As was introduced in our recent blog post summarizing the 2022 MedTech conference (here), FDA’s Center for Devices and Radiological Health (CDRH) recently announced the launch of a new pilot program, the Voluntary Total Product Life Cycle (TPLC) Advisory Program (TAP) Pilot (see announcement attributed to CDRH director Jeff Shuren, M.D., J.D. (here), Federal Register notice (here) and the Program Website (here)).  The TAP Pilot is intended to “de-risk the medical device valley of death,” the metaphorical place where innovative technologies die while trying to reach the market. U.S. Food & Drug Admin., CDRH Launches the Total Product Life Cycle Advisory Program Pilot (Oct. 11, 2022) [hereinafter “Announcement”]. One cause of death in this “valley” is related to the need to understand and meet regulator expectations.

The TAP Pilot is one of the commitments agreed to between FDA and industry as part of the Medical Device User Fee Amendments of 2022 (MDUFA V) and the Agency hopes the program will help ensure that U.S. patients are “first in the world” to receive innovative medical devices that are of “high-quality, safe, and effective” through “early, frequent, and strategic communications between the FDA and medical device sponsors.” U.S. Food & Drug Admin., Total Product Life Cycle Advisory Program (TAP) (Oct. 11, 2022) [hereinafter “Program Website”].

The TAP Pilot will build on the CDRH’s experience engaging with developers during the COVID-19 pandemic through the pre-EUA pathway, as well as the Agency’s experience with the Breakthrough Devices and Early Feasibility Study Programs. To implement the Tap Pilot, CDRH plans to build dedicated teams of advisors trained to provide feedback and advice tailored to the specific needs of each developer.  See Announcement.

A key goal of the TAP Pilot is to reduce time from concept to commercialization through improved engagement with developers and increased predictability of CDRH’s review.  Id.  Specifically, CDRH intends to engage with participants in a timely manner to facilitate improved decision-making during device development, including earlier identification and mitigation of risk and better alignment of expectations related to evidence generation.  See Program Website.

CDRH has established the following performance goals to achieve these objectives of improved engagement, which will be tracked and reported during the pilot, beginning in FY 2024.

• CDRH will engage in a teleconference with the participant on requested topic(s) pertaining to the TAP device within 14 days of the request for 90% of requests for interaction.
• CDRH will provide written feedback on requested biocompatibility and sterility topics(s) pertaining to the TAP device within 21 days of the request for 90% of such requests for written feedback.
• CDRH will provide written feedback on requested topic(s) pertaining to the TAP device other than biocompatibility and sterility within 40 days of the request for 90% of requests for written feedback.

Id.

CDRH plans to take a phased approach to implement the TAP Pilot throughout the duration of MDUFA V (FY 2023 – FY 2027).  The first phase, identified as the TAP Pilot Soft Launch, will begin January 1, 2023 and run through FDA’s FY 2023.  CDRH plans to enroll 15 devices evaluated by the Office of Health Technology 2 (OHT2):  Office of Cardiovascular Devices.  In the remaining years of the pilot, CDRH will begin tracking performance, will add additional offices, and increase the number of devices in the pilot.  Id.  The TAP Pilot will first focus on CDRH-designated breakthrough devices.  Devices in the Safer Technologies Program (STeP) will be included in FY 2026.  See Announcement.  An independent third party (or parties) will conduct assessments of the TAP Pilot beginning in FY 2024.  See Program Website.

A device is eligible for inclusion in the soft launch of the TAP Pilot if it is in early development and has received Breakthrough Device designation, but the participant has not yet submitted a Q-Submission request after receiving Breakthrough status.  A participant may enroll only one device per fiscal year.  Devices regulated by the Center for Biologics Evaluation and Research (CBER) and combination products are outside the scope of the TAP Pilot.  Id.

All in all, we think the TAP Pilot has the potential to be a valuable program and we applaud the Agency for including performance metrics and third-party assessment to evaluate its effectiveness.  Although the program is not intended to reduce evidentiary burdens for innovative devices, earlier communication of Agency expectations foreseeably could help some developers avoid the valley of death for their products.  There are many innovative devices, however, that do not meet the criteria for Breakthrough or STeP designation that find themselves in the valley of death, so we hope the TAP Pilot, if successful, will be broadened to include more types of devices, as well as devices regulated by CBER and combination products.

FTC sure thinks so.  And the FTC said as much in a recent Amicus Brief (“Brief”) in paragraph IV litigation between Avadel CNS Pharmaceuticals (“Avadel”) and Jazz Pharmaceuticals Inc. (“Jazz”).  This type of statement from the FTC is unprecedented; not only is the FTC Brief unusual in that it comes in the context of patent litigation between two private entities but also because the FTC opines where the government entity responsible for maintaining the Orange Book (the FDA) has long refused to address the propriety of such patent listings.  Because FDA has been reluctant to address questions of whether certain patents like device Risk Evaluation and Mitigation Strategies (“REMS”) patents are appropriately listed in the Orange Book, courts—and now the FTC—have provided their own opinions on the issue.

To set the stage: In August 2022, Avadel sued FDA alleging that the Agency violated the Administrative Procedure Act (“APA”) by requiring certification to a patent Jazz listed in the Orange Book for the relevant Reference Listed Drug (“RLD”) that Avadel had tried to carve-out with a section viii statement.  That patent was a method-of-use patent that described the drug distribution REMS approved for use with the RLD.  While technically, Avadel challenged FDA’s compelled certification to that patent, it also implicitly challenged whether a REMS patent could be listed in the Orange Book at all.  The Court, however, never got anywhere near that question because of parallel patent litigation.

Before the APA litigation, Jazz had filed suit against Avadel after FDA compelled Avadel to certify to the method-of-use patent, triggering a 30-month stay.  In response, Avadel filed a counterclaim seeking to delist the patent.  As the patent litigation ensued, Avadel sued FDA under the APA.  But because the APA authorizes review only when the plaintiff lacks another adequate remedy in court, the District Court in the APA litigation determined that Avadel had another available and adequate remedy—the delisting process—and therefore granted FDA’s and intervenor Jazz’s Motion for Summary Judgment.

While the Court may have ended the APA litigation, the counterclaim litigation seeking to delist the method-of-use REMS patent lives on.  FDA, of course, has not gotten involved in the delisting litigation—not surprising considering the Agency’s approach to Orange Book listings.  But in a surprise move for seemingly run-of-the-mill paragraph IV litigation, the FTC filed its Amicus Brief on November 10, 2022.  In the Brief, the FTC does not have too much to say about the method-of-use patent at issue or the specifics of the litigation at hand but instead focuses on the practice of listing REMS patents in the Orange Book.  Stepping in where FDA has not, the FTC explains the Orange Book’s potential for abuse and gamesmanship, which ultimately deprives “consumers of potential competition from lower-cost alternatives and the ability to choose between products.”

The FTC Brief details the potential for abuse arising from improper Orange Book patent listings, compounded by FDA’s “purely ministerial” role in the listing process.  Even if FDA wanted to, the Brief notes, FDA does not “have any tools to remove improperly listed patents.”  Thus, the FTC explains, there is “no gatekeeper to prevent a company from inappropriately listing patents that do not meet the Orange Book criteria.”  Instead, a brand can list a patent in the Orange Book, bring an infringement suit, and obtain a 30-month stay of generic approval “regardless of the scope or validity of the patent and regardless of whether it meets the statutory listing criteria.”  That 30-month stay, the FTC continues, serves as an incentive to brand companies to list non-listable patents in the Orange Book, and in so doing, block consumer access to a competing product that might reduce prices, improve quality, or both.  And “the only available remedy for an improper Orange Book listing is the statutory delisting provision that Avadel has invoked in this case.”

The FTC Brief further provides a textual argument based on the statutory language. Because the statute states patents covering methods of using a drug, the FTC argues that distribution patents—or in this case, the REMS patent—should not be listed in the Orange Book because they are not technically a method of using the drug.  While the FTC Brief takes no position on Jazz’s specific patent, it argues that a patent only covering drug distribution should be delisted:

As a general matter, however, patents that claim a distribution system do not meet the Orange Book listing criteria; to the extent they claim a method at all, it is a method of distributing a drug rather than a method of using one. This is an important distinction.

In other words, FTC explains that the statutory language states that only patents covering a “drug” or “method of using” a drug can be listed, and patents claiming a method of distributing drug do not cover the drug itself or a method of using the drug.  Because the use code for Jazz’s method-of-use patent at issue in the Avadel case is “method of treating a patient with a prescription drug using a computer database in a computer system for distribution,” the FTC explains that the patent does not cover either the drug or a method of using that drug—only a method of distribution.  “To be sure, a REMS distribution system is a condition of FDA approval for certain drugs. But that does not make it a condition of the drug’s use.”  The FTC also argues that listing REMS patents not only contravenes the plain text of the Orange Book listing statute, but it also may violate the REMS statute by blocking or delaying follow-on approval.

Generally, we would expect that the FTC would be working with FDA to address potential anticompetitive behavior arising from a scheme that FDA is responsible for administering.  But there’s no indication here that FDA provided any input on the Amicus Brief or whether FDA agrees with this position.  It will be interesting to see how (or whether) the Court addresses this argument in the context of the delisting, how (or if) FDA will react, and whether there will be further litigation arising from any decision that addresses the FTC’s argument.  Without hearing FDA’s position though, the uncertainty lingers.

FDA announced that it has completed the first pre-market consultation for an animal cell-cultured food, based on a safety assessment submitted by UPSIDE Foods. In an indication of the significance of this development, FDA Commissioner Robert Califf and CFSAN Director Susan Mayne issued a statement marking the occasion, and reiterating the agency’s commitment to supporting innovation while ensuring the safety of the food supply.

FDA’s response letter to UPSIDE Foods indicates that the safety standard applied by the company was one of comparable safety (i.e., “foods comprised of or containing the cultured cellular material resulting from the production process defined [in the submission] are as safe as comparable foods produced by other methods”). In addition, FDA “did not identify a basis for concluding that the production process as described in [the submission] would be expected to result in food that bears or contains any substance or microorganism that would adulterate the food.” FDA posted a longer and more detailed scientific memo that summarizes FDA’s evaluation.

In keeping with FDA’s agreement with USDA-FSIS regarding the agencies’ joint oversight of this product category, FDA’s response letter notes that submitters must still ensure that they comply with all regulatory requirements administered by FSIS. That includes labeling requirements, for which FSIS has initiated rulemaking (see our prior post here).

Hyman, Phelps & McNamara, P.C. (“HPM”) is pleased to announce that John W.M. Claud has joined the firm as Counsel. Mr. Claud is a 15-year veteran of the Department of Justice, where most recently he was an Assistant Director of the Consumer Protection Branch overseeing the Corporate Compliance and Policy Unit. At DOJ, Mr. Claud prosecuted and supervised complex criminal and civil trial litigation and investigations under the Food, Drug, and Cosmetic Act, Federal Trade Commission Act, Consumer Product Safety Act, and Federal data privacy laws. He also held leading roles in DOJ’s response to multiple significant national health crises, including the COVID-19 pandemic, the 2019 EVALI vaping crisis, and the 2012 New England Compounding Center fungal meningitis outbreak.

Mr. Claud was the national coordinator of DOJ’s oversight of criminal prosecutions under the FDCA and has extensive knowledge of issues concerning corporate compliance best practices, health care fraud, telemedicine, and pharmacy compounding. He has won numerous awards for his work in groundbreaking prosecutions,  Mr. Claud is also an accomplished trial lawyer, having started his career as an Assistant District Attorney in Manhattan before joining DOJ. He is a frequent public speaker on matters of government enforcement strategies under the FDCA as well as corporate compliance best practices.

At HPM, Mr. Claud will represent regulated entities on litigation, enforcement, and compliance matters, internal investigations, and data privacy concerns. He also will advise clients on matters related to compliance with the Controlled Substances Act and DEA regulations, and matters involving drug compounding, telehealth, and telemedicine.

“I was on the other side of the table against Hyman Phelps several times during my career as a prosecutor,” said Claud. “In each instance, I came away thinking more of the firm both as worthy opponents in litigation and as thoughtful people. I am really lucky to work with attorneys who are expert in this practice area.”

Mr. Claud graduated from Trinity College (CT) in 1991 with a B.A. in history, the University of Colorado’s Graduate School of Public Affairs in Denver with a master’s degree in criminal justice, and is a 2000 graduate of the Catholic University of America’s Columbus School of Law, cum laude. He is admitted to practice law in the District of Columbia.

In our last blog post, we advised medical device companies to consider applying to FDA’s Small Business Program to help with the noticeably higher user fees for FY2023. In this blog post, we provide a primer on user fees and the Small Business Program.

User Fees

User fees are fees that FDA collects from “companies that produce certain products, such as drugs and medical devices, and from some other entities, such as certain accreditation and certification bodies.” These fees supplement the annual funding Congress provides for FDA. These fees are negotiated by FDA and industry every five years. Industry agrees to fee collections in exchange for FDA commitments to meet certain performance goals, such as reaching a decision on a marketing application within a predictable timeline. The user fees, however, do not correlate to the review outcome for the application. While the fees provide funding for a review, meeting the timeline 100% is not guaranteed and the performance goals do account for this potential.

Exemptions or Waivers

FDA allows for the following exemptions or waivers for user fees for medical devices (see here for further information).  Note that the FDA Small Business Program is open to both US and foreign businesses.

Small Business Program

FDA’s Small Business Program reviews requests by medical device companies to be considered small businesses. To qualify as such, the business, including its affiliates, must have gross receipts and sales of less than $100 million for the most recent tax year.

The key benefit to being designated a small business is being eligible for a reduced fee for those medical device submissions that require a user fee. The small business fees for FY 2023 can be found here. Qualified businesses can save anywhere from 50 – 75% off the standard fees. Note that the establishment registration fee is not eligible for a reduced fee or waiver (see here).

Additionally, a small business is eligible for a “first premarket application/report” (e.g., first PMA (including modular PMA), BLA, PDP, or PMR) fee waiver, if the business and its affiliates have gross receipt and sales of no more than $30 million (for details, see Section III.C of the FDA Guidance).

FDA intends to complete its review of a small business certification request within 60 calendar days of receipt. If granted, the company can enjoy the benefits for that fiscal year alone, which runs from October 1 through September 30. The company must apply and be granted the certification for each fiscal year in which they plan to submit a medical device application that requires a user fee. FDA will not accept requests for the next fiscal year before August 1 — so plan accordingly. If you would like to request for FY 2023 status, you can submit an application through September 30, 2023.

Submitting a Small Business Certification Request

To submit a small business certification request:

1. Collect tax documentation. This should be completed, signed and dated for the most recent tax year for the business and all US affiliates.
2. Obtain your Organization ID number (Org ID). The Org ID identifies a business in FDA’s user fee website and is automatically generated when an account is created.
3. Download either Form FDA 3602 (for a business headquartered in the United States) or Form FDA 3602A (for a business headquartered outside the United States).
4. Send documents to FDA.

If you are a foreign business, we recommend that you allow for additional time to prepare your documents. A business headquartered outside the U.S. will need to submit Form FDA 3602A to their National Taxing Authority first (i.e., the equivalent of the U.S. Internal Revenue Service), who then completes Section III of that form (i.e., National Taxing Authority Certification). If a foreign business has any additional foreign affiliates or US affiliates, a separate certified Section III of Form FDA 3602A for each foreign affiliate or a Federal (U.S.) income tax return for each U.S. affiliate will need to be sent to FDA. When your documents are ready, send them to the following address:

FY 20__ MDUFA Small Business Qualification

Small Business Certification Program

10903 New Hampshire Avenue

Building 66, Room 5305

Silver Spring, MD 20993

U.S.A.

Our Observations

FDA guidance makes no mention of exceptions or technicalities—therefore, if you are certified as a small business, don’t wait to submit your marketing application to FDA!

Consider this hypothetical situation for your 510(k) submission that will be mailed to FDA (Standard Fee for FY2022: $12,745, Standard Fee for FY2023: $19,870, Small Business Fee for FY2022: $3,186, Small Business Fee for FY2023: $4,967, see our previous blog for the details). You have been designated as a small business for FY2022 and therefore paid the small business fee of $3,186. You send your 510(k) on the last day of FY2022, with a postmark of Friday, September 30, 2022, believing that your 510(k) would be considered squarely within FY2022. However, it is most likely your submission will be logged in on the next business day (Monday, October 3, 2022) during the new fiscal year 2023. That means the user fee that would have been acceptable on Friday is now insufficient because the new set of medical device user fees have become effective. Now, your 510(k) application is subject to user fee hold.

To make matters worse, your small business certification for FY2022 is now expired as of the first day of FY2023, meaning that you will need to reapply for the small business designation. However, as a small business, you may be anxious to obtain a 510(k) clearance as soon as possible. As a result, you may be inclined to pay the standard fee for FY2023 for a 510(k) submission to get the FDA review started. But in doing so, you have just paid a difference of 524% in user fees over a few days ($3,186 of FY2022 Small Business Fee for a 510(k) vs. $19,870 of FY2023 Standard Fee for a 510(k))!

FDA states that “[p]ayment must be received and processed at the time or before the date the application is sent. If the FDA receives an application without full payment of all required fees, the FDA will consider the application incomplete and will not begin its review.” Payment is accepted by mail, courier, or wire transfer. In our experience, wire transfer is the most efficient but comes with caveats. The submitter must notify FDA when the payment clears. The user fee hold letter states that “[w]hen we [FDA] have been notified that your full user fee payment has been received, review of the submission will resume as of that date.” It is written in the passive voice and does not specify who is to make this notice. There is nothing approaching clear notice that in addition to payment, the user fee payor must also inform FDA—”we made a payment.”  The natural inference is that FDA would receive notice from another part of FDA or the bank receiving the wired funds, namely, the Federal Reserve Bank of New York. In fact, in instructions on submitting payment by wire transfer, the Federal Reserve Bank of New York is the entity tasked with notifying FDA of payment within 1 working day (see here).

That view is consistent with the user fee hold letter that seems to imply that at least some forms of payment result in faster processing and notification: “You now have the option to pay online by credit card. We recommend this form of payment. Credit card payments are directly linked to your user fee cover sheet and are processed the next business day.” This instruction appears to imply that payments that are “directly linked” results in a faster notification, while checks may result in a slower notification.

There is also no directive following this statement in the user fee hold letter as to how the user fee payor should provide notice that FDA had “received” the funds, further strengthening the inference that another entity would be providing notice as FDA notes here.  It does not make sense that the user fee payor would provide notice to FDA, since they would not have direct knowledge of when payment was “received.”  Their knowledge would relate to the date of “sending.”  It is FDA that would have knowledge of whether FDA has “received” funds or has been notified by the bank that funds have been “received.”

Suggestions for Industry

In a recent example, the company paid the user fee before its application was sent on the last day of FY2022, thereby complying with FDA procedures. As long as user fees are paid “at the time or before the date the application is sent,” which was clearly true in this company’s case, FDA should have honored the FY2022 user fees.

However, because FDA did not receive the submission until the first business day of the new fiscal year, it required the company to pay the higher FY2023 fees. “FDA records as the submission receipt date the latter of the following: 1. The date the submission was received by the FDA; or 2. The date the Federal Reserve Bank of New York notifies the FDA that payment has been received.” (Please see here for more information.)

As a result, we ask companies to consider additional time during the transition from one fiscal year to the next. This is particularly important when it is apparent that the company has complied with FDA procedures to pay the user fee before it submits an application within the same fiscal year. This is also especially important when MDUFA is renewed and would alleviate some anxiety over the uncertainty of the timing of the passage of the bill and its impact on user fees.

Currently, FDA allows for two different methods to send submissions for review: eCopy and eSTAR. We previously blogged about the advantages of eSTAR. To reduce the chances of inefficiencies with delivery and processing, we recommend utilizing eSTAR to submit your applications to FDA.

Suggestion for FDA

We also suggest that FDA address the ambiguity about the notice requirement. Wire transfers and credit card payments are inherently “automated.” FDA should not require additional notification from the payor that the user fee has been paid. Therefore, it makes sense that the communications around payment are between the financial institution and FDA and not the payor.

Early Nov. 2022, FDA published a draft guidance on FDA’s implementation of the Over-the-Counter Monograph Drug User Fee Program (OMUFA). The draft guidance provides information regarding various aspects of the OMUFA program under sections 744L and 744M of the FDC Act,  as added by the CARES Act.

FDA’s newly released draft guidance describes the types of OMUFA fees, the due dates for fee payment, exceptions to certain fees, the process for submitting fee payments, the consequences of failing to pay the required fees, and the process for submitting refund requests or disputing FDA’s assessment of OMUFA fees.  Much of the guidance repeats the law and FDA’s previous notices (see e.g., our blog posts here and here).  That said, the guidance  will be a helpful reference for companies that are not sure whether they are subject to the OMUFA facility fees, whether there any exceptions, how much they have to pay, when they need to pay, etc.

FDA is authorized to charge an annual facility fee for OTC monograph drug facilities. The facility fee applies to a single manufacturing facility.  The guidance explains that a facility counts as a single facility subject to a single facility fee if it is under one management and in one geographic location and address, and is engaged in manufacturing or processing the finished dosage form of an OTC monograph drug product.  Importantly, to be deemed a single site, a multiple-facility operation must be listed with the agency under one “FDA establishment identifier” (FEI).  If a party believes that its facilities should be considered a single facility and multiple FEIs have been assigned in error, it may request consolidation of the FEIs. The consolidated FEI will be reflected in the following fiscal year user fee assessments, only (i.e., FDA will not refund any fees that have been incurred already).

For purposes of the facility fees, a facility at one geographic location but under multiple management will be considered multiple OTC monograph drug facilities, one per management entity.  Size, revenue, and number of finished drug products manufactured at a facility do not affect the OMUFA facility fee.

The guidance also addresses the timing of the determination as to whether  a facility is subject to a fee.  To determine if a facility is subject to a fee, FDA will look at the activities at the facility and at the registration status.  Facility fees are set per fiscal year (from Oct. 1 through Sept. 30).  However, the relevant time to determine whether a facility is subject to a facility fee is the period of Jan. 1 through Dec. 31.  For example, a facility that was registered at any point during the period Jan 1 through Dec. 31, 2021 is subject to the fee for FY 2022. (In other words, to avoid being subject to a fee, a facility must cease manufacturing of OTC monograph drug product and undo its registration by Dec. 31, 2020).  Thus, updating facility registration in a timely manner is critical to avoid being charged fees long after a facility has discontinued manufacturing of OTC monograph drug products.  FDA stresses that the law does not provide exemptions or waivers. That said, any facility that first registered after Jan. 27, 2020, solely for the purpose of manufacturing hand sanitizer products during the public health emergency is exempt from OMUFA fees. The guidance also provides clarification about some types of facilities that are not subject to facility fees under OMUFA.  It appears that some of these clarifications may reflect issues FDA has faced as some in the regulated community were surprised to receive invoices for the fee.  For example, the guidance expands on the statutory language that provides that a facility is not subject to an OMUFA facility fee if the only manufacturing or processing activity is overpackaging.  Specifically, the guidance states that FDA considers overpackaging to be the enclosure of individual drug products that each bear full and complete labeling information required under the FDC Act to allow legal marketing individually.  If the individual packages do not include this level of labeling information and the only processing activity is to take those packages and put them into an outer container that includes the full labeling information, the facility will be subject to a facility fee, but if each individual package does have full labeling information, the same activity should not subject the facility to a fee under OMUFA.

The guidance also addresses fees for OTC monograph order requests (OMORs).  Under section 744M(a)(2) of the FDC Act, the Agency is authorized to assess and collect fees from each person that submits an OMOR, except for OMORs that request certain safety-related changes.  OMOR fees are due on the date of the submission of the OMOR. However, if the requestor withdraws the OMOR before FDA accepted or refused the OMOR for filing or FDA refuses to file the OMOR, FDA will refund 75 percent of the OMOR without a written refund request.  If an OMOR is withdrawn after it is filed, FDA may refund the fee or a portion of the fee if no substantial work was performed on the OMOR.  FDA has sole discretion as to the amount that it will refund.

The guidance describes the process to dispute fees. To qualify for the return of a facility fee or an OMOR fee claimed to have been paid in error, an entity must submit a written request with justification for the refund or reduction within 180 calendar days after the date the fee was paid. If FDA denies the request, the entity may submit a request for reconsideration within 30 days of FDA’s decision.  If a request is denied upon reconsideration, the entity may choose to appeal the denial up the chain of command.

FDA has several tools to enforce payment of fees. For OMOR fees, FDA will not file the OMOR unless the entity submitting the OMOR is up to date on fees and pays the applicable OMOR fee in full.  If an entity does not pay the full facility fee in a timely manner (meaning within 20 days of the due date) FDA will include the name in a publicly available arrears list, and all OTC monograph drug products produced at that facility are misbranded.  Delinquent entities will receive an invoice from FDA detailing information on the user fee incurred, the due date, and the payment instructions. If full payment is not received by the date specified on the invoice, interest will be charged at a rate set by the U.S. Department of Treasury. In addition, delinquent invoices will have a $20 administrative fee assessed for each 30-day period that the invoice remains outstanding. In addition, FDA will assess a penalty of 6 percent per year on any invoice delinquent for more than 90 days.

To be considered by FDA, comments must be submitted by January 3, 2023.

When you have followed Drug Enforcement Administration (“DEA”)/Department of Justice (“DOJ”) civil settlements for as long as we have, you cannot help but think that you’ve seen it all.  Then something novel comes along.  Unlike virtually all DEA/DOJ civil settlements that we are aware of, the government recently announced a settlement not with a DEA registrant but with non-registered retail inventory service providers.  While no registrant is a party to the settlement, as the U.S. Attorney’s press release observes, it is a stark reminder that registrants are “ultimately responsible for supervising all personnel on the premises and preventing the diversion of controlled substances.”  The U.S. Attorney’s Office press release is here.  Company Pays $158,760 to Resolve Claims Related to Controlled Substance Thefts From Pharmacies During Inventory, U.S. Attorney’s Office, Northern District of New York (Sept. 29, 2022), at https://www.justice.gov/usao-ndny/pr/company-pays-158760-resolve-claims-related-controlled-substance-thefts-pharmacies.

Affiliated companies RGIS LLC (“RGIS”) and Retail Services WIS Corporation (“WIS”) provide inventory services to retail stores, including pharmacies, throughout the U.S.  The press release notes that the companies’ policies touted that “only handpicked, high-caliber, well-respected employees are assigned to pharmacy inventory teams[,]” those employees “are required to undergo a drug test and criminal background check” and the companies “maintain a ‘zero tolerance’ policy for theft.”  Id.  Yet even with those safeguards in place, RGIS and WIS employees were able to steal controlled substances from pharmacies they inventoried.  Id.  One RGIS employee stole Vicodin, a schedule II substance, while inventorying a pharmacy in Schenectady, New York, in July 2017.  That employee was terminated, rehired and “implicated in stealing narcotics” from three other New York pharmacies in 2020.  Id.  Not only was that employee caught diverting a schedule II opioid, they were given further opportunities to steal from pharmacies.  RGIS employees “were also implicated in stealing narcotics” from pharmacies in Kentucky, North Carolina and Louisiana and WIS employees “were implicated” in thefts from three Texas pharmacies.  Id.

RGIS and WIS agreed to pay $158,760 to resolve allegations “that they caused violations of the Controlled Substances Act.”  Id.  At first glance, $158,760 would appear to be some random sum the parties appear to have arrived at, but the maximum penalty assessed for each recordkeeping violation pursuant to 21 U.S.C. § 842(c)(1)(B)(i) between December 2021 and May 2022 was $15,876.  It would seem that the government and RGIS/WIS reached agreement that the employees were responsible for ten separate alleged thefts, or violations.  The settlement also requires the companies to enhance their background checks of employees who inventory pharmacies and to make the results available to their pharmacy-clients.  Id.

While neither the U.S. Attorney’s Office for the Northern District of New York nor DEA have announced related settlements with any affected pharmacies, it behooves all registrants to seriously consider whether to allow outside entities to inventory or conduct other activities requiring access to their controlled substances.  Pharmacies and every registrant must provide effective controls and procedures to guard against the theft and diversion of controlled substances.  21 C.F.R. § 1301.71.  The regulations prohibit registrants from employing anyone with access to controlled substances who has been convicted of a controlled substance-related felony or who has had a DEA application denied, a DEA registration revoked, or has surrendered a DEA registration “for cause” without a waiver to employ that person.  21 C.F.R. §§ 1301.76(a), 1307.03.  Should registrants engage an outside entity who will have access to their controlled substances, they must ensure to the extent possible that the entity has conducted adequate employee background checks of everyone entering the facility.  Once on-site, registrants should never leave any non-employee with access to controlled substances unaccompanied.

As the press release warns, registrants are ultimately responsible for the security of their controlled substances.

On September 30, 2022, President Biden signed into law the Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023, Division F of which is titled the “FDA User Fee Reauthorization Act of 2022” (“FUFRA”).   In addition to reauthorizing for an additional five fiscal years—Fiscal Years 2023-2027—several drug, biological product, and medical device user fee provisions that were scheduled to sunset on September 30, 2022, FUFRA reauthorizes—but only through December 16, 2022—several other statutory provisions that were scheduled to expire.

Unlike prior user fee reauthorizations, FUFRA does not include any “riders” addressing additional, non-user fee related statutory changes.  The limited reauthorizations will likely force Congress back to the negotiation table later this year to pass additional legislation that would extend those provisions through Fiscal Year 2027.  At that time, Congress may also consider various “riders” that were included in the House and Senate versions of FDA’s user fee program reauthorizations.

As we have done in the past for the initial and each quinquennial reauthorization of the drug and medical device user fee laws—in 1992, 1997, 2002, 2007, 2012, and 2017—Hyman, Phelps & McNamara, P.C. has prepared a detailed Summary and Analysis of FUFRA.  The memorandum summarizes each section of FUFRA and analyzes the new law’s potential effects on the FDA-regulated industry.

At the latest MedTech conference held in Boston, MA from October 24-26, we heard from FDA officials and industry representatives on a range of topics. Below, we provide a snapshot of the three-day event:

Update on the International Medical Device Regulators Forum (IMDRF)

The IMDRF conference was held in early September where Associate Director for International Affairs at CDRH, Melissa Torres, summarized actions members were taking, including working on harmonizing premarket review requirements. She indicated the requirements went out for comments and expects the group to finalize the document by early next year.

Harmonizing different regulatory requirements is difficult both because of a lack of resources and differences in how each country’s laws and regulations are written. Recognizing this, moderator Diane Wurzburger, a regulatory affairs executive at GE, asked whether industry could assist in advancing hot areas such as artificial intelligence/machine learning (AI/ML). In response, Ms. Torres shared that on the heels of the MDUFA V announcement, the international affairs team will be able to hire another five employees on top of the two existing ones. This allows FDA to further engage with international members, address harmonization of international standards, develop multilateral agreements and cross agency documents around AI/ML and a predetermined control plan (PCCP), and converge on topics such as AI/ML.

Ms. Torres also shared that the eSTAR program, which we most recently blogged about here, is being developed with Health Canada. The goal is to permit sponsors to submit their device applications through eSTAR to both US and Canadian regulators and reduce administrative burden. Fellow panelist, August Bencke Geyer, who serves as Deputy General Manager of the Medical Devices Office at ANVISA (Brazilian Health Regulatory Agency) expressed enthusiasm and indicated that Brazilian regulators are watching closely to see how the program unfolds. We are too!

Understanding FDA Emergency Use Authorization (EUA) Transition Plan

Last month, we advised planning for the end of the Covid-19 public health emergency (PHE) and highlighted that transition plans for Covid-19 products are amongst CDRH FY2023 priorities. In one of the conference’s well-attended sessions, Dr. William Maisel, Chief Medical Officer and Director at CDRH’s Office of Product Evaluation and Quality, shared FDA’s experience with EUAs over the last two and a half years as well as more detail on transition planning for those devices marketed under an EUA or enforcement policy (EP).

CDRH’s pandemic responses included more than 4,000 medical devices authorized. This includes EUAs and full marketing authorizations. To put it into perspective, these were the numbers (so far) for in vitro diagnostics EUAs: 304 molecular, 84 antibody, 51 antigen, and 5 other. FDA also authorized the following medical devices: 279 personal protective equipment (PPE), 119 ventilators, and 52 others.

To paraphrase from our blog post, EUAs are triggered by an EUA declaration; FDA will publish advanced notice for an EUA declaration and provide a 180 day notice before the implementation of the transition plan. Section 319 of the Public Health Service Act is a declaration by the Health and Human Services (HHS) Secretary that a PHE exists; these declarations generally last 90 days but may be extended by the HHS Secretary. EPs are triggered by an expiration of Section 319 or at least 45 days after guidance is finalized, whichever is later.

Dr. Maisel reaffirmed that an EUA may remain in effect beyond the duration of the declared PHE, unless FDA chooses to revoke an EUA. Below, we re-create information shared by Dr. Maisel that summarizes transition planning and what has been outlined in a guidance document and our blog post:

Dr. Maisel’s short and sweet takeaway: “focus on getting your application accepted, not even cleared or approved. It’s an easy way to manage the transition.”

Accepted means through the Refuse to Accept (RTA) process. As we noted previously, eSTAR 510(k)s are exempt from RTA – one more advantage to submitting a 510(k) via eSTAR.

If you have a good relationship with the review team, Dr. Maisel encourages a brief phone call or quick email to obtain informal feedback.

Dr. Maisel also discussed disposition of already distributed devices. For whose manufacturers who do not intend to continue device distribution, FDA generally does not intend to request market removal of those devices distributed before the applicable EUA termination or guidance withdrawal date. However, he cautioned that manufacturers should be aware of any applicable Food, Drug, and Cosmetic Act (FD&C Act) requirements for their specific device and continue to comply with these requirements for as long as they are applicable.

In closing, he advised manufacturers who plan to market their products beyond the public health emergency to plan to submit marketing applications. He signaled that MDUFA V will impact pre-submissions with their goal of completing 90% within 70 days. In other words, for those wishing to obtain FDA feedback on their transition plan or marketing submission, they should plan to do it soon and ensure enough time to comply with regulatory requirements.

Getting Serious About Women’s Health in Medtech

On the second day of the conference, we heard from Dr. Terri Cornelison, Chief Medical Officer and Director of Health of Women at CDRH. She described the CDRH Health of Women Strategic Plan to Better Inform Medical Device Research and Regulation for Women and summarized three priorities:

1. Sex and gender specific analysis and reporting,
2. Integrated approach for current and emerging issues related to women’s health, and
3. Research roadmap.

Under the first priority, CDRH practices for sex and gender specific data collection, analysis, and reporting would be optimized. Priority 2 will result in CDRH coordinating and leading a center-wide integrated approach to current and emerging issues as they relate to women. Under priority 3, CDRH will continue to promote advancement of regulatory science; strategize gap areas; discover and improve understanding; better understand women’s experience; facilitate sex and gender analyses; and identify areas where clinical trial enrollment can be better balanced for women.

We also heard from Dr. Suzanne Baron, Director of Interventional Cardiology Research at Lahey Hospital and Medical Center. Dr. Baron spoke to specific actions sponsors can take to improve representation of women in cardiac clinical trials. These include, but are not limited to, ensuring inclusion/exclusion criteria addresses how women present with disease, obtaining input on protocol design from women, and including women on steering committees, advisory boards, and as principal investigators. These are important considerations as FDA routinely asks sponsors to ensure their protocols are diverse, not just in the subjects recruited, screened, and enrolled, but also in users and those who carry out the protocols.

CDRH Town Hall

In the last session of the conference, aptly described as a super session, CDRH officials led the standing room only presentation and discussion around the CDRH strategic plan and priorities, Covid-19 impact on workload and attrition, and the total product life cycle (TPLC) Advisory Program (TAP).

CDRH Strategic Plan and Priorities

Dr. Jeff Shuren, Director of CDRH, kicked off the super session by acknowledging that increasing cybersecurity vulnerabilities to medical devices and the risks that are imposed such that patient care is compromised represent a national security. To that end, Dr. Shuren shared that there was a 17-fold increase in device related vulnerabilities from 2016 to 2020 and said FDA requires more funding and authority to fight the issue.

As part of his introductory remarks, Dr. Shuren touted the digital health activities CDRH has undertaken: establishing the Digital Health Center of Excellence and the pre-certification program and publishing guidance on clinical decision support and AI/ML.

He also shared that the three 2022 – 2025 priorities are:

1. Promote a modern and diverse workforce,
2. Enhance organizational agility and resilience, and
3. Advance health equity.

FDA’s recent pre-certification report, which we blogged about here, would enable FDA to create a new pathway for those products considered software as a medical device (SaMD). The report illuminated the fact that FDA is currently only allowed to grant a de novo application through such a pathway. Dr. Shuren acknowledged this highlights a major shortcoming in that the regulatory regime will be behind evolving digital health technologies.

Covid-19 Impact

Dr. Shuren praised the administrations of both President Biden and former President Trump in their commitment to streamline guidance documents, citing the first Covid-19 guidance was cleared within 36 hours.

He signaled that 2023 will be a transition year as FDA aims to “return to normal” after an unprecedented workload, speaking to a slide that showed a nearly 70% increase in submission volume in FY2020, 35% in FY2021, and 20% in FY2022 as compared to FY2019. The FY2022 data is through October 17, 2022 and includes more than 1,400 EUAs and pre-EUAs. As discussed above in the session with Dr. Maisel, Dr. Shuren reinforced plans to publish guidance on transition plans for devices marketed under EUAs and EPs.

Dr. Shuren also remarked that this year was busy for those submitting and reviewing breakthrough designations, which are granted about 40% of the time.

TAP

For those unfamiliar, Dr. Douglas Kelly, Deputy Director for Science, Chief Scientist at CDRH introduced the Total Product Life Cycle (TPLC) Advisory Program (TAP) Pilot.

The TAP program is a voluntary program intended to leverage experts “who provide dynamic, strategic advice” and is a new component of MDUFA V. The program will include FDA review teams, patients, providers, and payors and is designed to incorporate input from these stakeholders to “improve various aspects of medical device development and to increase the predictability and reduce the time from concept to commercialization.” One goal of the program is to provide for more timely premarket interactions. Another is to improve submission quality.

Dr. Kelly shared that the TAP Pilot will be introduced in a phased approach with the first phase set to launch on January 1, 2023. During this time, fifteen cardiovascular devices from the Office of Health Technology 2 (OHT2) will be enrolled. OHT2 was chosen based on their history of granting breakthrough device designations, workload, and experience with programs that involve rapid interactions. Dr. Kelly indicated that an additional 45 devices will be enrolled in FY2024 and an additional 65 in FY2025. Because these additional devices have not been identified, Dr. Kelly welcomed feedback on areas to target next.

In closing, we appreciated hearing from an impressive slate of speakers and enjoyed meeting and reuniting with friends and colleagues. We return energized with new perspectives and work ahead!

On Friday, November 4, CMS finalized a rule to implement mandatory rebates (called “refunds”) for discarded amounts of separately paid Medicare Part B single-source drugs packaged in single-dose or single-use containers.  For a summary of the rule, we refer readers to our July 2022 post on the proposed rule (click here), since he substance of the final rule has not changed from the proposal.  The only differences relate to timing.  Refunds will still be owed for quarters beginning with 1Q 2023, and CMS will still send annual reports to manufacturers containing the number of discarded units and the refunds owed for four quarters.  However, whereas the proposed rule provided that CMS would send the first annual report by October 1, 2023 and manufacturers would have to pay undisputed refunds by December 31, 2023, CMS has now decided to postpone establishing a timeline for the reports and payment.  The preamble explains that CMS wants to coordinate the collection of these refunds with the collection of Part B and D inflation rebates imposed under the Inflation Reduction Act (see our summary of those requirements here).  CMS will address the timing of reports and payment deadlines in a future rulemaking.  A preliminary report on discarded amounts during the first two quarters of 2023 will be issued by December 31, 2023, but the report will not be final and will not require payment of refunds.

Other clarifications in the preamble include the following:

• Part B refunds on discarded amounts will be excluded from average sales price (ASP) and Medicaid rebate average manufacturer price (AMP) and best price because CMS deems them to be refunds for “otherwise unsaleable return goods,” which are excluded from those prices.
• The requirement to use a JZ modifier where there were no discarded amounts has been delayed for six months until July 1, 2023. The requirement to use a JW modifier for discarded amounts beginning on January 1, 2023 remains in place.
• CMS clarifies that units of drugs packaged under the end-stage renal disease (ESRD) prospective payment system, like other packaged drugs, are not subject to the discarded drug refund.

The refunds for discarded drugs seem a relatively benign and narrowly focused government discount in comparison to the Part B and D inflation rebates and negotiated prices imposed under the Inflation Reduction Act.  CMS notes that Medicare Part B spending on discarded drugs is weighted heavily toward a small number of drugs.  However, even assuming CMS is correct, manufacturers of drugs in single-use containers will still be faced with decisions about whether to spend resources introducing smaller container sizes, or risk ongoing liability for discarded drug refunds.

We previously blogged about Pfizer’s copay assistance lawsuit, which sought to challenge HHS’s interpretation of the Federal health care program anti-kickback statute (AKS) and position that the company’s proposed copay assistance program would violate the AKS.  Now, after an unfavorable HHS Office of the Inspector General (OIG) advisory opinion and two defeats in court, Pfizer has appealed the Second Circuit’s decision to the Supreme Court.

In its petition filed earlier this month, Pfizer challenges HHS’s interpretation of the AKS as “staggeringly overbroad,” contrary to the congressional intent behind the AKS, and a threat to “almost any activity that facilitates patient access to federally funded healthcare.”  At the center of Pfizer’s argument is whether an AKS violation requires corrupt intent.  If SCOTUS takes up this case, it could have significant and far-reaching implications across the healthcare fraud and abuse landscape.

Background

Pfizer manufactures tafamidis (sold under brand names Vyndaqel and Vyndamax), a breakthrough treatment for a rare, progressive heart condition called transthyretin amyloid cardiomyopathy (ATTR-CM).  Pfizer set the price of tafamidis at $225,000 for each one-year course of treatment.  Under Medicare’s payment formula, Part D plan enrollees who take tafamidis are responsible for a copay of approximately $13,000 per year.  Recognizing that this out-of-pocket cost represents a significant financial barrier for many patients, Pfizer proposed a Direct Copay Assistance Program for Medicare Part D enrollees using tafamidis.  Under the proposed program, Pfizer would directly cover nearly all of a Medicare Part D enrollee’s copay for tafamidis, subject to certain eligibility criteria, including financial need.  Eligible patients would be responsible for only $35 per month, and Pfizer would cover the rest of the approximately $13,000 annual copay.  The Medicare program would pay most of the remaining $225,000 in annual cost.  In June 2019, Pfizer sought an OIG advisory opinion to ensure that its proposal would not run afoul of federal law.

In September 2020, the OIG issued an unfavorable advisory opinion to Pfizer, concluding that the proposal was “highly suspect” under the AKS because one purpose of the program, and perhaps the primary purpose, would be to induce Medicare beneficiaries to purchase Pfizer’s federally reimbursable medication.   Federal courts, too, have broadly interpreted the AKS to cover any arrangement where “one purpose” of the remuneration is to induce referrals, purchases, or orders of federally reimbursable items or services, even if the arrangement has other, legitimate purposes (see, e.g., United States v. Borrasi, 639 F.3d 774 (7th Cir. 2011), here, and United States v. Greber, 760 F.2d 68, 71 (3d Cir.), cert. denied, 474 U.S. 988 (1985), here).

Pfizer challenged the OIG’s interpretation as contrary to law in a lawsuit brought in the Southern District of New York (SDNY).  The district court sided with OIG, rejecting Pfizer’s narrower reading of the AKS, which would require an element of “corrupt” intent to impose AKS liability.  Pfizer appealed to the Second Circuit, which again ruled against Pfizer.

The Second Circuit’s Interpretation of the AKS and its Mens Rea Element

The AKS makes it a criminal felony to knowingly and willfully offer or pay any remuneration (including a kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a person to, inter alia, purchase, order, or arrange for the purchase or order of, a drug reimbursed in whole or in part by a federal healthcare program, such as Medicare Part D.

In affirming the district court’s decision, the Second Circuit held that Pfizer’s proposed program falls squarely within the AKS’s prohibitions because it is specifically designed to induce Medicare beneficiaries to purchase Pfizer’s federally reimbursable drug, tafamidis.

In relying on the plain meaning of the term “induce,” as the district court had done, the Second Circuit clarified the definition as:  to entice or persuade another person to take a certain action.  Contrary to Pfizer’s contention that the term implies a corrupt intent, the Court found it to have neutral intent, as one can persuade another to take an action with good or bad motives.

Similarly, the Court drew on the plain meaning of “willfully” to reject Pfizer’s argument that the term suggests “an element of corruption.”  The Court instead interpreted the term, as used in the AKS, to mean an intentional violation of a known legal duty, but concluded that “the mens rea element goes no further.”  Consistent with the district court, the Second Circuit likewise found nothing in the statutory text that would indicate that corrupt intent is a required element of an AKS violation.  On the contrary, referring to the statement in the statute itself that a person need not have actual knowledge of the AKS or specific intent to commit a violation of it, the Court concluded that a person can willfully violate the AKS, even without knowledge of the exact statutory provision that her conduct violates, as long as she knows her conduct is illegal.

In addition, the Second Circuit rejected Pfizer’s argument that the AKS should be read more narrowly than the beneficiary inducement statute (BIS), a civil statute that prohibits a person from offering to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under Medicare or Medicaid.  According to Pfizer, Congress intended that the BIS be the AKS’s broader, civil counterpart, meaning that the Court should interpret the term “induce” in the AKS more narrowly than the term “influence” in the BIS.   The Second Circuit found that, although the two statutes have some subject matter overlap, they prohibit different activities—the AKS is not simply a narrower or criminal version of the BIS.  The Court found that there is at best little utility in interpreting the AKS by reference to the BIS.

Pfizer’s Petition to SCOTUS

Pfizer is now asking SCOTUS to reject these earlier interpretations of the AKS.  As Pfizer has argued throughout this legal battle, its proposed copay assistance program “poses no risk of corrupting independent decision making” or of inducing improper utilization of tafamidis.  According to Pfizer, this is because tafamidis is the only FDA-approved drug to treat ATTR-CM.  Because no approved alternative exists, its proposed copay assistance program would not influence treatment decisions away from other drugs.  However, HHS, SDNY, and the Second Circuit have each concluded that corrupt intent is not required for an AKS violation—copay assistance “induces” a beneficiary to purchase a medication when the assistance removes a financial barrier, even if the medication is one that the beneficiary needs and would have purchased if they had the financial means to do so.  Pfizer’s case therefore turns on whether it can convince the Court to adopt a narrower reading of the AKS.

Pfizer’s arguments for a narrower reading of the AKS in its petition are consistent with its arguments inSDNY and the Second Circuit.  Pfizer contends that these earlier interpretations of the AKS are not supported in the statute’s text, structure, or legislative history.  Rather, Pfizer argues, the AKS focuses on “corrupt transactions,” such as the specific examples of “kickback, bribe, or rebate” that Congress provided.  To Pfizer, HHS’s interpretation is “out of step” with the Supreme Court’s “longstanding efforts to ensure that criminal laws do not sweep more broadly than Congress intended.”

If SCOTUS takes up this case, we will expect to see HHS make familiar responses to Pfizer’s AKS interpretation arguments as explained above, relying on the plain meaning of “induce” and “willfully” and declining to interpret the AKS by distinguishing it from the BIS.

It remains to be seen how the justices will respond to Pfizer’s petition, but without a circuit split on this issue, it is less likely that they will take up the case.  SCOTUS has until Dec. 14, 2022 to decide whether to grant certiorari.  For now, the Second Circuit decision still stands: however serious the disease, however beneficial a copay assistance program might be to patient access to treatment, and however well-intentioned the manufacturer may be, manufacturer copay programs that include government beneficiaries are at high risk under the AKS.

On October 26, 2022, US Pharmacopeia (USP) Biologics Stakeholder Forum held a workshop on “Collaborating to solve CMC challenges and support efficient development of lentiviral-mediated CART cell therapies.”  Panelists discussed CMC challenges for CART therapies, including potency assay development, analytical method transfer, and demonstrating comparability.  Panelists also provided advice and recommendations on how they approach potential these challenges as well as potential areas for standards development.  USP aims to identify tools and solutions that may facilitate CART therapy development and mentioned potentially writing an information chapter on developing assays for CART therapies based on the workshop’s panel discussion.

The workshop included presentations by USP on its available standards for advanced therapies, FDA/CBER on CMC challenges for CART cell therapies, and industry approaches to potency testing during CART development, and using Analytical Quality by Design (AQbD) principles in potency assay development.   The majority of the workshop was spent on Q&A and included discussions on too many topics to write about in this blog.

USP opened the workshop with a description of its organization, each of its applicable standards for advanced therapies, including its standards (general chapters) <1046> Cell and Tissue Based Products and <1047> Gene Therapy Products, and its microbial related chapters open for comment: <74> Solid Phase Cytometry-Based Rapid Microbial Methods for Detection of Contamination in Short Shelf-Life Products, <77> Mycoplasma Nucleic Acid Amplification Tests, and <1114> Microbial Control Strategies for Cell Therapy Products.

FDA/CBER (the Agency) provided an overview of CMC challenges for CART development (e.g., limited manufacturing experience, in-process testing, product characterization, product stability data, assay development and qualification), CMC expectations for late-stage CART cell development (have a controlled manufacturing process, well developed and qualified analytical methods, and sufficient manufacturing experience), and regulatory considerations for potency assay development.  Some key points the Agency shared included the following:

• Your product is only as good as the process-demonstrate your manufacturing process consistently produces drug product as per your critical process parameters (CPPs)
• Have qualified potency assay(s) prior to conducting your pivotal study
• Agency often sees issues when the drug product is put on an expedited manufacturing or an expedited clinical program
  • As the clinical program for the drug product matures, the CMC information should mature hand in hand
• Early product characterization and concurrent matrix-based assay development are often seen as a key for product development and licensure success
  • Helps you move forward in drug development and quicker later in development (i.e., avoid CMC bottleneck prior to initiating pivotal study)
  • You’ll have the data to support comparability for when changes are made
  • May help you avoid analytical bridging studies
  • Allows you to determine which potency assay(s) are most relevant for your product
• Don’t assume that product characterization is not needed when using an automated piece of equipment that is generating CART products. Use of automation does not allow for bypassing FDA requirements with respect to method transfer comparability.
• Although not expected at the pivotal study stage, successful sponsors validate early
  • Opportunity for feedback from FDA if provided pre-BLA
• Avoid running Process Performance Qualification (PPQ) prior to validating your methods
• A replication competent lentivirus (RCL) testing exemption can be requested after you’ve obtained several lots showing that you can repeatedly generate RCL negative drug product
• It is less likely for a company to be granted a RCL testing exemption if IND B vector uses a different length of viral vector backbone or is manufactured in a different way than the IND A vector
• The ultimate goal of a comparability study is not to demonstrate that the products are identical, but to demonstrate you can consolidate clinical data from these lots
  • Release testing alone is not sufficient
  • The bar for demonstrating comparability is high if a manufacturing change is introduced in the middle of a Phase 2 pivotal study versus if a sponsor introduces a process improvement between Phase 1 and before starting the Phase 2 pivotal study

Panelists stated that a reference standard should be incorporated into your strategy for method monitoring, which then informs how your methods may change over time.  You also want your reference standard to reflect the manufacturing process.  Overall, it appeared from the workshop discussions that potential standards relevant to CART cell therapies include particle size, particle number, for the cell line, and infectious titers.

Stay tuned for USP white paper(s) on the workshop’s discussion as well as USP information chapters on lenti-viral vector cell therapies.  USP is currently looking for volunteers to serve as scientific experts on the Lentivirus Cell Therapy Expert Panel who will develop lenti-viral vector standards.

FDA began the Software Precertification (Pre-Cert) pilot program in 2017 to evaluate an alternative approach to regulation of software as a medical device (SaMD) over the total product lifecycle (TPLC).  We have followed it over the last five years, with blog posts here, here, here, here, here, here, and here.  The Pre-Cert pilot program, as described in the Working Model, included an Excellence Appraisal (pre‑certification) to demonstrate a culture of quality and organizational excellence, a review determination to evaluate whether a pre-market review would be required for the particular SaMD, a streamlined premarket review, when required, and evaluation of real-world performance to verify the product’s continued safety, effectiveness, and performance.  As part of the pilot program, FDA included a Test Plan.

As of September 2022, FDA has now announced the conclusion of the pilot program.  It also has released a report summarizing the findings from the pilot program.  The Software Precertification (Pre-Cert) Pilot Program: Tailored Total Product Lifecycle Approaches and Key Findings (“Key Findings”).  The Key Findings are summarized below, along with our thoughts on the lessons learned in the pilot and how some of the pilot’s findings may be useful to industry while we wait to see if there will be a sequel.

Excellence Appraisals

FDA found that further development would be needed before they would be comfortable identifying low-risk devices where the Excellence Appraisal alone could be relied upon without further premarket review.   The basis of this conclusion relates to the large range of device indications and technology and nuances of testing to support them. It seems that FDA may have validated that, even with an Excellence Appraisal above and beyond standard compliance with good manufacturing practices, there is a need for pre-market review for Class 2 devices.  FDA notes that “a future approach could build on features of the current regulatory system, where a Quality Management System and other general and, in some cases, special controls provide a reasonable assurance of safety and effectiveness for certain low to moderate risk devices.” Key Findings at 12.

Streamlined Review

In their evaluation of the Streamlined Review process, FDA identified an issue that industry has complained about for years – that there is variability in how information is used in making regulatory decisions.  FDA proposes that “modern mechanisms that support clear and consistent communication of device information could facilitate efficient device review activities” and notes that they “consistently observed the need for structured data . . . .” Id.  One struggle that many companies face is the need to generate data in compliance with their quality system and then reformat or restructure it for review in a premarket application.  We hope that any regulatory tools proposed by the Agency to support premarket review are developed in conjunction with FDA’s post-market reviewers and inspectors so that changes are helpful across the TPLC and do not introduce new burdens.

Test Plan

As discussed in our previous posts, we were concerned that the Agency may not be able to adequately validate the program.  FDA did find that their ability to fully test the program was limited.  Challenges to a successful test program included there being only nine companies in the pilot program and the need to limit formal implementation to the De Novo classifications.  It was noted that authorizing a device through a De Novo would create pilot specific special controls that other companies would need to follow, even if not participating in the pilot program.

Despite the limitations in testing, some of the findings were noteworthy.  As part of the testing, FDA retrospectively reviewed applications to determine if the Excellence Appraisal could be used in lieu of certain other premarket software documents.  They found that either a “concise statement of precertification without the expectation of further premarket review of the Excellence Appraisal information, or a detailed report of the Excellence Appraisal process and results to be reviewed in-depth in the context of the device subject to review” would be useful, but a summary that fell in between these two approaches was least valuable.  Id. at 8.  While the former approach would likely be welcome by sponsors, the need to write a detailed report of the Excellence Appraisal as it applies to the device may be equally burdensome to the software document it is intended to replace.

Key Performance Indicators

The pilot resulted in many findings related to excellence principles and key performance indicators (KPIs) that may be useful to manufacturers of SaMD, as well as other device types, both with and without software.  Within the current legislative framework, the efficiency of the premarket review process will be best when device information is clearly presented and answers key questions related to review of the device’s safety and effectiveness.

Implementing some or all of the KPI objectives presented in Appendix List A of the Key Findings document may, therefore, improve efficiency of the regulatory process regardless of whether there is a new regulatory framework for software devices.  You may also note that many of these key findings can be considered best practices for implementation of a quality management system in compliance with the Quality System Regulation, 21 C.F.R. Part 820.  The Descriptive KPI Objectives include:

1. Processes engage the right people, at the right times, to the right degree: “We use knowledgeable, qualified, and multidisciplinary teams throughout the TPLC.”
2. Development process results in well-characterized software: “Our software behaves as expected.”
3. Deployment and monitoring process confirms well-characterized software in context of use: “Our software behaves as expected in the real-world.”
4. Patching process ensures timely resolution of issues across the entire installed base: “We can fix our software when it doesn’t behave as expected.”
5. Update process ensures modifications meet user needs identified through real-world use: “We can identify and implement improvements to the expected behavior of our software.”

Key Findings at 18.

Statutory Authority

Finally, FDA concluded that there were challenges with implementing the Pre-Cert approach under the current statutory authorities.  While there is a need for new statutory authority, the Key Findings report does not provide any details as to what type of regulatory framework would be useful to achieve the goals of the Pre-Cert program.  FDA provides only high-level information on the need for a “flexible, risk-based approach to regulation” that “could allow FDA to tailor regulatory requirements more efficiently for devices based on the latest science, the benefits and risks posed by devices, their real-world performance, and their contribution to promoting health equity.” Id. at 13.

While it is not clear if there will be a sequel to the Pre-Cert pilot program, we look forward to seeing what new ideas FDA’s Digital Health Center of Excellence will bring to reducing regulatory burdens to allow software devices to be developed and iterated efficiently, while ensuring safety and effectiveness.

On October 21, 2022, FDA published a draft guidance document titled Select Updates for the Breakthrough Devices Program Guidance: Reducing Disparities in Health and Health Care.  This draft guidance proposes updates to FDA’s Breakthrough Devices Program, which is outlined in a separate December 2018 guidance document.

FDA intends to incorporate these updates into the December 2018 Breakthrough Devices Program guidance after considering public comment.  The proposed updates are designed to clarify how the Breakthrough Devices Program may be applicable to devices “that benefit populations impacted by health and/or health care disparities.”

First, FDA is proposing to add a statement to the introduction section of the 2018 guidance that certain “non-addictive medical products to treat pain or addiction” may be eligible for breakthrough designation.  The draft guidance states that this addition is consistent with FDA’s obligations under the Substance Use-Disorder Prevention That Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, which required FDA to update existing guidance documents to address how the Agency may apply breakthrough criteria to such products.

FDA is also proposing updates to Section III of the 2018 Breakthrough Devices Program guidance to clarify the designation considerations for the first breakthrough criterion—whether a device provides for “more effective” treatment or diagnosis.

Specifically, FDA proposes to add language stating that the level of evidence required to demonstrate “more effective” treatment or diagnosis may vary depending on the intended use of the device, its technology and features, and the available standard of care alternatives.  For this reason, FDA intends to consider the totality of the information about the proposed device, its function, potential for technical success, potential for clinical success, potential for a clinically meaningful impact, and its potential benefits and risks.

This first criterion, requiring a demonstration of “a reasonable expectation that the device may provide for more effective treatment or diagnosis as compared to the current standard of care” is often cited in decisions denying breakthrough designation.  It is not always clear to sponsors of breakthrough designation requests the level of evidence required to meet this standard.  For some devices, preclinical data may be sufficient, while for other devices, FDA may request a clinical study validating the technology.  The language that FDA is proposing to add to the 2018 guidance seems to further reinforce that the level of evidence require will vary widely, and therefore may be difficult to predict, though the new language does not appear to change the “reasonable expectation” standard.

The most significant proposed update is the addition of a new section to the 2018 guidance on reducing disparities in health and health care.  This section notes that, when FDA assesses the statutory eligibility criteria for breakthrough designation, it intends to consider technologies and device features that may help to address health and/or health care disparities and promote health equity by providing for more effective treatment or diagnosis in populations that exhibit health and health care disparities.

Such technologies and features may include those tailored to better address characteristic differences (e.g., those arising from social factors, phenotypic variations, pathophysiology, and/or response to treatment) compared to standard of care.  FDA also intends to consider devices that address disparities that arise in populations impacted by rare diseases or conditions with limited diagnostic and treatment options.

Additionally, FDA plans to consider “accessibility” to health care, which is described as an individual’s or group’s capacity to benefit from a medical device.  Features that may improve accessibility include user features that make a device more adaptable or easily used by diverse populations or in diverse settings.  However, increased “accessibility,” as that term is described in the draft guidance, does not appear to include cost-related considerations.

These examples of technologies and features that may lead to more effective treatment or diagnosis through their ability to address health and health care disparities may open the door for companies that may not have otherwise considered their device to be a breakthrough device.  It appears that demonstrating an advantage over standard of care with regard to a device’s ability to address a health disparity could help support a finding that the device would lead to “more effective” treatment, satisfying the first breakthrough criterion.

Finally, FDA is proposing to add language to the 2018 guidance regarding the confidentiality of breakthrough requests.  The proposed update clarifies that FDA will not disclose the existence of requests for breakthrough designation or the Agency’s decision on the breakthrough request (e.g., in response to a FOIA request), unless the designation was previously publicly disclosed or acknowledged by the sponsor.  Additionally, once a breakthrough device receives marketing authorization, FDA intends to disclose its breakthrough status for that indication for use in a list on the FDA website.  FDA recently updated this list on October 28^th, announcing that there has been a total of 56 breakthrough devices that FDA has authorized for marketing (see Breakthrough Devices Program metrics here).

FDA is accepting comments on these proposed updates until December 20, 2022 via a docket established on Regulations.gov.

FDA recently published the final guidance document “Comparability Protocols for Postapproval Changes to the Chemistry, Manufacturing, and Controls Information in an NDA, ANDA, or BLA.”  This final guidance provides recommendations to original applicants and holders of approved applications for human drugs and certain biological products on implementing chemistry, manufacturing, and controls (CMC) postapproval changes(s) through the use of a Comparability Protocol (CP).

According to the FDA, the draft guidance was published in 2016 in order to update the 2003 guidance by including current pharmaceutical quality concepts, providing more flexibility regarding filing procedures for notification of modifications to an approved CP in less burdensome reporting categories than a prior approval supplement, and adding an appendix to address commonly asked questions.  The updated final guidance now also incorporates ICH Q12 Technical and Regulatory Considerations for Pharmaceutical Product lifecycle Management.  The final guidance includes several changes that are summarized below.

Section D: Comparability Protocol for the Proposed CMC Change(s) was largely rewritten to add more detail on what the CP should describe as well as recommendations for designing the CP.  For example, the guidance now includes that the design of the CP should take into account your understanding of the product, manufacturing process, risks, control strategy that are relevant to the proposed change(s), and the intended use of the product.

To address industry comments regarding the requirement to perform tests and studies or collect and analyze data for the proposed change(s) at commercial manufacturing scale, the guidance now includes “…except where less than commercial scale is justified.”  According to the updated final guidance, it might be possible to design a CP to compare the post-change product to established quality reference standards and/or comparator products, but that it recommends reaching out to the Agency for complex products that are difficult to characterize.

FDA added examples in Section V of the guidance of modifications to an approved CP that must be submitted as an annual report.  Additional examples of modifications to an approved CP that must be submitted as either a CBE-30 or CBE-0 were also provided in the updated guidance.  In the updated guidance FDA’s clarifies that it is acceptable to submit a CBE-0 to replace or modify a characterization test or study as specified in an approved CP that provides increased assurance of the product quality.  FDA also provided additional examples as to what changes would be considered “annual reportable.”  While the clarifications appear to be minor, they can save companies significant time in the preparation of materials for FDA review.

The FDA added in Section VI that if the data does not demonstrate that the approved acceptance criteria in the CP have not been achieved or there is some other impact on product quality, applicants have a few options, including 1) withdrawal of the approved CP in a CBE-0 supplement, 2) pursue change without using a CP using applicable reporting categories established in 21 CFR 314.70 or 601.12, or 3) pursue a change using a CP by contacting FDA to discuss an appropriate course of action.

When you are ready to notify the FDA of the change(s) in the approved CP, the FDA states that you should include all of the information agreed upon in the approved CP and that the submission should update, using the ICH CTD-Q format (where applicable), the appropriate section(s) of the application to which the CMC change(s) applies.

Based on comments from Industry, the updated guidance now includes questions and answers for Manufacturing Equipment Changes, Drug-Device or Biologic-Device Combination Products, and Master Files.  The Manufacturing Process Changes section of the Appendix now includes two questions on process scale changes and a change from batch to continuous manufacturing.  FDA states that a CP can be useful for changes in manufacturing process scale (scale-up, scale-down, scale-out), and that FDA recommends including information on potential effects of changes in manufacturing scale on product quality.  Regarding a change from batch to continuous manufacturing process, the FDA states that a reporting category other than a PAS would generally not be justified.