On November 22, 2022, FDA approved CSL Behring’s BLA for Hemgenix (etranacogene dezaparvovec), an AAV-based gene therapy for the treatment of adults with Hemophilia B who currently use Factor IX prophylaxis therapy, have current or historical life-threatening hemorrhage, or have repeated, serious spontaneous bleeding episodes.  This product was developed by uniQure prior to being licensed to CSL Behring.  This approval marked the 5th  viral vector gene replacement therapy product for genetic disorders (referred to in this post as “gene therapies” for simplicity’s sake), and the 3rd this year, approved by FDA following, in order, Luxturna (voretigene neparvovec), Zolgensma (onasemnogene abeparvovec) (see previous coverage here), Zynteglo (betibeglogene autotemcel), and Skysona (elivaldogene autotemcel).

As demonstrated by the few gene therapies approved by FDA, we are still in the early days of the development and evaluation of gene therapy benefits and risks in the United States.  In simple terms from a non-scientist, these gene therapies add functional versions of genes to patients that do not have them, and thus the idea is to have these genes function in the same way as they do in individuals without these disorders.

At times, there has been speculation that these can be actual “cures,” and at some point, they might well be.  However, there are many treatment goals that patients and their caregivers have that fall short of a cure, not only improvements but, for progressive conditions, a slowing or halting of worsening.  It takes many years to determine if something provides durable treatment and to what degree it may fade over time.  Thus, the current reality of gene therapy products presents a conundrum to FDA: If you have an efficacious one-time treatment, how long do you wait to see if the treatment stops working or stops working as well, while patients receive very real benefits in the interim?

Of course, neither “cure” nor permanency are the bar for FDA to find that a new drug is effective; simply because there is the potential for something to be a “cure” or offer permanent/near-permanent effects does not mean it should be required to be such.  At the same time, it is understandably important to be able to measure and characterize a treatment’s effect over time.  We know, for example, the use of viral vectors results in antibody production that could inhibit future administration of gene therapies using the same or similar viruses, which will inform treatment decisions by patients with their doctors.  However, with this most recent approval, FDA did not leave the question of durability as something to be answered postapproval, which signals to us that this issue looms large in FDA’s preapproval regulation of gene therapies.

We can see this evolution for requiring longer-term follow-up play out with this most recent approval of Hemgenix.  We can look to what information has been shared in the public domain as we do not yet have FDA’s summary basis of approval.  The gene therapy demonstrated that it increased Factor IX (“FIX”) plasma levels at 6 months, the original primary endpoint of the Phase 3 trial.  It seems reasonable to assume that there was some hope this would be sufficient for accelerated approval based on this surrogate endpoint.  However, while announcing in November 2020 that this endpoint was achieved, the sponsor shared that “[b]ased on interactions with the FDA and EMA,” it changed this primary endpoint for the trial to the co-primary endpoints of FIX activity and annualized bleeding rate (“ABR”), now measured at 52 weeks.  This was despite the 6-month data also demonstrating clinical benefits in reduction of bleeding events and declines in the use of FIX replacement therapy.

In June 2021, uniQure provided another regulatory update, announcing that FDA was requiring a demonstration of “durability of effect” based on data from patients followed for at least 52 weeks after FIX levels achieve steady state, which occurs by 26 weeks.  Essentially, FDA was now asking for 18 months of data following treatment.  Thus, the primary endpoint changed again to a sole primary endpoint of ABR at 78 weeks.  Again, this was despite the fact that subjects in the trial had demonstrated durable FIX activity to this point, with a mean of 41.5% of normal as compared to 39% at 6 months, that was coupled with substantial reductions in ABR and usage of FIX replacement therapy apparent as early as at 6 months that had now demonstrated persistence at 1 year.

That brings us to the product’s approval.  The FDA-approved Package Insert describes the “main efficacy outcome” as being “a non-inferiority test of annualized bleeding rate (ABR) during Months 7 to 18” as compared to the ABR during the lead-in period.  Therefore, the durability of response in FIX activity appeared to support the FDA-requested evidence of durability.

This approval suggests that FDA may have shown a reticence to allow such FIX levels, even with corresponding clinical benefit at earlier timepoints, to serve as a surrogate endpoint to support approval, including as a surrogate that is reasonably likely to predict clinical benefit for an accelerated approval.  Instead, FDA is requiring follow-up using this surrogate biomarker coupled with durable clinical benefits and may be delaying approvals due to the assumption that the biomarker predicts durability of effectiveness.

The fact that FDA seemingly required Hemgenix to demonstrate a degree of durability out to 18 months before determining it met the approval standard begs the question: would FDA have approved this one-time gene therapy treatment if the effects were not permanent (i.e., they waned over time), even though patients would have benefited over a shorter duration?  The regulatory bar has never required curative level or permanency of effect, so what magnitude of effect and for how long is enough for the Agency? And on what basis is FDA making such judgments?  We’ll have to stay tuned for the summary basis of approval to be posted here in the coming weeks to see what FDA has to say.

Sentencing for defendants convicted in federal court of felony offenses that involve fraud, including violations of the Federal Food, Drug, and Cosmetic Act, may be dramatically reduced based on an opinion issued last week by a panel of the Third Circuit Court of Appeals.  The change in sentencing practices has the potential to reverberate in federal courts not only in the Third Circuit (which has responsibility for federal cases in Pennsylvania, Delaware, and New Jersey), but also elsewhere in the United States.  Consistent with Third Circuit practice, the written opinion in the case is marked, at the beginning, as “PRECEDENTIAL.”

In sentencing defendants in mail or wire fraud cases, judges rely on the fraud loss levels spelled out in Section 2B1.1 of the Federal Sentencing Guidelines.  The higher the amount of fraud, the more a defendant’s offense level increases, as does the possible sentence imposed.  But even defendants whose crimes do not cause actual loss, such as when the fraud was attempted but not actually effectuated, have faced long terms of incarceration, because sentencing judges have employed what they determine to be “intended loss” to set sentences.  Section 2B1.1’s Application Notes instruct that “loss” is the greater of realized loss or intended loss, and judges often have looked to the amount of attempted, if not realized, ill-gotten gains when calculating fraud loss and offense levels.

Section 2B1.1 is also applied in sentencing for offenses other than mail and wire fraud, including felony criminal violations of the prohibited acts in the FDCA.  For example, Section 2N2.1 is the primary applicable guideline for “Violations of Statutes and Regulations Dealing With Any Food, Drug, Biological Product, Device, Cosmetic, Agricultural Product, or Consumer Product.” It states that “[i]f the offense involved fraud, apply §2B1.1.”  Normally, convictions for felony violations of the FDCA require the government to prove that the offense was committed with intent to defraud or mislead, so judges often employ a fraud loss calculation under 2B1.1 when sentencing FDCA criminal cases.

Last week, an appellate panel of the Third Circuit, in United States v. Banks, ruled that the amount of intended but unsuccessful fraud was not a suitable basis to increase a defendant’s offense level under 2B1.1. That ruling brushed aside a common practice at Federal criminal sentencings.  But perhaps Banks is less of a novel ruling when it is viewed in light of the current judicial currents that adhere to deference to the literal meaning of the words of a statute, combined with the prevailing headwinds facing deference to accompanying agency interpretation.

Prosecutors in the Western District of Pennsylvania convicted Frederick Banks of wire fraud.  According to the Third Circuit opinion, Banks tried to exploit the lag in the timing of deposits and withdrawals between different accounts.  The opinion explains that Banks used bogus information to open accounts at the FOREX.com international exchange system, ostensibly to buy and sell foreign currencies.  He then made electronic deposits into those accounts from others that lacked funds.  Attempting to exploit the timing between transfers, he tried to withdraw $264,000 from FOREX accounts before FOREX detected that the transfers were bogus.  However, Banks’s attempts to transfer money all failed.

After trial, the District Court sentenced Banks to 104 months of incarceration based on his attempted fraud, relying on the Application Notes that describe loss under 2B1.1.  The District Court found that those Notes define “loss” as not only actual loss, but also as intended loss.  This is a common interpretation among the Federal judiciary.  Here, Banks faced a base offense level of 7.  Based upon the loss he intended to inflict, the District Court added 12 levels, for a total of 19.

The Third Circuit panel of three judges disagreed, applying strict statutory construction to the word “loss” in 2B1.1, and deciding that the District Court could not consider intended loss.  Section 2B1.1 lays out a chart of “Specific Offense Characteristics” that guide judges.  They raise offense levels through a series of increasing steps based upon the serious of the relevant financial harm.  Section 2B1.1 does not, in the unmodified words of the Guideline, add anything to describe what “loss” is.  It merely states that “if the loss” exceeds certain amounts, offense levels rise with it.  In a lengthy discussion of dictionary definitions of the word “loss,” the Circuit Court here determined that “loss” means only actual, realized loss, and that further analysis was unnecessary.

Discounting reliance on the Application Notes, the panel ruled that the District Court erred in applying on the Notes’ definition of “intended loss” as the basis for the enhanced sentence.  As a result, in the Third Circuit, the commentary in the Guidelines does not expand the meaning of the word “loss” to include intended loss.

The Third Circuit’s ruling rests upon the agency deference roadmap the U.S. Supreme Court laid out in Kisor v. Wilkie.  That 2019 decision directed courts to exhaust all traditional tools of statutory construction before turning to agency interpretations, beginning with analysis of the clarity of the relevant words of the law or legislative rule at issue.  Here, the Banks judges affirmed that the Guidelines themselves are legislative rules.  The Application Notes that expound on “intended loss” are, therefore, relegated to the category of agency interpretive rules, and are extraneous since, according to the Third Circuit, the relevant legislative rule defining “loss” is clear.

Perhaps the Department of Justice would try to appeal this decision, either through a hearing before the Third Circuit en banc (as opposed to the panel of three judges that issued the Banks decision) or eventually through a petition for review with the Supreme Court.  It is unclear whether doing so would be worth the effort and risk.  In this case, at re-sentencing, the District Court may take greater pains to base its decision on the factors set out in 18 U.S.C. § 3553.  While Banks’ re-sentencing will not be predicated on the commentary-based enhancement, the Guidelines are not binding on judges.  Perhaps the District Court will more thoroughly articulate other reasons under 3553 to enhance Banks’ sentence above the base offense level, if the judge is so inclined.

One of the panel judges also sits on the U.S. Sentencing Commission as its Vice-Chair.  That connection may prompt discussion of a small but impactful change to the text of the Guidelines, specifically including intended loss in fraud loss guidelines.  As this opinion just came down, expanding “loss” in the Guideline’s language does not appear on the Commission’s recently published list of 2023 Amendment Priorities.  That said, the Commission’s appetite for amendment in any direction is unknown.

One final speculation, based on this case: how deeply will federal prosecutors and agents dig into cases where the accused defendant did not actually profit from fraud?  Unsuccessful fraud schemes may result in plea offers more favorable to defendants or even declinations of prosecution as prosecutors see vanishing likelihood of long sentences for unsuccessful fraud schemes.

In any event, prosecutors and defense attorneys in Pennsylvania, Delaware, and New Jersey now must work with new limitations on the scope Federal Sentencing Guidelines.

Anne Walsh of Hyman, Phelps & McNamara PC will be presenting on “The Relationship Between Outside Counsel Investigations and Quality System Investigations, and What to Do when they Conflict” as part of the Food and Drug Law Institute’s Enforcement, Litigation, and Compliance Conference on December 7-8 in Washington, DC. As we move out of the COVID-19 pandemic, come hear from your peers about how they are staying compliance and inspection ready as FDA ramps back up inspections, what companies need to do to plan for and manage enforcement risk, trends in criminal and civil litigation, and government priorities for the new year. Sign up with the discount code SAVE15 for 15% off registration and learn more at fdli.org/enforcement.

Earlier this year, we posted on the still unsettled state of the law regarding whether “FDCA violations may, in certain circumstances, be material to the government’s decision whether to pay for the affected product, and thus relevant in an FCA case.”  In particular, we noted that a recent statement of interest from the U.S. Department of Justice staked out a position that preserved that possibility.  Last month the United States Court of Appeals for the Second Circuit affirmed  the district court’s decision to dismiss a False Claims Act (FCA) (21 U.S.C 3729) qui tam suit, alleging that Grifols USA, Grifols Biologicals, Grifols, S.A., and Grifols Shared Services as defendants (collectively, “Grifols”) concealed and submitted falsified information to the United States Food and Drug Administration (FDA) to obtain FDA approval for manufacture of Gamunex at its new manufacturing facility in Los Angeles in order to receive reimbursement and contracts with various government healthcare programs for Gamunex.

According to the allegations in the complaint, approval of the new Los Angeles manufacturing facility required a Prior Approval Supplement (PAS) and a Pre-Approval Inspection (PAI) of the facility.  The purpose of the PAI was to determine whether the facility has a quality system that was designed to achieve sufficient control over the facility and commercial manufacturing operations and evaluate the facility’s Good Manufacturing Practice (GMP) compliance. The Relator, a former quality assurance plant manager at the Grifols Los Angeles facility, alleged there were discrepancies in the Clean In Place (CIP) equipment qualification.   According to the Relator, these CIP qualification discrepancies “may lead to contamination” and “…over time [lead to] to adulterated [Gamunex] product and significant risk of patient harm.”  The Relator also found various CIP equipment qualification reports with his initials, indicating his approval even though he had never signed those reports.  These CIP equipment qualification reports were provided to the FDA in support of its PAS and PAI to approve the new facility.  The Relator also alleged that rabbits injected with Gamunex had developed a fever, indicating presence of endotoxin in the product, and that these results were concealed by Grifols from the FDA during the PAI.  In sum, the Relator alleged factual support for potential FDCA violation.  As readers of this blog well know, there is no private right of action to enforce the FDCA.  Therefore, in an attempt to turn FDCA violations into an FCA case, Relator asserted violations of the FCA.  The Relator argued that the government healthcare programs require that drugs not be “adulterated,” which means that Grifols’ manufacturing processes must comply with all applicable GMPs.  In addition, Grifols’s eligibility for government contracts is conditioned on FDA approval of Gamunex and FDA approval is conditioned on compliance with GMPs.

The district court dismissed the complaint, concluding primarily that the Relator failed to sufficiently allege that Grifols’ claims for payment to government programs that contained records or statements material to a fraudulent claim.  On October 14, 2022, the 2^nd Circuit affirmed the district court decision similarly, concluding that the Relator did not plausibly allege that any misrepresentation by Grifols materially impacted the government healthcare programs’ payment determination.

This result follows from the Supreme Court’s observation in Escobar that emphasized “[t]he False Claims Act is not an all- purpose antifraud statute or a vehicle for punishing garden-variety breaches of contract or regulatory violations.”  FDA regulated companies should not take too much comfort from this and similar results, though, because while relators cannot enforce the FDCA, the FDA certainly can, and one function of qui tam FCA cases is that they prompt the government to evaluate and investigate the allegations in the complaint and written disclosure of the material evidence that the relator possesses.  If a relator discloses to the government material evidence of previously unknown FDCA violations, those violations likely spell trouble, regardless of whether an FCA complaint survives a motion to dismiss.

This blog will continue to monitor how DOJ and the courts analyze the intersection between the FDCA and the FCA.

On November 4th, CDC issued its revised guideline on prescribing opioids for pain as an expansion and update of its 2016 CDC Opioid Prescribing Guideline.  Dowell D, Ragan KR, Jones CM, Baldwin GT, Chou R.,  CDC Clinical Practice Guideline for Prescribing Opioids for Pain — United States, 2022. MMWR Recomm Rep 2022;71(No. RR-3):1–95. (“2022 Guideline”).   DOI: http://dx.doi.org/10.15585/mmwr.rr7103a1.  CDC received some 5,500 comments from patients, caregivers, clinicians and interested organizations to the proposed guideline update it issued in February.  2022 Guideline at 15.  (We blogged on the 2016 guideline here in March 2016, and the proposed guideline here on March 18th).

An important part of the 2022 Guideline includes CDC’s pronouncement that some laws, regulations and policies have misapplied the 2016 guidelines and likely contributed to patient harm.  2022 Guideline at 3.

CDC notes that even though “the recommendations are voluntary and intended to be flexible to support, not supplant, individualized, patient-centered care,” in response to the guideline about half of the states enacted legislation limiting initial opioid dosage for acute pain to less than 7-days, and that “many insurers, pharmacy benefit managers, and pharmacies have enacted similar policies.”  Id. at 3.  In addition, the guideline has been misapplied to cancer and palliative care patients, and there have been rapid opioid tapers without patient collaboration, rigid application of opioid dosage thresholds, application of opioid use for pain to opioid use disorder treatment, insurer and pharmacy duration limits, patient dismissals and abandonment.  Id.  Such actions have resulted in “untreated and undertreated pain, serious withdrawal symptoms, worsening pain outcomes, psychological distress, overdose, and suicidal ideation and behavior.”  Id. at 3-4.

The 2022 guideline, intended to improve communication between clinicians and patients about the benefits and risks of opioid therapy, expands and updates the 2016 guideline by providing evidence-based recommendations to clinicians (primary care, physicians, nurse practitioners, physician assistants, and oral health practitioners) for prescribing opioids for acute pain (lasting less than a month), subacute pain (lasting 1-3 months), and chronic pain (lasting longer than 3 months) to outpatients 18 years of age and older.  Id. at 1, 4.  The recommendations do not apply to inpatient hospital care, in the emergency department or other observed settings.  They do apply, however, to prescribing for pain management upon discharge.  Id. at 7.  The 2022 guideline, as with the 2016 guideline, reiterates that it does not apply to pain management related to sickle cell disease or cancer-related pain treatment, palliative care and end-of-life care.  Id. at 1.

Recommendations

The 2022 guideline recommendations address four general areas: (1) whether to initiate opioids for pain; (2) opioid selection and dosage; (3) initial opioid duration and follow-up; and (4) assessing risk and addressing potential harms of opioid use.

We again quote each recommendation verbatim in bold text and include significant “implementation considerations” though not verbatim.  We strongly suggest that clinicians and others read recommendations and implementation considerations in their entirety to obtain the fullest understanding of the guideline.

a.  Determining Whether to Initiate Opioids for Pain

Recommendation 1.

Nonopioid therapies are at least as effective as opioids for many common types of acute pain.  Clinicians should maximize use of nonpharmacologic and nonopioid pharmacologic therapies as appropriate for the specific condition and patient and only consider opioid therapy for acute pain if benefits are anticipated to outweigh risks to the patient.  Before prescribing opioid therapy for acute pain, clinicians should discuss with patients the realistic benefits and known risks of opioid therapy.  Id. at 17.

• Non-opioid therapy is at least as effective as opioids for many acute pain conditions such as low back and neck pain; musculoskeletal pain from sprains, strains, tendonitis and bursitis; pain related to minor surgeries with minimal tissue injury, and mild postoperative pain; dental pain, kidney stones, and headaches including migraines.
• Opioid therapy plays an important role in treating acute pain related to severe traumatic injuries when non-steroidal anti-inflammatory drugs (“NSAIDs”) and other therapies are contraindicated or ineffective.
• When acute pain warrants the use of opioids, clinicians should prescribe immediate-release opioids at the lowest effective dose for the expected duration of pain requiring opioids.
• Clinicians should prescribe opioids only as needed (for example, one hydrocodone 5 mg./acetaminophen 325 mg. tablet not more frequently than every four hours as needed for moderate to severe pain) rather than on a scheduled basis. Clinicians should encourage tapering if patients take opioids around the clock for more than a few days.
• Patients should be aware of expected benefits, risks and alternatives before beginning or continuing opioid therapy and should participate in therapy decisions. Id. at 17-18.

Recommendation 2.  

Nonopioid therapies are preferred for subacute and chronic pain.  Clinicians should maximize use of nonpharmacologic and nonopioid pharmacologic therapies as appropriate for the specific condition and patient and only consider initiating opioid therapy if expected benefits for pain and function are anticipated to outweigh risks to the patient.  Before starting opioid therapy for subacute or chronic pain, clinicians should discuss with patients the realistic benefits and known risks of opioid therapy, should work with patients to establish treatment goals for pain and function, and should consider how opioid therapy will be discontinued if benefits do not outweigh risks.  Id. at 21.

• When appropriate, clinicians should suggest noninvasive, nonpharmacologic approaches to manage chronic pain.
• Clinicians should review FDA-approved labeling and weigh benefits and risks before beginning pharmacologic therapy.
• NSAIDs should be used at the lowest effective dose for the shortest needed duration.
• Although nonpharmacologic and nonopioid pharmacologic therapy should have to fail before initiating opioid therapy for subacute or chronic pain, opioids should not be first-line or routine therapy. Expected clinical benefits should be weighed against risks before beginning therapy.
• Opioid therapy should not be initiated without clinician and patient considering “an exit strategy” should therapy be unsuccessful.
• Patient education and discussion are critical before initiating therapy.
• Patients should be aware of expected benefits and common risks of opioid therapy and alternatives before beginning or continuing opioid therapy. Patients should be involved in the decision of whether to begin therapy.  Id. at 21-23.

b.  Opioid Selection and Dosage

Recommendation 3.  

When starting opioid therapy for acute, subacute, or chronic pain, clinicians should prescribe immediate-release opioids instead of extended-release/long-acting (“ER/LA”) opioids.  Id. at 28.

• ER/LA opioids should be “reserved for severe, continuous pain.”
• Methadone should not be the first choice for an ER/LA opioid.
• Only clinicians familiar with dosing and absorption of ER/LA opioid transdermal fentanyl who educate their patients about it should consider prescribing it. Id.

Recommendation 4.  

When opioids are initiated for opioid-naïve patients with acute, subacute, or chronic pain, clinicians should prescribe the lowest effective dosage.  If opioids are continued for subacute or chronic pain, clinicians should use caution when prescribing opioids at any dosage, should carefully evaluate individual benefits and risks when considering increasing dosage, and should avoid increasing dosage above levels likely to yield diminishing returns in benefits relative to risks to patients.  Id. at 30.

• Guideline opioid use recommendations “are not intended to be used as an inflexible, rigid standard of care; rather, they are intended to be guideposts to help inform clinician-patient decision-making.” The recommendations apply to beginning opioids or to increasing opioid dosages.  Different benefits and risks apply to reducing opioid dosages.
• “[B]efore increasing total opioid dosage to ≥ 50 MME/day, clinicians should pause and carefully reassess evidence of individual benefits and risks. If a decision is made to increase dosage, clinicians should use caution and increase dosage by the smallest practical amount.”
• Dosage increases beyond 50 MME/day “are progressively more likely to yield diminishing returns in benefits for pain and function relative to risks.” Id.

Recommendation 5.

For patients already receiving opioid therapy, clinicians should carefully weigh benefits and risks and exercise care when changing opioid dosage.  If benefits outweigh risks of continued opioid therapy, clinicians should work closely with patients to optimize nonopioid therapies while continuing opioid therapy.  If benefits do not outweigh risks of continued opioid therapy, clinicians should optimize other therapies and work closely with patients to gradually taper to lower dosages or, if warranted based on the individual circumstances of the patient, appropriately taper and discontinue opioids.  Unless there are indications of a life-threatening issue such as warning signs of impending overdose (e.g., confusion, sedation, or slurred speech), opioid therapy should not be discontinued abruptly, and clinicians should not rapidly reduce opioid dosages from higher dosages.  Id. at 32-33.

• Clinicians should carefully weigh the benefits and risks of continuing opioid therapy and of tapering opioids.
• When benefits do not outweigh risks of continuing opioid therapy, clinicians should optimize other therapies and work with patients to gradually reduce dosage or if warranted because of the patient’s individual clinical circumstances, “appropriately taper and discontinue opioid therapy.”
• Clinicians should follow up at least monthly with patients tapering opioid therapy.
• Payers, health systems, and state medical boards should not use the guideline to set rigid standards or performance incentives related to opioid dosage or opioid therapy duration. Rather, they should ensure their policies do not result in rapid tapering or abrupt opioid discontinuation.  They should also ensure that policies do not penalize clinicians for accepting chronic pain patients using prescribed opioids, including those receiving high opioid doses.  Id. at 33-34.

c.  Opioid Duration and Follow-Up

Recommendation 6.

When opioids are needed for acute pain, clinicians should prescribe no greater quantity than needed for the expected duration of pain severe enough to require opioids.  Id. at 38.

• Clinicians can often manage nontraumatic, nonsurgical acute pain without opioids. When opioids are needed, a few days or less are often sufficient when opioids are needed for nontraumatic, nonsurgical pain.  Duration should be individualized based on the specific patient’s clinical circumstances.
• Clinicians should evaluate patients continuing to receive opioids for acute pain at least every 2 weeks.
• Clinicians should refer to recommendations on subacute and chronic pain for initiation (Recommendation 2 above), follow-up (Recommendation 7 just below) and tapering (Recommendation 5 above) for treating patients receiving opioids for a month or longer. Id. at 38-39.

Recommendation 7.  

Clinicians should evaluate benefits and risks with patients within 1 to 4 weeks of starting opioid therapy for subacute or chronic pain or of dose escalation.  Clinicians should regularly reevaluate benefits and risks of continued opioid therapy with patients.  Id. at 40.

d.  Assessing Risk and Addressing Potential Harms of Opioid Use

Recommendation 8.  

Before starting and periodically during continuation of opioid therapy, clinicians should evaluate risk for opioid-related harms and discuss with patients.  Clinicians should work with patients to incorporate into the management plan strategies to mitigate risk, including offering naloxone.  Id. at 43.

• Clinicians should offer naloxone when prescribing opioids to patients who are at increased risk for overdose including those with a history of overdose, substance use disorder or sleep-disordered breathing. This includes patients who take higher opioid dosages, for example 50 MME/day or more, patients combining benzodiazepines with opioids and patients at risk for returning to a high dose who have lost tolerance.
• Clinicians should educate patients on preventing overdose and use of naloxone, and offer to educate patient’s households.
• Clinicians should review state Prescription Drug Monitoring Program (“PDMP”) data and toxicology screening to assess concurrent substance use disorder and overdose. Id. at 43-44.

Recommendation 9.  

When prescribing initial opioid therapy for acute, subacute, or chronic pain, and periodically during opioid therapy for chronic pain, clinicians should review the patient’s history of controlled substance prescriptions using state prescription drug monitoring program (PDMP) data to determine whether the patient is receiving opioid dosages or combinations that put the patient at high risk for overdose.  Id. at 48. 

• Clinicians ideally should review available and accessible PDMP data before issuing every opioid prescription for acute, subacute, or chronic pain.
• For long-term opioid therapy, clinicians should review PDMP data before issuing initial opioid prescriptions and at least every 3 months thereafter.
• Clinicians should not dismiss patients from treatment on the basis of PDMP information.
• Clinicians should strive to improve patient safety. Id.

Recommendation 10.

When prescribing opioids for subacute or chronic pain, clinicians should consider the benefits and risks of toxicology testing to assess for prescribed medications as well as other prescribed and non-prescribed controlled substances.  Id. at 50.

• Clinicians should not use toxicology test results punitively nor dismiss patients based on toxicology test results.
• Clinicians should consider toxicology results as “potentially useful data” along with other clinical information. Id.

Recommendation 11.

Clinicians should use particular caution when prescribing opioid pain medication and benzodiazepines concurrently and consider whether benefits outweigh risks of concurrent prescribing of opioids and other central nervous system depressants.  Id. at 52-53.

• There are circumstances when it may be appropriate to prescribe opioids to a patient taking benzodiazepines, for example a patient in acute pain who is taking long-term, low-dose benzodiazepines. Clinicians should use caution and consider whether benefits outweigh risks of concurrent opioid use with other central nervous system depressants including muscle relaxants, non-benzodiazepine sedative hypnotics and potentially sedating anticonvulsant medications like gabapentin and pregabalin.
• Buprenorphine or methadone for opioid use disorder should not be withheld from patients who are also taking benzodiazepines and other medications that depress the central nervous system. Id. at 53.

Recommendation 12.

Clinicians should offer or arrange treatment with evidence-based medications to treat patients with opioid use disorder.  Detoxification on its own, without medications for opioid use disorder, is not recommended for opioid use disorder because of increased risks for resuming drug use, overdose, and overdose death.  Id. at 54. 

• Clinicians should not dismiss patients from their care due to opioid use disorder which can adversely impact patient safety. Id.

Conclusion

CDC concludes that “[a] central tenet of this clinical practice guideline is that acute, subacute, and chronic pain needs to be appropriately and effectively treated regardless of whether opioids are part of a treatment regimen.”  Id. at 59.  Clinicians achieve this through nonpharmacologic or pharmacologic treatments that “maximize patient safety and optimize outcomes in pain, function, and quality of life.”  Id.  Care must “be individualized and person centered.”  Id.  To avoid unintended consequences to patients, CDC warns that, neither the 2022 guideline nor policies derived from it should be misapplied and extended “beyond its intended use.”  Id. at 60. Misapplication can include inflexibility on opioid dosage and duration, discontinuing or dismissing patients, rapidly tapering patients without their collaboration who may be stable on higher doses, and application to cancer, sickle cell, or end receiving end-of-life patients.  Id.

The 2022 guideline comes at a critical time as more and more resources are being devoted to preventing opioid abuse and provide much needed addiction treatment.  In our opinion, the 2022 guideline provides necessary clarification and additional support for the recommendations related to appropriate prescribing of opioids for pain.  These should provide the healthcare industry with more useful guidance to be incorporated in patient treatment and care.  We also commend CDC for acknowledging the damage done to patient care by misapplication of the 2016 guideline and CDC’s emphasis on the appropriate use of the 2022 guideline.  We hope that CDC’s statements and recommendations will result in a more balanced approach by federal and state regulators to ensure that patients receive effective, appropriate medical care.

At the risk of ruining our readers’ appetite for America’s most food-focused holiday, foodborne illnesses have been a feature of Thanksgiving for some time now.  Some of us might still recall the 2017 salmonella outbreak linked to raw turkey products that caused over 279 infections, 107 hospitalizations, and one reported death in 41 states.  Reported illnesses began just three days before Thanksgiving in 2017, but due to the unknown source of the turkey at the center of the outbreak, the Centers for Disease Control and Prevention (CDC) did not conclude the outbreak investigation until April 2019.

Two days before Thanksgiving the following year, the CDC warned U.S. consumers not to eat romaine lettuce and destroy any romaine lettuce in their homes due to a potential E. coli contamination.  Concurrently, the U.S. Food and Drug Administration (FDA), requested withdrawal and destruction of all romaine lettuce on the market because the agency was unable at the time to tie the outbreak to a specific grower or region.

But as Thanksgiving approaches this year, FDA is setting the table for foodborne illness prevention with a final rule on Requirements for Additional Traceability Records for Certain Foods (Food Traceability Final Rule).

Requirements Under the Food Traceability Final Rule

On November 15, as part of the Agency’s implementation of the Food Safety and Modernization Act (FSMA), FDA released the food traceability final rule, which aims to reduce the occurrence of foodborne illnesses by enabling FDA to more efficiently identify and remove potentially contaminated food from the market.

When foodborne illness outbreaks arise, efficient traceability is critical to prevent illnesses, death, and unnecessary product loss.  But as noted above, identifying points in the food supply chain, the source of the product, and where contamination may have occurred can be a long and difficult process.

In an effort to correct some of the bottlenecks in traceability efforts, the final rule imposes additional recordkeeping requirements on domestic and foreign firms who manufacture, process, pack, or hold foods on the Food Traceability List (FTL) for U.S. consumption (absent the applicability of exemptions that are beyond the scope of this summary).  The FTL includes foods like fresh leafy greens, crustaceans, shell eggs, and other foods that FDA designated as requiring additional recordkeeping requirements to protect public health.

Entities covered under the final rule must maintain and provide to their supply chain partners certain Key Data Elements (KDEs) for Critical Tracking Events (CTEs) throughout the supply chain.

CTEs include:

• Harvesting;
• Cooling;
• Initial Packing (other than a food obtained from a fishing vessel);
• First Land-Based Receiver (for food obtained directly from a fishing vessel);
• Shipping;
• Receiving; and
• Transformation (events involving manufacturing, processing, or changing a food, its packaging, or packing, not including initial packing, harvesting, or cooling, listed above).

What information firms must maintain and share under the rule depends on the type of activities they perform in the supply chain with respect to an FTL food.  Some examples of KDEs include:

• Location descriptions (e.g., for the immediate subsequent recipient (other than a transporter) of the food);
• Quantity and unit of measure of the food;
• Product description for the food;
• Relevant dates (e.g., of the applicable CTE(s)); and
• Traceability lot code (TLC).

The TLC is a unique identifier that must be assigned to a food on the FTL.  Once a food has been assigned a TLC, that TLC must be included in the records required at each CTE in the food’s supply chain, and all KDEs must be linked to the relevant TLC.

All persons covered by the final rule must also establish and maintain a traceability plan that includes a description of the procedures used to:

• maintain the required records under the final rule;
• identify handled foods on the FTL; and
• assign TLCs to FTL foods.

In addition, entities that grow or raise an FTL food other than eggs must maintain a farm map showing the area in which the food is grown or raised.  The traceability plan must be updated as needed to ensure that the information reflects current practices.  Following an update, the previous traceability plan must be retained for two years.

All records required under the final rule must be made available to FDA within 24 hours after a request is made.  When necessary to help prevent or mitigate a foodborne illness outbreak or assist in implementing a recall, firms must generally provide an electronic sortable spreadsheet containing information that FDA requests on specified CTEs, FTL foods, date ranges, and TLCs.

The additional records required under the final rule establish a structure for maintaining and providing uniform, data-driven traceability information and coordination.  The new requirements have several aims, including more efficient FDA’s investigations of foodborne illness outbreaks, more targeted recalls, more public trust in the food supply chain, and fewer foodborne illnesses and deaths.

These potential benefits are only on the horizon: because the final rule requires entities across the supply chain to share information with each other, the compliance date for all entities subject to the recordkeeping requirements is set for Jan. 20, 2026.

FDA will hold a webinar to provide an in-depth overview of the final rule and Q&A on Dec. 7, 2022 at 1 p.m. EST.  Attendees can register here or watch the livestream here.

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!