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  • CMS Eliminates CME Exclusion Under Sunshine Rule

    By Jennifer D. Newberger & Alan M. Kirschenbaum

    On October 31, 2014, the Centers for Medicare & Medicaid Services ("CMS") finalized changes to the regulations implementing the Affordable Care Act’s transparency reporting provisions, otherwise known as the Physician Payment Sunshine Act ("Sunshine Act").  The original Sunshine Act regulation, published on February 8, 2013 (which we summarized here), excluded from the reporting requirement payments to speakers at a certified continuing medical education ("CME") event if the event met certification or accreditation requirements and standards for continuing education established by one of the five accrediting organizations specified in the rule; the applicable manufacturer did not pay the covered recipient speaker directly; and the applicable manufacturer did not select the covered recipient speaker or provide the program provider with recommendations for speakers. 

    In July 2014, CMS proposed to eliminate this exclusion on the ground that it is unnecessary because payments to CME program providers would already be excluded under the “indirect payment” rule.  An indirect payment is not reportable if the manufacturer does not know the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year.  42 C.F.R. § 403.904(i)(1).  In response to this proposal, industry stakeholders objected that the indirect payment rule would not exclude payments to CME organizations because the manufacturers could learn the identity of the physician speakers by looking at brochures and other informational literature. 

    CMS has nevertheless proceeded to eliminate the CME exclusion, continuing to believe that it is redundant to the indirect payment rule.  The preamble explains that “payments or other transfers of value, including payments made to physician covered recipients for purposes of attending or speaking at continuing education events, which do not meet the definition of an indirect payment, as defined at § 403.902, are not reportable.” In other words, no reporting is required so long as the applicable manufacturer “does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or other transfer or [sic] value in whole or in part to a covered recipient,” regardless of whether the manufacturer knows or later learns the identity of the physician faculty.  See page 595. 

    Thus, CMS appears to believe that the mere knowledge by an applicable manufacturer that a CME grant will be used by a program provider, in whole or in part, to subsidize physician faculty honoraria, travel expenses, registration fees, or other expenses is not sufficient to trigger Sunshine reporting, as long as the CME support agreement does not specify, and the manufacturer does not otherwise “require, instruct, direct, or otherwise cause” the funding to be used for such purposes.  In other words, CME funding provided without restriction as to the program-related expenses that the funding may be used to defray is not reportable.

    CMS has also finalized two other changes to the Sunshine regulations.  The original Sunshine rule required an applicable manufacturer to report the marketed name for each covered drug or biological product related to a payment or other transfer of value, but there was no similar requirement for covered devices.  Instead, a manufacturer of a covered device could report either (1) the marketed name, or (2) the product category or therapeutic area of the covered device.  The new change will require reporting of both the marketed name on one hand and the product category or therapeutic area on the other.  CMS states this will align reporting requirements across all product categories and “enhance consumer’s [sic] use of the data.”  Id. at 597. 

    The final change to the Sunshine rule pertains to reporting the form of a payment or other transfer of value.  Instead of permitting aggregate reporting of stock, stock options, and other ownership interests, the revised rule will require reporting these three forms of transfers in distinct categories.

    All three changes are effective January 1, 2016.

    Categories: Health Care

    FDA Considers Significantly Expanding Red Book Food Safety Testing Guidance to Cover Dietary Ingredients, Food Contact Substances, and Cosmetics

    By Wes Siegner

    In the October 30 Federal Register, FDA announced that it will hold a public meeting on December 9 to consider significant changes to its guidance titled  “Toxicological Principles for the Safety Assessment of Food Ingredients,” or “Redbook”.  FDA also invited comment to be submitted by February 9, 2015.

    FDA’s Redbook has for decades provided a system of tiered recommendations for the animal toxicological studies that FDA would expect to see in a submission requesting approval of a food or color additive.  The implications of applying the Redbook or a similar process to other regulated product categories are not clear.  On the positive side, guidance could make review and approval, or in the case of new dietary ingredient notifications, “filing,” more streamlined.  However, as happens all too often with FDA guidance, new guidance may effectively require additional animal testing that would erect costly new barriers to market access. 

    Participation of the affected industries in this process will, therefore, be essential to assuring FDA’s expansion does not become a hindrance to market access and have negative impacts on public health.

    CPSC Imposes Largest-Ever Failure to Report Civil Penalty against Baja Inc.

    By Alexander J. Varond

    In one of the clearest signs that the U.S. Consumer Product Safety Commission ("CPSC") is stepping up enforcement of CPSC requirements, the Commission recently announced that it had reached a record $4.3 million civil penalty settlement with Baja Inc., and its corporate affiliate, One World Technologies, Inc.   The settlement was in connection with the companies’ alleged failure to report defects involving 11 models of go-carts and minibikes.

    According to the CPSC, Baja sold the go-carts and minibikes at issue from November 2004 to June 2010.  By 2010, the company had received four reports of fires from leaking gas caps and burn injuries to customers, including a serious burn injury to a child.  It had also, as the CPSC alleged, learned of a defect that caused the company’s throttles to stick and for the vehicles to unexpectedly accelerate.  CPSC alleged that, despite this, Baja failed to file a full report required under section 15(b) of the Consumer Product Safety Act ("CPSA") until June 2010.  The company also allegedly failed to notify CPSC or consumers of the design changes it made to the go-carts and minibikes to address the stuck throttle issue.

    This settlement is an important reminder that, pursuant to 16 C.F.R. § 1115.14(e), manufacturers, distributors, and retailers of consumer products must immediately report (within 24 hours) to CPSC after learning that a product contains a defect that “could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule or any other rule, regulation, standard, or ban enforced by CPSC.”

    CPSC alleged that the company “knowingly failed to report to CPSC immediately . . . defects and an unreasonable risk of serious injury,” in violation of section 15(b) of the CPSA.  In addition, the Commission alleged that, in failing to inform CPSC about the products immediately, Baja knowingly violated CPSA section 19(a)(4), which makes it unlawful to fail to “furnish information required by section 15(b).”

    In addition to the record $4.3 million civil penalty levied under CPSA section 20, 15 U.S.C. § 2069, Baja agreed to implement a program designed to ensure compliance with reporting requirements of section 15(b) of the Consumer Product Safety Act.  The compliance program includes:

    • Written standards and policies;
    • Systematic procedures for reviewing and referring consumer and retailer incident reports for potential safety issues;
    • Confidential employee reporting of compliance concerns to a senior manager;
    • Effective communication of compliance policies and procedures, including training;
    • Senior manager responsibility for compliance and accountability for violations;
    • Oversight of compliance by the firm’s governing body; and
    • Records retention requirements.

    Importantly, the settlement does not amount to an admission of defect, substantial product hazard, or unreasonable risk of serious injury or death.  It also expressly states that Baja does not admit that the company failed to notify the Commission in a timely manner.

    As further evidence of the CPSC’s increasing enforcement in this area, the Commission imposed a $700,000 civil penalty against Williams-Sonoma on October 30, 2014 for its alleged failure to report defective Pottery Barn Kids Roman shades.

    Categories: Enforcement

    FTC to Food Marketers: Don’t Forget the “Q” in QHC

    By Ricardo Carvajal & Riëtte van Laack – 

    FTC filed a complaint in the district court of New Jersey alleging that certain of Gerber’s advertising claims for its hydrolyzed-whey-based infant formula constitute deceptive acts or practices and the making of false advertisements, in violation of the FTC Act.  FTC challenges as unsubstantiated Gerber’s claims that its formula reduce the risk of allergies in infants who have a family history of allergy.  FTC also challenges as false or misleading Gerber’s advertising of its qualified health claim (QHC).

    In May 2009, Nestlé Nutrition submitted a QHC petition to FDA requesting that the agency exercise enforcement discretion for a QHC characterizing the relationship between consuming 100% whey-protein partially hydrolyzed infant formula and a reduced risk of atopic dermatitis.  FDA determined that the relationship was “uncertain, because there is very little scientific evidence for the relationship.”  FDA’s letter of enforcement discretion issued in May 2011 sets forth tightly worded qualified claims that are limited to one type of allergy, namely atopic dermatitis.

    According to FTC’s blog posting, “Gerber took the FDA’s narrow letter and turned it into a prominent gold badge that read: ‘1st & Only Meets FDA Qualified Health Claim.’ The leap Gerber made from FDA’s cautious admonition to what the FTC says consumers would view as an FDA approval claim” is at the heart of one of the counts in the complaint.  The other count addresses Gerber’s allegedly unsubstantiated allergy prevention claims.  FTC requests permanent injunctive relief, consumer redress, and additional relief as the Court may determine to be just and proper.

    Feeling Dissed, Amgen Sues After Sandoz Abandons the BPCIA Patent Dance Procedures for NEUPOGEN Biosimilar; Alleges Unfair Competition, Patent Infringement, and Theft

    By Kurt R. Karst –      

    Ever since the July 2014 announcement by Sandoz Inc. (“Sandoz”) that FDA accepted the first ever application for a biosimilar biological product submitted pursuant to Section 351(k) of the Public Health Service Act (“PHS Act”) – in this case, a biosimilar version of Amgen, Inc.’s (“Amgen’s”) NEUPOGEN (filgrastim) approved under BLA 103353, and which 351(k) application could be acted on by May 2015 under the performance goals agreed to as part of the Biosimilar User Fee Act of 2012 – we wondered how the so-called “patent dance” procedures added to the law by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) were progressing (or not).  Apparently Amgen has been left on the dance floor without a partner.  And Amgen doesnt take rejection well.  Feeling dissed and spurned, last week Amgen filed a Complaint in the U.S. District Court for the Northern District of California alleging that Sandoz has unlawfully refused to follow the BPCIA’s patent resolution procedures, and is seeking declaratory and injunctive relief. 

    By way of background, the BPCIA lays out a multi-step “patent dance” at PHS Act § 351(l) for an applicant seeking approval of a biosimilar version of a reference product: Step 1 – Transmission of Biosimilar Application; Step 2 – Reference Product Sponsor’s Paragraph 3(A) Patent List; Step 3 – Biosimilar Applicant’s Paragraph 3(B) Patent List; Step 4 – Reference Product Sponsor’s Response; Step 5 – Patent Resolution Negotiations; Step 6 – Patent Resolution If No Agreement; and Step 7 – Filing of the Patent Infringement Action.  Under Step 1, not later than 20 days after FDA informs a 351(k) applicant that its application has been accepted for review (i.e., filed), the applicant must provide to the reference product sponsor “a copy of the application submitted to the Secretary under subsection (k), and such other information that describes the process or processes used to manufacture the biological product that is the subject of such application” (PHS Act § 351(l)(2)(A); 42 U.S.C. § 262(l)(2)(A)) and “may provide to the reference product sponsor additional information requested by or on behalf of the reference product sponsor” (PHS Act § 351(l)(2)(B); 42 U.S.C. § 262(l)(2)(B)). 

    In addition, the BPCIA provides that a 351(k) applicant must provide notice to a reference product sponsor “not later than 180 days before the date of the first commercial marketing of the biological product licensed under [Section 351(k)].”  After receiving that notice, a reference product sponsor may seek a preliminary injunction prohibiting the 351(k) applicant from manufacturing or selling its biosimilar product until a court decides the issue of validity, infringement, and enforcement of certain patents (PHS Act § 351(l)(8); 42 U.S.C. § 262(l)(8)).

    Thus far, controversy surrounding the BPCIA’s patent resolution procedures has focused on whether or not a prospective 351(k) applicant can seek patent certainty by filing an action for declaratory judgment.  As we previously reported, in November 2013, in Sandoz Inc. v. Amgen Inc., Case No. 3:13-cv-02904-MMC (N.D. Cal.), the U.S. District Court for the Northern District of California granted Amgen’s Motion to Dismiss a June 2013 Complaint for Declaratory Judgment and Patent Invalidity and Non-infringement concerning two patents Roche licensed to Amgen that purportedly cover Amgen’s biological product ENBREL (etanercept).  According to the California District Court, “Sandoz does not contend, and cannot contend, it has complied with its obligations under [PHS Act §§ 351(l)(2)-(6)], because . . . it has not, to date, filed an application with the FDA.”  In addition, the court noted that “Sandoz cannot, as a matter of law, have provided a ‘notice of commercial marketing’ because . . . its etanercept product is not  licensed under subsection (k).’”  That decision was appealed to the U.S. Court of Appeals for the Federal Circuit where a decision is pending (see our previous post here).  Meanwhile, two other declaratory judgment complaints were filed.  Both of those cases involve REMICADE (infliximab) and Celltrion Healthcare Co., Ltd. and Celltrion, Inc.’s biosimilar version of the product (see our previous post here).  One of the cases was recently dismissed voluntarily (see here), while the other case is progressing and is in the Motion to Dismiss stage (briefs available here, here, and here).

    In its October 24th Complaint, Amgen alleges that Sandoz received notice from FDA on July 7, 2014 that the Agency had accepted the company’s 351(k) BLA for a biosimilar version of NEUPOGEN, and that such notice should have triggered a cascade of events under the patent resolution procedures at PHS Act § 351(l), but did not because Sandoz failed to comply with the initial disclosure under PHS Act § 351(l)(2)(A).  According to Amgen:

    Defendants are attempting to obtain the benefits of the BPCIA by filing their BLA under the § [351(k)] pathway without complying with the requirements that Congress also imposed through the BPCIA on biosimilar applicants.  For example, Defendants made a deliberate decision not to provide Amgen with a copy of its BLA, together with other information necessary to describe the process(es) for manufacturing the biosimilar product, within 20 days of receiving notification of FDA acceptance of their application.  Under [PHS Act § 351(l)(2)], Sandoz was required to provide Amgen with such materials by Monday, July 28, 2014.

    Instead, Sandoz apparently proposed an alternative procedure in a July 8, 2014 letter to Amgen: that the parties exchange certain information without following the process at PHS Act § 351(l)(2).  Amgen rejected the offer.  Later, Sandoz letter sent Amgen another letter stating that Sandoz had decided “not to disclose our application to Amgen” and also  not to exercise the company’s “right to use the patent information exchange process of the BPCIA.”  Finally, in an October 20, 2014 letter, Sandoz allegedly reminded Amgen that Sandoz’s initial July 8th letter provided Amgen with Sandoz’s 180-day notice of commercial marketing pursuant to PHS Act § 351(l)(8)(A).  Amgen’s Complaint, which cites, among other things, the November 2013 decision in Sandoz Inc. v. Amgen Inc. for the proposition that the 180-day notice can come only after approval of a 351(k) BLA, followed a few days later. 

    According to Amgen:

    Each of [Sandoz’s] unlawful acts (violation of 42 U.S.C. § 262(l)(2)(A) and violation of 42 U.S.C. § 262(l)(8)(A)) independently deprive Amgen of the benefits afforded under the statute and which Congress provided to reference product sponsors.  Defendants’ failure to provide the BLA and manufacturing information to Amgen under 42 U.S.C. § 262(l)(2)(A) deprives Plaintiffs of the opportunity to seek a preliminary injunction enjoining Defendants from engaging in the commercial manufacture or sale of the Sandoz biosimilar product in time to prevent irreparable harm to Plaintiffs, i.e., after FDA approval of the Sandoz biosimilar product but before Defendants’ commercial marketing of the biosimilar product.  In addition, Defendants’ failure to provide a legally operative notice of commercial marketing deprives Plaintiffs of the opportunity to seek a court intervention to prevent Plaintiffs from suffering irreparable harm.  This too prevents Plaintiffs from enjoining Defendants in time to prevent irreparable harm.

    Amgen asserts three causes of action: (1) unfair competition under Cal. Bus. & Prof. Code § 17200 et seq.; (2) conversion; and (3) infringement of U.S. Patent No. 6,162,427 covering a method of using NEUPOGEN to treat a disease requiring peripheral stem cell transplantation in a patient in need of such treatment. 

    Amgen’s second cause of action – i.e., conversion – caught our attention.  It’s not a cause of action we see on a daily basis.  Conversion, better known as theft, is an intentional tort that consists of the wrongful exercise of dominion or control over personal property that so seriously interferes with another’s right to control the property that the converter (i.e., thief) is required to pay the other the full value of the property as damages for the conversion.  According to Amgen:

    [Sandoz’s] use of the license for NEUPOGEN® (filgrastim) to obtain a governmental privilege (FDA approval to market, manufacture, import, and sell the Sandoz biosimilar product for use in the United States) for Defendants’ own benefit and profit is an act of conversion.  Specifically, Defendants filed a BLA for the Sandoz biosimilar product that intentionally uses Amgen’s prior demonstration of the safety, purity, and potency of NEUPOGEN® (filgrastim), but without Plaintiffs’ authorization or permission and without satisfying the mandatory provisions of 42 U.S.C. § 262(l) that apply to biosimilar applicants.  By filing their BLA for the Sandoz biosimilar product under the § 262(k) pathway rather than the § 262(a) pathway, Defendants seek to obtain a valuable benefit from the license for NEUPOGEN® (filgrastim).  Without Amgen’s efforts, the information relied on by Defendants for the safety, purity, and potency of the Sandoz biosimilar product would not exist. As a result, Defendants have converted property belonging to Plaintiffs.

    Amgen is seeking declaratory and injunctive relief.  In particular, Amgen wants the court to enjoin Sandoz from “commercially marketing the biosimilar product until Amgen is restored to the position it would have been had Defendants met their obligations under the BPCIA” and until Sandoz provides Amgen with notice of commercial marketing “on or after FDA licensure of its biosimilar product (and no later than 180 days before first commercial marketing of the product by Sandoz).  In addition, Amgen wants an injunction preventing Sandoz “from continuing to seek FDA review of [the company’s 351(k)] application and/or compelling Defendants to suspend FDA review of [the company’s 351(k)] application until Defendants have obtained permission from Plaintiffs to use the NEUPOGEN® (filgrastim) license or require Defendants to restore to Amgen the benefits afforded to reference product sponsors in the statute,” and a judgment “[a]djudging and decreeing that Defendants have committed a statutory act of infringement under 35 U.S.C. § 271(e)(2)(C)(ii) of the’427 patent by submitting their BLA to the FDA for approval of the Sandoz biosimilar product without providing the required BLA and manufacturing information to Amgen.” 

    Those of us who work in the Hatch-Waxman/BPCIA space predicted back in 2010 when the BPCIA was enacted that there would be a lot of controversy over the patent dance procedures (and even hesistance from some to go on to the dance floor in the first place).  We’re now seeing those predictions become reality, and in controversies that will shape the future of the biosimilar approval pathway for decades to come. 

    FTC and Bayer Head for a Show-Down

    By Jennifer M. Thomas

    Around this time last month, we wrote about the government’s motion for an order to show cause in United States v. Bayer, and the potential lessons to be gleaned from that case.  Bayer entered into a consent decree with the FTC in 2007, which prohibited the company from making any representation about the benefits, performance, or efficacy of a dietary supplement without “competent and reliable scientific evidence” to substantiate such claim.  The current proceedings arise from FTC’s assertion that Bayer lacks such substantiation for its representations about its probiotic product Phillips’ Colon Health.   Now it is time to briefly update our readers, as the saga of Bayer continues. 

    Since we last wrote, Bayer filed its response to the government’s motion for an order to show cause why Bayer should not be held in contempt, and was joined by two potential amicus curiae in opposition to the government – the Council for Responsible Nutrition (“CRN”) and the Natural Products Association (“NPA”).  On October 10th, the government replied to Bayer, and subsequently responded to CRN’s and NPA’s requests for leave to participate as amici (see here and here).  Last week, on October 23rd, the court granted FTC’s motion for an order to show cause, but granted leave for CRN and NPA to appear as amicus curiae in the case.

    The Court took no position on whether Bayer had actually violated the Order.  However, it did indicate that it would consider Bayer’s primary arguments with regard to the legality of the standard for “competent and reliable scientific evidence” asserted by FTC.  These arguments were echoed by CRN and NPA, and contend in sum that (1) the standard put forth by FTC is contrary to DSHEA, (2) the inflexibity of the proposed substantiation standard is inconsistent with FTC law and past practice, and (3) the standard would be tantamount to subjecting Bayer to a drug-like substantiation requirement.  CRN and NPA also argued that the standard for “competent and reliable scientific evidence” put forth by FTC – namely, two randomized controlled clinical trials on the product itself – would have dire consequences for the dietary supplement industry and for consumers, and that FTC should not be permitted to change the law applicable to dietary supplements through contempt proceedings.

    The government strongly contested the implication that the standard it asserted in Bayer would be an industry-wide one, asserting that “this matter is only about determining whether Bayer possessed and relied upon competent and reliable scientific evidence, based on the expertise of professionals in the relevant area . . . not about the government trying to establish a new, one-size-fits-all, approach to all dietary supplement claims . . . .”  Gov’t Resp. to NPA at 7-8.  But it seems the Court was not sufficiently convinced by FTC’s assurances, and in granting CRN and NPA’s motions for leave to participate as amici Judge Linares noted that

    [b]oth trade associations have submitted thorough and informative briefs, which are of assistance to the Court, particularly in considering the implications of the ultimate outcome of this dispute on the entire dietary supplement industry.

    Order at 3.

    The Court has not yet addressed one of the arguments raised in Bayer’s response that we at HPM found of particular interest.  Specifically, Bayer argued that the consent decree is not sufficiently “clear and unambiguous” with respect to the standard for “competent and reliable scientific evidence,” and thus that provision cannot provide the basis for a finding of contempt.  If Bayer were to succeed in this argument, it could certainly affect the degree to which FTC is willing to negotiate regarding a specific, versus a more general, substantiation standard in consent decrees going forward.

    Of note is the fact that Bayer’s response did not seek to counter FTC’s substantiation expert, Dr. Loren Laine, with a comparable expert to opine that Bayer’s substantiation constituted “competent and reliable scientific evidence.”   Whether this factored into the court’s determination that FTC had “made a sufficient showing at this juncture to support its application for an Order to Show Cause” (Order at 1), is not clear.  However, we expect that the company may well engage such an expert going forward, despite the fact that the burden of proving contempt, by clear and convincing evidence, remains on FTC.

    A status conference in U.S. v. Bayer was on October 28, and another is scheduled for March 18, 2015.  The significance of a relatively lengthy period of time before the next status conference is not clear, although it could indicate either that the parties are in negotiations to settle the case, or that there will be discovery in the interim.

    Categories: Uncategorized

    CDRH Holds Webinar on Draft LDT Guidances – Highlights that Guidances Hold More Questions than Answers

    By Allyson B. Mullen & Jeff N. Gibbs

    On October 23, 2014, CDRH held a webinar regarding the two Laboratory Developed Tests (LDT) draft Guidance Documents that were released on October 3 (previously blogged on here and here).  The webinar began with a high-level description of the draft guidances.   While the discussion generally restated the fundamentals of the draft guidances, one point of interest was that FDA plans to address all comments that it receives during the comment period.  Addressing all substantive comments would be a requirement had FDA gone through notice and comment rulemaking, but it is not a requirement for the issuance of a guidance document.

    Afterwards, Katherine Serrano, Liz Mansfield and Alberto Gutierrez fielded questions.  The breadth of the questions were wide ranging and highlighted that these guidances, if finalized, will have a wide-reaching effect on laboratory diagnostics, patient care and the economy.  Also, the number of questions underscored that there are many open issues – some FDA easily answered, some FDA said it has considered, but had not yet addressed, and others that it sounded as though FDA had not even considered. 

    Key questions and answers included:

    • There was a question regarding what will constitute labeling for an LDT.  FDA did not have an answer.
    • FDA said it may consider issuing a second draft of the guidance documents.  This is unusual, but if there are extensive, significant comments and the need for extensive revisions, it would be appropriate.
    •  If a test falls into one of the categories in the LDT Framework Guidance, but is also a companion diagnostic, the companion diagnostic guidance document will control.
    • It is not clear what rules will apply if an LDT falls into two categories within the LDT Framework Guidance.
    • Laboratories will be required to submit during the timeframes in the Framework Guidance, not obtain clearance.  LDTs will only be required to come off of the market if FDA disapproves the LDT submission.  

    This comment raises an interesting but important nuance regarding how FDA currently interacts with 510(k) applicants.  Under the current 510(k) process, applicants generally receive only one request for Additional Information, due to time limitations set by the user fee goals.  If additional information is still required as the 90-day review clock is nearing its end, FDA will give the applicant the option to withdraw its 510(k), gather the additional information and resubmit.  Most companies choose withdrawal over a not substantially equivalent letter.  If, however, laboratories will be required to withdraw their tests from the market if they withdraw their application, will laboratories wait for an NSE letter and then appeal?  How will FDA accommodate labs that can supply additional data relatively rapidly but not before the clock runs out?  Given that most laboratories have little to no experience working with FDA, it is very likely that many LDT 510(k)s will not be fully resolved during their first review cycle.

    • For more established LDTs, clinical practice guidelines may be used to help establish clinical utility in a premarket submission.  Alberto Gutierrez stated that in the Agency’s review of IVD submission, it only considers clinical validity, not clinical utility.
    • Analyte Specific Reagents (ASRs) and Research Use Only (RUO) materials can be used as components of an LDT.  If an RUO component is used, however, the LDT premarket submission will be required to establish quality control over the RUO.
    •  Advisory committee panels will be used to establish the priority and timelines for LDT premarket submissions.
    • Public Health laboratories and neonatal screening tests are within the scope of the draft guidances.  Laboratory Information Systems (LIS) are outside the scope of the draft guidances.
    • FDA encourages laboratories to do a pre-submission to obtain FDA feedback regarding existing clinical data for their tests or for planned studies to gather data for a premarket submission (see our prior post on the pre-sub program here).
    • FDA agrees that guidance regarding applicability of the Quality System Regulation (QSR) to a laboratory setting is necessary.  It is not clear when this guidance will be available for comment.  (The manner in which QSRs will be applied is a significant factor for labs; without this insight, it is difficult to assess the nature or extent of the increased operational regulatory burden labs will bear.)
    • FDA does not yet know how to handle genetic profile panels.  If one marker on a genetic panel is currently cleared or approved as a companion diagnostic, then that marker will be deemed a companion diagnostic which does not fall within the Unmet Needs Category and will require approval in the highest risk group.  FDA acknowledged that it does not know what to do about the other markers in these types of panels.
    • If a test is for a rare disease under the draft Framework Guidance, it is possible the lab could get an Emergency Use Authorization to run a large number of the tests during an outbreak situation, but it is unclear how this situation would be handled.  
    • LDTs for Unmet Needs will have 1 year to submit a premarket application after another company receives 510(k) clearance or PMA approval for the same intended use.
    • FDA considered coordinating with NY State and CAP regarding the existing laboratory certification programs, but it did not want to appear to be passing off its own responsibilities.  FDA encouraged laboratories to comment on how these programs could be useful in the FDA review process.  

    Finally, when specifically asked about the “bad” LDTs that it is aware of, CDRH named OvaSure, an ovarian cancer test that has been off the market for nearly 6 years, a false whooping cough outbreak at Dartmouth where people were given antibiotics unnecessarily due, in part, to an LDT, and a New York Times article regarding Vitamin D testing.  FDA went on to say that it is aware of other “bad” LDTs, but because of the type of work the Agency does, the information sometimes cannot be made public.  In response to a question, FDA stated that it has investigated the veracity of the information that it has received regarding “bad” LDTs, particularly whether there is a conflict of interest.  Given the drastic impact that these draft guidances are poised to have on laboratory testing and healthcare, and that FDA is basing the need for regulating LDTs in part on safety issues, it would seem to us that FDA should provide a stronger record for its position.  If this were notice-and-comment rulemaking, the example cited probably would be insufficient to survive judicial scrutiny.

    FDA Makes Educational Push on Mislabeling of Seafood

    By Ricardo Carvajal

    FDA released an online learning module intended “to help the seafood industry, retailers, and state regulators ensure the proper labeling of seafood products offered for sale in the U.S. marketplace.”  The learning module consists of three videos that provide an overview of applicable regulations and guidance, explain the scope of the agency’s authority to address mislabeling arising from a variety of circumstances (including nonconformance with applicable standards and species substitution), highlight the potential health consequences of misidentification, and provide tips for inspectors, retailers, and consumers on detecting substitution.

    On a separate web page, FDA provides results of its DNA testing of “fish that have a history of being misidentified.”  The agency sampled fish primarily at the wholesale level, and found incorrect identification of fish species 15% of the time.  Almost all mislabeling occurred in the snapper and grouper categories. 

    It remains to be seen whether the educational push will be accompanied by more enforcement activity.  In August 2013, a seafood distributor was fined and sentenced to probation after pleading guilty to selling mislabeled fish.  That followed on the heels of a few warning letters to other distributors, but there appears to have been little activity since then.

    FDA’s Hollow Medical Device Recall Guidance: Ending Not with A Bang But A Whimper

    By Jeffrey K. Shapiro

    FDA has recently finalized the guidance document, now titled “Distinguishing Medical Device Recalls from Medical Device Enhancements.”  We were critical of the draft guidance, especially the proposal for a new, extra legal reporting requirement for device enhancements (see our previous post here).  

    Thankfully, the final guidance does not include this proposal.  The main thrust of it is that one should distinguish a recall from an enhancement by looking at whether the device modification is intended to address a violation of the Federal Food, Drug, and Cosmetic Act against which the agency would take action versus a change that does not address such a violation. 

    This concept was present in the draft guidance but is presented more forcefully.  It is a fairly obvious point that did not require a guidance.  On the really difficult questions, the final guidance punts (just like the draft guidance did). 

    For example, a “market withdrawal” is by definition a correction or removal involving a minor violation not subject to legal action by the agency.  The determination as to whether a violation is “minor” is, in some cases, not easy.  A device that fails to meet specifications or perform as represented is generally considered adulterated or misbranded, and action to address such issues would be a recall rather than an enhancement.  However, there are many ways in which performance issues can arise with a device that are not addressed in the specifications or marketing representations.  The final guidance does not discuss these situations.

    It is troubling that FDA’s final guidance definition of “device enhancement” still does not explicitly state whether modifications within this definition are to devices already in the field or confined to future production.  The examples do not clarify this point.  The issue of distinguishing a recall from an enhancement (which is the point of this final guidance) should arise only if a firm is correcting or removing devices in the field.  If a firm is modifying future production only, under the regulatory definitions in 21 C.F.R. Parts 7 and 806, there is not a correction or removal, and a Part 806 reporting requirement cannot apply.  (This issue was discussed at length in our post on the draft recall guidance.)

    If FDA is impliedly taking the position that modifications of future production only can be a correction subject to Part 806, that is a bold and controversial proposition that the agency should forthrightly state and defend.  On the other hand, if FDA is not taking this position, then this guidance should have said so, if only to correct the misimpression left by the draft guidance.  A guidance is supposed to clarify regulatory requirements, not introduce new uncertainties.

    In the end, the final guidance does not have the worst features of the draft guidance, for which industry should be grateful.  At the same time, it does not clarify much or provide much useful guidance, and it will probably soon be forgotten.  And so, a guidance episode that started with a loud bang, ends in a soft whimper.

    Categories: Medical Devices

    In Draft Guidance on Acute Migraine Treatments, FDA Proposes Novel Efficacy Endpoint

    By Etan J. Yeshua

    Drug developers targeting acute migraines may now have a new path to approval.  In a draft guidance document issued on Tuesday by the Division of Neurology Products ("DNP"), FDA offers a novel primary endpoint that has not been used before to support migraine drug approvals (primarily the triptan class of drugs).  The guidance document also addresses safety considerations, class labeling, and other study design issues.

    Migraines are characterized by more than one symptom (i.e., headache, nausea, photophobia, and phonophobia) and approved treatments, at the insistence of DNP, have traditionally demonstrated efficacy on all four of these as co-primary endpoints.  In the past several years, however, DNP has taken the view that a demonstration of efficacy on headache and only one additional co-primary endpoint – nausea – could be sufficient.  Now, DNP has apparently recognized that this paradigm, while lessening the regulatory burden from four endpoints to two, suggests (perhaps inappropriately) that nausea is a more important symptom than photophobia and phonophobia.  DNP has now opened the door to an alternative approach which appears to recognize that not all migraine patients suffer equally from the same secondary symptoms.  As explained in the guidance document, FDA would still require two co-primary endpoints: (1) headache, and (2) an effect on “the [other] most bothersome migraine-associated symptom” as prespecified by each individual subject.  In other words, FDA is considering “having patients prospectively identify their most bothersome migraine-associated symptom in addition to pain,” and efficacy would have to be demonstrated on headache pain and on “the most bothersome associated symptom” – whatever that may be for a given patient.  This new approach could be an effort by FDA to recognize the varied presentations of migraine symptoms as part of the agency’s recent emphasis on “patient-focused drug development.”

    The extent to which this alternative approach actually lowers the bar to approval, however, is unclear.  Although DNP is reducing the number of efficacy endpoints necessary for a new migraine therapy to obtain approval, Tuesday’s guidance document leaves out some important details, which counsels toward thorough communication with DNP early in the development process.  For example, the guidance states that, in addition to the two co-primary endpoints, “all . . . migraine-associated symptoms (i.e., nausea, photophobia, and phonophobia) should be assessed as secondary endpoints,” but it does not specify whether and/or to what extent a drug candidate must demonstrate efficacy on one or more of these secondary endpoints.  While pivotal studies are typically not required to demonstrate statistical separation from placebo on secondary endpoints, the history of FDA’s required showing for triptans – efficacy across four endpoints whether they were itemized as co-primary, or primary and key secondary – suggests that the prudent drug developer obtain program-specific clarity on this point from DNP at or before the end of phase 2. 

    In addition, the guidance document does not address whether FDA will require studies to enroll some minimum number or proportion of subjects who identify each of the three associated symptoms as the “most bothersome.”  Given that DNP has previously suggested that nausea is the most significant non-headache endpoint, it remains unclear whether a study in which the majority of subjects list, say, phonophobia as their most bothersome symptom, with success on that endpoint but little or no effect on secondary endpoints of nausea or phonophobia, would be sufficient for approval in acute migraine.  Finally, while randomization should assure a balanced distribution of most bothersome symptoms across treatment groups, it is unclear whether DNP would approve a drug that showed a benefit on the co-primary endpoint when, in fact, the results were driven by different identified symptoms in the placebo and treatment groups.

    FDA asked that comments about the draft guidance be submitted by December 22, 2014.  Other topics discussed in the document include trial population inclusion criteria, dose selection, concomitant medications, additional secondary endpoints, frequency of data collection, statistical issues, safety considerations, pediatric studies, and labeling.

    What Can FDA Do During Drug Inspections: Will FDA Apply Its New Guidance to Other Products?

    By Jay W. Cormier & Anne K. Walsh

    For managers and employees of drug facilities, the arrival of an FDA inspector can be an anxiety-producing experience.  Adding to the understandable nervousness surrounding an inspection is FDA’s new statutory authority to deem drug products adulterated if a facility delays, denies, limits, or refuses to permit entry during an FDA inspection (previous post here).  On October 21, 2014, FDA issued a Final Guidance that explains what FDA considers to be circumstances that constitute violative delay, denial, limitation, or refusal.  It appears FDA attempted to clarify certain issues from the Draft Guidance, yet, as we will discuss below, the Final Guidance is critically vague and legally questionable in several ways.

    Application to Other Products

    On its face, the Final Guidance does not apply to inspections of food, medical device, tobacco, and cosmetic facilities, but the Final Guidance is written in sweeping terms (e.g., “This guidance therefore covers facilities subject to inspection under any of the authorities in section 704”, and section 704 governs inspections of “food, drugs, devices, tobacco products, or cosmetics” facilities).  Therefore it is reasonable to expect that FDA will take a similar approach for all FDA-inspected facilities. 

    We also note that the Final Guidance specifically includes “outsourcing facilities” that voluntarily register under section 503B of the FDCA, which was added since the Draft Guidance was issued.  FDA encourages all registrants, including outsourcing facilities, to keep their point-of-contact email information with FDA up to date.  In a footnote, the Final Guidance states that pharmacies are subject to inspection under section 704(a)(1) “even if [a part of] 704(a)(1) is not applicable because of 704(a)(2).”  Although not required to provide FDA with point-of-contact information, FDA encourages pharmacies to keep their point-of-contact information with State agencies up to date, as FDA may use State license information as a source of a facility’s contact information.

    (Inappropriate) Regulatory Creep

    FDA has frequently issued guidance without going through notice and comment rulemaking.  Try as it may, FDA cannot make law via guidance.   Although the Final Guidance claims it does “not establish legally enforceable responsibilities,” FDA may treat this document as binding authority.  Therefore, the examples that FDA provides throughout the Final Guidance illuminate FDA’s thinking, however erroneous, about the span of FDA’s authority during inspections.  Issues may arise with respect to taking photographs, requiring employees to answer questions, producing documents that are not on-site, or requiring personnel to be present at an inspected facility.

    In spite of a lack of statutory language or a binding relevant court opinion, FDA maintains its general rule that investigators are entitled to take photographs during an inspection.  The Final Guidance goes even further than the Draft when claiming that “[i]mpeding or resisting photography” may constitute limiting the investigation and that such a conclusion is in the discretion of the investigator.  FDA’s only example of a “reasonable explanation” for not allowing photos during an inspection borders on ludicrous:  FDA claims it would be reasonable to not allow photos if the light from a camera flash could adversely affect product quality.  As we discussed in depth when the Draft Guidance was issued, the issue of FDA’s authority in the realm of photographs is murky, at best.

    The Final Guidance also signals FDA’s view that an inspector has the authority to ask questions of, and demand oral answers from, any individual at a facility –particularly if the individual is designated as a subject matter expert.  Specifically, the Final Guidance states that it would be reasonable for a facility to delay an unannounced inspection if “appropriate personnel are not immediately available to accurately answer the FDA investigator’s questions.”  Given that FDA has no statutory authority to require anyone to answer any questions during an inspection, FDA’s example seems either (1) naïve with respect to the statute, or (2) foundation for a later FDA argument that failure to provide individuals who can “accurately answer the FDA investigator’s questions” is itself a ground for a violation. 

    Likewise, the Final Guidance states: “Although FDA recognizes that facilities require a reasonable amount of time to produce records requested, especially if the records are maintained at a different site, a delay in producing records to FDA without reasonable explanation may be considered delaying the inspection.”  This statement shows FDA’s view that it is entitled to records housed at one facility while it is inspecting a different facility.  When inspecting a drug facility, section 704 applies to, among other things, “all things therein (including records, files, papers, processes, controls, and facilities).”  FDCA § 704(a)(1) (emphasis added).  The hypothetical posited in the Final Guidance confirms that FDA’s expectations of facilities extend beyond the already substantial reach Congress delegated to FDA.

    It also appears that FDA considers itself entitled to observe a functioning facility during inspection.  The Final Guidance implies that sending staff “home for the day” and telling the investigator that “the facility is not producing any product” would constitute a violative delay.  While FDA may be entitled to observe a functioning facility (provided that the facility is producing product at the time of an inspection), a facility is not required to keep any personnel present at the site beyond the minimal numbers arguably required to carry out the ongoing production runs.  We do not read the Final Guidance as saying that a company cannot send anyone home once it learns of an FDA inspection; nor are we aware of any legal basis for FDA to take such a position.

    Reasonable vs. Adequate

    In the Final Guidance, FDA made a uniform language shift from use of the word “adequate” to “reasonable,” to define the types of justifications necessary for a delay, denial, limit, or refusal to be excused.  But is there really a difference between the two terms?

    The term “adequate” seemed to render FDA the ultimate finder of fact – whether the facility’s reason for a delay is “adequate” to excuse the delay is something that appears to be clearly a discretionary finding provided that such a determination is not arbitrary and capricious.  One may be tempted, therefore, to take refuge in the softer tone of “reasonable,” particularly if that person has spent time in or around a courtroom or law office where the term “reasonable” has a very specific and long-established meaning.  In the legal world “reasonable” is an objective standard – what would a reasonable person do under a given set of facts; could a reasonable jury find the defendant liable or guilty.  Here, FDA should be held to an objective standard that permits discretion only to the extent that its findings are consistent with what a reasonable finder of fact would conclude (a relatively higher standard than an arbitrary and capricious standard). 

    The Final Guidance, however, is notably silent regarding what lexicon it employs.  FDA could adopt a legal definition of “reasonable” or it could just as easily decide that it has the sole discretion to determine what constitutes a “reasonable” explanation or justification for a delay, denial, limitation, or refusal.  Because these determinations will be made in practice by investigators in the field rather than attorneys, FDA will likely become its own arbiter of reasonableness.  Under such a scenario, whether there is any daylight between “adequate” and “reasonable” will be an interesting issue to follow.

    * * *

    The Final Guidance, thus unfortunately, creates issues rather than clarifies issues. Whether FDA will “get away” with the regulatory creep evidenced in the Final Guidance will depend on facilities holding FDA accountable to the four corners of the FDCA and not ceding ground to FDA. 

    One thing that is clear, however, is that the Final Guidance is a reminder of the importance of having written internal procedures that specifically address inspectional issues such as whether and who, if anyone, is authorized to speak to FDA during an inspection and the company’s position regarding the taking of photographs and providing documents that are off-site.  When developing and implementing such policies and revising any existing policies to reflect FDA’s new Final Guidance, companies should seek input from counsel.  Once policies are developed, employees should be trained so that all employees understand the company’s positions prior to an FDA inspection.

    Categories: Enforcement

    FDA Agrees to Deadline for Issuance of GRAS Final Rule

    By Ricardo Carvajal – 

    FDA and the Center for Food Safety (CFS) entered into a consent decree that calls for FDA “to submit a final rule regarding ‘Substances Generally Recognized as Safe’ to the Federal Register for publication no later than August 31, 2016.”  As we reported in a prior posting, CFS sued FDA over the agency’s administration of a GRAS notification program consistent with a proposed rule issued in 1997.  The consent decree does not address CFS’s substantive concerns.  Rather, it commits FDA to issue a final rule by the agreed-upon deadline.  CFS reserves the right to “challenge the merits of the final rule, including but not limited to claims relating to whether FDA’s final action complies with the APA and other applicable laws.”  FDA can seek an extension of the agreed-upon deadline for good cause and/or exceptional circumstances.

    Notwithstanding the limited relief obtained through the consent decree, CFS trumpeted a victory on its website.  The CFS announcement propagates a number of mischaracterizations of the GRAS exception (e.g., that it was intended only for common food ingredients like sugar and gelatin, and that manufacturers could once “formally petition FDA to approve a food additive as GRAS”).  Further, CFS claims that finalization of the GRAS rule “gives the public the right to challenge FDA on its GRAS system.”  CFS’s posture suggests that FDA’s issuance of a final rule could beget additional litigation – and a corresponding delay in the rule’s implementation. 

    No Good Precedent Goes Overlooked: FDA is Asked to Reset FUSILEV Approval and Exclusivity Dates Because of Proprietary Name Review

    By Kurt R. Karst –      

    We were wondering how long it might be until a company went running to FDA to request that the Agency reset the date of approval of its NDA, as well as any unexpired marketing exclusivity, as the result of a proprietary name review issue FDA identified in a footnote to an April 30, 2014 denial of two  Citizen Petitions requesting that the Agency reset the 5-year New Chemical Entity (“NCE”) exclusivity periods for drug products because of delays in the controlled substance scheduling process.  It took one company, Spectrum Pharmaceuticals, Inc. (“Spectrum”), less than 6 months to make its appeal to FDA.  In an October 13, 2014 Citizen Petition (Docket No. FDA-2014-P-1615), Spectrum requests that FDA update the Orange Book to state that the company’s FUSILEV (levoleucovorin) for Injection drug product approved under NDA 020140 was approved 129 days after the date currently listed in the publication – on July 14, 2008 rather than March 7, 2008 – and that the period of 7-year orphan drug exclusivity expires 129 days later than currently listed – on July 14, 2015 instead of March 7, 2015.  (Spectrum’s October 13th petition follows a September 30th Citizen Petition [Docket No. FDA-2014-P-1649] from the company requesting that FDA not approve ANDAs for generic FUSILEV that omit certain labeling information – see our updated Generic Drug Labeling Carve-Out Scorecard.)

    As we previously reported (here, here, and here), Eisai Inc. (“Eisai”) and UCB, Inc. submitted Citizen Petitions (Docket Nos. FDA-2013-P-1397 and FDA-2013-P-0884) to FDA in 2013 requesting that the Agency conclude that the NCE exclusivity start dates for BELVIQ (lorcaserin HCl) Tablets (NDA No. 022529), FYCOMPA (perampanel) Tablets (NDA No. 202834), and VIMPAT (lacosamide) Tablets (NDA No. 022253) are triggered only when FDA-approved labeling incorporates the final Drug Enforcement Administration Controlled Substances Act scheduling decision to permit commercial marketing of the drug products, and not on the date of NDA approval.  In denying the petitions, FDA addressed the petitioners’ argument that the Agency’s regulation at 21 C.F.R. § 314.108(a) defining “date of approval” supports a later NCE exclusivity start date.  That regulation defines “date of approval” as follows:

    Date of approval means the date on the letter from FDA stating that the new drug application is approved, whether or not final printed labeling or other materials must yet be submitted as long as approval of such labeling or materials is not expressly required. “Date of approval” refers only to a final approval and not to a tentative approval that may become effective at a later date. [(Emphasis added)]

    According to FDA, the approval letters for BELVIQ, FYCOMPA, and VIMPAT do not “expressly require” approval of labeling or other materials, and therefore, the regulation is not applicable to the approval of those drugs.  To make the point about the limited nature of the “expressly required” exception in the regulation, FDA says the following in footnote 92 of the petition denial:

    The highlighted language is an exception to the general rule, and FDA has always construed that exception narrowly.  PhRMA, in a comment supporting Petitioners, has argued that this exception can only have been intended to apply to scheduling situations (despite the fact that it has never been applied to such situations).  PhRMA comment at 5-6.  FDA is aware of one situation, which did not involve scheduling, in which this narrow exception has been applied.  In that case, the letter announcing the approval of the NDA contemplated the later submission of a trade name that FDA would have to review and approve prior to marketing, and FDA determined that the approval date was the date when the trade name was approved. The drug involved in that case was Razadyne ER (NDA 021615). . . .

    That footnote – and the RAZADYNE ER (galantamine hydrobromide) Extended-release Capsules precedent in particular – is at the heart of Spectrum’s October 13th petition.  (It also plays an important role in the lawsuit Eisai filed against FDA earlier this year after the Agency denied the company’s petition – see our previous post here – and in Eisai’s recent Motion for Summary Judgment in that case.)

    FDA initially approved NDA 021615 for RAZADYNE ER on December 22, 2004.  The drug, however, was approved without a proprietary name after FDA rejected name proposals because of concerns about medication errors.  The NDA sponsor ultimately (i.e., 101 days after the  December 22, 2004 approval, or April 1, 2005) found a proprietary name that passed muster at FDA and then asked the Agency to revise the NDA approval date.  FDA acquiesced and issued a letter in June 2006 with the following rationale: 

    FDA’s December 22, 2004 action letter stated that, because of medication errors associated with the use of the trade name Reminyl for the approved galantamine hydrobromide immediate release product, J&J would not market the extended release product until a new trade name had been reviewed and approved by FDA. 

    We have reviewed your letter and the NDA record, and concluded that the action letter of December 22, 2004, should be considered an approvable letter as described in 21 CFR 314.110.  In light of the concerns about medication errors expressed in that letter, it is reasonable to conclude that Razadyne ER was not approved until April 1, 2005, when the Agency completed its review of the proposed new trade name, found it acceptable, and conveyed this information to J&J.

    As a result, FDA also amended the Orange Book to reflect the new NDA approval date, and reset the period of 3-year exclusivity for  RAZADYNE ER to expire on April 1, 2008 instead of December 22, 2007. 

    According to Spectrum, the regulatory history of FUSILEV is strikingly similar to that of RAZADYNE ER.  FDA and Spectrum were unable to come to terms on a proprietary name for the proposed Levoleucovorin drug product, which led to the approval letter issued on March 7, 2008 providing

    for the use of Levoleucovorin for Injection, 50 mg/10 mL or 10 mg/mL for rescue after high-dose methotrexate therapy in osteosarcoma and to diminish the toxicity and counteract the effects of impaired methotrexate elimination and of inadvertent overdosage of folic acid antagonists.

    The letter goes on to state that

    A decision on the acceptability of your proposed trade name will be made by the Division of Medication Error Prevention and will be communicated to you at a later date.  Accordingly, you may submit a post-approval labeling supplement with inclusion of the accepted trade name. Until then, you may not use any trade name on the labels and labeling, but may only use the established name.

    On July 14, 2008 – 129 days after the original March 7, 2008 approval letter was issued – FDA sent Spectrum a letter approving a supplement providing “for a proprietary name, Fusilev, and revised labeling to include the proprietary name.”  Spectrum subsequently began marketing the drug with the FUSILEV name. 

    Spectrum says that there is no reason for FDA to treat FUSILEV and the circumstances surrounding the proprietary name review and approval of the drug any different than in the case of RAZADYNE ER.  But a decision is needed fast, says Spectrum.  The March 7, 2015 date currently listed in the Orange Book for the expiration of a period of orphan drug exclusivity, and that could mean ANDA approval, is approaching quickly. 

    Categories: Orphan Drugs

    Beyond Drinking the Worm

    By Ricardo Carvajal

    That’s the clever title of a symposium on entomophagy being delivered at the next annual meeting of the Entomological Society of America (ESA), scheduled for the week of November 16 in Portland, Oregon.  As we noted in a prior posting, the market for insect-derived foods is stirring, and with that awakening comes greater interest in understanding the governing regulatory framework.  Hyman, Phelps & McNamara, P.C. will cover that topic at the symposium, which will also feature presentations on consumer perception, market research, bringing products to market, and other issues of interest to producers, consumers, and researchers.  For those planning to attend, no word yet on whether there will be samples on hand, but at least one local eatery aims to please.  Sushi Mazi offers a grasshopper roll that has its devotees. 

    Invitation Accepted: PhRMA Sues HHS Over “Interpretive” 340B Orphan Drug Rule

    By Jay W. Cormier & Alan M. Kirschenbaum

    As we previously reported, in late August, the U.S. District Court for the District of Columbia denied PhRMA’s request that the Court vacate a recent HRSA interpretive rule on the orphan drug exception under the 340B drug discount program, ruling that the interpretive rule was not the subject of PhRMA’s lawsuit. The Court stated that PhRMA “is free to challenge that interpretive rule, but such a challenge is beyond the scope of the instant action.”   It should come as no surprise that PhRMA was not deterred by the procedural hiccup.

    Briefly, in July 2013, HRSA issued a regulation providing that the orphan drug exclusion added to the 340B statute by the Affordable Care Act – which exempts orphan drugs from 340B pricing in cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals – applies only to orphan drugs that are used for the rare condition or disease for which that orphan drug was designated.  (For a more detailed description of the 340B program and the orphan drug rule specifically, please see our previous post.)  In October of 2013, PhRMA filed suit alleging that the final rule violated the Administrative Procedures Act (see our previous post here).  In May of this year, the Court agreed with PhRMA, finding that HRSA did not have statutory authority to promulgate the rule.  (See our previous post here.)  In July, HRSA issued what was styled an interpretive rule, which set forth the same use-based limitation contained in the final rule that had been invalidated by the Court.  PhRMA then asked the Court to strike down the interpretive rule, and, as mentioned at the opening of this post, the Court dismissed PhRMA’s motion on the ground that PhRMA needed to file a new suit (see our previous post here).

    Last week, PhRMA did file a new lawsuit in the D.C. District Court, challenging HRSA’s use-based interpretation of the orphan drug exclusion as arbitrary, capricious, and not in accordance with law.  PhRMA’s complaint requests declaratory and injunctive relief, arguing that, although styled an interpretive rule, the rule requires PhRMA members to either change their conduct and comply with HRSA’s interpretation or risk substantial penalties, including a requirement to pay refunds to 340B covered entities. 

    As if to substantiate PhRMA’s latter point, HRSA has recently sent letters to at least some manufacturers of orphan drugs, warning them that, if they do not offer 340B pricing on orphan drugs when used for non-orphan indications, they will be in violation of the 340B statute and their 340B agreements with HHS.  The letters request the manufacturer to submit to HRSA within 30 days a plan for providing refunds to covered entities that have overpaid for orphan drugs and for providing the 340B price in the future.

    We will continue to keep our readers updated as events continue to unfold.