the comment period on the proposed rule is open for 75 days.

By David C. Gibbons –

As we reported in a previous post, the House Committee on Energy and Commerce requested that FDA answer a number of questions regarding how FDA Centers issue and publicly disclose Untitled Letters (“ULs”).  As readers may recall, the letter to FDA questioned whether FDA’s practices concerning the issuance and disclosure of ULs has been “consistently fair, effective, or efficient” and solicited responses to numerous questions to provide color to the same.  In its brief response, FDA reiterated its general policies regarding the issuance and dissemination of ULs, clarified, to some extent, its approach on disclosure, and addressed the Committee’s assertion that FDA had ulterior motive in the timing of public disclosure of certain ULs.

FDA answered the Committee’s questions concerning the issuance of ULs by stating that ULs are means to “communicate and provide formal notice” to companies that FDA has determined a violation of FDA regulations has occurred that does not rise to the threshold of a WL.  FDA further stated that ULs provide “the factual basis regarding the violation,” communicate FDA’s concerns, but do not commit FDA to take enforcement action for such violation.  In answering these questions, FDA generally related information from its Regulatory Procedures Manual (“RPM”).  For example, FDA pointed to the RPM sections that describe certain types of Warning Letters (“WLs”) and ULs reviewed as a matter of course by FDA’s Office of Chief Counsel – additional detail can be found in RPM Exhibit 4-1 (here). 

More noteworthy was FDA’s response regarding public disclosure – that is, posting to FDA’s website – of ULs.  FDA clarified that Center-specific policies concerning the posting of ULs apply, but only when such policies do not conflict with the Agency’s approach to posting ULs proactively in consideration of its obligations under the Freedom of Information Act (“FOIA”).  FDA said that FOIA requires FDA to post “any Agency record subject to the FOIA,” including ULs, if:

• FDA has received three or more FOIA requests for a copy of such record; or
• The “content relates to a matter of significant public interest” and FDA expects to receive multiple FOIA requests for the record.

In defending its approach, FDA stated: “[t]his approach is consistent with Federal law, Department of Justice Guidelines, President Obama’s January 21, 2009, FOIA Memorandum, and Attorney General Holder’s March 19, 2009, Memorandum.”  Further, FDA said that Centers may utilize approaches that “provide a greater measure of transparency” by proactively posting ULs.  FDA also said that it has been “encouraged” to go beyond the legal requirements for public disclosure when deemed appropriate by FDA Centers.  Finally, FDA noted that its Centers regulate a broad array of products that vary widely in terms of risk as well as the availability of resources, both of which are taken into account when developing Center-specific approaches to the public disclosure of ULs.

FDA took issue with Congress’ suggestion that FDA had motives other than achieving regulatory compliance in issuing and posting some ULs.  In its letter to FDA, Congress questioned whether the timing of issuing ULs was meant to advance new FDA policy or interpretation outside the routine administrative process or impact investment decisions.  In its response to this issue, FDA expressly rejected the notion that it uses ULs to “announce new regulatory approaches or policy.”  With respect to timing, FDA responded by stating that it does not “investigate or evaluate” whether companies receiving WLs or ULs are publicly traded on a U.S. or foreign exchange or “seek to time [the] release [of WLs or ULs] based on market considerations.”  In a final point on this issue, FDA stated it “does not believe the Agency has a special expertise or a mission to change its own processes to attempt to time impacts on the stock market and determine whether impacts are desirable.” 

It will be interesting to see where this goes from here.  Was the Committee’s intent to take FDA to task over what FDA Centers should do, having FDA describe its existing policies regarding the issuance and posting of ULs?  If so, then we may not hear more from either Congress or FDA on the subject.  Or was it a more searching inquiry into what FDA Centers actually do?  If it was the latter, then FDA’s response likely does not provide Congress with what it was looking for and we may see more activity from the Committee, such as a request for a public hearing on the matter.

By Alexander J. Varond & James E. Valentine* –

FDA recently released a draft guidance, titled “Rare Diseases: Common Issues in Drug Development.”  The fourteen-page document amounts to more of a primer than a focused discussion of technical issues.  It serves as a useful reminder of the broader themes that confront orphan drug sponsors, and it is particularly helpful for those that are new to the rare disease space.  In a number of ways, the Draft Guidance is similar to another draft guidance published in May 2015, entitled “Investigational New Drug Applications Prepared and Submitted by Sponsor-Investigators,” which, as the title suggests, provides a high-level overview on how to prepare and submit an IND.

By publishing the Draft Guidance, FDA may be seeking to increase the consistency and flexibility exercised in the review of orphan drugs in CBER and CDER as well as across the Centers’ various review divisions.  To be certain, the Draft Guidance highlights a number of ways FDA can exercise flexibility in its review of orphan drugs.  For example, the Draft Guidance discusses FDA’s views on the acceptance of historical controls, and reliance on a single trial with confirmatory evidence.  FDA also notes that “[t]here is no specific minimum number of patients that should be studied to establish effectiveness and safety of a treatment for any rare disease.”

Overview

The Draft Guidance addresses the following aspects of developing a drug for a rare disease:

• Adequate description and understanding of the disease’s natural history;
• Adequate understanding of the pathophysiology of the disease and the drug’s proposed mechanism of action;
• Nonclinical pharmacotoxicology considerations to support the proposed clinical investigation or investigations;
• Reliable endpoints and outcome assessment;
• Standard of evidence to establish safety and effectiveness; and
• Drug manufacturing considerations during drug development.

Natural History Studies

Perhaps the most interesting aspect of the Draft Guidance document comes in its discussion of natural history studies.  FDA’s Draft Guidance urges sponsors of drugs for rare diseases to develop an understanding of the natural history of the disease early in the development program so as to better inform the design and analysis of clinical trials. 

Natural history has been defined as “the natural course of a disease from the time immediately prior to its inception, progressing through its presymptomatic phase and different clinical stages to the point where it has ended and the patient is either cured, chronically disabled or dead without external intervention.” Stephen C. Groft and Manuel Posada de la Paz, “Rare diseases-avoiding misperceptions and establishing realities: the need for reliable epidemiological data,” Rare Diseases Epidemiology (2010).  In May 2012, FDA hosted a helpful workshop on natural history entitled, “Workshop on Natural History Studies of Rare Diseases:  Meeting the Needs of Drug Development and Research.”

The Draft Guidance accepts that the natural history of rare diseases is often poorly understood.  Although natural history studies are not required, FDA counsels that, for an orphan drug, “a well-designed natural history study may help in designing an efficient drug development program.”  Such studies, FDA notes, can help by:

• Defining the disease population, including a description of the full range of disease manifestations and identification of important disease subtypes;

• Understanding and implementing critical elements in clinical study design, such as study duration and choice of subpopulations;

• Developing and selecting outcome measures that are more specific or sensitive to changes in the manifestations of the disease or more quickly demonstrate safety or efficacy than existing measures; and

• Developing new or optimized biomarkers that may provide proof-of-concept information, guide dose selection, allow early recognition of safety concerns, or provide supportive evidence of efficacy.

The Draft Guidance also notes that, because rare diseases are “highly diverse . . . with wide variations in the rates and patterns of manifestations and progression,” natural history studies should be broad and based on features of the disease, including those morbidities most important to patients.  The Draft Guidance then sets forth a number of helpful considerations in developing a natural history study, including:

• Selecting data elements that are broad and based on features of the disease, including morbidities that are most important to patients, among others.

• Because of the substantial phenotypic variability in many rare disorders, natural history studies should include patients across as wide a spectrum of disease severity and phenotypes as possible, rather than focusing too early on a particular subset;

• Natural history data should be collected for a sufficient duration to capture clinically meaningful outcomes and determine variability in the course of the disease; and

• The data for natural history studies can be collected prospectively or retrospectively, but prospective longitudinal natural history studies are likely to generate the most useful information about a disease.

It is important to note, however, that prospective longitudinal natural history studies can span years and even decades and waiting for the results of a such trials, prior to designing pivotal studies, may substantially delay drug development programs.  As such, patients with serious and life-threatening conditions may be denied access to promising therapies.  In addition, companies may find that conducting such prospective longitudinal natural history studies is not commercially viable.  This is particularly true for small companies, which make up a large percentage of the orphan drug space.

While the Draft Guidance emphasizes the utility of natural history studies as “critical background information” to inform sponsors’ decision-making regarding clinical trial design and provides guidance on developing natural history registries to support that activity, when it comes to the use of natural history data as a historical comparator, the Draft Guidance minimizes the credibility of using historical controls.  While the challenges associated with the use of historical controls are well recognized, FDA fails to recognize that natural history studies have been used in this way to support important approvals in the rare disease space; for example:

• Myozyme (alglucosidase alfa), the first treatment for patients with Pompe disease, was approved on the basis of two studies with historical controls where a natural history database was used to create a subgroup-matched historical control based on certain prognostic factors;

• Cresemba (isavuconazonium sulfate) was approved in 2015 for the treatment of invasive aspergillosis and invasive mucormycosis, rare but serious infections, with one of the two studies’ effectiveness comparisons using a combination of both matched and unmatched historical controls; and,

• Cholbam (cholic acid) was approved in 2015 for both bile acid synthesis disorders due to single enzyme defects and as an adjunctive treatment of peroxisomal disorders including Zellweger spectrum disorders, which in the absence of sufficient natural history information was based largely on uncontrolled studies.

The use of natural history data as a historical control remains an area where a greater understanding of FDA’s flexibility in previous approval decisions would benefit the rare disease community.

Comments on the Draft Guidance are due by October 16, 2015 here.

*Admitted only in Maryland. Work supervised by the Firm while D.C. application pending.

By James E. Valentine* –

On August 17, 2015, FDA announced the availability of an update to its 11 year old guidance on botanical drug development.  Botanicals are plant materials, algae, macroscopic fungi, and combinations of those things that can be regulated as a food (including a dietary supplement), drug/biologic, medical device, or cosmetic under the Federal Food, Drug, and Cosmetic Act.  The updated guidance covers the development of those botanicals that are that are regulated as drugs (i.e., under an investigational new drug application to support a future new drug application submission, as part of over-the-drug monograph system).  While the general approach to botanical drug development has remained unchanged in the updated guidance, FDA has primarily modified and expanded the 2004 draft guidance to address late-phase development and NDA submission.  The updated guidance still covers these topics in drug development:

1. Description of the product and documentation of prior human experience;
2. Chemistry, manufacturing, and controls (CMCs);
3. Nonclinical safety assessment, including pharmacology and toxicology;
4. Clinical pharmacology and bioavailability; and,
5. Clinical considerations.

Therapeutic Consistency

While there are a number of smaller changes to what FDA requests of sponsors when embarking on clinical trials for botanical drugs, the Agency significantly expanded the quality control measures.  Given the heterogeneous nature of botanical drug products, and that it can be technically challenging to determine a botanical drug’s identity and ensure its consistency, the draft guidance maintains a “totality-of-the-evidence approach” to demonstrate that the commercial batches will be therapeutically consistent with those batches observed during premarket clinical development.  Such quality controls still consist of a combination of (a) botanical raw material controls (e.g., agricultural practice and collection), (b) quality controls by chemical tests, and (c) manufacturing controls.  However, it seems that FDA would like to see additional evidence that supports therapeutic consistency.  As such, the updated guidance includes two new quality control aspects: biological assays and clinical data.

Biological Assays.  While raw material controls and other CMC measures can help establish the identity and ensure the quality of botanical drug products, the draft guidance states that in certain cases information on correlations between such quality parameters and the pharmacological activity or clinical effect may be warranted to ensure that variations in raw materials and drug substance will not affect the product’s therapeutic consistency.  For a biological assay, FDA prefers one that reflects the drug’s known or intended mechanism of action.  At a minimum, FDA would like to see an appropriately validated biological assay that demonstrates accuracy, precision, specificity, linearity, and range.

Clinical Data.  The updated guidance requests clinical data beyond the primary efficacy analyses to show that clinical response to a botanical drug will not be affected by variations of different batches in two ways.  The first approach is to conduct multiple batch analyses, looking at batch effects on clinical endpoints.  This allows quantification of potential heterogeneity in clinical outcomes for subjects who receive different batches in the study.  This is in principle similar to other types of subgroup analysis.  The second approach is to show that clinical response is not sensitive to dose, while also demonstrating that the studied doses are more effective than placebo or control, or not inferior to active treatment.

Applicability of Combination Drug Regulations

Another major expansion to the updated guidance is the addition of a discussion on the applicability of FDA's combination drug regulations.  For a fixed-dose combination drug product, current regulations require sponsors to demonstrate each component’s contribution toward overall efficacy and/or safety.  However, the draft guidance clarifies that these regulations generally do not apply to naturally derived mixtures, such as those found within a single botanical raw material.  Therefore, botanical drug products derived from a single botanical raw material are generally not considered fixed-dose combination drugs because FDA considers the entire botanical mixture to be the active ingredient. 

On the other hand, botanical drug products derived from multiple botanical raw materials are currently considered by FDA to be fixed-combination drugs.  Since demonstrating each botanical raw material’s contribution to efficacy and safety in such a botanical product is not always feasible, FDA is reviewing the requirements for fixed-combination drugs and how they should be applied to botanical drugs.  For now, FDA is requesting nonclinical data from animal disease models or pharmacological in vitro assays to help show the contribution of individual components to the claimed effects.

Other Modifications

In addition, the guidance document’s discussion of Phase 1 and Phase 2 clinical studies for botanical drugs is no longer split into separate recommendations and requirements for (a) marketed products without safety concerns and (b) non-marketed products or products with known safety concerns.  The new document has blended these requirements.  For example, the nonclinical pharmacology and toxicology information needed to support Phase 1 and Phase 2 clinical studies of botanical products still depends on the extent of previous human use, and if currently lawfully marketed in the United States as a dietary supplement, initial clinical studies may still be allowed to proceed without further nonclinical testing.  In the updated guidance, FDA has now further explained that regardless of whether the drug is currently lawfully marketed in the United States, if the anticipated exposure in the proposed clinical trials exceeds that in prior human use (e.g., higher doses or a longer duration), an additional nonclinical pharmacological/toxicological assessment is warranted to adequately address the difference between the prior human use and the proposed clinical trial.

Comments on the draft guidance can be submitted to the public docket through October 16, 2015 here.

*Admitted only in Maryland. Work supervised by the Firm while D.C. application pending.

By Riëtte van Laack - 

As we previously reported, FDA and FTC are reviewing their regulation of homeopathic drugs.  In March 2015, FDA issued a notice requesting comments on the current use of homeopathic drugs, and that agency’s approach to regulation of the category.  In June 2015, FTC announced a workshop in September to discuss advertising of over-the-counter (OTC) homeopathic products. 

Last week, FTC staff announced that it has submitted a comment to FDA.  The comment was approved by the Commission by a vote of 5-0.  Not surprisingly, FTC staff takes the position that claims for homeopathic drugs must be supported by competent and reliable scientific evidence.  The comment suggests that FTC believes that its position is compromised by FDA’s current conflicting policy that allows marketing of homeopathic drug products without proof of efficacy. FTC staff suggests that it has been “reluctant” to pursue action against homeopathic products because of this conflict.

FTC staff puts forward three possible approaches for FDA to resolve the conflict between FDA’s policy and FTC’s substantiation doctrine:

1. FDA discontinues its current policy and requires that homeopathic products meet the same standard as other conventional OTC drug products;
2. FDA removes the requirement for an indication for homeopathic drug products so that the inclusion of the indication becomes voluntary and, therefore, is no longer “sanctioned” by FDA but remains subject to FTC’s standard of competent and reliable scientific evidence;
3. FDA amends the current policy to require that the indication be supported by “competent and reliable scientific evidence.”

The FTC staff’s comment includes data from two studies – a focus group and copy test – to support its contention that consumers are confused about the nature of homeopathic products.  These studies and their interpretation will undoubtedly be a topic of discussion at FTC’s September workshop. 

The comment confirms that FTC is intent on holding homeopathic drug products to the same standard as conventional drug products.  The question now is whether FDA will accept the comment’s recommendations in furtherance of that objective or if FDA will continue to recognize the uniqueness of homeopathic drug products. 

By James C. Shehan –

We’ve all been told that consistency is a virtue and some recent developments have AbbVie’s consistency on display while that company questions FDA’s biosimilar labeling morality, or at least decision-making.  In a citizen petition supplement recently submitted to FDA, AbbVie renewed its efforts to change FDA’s policies on biosimilar labeling by assailing the logic behind FDA’s reliance on the Purple Book in response to a Congressional inquiry, by citing FDA’s own recent statements in the Amarin off-label matter and by continuing to assert the needs of prescribing physicians to be fully informed about biosimilars.

AbbVie’s specific requests are that the labeling of all biosimilars contain “clear statement[s] that the product is a biosimilar, that the biosimilar is licensed for fewer than all the reference product's conditions of use (if applicable), … that the biosimilar's licensed conditions of use were based on extrapolation (if applicable), [and] that FDA has not determined that the biosimilar product is interchangeable with the reference product (if applicable).”  AbbVie also asks for “[a] concise description of the pertinent data developed to support licensure of the biosimilar, along with information adequate to enable prescribers to distinguish data derived from studies of the biosimilar from data derived from studies of the reference product.”

The original AbbVie citizen petition was submitted by AbbVie in June in reaction to the Agency’s  removal from a final guidance document on “Scientific Considerations in Demonstrating Biosimilarity to a Reference Product” of requirements that the labeling of a biosimilar biological product indicate that it is biosimilar to a reference product, and also to call out whether or not it is interchangeable with a reference product, two requirements that did appear in the 2012 draft version of the document (see our previous posts here and here).

AbbVie’s supplement references FDA’s response to an April 30th letter from Lamar Alexander and eight other Republican senators that questioned FDA’s decision to make the labeling of the first approved biosimilar,  Sandoz Inc.'s Zarxio (filgrastim-sndz) almost identical to that of its reference product, Amgen Inc.'s Neupogen (filgrastim).  The letter noted that Zarxio’s labeling “does not even include the word "biosimilar," which could further increase consumer confusion about how this product relates to the reference biologic.”

AbbVie zeroes in on FDA’s June 22 response to that letter, in which FDA stated that information about biosimilarity and interchangeability did not need to be included in biosimilar labeling because it was in the Purple Book: “The Purple Book enables a user to see whether a biological product has been determined by FDA to be biosimilar to, or interchangeable with, a reference product.”  The Purple Book is the biologics analog to the Orange Book drug listing guide (see our post here).  The Purple Book lists licensed biological products and contains information about reference product exclusivity, biosimilarity and interchangeability.

AbbVie notes that FDA also states in the June 22nd letter that "health care professionals should have product labeling that includes the essential scientific information necessary to make informed prescribing decisions for their patients," while the 2012 draft guidance said that information "regarding biosimilarity or interchangeability" is needed for informed prescribing decisions.  This leads AbbVie to conclude that “The proposition that the Purple Book could cure a material omission in the labeling for a biosimilar is indefensible, FDA regulations explicitly state that prescription drug labeling found "on or within the package" (in other words, the package insert) must contain all of the information that prescribers require to administer the drug to their patients safely and effectively. For decades, FDA, industry, and the medical profession have all understood that package inserts must provide ‘full disclosure.’ If information is necessary for prescribing decisions, it must appear in the package insert. That is a foundational principle of FDA law—and one that FDA fought long and hard to vindicate.”

AbbVie also notes two other pieces of information that are not in the Purple Book but are needed to make informed prescribing decisions- information about the indications and routes of administration for which a biosimilar has been found to be biosimilar to its reference product.  AbbVie asserts that this information will become increasingly important as more biosimilars are approved and the market evolves into “a highly complicated landscape of products with varying scopes of biosimilarity and interchangeability," and concludes that “The only way to convey that nuanced information to prescribers is through product-specific disclosures in the labeling of each biosimilar.”

In a separate section of the citizen petition, AbbVie cites FDA’s own statements in support of AbbVie’s position that biosimilar labeling should make clear which supporting clinical studies were conducted by the reference sponsor and which by the biosimilar sponsor.  In the Amarin case, which involves a challenge to FDA’s regulation of off-label statements by drug companies, (see our post here), Amarin included a letter to it from Janet Woodcock, the Director of FDA’s Center for Drug Evaluation and Research, concerning what Amarin could and could not say, in FDA’s opinion, about its Vascepa (isocapent ethyl) product.  Dr. Woodcock states: “[A] communication should not state or imply that studies conducted using products other than Vascepa were studies of Vascepa itself …. Rather, to ensure that your communications are not false or misleading, we recommend that they expressly disclose when studies were conducted using products other than Vascepa (in particular when those other products contain active ingredients that are different from the isocapent ethyl—an ester of EPA—that is contained in Vascepa) and that the results of the studies may not be applicable to Vascepa. 

AbbVie also quotes the government brief in the Amarin case as saying that it would be "misleading for Amarin to suggest or imply … that studies using products other than Vascepa were studies of Vascepa itself."

AbbVie points out that these FDA statements stand in contrast to FDA's current approach to biosimilar labeling, at least in the case of Zarxio. “As explained in the Petition, a biosimilar and its reference product are – like Vascepa and related products — similar, but not the same active ingredients or products. But, the labeling that FDA approved for Zarxio relies entirely on studies involving a different product without acknowledging that the studies were not conducted with Zarxio. As both FDA and DOJ have now represented to a federal court, a failure to "expressly disclose when studies were conducted using [other] products" is misleading.”

A third section of the AbbVie supplement concerns growing “stakeholder support for more transparent biosimilar labeling.”  AbbVie' cites three recent letters to FDA’s Acting Commissioner, an important conference on Capitol Hill, additional survey evidence, and a recent statement from the biosimilar industry.

Our two earlier posts on this topic analogized the issue of whether biosimilar labeling should or should not indicate that a product is a biosimilar to the affixing of a scarlet letter to Hester Prynne in Hawthorne’s classic novel.  Having completed a blog trilogy and seeing no end in sight for the issue of biosimilar labeling issues, we may need to move on to new references – perhaps Fast and Furious 8 will suffice.

By Jenifer R. Stach* & Ricardo Carvajal –

On July 24, 2015, FDA issued a proposed rule amending the Agency’s previously issue proposed rule on Accreditation of Third-Party Auditors/Certification Bodies (see our prior posts here and here) and establishing user fees for the Agency’s proposed accreditation program (hereinafter “User Fee Proposed Rule”).  On the same day and in a related publication, FDA issued a draft guidance for Model Accreditation Standards (hereinafter “Draft Guidance”).  

On their face, the User Fee Proposed Rule and the Draft Guidance might seem to be of interest only to those who might participate in the Voluntary Qualified Importer Program (see our prior post here).  However, FDA’s accreditation standards can be expected to influence the content of similar standards currently used by third-party auditors and their certifiers.  In addition, because the accreditation program set up by FDA might not be revenue neutral, administration of the program could divert resources from other program areas – one of the several issues on which the Agency has requested comment.  Comments on both the User Fee Proposed Rule and the Draft Guidance are due October 7, 2015.  Below we provide summaries of both documents.  

User Fee Proposed Rule.  Section 808(c)(8) of the FDC Act (which was added by FSMA) requires FDA to establish a user fee program to set up and administer the Agency’s proposed accreditation program.  FDA explains the costs associated with establishing and maintaining the accreditation program in the User Fee Proposed Rule in a Q&A format. The Questions are presented as follows: (1) Who would be subject to a user fee; (2) What user fees would be established; (3) How will FDA notify the public about the fee schedule; (4) When must the user fees be submitted; (5) What are the consequences for not paying a user fee on time; and (6) What are the possible exemptions?

(1) Who would be subject to a user fee?

Accreditation Bodies (ABs) and third-party auditors/certification bodies (CBs) would be subject to user fees.  As presented in the proposed § 1.700, FDA identifies four main groups subject to a user fee:

• ABs submitting applications or renewal applications for recognition in the third-party accreditation program;
• Recognized ABs participating in the third-party accreditation program subject to FDA monitoring activities;
• CBs submitting applications or renewal applications for direct accreditation; and
• Accredited CBs (whether accredited by recognized ABs or by FDA through direct accreditation) participating in the third-party accreditation program subject to FDA monitoring activities.

(2) What user fees would be established?

The proposed language in § 1.705 establishes application fees and annual fees for ABs and CBs in the four categories listed in the above section “Who would be subject to a user fee?”  FDA bases the costs for this proposed User fee program on other established User fee programs such as the Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee Act (MDUFA).  These exiting User fee models show that every seven full-time federal employees (FTEs) who perform direct FDA work require three indirect and supporting FTEs.  FDA calculates the base unit for the hourly fee rate of an FTE as $202.  The base unit for the hourly fee rate of an FTE requiring foreign inspection travel is calculated at $305, and the hourly fee rate of an FTE requiring domestic inspection travel is $217.

In the User Fee Proposed Rule, FDA estimates the amount of time it will take to perform the functions necessary to establish and maintain the accreditation program.  For example for FDA to accredit an AB applying for recognition, FDA estimates that it will take approximately 60 person-hours to review a submitted application, 48 person-hours to perform an onsite performance evaluation, and 45 person-hours to prepare a written report.  Therefore, the total estimated average cost for FDA to review an application submitted by an AB is $35,850.      

Using similar hourly estimate calculations, FDA provides user fee costs for the following functions:  

• AB Applying for Recognition, $ 35,850 (as discussed in the example)
• AB Renewal Application,  $18,853
• CB Applying for Direct Accreditation from FDA, $35,850
• CB Renewal Application, $26,930
• Annual Fees for Recognized ABs, $7,928 over 5 years  
• Annual Fees for CBs Directly Accredited by FDA, $21,104
• Annual Fees for CBs Accredited by a Recognized AB, $7,928 over 4 years  

FDA states that the proposed fee structure for ABs and CBs is consistent with the current industry model.  FDA is requesting comment on whether these fees should be paid as a flat fee or billed on an hourly basis.  FDA proposes that the alternative approach of an hourly bill may incentivize ABs and CBs to submit higher quality applications, in other words, applications that are faster to review because of the substantive quality of the application.  FDA also requests comment on a proposed flat fee, hourly fee, or whether a hybrid approach of flat fee and hourly would be appropriate.   

(3) How will FDA notify the public about the fee schedule?

Under the proposed § 1.710, FDA intends to notify the public annually in the Federal Register prior to the beginning of the fiscal year for which the fee will apply.  As an example, MDUFA fee rates were published on July 30, 2014 for fees beginning in 2015.   

(4) When must the user fees be submitted?

Application and renewal fees will be submitted concurrently with an application or renewal.  FDA will not review an application or renewal until the fee has been submitted.  FDA also notes that user fees are not refundable.  FDA tentatively concludes that this is the simplest approach to encourage high quality applications for ABs and CBs who have made a thoughtful decision to stay in the program for subsequent years.    

(5) What are the consequences for not paying a user fee on time?

Annual fees will be paid within 30 days of the due date.  After 30 days, the entity (AB or CB) will face suspension.  After 90 days, the status of the entity will be revoked.  

(6) What are the possible exemptions?

In the proposed rule, FDA does not provide an exemption or reduced fee for small businesses or entities.  FDA is requesting comment on whether the final rule should account for small businesses by offering an exemption or fee reduction.  FDA also proposes to charge user fees to foreign governments that are participating in the program as either an AB or CB.  FDA requests comment on whether for trade reasons, or other reasons, they should consider a different approach.  

Draft Guidance.  Section 808(b)(2) of the FDC Act requires FDA to develop Model Accreditation Standards for recognized accreditation bodies (ABs).  Pursuant to the statute, ABs shall use these model standards to qualify third-party auditors/certification bodies for accreditation.  FDA noted that the Draft Guidance, “if finalized, will constitute the model accreditation standards referred to in section 808(b)(2) of the FD&C Act.  In instances where this draft guidance provides different or more specific recommendations than are contained in the ISO/IEC 17021:2011, or conflicts with ISO/IEC 17021:2011, the recommendations of this guidance apply.”  As is the case with any guidance, alternative approaches may be used to the extent that they meet the requirements of the statute, and in this case, the proposed rule.    

• Authority and responsibility:  A third-party auditor/certification body must demonstrate the authority, as a governmental entity or through legally enforceable contractual rights, to exert any authority necessary to perform credible audits and certifications of the program.  Specifically, a third-party auditor/certification body must have authority to (1) Review relevant records; (2) Conduct onsite audits; and (3) Suspend or withdraw certification for failure to comply with requirements of the program.  
• Capacity and competence:  A third-party auditor/certification body must demonstrate that it has the adequate number of competent personnel to implement the program, as well as sufficient finances to operate in compliance with the program.  Competent personnel must have relevant knowledge, skills, and experience to audit and assess compliance with FDA requirements under the program.  Competency is based on education, industry experience, ongoing training, and professional development in the area of food safety.  A third-party auditor/certification body should have a documented process to ensure that audit agents and managers meet the requirements for competency.      
• Conflicts of interest:  A written program must be in place to prevent conflicts of interest between a third-party auditor/certification body and entities seeking certification.  The written program should include measures for promoting independence, objectivity, and impartiality and procedures for effectively identifying, investigating, and resolving potential conflicts. 
• Quality assurance:  A third-party auditor/certification body must implement a written program to conduct periodic self-assessment, implement corrective actions, and prepare a report written in English documenting the results of the self-assessment.  FDA recommends that the third-party auditor/certification body establish procedures to conduct annual reviews for their self-assessment.   The annual review would include areas of improvement for deficiencies, corrective action taken to address deficiencies, assessment of the effectiveness of the corrective action, an evaluation of personnel compliance with conflict of interest measures, and an identification of resource needs.  
• Records:  A third-party auditor/certification body must maintain written procedures to establish, control, and retain records.  The written procedures must include requirements that records must be written in English and retained electronically for four years.  A third-party auditor/certification body should also have legal authority to grant FDA access to relevant records. 
• Regulatory audit reports:  Within 45 days of completing a regulatory audit, an accredited auditor/certification body must prepare and submit a report written in English to FDA and to its accreditation body.  In the case of direct accreditation, an accredited auditor/certification body would only submit the report to FDA.  The audit report should include the name and address of the facility; the FDA food facility registration number, if applicable; the date and scope of the audit; the processes and foods observed during the audit; the identity of the person responsible for compliance at the facility; deficiencies observed, and the reasonable probability that the deficiency poses a serious adverse consequence to public health; corrective action for any deficiency; whether sampling or analysis was used at the facility; whether a food-safety recall has been issued in the last 2 years, and the reason for the recall; whether significant changes have been made to the facility, processes, or products in the last 2 years; and a list of any food or facility certifications issued to the entity in the last 2 years.         
• Miscellaneous:  A third-party auditor/certification body must maintain an updated list of eligible entities on its website.  For each eligible entity listed, the website should identify the duration and scope of the certification and the date the entity paid, or was reimbursed for, a fee associated with their certification.  Also, a third-party auditor/certification body must issue food or facility certifications electronically in English.    

*Admitted only in Maryland.  Practicing under the supervision of the Firm.

By  Karla L. Palmer –

The GAO was asked to review DEA registrants’ and others’ interactions with DEA.  The GAO Report, released at the end of July examines the following: (1) To what extent registrants interact with DEA about their Controlled Substances Act (CSA) responsibilities and registrants’ perspectives on those interactions; (2) how state agencies and national associations interact with DEA; and, (3) stakeholders’ perspectives on how DEA enforcement actions have affected prescription drug abuse, diversion, and access to drugs for legitimate medical needs.  To conduct its study, GAO administered web-based surveys to DEA-registered pharmacies, distributors, corporate offices of chain pharmacies, and practitioners.  GAO interviewed DEA employees, individuals from 26 national associations including non-profit associations, and 16 government agencies in four states.  Set forth below are some of the GAO’s conclusions. 

Registrants’ Interactions with DEA.  The Report notes that registrants vary in the extent of their interaction with DEA, and their awareness of DEA resources available to assist registrants in complying with the CSA and DEA’s implementing regulations.  Page 19 of the  Report notes that although DEA has made available various resources to assist registrants, such as guidance manuals and registration validation tools,  registrants are not utilizing these resources because they are unaware they exist.  (Report at 20).  Registrants also want DEA to provide them with additional information.  GAO indicated that distributors may have more communication with DEA given the fact that their renewal cycle is on an annual basis, while pharmacies and practitioners renew their DEA registrations every three-years, and are not subject to scheduled, cyclical regulatory investigations.  Report at 17 (… although we note that DEA has been inspecting pharmacies on a more frequent basis than it did in the past).   

The survey also showed that many registrants are not utilizing these DEA information resources.  For example 70% of practitioners are not aware of the Practitioner’s Manual, and 53 percent of pharmacies are not aware of the Pharmacist’s Manual.  Although the survey interestingly refers to “Know Your Customer” guidance for distributors, that information is not generally available, to our knowledge, on DEA’s website or otherwise; instead DEA provides the “Know Your Customer” guidance to distributors when it visits the registered location or otherwise meets with the registrant.  GAO states that the “lack of awareness among registrants of DEA resources and conferences suggests that DEA may not have an adequate means of communicating with its registrant populations.”  Report at 21.

 The GAO also noted, surprisingly, that while DEA has promoted some industry conferences by email, DEA generally does not have current, valid email addresses for all of its registrants.  GAO stated that DEA should “ensure that there are adequate means of communicating with stakeholders who may have a significant impact on the agency achieving its goals.”  Report at 22.  DEA officials responded that despite the lack of awareness noted by GAO, DEA indicated that they do not believe they need to “take any additional steps to improve communication or raise registrants’ awareness of the agency’s conferences and resources.”  Id. 

GAO concluded that given the state of industry unawareness of available resources, DEA “lacks assurances that registrants have sufficient information to understand and meet their CSA responsibilities.”  Among the registrant groups that communicate with DEA, a common theme contained in the responses to the GAO survey was that they desired more and clearer communications from the Agency, as well as a more collaborative and proactive relationship.  Pharmacies and distributers responded in particular that they wanted increased guidance and communications with the Agency.

Although State Agencies are Satisfied, Associations Want Improved Communications with the Agency.  GAO described different communications that state agencies had with DEA, such as through joint enforcement activities, joint task forces, or otherwise working collaboratively to reduce diversion and abuse.   State agencies reported general satisfaction with interactions with the Agency.   However, twenty four national associations reported various levels of interactions with DEA, typically through meetings where they have hosted DEA at events to discuss regulations or trend data on prescription drug abuse.

Some associations noted that DEA interactions were insufficient in terms of both communication and collaboration.  Five reported that as prescription drug abuse has increased, DEA has been less collaborative; officials from two organizations noted that DEA refused to meet with them to clarify issues related to their members’ CSA responsibilities.  Report at 35.  DEA responded that registrants should communicate directly with DEA to the extent they have questions related to “roles and responsibilities.”  GAO noted that improved communications with and guidance for registrants may address associations’ concerns. 

DEA’s Enforcement Actions may have Decreased Diversion and Abuse but Also May Have Limited Legitimate Access to Controlled Substances.  Many of the survey responders reported that DEA’s actions have resulted in decreased drug abuse and diversion.  However, over half of DEA registrants reported changing certain business practices as a result of DEA enforcement actions, or the business climate the actions have created.  Many reported these changes limit access to prescription drugs for patients with legitimate medical needs.

As for enforcement actions, GAO reports that many stakeholders believe that the Agency’s enforcement actions have helped to decrease drug diversion and prescription drug abuse.  A review of DEA enforcement actions from 2009 through 2013 showed that certain types of administrative enforcement actions — enforcement hearings, letters of admonition, and memoranda of agreement – increased across all registrant types.  However, other administrative enforcement actions including orders to show cause and immediate suspension orders decreased.  This shows that DEA’s enforcement efforts are being resolved by methods that involve increased cooperation between registrants and DEA.    However, there is no available data to show the link between DEA enforcement actions and a decrease in diversion.  Report at 38. 

GAO recognized that some changes in business practices may help drug abuse and diversion, and cited specifically to pharmacy calls to verify prescriber prescriptions.  The Report noted, though, that stricter distributor thresholds, or limits on the quantity of controlled substance ordering, which were influenced by DEA’s enforcement actions against distributors, limit supplies of controlled substances to those with legitimate medical needs.  Of the national associations interviewed, more than half expressed concern that DEA’s enforcement actions have limited access to controlled substances that serve legitimate needs.  DEA responded that enforcement actions do not have any bearing on access issues, and they have rarely heard about concerns with patient access to needed medications.  GAO suggested that if access is an issue, then DEA and registrants should communicate more regularly, including with clearer guidance, which could mitigate registrants’ fears of DEA action. 

GAO Recommendations.  GAO concludes by making three recommendations – each in an effort to strengthen DEA’s communications, guidance, and interaction with registrants: 

• Identify and implement means of cost-effective, regular communication with distributor, pharmacy, and practitioner registrants, such as through listservs or web-based training.
• Solicit input from distributors, or associations representing distributors, and develop additional guidance for distributors regarding their roles and responsibilities for suspicious orders monitoring and reporting.
• Solicit input from pharmacists, or associations representing pharmacies and pharmacists, about updates and additions needed to existing guidance for pharmacists, and revise or issue guidance accordingly.

DEA raised concerns about the second recommendation.  DEA specifically stated that it cannot provide more specific information to distributors about suspicious order monitoring systems because those systems differ depending on the distributor.  DEA noted it can educate through proactive interaction during inspections.  GAO responded that inspections do not provide registrants with a “neutral education setting in which to obtain a better understanding of their CSA roles and responsibilities.”  GAO also stated that DEA could provide better written guidance for distributors.  Note that those that represent distributors likely believe that such guidance is only appropriate to the extent that it is promulgated through notice and comment rulemaking; otherwise it is not necessarily widely disseminated, well known, or generally available; nor does it provide enforceable obligations among registrants.

With respect to the third conclusion concerning soliciting input from pharmacists, DEA responded that it would update its Pharmacist Manual to address rescheduling of hydrocodone and new disposal rules, but it did not comment whether it would provide any additional guidance to pharmacies.  GAO stated that any update should address a pharmacist’s corresponding responsibility under CSA.  Industry would likely agree with GAO’s recommendation, especially given the recent (and significant) enforcement actions) DEA has taken against chain and independent pharmacies based on corresponding responsibility violations.  

By Kurt R. Karst –

Back in September 2013, when FDA’s Office of Generic Drugs (“OGD”) was gearing up for significant implementation of the Generic Drug User Fee Amendments of 2012 (“GDUFA”) (and the associated Performance Goals and Procedures), the Office issued a Manual of Policies and Procedures (“MAPP”) – MAPP 5200.3 – titled “Responding to Industry Inquiries with respect to Abbreviated New Drug Applications in the Office of Generic Drugs.”  The MAPP was intended to clarify “the general principles for handling inquiries with respect to [ANDAs] from the authorized representative for an applicant with an ANDA submission (the authorized inquirer) by Regulatory Project Management (RPM) staff in [OGD].”  At the time, this blogger, channeling concern from some in the generic drug industry, was pretty critical of the MAPP (see our previous post here).  Our friend Bob Pollock (from Lachman Consultants) even turned a nice phrase, calling the document “The MaPP to Nowhere.”  (Bob's post on the revised MAPP, which we discuss below, harkens back to that old post: “MaPP to Nowhere Now has Coordinates to Find the Treasure.”) 

A LOT has happened in the nearly two years since FDA issued MAPP 5200.3.  OGD has undegone a significant transformation, becoming a “Super Office” with a permanent Director and instituting a new organizational structure.  OGD has churned out numerous new and revised policies and guidance documents (see our previous post here).  In early 2014, OGD announced a massive and unprecedented undertaking (presumably to address, in part, an outpouring of concern about MAPP 5200.3) to conduct a complete inventory of all original ANDAs in OGD’s queue, and to provide each applicant with an update regarding the status of their ANDAs (see our previous posts here and here).  Earlier this year, at the Generic Pharmaceutical Association’s (“GPhA’s”) annual meeting, OGD Director Kathleen (“Cook”) Uhl provided an update on the status of GDUFA implementation and included some positive numbers (see our previous post here).  (Recent figures published by FDA show some progress with achieveing the goals of GDUFA, as does the latest GDUFA Performance Report.  Indeed, we understand that OGD recently approved the first GDUFA cohort year 3 ANDA way ahead of the scheduled action date: ANDA 207955 for Tretinoin Gel, 0.05%, approved on August 13, 2015.)  Dr. Uhl also announced at the GPhA meeting that OGD would be assigning Target Action Dates (“TADs”) to pre-year 3 cohort applications (i.e., ANDAs submitted in the year 1 cohort [Fiscal Year 2013] and year 2 cohort [Fiscal Year 2014] – the so-called “GDUFA donut hole”), and indicated that a revision to MAPP 5200.3 was in the works and would address industry concerns.

Earlier today, FDA announced the publication of a revised and renamed MAPP 5200.3.  Titled “Communications with Industry with respect to pre-GDUFA Year Three Abbreviated New Drug Applications,” the revised MAPP, “[d]ue in part to stakeholder feedback,” “substantially expands and sets forth responsibilities and procedures for communications between generic drug program staff and Authorized Representatives concerning the review status of pre-Year 3 submissions.”   Pre-Year 3 submissions include not only the GDUFA donut hole (i.e., applications not approved or withdrawn as of the close of business on September 30, 2014), but pre-GDUFA backlog submissions (i.e., applications not approved or withdrawn as of October 1, 2012).  The Revised MAPP continues OGD’s emphasis on RPM empowerment and responsibility for ANDAs, but also promises a greater depth and improved frequency in communication with ANDA applicants.  

In an email memo “To All Staff Working with ANDAs” (reprinted below),  CDER Director Janet Woodcock, M.D., stated that OGD RPMs “will communicate Target Action Dates, periodically update applicants and/or respond to applicant queries concerning the review status of submissions, communicate when certain major deficiencies may be forthcoming, and provide certain advance notifications of regulatory correspondences.”   These goals are stated in greater detail in the revised MAPP, first in a Background section:

Although GDUFA requires FDA to take action on 90% of the submissions in the pre-GDUFA backlog cohort by September 30, 2017, individual pre-Year 3 submissions lack goal dates. This makes it hard for applicants to plan product launches and conduct other business planning that affects generic drug availability.  To facilitate launch planning – and help ensure public access to affordable, quality generic medicines at the earliest legally available date – we intend to provide information concerning the review status of pre-Year 3 submissions down to the discipline and sub-quality discipline levels. [(Emphasis in original)]

. . .  and then in a Policy section:

Our policy is to provide prompt and accurate responses to any inquiry regarding review status from the Authorized Representative while maintaining appropriate confidentiality related to other stakeholders in the generic review process, including the existence of and information contained in other ANDAs and information contained in a referenced Drug Master File. Generally, inquiries should be responded to within two business days of receipt.

. . . . and then in a Responsibilities section with very specific responsibilities laid out for OGD Division of Project Management Discipline Project Managers, Division of Filing Review Project Managers, and (most importantly) OGD RPMs.  

OGD RPMs bear the greatest responsibilities, being tasked with ensuring application flow, timely responding to applicant (authorized representative) inquiries, and communicating with applicants (including initial TADs and revised TADs, that a newly filed pre-year 3 submission – yes, there are still about 250 ANDAs for which a filing/receipt communication has not yet been sent – has been assigned to that RPM, and advance notice of Complete Response actions).

Of course, the proof is in the pudding.  There will undoubtedly be some initial bumps in the road.  In the long term, however, we’re hopeful that OGD follow-through on the policies and points articulated in revised MAPP 5200.3 will significantly enhance “the user experience” and provide the greater level of clarity the generic drug industry needs and craves.

To All Staff Working with ANDAs

I am pleased to announce the issuance of the revised, joint Office of Generic Drugs-Office of Pharmaceutical Quality MAPP 5200.3, “Communications with Industry with respect to pre-GDUFA Year 3 Abbreviated New Drug Applications” (available on FDA’s Web site []).  It will substantially expand our communications with applicants concerning pre-GDUFA backlog, GDUFA Year 1 and GDUFA Year 2 submissions (collectively, “pre-Year 3 submissions”). 

Although GDUFA requires us to act on 90% of the submissions in the pre-GDUFA backlog cohort by September 30, 2017, individual pre-Year 3 submissions lack GDUFA goal dates.  This makes it hard for industry to plan product launches and conduct other business planning that affects generic drug availability.  To facilitate launch planning, we will provide information concerning the review status of pre-Year 3 submissions down to the discipline and sub-quality discipline levels.  This will help ensure that quality, affordable generic medicines reach the public at the earliest legally available date.  

For example, OGD Regulatory Project Managers will communicate Target Action Dates, periodically update applicants and/or respond to applicant queries concerning the review status of submissions, communicate when certain major deficiencies may be forthcoming, and provide certain advance notifications of regulatory correspondences.

OGD Discipline Project Managers and OPQ Regulatory Business Process Managers will issue Informational Requests for their respective disciplines.  Informational Requests are letters sent to request further information or clarification that is needed or would be helpful to allow completion of the discipline’s review.  The purpose of these communications is to assure that FDA has all the information necessary to evaluate if the application is approvable or must receive a Complete Response Letter.

To facilitate meaningful communications, we are asking review staff members to refer all questions about the overall status of applications to the appropriate OGD Regulatory Project Manager.

We appreciate all of the ANDA discipline reviewers and project managers working together to expand communications with applicants.  Implementing these changes will help us achieve a robust generic drug program.

Thank you,

Janet Woodcock, M.D.

By Kurt R. Karst –

It seems that hardly a week passes (and sometimes, hardly a day or two) without news of a new merger or acquisition in the pharmaceutical or biotechnology industries.  Indeed, 2015 may be a record-breaking year for such deals (see here, here, and here).  Whether we’re talking about generic-on-generic, brand-on-brand, or brand-on generic acquisitions, however, there are exclusivity considerations companies must keep in mind to avoid inadvertently losing (or triggering) exclusivity.  We highlight a couple of those considerations below. 

We’ll start on the generic drug 180-day exclusivity side of the fence, and, specifically, with the triggering event to start the 180-day period: commercial marketing.  The statute, at FDC Act § 505(j)(5)(B)(iv)(4), provides that subject to the statutory forfeiture provisions, if an ANDA from a non-first applicant (i.e., a subsequent applicant) contains a Paragraph IV certification, approval of such ANDA “shall be made effective on the date that is 180 days after the date of the first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant.”  This provision of the FDC Act was added by the 2003 Medicare Modernization Act (“MMA”) and incorporates FDA’s previous determination (Docket No. 2000P-1446) that commercial marketing of an authorized generic by a first-filer eligible for 180-day exclusivity triggers that exclusivity. 

Back in 2012, FDA applied the Agency’s pre-MMA interpretation of the statute with respect to Teva’s claim to 180-day exclusivity for a generic version of Cephalon’s PROVIGIL (modafinil) Tablets, 100 mg and 200 mg.  Teva had acquired Cephalon on October 14, 2011, and on March 20, 2012, Cephalon announced the launch of an authorized generic version of PROVIGIL by Teva.  FDA determined that Teva’s commercial marketing of the PROVIGIL authorized generic triggered Teva’s 180-day exclusivity such that it would expire 180-days later on September 26, 2012 (see our previous post here). 

But FDA could have determined that 180-day exclusivity had been triggered months before, on October 14, 2011 when Teva acquired Cephalon.  It was at that time that “Teva immediately began marketing PROVIGIL under Cephalon’s NDA.”  FDA laid out this option in a footnote to an April 4, 2012 Letter Decision:

We have considered finding that Teva’s marketing of PROVIGIL upon its acquisition of Cephalon triggered its 180-day exclusivity, and believe that there is a strong argument for finding so.  We have refrained from adopting that interpretation in this case, however, because that exclusivity, if it were triggered by Teva’s acquisition of Cephalon, would expire on April 11, 2012 and, given the multiple uncertainties in this case, Teva had no notice that FDA considered it to be running.  Because of the potential for collusion between NDA holders and captive first generics, and the subversion of the statutory scheme that could result, the agency may in the future provide guidance on the effect of such a relationship between NDA holder and first applicant upon any claim for 180-day exclusivity.

We’re not aware of any further guidance from FDA on this issue, or whether or not the Agency has applied this position in other circumstances, but it’s clearly an issue FDA has considered and believes is consistent with the law.  With complex merger and acquisition deals, companies should not forget about this possibility . . . and ANDA applicants that might otherwise be blocked by 180-day exclusivity should also be aware of this FDA position in case it needs to be argued to FDA. 

Moving on to biological products, we note a provision added to the PHS Act by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  Specifically, PHS Act § 351(k)(7), which concerns Reference Product Exclusivity (“RPE”), includes certain “anti-evergreening” provisions.  One of those provisions provides that the 12-year and 4-year RPE periods do not apply in the case of:

a subsequent application filed by the same sponsor or manufacturer of the biological product that is the reference product (or a licensor, predecessor in interest, or other related entity) for— (I) a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or (II) a modification to the structure of the biological product that does not result in a change in safety, purity, or potency. [(Emphasis added)]

In other words, for purposes of determining the start of the 12-year and 4-year RPE periods – i.e., the date of first licensure of a reference product –  FDA must take into consideration corporate relationships between sponsors. 

FDA provided insight on how the Agency intends to apply the “licensor, predecessor in interest, or other related entity” criterion in draft guidance issued in August 2014 (see our previous post here).  FDA explained that:

With respect to 351(k)(7)(C), the Agency intends to interpret the term “predecessor in interest” as it does in the 3-year new drug product exclusivity context.  It will consider any entity that the sponsor has taken over, merged with, or purchased, or that has granted the sponsor exclusive rights to market the biological product under the 351(a) application, or had exclusive rights to the data underlying that application to be a predecessor in interest for purposes of the first licensure provisions at section 351(k)(7)(C) of the PHS Act.

The Agency intends to consider a “licensor” under the BPCI Act to be any entity that has granted the sponsor a license to market the biological product, regardless of whether such license is exclusive.  This term would include, for instance, entities that continue to retain rights to develop, manufacture, or market the biological product, and/or rights to intellectual property that covers the biological product.

Although the BPCI Act does not define the term “other related entity,” the Agency generally will consider an applicant to be a “related entity” in this context if (1) either entity owns, controls, or has the power to own or control the other entity (either directly or through one or more other entities) or (2) the entities are under common ownership or control.  The Agency also may find that two parties are related entities for purposes of the BPCI Act if the entities are or were engaged in certain commercial collaborations relating to the development of the biological product(s) at issue.  In analyzing whether the relationship between the parties would result in a finding that they were “other related entities,” the Agency expects to consider not only ownership and control of the investigational new drug application (IND) and the BLA, but also the level of collaboration between the entities during the development program as a whole.

What this seems to indicate is that RPE determinations may very well be fluid because of after-the-fact happenings between companies.  Thus, FDA might determine, after granting two sponsors each a period of RPE for essentially the same biological product, that after a merger of the two sponsors (or the acquisition of one by the other), there is now, post-hoc, a different date of first licensure for the later approved product.  Such a post-hoc decision could significantly alter the landscape for biosimilar competition and affect how companies strategize about the BPCIA’s “patent dance” procedures.    Similarly, if a sponsor with RPE files a patent infringment lawsuit against a competitor developing essentially the same product, any settlement of the lawsuit that involves a license would presumably shorten the RPE of the competitor’s product.

As the merger and acquisition rage continues, buyers and sellers should take note of the potential effects on exclusivity: caveat emptor (and caveat venditor)! 

By James C. Shehan –   

In the latest Biologics Price Competition and Innovation Act of 2009 ("BPCIA") patent dance development, Amgen filed a lawsuit alleging that Apotex’s biosimilar of Neulasta (pegfilgrastim) infringes two Amgen patents, one about to expire composition of matter patent and one process patent expiring in 2031.  This is the first lawsuit in which the parties at least initially engaged in the “intricate and carefully orchestrated set of information exchanges” known as the patent dance.  But alas, this beautiful pas de deux has been marred, according to Amgen, by Apotex’s providing notification of commercial marketing prior to FDA approval of its Section 351(k) application, or Abbreviated Biologics License Applications ("ABLA").  And Amgen isn’t relying solely on its interpretation of the BPCIA – the judges of its last dance contest, also known as the Federal Circuit, have already ruled in Amgen v. Sandoz that notification of commercial marketing must come after approval (see our earlier post here).   Although it is anticipated that an en banc or Supreme Court appeal will be granted in that case, while it stands, the Federal Circuit opinion should govern this case.  But how that will play out in the current litigation remains to be seen, as it appears that Amgen has filed a complaint that partially follows the patent dance and partially does not. 

Amgen filed suit against Apotex in the Southern District of Florida on August 6th, alleging infringement of U.S. Patent Nos. 8,952,138 and 5,824,784.  Amgen states in the Complaint that Apotex and it began exchanging the information and statements required by the BPCIA in December 2014 and agreed that the two above-referenced patents would be included in patent dance litigation.  

Amgen received a letter from Apotex purporting to be a notification of commercial marketing on April 17, 2015.  Note that this date is roughly a month after the ruling by the U.S. District Court for the Northern District of California in Amgen v. Sandoz that notification of commercial marketing could occur before approval (the ruling that was subsequently reversed by the Federal Circuit).

Although Amgen doesn’t reveal at which stage the rest of the patent dance was at when it received the April 17th letter, from the timing it was likely somewhere in the middle.  The Apotex ABLA was apparently accepted by FDA in December (see Apotex press release here) and patent dance exchanges with Amgen began that month.  These patent dance exchanges take quite a bit of time – 20 days permitted for Apotex to supply the ABLA to Amgen, 60 days for Amgen to provide a patent list, 60 days for Apotex to supply its own patent list, 60 days for Amgen to respond, an unspecified amount of time for good faith negotiations on which patents to litigate over (agreed to here, at least according to Amgen), and then 30 days for Amgen to bring a lawsuit. 

Amgen thus appears have allowed the patent dance to proceed otherwise unimpeded after it received the April 17th notification of commercial marketing.  Nothing in the complaint indicates that Amgen told Apotex upon receipt of the letter that it was ineffective or otherwise took steps to stop the patent dance.  But with the Federal Circuit opinion now in hand, Amgen appears to be hedging its bets, filing a Complaint that acts as if the patent dance is and is not still on.  In other words, the complaint asks for both findings of infringement under the BPCIA patent dance (artificial acts of infringement of both patents by virtue of the filing of the ABLA) and for declaratory judgements outside of the patent dance.  Amgen makes two distinct declaratory judgment requests: (1) that the court declare that Apotex will infringe the later to expire process patent (No. 8,952,138) if it manufactures, uses, offers to sell, sells or imports its pegfilgrastim product; and (2)  that the court declare that Apotex’s April 17th letter is not effective notice of commercial marketing and that the Court declare that Apotex will violate 42 U.S.C. § 262(l)(8)(A) by not providing Amgen with a notice after its ABLA is approved and at least 180 days before marketing commences.  Amgen also asks that the court to enjoin Apotex from taking these actions. 

It will be fascinating to see how Apotex responds to the nimble steps taken by Amgen, and how this case will change in reaction to possible further developments in Amgen v. Sandoz.  And with Neulasta ringing up about $4.6B of annual sales in 2014, we can be pretty certain that we will see some more interesting positions taken in this litigation, and that the FDA Law Blog will find more dance puns to use to comment upon them.  According to Big Molecule Watch Blog, the case has been scheduled for a two-week trial beginning on July 11, 2016.  Meanwhile, the user fee date for the Apotex product should be sometime this month, although the absence of notice of an advisory committee meeting to review the application suggests that approval may not be imminent. 

By Jamie K. Wolszon –

As we have previously blogged on numerous occasions, FDA has released a framework for regulation of laboratory-developed tests (LDTs) that has sparked considerable controversy.  The Association of Molecular Pathology (AMP), which represents molecular pathologists and has been an active participant in the LDT debate, announced in a press release that it has met with the Senate Health, Education, Labor and Pensions Committee to propose a legislative solution to modernize the Clinical Laboratory Improvement Amendments (CLIA), including premarket review by the Centers for Medicare & Medicaid (CMS) or its designated third parties, as a substitute.  Under the AMP proposal, FDA would only review laboratory-developed testing protocols (LDPs) – a new term coined by AMP to stress that these are healthcare professional services –  under limited circumstances.  At the same time, it will increase CMS regulation of LDPs compared to today.

The House Energy & Commerce Committee has released a discussion draft which proposes a separate alternative to the Framework.  The 21st Century Cures legislation adopted by the House did not address LDTs.  In the meantime, as we have previously reported, a group of labs and in vitro diagnostic kit companies called the Diagnostic Test Working Group have tried to craft their own legislative solution.  We expect that additional legislative solutions may be proposed in the near future.  Whether any legislation will actually be enacted is anyone’s guess.

As for FDA, we understand that FDA is working on revising the two draft guidances that outlined the framework (the “Framework” guidance and the “Notification” guidance).  As of today, according to regulations.gov, FDA has received 236 comments on the draft “Framework” guidance; however, it has only posted 170 of those comments.  We do not understand why more than six months after the comment period closed (in early February 2015) so many of the comments have yet to be posted.  The website offers no explanation for the missing 66 comments other than the following boilerplate language: “[S]ome agencies may choose to redact, or withhold, certain submissions (or portions thereof) such as those containing private or proprietary information, inappropriate language, or duplicate/near duplicate examples of a mass-mail campaign.”

Discussing the rationale for its own legislative proposal, AMP explains that it is duplicative to have two separate agencies regulate LDPs, and CMS, as the agency that implements CLIA, is the appropriate agency for the task. 

At the heart of the proposal is a risk-based scheme that will determine whether a LDP must undergo premarket review.  To be high-risk the LDP must involve a proprietary computational method or algorithm AND be used “to diagnose a disease, predict risk of disease, or risk of progression of a disease, that is associated with significant morbidity or mortality, or threatens the public health.”  Therefore, an LDP that FDA would now consider a companion diagnostic is high risk under the AMP proposal only if it uses an algorithm or computational method.  The approach of focusing on transparency is reminiscent of FDA’s IVDMIA proposal, in which it proposed to require premarket review for a subset of LDTs, involving an algorithm.  The theory behind the IVDMIA proposal was that these tests were non-transparent black boxes. 

Under the AMP proposal, like high-risk tests, moderate-risk tests would also be those used “to diagnose a disease, predict risk of disease, or risk of progression of a disease, that is associated with significant morbidity or mortality, or threatens the public health.”  However, moderate-risk LDPs would use a methodology that “lends itself to inter-laboratory comparisons or proficiency testing.” 

Low-risk tests, by contrast, would either be adjunctive in nature or protocols for which “the consequence of an incorrect result or interpretation is unlikely to lead to serious morbidity or mortality, either for the patient or the public health.”  The AMP proposal would classify LDPs used for rare diseases, for public health emergencies, and for infectious agents that are not serious threats to the public health as low risk.  The proposal would modify the definition rare disease to match the drug definition of a disease or disorder with an incidence of fewer than 200,000 newly diagnosed individuals per year in the United States.  FDA’s “Framework” draft guidance proposed an exemption from premarket review for rare disorders, but it included a limitation of 4,000 tests per year.  During FDA’s public meeting in January 2015, multiple stakeholders criticized that limited number.

Under the AMP program, FDA would only review the LDP submission if the laboratory voluntarily chooses to go through FDA PMA/510(k) process or if a protocol is high-risk and the laboratory does not want to give the proprietary information to the CMS or third-party reviewer.  In all other instances where premarket review would be required, CMS or a qualified third party acting as a surrogate of CMS would perform the review.  CMS would establish a transparent process to designate non-federal government organizations as third parties.  Current accrediting bodies under the CLIA process, such as the College of American Pathologists (CAP), could be a third party, as could a state for LDPs offered to residents of that state. 

The proposal would direct CMS to stipulate a minimum level of standards for LDP analytical and clinical validity.  The proposal defines clinical validity as “the association of a biomarker or analyte with the presence, absence, predisposition to, or risk of a specific clinical condition.”  The proposal notes that clinical validity is distinct from clinical utility.  Clinical validity can be established by many things including peer reviewed literature; clinical practice guidelines; subject matter expert opinion; bench studies, including use of archived specimens; past experience with similar products; case studies; clinical data; consensus standards; reference standards; data registries, e.g., ClinGen, ClinVar, CancerLinQ, or other curated relevant database; post-market data; or clinical trials, including those conducted outside of the United States.

The need for clinical studies would be substantially curbed.  A third-party reviewer could require a laboratory to conduct a clinical trial only for a high-risk protocol and only if the CMS or the third-party reviewer determines that no other approach can provide the necessary information to support the laboratory’s claims, and provides written justification for that decision.

The LDP review information must be sent to CMS within three days after completion of review of the LDP.  CMS can reclassify the risk of an LDP, which implies that CMS reviews the information sent to them by either the CMS or third-party reviewer.  How often CMS will exercise this right to verify the work of the third-party reviewer within the deadlines outlined in this proposal is an open question.  This has been an issue under FDA’s third-party 510(k) review program as there have been claims that FDA’s secondary review of the reviewer’s work means that any potential efficiency from a third-party review is lost.

If a LDP is high-risk, the CMS or third-party reviewer has 90 days to review the submission.  If the CMS or third-party reviewer does not complete the review within the deadline the approval is automatically granted.  There is no grandfathering for high-risk LDPs.  This timeframe of 90 days is the same as the 510(k) process, and shorter than the PMA review timeframe of 180 days; there is no mention of stopping the clock as there is under the PMA and 510(k) processes.    

If a LDP is moderate risk, the CMS or third-party reviewer has 30 days to review the submission.  If the CMS or third-party reviewer does not complete the review within the deadline, the submission is automatically granted.  There would be grandfathering for moderate-risk tests on the market prior to enactment of the law. 

Low-risk LDPs would not undergo premarket review under the proposal.  Rather, low-risk LDPs would be subject to inspection in the normal course of the laboratory inspection process. 

Laboratories with demonstrated success with approved LDPs in the same or higher-risk classification, will be conditionally approved to begin testing with LDPs that use similar technologies or methodologies while review of the LDP submission is pending. 

In addition to pre-market review, the AMP proposal would require laboratories to prepare summaries about the test that could be posted by CMS.  This summary would be similar to the ones that a 510(k) submitter must provide, and that FDA publishes on its publicly available searchable electronic database.  Low-risk LDPs would not have to provide these summaries.  Moderate-risk tests on the market as of April 24, 2003, would not have to provide these summaries.  (It is not clear why this date was selected).  Once there have been three tests of the same kind the laboratory seeking to market a new LDP does not need to provide clinical validity either in the submission or prepare a summary of the clinical validity for the test but can instead reference the database.

If a laboratory modifies an LDP after the protocol goes through the review process, that modified LDP would have to undergo new review if the change elevates the test to a higher risk classification or if the modification significantly changes the performance characteristics.  Moreover, if a laboratory modifies an FDA-approved or cleared test in a way that significantly changes the performance characteristics, and the modified test is high risk or moderate risk, the modified test would need to undergo premarket review as described above.  If the modification to the approved or cleared device does not change the performance characteristics, the laboratory would need to provide summary information that could be published as described above. 

The proposal also would modify CLIA requirements related to proficiency testing, inspections, recordkeeping, and reporting of laboratory errors.  It also would authorize CMS to collect an annual user fee, limited to cost recovery, from laboratories determined by the number of LDPs the laboratory offers.  

The proposal would call on CMS to issue final updated CLIA regulations within two years after the legislation is enacted. That is a very short time period for issuance of any final rule.  The requirements will be effective two years after the regulations are finalized.

The fate of the proposal is uncertain.  However, it does show that there are alternative approaches to regulating LDPs – or LDTs – than what FDA proposed.

By David C. Gibbons & Alan M. Kirschenbaum –

The U.S. Department of Health and Human Services Office of Inspector General (“OIG”) has recently issued two Advisory Opinions involving patient benefits provided by drug and device manufacturers.  Advisory Opinion 15-11, posted today, involves a manufacturer’s short-term free-drug program.  The other, Advisory Opinion 15‑07, which was posted in June, concerned a device manufacturer’s subsidies for products and services provided to clinical trial subjects.  We bring these to our readers’ attention because they both involve manufacturer programs addressing problems that are not uncommon in the industry.

Free Drug Supply Program for Coverage Delays (Advisory Opinion 15-11)

The requestors in this Advisory Opinion are pharmaceutical manufacturers who co-promote an oral oncology drug that was FDA-approved for various antineoplastic indications under FDA’s Breakthrough Therapy Designation for which limited alternative therapies are available.  The drug can be obtained only through specialty pharmacies.

To deal with delays in coverage determinations for individual prescriptions for the drug, the manufacturers have implemented a free drug supply program for this product (the “Program”).  A third-party vendor operates the Program through a single specialty pharmacy (the “Program Pharmacy”) that does not fill prescription orders for the general public or bill third-party payors, but only dispenses drugs under various contract supply programs, including the Program.

To receive the drug through the Program, patients are required to satisfy certain eligibility requirements.  The patient must:

1. be a “new” patient;
2. have received a prescription for the drug;
3. have a diagnosis consistent with a labeled indication;
4. have health insurance that covers prescription drugs (including private, commercial, or government health insurance programs); and
5. have experienced a delay in a coverage determination of at least five business days.

If the patient’s pharmacy does not receive a coverage determination from the patient’s insurer within five business days, then either the patient’s pharmacy or the prescriber can submit a request for the drug to the Program Pharmacy.  Once the Program Pharmacy confirms eligibility, a separate prescription for the drug is obtained from the prescriber to cover the drug’s dispensing under the Program.

The manufacturers provide up to two free 30-day supplies of the drug under the Program.  Eligible patients receive their first fill and potentially one refill if the coverage determination delay persists beyond 30 days or if the patient has been denied coverage but files a timely appeal with their insurer.

The OIG concluded that, although the arrangement has the potential to generate improper remuneration under the federal health care program anti-kickback statute (“AKS”), 42 U.S.C. § 1320a–7b(b), the OIG would not seek administrative sanctions against the manufacturers because the Program presents a low risk of fraud and abuse.  The HHS OIG cited several reasons for this conclusion:

• The risk of overutilization of the drug product is limited.  Only on-label patients whose insurers do not make a coverage determination within five business days are eligible for the program.  In addition, no more than two 30-day supplies of the drug are provided. 

• The arrangement is distinguishable from “seeding” arrangements in which a pharmaceutical manufacturer offers a product for free or at a substantially reduced cost to induce a patient to use the drug, which will subsequently be reimbursed under a federal health care program.  The Program is not “actively marketed” (i.e., no direct-to-consumer advertising) to patients and information about the Program is available primarily on the manufacturers’ websites.  The manufacturers certified that only 0.0008% of drug “shipments” have been made under the Program, approximately one-third of which were made to beneficiaries of federal healthcare programs.

• Prescribers receive no remuneration under the Program and no fee for administration of the drug.  Thus, there is no inducement to prescribers to purchase or prescribe the drug.

• There are no costs to a federal healthcare program since no third-party payor is billed for free drug provided under the Program, and no part of the costs associated with the drug provided under the Program count towards a patient’s true out-of-pocket (“TrOOP”) expenses under Medicare Part D.

• There is little risk of beneficiary inducement to obtain other federally reimbursed prescription drugs from the Program Pharmacy, since patients cannot obtain future refills of the drug product from the Program Pharmacy and the Program Pharmacy does not dispense to the general public outside of contract supply programs.

The OIG also concluded that the arrangement would not violate the beneficiary inducement civil monetary penalty, 42 U.S.C. § 1320a–7a(a)(5), which prohibits the offer of remuneration to a Medicaid or Medicare beneficiary that the offeror knows or should know is likely to influence the beneficiary to use a particular “provider, practitioner, or supplier” for federally reimbursed items or services.  After reiterating its long-standing interpretation that an inducement to use a particular manufacturer’s drug does not violate the statute because pharmaceutical manufacturers are not “providers, practitioners, or suppliers,” the OIG reasoned that beneficiaries could not be influenced to use the Program Pharmacy to dispense federally reimbursed drugs, since the Program Pharmacy does not dispense drugs to the general public or bill third party payors.

This Advisory Opinion, like others, is limited in its applicability to the specific requestors under the particular set of facts provided.  For example, the opinion might have been less favorable if the Program Pharmacy had the capacity to continue dispensing the product to the patient after the free drug was used up, if the prescriber received a drug administration fee, if off-label patients were eligible to receive the free drug, or if the manufacturers actively promoted the Program.  However, this Advisory Opinion provides a blueprint for pharmaceutical manufacturers to provide assistance where it is important for patients to obtain urgently needed therapy pending reimbursement delays.

Copay Subsidies in Clinical Trial (Advisory Opinion 15-07)

In this Advisory Opinion, the OIG approved of a device manufacturer’s subsidies covering copayments owed by clinical trial subjects.  The trial was a prospective, randomized, double-blind, placebo-controlled study of percutaneous image-guided lumbar decompression (“PILD”) procedures for patients with lumbar stenosis, which was to be sponsored by the manufacturer of devices (the “System”) used in the procedure.  Patients in the control arm of the study would receive a “sham” procedure (i.e., no therapeutic treatment would be performed), but would be able to elect have the PILD procedure after the primary endpoint was reached at six months post-procedure.  CMS had determined to cover the study under its Coverage with Evidence Development (CED) Program.  For subjects in the control arm, Medicare would not cover expenses of the sham procedure, since no therapy would be provided.  For those in the treatment arm, Medicare would cover the facility and professional costs of the PILD procedure, but those subjects would still owe copayments.  The manufacturer faced the problem that, if subjects in the control arm were not charged any payments but subjects in the treatment arm were charged copayments, both would know which arm of the study they were in, thus breaking the blind.  Therefore, the manufacturer proposed to subsidize the copayments owed by the treatment arm subjects by paying the copayments directly to the providers.  The manufacturer would also subsidize all of the costs of the control subjects who, after the endpoint had been reached, elected to have the PILD procedure.

The OIG found that this arrangement presented  minimal risk of fraud and abuse, for several reasons.  First, the study had been designed in consultation with CMS, which would use the results to determine whether PILD should be covered under Medicare.  Second, the Program was necessary to enable a properly designed study to be conducted, and was “a reasonable means of achieving the Study’s goals because it both encourages necessary patient enrollment in the Study and allows for the true impact of the PILD using the System on patient health outcomes to be isolated and assessed.”  In other words, the subsidies were necessary both to keep financial considerations from inhibiting enrollment or causing drop-outs, and to maintain the blind.

The OIG also noted that compensation paid to investigators was fair market value, thus not designed to induce physicians to use the System, and that overutilization would not be a problem because of the small number of subjects, the requirement that investigators follow the study protocol, and the oversight of an IRB.

This Advisory Opinion addresses the infrequent situation where a study has been approved by CMS for coverage under CED.  However, it contains certain considerations that may have wider applicability.  Device and drug manufacturers conducting blinded non-inferiority studies comparing an investigational product to an approved, marketed product sometimes face the predicament described in this Advisory Opinion.  The marketed comparator product may be covered by third party payors, but the associated copayments may be sufficient to cause lower-income patients to drop-out or fail to enroll in the first place, and may also undermine the blind by making patients aware that they are in the comparator arm.  One solution is for the sponsor to provide the comparator product to subjects at no charge, but it is sometimes not possible for the sponsor to obtain the product, or, even it is possible, purchasing it and providing it to subjects might be cost-prohibitive, depending on the product and the size of the study. 

Although CMS’s approval of the study in the Advisory Opinion was clearly an important factor to the OIG, it was not the only one.  The OIG also recognized that the subsidies were necessary both to encourage patients to enroll and remain in the study regardless of their income, and to maintain the blind.  This is not the first Advisory Opinion to recognize this problem.  See, e.g., Advisory Opinions 00-05 (“waiving copayments is a reasonable means of enhancing patient compliance with study requirements and retaining patients for the entire study period.  Waiving copayments will also ensure that economically disadvantaged patients are not precluded from the study”) and Advisory Opinion 98-06.  Although it is somewhat perilous to extrapolate OIG conclusions in one Advisory Opinions to different situations, we would hope that the OIG would take a similar view of copay subsidies in other types of well designed non-inferiority studies where they are intended to ensure the integrity of the clinical trial, and not intended as inducements to purchase or prescribe products.

By Kurt R. Karst –

Earlier this week, the U.S. District Court for the District of Maryland unsealed a 73-page Opinion handed down on July 29, 2015, along with an Order, in a challenge brought by Mallinckrodt Inc. (“Mallinckrodt”) last November after FDA downgraded from “AB” to “BX” the Therapeutic Equivalence (“TE”) rating for Mallinckrodt’s generic version of CONCERTA (methylphenidate HCl) Extended-Release Tablets, 27 mg, 36 mg, and 54 mg, approved under ANDA 202608.  According to FDA, “an analysis of adverse event reports, an internal FDA re-examination of previously submitted data, and FDA laboratory tests . . .  have raised concerns that the products may not produce the same therapeutic benefits for some patients as the brand-name product, Concerta. . . .”  FDA also revised the Agency’s Draft Guidance on Methylphenidate Hydrochloride (“2014 Draft Guidance”), changing the bioequivalence metrics for approval of generic CONCERTA.  The district court granted FDA’s Motion to Dismiss with respect to three of the five counts in the Complaint and granted summary judgment in favor of FDA with respect to the two remaining counts. 

As we previously reported, Mallinckrodt alleged in the company’s five-count Complaint violations of the Administrative Procedure Act (“APA”) and a direct cause of action under the Fifth Amendment’s Due Process Clause:

• Count I: Alleges a violation of the APA because FDA’s TE rating downgrade was done without a hearing, thereby violating Mallinckrodt’s Fifth Amendment due process rights in violation of 5 U.S.C. 706(2)(B).
• Count II: Asserts a direct right of action under the Fifth Amendment based on FDA’s failure to provide Mallinckrodt a hearing in conjunction with the TE rating downgrade.
• Count III: Alleges a violation of the APA insofar as FDA’s TE rating downgrade was in excess of its statutory authority in violation of 5 U.S.C. § 706(2)(C), because “FDA has no authority to take a drug off the market without following the procedures set forth in 21 U.S.C. § 355(e).”
• Count IV: Alleges a violation of the APA insofar as FDA issued the 2014 Draft Guidance without first going through the required notice-and-comment procedure.   
• Count V: Alleges a violation of the APA insofar as FDA’s TE rating downgrade was arbitrary and capricious because it did “not satisfy the evidentiary standard set forth in the Orange Book’s description of code BX[,]” was “not the product of reasoned decisionmaking, is not rationally related to the facts, and/or does not account for evidence contrary to its conclusions.”

Judge Deborah K. Chasnow divided her analysis of the allegations into three parts, first tacking Counts I, III, and V (APA claims challenging FDA’s TE rating downgrade), then moving on to Count IV (APA claims challenging FDA’s issuance of the 2014 Draft Guidance), and finally, addressing Count II (Fifth Amendment due process right of action). 

With respect to Counts I, III, and V, Judge Chasnow did not view FDA’s TE rating downgrade as final agency action subject to challenge; however, she left open the litigation door if FDA ultimately pursues withdrawal of the ANDA.  We finally get to that conclusion on page 35 of the decision, where Judge Chasnow writes:

FDA’s reclassification of the drug’s TE rating is not a final agency action, but rather appears to be an intermediate step taken by FDA to inform the public that Mallinckrodt’s drug may not be therapeutically equivalent and therefore have “the same” clinical effect as Concerta. . . .  The record also indicates that the agency’s position concerning the therapeutic equivalence of Mallinckrodt’s product is a tentative one: FDA indicates that it may take steps in the future to remove Mallinckrodt’s product from the market if the drug’s TE is not established, but at this time it has not made a final decision as to the product’s TE or that Mallinckrodt’s ANDA must be removed from the market. . . .  FDA has not instigated formal proceedings to withdraw Mallinckrodt’s product from the market, it has simply indicated that pending further review it may choose to instigate a withdrawal proceeding if it determines that Mallinckrodt’s product is not TE. . . .  Although FDA has asked Mallinckrodt voluntarily to withdraw its ANDA, it has not compelled or ordered Mallinckrodt to take any action. . . .  Should FDA choose to instigate a withdrawal proceeding, then all procedures required under 21 U.S.C. § 355(e), including notice and hearing, would apply, and if FDA makes a determination following these proceedings that Mallinckrodt’s drug is not therapeutically equivalent to Concerta and revokes its ANDA approval, this final agency decision would be subject to judicial review.

Moving on to Count IV, Judge Chasnow concluded that the 2014 Draft Guidance “was an interpretive rule rather than a legislative rule, and therefore the agency did not violate the APA by failing to go through formal notice and comment procedures before issuing the document.”  Although Mallinckrodt argued that even if the 2014 Draft Guidance is an interpretive rule, FDA nevertheless violated the APA’s notice-and-comment requirements insofar as they apply to significant amendments to agency interpretive rules, Judge Chasnow pointed to the U.S. Supreme Court’s recent decision in Perez v. Mortgage Bankers Association that does away with the so-called “Paralyzed Veterans doctrine.”  As we previously posted, that doctrine had held that an agency must use notice-and-comment procedures as required under the APA when the agency wishes to significantly change its previous interpretation of a regulation, even if the original regulation was not one for which notice-and-comment rulemaking was required. 

With respect to Mallinckrodt’s assertion of a direct right of action under the Fifth Amendment based on FDA’s failure to provide Mallinckrodt a hearing in conjunction with the TE rating downgrade, Judge Chasnow concluded that Mallinckrodt failed to show that FDA has deprived the company of a property interest in its ANDA.  Moreover, Judge Chasnow was unconvined by Mallinckrodt’s “partial deprivation theory,” which is “premised on the fact that pharmacists will no longer automatically substitute [Mallinckrodt’s] for Concerta and fewer of its major distributors will purchase its drug due to its new TE rating, which will purportedly result in decreased market share and profits for Mallinckrodt.”  According to Judge Chasnow:

FDA’s reclassification of Mallinckrodt’s TE rating in the Orange Book did not deprive Mallinckrodt of its ANDA approval.  Mallinckrodt has argued that because of its new TE rating in the Orange Book pharmacists will no longer automatically substitute its drug for Concerta and fewer customers will purchase its drug, resulting in a loss of market share and profits.  Mallinckrodt has provided some evidence . . . of the anticipated impact on its market share, shortly following the TE rating change. . . .  Evidence of the impact on its market share and sales, however, does not show that its property right — the ability to sell its product lawfully — has been deprived by FDA and instead, shows third party and market reactions to FDA’s reclassification. . . .  FDA did not compel the pharmacists or Mallinckrodt’s customers to change their dispensing and buying habits.  It merely changed the drug’s TE classification in the Orange Book in accordance with its duty to provide updated drug information to the public on a regular basis.  Taking Mallinckrodt’s facts as true, it has failed to show a deprivation of its property interest by FDA. [(Emphasis in original; internal citations omitted.)]

Will Mallinckrodt appeal the decision?  Mallinckrodt initially commented that the company was “evaluating its options with respect to the court’s decision, including a possible appeal to the U.S. Court of Appeals for the Fourth Circuit.”  Well, that evaluation has concluded, and on August 12, 2015, Mallinckrodt appealed Judge Chasnow's decision to the Fourth Circuit (Notice of Appeal).

We found it quite interesting that shortly after Judge Chasnow issued her decision under seal, Intellipharmaceutics International Inc. (“Intellipharmaceutics”) issued a press release explaining the company’s travails with FDA over the bioequivalence requirements for FOCALIN XR (dexmethylphenidate HCl) Extended-release Capsules, a drug closely related to CONCERTA. 

We previously posted on the approval landscape for generic FOCALIN XR, explaining that FDA approved Intellipharmaceutics’ ANDA 078992 for the 15 mg and 30 mg strengths, but only tentatively approved the 5 mg, 10 mg, 20 mg, and 40 mg strengths.  It seems that FDA wants Intellipharmaceutics to supply new bioequivalence data – using updated bioequivalence metrics – but only with respect to the tentatively approved strengths.  That seems odd, no?  Just as odd, however, is the on-again, off-again (and now on-again) requirement that Intellipharmaceutics evaluate bioequivalence using FDA’s revised criteria.  Here’s how Intellipharmaceutics summarizes the volley with FDA:

• In November 2013, the FDA granted the Company tentative approvals for the 5 mg, 10 mg, 20 mg, and 40 mg strengths of its generic Focalin XR®.
• In June 2015, the FDA required that the Company demonstrate bioequivalence with Focalin XR® for the 40 mg strength, under new bioequivalence criteria, as a basis for the approval of each of the affected strengths.
• In July 2015, the FDA rescinded its June 2015 requirement that the Company demonstrate bioequivalence with Focalin XR® for the 40 mg strength, under new bioequivalence criteria, as a basis for the approval of each of the affected strengths.
• The FDA has now reinstated the requirement that the Company demonstrate bioequivalence with Focalin XR® for the 40 mg strength, under new bioequivalence criteria, as a basis for the approval of each of the affected strengths.  More specifically, in reverting to the requirement for a demonstration of bio-equivalence under new criteria, the FDA stated “Upon review, we have concluded that our rescission was issued in error.”

By Jenifer R. Stach* –

After Stewart Parnell’s conviction for selling salmonella-tainted peanut products, causing many deaths and illnesses, he could be facing life in prison.  Attorneys on both sides called the recommendation for a life sentence “unprecedented” for a food-poisoning case.   

We wrote about the convictions in a prior posting after the Peanut Corporation of America (PCA) defendants were found guilty on September 19, 2014.  On July 22, 2015, the Government filed their brief seeking a life sentence for Stewart Parnell, 17.5 – 21 years for his brother, Michael Parnell, and 8 – 10 years for Mary Wilkerson, a PCA Quality Assurance Manager.  

Are these sentencing recommendations warranted? 

In their brief, the Government argues that the Sentencing Guidelines adjusted offense levels in the Pre-Sentence Reports (PSRs) issued by the U.S. Probation Office were properly calculated.  The adjustments were made based on the following factors:  number of victims, loss calculations, conscious or reckless risk of death or serious bodily injury by the Parnell brothers, and a general lack of acceptance of responsibility by Mary Wilkerson.  While the recommendation for a life sentence may be unprecedented, so are the facts of the case.     

Number of Victims.  The number of victims included 9 deaths; 714 people who fell ill, with 166 of those hospitalized; and that for every case reported to the Center for Disease Control, 30 cases go unreported, therefore, the 714 illnesses confirmed by the CDC could represent as many as 20,000 ill people across the United States. 

Conscious or Reckless Risk of Death or Serious Bodily Injury by the Parnells.  The Parnell brothers both claimed that they were unaware of the risk of serious bodily injury or death.  The Government argues that witness testimony by PCA employees of the conditions of filth in the Texas, Virginia, and Georgia plants,  knowledge by defendants of the salmonella-positive test results, the falsification of Certificates of Analysis (COAs) for testing, and emails written by Stewart Parnell telling his employees to ship tainted products were aggravating factors that warranted the adjusted sentencing levels.    

An executive who was perhaps new to the industry may have been able to make the claim that they were unaware of the risk, but the Parnell brothers had been in the peanut business with their father as peanut roasters since 1977.  In 2005, Stewart Parnell was appointed to the USDA’s Peanut Agriculture Board, which (ironically enough) sets quality control procedures for peanuts.  In 2009 after the DOJ investigation was initiated, Parnell was removed from the board.  Clearly, Parnell’s egregious and continuous behavior directing his employees to ship tainted products was not a result of being unaware.  

Loss Calculation.  Despite arguments by the Parnell brothers that insurance payouts should be considered in the loss calculation, the Government argues that insurance payouts are not relevant and asserts that the loss estimates to PCA customers is $144 million due to recalls and product that had to be destroyed.

A General Lack of Acceptance of Responsibility by Mary Wilkerson.  Wilkerson claims she had no knowledge of the schemes to ship tainted products.  The Government points to testimony by PCA employees that Wilkerson was the Quality Assurance Manager responsible for COAs during the time of the outbreaks, and that she was aware that products were produced and shipped on the same day, despite her knowledge that salmonella testing takes two to four days.    

All in all, the Government argues that “this criminal activity was extensive.”  But the impact is wider than the Sentencing Guidelines factors.  We should not forget the number of people affected by the deaths of those nine people — their family and friends, the interruption in the lives of those who fell ill, and the impact of the PCA employees and family members who lost their jobs after the company filed bankruptcy. 

Even if Stewart Parnell does not receive a life sentence, the impact on government enforcement priorities has persisted.  The Department of Justice (DOJ) and FDA continue to focus on safety in peanut manufacturing as a priority.  Recent cases indicate that companies are learning the potential consequences of violating the FDC Act.  In 2012 Sunland, a New Mexico based peanut producer entered into a consent decree with DOJ to implement sanitation control programs, conduct testing, and develop monitoring and remediation protocols.  Most recently in May, ConAgra pled guilty to a misdemeanor charge of the FDC Act for introducing peanut butter with salmonella into interstate commerce (coincidentally manufactured in Georgia). 

Will Stewart Parnell’s willful sales of tainted peanut butter be enough for a court to sentence him to life in prison?  We’ll find out soon, because sentencing is scheduled for September 21, 2015.   We will keep you posted. 

*Admitted only in Maryland.  Practicing under the supervision of the Firm.