As we promised in an earlier post, we provide here a deeper analysis of the Second Circuit’s holding in United States v. Caronia and the context in which it should be viewed by industry.

Since the 2004 Warner-Lambert settlement, the federal government has investigated hundreds of companies for promotion of approved products for unapproved uses, commonly known as “off-label promotion.”  Many of the publicly known investigations have been fueled by whistleblowers who file qui tam suits under the federal False Claims Act ("FCA") in hopes of gaining a share of the government’s recovery.  These civil suits rely on an underlying violation of the Federal Food, Drug, and Cosmetic Act ("FDCA") to support the theory that certain claims for reimbursement from federal programs were false.  The government also has litigated a number of criminal prosecutions of companies and individuals for their alleged off-label promotion.  In light of the Second Circuit’s statement about the Agency’s wrongful criminalization of this type of conduct, we address below whether Caronia is likely to curtail future enforcement efforts by the government.

I.     Legal Framework

Much to the surprise of many companies, the term “off-label promotion” is not found anywhere in the FDCA.  FDA’s authority to regulate off-label promotion draws from the FDCA prohibitions against introducing an “unapproved new drug” or a “misbranded” drug into interstate commerce.  21 U.S.C. §§ 331(a), (d).  If a company promotes a drug for a use that is not embodied in the FDA-approved labeling, then it can be deemed a “new drug” because it is not generally recognized as safe and effective “for use under the conditions prescribed, recommended, or suggested in the labeling thereof.”   21 U.S.C. § 321(p).  This definition of “new drug” requires that the new intended use be evident in the “labeling” of the product.  The definition of “labeling” is quite broad.  It includes “all labels and other written, printed, or graphic matter . . . accompanying such article,” 21 U.S.C. § 321(m), and could include brochures, leaflets, letters, and arguably websites.  Under this “unapproved new drug” theory, the off-label claims must be contained in the labeling, i.e., the company’s written promotional materials. 

Drug and device marketing, however, is often conducted through oral communications between a company’s sales and marketing team and healthcare providers.  Therefore, the government may not have evidence sufficient to support an unapproved new drug charge.  Instead, the government proceeds under a convoluted misbranding charge, called the “backdoor new drug” charge, to support its civil and criminal cases.  Under this theory, a drug is misbranded for failing to bear adequate directions for its intended uses.  21 U.S.C. § 352(f)(1).  FDA relies on an exemption contained in the regulations precluding prescription drugs from ever meeting this requirement, 21 C.F.R. § 201.5, and then uses the oral promotional statements of the company’s sales representatives as evidence of the company’s intended use.  21 C.F.R. § 201.128. 

The use of speech to support a “backdoor new drug” charge has withstood earlier First Amendment challenges.  For example, in Whitaker v. Thompson, 353 F.3d 947 (D.C. Cir. 2004), the plaintiff argued that he had a First Amendment right to label his product with a disease claim, even though FDA had not reviewed and approved the claim.  The D.C. Circuit determined that the “use of speech to infer intent, which in turn renders an otherwise permissible act unlawful, is constitutionally valid.”  Id. at 953.  In fact, it ruled the First Amendment allows “the evidentiary use of speech to establish the elements of a crime or to prove motive or intent.”  Id. 

The government justifies its crackdown on off-label promotion on the ground that it is protecting the integrity of FDA’s drug approval process.  The notion is that a manufacturer might seek approval of a new product for only a narrow (and easily approvable) claim, and once the drug is approved, the sky would be the limit for the company to make other claims that would lead to larger sales.  This perception, however, ignores other reasons why a manufacturer would not illegally off-label promote, such as litigation commenced under states’ product liability laws for ineffective products and the resulting reputational harm from such lawsuits.

FDA has made clear that it does not intend to go after all promotional statements.  For example, it recognizes that truthful and non-misleading speech about an approved use of an approved drug does not by itself establish a new intended use of the drug.  See Declaration of Rachel E. Sherman, submitted in support of Defendant’s Memorandum in Support of Motion to Dismiss, in Par v. United States, No. 1:11-cv-1820, ¶ 14 (D.D.C. Jan. 11, 2012).  “While manufacturer speech is always a relevant factor in determining intended use, in the absence of other evidence that an unapproved use is intended, a drug manufacturer that engages in truthful and non-misleading speech about an approved use is not placing itself in violation of the FDCA.”  Defendant’s Memorandum in Par, at 27.

FDA also recognizes the value of manufacturers providing off-label information in certain contexts.  It has drafted guidance documents describing parameters under which a manufacturer can disseminate reprints of peer-reviewed scientific literature, sponsor educational programs, and respond to unsolicited requests for off-label information.  FDA states that if a manufacturer meets the factors contained in the guidance, the Agency will not use the activity as evidence that the company created a new intended use for the product.

II.     United States v. Caronia

On November 30, 2009, a jury found Alfred Caronia guilty of misdemeanor conspiracy to introduce misbranded drugs into interstate commerce.  His conviction was based on off-label statements he made while employed as a pharmaceutical sales representative for Orphan Medical, Inc. (“Orphan”).  Specifically, Caronia verbally promoted the drug Xyrem, a central nervous system depressant approved only for the treatment of certain categories of narcolepsy patients, to treat a variety of other conditions including insomnia, fibromyalgia, and Parkinson’s.  He also promoted Xyrem for use in an unapproved patient population – individuals under the age of 16.

The government began its investigation of Orphan in 2005, when former Orphan saleswoman Shelley Lauterbach filed a qui tam suit against the company.  During the course of the investigation, Caronia was recorded on two occasions discussing off-label uses of Xyrem.  On both occasions, Caronia was recorded speaking alongside Dr. Peter Gleason, a doctor that Caronia had engaged to participate in “speaker programs” intended to educate other physicians about Xyrem.  Caronia and Dr. Gleason discussed off-label uses for Xyrem with Dr. Jeffrey Charo, an undercover informant for the government.  In 2006, the government filed charges against Orphan, Dr. Gleason, Caronia, as well as David Tucker (a former Orphan sales manager) for conspiring to promote Xyrem for off-label uses, and thereby introduce a misbranded drug into interstate commerce.

In March 2007, David Tucker pleaded guilty to a single felony misbranding charge.  In July 2007, Orphan pleaded guilty to felony charges, and its parent company, Jazz Pharmaceuticals, Inc., agreed to pay $20 million and enter into a Corporate Integrity Agreement to resolve both criminal and civil charges.  In August 2008, Dr. Gleason also pleaded guilty to criminal misbranding charges. 

Caronia, however, did not plead guilty and filed a motion to dismiss his case based inter alia on First Amendment grounds.  The District Court denied his motion, but noted that the allegations against Caronia included First Amendment-protected speech.  Nevertheless, the District Court concluded that the government’s interpretation of the FDCA was constitutional under the commercial speech doctrine because it did not limit speech more than was necessary to achieve the government’ objectives.  On appeal of Caronia’s criminal conviction, the Second Circuit disagreed.

The Second Circuit first clarified that the government did, in fact, prosecute Caronia for “mere off-label promotion.”  Slip op. at 26.  The court’s opinion details the government’s statements to that effect, as well as the jury instructions that reflected a focus on the off-label promotion rather than promotion as evidence of the intended use of Xyrem.  The court next concluded that strict scrutiny should apply to the government’s interpretation of the FDCA misbranding provisions to prohibit and criminalize off-label promotion.  According to the court, the government’s position was speaker-based:  many individuals (physicians, researchers, etc.) were permitted to access off-label information and make off-label statements, while others (pharmaceutical companies and sales representatives) were not.   It also was content-based because it restricted off-label promotion while permitting favored on-label promotion.  The court determined that Caronia’s prosecution failed to pass strict scrutiny.

The court went further.  Even assuming that off-label promotion triggered only intermediate scrutiny under the Central Hudson test, the Second Circuit found that Caronia’s prosecution would not pass this lower threshold.   First, the off-label speech in question concerned lawful activity and was not false or misleading.  Second, while the government’s interests in drug safety and the public health were substantial, its construction of the FDCA to prohibit off-label promotion did not directly advance those interests.  Third, because physicians can prescribe and patients can receive drugs off-label, even if pharmaceutical manufacturers could not promote drugs for such uses, prohibition of truthful promotion did not directly further the government’s goals: “the government’s prohibition of off-label promotion by pharmaceutical manufacturers ‘provides only ineffective or remote support for the government’s purpose.’”  Id. at 47.

Finally, the court determined that the government’s interpretation of the FDCA – a “complete and criminal ban on off-label promotion by pharmaceutical manufacturers” – was not narrowly drawn to protect its interests.  The court construed “the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”  The court cited several less-restrictive methods the government could have used to protect its interests instead, such as developing a warning or disclaimer system, and concluded “that the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.”  Id. at 51.

III.     Potential Next Steps in Caronia

Under the Federal Rules of Appellate Procedure, the government has a few options for handling the Second Circuit’s decision.  Of course the government could do nothing, and let the Caronia decision stand as law in the Second Circuit. 

The government also could petition the Second Circuit for a rehearing, or a rehearing en banc, or both.  See Fed. R. App. P. 35 – 35.1, 40.  Rehearing is generally disfavored, and will not be ordered unless “en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or . . . the proceeding involves a question of exceptional importance.”  Id. at Rule 35.  Should the government proceed with a rehearing, it must file its petition within 14 days after the entry of judgment, which occurred on December 3, 2012.  Therefore, the deadline for this petition is December 17, 2013. 

Alternatively, the government may petition for writ of certiorari to the United States Supreme Court.  A writ of certiorari is not a matter of right, but of judicial discretion, and the Court may consider granting certiorari if a “Circuit Court decision conflicts with that of another Circuit Court on the same ‘important matter.’”  S. Ct. Rule 10.  The petition must be filed with the Supreme Court clerk within 90 days of entry of the judgment.  S. Ct. Rule 13.  Therefore, if no petition for rehearing or rehearing en banc is filed, the government must file a writ of certiorari by March 4, 2013.  If the government petitions for a rehearing and/or en banc, then the time to file a writ of certiorari is 90 days from the date of the denial of the rehearing.  Even if the Supreme Court grants review, it may dispose of the case by summary affirmance or reversal, or by simply vacating the judgment below and remanding for further proceedings.

There is no circuit split that would make likely the Supreme Court’s granting of the writ.  The government may claim that the D.C. Circuit’s opinion in Whitaker v. Thompson creates a split of opinions.  Whitaker, however, was not a criminal prosecution like Caronia, and the Second Circuit went to great pains to highlight that Caronia did not involve a situation in which the government used speech as evidence of establishing intended use. 

Although oral argument was heard on December 6, 2012, in the Ninth Circuit in another high-profile off-label case, United States v. Harkonen, the former CEO of InterMune was convicted of wire fraud, not the FDCA misbranding charge at issue in Caronia (see our previous posts here and here).  While Harkonen’s defense team consistently has attempted to raise the First Amendment issue throughout trial and on appeal, the Ninth Circuit is likely to remain silent on the issue due to the allegations by the government of the false or misleading nature of Harkonen’s statements. 

The decision to seek rehearing en banc and/or seek Supreme Court review is made by the Solicitor General of the United States, not FDA.  If FDA seeks further review of the decision, we expect that the Solicitor General will surely require FDA to demonstrate why it cannot live with this ruling.

IV.     Potential Impacts on Enforcement Activity

Assuming the Caronia decision stands, can industry expect any changes in FDA’s enforcement focus?   The federal government frequently touts the multi-million dollars it has recovered in settlements for off-label promotion cases.  It would be premature to believe that the government would give up easily on these high-profile and lucrative recoveries, and we certainly do not expect the case to have any effect on relators, who will continue to bring off-label promotion allegations to the attention of the government.  But the Second Circuit’s holding represents an unmistakable setback for the government from continuing business as usual.

Even though the FDCA allows for strict liability prosecution, criminal charges have generally been brought against manufacturers and their agents only in cases involving intentionally false or misleading statements.  These selective prosecutions may have been due to prescient prosecutors who recognized the potential First Amendment implications of these cases, or simply an effort to enhance the jury appeal of a case.  With Caronia, industry can expect to see even closer review of criminal charges to ensure there is strong evidence that a company lied about the safety or efficacy of a drug or device, or made mistakes and/or incomplete statements about the product at issue.  It is unlikely that we will see prosecutors bringing criminal charges against companies, and companies willing to pay money, in cases in which there is strong scientific support for an unapproved use of a product, absent clear evidence that there also were false or misleading statements.  

Indeed one of the key factors the government considers in deciding to pursue a criminal off-label case is whether the company had previously sought, and FDA had explicitly denied, the use that the company is allegedly promoting.  In such cases, the government generally views the company’s conduct as a direct attack on FDA’s drug approval process, and has been more inclined to prosecute the company criminally.  But in light of Caronia, and other FDA guidance, there is a strong argument that the company should be allowed to provide truthful and non-misleading information that may have developed since FDA’s original review of the unapproved use without fear of criminal prosecution. 

We wonder if we will see FDA shift its focus to the “unapproved new drug” charge to support off-label promotion cases against pharmaceutical manufacturers.  Note that there is no analogous “new device” definition contained in the FDCA. This shift would require evidence of labeling containing the drug’s new intended use.  Companies should continue to scrutinize promotional materials to be sure they do not contain false or misleading claims.

Companies also should be wary that FDA may use knowledge of a drug’s intended use as independent evidence to support a misbranding charge.  21 C.F.R. §§ 201.128, 801.4.  Under its regulations, FDA requires manufacturers to provide adequate labeling for a product that the company knows is being used off-label, even if there is no active promotion by the manufacturer.  This requirement has been rarely enforced, but we are aware of a recent Warning Letter in which it was cited to require changes to a product’s labeling.  After Caronia, FDA may look to creative ways, such as this, to curtail off-label promotion without using the manufacturer’s speech.

It is important to note that the holding from Caronia is only the law of the Second Circuit, which covers Connecticut, New York, and Vermont.  Given the broad reach of the Commerce Clause, it is difficult to imagine that any FDA-regulated industry can claim that it is not subject to jurisdiction outside the Second Circuit.  Indeed the U.S. Attorney’s Office in Boston is the most active prosecutor of off-label promotion cases, but only a handful of the companies it has prosecuted have been headquartered in its district.  

The Caronia decision also may have some bearing on the federal False Claims Act, and its state counterparts.  In this context, there arguably has always been a requirement that the government demonstrate that the claim involves falsity – thus the name “false claim” – used to obtain fraudulent reimbursement from a federal healthcare program.  Caronia makes clear that if promotional statements about a product are true and scientifically supported, FDA cannot prohibit this truthful, non-misleading speech.  Therefore it follows that neither can a sister agency of FDA use that same speech to recover hundreds of millions of dollars.  Thus we expect companies to challenge the government and relators on their burden to prove that the claim is actually false.  This may affect future False Claims Act settlements, which have been some of the government’s most sizable.

Although Caronia has made some waves, the tide has far from turned.  Industry remains exposed to substantial risk if it exercises its First Amendment right to free speech by promoting off-label.  Now seems like a ripe opportunity for FDA to provide further clarification to industry on how it will proceed in its enforcement actions after Caronia.

By Ricardo Carvajal –

We previously reported on a lawsuit that seeks to compel OMB and FDA to accelerate the implementation of FSMA.  Now the government has filed a motion to dismiss the case and for summary judgment.  The motion provides a full accounting of FDA’s efforts to implement FSMA, and is worth reading for that reason alone.  However, students of administrative law will also find it worth their time.

The motion sets the stage by noting the difficulty of the challenge of implementing FSMA due to the enormity and diversity of the food supply:

The regulations FDA has been directed to promulgate are novel and complex, and that complexity is increased by the need to build a cohesive system of regulatory controls integrating different regions and countries, as well as different food types. The enormity and scope of the task given to FDA cannot be overstated: FDA regulates over $450 billion worth of domestic and imported food and hundreds of thousand registered food facilities; FDA’s responsibility in the food area generally covers almost all domestic and imported food (except meat, poultry, and frozen, dried, and liquid eggs, tolerances for pesticide residues in foods, and requirements for public (tap) drinking water); the diversity of FDA regulated food (including, for example, perishable and non-perishable, seasonal, processed and raw agricultural commodities) necessitates a regulatory system that addresses a large variety of concerns; and the complexity of the food industry and the technologies used in food production and packaging are increasing…. Through FSMA, Congress directed FDA, for the first time, to develop comprehensive, science-based preventive controls across the entirety of the food supply.

The motion then details the organizational structure created by FDA for FSMA implementation, but notes that the “aggressive timelines” in FSMA were essentially “unachievable” even with “several hundred” FDA employees working on the task.  FDA therefore split the required rulemakings into two “waves,” with priority given to the four rules that FDA believed “are foundational for other rules and offer the most public health benefits.”  The motion serves as a scorecard of sorts for the various rules:

First Wave
• Preventive Controls for Human Food – under review at OMB
• Produce Safety Standards – under review at OMB
• Foreign Supplier Verification Program – under review at OMB
• Preventive Controls for Animal Food – under review at OMB

Second Wave
• Intentional Adulteration – Advance Notice of Proposed Rulemaking under review at FDA
• Sanitary Transport – draft codified and preamble language under review at FDA
• Third Party Accreditation – under review at OMB

The motion alludes to the interdependence of some of these rules, which suggests that some of them could issue concurrently.

Finally, FDA defends its decision not to enforce certain provisions of FSMA under Heckler v. Chaney.  FDA argues that the agency’s “fundamental enforcement tools are the same provisions examined in Chaney, and plaintiffs have not identified anything in FSMA that would circumscribe the discretion inherent in those provisions.”  FDA further argues that its implementation timetable is reasonable and that judicial intervention is not warranted. 

By Karla L. Palmer –

On December 5, 2012, Representatives Rosa DeLauro (D-CT) (the ranking member of the House committee responsible for FDA appropriations) and Nita Lowey (D-NY) (also on the House Appropriations Committee and a senior member of the Health and Human Services Subcommittee) introduced a bill to regulate prescription drug compounding in the wake of the fallout resulting from the New England Compounding Center matter.   To date, the compounding incident is allegedly responsible for 500 illnesses aand at least 36 deaths.  The proposed legislation, titled “Supporting Access to Formulated and Effective Compounded Drugs Act” ("SAFE Act") (H.R. 6638), would provide significantly greater federal oversight of compounding pharmacies.  This latest legislation comes on the heels of the proposed VALID legislation (Verifying Authority and Legality in Drug Compounding), which bill was introduced by Congressman Markey on November 1, 2012 and blogged about here that also seeks to increase federal control of pharmaceutical compounding.

The SAFE bill provides as follows: 

• Registration:  The Secretary of Health and Human Services ("HHS"), in consultation with state regulators, health care providers, compounding pharmacies, and other stakeholders, would be required establish a process by which compounding pharmacies would register their facility with FDA through an electronic registration process.  Subject to limited exceptions, every person who owns or operates a compounding pharmacy would be required to submit to a database specific information, including contact information for the pharmacy; the state of licensure; compounding methods used; and any additional information (that may include the quantity of products compounded) for the purpose of determining whether the facility is engaging in manufacturing, yet inappropriately registering as a compounding pharmacy.  Exemptions would apply for compounding pharmacies that employ fewer than 20 full-time equivalents or perform traditional compounding of drug products that are used in a single state.

• Labeling: The proposed legislation seeks to ensure that patients know they are receiving a compounded drug by requiring that compounded drugs are appropriately labeled.  The legislation would require the prescriber to inform an individual patient, including patients in a healthcare setting, that the individual is being prescribed a compounded drug, and to provide the patient information concerning safety, availability and the production of compounded drugs.  The pharmacist must confirm that the patient received such information when he or she receives a compounded drug product. Furthermore, the product labeling must clearly indicate that the drug product is a “non-FDA approved compounded drug product,” and subject to other to-be-determined regulatory labeling requirements.  

• Database:  The legislation would require HHS to establish and maintain a database of information on compounding pharmacies that are licensed in more than one state to assist and inform oversight and inspection of compounding pharmacies by the FDA and state regulatory authorities.  The database would include minimum standards for a compounding pharmacy license in each state and other information.  The database would be accessible by both state and federal authorities and would permit the sharing of information. 

• Production standards:  The Secretary would also be required to set forth minimum production standards for compounded drug products, and to determine the particular products that would be required to meet the established minimum standards.  The enhanced standards may include, but are not limited to, the intended route of administration for the drug product and whether the product is sterile or non-sterile.  The Secretary may vary the minimum standards depending on type or intended use of the drug product.

• Training:  The Secretary of HHS would also be required to conduct a series of training sessions for state agencies that regulate pharmacies and compounded drugs.  The training would include information on to-be-established minimum product standards, sample inspection protocol and recordkeeping to facilitate inclusion of such information in the database described above. 

The proposed legislation sets forth an 18-month deadline for the issuance of regulations addressing labeling and notification requirements.  It would also establish an advisory committee comprised of patient or consumer representatives, state agencies, compounding pharmacies and health care providers, and “at least one member with expertise on clearly communicating information in such labeling of drugs.”  (Safe Act at 9).  The advisory committee must submit recommendations within 12 months after enactment of the Act.  The proposed legislation similarly calls for establishment of a “database” advisory committee, comprised of representatives of consumers or patients, health care providers, compounding pharmacies, state agencies, and information technology experts, to consult on the development within 12 months of implementation of the proposed compounding pharmacy database.  In addition, the Act would establish a permanent advisory committee on pharmacy compounding to consider issues “related to the safety and availability of compounded drug products.” 

In addition to these various reporting requirements, the Act would require that, not later than six months after enactment, and each six month period (for 25 months thereafter), the Secretary of HHS must submit to Congress a report on the status of the implementation of the requirements of the Act and any amendments.  The Secretary will also be required within 12 months to submit to Congress an additional report that would contain a review and effectiveness evaluation of standards used by organizations that provide accreditation to compounding pharmacies.  Furthermore, not less than 18 months after enactment, the Secretary must submit to Congress a report that contains a review of models that states use to structure their oversight of compounding pharmacies, including how that structure may impact development and enforcement of regulations to ensure safety of compounded drug products. 

And lastly, if the above does not impose enough federal reporting, the Act would require the Government Accountability Office to review the extent to which federal health care programs ensure (1) the extent to which compounded drug products are compounded in facilities that comply with the FDCA, (2) whether reimbursement rates for compounded drugs under such federal programs are appropriate, and (3) whether such programs encourage the use of compounded drugs in lieu of available, lawfully marketed drug products. 

Finally, the proposed legislation would establish significant criminal penalties, including fine or imprisonment, for any person who knowingly and intentionally violates section 301(d) of the Federal Food, Drug, and Cosmetic Act with an intent to defraud or mislead or with conscious or reckless disregards of a risk of death or serious bodily injury.  Lowey commented: “As recent events have made clear, it is critical to ensure compounding pharmacies are operating safely and the products consumers receive will improve – not jeopardize – their health. Federal oversight is critical to identify and correct potential problems and keep consumers safe.”  The proposed legislation likely will not gain much momentum this lame duck session of Congress.

By John A. Gilbert & Delia A. Stubbs –

Last week, Representative Diana DeGette (D-CO) introduced legislation proposing to amend section 903 of the Controlled Substances Act (“CSA”) to create an exception for state marihuana laws.  Section 903, as currently written, expresses Congress’s intent not to preempt state laws that occupy the same field of regulation as the CSA, unless those laws are in “positive conflict” with the federal law.  21 U.S.C. § 903.  A “positive conflict” is described as one that renders the federal and state law unable to “consistently stand together.”  Id.  H.R. 6606 (the “Respect States’ and Citizens’ Rights Act of 2012”), if passed, would insert language stating that no provision of the CSA “shall be construed as preempting” “any state law that pertains to marihuana.”  H.R. 6606 thus seeks to allow states greater flexibility in passing marihuana laws that are less stringent than the federal law.  (H.R. 6606 would also remove federal preemption of any state law relating to marihuana that prohibits an activity expressly permitted by federal law.)

More importantly, H.R. 6606 serves as a crucial reminder to entities that manufacture, distribute or dispense controlled substances  to look beyond federal law in designing their compliance programs.  Because of the congressional intent expressed in Section 903, principles of federalism do not prohibit states from imposing requirements that are separate or more heightened than those imposed by the CSA. U.S. Const. art VI, Cl. 2; Bldg. & Const. Trades Council of Metro. Dist. v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218, 113 S. Ct. 1190, 122 L. Ed. 2d 565 (1993) (where Congress has not expressed an intent to occupy the entire field in which federal law exists, state laws that are consistent with the federal law are valid).

Indeed, many states have passed laws that are more stringent than the CSA.  For example, some states schedule drugs not otherwise scheduled by the CSA or place drugs in stricter schedules than the CSA. See DEA, Office of Diversion Control, Drug & Evaluation Section, Tramadol (Feb. 2011) (noting that  several states designate Tramadol as a Schedule IV controlled substance despite being considered only a “drug of abuse” by DEA); N.Y. Pub. Health § 3306, N.Y. COMP. CODES R. & REGS. titl. 10, § 80.67 (scheduling anabolic steroids in Schedule II, although only placed in Schedule IV in the CSA, and restricting prescription quantity to 6 months for certain disorders). Other areas where some states have imposed stricter laws regarding controlled substances include dispensing (e.g., limits on supplies) drug sampling and advertising.   Thus, companies should be sure to review state laws and regulations, in addition to the federal CSA, when designing and implementing their corporate compliance program.

By Kurt R. Karst –   

Things are heating up in litigation in the U.S. District Court for the District of New Jersey initiated by Actelion Pharmaceuticals Ltd. and Actelion Clinical Research, Inc. (collectively “Actelion”) in September 2012, which, according to Actelion, “concerns the fundamental right of a business to choose for itself with whom to deal and to whom to supply its products.”  As we prevously reported, Actelion is seeking declaratory relief that the company is under no duty or obligation to supply prospective ANDA applicants Apotex Corp. (“Apotex”) and Roxane Laboratories, Inc. (“Roxane”) with TRACLEER (bosentan) Tablets for purposes of bioequivalence testing and ANDA submission.  Because of the potential of the drug to cause serious side effects,  TRACLEER is approved with a Risk Evaluation and Mitigation Strategies (“REMS”) program with Elements To Assure Safe Use (“ETASU”) that limit distribution of the drug through certain pharmacies, practitioners, and health care settings.  Apotex and Roxane both sent correspondence to Actelion seeking TRACLEER sample for use in bioequivalence testing and threatening antitrust litigation, but Actelion refused to provide drug sample to the companies “maintaining its right to choose with whom it does business” and citing certain REMS compliance issues. Instead of waiting for that antitrust action to be filed, Actelion took a proactive approach and sued Apotex and Roxane, saying, among other things, that “Apotex and Roxane are seeking to force Actelion to supply them with product, turning well-settled law, not to mention basic free-market principles, on their head,” and that “Apotex’s and Roxane’s demands would also require Actelion to violate its regulatory obligations.” 

In recent court filings, both Apotex and Roxane have brought counterclaims alleging illegal and anticompetitive conduct by Actelion.  Apotex’s Counterclaim Complaint alleges that Actelion has abused its monopoly power in violation of Section 2 of the Sherman Act and the New Jersey Antitrust Act “by denying Apotex the ability to purchase Tracleer samples for bioequivalence testing and to submit an ANDA to FDA for a generic bosentan product.”  Apotex seeks declaratory and injunctive relief and treble damages, including that the court compel Actelion “to sell Apotex sufficient quantities of Tracleer at market prices so that Apotex can perform bioequivalence testing.” 

Interestingly, Apotex procured a version of TRACLEER marketed in Canada and asked FDA for the Agency’s views on using that drug product in bioequivalence testing instead of the U.S.-approved and marketed drug product.  FDA commented in correspondence to Apotex that the company’s bioequivalence studies “should be performed using the approved US product as the reference product,” and that “[i]t is not acceptable to use an approved Canadian drug product . . . .”

Roxane’s Counterclaim Complaint alleges violations of, among other things, Sections 1 and 2 of the Sherman Act and the New Jersey Antitrust Act, and seeks declaratory and injunctive relief and treble damages.  Roxane’s Counterclaim Complaint concerns not only TRACLEER, but another drug as well – Actelion’s ZAVESCA (miglustat) Capsules, which FDA approved on July 31, 2003 under NDA No. 021348 for mild to moderate Type I Gaucher disease in adults for whom enzyme replacement therapy is not a therapeutic option.  ZAVESCA is not subject to an ETASU REMS, but rather, is subject to a “restricted distribution” program adopted and implemented by Actelion.  According to Roxane:

Faced with [a] threat to its monopolies, Actelion engaged in a scheme to prevent Roxane from obtaining the FDA-mandated drug samples necessary to develop Roxane’s generic products, by prohibiting distributors to sell to Roxane and by refusing to sell to Roxane itself.  Through its actions, Actelion has unlawfully prevented Roxane from developing generic versions of these drugs.

Roxane requests that the New Jersey court enter a Judgment and Order declaring that Actelion’s conduct is unlawful and “enjoining and restraining Actelion from limiting distribution of Tracleer and Zavesca samples to Roxane through use of its REMS and/or restricted distribution programs or otherwise,” among other relief.

Another generic drug manufacturer, Actavis Elizabeth LLC (“Actavis”), is seeking to enter the case as a intervenor-defendant/counterplaintiff.  According to Actavis’ Motion to Intervene, “Actelion has refused to provide Actavis with any Tracleer samples on the grounds that the [FDC Act] does not require ‘that Actelion relinquish its right to choose with whom it does business.’”  Actavis’ Proposed Counterclaim Complaint, like the Apotex and Roxane Counterclaim Complaints, alleges violations of the Sherman Act and the New Jersey Antitrust Act and seeks declaratory and injunctive relief and treble damages.

With the increasing profile of this lawsuit and the possibility of a game-changing decision (for either Actelion or generic competitors), one must wonder whether or not the Federal Trade Commission (“FTC”) will eventually seek to chime in on the case.  The FTC has reportedly been investigating REMS and its effects on generic competition.  Is a proposed amicus brief being drafted?  We’ll see.  The FTC has been active as of late, with amicus briefs filed in antitrust lawsuits involving patent settlement agreements and “product hopping.”  As a side note, REMS reform was recently included as a policy recommendation in a report (page 24) from the National Coalition on Health Care on curbing health care costs.

By William T. Koustas –

The Federal Trade Commission (“FTC”) has amended its Red Flags Rule (“the Rule”) to comply with the Red Flag Program Clarification Act of 2010 (“Clarification Act”).  As we have previously reported, the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”) directed the FTC to promulgate regulations that required creditors to enact procedures to prevent identity theft.  In 2007, the FTC adopted the Rule, which required creditors to implement these procedures.  However, in April 2009, the FTC issued a document explaining that the Rule applied to various professions, including attorneys and healthcare providers because they bill their clients after services are rendered, thus extending credit. 

This caused many professional organizations, including the American Medical Association and the American Bar Association, to lobby for changes to the Rule or the FACT Act.  In August 2009, the American Bar Association filed a lawsuit against the FTC to enjoin enforcement of the Rule.  In the end, Congress enacted the Clarification Act that amended the definition of the term “creditor” in the FACT Act to exempt attorneys and other professionals who bill their clients for services rendered.

On November 30, 2012, the FTC issued an interim final rule amending the definition of a “creditor” in the Rule to make it consistent with the definition in the Clarification Act.  The interim final rule becomes effective on February 11, 2013. 

Hyman, Phelps & McNamara, P.C., the nation’s largest boutique food and drug regulatory law firm, seeks an associate with three to six years experience in medical device law and regulation to assist with a growing practice.  Strong writing skills are required.  Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Jeffrey N. Wasserstein (jnw@hpm.com).

On December 12th and 13th, the Food & Drug Law Institute (“FDLI”) will hold its annual conference on “Enforcement, Litigation and Compliance.”  This year’s conference will be held at the Westin Georgetown hotel in Washington D.C.  It will include quite a few government presenters on a wide range of enforcement-related topics that relate to the industries regulated by the FDA, FTC, DEA, and other enforcement agencies.  HP&M Director John R. Fleder is one of the speakers. 

See here for a copy of the conference agenda and to register.  FDA Law Blog readers can receive a 15% discount off the conference registration price.  Use promotion code ENF201 to receive the discount.  We encourage people to register for the conference and to attend this two-day session. 

The ability to successfully obtain FDA approval is critical to the success of a medical device.  However, sometimes even the most dedicated efforts fall flat when FDA says “No.”  What then?  What can you do if FDA says it believes there is not an adequate predicate device for your product?  Or if FDA is requiring an overly burdensome clinical study?  Or imposing data requirements that were not applied to your competitor's similar 510(k) six months earlier?

Hyman, Phelps & McNamara, P.C. Director Jeffrey K. Shapiro will be the featured speaker at a webinar scheduled to take place on January 10, 2013 from 11:30AM to 12:30PM (Eastern).  The webinar, titled “When a 510(k) or PMA Goes Off Track – FDA’s Appeals Process,” will cover the appeals processes that are available to medical device companies when FDA takes an adverse action during premarket review of a 510(k) or PMA.  Specifically, Mr. Shapiro will discuss:

• The appeal procedures available when a dispute arises with FDA;
• How to choose the right procedure and formulate a strategy for resolving the dispute;
• Practical tips on how to resolve the dispute as quickly as possible;
• How long an appeal typically might take;
• The impact of the new statutory timing requirements and FDA's draft appeals guidance; and
• How to assess the odds of success.

You can register for the webinar here.  Mr. Shapiro has authored several articles on the medical device appeals process – see here, here, and here – and will be discussing the latest FDA guidance and procedures on the topic.

On December 3, 2012, the United States Court of Appeals for the Second Circuit (which is based in New York City) issued a long-awaited ruling in United States v. Caronia, a case involving off-label promotion.  In a 2-1 82-page decision that involves a vigorous dissent, the Court vacated the criminal conviction of Alfred Caronia, a former sales representative for a pharmaceutical company.  The sales representative was convicted for promoting the drug Xyrem for a use that had not been approved by FDA. 

The Court ruled that “we construe the FDCA as not criminalizing the simple promotion of a drug’s off-label use because such a construction would raise First Amendment concerns.”  The Court concluded that the record  demonstrated that the government had prosecuted Mr. Caronia for “mere off-label promotion.”  Slip Op. at 26.

The Court explained that FDA’s construction of the FDCA legalizes the outcome of off-label use by doctors, but “prohibits the free flow of information that would inform that outcome.”  The Second Circuit concluded that “the government’s prohibition of off-label promotion by pharmaceutical  manufacturers ‘provides only ineffective or remote support for the government’s purpose.’”  Slip Op. at 47.

The Court also ruled that it construes “the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”  In addition the Court ruled “that the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.”  Slip. Op. at 51.

It goes without saying that this is a very significant ruling that will have wide implications for FDA and the companies and individuals regulated by FDA.  Our firm will provide a more detailed analysis of the ruling in the upcoming days. Our previous post on the case is available here.

By Jennifer D. Newberger –

On November 28, 2012, CDRH issued a report titled “Improvements in Device Review,” addressing progress in the Center since issuance of its “Plan of Action” in January 2011.  The report states that since the Plan of Action, “the speed and predictability of device review have improved for the first time in almost a decade, including significant reductions in the time it takes FDA to review applications and the size of application backlogs.”

A brief review of the Plan of Action and reasons for its implementation may be helpful in understanding the genesis of this recently released report.  In response to concerns raised by industry, consumer groups, and CDRH employees, CDRH began an evaluation of its premarket review process in late 2009.  In August 2010, in response to internal reviews and public feedback, CDRH released two reports.  The first identified problems with its premarket review process, and the second addressed CDRH’s use of science in regulatory decision-making.  The main problem identified in the premarket review process was unpredictability, “including uncertainty about the requirements for approval and the likely length of the review process, as well as inconsistencies and mid-stream changes in what information was required to obtain approval.”  CDRH issued its Plan of Action in January 2011 to address those concerns.  It included 36 action items, many focused on the major causes of unpredictability. 

The November 2012 report assesses progress on those items, including:

• More efficient review of lower risk products;
• Increasing reliance on national and international device studies and standards;
• Enhancing reviewer training;
• Providing better, timelier guidance to CDRH staff and industry on requirements for clearance and approval;
• Reducing unnecessary and inconsistent data requests;
• Promoting greater transparency, interaction, and collaboration between FDA and industry during premarket reviews; and
• Improving CDRH’s understanding of new device technologies.

The report also discusses CDRH’s action to support innovation, including the Innovation Pathway, the Entrepreneurs-in-Residence program, and creating incentives for conducting clinical trials in the U.S.

According to the report, some of the specific positive trends resulting from the Plan of Action include:

• The average time it takes to clear a 510(k) began declining in 2011, for the first time since 2005;
• The backlog of 510(k)s pending for more than 90 FDA-days dropped by almost two-thirds from its high in 2010, dropping for the first time since 2005;
• The percentage of 510(k)s for which CDRH requested additional information during the first review cycle has decreased;
• The average time to reach a decision on a PMA has been reduced by approximately one-third since 2010; and
• The percentage of 510(k)s cleared and PMAs approved has increased since 2010.  FDA attributes this to “improvements in the quality of applications and the consistency of review standards.”

While these initial numbers are encouraging, it is understandable if industry remains cautious.  It is a bit too soon to consider these results to be “trends.”  Though some of CDRH’s action items actually went into effect in 2010, before issuance of the Plan of Action, the results described in the report are based on, at most, one and a half years of data:  all of FY2011, and limited information from FY2012.  It will be interesting to see what the data look like in another year.

Industry can, however, take comfort in the number of efforts underway at CDRH to improve the review process.  There is no question that CDRH has issued a large number of draft and final guidance documents in the last two years, many of which should prove very useful to both industry and CDRH in improving the premarket review process.  Additionally, improvements in reviewer training and the increase in informal interactions are positive steps. 

Hopefully, CDRH will not take the initial results as a necessary sign of success, but will instead continue to work towards improving its premarket review process and relationship with industry.

By Kurt R. Karst –    

Last Friday afternoon, Endo Pharmaceuticals Inc. (“Endo”) filed a Complaint and a Motion for Preliminary Injunction in the U.S. District Court for the District of Columbia seeking declaratory and injunctive relief concerning the company’s non-crush-resistant formulation of Opana® ER approved under NDA No. 021610 (identified in Endo’s Complaint as “Original Formulation Opana® ER”).  Endo alleges that FDA violated the FDC Act and the Administrative Procedure Act by failing to make a determination as to whether Original Formulation Opana® ER, which was discontinued from marketing earlier this year, was withdrawn for reasons of safety.  Endo currently markets a crush-resistant version of Opana® ER approved under NDA No. 201655 (identified in Endo’s Complaint as Opana® ER CRF).  Endo is also seeking a preliminary injunction ordering FDA to make a decision by December 31, 2012 on whether Original Formulation Opana® ER was discontinued for safety reasons.  FDA has approved two ANDAs for generic versions of Original Formulation Opana® ER – ANDA No. 079087 (Impax) and ANDA No. 079046 (Actavis) – and the companies are expected to begin marketing their drug products on January 1, 2013.  In the interim, Endo wants a court order directing FDA to withdraw or suspend those approvals.

The lawsuit follows a pair of citizen petitions Endo submitted to FDA in August. The first Citizen Petition (Docket No. FDA-2012-P-0895) requests that FDA determine that Original Formulation Opana® ER was discontinued for reasons of safety and can no longer serve as the basis of approval for an ANDA, that FDA refuse to approve any pending ANDA for a generic version of Original Formulation Opana® ER, and that FDA suspend and withdraw the approval of any ANDA referencing Original Formulation Opana® ER as its basis for approval.  The second Citizen Petition (Docket No. FDA-2012-P-0951), which was recently supplemented, primarily concerns the requirements to obtain approval of an ANDA for a generic version of Opana® ER CRF, but also brings Original Formulation Opana® ER into the mix.

“FDA has not carried out its responsibility under 21 C.F.R. § 314.161(a) to make a determination sua sponte as to whether Endo discontinued Original Formulation Opana® ER for reasons of safety,” alleges Endo.  That regulation requires FDA to determine, prior to approving a pending ANDA that refers to a drug product that is no longer marketed, and “[w]henever a listed drug is voluntarily withdrawn from sale and [ANDAs] that referred to the listed drug have been approved,” whether such discontinuation was for reasons of safety or effectiveness.  In addition, the statute (FDC Act § 505(j)(4)(I)) and FDA’s implementing regulations ( 21 C.F.R. § 314.127) provide that FDA may refuse to approve an ANDA if the Agency determines that the RLD was withdrawn from sale for reasons of safety or effectiveness, and that FDA can suspend and withdraw approval of an ANDA if the Agency determines that the RLD was withdrawn from sale for reasons of safety (FDC Act § 505(j)(6)). 

“FDA has not taken any action in response to either of Endo’s Citizen Petitions or its recent Supplement that sought to prod the agency into fulfilling its statutory and regulatory obligations, triggered by Endo’s May 31, 2012 Notice that it had withdrawn Original Formulation Opana® ER,” says Endo.  Moreover, Endo alleges that FDA has failed to make the legally required discontinuation determination despite

mounting evidence of the public health crisis caused by abuse and misuse of prescription opioid pain relievers; FDA’s awareness that opioid pain relievers that are manufactured without safety features are more susceptible to abuse; FDA’s exhortations to pharmaceutical companies to invest in innovative crush-resistant formulations of opioid pain relievers; Endo’s data demonstrating the safety benefits of Opana® ER CRF over non-crush-resistant versions of the drug; the documented “squeezing-the-balloon effect,” whereby opioid abusers can be expected to quickly learn of and migrate to generic non-crush-resistant formulations, i.e., those pills that may be readily crushed and snorted; and FDA’s knowledge that a non-crush-resistant generic version of Opana® ER is poised to launch on or about January 1, 2013.

The issue of simultaneous marketing of abuse-deterrent brand-name drugs and non-abuse-deterrent generic drugs has been heating up over the past year – not only here in the United States, but, for example, in Canada as well. 

In addition to Opana ER, FDA has received several citizen petitions (Docket Nos. FDA-2011-P-0473, FDA-2010-P-0540, and FDA-2010-P-0526) requesting that the Agency determine whether the abuse-deterrent version of OxyContin (oxycodone hydrochloride) Controlled-Release Tablets was discontiued for safety reasons.  Congress has also expressed interest in the topic with the introduction of the Stop Tampering of Prescription Pills Act of 2012 (“STOPP Act”) in July.  As we previously reported, the STOPP Act would amend the FDC Act to, among other things, establish new requirements for the approval of brand-name and generic drugs that are otherwise available in a tamper-resistant formulation, and deem the discontinuation of a non-abuse-deterrent drug after the approval of an abuse-deterrent to be a discontinuation for safety reasons.

By Kurt R. Karst –      

The Alliance for Safe Biologic Medicines (“ASBM”), a self-described “organization composed of diverse healthcare groups and individuals from patients to physicians, innovative medical biotechnology companies, and others who are working together to ensure patient safety is at the forefront of the biosimilars policy discussion,” urges FDA in a new paper to adopt unique non-proprietary names for all biological products licensed under the Public Health Service Act (“PHS Act”), and in particular biosimilar versions of reference products (even those that are interchangeable).  The paper, titled “It’s All About the Name: What is the Imperative of Adopting Unique Names For Biologic and Biosimilar Therapeutics?,” appeared in the latest edition of the Food and Drug Law Institute’s “Food and Drug Policy Forum,” and is the latest effort by ASBM and its members to advocate for unique biosimilar naming.  Over the past few months, ASBM and several member organizations have sent letters to FDA (see here) saying that it is essential that each biosimilar licensed under PHS Act § 351(k) have a unique name in order for patients and physicians to easily distinguish between medicines and to track and trace adverse events for such products.

The “naming issue” has been around since well before the March 23, 2010 enactment of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created the biosimilars pathway in the U.S.  For example, in an October 2006 Policy Position on Naming of Biotechnology-Derived Therapeutic Proteins submitted to the World Health Organization (“WHO”), several organizations, including PhRMA and BIO, recommended the assignment of distinct International Nonproprietary Names (“INNs”) to each biotechnology-derived therapeutic protein produced by different manufacturers in order to “accommodate the acknowledged complexity of protein medicinal products and best meet the WHO Objectives for INNs to facilitate safe prescription and dispensing of medicines and preserve patient safety.”  (An INN is the official generic name assigned to a pharmaceutical’s active ingredient by the WHO and applies to each product globally.)  Just a month before, FDA had commented (see here, page 9) to the WHO that “INNs for biologicals should not be used to imply product interchangeability in the absence of credible scientific evidence.  Likewise, however, INNs should not be used to differentiate biological products with the same active ingredient(s) when credible scientific data demonstrate that no pharmacologically relevant differences exist.” 

The BPCIA, as enacted, does not specifically address biosimilar product naming.  Although previous biosimilar legislation did address the issue, such as Representative Henry Waxman’s (D-CA) Access to Life-Saving Medicine Act (H.R. 1038) and Senator Judd Gregg’s (R-NH) Affordable Biologics for Consumers Act (S. 1505) (both from 2007), it was ultimately decided that naming provisions should not be included in the final biosimilars bill.  Given that “hole,” and an intensifying interest in a U.S. biosimilars market, the “naming issue” has taken on a life of its own.  Indeed, it was a much discussed issue at FDA’s November 2010 public hearing on the Agency’s implementation of the BPCIA. 

ASBM makes the point in its FDLI Policy Forum paper that:

The need for clear, defined naming considerations and a system to implement an effective tracking and tracing of all biologics – not just biosimilars – stems from the potential of these products to be unexpectedly altered by the manufacturing process, handling, etc., in a manner that could cause unintended harm to patients.  Whether the products that FDA approves will have the same name or a different name than the originator biologic will determine how well products can be traced back to a patient who has an adverse reaction.

With this backdrop, ASBM outlines what it says are key components that FDA must address in the biologics naming space, and makes four recommendations: 

1. All biologics should receive distinct non-proprietary names;

2. The United States Pharmacopeia should work with FDA to adapt the product monograph system to accommodate the unique attributes of structurally-related, but distinct, biologic medicines;

3. The non-proprietary name of a reference product and product/s biosimilar to it should have a common, shared root but have distinct and differentiating suffixes; and

4. Products designated interchangeable should have a distinct name from the reference product for which they are considered interchangeable to facilitate accurate attribution of adverse events.

On the other side of the fence, the Generic Pharmaceutical Association (“GPhA”) has taken the position that “[c]onsistency, patient safety and sound scientific principles necessitate biosimilars having the same INN as their specific reference product,” and that “[t]here is no evidence that a unique INN will improve the effectiveness of pharmacoviligance.”  Moreover, says GPhA, the BPCIA does not require different names for biosimilars and their reference product counterparts, and requiring different names for interchangeable products effectively make such a determination meaningless. 

By Ricardo Carvajal & John R. Fleder –

On November 26th, Commissioner Hamburg issued an order suspending the registration of the Sunland Inc. food manufacturing facility alleged to be at the heart of the ongoing recall of peanut products potentially contaminated with Salmonella.  Until the order is vacated and the registration is reinstated, Sunland may not introduce food from the facility into interstate or intrastate commerce.  This marks the first time that FDA has exercised this authority, which was conferred on the agency by the Food Safety Modernization Act (“FSMA”), enacted on January 4, 2011.

If FDA determines that food manufactured, processed, packed, received, or held by a registered facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, FDA can suspend the registration of the facility that (1) created, caused, or was otherwise responsible for such reasonable probability; or (2) knew of, or had reason to know of, such reasonable probability, and packed, received, or held such food.  The authority to suspend a registration cannot be delegated by the Commissioner.

FDA determined that Sunland’s products have a reasonable probability of causing serious adverse health consequences or death to humans, and that the facility created, caused, or was otherwise responsible for the probability.  FDA relied in part on multiple test results purportedly showing that the products manufactured, processed, packed, and held by the facility “are contaminated with Salmonella, or are at risk for contamination with Salmonella, based on the conditions in [the] facility.”  FDA cited both its own product and environmental test results, and those provided to FDA by the facility.  FDA also questioned the facility’s decision to release certain products into commerce:

Your facility distributed at least a portion of eight (8) lots of peanut and almond butter… after composite testing of those lots revealed the presence of Salmonella. Specifically, when composite testing of a lot was positive for Salmonella, individual containers of product from the positive tested lots were re-tested and portions, or all, of these lots were distributed based on the re-test (non-composite) testing. The initial Salmonella positive composite test results were disregarded. At least one of the batches from a lot with initial positive composite test results… that was ultimately distributed, contained a Pulsed Field Gel Electrophoresis (PFGE) pattern that was indistinguishable from the clinical isolates for the outbreak strain Salmonella Bredeney. When a PFGE pattern of an isolate is indistinguishable from the pattern of another isolate from a common source, it is highly likely that the two isolates are the same strain of Salmonella Bredeney.

Sunland has the opportunity to request an informal hearing on reinstatement of its registration.  The request must be submitted within 3 business days after issuance of the order unless Sunland wants a hearing within 2 business days, in which case the request must be submitted within 1 business day.  The request “must present specific facts showing that there is a genuine and substantial issue of fact that warrants a hearing.”  The order states that “[a] hearing will not be granted on issues of policy or law.”  If the request is granted, the hearing will be conducted under the procedures specified in 21 CFR Part 16.

On its website, Sunland issued a statement suggesting that FDA’s decision caught Sunland by surprise.  In a previously issued statement, Sunland denied having released products “that it knew to be potentially contaminated with harmful microorganisms.”

This suspension action specifically, and more generally the FDA’s FSMA suspension authority, raise an interesting question.  If FDA believes that a food company is involved in a situation the agency believes presents “a reasonable probability of serious adverse health consequences” etc., when will the agency use the suspension authority provided in  FSMA and when will it alternatively seek its more traditional remedy of pursuing judicial relief in the form of a seizure action or an injunction case?  When will it impose an administrative detention?  We are unaware of any FDA guidelines that answer these questions.  Although the suspension authority presents the bureaucratic obstacle of requiring the explicit approval of the FDA Commissioner, it also provides FDA with a swift remedy that does not, in and of itself, require involvement from either the Justice Department or a court.  With that said, a suspended company should have the legal right to challenge a suspension order in court, by seeking a temporary retraining order to block the order  from remaining in effect.  We expect many companies to request the expedited hearing provided by FSMA.  Indeed, we expect many companies to pursue both remedies in cases where a company does not believe that the suspension order is legally or factually justified.

Seizure actions and injunction cases initiated by FDA and DOJ often proceed on a litigation calendar that does include expedited procedures.  There is no doubt that suspension orders issued by FDA will lead to expedited litigation when a company challenges an order.  Hopefully, this fact alone will dictate caution by FDA, as it will need to be prepared to defend its order in the administrative hearing provided in 21 CFR Part 16 and also in emergency court proceedings in a suit filed by the suspended entity.

By Bill Koustas & Alan Kirschenbaum –

In July, we reported that Massachusetts had amended its prescription drug and device marketing law to (among other things) allow pharmaceutical and medical device companies to provide “modest meals and refreshments” as part of an informational presentation to health care practitioners outside of the hospital or medical office setting.  (Note that, in this regard, Massachusetts law is less restrictive than the PhRMA Code on Interactions with Healthcare Professionals, which provides that meals offered in connection with informational presentations made by sales representatives or their immediate managers should be limited to in-office or in-hospital settings.)

On September 19, 2012, the Massachusetts Department of Public Health ("DPH") issued a temporary emergency rule to implement the statutory amendments.  The emergency rule amended DPH regulations in two significant ways.  First, in accordance with the statutory amendment, it removed the prohibition against providing meals to health care practitioners outside of the office or hospital setting, while also requiring pharmaceutical and medical device companies to submit quarterly reports detailing any activities where such meals or refreshments are provided.  Second, in light of the physician payment sunshine provisions of the Affordable Care Act, the emergency rule removed the requirement to annually report other permitted gifts to covered recipients after calendar year 2012.

On November 21, 2012, DPH issued a final rule to replace the earlier emergency rule.  The final rule, which will take effect on December 7, 2012, is similar to the emergency rule, but with a few important modifications.  First, the final rule restores the annual reporting requirement for 2013 and subsequent years to the extent that the required information does not duplicate information that is reported to the federal government under the federal sunshine provisions and that is then reported by the federal government to Massachusetts in annual reports.  Since the federal sunshine provisions cover only remuneration provided to physicians and teaching hospitals, annual reports to Massachusetts will still be required for remuneration provided to other “Covered Recipients” under the Massachusetts law – i.e., hospitals, nursing homes, pharmacists, nurse practitioners, and other practitioners and providers who are authorized to prescribe, dispense, or purchase drugs. 

The final rule retains the quarterly reporting requirement for out-of-office meals and refreshments, but does not specify a reporting deadline.  Presumably, DPH will notify manufacturers about the quarterly report deadline in a future communication.  Interestingly, DPH noted in an explanatory memorandum that much of the information reported in the quarterly reports will likely be covered by the federal sunshine provisions and therefore be preempted, but DPH decided to retain the quarterly reporting requirement regardless.

In issuing the final rule, DPH rejected commenters’ requests to place a monetary cap on what is considered a “modest” meal and to exclude alcoholic beverages.  The definition of “modest meals and refreshments” continues to include both food and drinks without restrictions on alcohol, and the benchmark for “modest” remains what a practitioner “might purchase when dining at his or her own expense,” as judged by local standards.