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  • FDA Publishes De Novo Classification Final Rule with Few Changes from the Proposed Rule

    After 23 years, de novo classification review finally has an implementing regulation!

    The other major review processes have had their regulations in place for many decades.  The Medical Device Amendments of 1976 created the initial premarket application (PMA) review and 510(k) substantial equivalence review processes.  Only a year later, in 1977, FDA promulgated regulations governing 510(k) reviews (21 C.F.R. Part 807, Subpart E).  In 1986, FDA followed up with the PMA regulations (21 C.F.R. Part 814).

    In 1997, the de novo classification process was added to the Federal Food, Drug, and Cosmetic Act (FDCA) by the Food and Drug Administration Modernization Act of 1997.  The de novo process was later amended by the Food and Drug Administration Safety and Innovation Act and the 21st Century Cures Act.  Yet, all this time, this process lacked implementing regulations governing the process and the criteria for approval.  The regulatory uncertainty has ill‑befitted a very important pathway to market for novel medical devices.

    The rule became final on October 5, 2021 via publication in the Federal Register.  The new rule will be codified in 21 C.F.R. Part 860.  It was published approximately three years after the December 7, 2018 release of the proposed rule (see blog post on the proposed rule here).  The de novo rule is structurally similar to the 510(k) regulations (21 C.F.R. Part 807, Subpart E) and the PMA regulations (21 C.F.R. Part 814), and consistent with existing guidance documents on de novo request content and review:

    As discussed in detail in our post on the proposed rule, there are certain features of the de novo regulations that will increase the burden on de novo requesters, and may exceed FDA’s statutory authority.

    The final rule is largely unchanged from the proposed rule.  Perhaps the most controversial provision in the de novo rule is the inspectional authority FDA grants itself:  “[the Agency] may inspect relevant facilities to help determine” (1) that both nonclinical and clinical data were collected in a manner that ensures the data accurately represents device benefits and risks, and (2) that implementation of the Quality System Regulation (QSR), along with general and special controls, provide adequate assurance of safety and effectiveness.

    In our post on the proposed rule, we pointed out that with certain 510(k)s and generally all PMAs, the FDCA affirmatively grants pre‑approval inspection authority.  Specifically, for 510(k)s, QSR inspections are prohibited unless FDA finds that “there is a substantial likelihood that the failure to comply with such regulations will potentially present a serious risk to human health.”  FDCA § 513(f)(5).  In the PMA context, the statute permits FDA to withhold approval if manufacturing facilities do not conform to QSR requirements.  Id. § 515(d)(2)(C).  In contrast, the FDCA is silent regarding pre-classification inspections for de novo requests.  Some commenters, including AdvaMed, noted this apparent lack of inspectional statutory authority when it comes to de novo classification.

    In the preamble, FDA insists that the inspectional authority claimed in the final rule is narrowly drawn and will not be much used.  FDA says inspections may be necessary if a device has “critical and/or novel manufacturing processes that may impact the safety and effectiveness of the device.”  86 Fed. Reg. 54,826, 54,832 (Oct. 5, 2021).  FDA clarifies that, unlike pre-approval inspections conducted during a PMA review, the purpose of an inspection of a manufacturing facility for a de novo review is “not for the purpose of reviewing for compliance with the QSR.”  Id.  Rather, it is to “determine whether the proposed special controls are sufficient to reasonably assure safety and effectiveness or if additional controls are needed under section 513(f)(2)” of the FDCA.  Id.  FDA forecasts that the circumstances where an inspection is necessary “should arise with a small percentage of De Novo requests.”  Id.

    As to nonclinical and clinical testing facilities, FDA asserts authority to inspect comes from section 513(a)(1)(C), which defines Class III devices and subjects them to premarket approval under section 515.  FDA states that such inspections are necessary in order to “ensure[] the data accurately represents the risks and benefits of the device.”  Id.

    It remains to be seen whether FDA will be successful in justifying the new inspectional authority.  As discussed in our blog post on the proposed rule, the statutory provision that authorizes classification proceedings (FDCA § 513) does not authorize manufacturing inspections, except for a limited exception in the 510(k) context.  Since a de novo review is at bottom the promulgation of a new classification regulation under authority of § 513, it seems a stretch to say that it authorizes FDA to undertake inspections in connection with such classification proceedings.  As to the testing facility inspections, without more explanation than was provided in the preamble, it is not clear how section 513(a)(1)(C) provides authority.

    On the timing of de novo reviews, both the proposed and final rule state that FDA will grant or deny a de novo classification request within 120 days after receipt, with the exception of a pause in FDA’s review clock for up to 180 days while a requester responds to deficiencies identified by FDA.  The 120-day deadline is already in the statute, so FDA had no choice but to adopt this deadline in the final rule.

    Of course, despite the statutory deadline, pursuant to the MDUFA IV commitment letter, FDA currently has a goal to review 70% of de novo requests received in FY 2022 within 150 days.  The final rule theoretically shaves the current review timeline down by 30 days, and it applies to all de novo requests (not just 70% of requests).

    It will be interesting to see if and how FDA will be able to meet the new, shorter timeline.  It is possible that this shortened timeline will motivate FDA to be selective in its decisions to conduct pre‑classification inspections.  Alternatively, perhaps FDA will simply fail to meet the timeline or will continue to make to agreements with Congress that override both the statutory and regulatory timeline.

    The final rule requires, among other things, that the requestor submit a copy of representative advertisements for the device.  FDA disagreed with a comment that advertisements are outside the scope of a Class I and Class II device review, stating that “such information is necessary to determine the device’s intended use and its safety and effectiveness for the purposes of classification.”  86 Fed. Reg. at 54,839.  FDA does not have authority over the advertising of Class I and II devices (which was given to the Federal Trade Commission), so the Agency justifies this request based on its authority to consider intended use when determining safety and effectiveness.  21 C.F.R. § 860.7(b)(2).

    The final rule becomes operative on January 3, 2022.  As FDA begins to implement these provisions, we will be particularly interested in seeing how frequently FDA chooses to conduct pre‑classification inspections and whether they keep such inspections within the narrow scope described in the preamble.

    Categories: Medical Devices

    R.J. Reynolds Vapor Company First to Receive E-Cigarette PMTA Authorization

    On October 12, 2021, FDA authorized the marketing of R.J. Reynolds (RJR) Vapor Company’s Vuse Solo electronic nicotine delivery system (ENDS) device and accompanying tobacco-flavored e-liquid pods, specifically, Vuse Solo Power Unit, Vuse Replacement Cartridge Original 4.8% G1, and Vuse Replacement Cartridge Original 4.8% G2. This marks the first e-cigarette ever to be authorized by the FDA through the Premarket Tobacco Product Application (PMTA) pathway.  In a press release announcing the orders, Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products stated that the RJR data “demonstrates its tobacco-flavored products could benefit addicted adult smokers who switch to these products – either completely or with a significant reduction in cigarette consumption – by reducing their exposure to harmful chemicals.

    As we have previously discussed, under the PMTA pathway, manufacturers must demonstrate that, among other things, marketing of the new tobacco product would be appropriate for the protection of the public health. According to the FDA press release, the Vuse e-cigarette products were found to meet this standard:

    because, among several key considerations, the agency determined that study participants who used only the authorized products were exposed to fewer harmful and potentially harmful constituents (HPHCs) from aerosols compared to users of combusted cigarettes. . . .  Additionally, the FDA considered the risks and benefits to the population as a whole, including users and non-users of tobacco products, and importantly, youth. This included review of available data on the likelihood of use of the product by young people.  For these products, the FDA determined that the potential benefit to smokers who switch completely or significantly reduce their cigarette use, would outweigh the risk to youth, provided the applicant follows post-marketing requirements aimed at reducing youth exposure and access to the products.

    FDA also issued 10 marketing denial orders (MDOs) for flavored ENDS products submitted under the Vuse Solo brand by RJR.  FDA stated that the agency is still evaluating the company’s application for menthol-flavored products under the Vuse Solo brand.

    FDA Provides Update on Pending PMTAs

    FDA faced a crush of PMTA submissions in August–September 2020, largely for ENDS products.  To understand why that crush occurred, recall that for the “deemed” tobacco products that are subject to FDA regulation under the 2016 deeming rule, including ENDS products, FDA established certain “compliance periods.” The original deadline for submission of PMTAs for products subject to the deeming rule such as ENDS products was August 8, 2018.  The PMTA submission deadline was extended several times by FDA, and the agency ultimately decided that for combustible products such as cigars, pipe tobacco, and hookah tobacco, the submission deadline would be August 8, 2021, while for non-combustible products such as e-cigarettes and other ENDS products, the submission deadline would be August 8, 2022.

    After the last FDA extension of time, several public health organizations including the American Academy of Pediatrics sued FDA to force shorter deadlines.  In July 2019, the court shortened the deadlines for submission of premarket review applications for the “deemed” tobacco products from August 8, 2022 (for non-combustible products) to May 11, 2020 (see our post here).  The order also provided that a product subject to a timely submitted PMTA could remain on the market for up to one year from the date of application while FDA considered the application.  In April 2020, the court extended the submission deadline for non-combustible products to September 9, 2020 due to the effects of the COVID-19 pandemic.  FDA reported that it received thousands of submissions representing more than 6.5 million products, mostly ENDS products, by the deadline of Sept. 9, 2020.

    In the October 12, 2021 press release, FDA reported that it had “taken action” on over 98% of the applications submitted by that deadline.  This includes issuing MDOs for more than one million flavored ENDS products.  It should be noted that RJR submitted its Vuse Solo PMTAs on October 10, 2019, about 10 months before the PMTA submission crush, and it still took FDA two full years to review the Vuse Solo PMTAs.  FDA said that would “continue to issue decisions on applications, as appropriate, and is committed to working to transition the current marketplace to one in which all ENDS products available for sale have demonstrated that marketing of the product is ‘appropriate for the protection of the public health.’”

    Categories: Tobacco

    The FTC Resurrects Its Penalty Offense Authority in a Big Way

    Last fall, when AMG Capital Management, LLC v. FTC was pending before the Supreme Court, former Federal Trade Commission (FTC) Commissioner Rohit Chopra (now Director of the Consumer Financial Protection Bureau) and Samuel Levine (recently appointed Director of the FTC’s Bureau of Consumer Protection) coauthored an article proposing resurrecting the FTC Act’s penalty offense authority. Rohit Chopra & Samuel A.A. Levine, The Case for Resurrecting the FTC Act’s Penalty Offense Authority, U. Pa. L. Rev. (forthcoming). If you haven’t heard of the Penalty Offense Authority found in Section 5 of the FTC Act, 15 U.S.C. § 45(m)(1)(B), you aren’t alone – it was added to the FTC Act in 1975, and it was apparently highly successful for some time, but then largely abandoned during the 1980s when the FTC’s leadership saw markets as “self-correcting” and sought to rid itself of the “national nanny” moniker.  Chopra and Levine urged:

    Using this authority, the Commission can substantially increase deterrence and reduce litigation risk by noticing whole industries of Penalty Offenses, exposing violators to significant civil penalties, while helping to ensure fairness for honest firms. This would dramatically improve the FTC’s effectiveness relative to our current approach, which relies almost entirely on another authority, Section 13(b). Section 13(b) does not allow the Commission to seek penalties against wrongdoers, and it is now under threat in the Supreme Court. Chopra & Levine, supra.

    Under this authority, the FTC can send companies a “Notice of Penalty Offenses,” also referred to as a “Section 205 Synopsis.”  These Notices list certain types of conduct that the FTC has determined, in prior administrative orders, violate the FTC Act.  Once a company receives the Notice, it then “knows” about the conduct the FTC prohibits and if the company subsequently engages in the prohibited conduct, it can be subject to civil penalties of up to $43,792 per violation.

    As we reported here, the U.S. Supreme Court in AMG Capital Management, LLC v. FTC, No. 19-508 (Apr. 22, 2021), unanimously held that Section 13(b) of the FTC Act does not authorize the Commission to seek, or a court to award, equitable monetary relief such as restitution or disgorgement.  In response, the FTC has done what Chopra and Levine urged, and “resurrected” its Penalty Offense Authority.

    The Commission’s first such Notices under the resurrection went out on October 6, 2021 to 70 for-profit educational institutions.  And in what seems to be an effort to send Notices to every entity who might arguably be covered by a prior order, the FTC sent Notices to more than 700 companies on October 13, 2021, including many consumer product, pharmaceutical, and food manufacturers, focused on the misleading use of endorsements and testimonials.  The FTC’s Penalty Offenses Concerning Endorsements website lists the cases the FTC relied on, which date between 1941 – 1984, and includes a sample Notice and letter and a list of recipients.

    While the application of this authority seems fairly cut and dried, the FTC has only used this authority once in the last decade.  There may be reasons for that including the necessity of proving that the defendant committed the same conduct and did so with actual knowledge that the conduct was unfair or deceptive.  Any litigation in this area could be complex and protracted – defendants can challenge the FTC’s original determination of unfairness or deception, and the standard for actual knowledge is high (and has been recently litigated at the Supreme Court in the ERISA context in Intel Corporation Investment Policy Committee v. Sulyma, 140 S. Ct. 768 (2020)).

    The FTC assures the companies – and the public – “the fact that a company is on the list is NOT an indication that it has done anything wrong,” and that the Notices are not based on a review of a company’s advertising.  FTC, List of October 2021 Recipients of the FTC’s Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials (last updated Oct. 15, 2021).  However, there is no indication from the FTC about the determination of who should receive a Notice.

    What does this shift to the Penalty Offense Authority portend?  The first thing is that the FTC is clearly signaling more aggressive enforcement.  This shouldn’t come as a big surprise if you have been following the FTC, its new Chairman, Lina Khan, and its actions in the past nine months.  The second more surprising thing is that the votes of the Commission to authorize sending these Notices was 5-0: the Commission is unanimous in its support of the use of these Notices.  It will be interesting to see if the votes to seek civil penalties are similarly unanimous and whether the increased enforcement crosses party lines as well.  And finally, the FTC is giving companies the warning up front.  There will not be any second chances or cease and desist orders as in the past – if you violate the law after being warned, the FTC is likely to seek civil penalties.

    Categories: Enforcement

    FDA Withdraws Temporary Hand Sanitizer Policies Effective December 31, 2021

    The FDA announced last week that it intends to withdraw its guidance documents issued in March 2020 outlining temporary policies regarding the manufacture of hand sanitizers. Effective December 31, 2021, companies manufacturing hand sanitizers and alcohol for use in hand sanitizer under the temporary policies must cease production of these products. Hand sanitizers manufactured before or on December 31, 2021, and produced under the temporary policies by can no longer be sold or distributed by manufacturers after March 31, 2022.  Those who wish to continue to manufacture hand sanitizer after December 31, 2021 must comply with the tentative final monograph for over-the-counter topical antiseptics and other applicable requirements, including the FDA’s Current Good Manufacturing Practice requirements.

    As you may remember, at the outset of the pandemic, there was a shortage of hand sanitizer, and many different types of companies, like distilleries and breweries, sought to step into the breach and manufacture hand sanitizer.  Because of this, the FDA issued a Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19), and policies for the manufacture of alcohol to be used in hand sanitizer.  The FDA is now withdrawing these policies because consumers and health care professionals are no longer experiencing difficulties finding hand sanitizer products, and these temporary policies are no longer needed to help meet demand.

    The FDA has posted a helpful Q & A to assist those who have been manufacturing under the temporary policies.

    FDA Issues First Orders and More Under the CARES Act: Final Administrative Orders, a Sunscreen Proposed Order and the 3-Year Forecast

    Many of us have been waiting not-so patiently for FDA to begin implementing the over-the-counter (OTC) monograph reform provisions of the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (see our blog post here).  While we are aware that behind the scenes the Office of Nonprescription Drugs has been busy hiring, training, reorganizing and otherwise working on implementation, apart from setting the amount of the new fees and related actions (see our blog post here), until very recently, little had been officially forthcoming from FDA under these provisions.  Now FDA has taken several actions in the past few weeks that we describe below.

    Deemed Final Administrative Orders

    As part of the process of moving from the old rule-based monograph system to an administrative order framework, the CARES Act provides that in most cases a final monograph or tentative final monograph that establishes conditions of use for a drug described in section 505G(a)(1) or (2) of the FD&C Act is “deemed to be a final order”. These deemed final orders provide the current OTC drug monograph conditions that are in effect for each therapeutic category addressed by them.

    As a first step in implementing this provision of the CARES Act, FDA issued a Federal Register notice on September 21, 2021, announcing the availability of the first group of deemed final administrative orders.  In that notice, FDA also announced the establishment of a web portal, OTC Monographs@FDA, which provides access to the repository of final orders.  FDA intends to make the deemed final orders available in batches on a rolling basis until all 32 orders are available in the repository.  Their availability will be announced on the FDA website and FDA will not make additional announcements in the Federal Register.  As of this writing, 12 final orders can be found in the repository.

    For each OTC monograph title (e.g., nighttime sleep aid drug products), the repository provides an OTC Monograph ID (e.g., M002) and an Order ID (e.g., OTC000001) and an Order Title.  Perhaps one day those numbers will be as familiar as references to the various parts of the CFR containing the monographs (maybe).

    What is not found in the repository (as far as we can tell) is an easy way to access the rulemaking history for each order (the various tentative final monographs and amendments, and the advance notice of proposed rulemaking). The preambles to the rulemaking notices provide essential insights into FDA’s intent in adopting the original rules.  The final administrative orders include the same citations to the relevant Federal Register notices that have always been found in the Code of Federal Regulations, but no links.  We here at HPM hope that FDA will continue to maintain the webpage Status of OTC Rulemakings which contains easily accessed historical information and links. Even taking into consideration the webpage’s well-known shortcomings that resulted from a lack of funding for its upkeep over the years, it is a handy research tool.  Better yet, the addition of links for the rulemaking/administrative order history for each administrative order in the repository would be quite welcome.

    Sunscreen Orders

    As described in our blog post here, in 2019 FDA issued a proposed rule for sunscreens under the OTC drug review as required implicitly by the Sunscreen Innovation Act (a deadline for a final rule, but not the requisite proposed rule was included in the SIA).  By operation of its terms, the CARES Act, however, established a deemed final order for sunscreens, among other therapeutic categories as discussed above.  The CARES Act also mandated that FDA issue a proposed order to amend and revise the deemed final order for sunscreens by September 27, 2021.  FDA  posted both the sunscreen deemed final order and the new proposed order before this deadline.

    The provisions of the sunscreen deemed final order essentially maintain the status quo, including requirements related to active ingredients from the 1999 final monograph, which was stayed and did not go into effect, and the labeling and effectiveness requirements from the 2011 final labeling and testing rule codified at 21 CFR § 201.327.  The deemed final order establishes the current monograph for OTC sunscreen products.  Consequently, there is no longer a need for the guidance Enforcement Policy – OTC Sunscreen Drug Products Marketed Without an Approved Application and it has been withdrawn.

    The sunscreen proposed order is substantively consistent with the 2019 proposed rule.  Like the 2019 proposed rule, the new proposed order includes a maximum SPF value of 60+ and a requirement that all sunscreens with an SPF of 15 or higher meet the requirements for broad spectrum protection.  As to active ingredients, again consistent with the 2019 proposed rule, the new proposed order proposes only zinc oxide and titanium oxide sunscreens as generally recognized as safe and effective (GRASE) and identifies the others as not GRASE either because of safety concerns (aminobenzoic acid and trolamine salicylate) or because of inadequate data to support safety (for the remaining ingredients).

    A 45-day public comment period on the proposed order ends November 12, 2021.  FDA will consider comments received on the proposed order in concert with those previously submitted for the 2019 proposed rule in developing a final administrative order.  Interestingly, FDA has stated in FDA’s Questions and Answers  and elsewhere that if at the close of the comments for the proposed order, available data do not resolve the outstanding questions about an ingredient, but FDA has received “satisfactory indication of timely and diligent progress on the necessary studies for a specific ingredient,” it would be prepared to initially defer issuance of a revised final order regarding the status of sunscreens containing that ingredient.  If that sounds familiar, it’s because it is the approach FDA has taken with antiseptic monograph ingredients.  For more information on the effects of these sunscreen orders, see FDA’s Questions and Answers webpage.

    The Forecast

    One of the commitments FDA made in the OMUFA goals letter was to publish by October 1st of each year a nonbinding list of monograph issues FDA intends to address in the coming three years.  What issues would appear on the first list has been a subject of speculation since long before the CARES Act became law.  We expected to see monographs related to drugs that have been the subject of drug safety communications from FDA such as benzocaine-containing products and codeine-containing cough medicines and also expected FDA would want to tackle pediatric dosing of acetaminophen. Others appearing on the list are more surprising.  Here’s the list issued October 1, 2021 (in no particular order per FDA):

    Planned Proposed Safety Orders

    • Risks Associated with Codeine-Containing Cough Medicine
    • Pediatric Acetaminophen Dosing
    • Risks Associated with Propylhexedrine Abuse and Misuse
    • Nonsteroidal Anti-inflammatory Drugs (NSAIDs) and Oligohydramnios
    • Oral Healthcare in Infants and Children (addressing benzocaine and phenol preparations)
    • Serious Skin Reactions Associated with Acetaminophen

    Also included on the list is a planned proposed order on the anticaries test method to address test methods.

    FDA indicates in the forecast that it is not seeking additional data at this time in advance of issuing a proposed order and notes that each proposed order will specify a comment period during which data and comments can be submitted.

    FDA Issues Unsupported Safety Warning Regarding Surgical Robots for Cancer Treatment

    In recent years, for novel robot assisted surgery (RAS) devices, FDA’s Center for Devices and Radiological Health (CDRH) has taken the approach of clearing RAS devices for specific indications for use.  Gone are the days of tool type indications for this type of device.  Rather, FDA seems intent on regulating RAS devices almost as if they were therapeutics responsible for long term clinical outcomes.

    This view was highlighted, recently, in a safety warning issued by FDA regarding surgical robots for treatment of cancer (here).  In this safety communication, FDA states:

    The U.S. Food and Drug Administration (FDA) is reminding patients and health care providers that the safety and effectiveness of robotically-assisted surgical (RAS) devices for use in mastectomy procedures or in the prevention or treatment of breast cancer have not been established. ***

    RAS devices have been cleared for use in certain types of surgical procedures commonly performed in patients with cancer, such as hysterectomy, prostatectomy, and colectomy. These clearances are based on short-term (30 day) patient follow up. The FDA has not evaluated the safety or effectiveness of RAS devices for the prevention or treatment of cancer, based on cancer-related outcomes such as overall survival, recurrence, and disease-free survival.

    This view of FDA’s role in regulating RAS devices is strange.  The essence of RAS devices is to aid surgeons in conducting surgery.  Therefore, it makes sense that FDA would review data on intra‑operative performance and perhaps acute outcomes.  But these devices are not independent cancer therapeutics.  It is well out of bounds for FDA to regulate them as if they were a determinant of long term clinical outcomes.

    As a scientific/medical matter, there are many variables beside the RAS device that are responsible for clinical outcomes.  Will FDA now begin reviewing various types of manual surgical tools based on their long term clinical outcomes?  The question answers itself.  Although RAS devices do introduce some novelty in how the surgery is performed, they should not be treated as if they were intended to confer a specific therapeutic benefit any more than manual surgical tools would be.

    FDA issued the same type of warning regarding RAS devices and mastectomy back in February 2019 suggesting that FDA believes the problem has persisted.  Notably, the 2021 safety warning makes no mention of FDA actually be aware of patients having been injured or adverse health outcomes related to RAS devices being used for mastectomy or other cancer-related procedures, and the 2019 safety warning mentions only “limited, preliminary evidence that the use of robotically-assisted surgical devices for treatment or prevention of cancers that primarily (breast) or exclusively (cervical) affect women may be associated with diminished long-term survival.”

    The recent safety warning also highlights that FDA expects an investigational device exemption (IDE) for studies of RAS devices for new indications for use.  FDA states that such studies should include long-term patient follow-up regarding the prevent and treatment of cancer, and safeguards such as study stopping rules and periodic reporting to FDA.  Given these onerous requirements, it is not a surprise that RAS device manufacturers have not sought clearance for RAS devices for oncology procedures.  It would also be beyond the scope of what RAS device manufacturers are intending to offer, which is a better surgical tool, not a therapeutic for cancer.

    For many years, Intuitive surgical had the sole FDA clearances for surgical robotic systems.  The original clearances were largely for a tool-type indication, even if examples of specific procedures were provided.  Subsequently, more companies have entered this space with full or partially roboticized devices.  Examples include the Medrobotics Flex System and the Hominis Surgical System.

    FDA has taken a hard line that each new surgical robot, as compared to Intuitive’s original robot, are not tools and each one presents new issues of safety and effectiveness due to their complex design and construction and specific indications.  This approach has the perverse effect of slowing innovation in RAS devices, helping to further entrench Intuitive’s 20 year old technology.

    Again, this situation raises the question of where FDA’s role ends and the surgeons’ role begins with regard to use of RAS devices in the field of medicine.  The Federal Food, Drug, and Cosmetic Act states that nothing in the Act shall “limit or interfere with” the authority of a clinician to utilize any legally marketed device on a patient “for any condition or disease within a legitimate health care practitioner patient relationship.”  21 U.S.C. § 395.

    With FDA’s push for more specific indications for use for RAS devices, healthcare providers cannot be limited only to those indications for use, especially if a device could be useful for an unapproved procedure/patient.  Thus, this part of the Act becomes that much more important to healthcare providers innovating in the field of medicine.  Healthcare providers must assess and make use of legally marketed devices in whatever way they see fit to treat their patients appropriately.

    Equally, how can FDA issue a specific warning, like its recent cancer warning, regarding use of a legally marketed device if a surgeon believes it is appropriate for his/her patient, especially when, at best, FDA has cited “limited, preliminary evidence” of adverse outcomes?  If limited evidence is the bar for putting patients and healthcare providers on notice that an alleged off-label use of a medical device is dangerous, it seems that FDA should be warning about all sorts of issues.

    We support FDA’s general efforts to inform healthcare providers and protect patient safety.  In the case of RAS devices, however, it is going too far for FDA to police the practice of medicine and surgeons’ ability to choose which tool is right for a patient’s procedure.  To further innovation, FDA should limit itself to a review of whether a novel surgical platform is safe and effective for use in performing surgery and perhaps out to 30 days’ follow up.  Anything more is unwarranted mission creep.  FDA’s focus on long term clinical outcomes in surgical procedures performed with RAS devices invades a space that should be left to the practice of medicine.

    Categories: Medical Devices

    Hey Now! IQOS IQOS All Day (Just Not in the United States)

    It seems that although FDA giveth, the ITC taketh away.

    IQOS is a tobacco heating system in which “heatsticks” (reconstituted tobacco blended with glycerin) are electrically heated to release nicotine-containing aerosol, but the tobacco is not combusted.  Because IQOS was classified as a cigarette by FDA, it was required to have FDA marketing authorization before it could be marketed.  Accordingly, the IQOS premarket tobacco applications (PMTAs) were submitted to the FDA Center for Tobacco Products (CTP) on May 15, 2017.  On April 30, 2019 CTP issued PMTA marketing orders for IQOS  to Phillip Morris S.A., Marketing Order from Matthew R. Holman, Ph.D., Office of Science Director, Center for Tobacco Products, U.S. Food and Drug Admin., to Philip Morris Products S.A. (Apr. 30, 2019), which became the second company of only three companies to date ever to receive such an order.  Accordingly, the CTP’s 122-page “Decision Summary” for IQOS, U.S. Food and Drug Admin., Premarket Tobacco Product Marketing Order Decision Summary for IQOS System Holder and Charger, PM0000479 (Apr. 30, 2019), became something of a guidepost for companies seeking a PMTA marketing order, particularly for those products such as e-cigarettes and the other deemed tobacco products that were required to submit a PMTA by the September 9, 2020 deadline (the uncertain fate of these PMTAs will be discussed in a later post).

    However, in a patent case filed by R.J. Reynolds, the U.S. International Trade Commission ruled on September 30, 2021 that Philip Morris International and Altria must stop the sale and import of the IQOS tobacco product. Certain Tobacco Heating Articles and Components Thereof; Commission’s Final Determination Finding a Violation of Section 337, 86 Fed. Reg. 54,998 (USITC Oct. 5, 2021) (notice).  The trade agency found that IQOS infringed two of Reynolds’ patents.  The import and sales ban will take effect in two months after an administrative review that requires President Joe Biden’s signature.  While an appeal or settlement is always a possibility, it appears that for now consumers will not be able to obtain IQOS in the United States.

    Categories: Tobacco

    FDA Announces New Process for Requesting Release from Postmarketing Requirements (PMRs)

    As surveyed in detail by our colleagues in an earlier blog post, FDA’s PDUFA VII goals letter, for fiscal years 2023-2027, is full of announcements and new agency initiatives.  One of those announcements is a commitment to create a new process for reviewing sponsor-initiated requests for release from postmarketing requirements (PMRs).

    The process outlined in the goals letter begins when a sponsor submits a request to FDA summarizing its rationale for why an existing PMR is no longer needed, including all necessary supporting data and information.

    The relevant FDA review division or office will initiate review of the request, and will notify the sponsor of any additional information considered necessary to evaluate the request within 45 days of receipt.  FDA will then respond to the sponsor with a decision on the PMR release request within 60 days of receipt of the original request, or within 60 days of receipt of the additional information requested by FDA, whichever is later.

    FDA’s decision will take the form of an “agreement letter” or a “non-agreement letter.”  In the case of a non-agreement letter, FDA will provide its rationale for the decision.

    If FDA’s response is a non-agreement letter, the sponsor has the option of submitting a request for reconsideration with justification, and any additional information and/or data if appropriate.  The process as outlined in the goals letter does not include a deadline for when such a request for reconsideration must be submitted.

    Upon receiving a reconsideration request, the review division/office will discuss with the appropriate internal committee that includes senior agency leadership (e.g., Medical Policy and Program Review Committee, Medical Policy Coordinating Committee, and Pediatric Review Committee).  The review division/office will issue a written response to the reconsideration request within 45 days of receipt.  As with the original request for release from the PMR, FDA’s decision will be an agreement letter or a non-agreement letter, and if a non-agreement letter, will include FDA’s rationale for the decision.

    Today, sponsors are able to submit requests for release from PMRs.  FDA may respond to these requests by arranging a teleconference to discuss and/or providing a decision in the form of a General Advice Letter.  However, there is currently no formalized timeline or review process.  There is also no guarantee that FDA will provide any rationale for its decision to deny a request for PMR release.

    The new review process announced in the PDUFA VII commitment letter will bring much-needed consistency and predictability to requesting release from PMRs.  Additionally, the commitment to include FDA’s rationale in a non-agreement letter will provide sponsors another opportunity to address FDA’s concerns in the form of a reconsideration request.

    We look forward to the roll-out of this new process, but it will be some time until we see it in action.  This new process will be incorporated into relevant agency procedures and guidances beginning FY 2023, and will be finalized by the end of FY 2027 and are not subject to PDUFA performance goals.  So, FDA may not begin implementing this new process immediately, but it may be a potential avenue for sponsors starting in late 2022 or early 2023.

    PhRMA Sues Arkansas for Meddling in the Federal 340B Drug Discount Program

    Last week, we blogged about a growing list of drug manufacturers that have refused to follow a 2010 guidance issued by the Health Resources and Services Administration (“HRSA”), which permits 340B covered entities to contract with multiple pharmacies to dispense drugs to covered entity patients.  Because of concerns that these contract pharmacies, which include some of the largest chains in the U.S., are diverting drugs purchased at low 340B prices to non-340B patients, the companies are declining to sell drugs to 340B covered entities that use multiple contract pharmacies.

    When HRSA threatened enforcement action and penalties, several companies sued the HHS in federal district courts in Maryland, Indiana, Delaware, New Jersey, and the District of Columbia to enjoin those enforcement actions (see list below). These lawsuits were filed between January and June of 2021.

    On May 31, 2021, even as the contract pharmacy dispute was playing out in federal courts, the Arkansas legislature enacted Act 1103 of 2021, entitled the “340B Drug Pricing Nondiscrimination Act.” See Ark. Code Ann. § 23-92-604(c)(1), (2). Among other things, Act 1103 makes it unlawful for pharmaceutical manufacturers to prohibit pharmacies from contracting with a 340B covered entity by denying the pharmacy access to its drugs and makes it unlawful for pharmaceutical manufacturers to deny or prohibit 340B drug pricing for Arkansas-based community pharmacies that receive drugs on behalf of a 340B covered entity. Id.

    On September 29, PhRMA sued Arkansas in federal court for declaratory and injunctive relief, seeking to stay the enforcement of Act 1103 pending resolution of the 340B lawsuits in federal courts. This follows PhRMA’s July 2021 petition to the Arkansas Insurance Department, the agency charged with the implementation and enforcement of Act 1103, for a Declaratory Ruling relating to the state’s ability to enforce these two provisions. According to PhRMA, Arkansas effectively seeks to add Arkansas pharmacies as a sixteenth type of covered entity into a federal 340B statute that defines fifteen covered entities.

    PhRMA seeks a declaration that pharmaceutical manufacturers need not offer price discounts to contract pharmacies in Arkansas because Ark. Code Ann.§ 23-92-604(c) is both preempted by the federal 340B statute (conflict and field preemption), and because it is unconstitutional under the dormant commerce clause (having the practical effect of regulating commerce occurring wholly outside that State’s borders). PhRMA also requests an injunction barring Defendants from implementing and enforcing Act 1103 against PhRMA and its members.

    In response to PhRMA’s petition to the Arkansas Insurance Department, the Commissioner of the Department immediately stayed the enforcement of Act 1103 for 90 days, until October 26, 2021. It remains to be seen if the Department will renew the stay after it expires later this month.

    [The currently pending lawsuits in federal court are AstraZeneca Pharmaceuticals v. Becerra, No. 1:21-cv-00027-LPS, 2021 WL 2458063 (D. Del. Jan. 12, 2021); Eli Lilly & Co. v. Cochran, No. 1:21-cv-00081-SEB-MJD (S.D. Ind. Jan. 12, 2021); Sanofi-Aventis U.S., LLC v. HHS, No. 3:21-cv-00634-FLW-LHG (D.N.J. Jan. 12, 2021); Novo Nordisk Inc. v. HHS, No. 3:21-cv-00806-FLW-LHG (D.N.J. Jan. 15, 2021); Novartis Pharms. Corp. v. Becerra, No. 1:21-cv-01479 (D.D.C. May 31, 2021); United Therapeutics Corp. v. Espinosa, No. 1:21-cv-1686-DLF (D.D.C. June 23, 2021); PhRMA v. Cochran, No. 8:21-cv-99198-PWG (D. Md. Jan. 22, 2021).]

    ABA publishes Food Law: A Practical Guide

    The American Bar Association has published a guide to food law that was co-authored by a number of practitioners in this growing field. The book is billed as having been “written by practicing lawyers for practicing lawyers, with a focus on information that is both practical and actionable.” The book includes chapters on federal regulation, food litigation, safety and recalls, nutrition programs, international law, use of block chain in the industry, securing the food system during the pandemic, and intellectual property. HPM’s Ricardo Carvajal contributed the chapter that provides an overview of federal regulation.

    Oops!… [FDA] Did It Again: Another Orphan Drug Act Loss for FDA Based on Unambiguous Statutory Text; 11th Circuit Rules that the Scope of Orphan Drug Exclusivity is Determined by the Rare Disease or Condition Designated, and Not the Indication Approved

    In the appellate courts lately, it’s been FDA “Against the Music.”  In yet another decision based on statutory interpretation, an appellate court has decided that FDA’s interpretation of the Federal Food, Drug, and Cosmetic Act (FDCA) is contrary to the plain text of the statute.  Earlier this year, the D.C. Circuit told FDA that it cannot regulate a device as a drug notwithstanding an overlap in the statutory definition of drug and device.  And just last year, the D.C. Circuit told FDA, for the second time, that the plain text of the Orphan Drug Act unambiguously required FDA to award orphan drug exclusivity to any orphan designated drug, even if that designation was based only on a “plausible hypothesis” of clinical superiority that ultimately could not be confirmed.  Now, the Eleventh Circuit has held that another FDA interpretation of the Orphan Drug Act violates the plain text of the statute, this time relating to the scope of Orphan Drug Exclusivity and the term “same disease or condition.”  As courts keep hitting the Agency “…Baby, One More Time,”  the appellate court these days seems Toxic for FDA.

    In the case at issue now, Catalyst v. FDA, the Eleventh Circuit reversed a decision from the Southern District of Florida holding that the statutory phrase “same disease or condition” in the Orphan Drug Act is ambiguous.  As background, FDA approved Catalyst’s NDA for Firdapse (amifampridine) for the treatment of adult Lambert-Eaton myasthenic syndrome (LEMS) and, because the product had been designated an orphan drug, awarded Firdapse the statutory 7 years of orphan drug exclusivity expiring in November 2025.  Importantly, the orphan drug designation, awarded in 2009, had been for LEMS generally—not LEMS in adults.

    FDA later approved another amifampridine NDA for the treatment of LEMS, called Ruzurgi and sponsored by Jacobus, but only for certain pediatric LEMS patients (i.e., 6 to less than 17 years of age).  Jacobus had applied for approval for all LEMS patients, but FDA “administratively divided” the Ruzurgi NDA into two parts: one for the treatment of LEMS in pediatric patients and other for adult patients “to allow for independent action in these populations.”  FDA argued that approving Ruzurgi for pediatric use did not violate Catalyst’s exclusivity because, even though LEMS for adults and pediatrics are a single disease, treatment of the pediatric population constituted a different “indication or use” from Firdapse’s indication of LEMS for adult patients, and thus fell outside of the scope of orphan drug exclusivity applicable to Firdapse.

    Catalyst promptly sued FDA arguing (among other things) that, under the plain language of the Orphan Drug Act, FDA could not approve Ruzurgi because it is the “same drug” for the “same disease or condition” as Firdapse.  Catalyst also argued that the Firdapse labeling is false or misleading because it suggests that Ruzurgi can be used in adults—the patient population for which Firdapse has exclusivity.  A magistrate judge, and subsequently the District Court, determined that the phrase “same disease or condition” in the Orphan Drug Act is ambiguous, as the Orphan Drug Act is “unclear whether [the] phrase refers to the use for which the drug is approved after it submits its NDA.”  Because FDA’s interpretation of the phrase to mean “indication or use” was reasonable, both the Magistrate Judge and the District Court determined that FDA’s interpretation did not violate the FDCA.

    And, with that “Boom Boom,” Catalyst appealed to the Eleventh Circuit.  Reviewing the decision de novo, the Eleventh Circuit determined that the definition of “same disease or condition” was not ambiguous merely because Congress did not provide an explicit definition in the statute.  Neither FDA (nor intervenor Jacobus) nor Catalyst disputed that LEMS is the “disease,” so the Court only needed to look to the definition of the word “same.”  Based on common definitions of the word “same,” the Court concluded that the term here means “being the one under discussion or already referred to.”  The only “disease or condition” previously referenced in the statutory provision is the “rare disease or condition” for which the drug was designated.  Thus, the Court concluded, the “same disease or condition” must mean the designated “rare disease or condition” and could not be interpreted by the Agency to mean the “indication or use.”  And, because the orphan drug exclusivity provisions preclude FDA from approving another application “for the same drug for the same disease or condition,” orphan drug exclusivity inherently applies to the entire designated disease or condition rather than the “indication or use.”

    With the Court’s expansive interpretation of the term “disease or condition,” the Court determined that pediatric LEMS is the “same disease or condition” as adult LEMS and granted Catalyst’s Motion for Summary Judgment.  The Court explained, “[i]f Congress wanted to make the ‘use or indication’ inquiry relevant to a holder’s market exclusivity for an orphan drug, it could have done so by including such language in § 360cc(a). The fact that Congress did not include that language counsels against an interpretation that finds an ambiguity in § 360cc(a)’s language.”  Thus, the Court ruled:

    Based on these undisputed facts and record evidence, the FDA’s approval of Ruzurgi was contrary to the unambiguous language of the Orphan Drug Act.  Catalyst Pharmaceuticals, Inc., held the exclusive right to market, Firdapse, an orphan drug, for a period of seven years in order to treat the rare autoimmune disease, LEMS.  Because it is undisputed that none of the statutory exceptions to Catalyst’s market exclusivity apply, the FDA was prohibited from approving for sale the same drug manufactured by Jacobus Pharmaceutical Company, Inc., to treat the same autoimmune disease during the period of Catalyst’s market exclusivity.  As a result, the FDA’s agency’s action was arbitrary, capricious, and not in accordance with law, and its approval of Ruzurgi must be set aside.

    The Court’s ruling has the potential to make a “Circus” of orphan drug exclusivity.  It may lead to new litigation or call into question previous FDA awards of orphan drug exclusivity.  In some cases, particularly where drugs were designated and approved prior to this case, orphan drug exclusivity may now extend significantly farther than the approved indication for a product, leaving the drug “Overprotected” (and its sponsors “Lucky”) and the holder of another marketing application for the same drug for a different indication that reads on the same rare disease or condition in jeopardy of a challenge or FDA having to yank the approval.  (That is, a situation similar to the one with LEMS and amifampridine.)  In other cases, however, there may be challenges to FDA’s award of multiple periods of orphan drug exclusivity for the same drug for different indications of the same rare disease or condition.  That’s a topic we’ve discussed in previous posts (here and here).  As we previously noted, there are several instances in which FDA has granted multiple periods of orphan drug exclusivity based on the same original orphan drug designation, and where the drug’s sponsor obtains serial approvals for either different segments (i.e., indications) of the designated rare disease or condition, or where a drug’s indication evolves into something new, shedding and subsuming the previous indication statement (e.g., different disease stages or different lines of therapy).  With the Eleventh Circuit’s decision, companies (e.g., ANDA and 505(b)(2) NDA applicants) might consider challenging any FDA award of multiple orphan drug exclusivity periods as unauthorized or “Criminal”.  After all, the Court’s decision seems to support a “one and done” approach to orphan drug exclusivity.

    This decision also provides incentives to FDA to narrow orphan drug designations.  The parameters of a given condition are at FDA’s discretion (which is how FDA has been able to consider classifications of certain diseases, like lymphoma, different conditions), so, in theory, FDA could subdivide a given condition into multiple conditions so that any awarded exclusivity is not too broad.  But that could encourage further attempts to salami slice rare disease populations and result in additional awards of orphan drug exclusivity where a condition may not otherwise meet the rare disease population threshold.  Alternatively, FDA could raise the burden for a sponsor to show a “scientific rationale” that the product will treat a given disease or condition.  But given that orphan drug designation is supposed to be granted liberally in an effort to encourage innovation, an increased burden could be considered contrary to congressional intent.  This decision, therefore, will force FDA to take a hard look at this approach to orphan drug designations, as it may find it difficult to develop a consistent rubric for evaluating orphan drug designation requests.

    The Eleventh Circuit’s decision puts FDA at a “Crossroads.”  It’s going to be difficult for FDA to retool its orphan drug designation process to ensure that orphan drug development is properly incentivized while not providing a windfall to sponsors whose approved drug is not as helpful for a designated condition as hypothesized.  And of course, as companies implore FDA to “Gimme More,” FDA will need to consider the potential orphan drug gamesmanship that could arise.  Unless and until FDA or Congress implements a fix, this decision will undoubtedly drive the Office of Orphan Products Development “Crazy.”

    The D.C. District Court Slaps Down on Procedural Grounds FDA’s 20-year Effort to Implement its Memorandum of Understanding to Address Interstate Shipments of Compounded Drug Products

    The tale of “David versus Goliath” is never a dull skirmish.  This time, “David” consists of a cast of seven compounding pharmacies and their amicus curiae supporters.  And the “David” cast of characters has successfully challenged FDA’s promulgation of its final Memorandum of Understanding (“MOU”) intended to “address” shipments of compounded medications interstate.  See Federal Food, Drug, and Cosmetic Act (“FDCA”) Section 503A(b)(2).

    The U.S. District Court’s opening sentence of its Memorandum Opinion captures the historical essence of compounding:

    Evoking Victorian apothecary scales and porcelain mortars and pestles, compounded drugs are formulated by pharmacists to create medicines tailored for individual patients.

    Plaintiffs challenge FDA’s attempt—through promulgation of the MOU—to redefine compounding and the distribution of compounded formulations interstate in a manner that violates the procedural requirements of the Regulatory Flexibility Act (“RFA”).  See 5 U.S.C. § 603-604.  Remanding the MOU to FDA to engage in that required RFA analysis, or certify why it is not necessary, the Court deferred ruling on Plaintiffs’ substantive claims concerning whether the MOU—in particular its redefinition of the terms “distribute,” “dispense” and “inordinate amounts” and “shall issue regulations” clause—violates FDCA Section 503A.  The District Court spent 30 pages of its 38 page opinion detailing exactly why the Court has standing to adjudicate the aggrieved Plaintiffs’ claims, which standing arguments were briefed in excruciating detail by the government.

    The matter involves a “decades old skirmish” dating back to the late 1990s, (and previously blogged about here and here) when Congress passed the Food and Drug Administration Modernization Act (“FDAMA”), which created Section 503A.  Section 503A’s language requires FDA to promulgate a MOU to “address” the “distribution” of “inordinate amounts” of compounded drugs interstate and that it “shall issue regulations” to do so.  Pharmacies located in states that choose to not sign the non-negotiable MOU are limited to an interstate distribution limit of 5% of their compounded formulations.  In signatory states, compounding pharmacies are subject to a 50% “threshold” and certain reporting requirements.  To date, two states have signed the MOU.  Notably, FDA recently extended the time period for states to sign the MOU until October 2022, at which time FDA would commence enforcement of its provisions.

    FDA’s MOU drafts were the subject of various iterations over the past two decades, evoking comments from thousands of interested parties.  FDA finally settled on a “final” MOU a year ago, and a coalition of compounding pharmacies immediately filed suit.

    The Plaintiffs’ complaint alleges both substantive and procedural violations in FDA’s development of the MOU.  Plaintiffs  claim that, because the MOU is a legislative rule, its promulgation violated the RFA due to FDA’s failure to analyze the economic impact of the regulation on pharmacies.  Plaintiffs also plead a substantive violation—that FDA exceeded its statutory authority under Section 503A in defining several key statutory terms.

    The Court stated, “by defining key statutory terms in Section 503A that have binding legal consequences, FDA has evinced its intent to speak with the force of law in the MOU.” Mem. Op. at 32.  Furthermore, FDA’s “ultimate decision has significant binding legal consequences for plaintiffs and pharmacies across the country, and it signals a substantive change in the current legal regime governing interstate compounding.” Mem. Op. at 37.

    Determining that the MOU is indeed a legislative rule, the Court ruled in favor of the pharmacies on the procedural issue, but deferred on the critical substantive issue: in essence, whether the MOU improperly defines “inordinate amounts,” conflates the acts of “dispensing” and “distribution,” and violates the “shall issue regulations” requirement in Section 503A.

    Given Plaintiffs’ successful procedural challenge, the Court has remanded the matter back to FDA.  The Court ordered the Agency either to prepare the required regulatory analysis or certify that the MOU “rule” will not have a “significant impact on a substantial number of small entities.”  Mem. Op. at 37 (citing the RFA, 5 U.S.C. § 605(b)).  This blogger is interested in that analysis, especially because all of the Plaintiffs submitted declarations concerning the economic impact of the rule.  The Court will request a progress report from FDA in 60 days.  Does this take FDA back to the MOU drawing board, for the fourth time in 21 years?  And, after the Agency complies with the Court-ordered RFA requirement, will the Court then turn to the substantive merits addressing the significant remaining definitional issues raised by Plaintiffs?  Stay tuned.

    The 340B Showdown: HRSA Proceeds Towards Enforcement Despite Litigation

    The 340B drug pricing program has been booming, according to the Health Resources and Services Administration (“HRSA”), the agency under the U.S. Department of Health and Human Services (“HHS”), which reported that discounted purchases totaled $38 billion in 2020, a 27% increase compared to 2019.  The 340B program, authorized under Section 340B of the Public Health Services Act and administered by HRSA, imposes a ceiling price on pharmaceutical manufacturer sales to “covered entities,” which are certain health clinics that receive federal funding and certain types of safety net hospitals to provide them drugs at lower prices.  Manufacturers may choose not to participate in this program, but the federal government will not reimburse for their outpatient drugs under Medicaid or Medicare Part B if they do not.

    A growing list of drug manufacturers are claiming that the discounts meant for low-income patients of 340B covered entities are instead contributing to profits for pharmacies that contract with covered entities to dispense 340B drugs.

    Use of contract pharmacies ballooned after  a guidance issued by HRSA in 2010 allowed covered entities to use multiple contract pharmacies to dispense drugs to covered entity patients. By 2014, the HHS Office of Inspector General (“OIG”) found that the rise of contract pharmacy arrangements resulted in duplicate discounts and drug diversion, and a lack of access to 340B pricing at the contract pharmacies. A 2018 report by the Government Accountability Office (“GAO”) found similar issues, as well as contract pharmacy noncompliance and poor federal oversight.

    Drug Manufacturers Fight Back Against Proliferation of Contract Pharmacy Arrangements

    Drug manufacturers raised their concerns about the 340B program with HRSA with no success. Starting August 2020, several drug manufacturers announced that they would offer 340B prices only to covered entities that have an in-house pharmacy or contract with a single contract pharmacy, essentially reverting to a 1996 HRSA guidance. The companies asserted that their position fully complied with applicable law, and objected  that the practice of using multiple contract pharmacies, based on HRSA’s nonbinding interpretive guidance, has resulted in widespread contract pharmacy noncompliance, and has affected costs, distorted prescribing decisions, and hurt patient care.

    In response to this trend, the HRSA general counsel issued an Advisory Opinion (“Opinion”) on December 30, 2020 reaffirming that the 340B program allows covered entities to distribute discounted drugs through multiple contract pharmacies—and that manufacturers are required to sell them those drugs. HRSA based its opinion on the statute and agency precedents over the last 25 years. In January 2021, several companies and the Pharmaceutical Research and Manufacturers of America (PhRMA) sued the agency on various statutory and procedural grounds.  See, e.g., AstraZeneca Pharmaceuticals v. Becerra, No. 1:21-cv-00027-LPS, 2021 WL 2458063 (D. Del. Jan. 12, 2021).

    Despite the ongoing legal proceedings, HRSA sent letters to the drug companies on May 17, 2021 stating that their 340B restrictions violated the 340B statute and that they “must immediately begin offering its covered outpatient drugs at the 340B ceiling price to covered entities through their contract pharmacy arrangements.” (see for example, this letter to Astra Zeneca).  The letters also stated that a refusal to do so may result in civil monetary penalties of around $5,883 for each instance of overcharging—over and above repaying the covered entity the amount overcharged. In AstraZeneca v. Becerra, the company requested, but the Court refused to an administrative stay of these fines until the lawsuit was settled. According to AstraZeneca’s court filings, the fines alone would accrue to the tune of $530 million per month.

    Federal Court Found HRSA’s Advisory Opinion Was Based on Faulty Legal Grounds

    On June 16, 2021, the District Court of Delaware issued a memorandum opinion denying HRSA’s motion to dismiss AstraZeneca’s case, finding that the Advisory Opinion was based on faulty legal grounds. Judge Stark found that, although HRSA’s interpretation of the statute was permissible, the Advisory Opinion unjustifiably assumed that Congress imposed this interpretation as a statutory requirement. According to the court, the relevant language of the Act was ambiguous and neither the plain meaning of the statute, nor the context of the statutory provisions or the legislative intent, explicitly supported HRSA’s Opinion (or, for that matter, AstraZeneca’s position). Because “the agency wrongly believes that interpretation is compelled by Congress,” the court refused to give agency deference to HRSA. The court also disagreed with HRSA’s arguments regarding longstanding agency precedents. The court noted that HRSA “dramatically expanded how covered entities may purchase 340B drugs” in the past 25 years. In fact, the Advisory Opinion was the first agency document to explicitly conclude that manufacturers are required by statute to provide 340B drugs to multiple contract pharmacies. According to the court, “because the government has changed what covered entities may do,” HRSA “has consequently changed what drug manufacturers must do” (emphasis in original).

    Two days after the court’s opinion, HHS withdrew the December 30, 2020 Opinion, but the parties agreed that the lawsuit was not moot because HRSA did not withdraw the May 17 letters and continued to maintain that companies must sell to covered entities through contract pharmacies.  AstraZeneca was permitted to amend its complaint to focus on the unlawfulness of the May 17 letters instead of the Advisory Opinion.  As of this writing, the court is still deliberating on the relief to be granted to the manufacturer.  A decision is expected in the coming months.

    HRSA Ploughs on With Enforcement Despite Federal Court Decision

    Despite the ongoing litigation, on Wednesday, September 22, 2021, HRSA signaled its continued intention to enforce its own interpretation of the 340B program requirements by referring the alleged violations of six drug companies to the HHS OIG. In its letters to the companies informing them of the referral, HRSA notes that, “given [the companies’] continued refusal to comply, HRSA has referred this issue to the HHS Office of Inspector General (OIG) in accordance with the 340B Program Ceiling Price and Civil Monetary Penalties Final Rule.”  OIG enforcement would provide HHS another opportunity to impose fines and restitution while avoiding the procedural issue of lack of notice-and-comment rulemaking. The OIG will nevertheless have to account for the federal court’s conclusion that the requirement to sell 340B drugs to multiple contact pharmacies is not contained in the statute.  The drug companies can be expected to challenge any OIG penalties.

    At some point, Congress may cure the statutory ambiguity by clarifying the scope of permitted contract pharmacy use under the 340B program, but such a clarification does not appear in the White House drug pricing plan (summarized here) or the major drug pricing bills currently being considered by Congress.

    Categories: Health Care

    ACI’s 16th Annual Paragraph IV Disputes Conference (and It’s In-Person!)

    The American Conference Institute (“ACI”) is sponsoring its 16th Annual Paragraph IV Disputes Conference on November 9-10, 2021 in New York, NY (Livestream Option Available) at the Sheraton New York Times Square Hotel.  And, unlike a lot of conferences over the past year-plus, the ACI conference format will be a live, in-person event (though an interactive, virtual livestream is also available).

    ACI’s Paragraph IV Disputes Conference provides invaluable professional development opportunities, meaningful networking, and vital “take-aways” for legal strategies and cost analysis for every aspect of this complex form of litigation

    A “Who’s Who of the Food Law Bar” will give you critical insights in sessions like:

    • “Forecasting the Future of Pharmaceutical Patent Litigation: Trends, Legal Analyses and Business Prognoses Post-Covid”
    • “Spotlight on Delaware: District Court Judges Address Brand and Generic Concerns”
    • “The PTAB Live! Practice, Policy, and Procedure in the New World of Pharmaceutical Patent Validity Challenges”
    • “The Ethical Practice of Paragraph IV Litigation: New Developments Impacting Professional Responsibility in the Hatch-Waxman Arena”

    Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst will be speaking at a “Regulatory Think Tank” session, titled “Analyzing the Effect of the Latest FDA Initiatives on Generic Drug Access and PIV Disputes.”

    FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-895-895AX04. You can access the conference brochure and sign up for the event here. We look forward to actually seeing you at the conference.

    Categories: Hatch-Waxman

    Pharmacy Owner Pleads Guilty to Federal Charges for Illegally Administering COVID-19 Vaccines to Children Under 12

    On September 24, 2021, the owner of a pharmacy in Puerto Rico pleaded guilty to participating in a felony conspiracy to convert government property and to commit health care fraud in connection with the illegal vaccination of minors between the ages of 7 to 11 with the Pfizer-BioNTech COVID-19 vaccine.  The U.S. Attorney’s Office (USAO) for the District of Puerto Rico and the Department of Health and Human Services, Office of Inspector General (HHS-OIG) announced both the charge and the plea on Monday.  To the best of our knowledge, this is the first time anyone has been federally charged for administering the COVID-19 vaccine to an unauthorized population.

    From approximately May 28, 2021 through June 22, 2021, the pharmacy owner and her employees conspired to knowingly and willfully administer the Pfizer-BioNTech COVID-19 vaccine to a total of 24 children aged 7-11 and to submit corresponding claims to the Pharmacy Benefit Manager (PBM) for Medicaid in Puerto Rico.  A full dosage (30 µg) of the vaccine was administered to the children; no serious medical conditions have been identified to date as a result of the illegal vaccination.  The Pfizer-BioNTech COVID-19 vaccine received emergency use authorization (EUA) for the prevention of COVID-19 disease in individuals aged 12-15 in May 2021.  While Pfizer and BioNTech recently announced positive results from a pivotal trial of its COVID-19 vaccine in children ages 5-11, it has not yet received an EUA for this age group.  Additionally, this recent trial studied a two-dose regimen of 10 µg administered 21 days apart, a much smaller dose than the 30 µg dose used for individuals 12 and older.  The Pfizer-BioNTech COVID-19 vaccine, now marketed as Comirnaty, has received full approval for the prevention of COVID-19 disease in individuals 16 years of age and older, and is available under EUA for children 12-15.

    The use of an approved drug for a use that was not approved by FDA, commonly known as “off-label” use, is typically a decision left to individual healthcare providers.  However, that is not necessarily the case within the specific context of the COVID-19 vaccines.  Currently, all COVID-19 vaccine used in the United States has been purchased by the government for administration exclusively by enrolled providers through the CDC COVID-19 Vaccination Program.  Eligible pharmacies participating in the program must comply with all FDA requirements, including the vaccine’s EUA or approval.  COVID-19 vaccines must be free to the patient, but vaccination providers may seek reimbursement for vaccine administration fees from the applicable private or public payor.  By administering the vaccine to children aged 7-11, which is not an age group authorized under the EUA, the pharmacy illegally conspired to “convert” the government’s property (i.e., the vaccine itself).  “Conversion” is a common law tort that may occur when one intentionally interferes with a person’s right to property without the owner’s consent and without lawful justification.  By billing the PBM for the administration of the vaccine to an unauthorized population, the pharmacy committed health care fraud.  In Monday’s statement, the USAO and HHS-OIG said that the unlawful activity was “identified quickly” by the Puerto Rico Department of Health.

    Under the terms of the plea, the pharmacy owner voluntarily agreed to be excluded as a provider for Medicare, Medicaid, and all federal health care programs for a period of five years.  She also faces a maximum penalty of 5 years in prison, a fine of up to $250,000, and 3 years of supervised release.  The pharmacy itself was suspended from the COVID-19 vaccination program and all funds received for the corresponding Medicaid billings were repaid.