In a short but sweet Guidance issued last week, FDA proposed a dramatic change to the way it evaluates interchangeable biosimilars.  For the last 14 years, an applicant could get approval of a biosimilar as a standard biosimilar or an interchangeable biosimilar, but the interchangeable biosimilar presented a higher hurdle to approval: Applicants needed to show that a patient could be switched from the Reference Product to the biosimilar and back without issue.  But, as time has marched on and FDA’s experience with interchangeable biosimilars grown, the Agency’s “experience has shown that . . . the risk in terms of safety or diminished efficacy is insignificant following single or multiple switches between a reference product and a biosimilar product.”  Indeed, 9 of the 13 interchangeable products FDA has approved thus far have not included switching studies.  Accordingly, FDA issued this new draft guidance that, when finalized, will revise certain sections of another guidance document, Considerations in Demonstrating Interchangeability With a Reference Product, which was written before FDA had received and reviewed any interchangeable biosimilar applications.

Interchangeable biosimilars differ from standard biosimilars as they may be substituted for the reference product without the intervention of a healthcare provider.  The switching study was intended to provide assurances that such a switch can be done safely by examining any immunogenicity risks.  Based on experience to date, along with currently available analytical technologies that can structurally characterize highly purified therapeutic proteins and model in vivo functional effects, FDA has decided to revise the Interchangeability Guidance such that switching studies are no longer required.  Instead, applicants may choose to provide an assessment of why the comparative analytical and clinical data provided in the application or supplement support a showing that the switching standard has been met.  This new policy applies retroactively to pending biosimilar applications, to which an applicant may submit an amendment, including such an assessment in lieu of switching studies.

FDA, in abrogating the requirement for switching studies, has removed the only significant barrier to interchangeability.  Rather than conducting studies, applicants can use modeling to support interchangeability, drastically decreasing the investment necessary to obtain approval of a biosimilar as interchangeable.  Lowering this standard should increase access to interchangeable drug products, but it raises questions as to whether any differences ultimately remain between biosimilars and interchangeable biosimilars.  And interchangeable exclusivity becomes an extraneous incentive, as there are no additional studies performed for which the reward serves as an incentive.  Effectively, all biosimilars could be interchangeable with the right explanation, which leaves questions of whether the distinction between a regular biosimilar and an interchangeable biosimilar is necessary at all.  Given that FDA asked Congress specifically to do away with the line between interchangeable biosimilars and other biosimilars in its recent Budget Request, this Guidance should not come as much of a surprise.

This afternoon Hyman, Phelps & McNamara, P.C. (HPM) Director Dara Katcher Levy will present an informative webinar on the newly released AMCP Format for Formulary Submissions version 5.0. The event, titled “New and Improved – AMCP Format for Formulary Submissions v5.0,” aims to educate pharmaceutical manufacturers and other healthcare stakeholders on the latest updates and best practices in dossier development.

The AMCP Format for Formulary Submissions (the Format) serves as the gold standard for pharmaceutical manufacturer dossiers, guiding the submission of evidence and information to support formulary placement decisions. Since its inception, the Format has been instrumental in standardizing the submission process, ensuring that critical data is presented in a clear and consistent manner. The latest iteration, version 5.0, released in April 2024, marks the first update since 2020. This update incorporates new guidelines and enhancements to address the evolving needs of the healthcare industry, improving the clarity and utility of the submitted information.

In this educational session, Dara Katcher Levy, alongside Jonathan Toft, PharmD, MBA, Principal at Formulary and Rebate Optimization, MedImpact Healthcare Systems, Inc., will delve into the specifics of the new and improved Format v5.0.

Participants will gain a thorough understanding of:

• The history and impact of the AMCP Format; how did we get here?
• Identify crucial updates made in AMCP Format 5.0 — understanding the nuance of certain new requirements is critical to your success
• Learn actionable best practices for developing compliant AMCP Format dossiers

The session will be moderated by Steven Kheloussi, PharmD, MBA, FAMCP, Director of Professional Affairs at AMCP.

To register for this insightful webinar, visit AMCP Learn. Don’t miss this opportunity to stay abreast of the latest developments in formulary submission standards.

For more than 50 years, the Drug Enforcement Administration (DEA) has enforced the central mandate of the Controlled Substances Act (CSA) to maintain a closed chain of distribution for drugs with a potential for abuse and diversion.  The CSA and regulations promulgated by DEA are intended to reduce the potential for diversion and abuse and ensure that controlled substances are dispensed and delivered to patients for a legitimate medical purpose.  However, the well-intentioned statutory language enacted in 1970 did not anticipate important changes in clinical therapies and advances in medical technology, and in some cases has created obstacles both to ensuring needed patient access and successful medical outcomes.

One such requirement which has been a controversial issue for many years is the requirement that a controlled substance can only be dispensed and delivered to the “ultimate user.”[1]  Under the relevant definitions in the CSA, the dispensing/delivery of controlled substances is limited to the “ultimate user” (i.e., the patient or a member of the patient’s household).[2]  Why is this an issue?  Because a strict interpretation of the law and regulations (other than a recent and limited amendment to the CSA) prohibits any alternative dispensing or delivery of critically needed medicines, e.g., directly to the practitioner’s office, even where such alternatives inarguably provide a safer and more effective treatment, and inarguably remove the risk of diversion.

For example, intrathecal infusion therapy, via an implanted infusion pump, or Targeted Drug Delivery (TDD), is a last-line therapy for patients who have failed all other conventional pain therapies.  This lifesaving and life-sustaining option is reserved for a small but highly vulnerable population of approximately 130,000 patients suffering from severe chronic pain due to, for example, spinal cord injuries, amputation, cancer, or spasticity caused by multiple sclerosis. The therapy involves an FDA-cleared surgically implanted pump that typically involves the delivery of compounded liquid pain medication directly into the patient’s spinal column and requires medication refills every 60-90 days.  However, TDD medications are highly concentrated opioids and cannot be self-administered.  Highly concentrated opioid formulations (e.g., fentanyl, morphine, hydromorphone, etc.) used in intrathecal pain therapy have strict sterility and stability requirements and are life-threatening if mishandled.  A qualified medical professional must perform the refill; it cannot be done by the patient.  This procedure is usually performed in a practitioner’s office, and rarely done in the home setting.

At 1/100 to 1/300 the typical oral dose of opioid and other controlled substance medications, intrathecal pain pumps substantially reduce use of and reliance upon oral opioids, which, in turn, significantly reduces abuse and diversion.  Further, the therapy reduces or eliminates the side effects of opioids and leads to better health outcomes and patients’ return to activities of daily living.  But requiring that the medicine be dispensed or delivered to the patient or at the patient’s home rather than directly to the practitioner’s office creates a significant safety issue, a greater potential for diversion, and could compromise the efficacy of the medication.

In 2016, DEA issued a guidance letter stating that delivery or dispensing to a practitioner’s office for administration to the patient was not addressed in the CSA or DEA regulations and therefore not specifically prohibited.  This information was widely publicized, and we are aware that industry practice evolved whereby pharmacies would deliver or dispense to practitioner’s office in certain cases including those discussed above.  However, two events conspired to undermine this prior guidance.  First, in 2018 Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, which created a narrow statutory exemption to the CSA’s “ultimate user” definition that authorizes the dispensing of injectable buprenorphine to a practitioner’s office for treatment of opioid use disorder.[3]   Second, the Trump Administration issued Executive Order 13891, requiring that all industry guidance be promulgated pursuant to specific criteria set forth in the Executive Order, including publication on an Agency’s website.  Then, President Biden revoked that Executive Order on his first day in office, January 20, 2021.  In either event, the 2016 DEA guidance letter is not currently published or otherwise available on DEA’s guidance portal.[4]

As a result, we are aware that DEA recently issued a letter stating that DEA’s current interpretation of the law and regulations require that, other than the specific SUPPORT Act statutory exception, all controlled substances must be dispensed or delivered to the patient or a member of the patient’s household (i.e., the “ultimate user”).  This interpretation would prohibit delivery to any other location such as a DEA-registered practitioner’s office or a nurse working as an agent of the practitioner in the field who would then deliver the medication specifically to the patient’s home for administration to the patient.

However, to DEA’s credit, we understand that the Agency has indicated that it intends to issue new guidance which would authorize dispensing or delivery to a practitioner’s office if the patient and practitioner execute a power of attorney (POA) wherein the patient specially authorizes the practitioner to receive the medicine on their behalf for the sole purpose of administration in the practitioner’s office.  We also understand that DEA has indicated this would be the only scenario in which the Agency believes the law and regulations would authorize an alternative dispensing or delivery of a prescription (other than the SUPPORT Act exception), excluding other dispensing models such as delivering the controlled substance medication to nurses for delivery and administration to patients at their residence.

With this much needed and anticipated new DEA guidance, a significant barrier to access will be removed, and patients will achieve better, safer access to life-sustaining medications, and the DEA will establish clear guidelines on how pharmacies may dispense these needed medications.  The proposed guidance furthers DEA’s goal of expanding access to alternative pain therapies while protecting the controlled system of drug delivery from diversion and abuse.

We do not know the timing of when DEA will issue such guidance, but we look forward to the guidance, and applaud DEA’s effort to expand access while maintaining the integrity of the controlled substance drug supply.  We also hope this is the first step towards the DEA and industry working together on additional CSA amendments to reduce obstacles to important patient care.

[1] 21 U.S.C.  § 802 (27) (The CSA’s “ultimate user” definition).

[2] See, e.g., id. § 802 (10) (defining “dispense”); § 802 (27) (defining “ultimate user”) and § 802(8) (defining “deliver or delivery”).

[3] 21 U.S.C. § 829a(a).

[4] See https://apps.deadiversion.usdoj.gov/guidance/#no-back-button.

FDA’s Office of Pharmaceutical Quality (OPQ) in the Center for Drug Evaluation and Research (CDER) is charged with assuring that drugs marketed in the U.S. are safe, effective, and meet appropriate quality standards. While no office at FDA truly works in a vacuum, we can safely call OPQ the tip of FDA’s quality spear.

Last week, OPQ released its 6th Annual Report on the State of Pharmaceutical Quality. This report is not to be confused with OPQ’s Annual Report, a shorter and gauzier look into OPQ’s operations. Instead, the State of Pharmaceutical Quality Report provides more detailed statistics and data from FY2023 (October 1, 2022—September 30, 2023), and a clearer window into enforcement priorities.

The Quality Report includes a rundown of what the universe of FDA-registered drug manufacturing sites looks like as included in the CDER Site Catalog. Of the 4,819 facilities in the Site Catalog, 60% manufacture drugs approved under a New Drug Application (NDA), Abbreviated NDA (ANDA), or Biologics License Application (BLA). (See here and here to better understand what BLAs are under CDER’s purview, as opposed to the Center for Biologics Evaluation and Research (CBER)). The remaining 40% are “no application” sites that manufacture drugs not marketed under an application approved by FDA, which includes OTC monograph drugs, homeopathic products, and unapproved prescription drug products (e.g., drugs subject to an open drug efficacy study implementation (DESI) program proceeding).

Medical gas manufacturers and 503B outsourcing facilities—both of which meet the definition of “manufacturer”—are excluded from the Quality Report. However, sites that manufacture exclusively alcohol-based hand sanitizers are no longer excluded as they had been from the FY2020, FY2021, and FY2022 reports.

From FY2019 through FY2023, Mexico (26%), China, (25%), South Korea (25%), India (16%), Germany (15%), and Spain (15%) saw the most substantial increase in registered facilities by percentage. Canada (-4%) and the U.K. (-1%) were the only countries that experienced a net decrease over OPQ’s 5-year survey. Measured in raw numbers, the U.S. is still the registered facilities leader with 2,009 of the overall 4,819 registered facilities. India (585), China (484), Germany (195), and Italy (151) follow.

See here: Source: OPQ Report on State of Pharmaceutical Quality, Table 1, page 3

Readers of this blog know that as the pharmaceutical industry continues its global growth, FDA has wrangled with inspecting foreign sites to varying degrees of success. Foreign drug quality inspections are conducted either by FDA or by a foreign regulatory authority with which FDA has a Mutual Recognition Agreement (MRA)—which currently includes all EU nations, Switzerland, and the United Kingdom. The number of MRA inspections increased from 144 in FY2022 to 187 in FY2023 (the highest number of MRA inspections to date). Inspections continued their post-pandemic creep upwards in FY2023, at just under 800 inspections of registered facilities internationally. That’s still way down from the over 1,300 inspections in FY2019, but way up from the pandemic low of under 300 inspections in FY2021. The bulk of inspections are still taking place in the U.S., but OPQ reports a substantial increase in India in FY2023, driven by for-cause inspections triggered by some dubious and notable quality deficiencies. OPQ professes a desire to bolster inspection numbers in China but says travel restrictions have hampered that effort.

See here: Source: OPQ Report on State of Pharmaceutical Quality, Figure 1, page 4

A note here that while the sheer number of inspections is a useful metric, the post-inspection classification of facilities also tells an important part of the story. OPQ reports that globally, “94% of all sites in the CDER Site Catalog received no action indicated (NAI) or voluntary action indicated (VAI) as their most recent inspection classification.” Perhaps predictably given the for-cause nature of inspections there, India lagged with 89% of inspected sites achieving good levels of classification status, European sites set the gold standard in FY2023 at 98% either NAI or VAI.

Other notes from the report include:

• FDA keeps a vast catalog of drug products. At the end of FY2023, the FDA Drug Product Catalog included 17,519 application products, to include 13,572 ANDAs, 3,593 NDAs, 354 BLAs, and 131,367 non-application products such as over-the-counter drugs. That total—148,886 listed products—is a 6% increase over FY2022. Every category saw an increase last year, led by BLAs (9%).
• FDA continues to increase its use of import alerts as an enforcement tool, adding 93 companies to import alerts in FY2023. In FY2021 and FY2022 combined, FDA added 77 companies. Of the sites placed on quality-related import alert, 90% are manufacturers of OTC monograph drugs and a full third of sites added (31) were manufacturers of hand sanitizers.
• Recalls declined in FY2023, down to 674 from 912 in FY2022. Most of those recalls were from antibacterials, cardiovascular agents, and the well-publicized spate of adulterated ophthalmic agents which accounted for 17% of all recalled products. The 53.7% increase in quality-related consumer complaints in FY2023 was also largely attributed to the recall of OTC eye drops.
• FDA issued 94 Warning Letters in FY2023, approaching its previous high from FY2019. Of the 94 quality-related Warning Letters, 80% were issued to manufacturers of OTC drugs—over half of which manufactured either hand sanitizer or products that could be contaminated with diethylene glycol (DEG) or ethylene glycol (EG).
• OPQ reports that the vast majority of the 81 drug shortages reported in CY2022-23 were due to quality issues (40%) and increase in demand (40%)—a significant change from 2013-2017 when quality issues were the cause of 62% of shortages.

The Quality Report comes out this year as FDA’s budget battle continues on Capitol Hill, and it makes a strong case that the Agency’s needs in this area dwarf its robust accomplishments. Every American consumer expects the U.S. to maintain its gold standard of pharmaceutical quality. While other tools are helpful to FDA, the data here show that in-person inspections are the primary tool to ensure global quality.

As we have noted for the last year or so, the FTC has been on a mission to clean up the Orange Book by removing what it deems to be “improper” patents.  The FTC has put out policy statements, challenged patent listings, tapped Congress, appeared on talk shows, and filed amicus briefs all in the span of the last 8 months.  It seems like all that work is paying off.  Though some drug companies have been reluctant to delist certain patents from the Orange Book, the District Court of New Jersey just ordered Teva to delist 5 of its patents that it deemed improperly listed.  And on X (R.I.P. Twitter), the FTC is taking credit for that.

As we explained back in March, Teva had initiated Hatch-Waxman pre-launch patent litigation against Amneal for infringement of 5 Orange Book-listed patents reading on the device constituent (a metered dose inhaler) of Teva’s combination product ProAir HFA.  Amneal, in turn, filed a counterclaim against Teva seeking a declaratory judgment of non-infringement and invalidity of all 5 patents, removal of those patents from the Orange Book, and relief from allegedly anticompetitive conduct in violation of state and federal antitrust laws.  FTC, deep in its foray into the Orange Book, filed an Amicus Brief in the case arguing that the patents do not claim any FDA-approved drug.  In the brief, FTC took the position that “In the FTC’s view, device patents that do not mention any drug in their claims do not meet the statutory criteria for Orange Book listing, and a device patent that is improperly listed in the Orange Book must be delisted” (emphasis added).

On June 10, 2024, the District Court of New Jersey issued its Opinion in the case, finding that Teva’s patents were improperly listed.  First, the Court dealt with the antitrust issue that Teva raised in a Motion to Dismiss.  Teva had argued that the alleged conduct—improper Orange Book listing and sham litigation—do not support an antitrust claim and consequently asked the Court to dismiss Amneal’s antitrust counterclaim.  Citing to a 2004 Supreme Court case, Verizon Commc’ns., Inc. v. Law Offs. of Trinko, LLP, 540 U.S. 398 (2004), Teva argued that Amneal has no cause of action under antitrust law because the Hatch-Waxman Amendments impose a new statutory duty on a company to cooperate with competitors and established a remedy for breach of that obligation.  The Court disagreed, stating that “Teva has not demonstrated that the Orange Book listing provisions at issue comprise a regulatory structure designed to deter and remedy anticompetitive harm.”  Not finding convincing any of Teva’s other arguments to dismiss the antitrust claims—and finding the FTC brief persuasive—the Court denied Teva’s Motion to Dismiss the antitrust claims.

Now, to the part we’ve all been waiting for: the Court determined that Teva’s patents covering only the inhaler component of ProAir HFA “are not properly listed in the Orange Book as a matter of law” (emphasis added).  More specifically, the Court concluded that “the Inhaler Patents do not claim the drug for which the applicant submitted the application” (emphasis added).  Though the Court acknowledged that the definition of the term “drug” is broad enough to include the ProAir HFA inhaler, the Court found that “this broad statutory definition of drug does not suffice to establish the Inhaler Patents claim the drug for which Teva submitted its application . . . .”  (emphasis added).  In other words, because FDA identified the drug “for which the applicant submitted the NDA” as “albuterol sulfate HFA Inhalation Aerosol,” albuterol sulfate must be claimed in the patent to be listable.  The Court supported this position by relying on the First Circuit’s Opinion in a case involving the listing of a device component patent (the patent claimed only the drive mechanism of an injector pen).

The Court addressed Teva’s valid argument that the Inhaler Patents are drug product patents and thus listable.  While the relevant regulation defines “drug product” as the “finished dosage form,” which theoretically includes the delivery device, the Court again falls back on the wording in 21 C.F.R. § 314.53(b)(1) that drug product patents may be listed if they claim the “drug product . . . that is described in the pending or approved NDA” (emphasis added).  According to the Court, the Inhaler Patents do not claim the finished dosage form that is the subject of the approved ProAir HFA NDA, which presumably the Court is interpreting to require the inclusion of the drug substance.  Given that the term “finished dosage form” is defined as “tablet, capsule, or solution, that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients,” and FDA has stated that dosage forms include prefilled drug delivery systems like ProAir HFA, one could argue that an inhaler-specific patent covers part of the finished dosage form that is integral to the product and thus should be listed.  But FTC has been fighting hard against that position and likely will continue to do so.  Again, the FTC has been clear that only patents that actually include the drug substance should be listed.

Teva has noticed its appeal of the delisting decision.  We’re confident that FTC will file another amicus brief at the appellate court, which doesn’t bode well for the future of listing device patents in the Orange Book, as the District Court makes clear that the FTC’s position is compelling. We’re looking forward to seeing what the Third Circuit has to say.

UPDATE: On Thursday, June 13th, U.S. District Judge Stanley Chesler ordered a 30-day stay of his earlier ruling, reportedly saying that he wanted the matter to reach the appellate court in the most orderly way possible.

Hyman, Phelps & McNamara (HPM) would like to congratulate the 7 rare disease programs selected for the inaugural class of the FDA’s “Support for clinical Trials Advancing Rare disease Treatment” (START) pilot program. The START pilot program was announced last September as a way to offer selected participants developing potentially life-saving and life-changing rare disease therapies enhanced communications with FDA review staff and a mechanism for addressing clinical development issues, similar to the “Operation Warp Speed” communication model for vaccines in development during the COVID-19 pandemic.

We are looking forward to seeing the START pilot program chart a path for a broader application of this more enhanced communication approach and FDA’s continued collaboration to facilitate development of new drugs for rare diseases, as we know there are many programs that would benefit from this approach, not just those included in the pilot. Following an evaluation of the pilot and feedback from the initial pilot participants, FDA may consider a second iteration of the START program.

HPM is proud to aid 5 of the 7 selected participants for the START pilot program.

It’s been over a year and a half since Over-the-Counter (“OTC”) hearing aids became legal, and it’s not clear that they’ve made the difference in hearing loss treatment that Congress anticipated.  (FDA once estimated that OTC hearing aids would save patients over $3000.)  A recent GAO Report hasn’t found that OTC hearing aids have had much impact.  While that’s not to say that OTC hearing aids aren’t working to address the critical issue of hearing loss, it seems that almost two years is still not enough time to assess market impact, or to show that some of the promises of significant savings for large numbers of consumers have been realized.

The category of OTC hearing aids was created by congressional mandate and implemented by FDA to address an “unmet public health need.”  With input from medical professionals, stakeholder, trade associations, and patient advocacy groups, FDA provided a pathway to market for air-conduction hearing aids without a prescription or the involvement of a licensed professional.  These OTC hearing aids are intended only for patients 18 and older and only those with mild-to-moderate hearing loss.

The GAO Report provides an overview of the rulemaking process for OTC hearing aids, the resulting OTC hearing aid regulatory scheme, and FDA’s interaction with other agencies when regulating OTC hearing aids.  While helpful background, it’s not new information.  What the GAO Report does provide though is a discussion of the effect of OTC hearing aid availability on patient access to hearing loss treatment.  Early research suggests that OTC hearing aids can be as effective as prescription hearing aids in certain circumstances, and published literature that FDA has reviewed has left the agency seeming hopeful.  But the GAO Report highlights the lack of research on OTC hearing aids thus far.  This is because “FDA officials and six external stakeholder groups . .  . said it was too early after implementation of the Rule to have data on its effects.”  Nevertheless, industry stakeholder report consumer interest in hearing loss treatment initially increased following  issuance of the OTC hearing aids rule and, anecdotally, a small initial increase in consumers accessing hearing health care.  Particularly interesting is that the increase in consumer interest isn’t limited to OTC hearing aids; industry noticed an increase in interest in audiologist assistance as well.    Another study found that consumers prefer working with hearing health care professionals in person rather than shopping online, while another study found many consumers had concerns about product safety absent professional oversight.

The Report highlights some of the barriers that remain for access to hearing treatment: consumer preference and professional concerns, difficulty in self-assessing hearing loss, and affordability.  Stakeholders also suggested to the GAO monitoring of the hearing aid market for concerns about marketing, pediatric use of hearing aids, return policies, and gain limits.  FDA seemingly dismissed most of these concerns, and, the Report notes, “[a]s of February 2024, FDA did not have any plans to revise its OTC hearing aid regulations.  The Agency “may issue technology specific regulations and guidance as new hearing technologies are approved and cleared by FDA.”  FDA does, however, expect to issue a report on OTC hearing aid adverse events to Congress by August 2024.

In all, the GAO Report did not provide much in the way of new information for industry.  As for whether the rules were worth all the trouble: It seems like it’s just too early to tell. However, at least in the short term, the issuance of the final rule has not resulted in the dramatic uptake of OTC hearing aids that some proponents had predicted.

Hyman, Phelps & McNamara, P.C. (HP&M) seeks to add an experienced attorney (7+ years) to our government discount program and price reporting practice. Our ideal candidate will have significant substantive experience working with:

• Price calculation and reporting under the Medicaid Drug Rebate Program and the 340B Drug Discount Program
• Average sales price reporting under Medicare Part B
• Price reporting and contracting with the Department of Veterans Affairs
• Drug discounting requirements under the Inflation Reduction Act Medicare inflation rebate programs, maximum fair price negotiation program, and Part D manufacturer discount program

Experience in FDA and other regulatory issues affecting the pharmaceutical industry is a plus.

Our firm culture is collaborative, and the subject matter is intellectually stimulating.   Strong verbal and writing skills are required. Partner/director, counsel and senior associate level attorneys with the requisite substantive experience are encouraged to apply. The ideal candidate will have a book of business.

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 Deborah Livornese (dlivornese@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

Among FDA-regulated establishments and stakeholders, there is one word that makes everyone go on edge – the dreaded FDA “inspection.” In an effort to clarify for industry and alleviate some of the stress associated with these activities, last week the FDA issued a draft guidance aimed at providing recommendations on how to handle inspections under FDA’s Bioresearch Monitoring (BIMO) program. This draft guidance, titled “Processes and Practices Applicable to Bioresearch Monitoring Inspections,” was prompted by a congressional directive under the Food and Drug Omnibus Reform Act and is intended to provide recommendations that are not otherwise specified in existing publicly available guides and manuals for such inspections (see pgs. 11-12 of the guidance for a list of these resources).  It is critical that this guidance be reviewed in tandem with the guidance set forth in FDA’s Investigations Operations Manual (IOM) and the Regulatory Procedures Manual (RPM), both of which provide more detail about how FDA investigators conduct investigations and make decisions about a firm’s regulatory compliance.

As a reminder, the BIMO program oversees a wide range of activities related to FDA-regulated research, including human and animal studies, and covers the full gamut of FDA centers (CDER, CBER, CDRH, CFSAN, CTP, and CVM). BIMO inspections can consist of on-site inspections, data audits, and remote regulatory assessments of nonclinical laboratories, clinical investigators, sponsors, contract research organizations (CROs), bioequivalence facilities, institutional review boards (IRBs), and postmarketing surveillance. These inspections include unannounced or announced inspections conducted in support of FDA’s review of specific submissions or marketing applications or periodic establishment inspections and are conducted both domestically and internationally to monitor compliance with Good Laboratory Practice (GLP) and Good Clinical Practice (GCP).  In FY2023, FDA conducted over 1000 inspections under the BIMO program.

Below we highlight FDA’s views about best practices for BIMO inspection communications, handling requests for records, and inspection preparation and follow-up as outlined in the draft guidance.  We also detail some of our recommended best practices to achieve success when FDA comes knocking.

Pre-BIMO Inspection Communication Best Practices

• The FDA may provide a pre-announcement notice to ensure that the necessary records and personnel are available during the inspection and includes general information about what the FDA plans to review.
• Establishment staff should confirm arrival details with FDA investigators and provide a contact phone number. An establishment’s failure to acknowledge a pre-announcement notification is not a reason to delay the start of an inspection (see FDA’s revised draft guidance on Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug or Device Inspection).
• FDA investigators routinely share their names, titles, contact information, and, when appropriate, reasons for conducting the inspection. Establishment staff should take note of this information (either by writing it down or taking a picture of the investigator’s credentials).
• Establishments using electronic information systems to hold, analyze, process or transfer pertinent information should be prepared to provide FDA access to such systems.

Communication Best Practices During a BIMO Inspection

• Provide timely and accurate responses to information requests.
• Ask clarifying questions.
• Discussions between FDA investigators/personnel and establishment staff should include observation clarifications.

Post-BIMO Inspection Communication Best Practices

• Discuss inspection findings during an inspection close-out meeting. During this meeting, the FDA investigator will notify the establishment whether a Form FDA 483 will be issued with observations of objectionable conditions and practices identified during the inspection.
• If the FDA issues a Form FDA 483, the FDA “encourages” responses within 15 business days of the close-out of the inspection. Importantly, FDA notes in the draft guidance that any responses received within this window “will be considered before further Agency action or decision.”
• An establishment’s response to a Form FDA 483 should, in addition to being submitted within 15 business days of the close-out of the inspection:
  • Demonstrate the establishment’s acknowledgement and understanding of FDA’s observations and the establishment’s commitment (including from senior leadership) to address such observations.
  • Address each observation separately.
  • Note whether the establishment agree(s) or disagree(s), and why.
  • Provide both corrective and preventive actions (CAPAs) and timelines for completion.
  • Provide both completed and planned actions and related timelines.
  • Provide a method of verifying or monitoring the effectiveness of the actions.
  • Submit documentation as evidence of addressing the observations (e.g., training, standard operating procedure (SOPs), corrective action plans, records, etc.).
• Develop and implement corrective and preventive action plans to resolve issues.
• Document all corrective actions and follow-up to ensure sustained compliance.
• If an establishment has any questions about the FDA investigator, the establishment may request the contact information for the Office of Bioresearch Monitoring Operations (OBIMO) division management from the FDA investigator during the close-out meeting.
• If an inspected establishment has any questions about the inspection classification itself, such questions can be directed to the FDA center point-of-contact identified in the post-inspection correspondence or in the relevant compliance program.
• Unresolved concerns relating to an inspection can be directed to the ORA Ombudsman Program.

Other Inspection Best Practices

• Develop a clear SOP for inspections, including the roles and responsibilities of staff.
• Ensure all relevant records and data (whether electronic or otherwise) are readily accessible and organized for review. Delays in producing records without reasonable explanation may cause drugs or devices to be adulterated under the Food, Drug, and Cosmetic Act (see FDA’s revised draft guidance on Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug or Device Inspection).
• Foster open and transparent communication with FDA investigators and engage in proactive communication to clarify any potential issues or misunderstandings.
• Regularly review and update SOPs to reflect current regulatory requirements.
• Conduct internal audits to identify and address compliance issues before inspections.

• Maintain accurate and detailed records of all research activities, including raw data, test results, and correspondence.
• Ensure records are securely stored and protected from unauthorized access or tampering.
• Implement a robust data management system to track and retrieve records efficiently.
• Provide ongoing training for staff on regulatory requirements and inspection processes.
• Ensure staff are knowledgeable about their roles and responsibilities during inspections.
• Promote a culture of compliance and quality within the organization.

Comments on the draft guidance can be submitted to the docket by August 5, 2024.

Last month the Department of Justice and the Drug Enforcement Administration submitted a notice of proposed rulemaking to reschedule cannabis from schedule I under the federal Controlled Substances Act (“CSA”) to schedule III.  Hyman, Phelps & McNamara, P.C. Director Larry Houck will participate as a panelist focusing on this timely topic in the Food and Drug Law Institute’s (“FDLI’s”) “High Time for a Change: Implications of DEA’s Proposed Marijuana Rescheduling” webinar June 12, 2024, 2:00-3:30 pm ET.  The live webinar will dissect the proposed rule and address potential implications for the cannabis industry, state regulation, research and social justice and equity.

Information and registration is available at the conference webpage here.

It seems as though we cannot get through a week without hearing about controlled substance diversion by employees at another hospital or healthcare facility.

We learned this week that Palomar Health, one of California’s largest healthcare districts, agreed to pay $250,000 to resolve allegations that numerous vials of fentanyl had been diverted from automated medication dispensing machines over a five-month period and that the hospital did not properly dispose of unused fentanyl.  Palomar Health self-disclosed to DEA that one of its employees may have diverted the fentanyl.  The hospital also “entered into a Memorandum of Agreement with the DEA requiring Palomar Health to undertake additional measures to increase security, implement specialized training, and to handle controlled substances properly and safely.”  DEA, Palomar Hospital Pays $250,000 for Diverting Fentanyl (June 3, 2024).

We also became aware that First Choice Surgical, an ambulatory surgical center in Cedar Rapids, Iowa, agreed to pay $125,000 to resolve allegations it failed to maintain complete and accurate records and failed to provide effective controls to guard against theft and diversion of controlled substances.  Employees discovered in August 2019 that a registered nurse removed fentanyl from vials, replaced fentanyl with saline, and returned the vials to storage.  The nurse pled guilty to charges related to the theft and was sentenced to five years of probation.  An investigation also identified 130 separate occasions in which the surgical center allegedly violated recordkeeping requirements and failed to timely report the fentanyl theft to DEA after learning about it.  DOJ, Iowa Surgical Center Agrees to Pay $125,000 to Resolve Allegations It Violated the Controlled Substances Act (June 4, 2024).

Recent employee diversion of significant controlled substance quantities from hospitals and healthcare facilities has resulted in large civil monetary settlements, some in the millions of dollars, and the undertaking of costly compliance remediation to resolve allegations.  Controlled substances are a necessary component in providing needed medical care to patients, and recent employee diversion incidents illustrate the continued vulnerability of hospitals.  Hospitals that are non-compliant and fail to fulfill their controlled substance obligations pose serious health risks to patients for undertreatment and to employees for overdose and death.  Employee diversion can result in unwanted local and national publicity.

I will be presenting “Hospital/Healthcare Facility Controlled Substance Diversion,” focusing on this timely topic, at the World Conference Forum’s 2024 Opioid & Fentanyl Abuse Management Summit in Chicago on July 12^th.  Attendees will learn:

• How employees diverted significant controlled substance quantities in some high-profile cases
• Red flags that were missed
• Safeguards to minimize internal diversion risks
• Best practices for maximizing diversion detection

Click here to learn more about the Opioid & Abuse Management Summit.

The FDA’s new rule for laboratory developed tests (LDTs), unless overturned through litigation (see here), by legislation, or the election, is going to have profound effects on the U.S. health care system.  At this point, nobody knows all the impacts the rule will have.  But even FDA acknowledges that some labs will go out of business, some tests will be discontinued, there will be some consolidation of the industry, and costs will be higher.  It is absolutely foreseeable that the LDT rule will reduce innovation for new tests, make it harder for labs to modify tests, and make it much less likely that patients with rare diseases or conditions will be correctly diagnosed.

There is another foreseeable impact: sports doping will be harder to detect.  In the preamble to the rule, FDA has maintained an exemption for forensic tests, which it states is exclusively for “law enforcement.”  As the rationale for this limited exemption, the preamble says, “[t]ests used in the law enforcement setting are subject to protections and requirements associated with the judicial process that mitigate risk related to test accuracy and sample collection.”  FDA makes it crystal clear that this exemption does not apply to sports testing.  See 89 Fed. Reg. 37286, 37298 (May 6, 2024) (here).  In other words, labs that offer tests to catch cheaters will need to comply with the full panoply of device requirements.

As a threshold matter, FDA’s approach fails to recognize that sports testing, as now conducted, does involve numerous safeguards.  FDA’s exemption for forensic testing is based on the checks and balances that the judicial system provides.  While major sports leagues do not have a judicial process, there are significant technical and procedural safeguards in place, with processes negotiated with unions.  The U.S. Anti-Doping Agency (USADA) also follows extensive policies and procedures to try to ensure accuracy of test results.  For example, in the recent suspension of swimmer Kensey McMahon (announcement here), the USADA press release explained that an independent arbiter had rendered a decision after an evidentiary hearing where both the athlete and USADA were provided a full opportunity to present their case and witnesses.  FDA’s preamble completely ignores these types of measures, which differentiate sports testing from other settings for drug testing.

The world of performance enhancing drugs (PEDs) has been characterized by innovation.  Over the years, many new drugs have become available to would-be cheaters.  Historically, PEDs were thought of as steroids alone, but in recent years new types of PEDs, including experimental peptides like BPC-157 have entered the market.  See here. News outlets have also reported that with the emergence of artificial intelligence, it is possible for would-be cheaters to develop new PEDs to evade outdated drug tests.  See here.  LDTs, because they can be rapidly developed, validated, and deployed, are well‑equipped to identify these new PEDs.

Conversely, speed and flexibility are not hallmarks of the device regulatory system.  New PEDs can emerge quickly.  While an LDT can be rapidly introduced to address these new products or any variations to them, FDA-regulated diagnostics cannot.  Barring a complete overhaul in FDA’s approach, the comprehensive testing that would be needed before a marketing application can be submitted for a new PED and the extensive FDA review process, means that new 510(k)s simply can’t quickly be obtained.  Moreover, the high regulatory costs and niche market may mean these tests are uneconomical for manufacturers, barring significant subsidies from customers such as sports leagues or the U.S. Olympic Committee.

While overlooked now, this issue may get more visibility with the upcoming Paris Olympics, new stories about cheating in sports (see, e.g. here), and the run-up to the 2028 Olympics in Los Angeles.  If the current FDA approach remains in place, it is difficult to see how the USADA (or World Anti-Doping Agency) will be able to keep up in the race with sports dopers.  Without LDTs, U.S. companies will not be able to provide comprehensive panels that include the newest PEDs.  Setting up satellite facilities in other countries to run the tests for the LA Olympics might be feasible, although embarrassing and less efficient.

Maintaining integrity in sports has become increasingly challenging.  FDA’s rule adds one more hurdle to those who are trying to catch cheaters.  Because FDA’s LDT rule is short on specifics, the agency could easily decide to extend enforcement discretion to sports testing.  If it does not, then the bodies responsible for trying to hold sports doping in check are going to face new obstacles as they try to detect and punish cheaters.

Today’s email brings an interesting, and somewhat confusing settlement of what should have been an ordinary antikickback statute case, and may bring about a clash between what many companies do and what the government may be objecting to.  Or, perhaps your loyal blogger is reading too much into a brief settlement document.

The facts of the settlement are rather simple.  DePuy Synthes, a subsidiary of J&J, was alleged to have given a Massachusetts spine surgeon named Tony Tannoury spinal implants and tools worth thousands of dollars in order to secure his business.  In 2023, DePuy paid $9.75 million to resolve these allegations.  (I remember when a $9.75 million settlement meant something.  These days, I barely read the papers if it’s less than a billion.  Also, stay off my lawn you durn kids.)  All of this is very routine and not terribly interesting.

Now, here’s where things get crazy kids.  Dr. Tannoury was alleged to have performed surgeries using these products in the Kingdom of Saudi Arabia, Lebanon, and Qatar.  However, there is not a single allegation in the settlement agreement that Dr. Tannoury was paid for these surgeries.  Now, the implication may be that he was, and it was this profit that induced him to favor DePuy products with his patients who were covered by Medicare and Medicaid in the United States.

But what if there’s more here?  Reading the settlement agreement, much like reading tea leaves, leaves me with the vague feeling that if the giving of the free devices and tools was sufficient to allege the kickback, and hence the allegation that Dr. Tannoury violated the False Claims Act, that the government could use the same theory for other, benign arrangements.  Walk with me a minute.

A thought exercise:  A company, at the behest of a key opinion leader, donates product to the doctor which the doctor takes overseas to treat sleeping sickness in Africa.  Or donates products to a surgeon to fix cleft palates in Ukraine.  In neither case is the donation to a charity per se, but it is being done for charitable purposes.  The KOL looks kindly on the company and uses its products, but that wasn’t the intent of the donation.  Is this problematic where the company intends to benefit the patients and not the physician?

Obviously, the easy way around this is to donate the equipment to a legitimate charitable organization, and companies should ensure that they do so, particularly in light of this settlement.  Because while one might assume that Dr. Tannoury was treating royals or other people in power, if in fact he was treating people in need, and not financially benefitting from these surgeries, does it really make sense to punish him?

FDA’s Office of Women’s Health (OWH) recently celebrated its 30th anniversary.  This office was formed in 1994 to promote the inclusion of women in clinical trials and to provide leadership on topics related to the health of women.  Given that FDA was founded in 1906 and the Federal Food, Drug and Cosmetic Act went into effect in 1938, the OWH’s thirty years of existence, while an important milestone, constitutes a very small amount of time to be focused on the health of fifty percent of the population. The implication of this is that many women living today have spent the majority of their lives receiving healthcare that may not have been developed with the unique health needs of women in mind or tested in a representative number of women.

In celebration of the OWH anniversary, FDA Commissioner Dr. Robert Califf, and Associate Commissioner for Women’s Health and Director of the Office of Women’s Health, Dr. Kaveeta P. Vasisht, recently shared a statement, Protecting and Advancing the Health of Women Through Policy, Research, Education and Outreach, highlighting the work of the OWH.  The OWH has been involved in funding women’s health research projects, advocating for sex as a biological variable in research design, promoting diversity and inclusion of women in clinical trials, and championing better health outcomes on conditions that disproportionately, differently, or uniquely impact women.

The OWH is updating the Women’s Health Research Roadmap, in support of the Executive Order on Advancing Women’s Health Research and Innovation released by President Biden earlier this year.   The roadmap will provide a science-based framework to address research questions relevant to women’s health and to encourage research activities by FDA and other federal agencies to consider women’s health.

The Executive Order establishes the White House Initiative on Women’s Health Research (Initiative) within the Office of the First Lady to accelerate research related to women’s health.  The Initiative includes requirements for:

• Furthering integration of women’s health research in federal research programs,
• Prioritizing federal investments in women’s health research,
• Galvanizing research on women’s midlife health, and
• Assessing unmet needs to support women’s health research.

We are honored to have helped many companies bring to market FDA-regulated products that are intended specifically for women, or have been adequately tested in both men and women to ensure both groups can rely upon the results of clinical studies presented in product information. With the White House Initiative and programs offered by OWH, we look forward to supporting continued innovation in this important space.

Last week, the United States Court of Appeals for the District of Columbia ruled that Section 340B of the Public Health Service Act does not prohibit pharmaceutical manufacturers from imposing conditions on the distribution of discounted drugs to covered entities in the program.  In United Therapeutics Corporation v. Carole Johnson, et al./Novartis Pharmaceuticals v. Carole Johnson (consolidated cases), the Court found that the conditions set by Novartis and United Therapeutics on covered entities did not violate the 340B statute, although more restrictive conditions could violate the law.

The 340B statute requires drug manufacturers to sell certain drugs at discounted ceiling prices to covered entities, which are defined by statute to include certain types of safety net hospitals, health centers, and clinics receiving federal grants.  Initially, drug manufacturers were required to offer these discounts only to the in-house pharmacies of covered entities.  In 2010, the Health Resources and Services Administration (HRSA) authorized covered entities to contract with an unlimited number of retail pharmacies to fill prescriptions for their patients.  Over the ensuing years, drug manufacturers argued that extensive networks of contract pharmacies led to diversion of 340B drugs to non-340B patients, excessive profits to contract pharmacies, and abuses of the system at manufacturers’ expense.   The issue came to a head in 2021, when HRSA threatened enforcement against manufacturers who tried to limit shipments of their 340B drugs to covered entity’s in-house pharmacy and a single contract pharmacy.  A number of drug companies sued to enjoin enforcement.  We have blogged about this controversy in previous posts (see e.g., here and here).

Novartis and United Therapeutics Corporation sued in the D.C. District Court and won, prompting a government appeal to the D.C. Circuit.  In affirming the District Court’s ruling, the D.C. Circuit held that the 340B statute does not prohibit manufacturers from limiting distribution of discounted drugs via contractual terms.  The Court concluded that the 340B statute requires manufacturers to “offer” to sell covered drugs to covered entities at or below a specified “price,” but is silent about delivery.  The Court reasoned that this silence allows sellers to enforce certain delivery conditions, stating that “this silence preserves—rather than abrogates—the ability of sellers to impose at least some delivery conditions.”

However, the D.C. Circuit’s decision only addressed the specific conditions imposed by Novartis and United Therapeutics.  The Court found that the 340B statute’s requirement that manufacturers make an “offer” means at least a bona fide offer, and that “some conditions may be onerous enough to effectively increase the contract ‘price,’ thus perhaps nudging it above the statutory ceiling” such that it violates the 340B statute.  The Court was “confident” that the courts can adjudicate questions regarding what conditions would violate the 340B statute, should they arise in other cases.

The D.C. Circuit joins the Third Circuit, which decided in favor of manufacturers on similar grounds (see here).  Other drug manufacturers are awaiting a decision in a pending Seventh Circuit case.  If the Seventh Circuit reaches a different conclusion than the Third Circuit and D.C. Circuit, this circuit split would create a high likelihood that the issue would go to the Supreme Court.  Manufacturers have won this most recent battle, but whether they will win the war will depend on the rulings of other appellate courts and whether the Supreme Court will grant certiorari.

Drug manufacturers must also contend with the growing number of states seeking to prohibit drug manufacturers from imposing restrictions on 340B contract pharmacies.  Six states have enacted contract pharmacy protections into law: Kansas, Maryland, Mississippi, and West Virginia in 2024, Louisiana in 2023, and Arkansas in 2021.  Bills are pending in other states, including Missouri and New York.  We recently wrote about the Eighth Circuit’s decision to uphold the Arkansas law against a constitutional challenge brought by the Pharmaceutical Research and Manufacturers Association (PhRMA) (see here).  There, the Court held that the Arkansas law was not preempted by the 340B statute or the Federal Food, Drug, and Cosmetic Act.  This decision may encourage more state-level efforts to adopt similar laws.  To the extent states successfully enact and defend their contract pharmacy protection laws, drug manufacturers’ victories against HRSA in federal courts, including the recent D.C. Court decision, may be rendered inconsequential.