FDA has issued a draft guidance document to explain how FDA plans to implement the new eCopy program under Section 745A(b) of the Federal Food, Drug, and Cosmetic Act (“FDC Act”), which was added by the Food and Drug Administration Safety and Innovation Act (“FDASIA”). When implemented, this program will allow the immediate availability to FDA reviewers of an electronic version of the submission instead of relying solely on the paper version for review.
Section 745A(b) to the FDC Act requires that FDA issue a guidance document implementing the requirement that “presubmissions and submissions for devices under section 510(k), 513(f)(2)(A), 515(c), 515(d), 515(f), 520(g), 520(m), or 564” of the FDC Act, and for devices regulated by CBER under Section 351 of the Public Health Service (“PHS”) Act, and “any supplements to such presubmissions or submissions, [] include an electronic copy of such presubmissions or submissions.” The statute permits FDA to include in the guidance document the “standards for the electronic copy” and the “criteria for waivers of and exemptions from the requirements [under Section 745A].”
An eCopy as an exact duplicate of the paper submission. It may be submitted on a CD, a DVD, or in another electronic media format accepted by FDA. It must be accompanied by a copy of the signed cover letter and the complete original paper submission. If a submission is received by FDA without an eCopy or the eCopy submission does not meet the standards provided in the guidance, FDA will put the application on hold (that is, the review clock will not start) until a valid eCopy is submitted.
Once the FDA finalizes this draft guidance document, FDA will require the submission of an eCopy for the following applications: 510(k)s, de novo requests, PMAs, PDPs, IDEs, HDEs, HUDs, and pre-submissions (formerly known as “pre-IDEs”). In addition, any subsequent submission, such as amendments, annual reports, or supplements, must be submitted under the eCopy program. This requirement regarding subsequent submissions will apply even if the original submission was submitted to FDA prior to the implementation of the eCopy program.
FDA has specifically exempted compassionate use and emergency use IDEs and Emergency Use Authorizations (“EUAs”) from the eCopy requirement. In addition, FDA plans to allow waivers for device submissions that are subject to licensure under the PHS Act (e.g., BLAs, INDs) that are submitted entirely as electronic submissions to CBER. CBER has already issued guidance documents for applicants who choose to submit electronic submissions.
The criteria and specifications required for an eCopy described in the draft guidance document are not being implemented by FDA until the document is finalized. You may submit written comments regarding this draft guidance to FDA’s Division of Dockets Management (via http://www.regulations.gov) at any time. But to ensure that your comments are considered prior to finalizing the draft guidance, you should submit them by November 16, 2012.
A lot has been happening at FDA over the past two months – and in particular in recent weeks – as the Agency works diligently to implement the Generic Drug User Fee Amendments of 2012 (“GDUFA”). There have been various notices published in the Federal Register, draft guidance documents published, meetings planned, and policies and procedures updated. We won’t get into all of those documents here, but note in particular new guidance on stability testing of drug substances and drug products intended to bring generic drug requirements in line with International Conference on Harmonisation stability recommendations, and a new Manual of Policies and Procedures to help reviewers in the Office of Generic Drugs determine whether an amendment to a pending ANDA should be categorized as major or minor. Under the GDUFA Performance Goals and Procedures, amendments can affect the goal date for action on an application.
GDUFA was enacted in July as Title III of the FDA Safety and Innovation Act (“FDASIA”), and went into effect on on October 1, 2012 – the start of Fiscal Year (“FY”) 2013 (see our FDASIA summary and analysis here). Shortly after the start of FY 2013, the FDA User Fee Corrections Act of 2012 was signed into law to enable collection of FY 2013 GDUFA user fees without enactment of an appropriations act (see our previous post here). GDUFA establishes several types of user fees that together will generate $299 million in funding for FDA in FY 2013, and adjusted annually thereafter. Application fees include an original ANDA fee and a Prior Approval Supplement (“PAS”) fee, which is one half of the ANDA fee, and a Type II Drug Master File (“DMF”) “first reference fee.” An application containing information concerning the manufacture of an Active Pharmaceutical Ingredient (“API”) at a facility by means other than reference to a Type II DMF, must pay, in addition to an application fee, a special “API fee” (also referred to as the “(a)(3)(F) fee”) if “a fee in the amount equal to the [Type II DMF] fee . . . has not been previously paid with respect to such information.” An annual facility fee must be paid by both Finished Dosage Form (“FDF”) and API manufacturers. There is a fee differential of not less than $15,000 and not more than $30,000 for foreign FDF and API facilities, which is intended to reflect the added costs of foreign inspections conducted by FDA. Finally, there is a one-time ANDA backlog fee that will be assessed in FY 2013 for ANDAs pending on October 1, 2012. Under GDUFA, an ANDA that is “pending” on October 1, 2012, is an application “that has not received a tentative approval prior to that date.” That fee is calculated by dividing $50 million by the number of ANDAs in the backlog.
FDA has initiated the process for the Agency to calculate the FY 2013 facility fee rates, which FDA will publish by January 13, 2013. In draft guidance and other documents published on FDA’s website (here and here), FDA lays out the so-called self-identification process by which the Agency will obtain an accurate inventory of facilities, sites, and organizations involved in the manufacture of generic drugs for purposes of setting annual facility fee user fee rates and targeting inspections. FDA recently noted in a Federal Registernotice that for FY 2013, identification information must be submitted by December 3, 2012. For subsequent FYs, identification information must be submitted, updated, or reconfirmed on or before June 1 of the preceding FY. Failure to pay a facility fee within 20 calendar days of the due date will result in the several consequences, including that all FDF or API products manufactured at the facility and all FDFs containing APIs manufactured at the facility will be deemed misbranded.
The remaining GDUFA user fees are addressed in a pair of Federal Register notices published on October 25, 2012. In one notice FDA addresses the original ANDA fee, PAS fee, and Type II DMF fee. In a second notice, FDA addresses the ANDA backlog fee.
Based on an estimation of 1,160 full application equivalents that will be submitted in FY 2013, and by dividing that number into $59,760,000, which is the fee revenue amount to be generated from application fees in FY 2013 under GDUFA, FDA establishes an original ANDA application fee of $51,520 per ANDA (rounded to the nearest $10). The PAS fee, which is equal to half of the ANDA fee, is $25,760. Payment of the application fee is due on the later of the date of submission of an ANDA or PAS, or 30 days after October 25, 2012. Applications submitted since October 1, 2012 and prior to October 25, 2012 are subject to fees and sponsors will be required to pay. Failure to pay the application fee within 20 calendar days of the due date will result in the application not being received by FDA until the fee is paid. (Of course, ANDA receipt date is particularly important when 180-day generic drug exclusivity is at stake.)
With respect to the “(a)(3)(F) fee” (i.e., the special “API fee”) for those ANDAs that include information about the production of APIs other than by reference to a DMF, FDA comments in the notice that the Agency “considers this additional fee to be unlikely to be assessed often.” The “(a)(3)(F) fee” rate ia set by statute at an amount equal to the DMF fee.
FDA establishes the FY 2013 Type II DMF fee, which is a one-time fee for each individual DMF. Based on an estimation of 700 DMFs that will be referenced by an initial letter of reference in FY 2013, and by dividing that number into $14,940,000, which is the fee revenue amount to be generated from DMFs in FY 2013 under GDUFA, FDA establishes a Type II DMF fee of $21,340 for FY 2013 (rounded to the nearest $10). In separate draft guidance published earlier this month, FDA provides recommendations for information that should be included in TYPE II DMFs to facilitate an initial completeness assessment required by GDUFA. Payment of the Type II DMF fee is due on the later of the date on which the first generic drug submission is submitted that references the associated DMF, or 30 days after October 25, 2012. Failure to pay the Type II DMF fee within 20 calendar days of the due date results in the Type II API DMF not being deemed available for reference, and an affected ANDA will not be received unless the fee has been paid within 20 calendar days of FDA notification of the failure to pay the fee.
Moving on to the one-time ANDA backlog fee, FDA calculates the fee to be $17,434. This amount is calculated based on dividing $50,000,000, which is the fee revenue amount to be generated from the backlog fee under GDUFA, by 2,868 pending ANDAs. Payment of the backlog fee is due no later than 30 days after October 25, 2012. Failure to pay the backlog fee will result in placing the ANDA sponsor on a public arrears list, such that no new ANDAs or supplements will be received (submitted by the applicant or its affiliates).
Over the past several months, FDA has taken pains to make sure that the ANDA backlog is accurate and implored ANDA sponsors to withdraw any pending ANDAs they are no longer interested in to avoid assessment of the backlog fee. A reduced ANDA backlog means a slightly higher fee for each pending ANDA, but also reduces FDA’s review burden. Under GDUFA, FDA agreed to review and act on 90% of all ANDAs, ANDA amendments, and ANDA PASs pending on October 1, 2012 by the end of FY 2017.
Although FDA probably quietly hoped there would be a mass withdrawal of pending ANDAs, that did not happen. In fact, only a few ANDAs were withdrawn. Moreover, there was an increase in the number of last minute ANDA submissions. There were 159 ANDAs submitted to FDA in September alone (and a total of 1,103 over the past 12-month period). That left FDA with a an ANDA backlog of 2,933 ANDAs at the end of FY 2012, as shown in the table below.
The 2,933 figure does not jibe with the figure of 2,868 pending ANDAs identified in the Agency’s Federal Register notice on the ANDA backlog fee. It is off by 65 ANDAs. We understand that’s because for GDUFA ANDA backlog purposes FDA excluded from the 2,933 figure certain ANDAs, such as those subject to FDA’s Application Integrity Policy.
FDA’s user fee notices provide information on payment options and procedures. Additional information is available on FDA’s website (here). Completion of the new GDUFA Cover Sheet will generate a user fee payment identification number that will facilitate payment.
We were hardly surprised when we learned that Momenta Pharmaceuticals, Inc. and Sandoz Inc. (“Plaintiffs-Appellees”) filed a Petition for Rehearing en banc seeking reconsideration of an August 3, 2012 decision by a divided (2-1) panel of judges from the U.S. Court of Appeals for the Federal Circuit in Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. (Docket Nos. 2012-1062, -1103, -1104) concernng the scope of the Hatch-Waxman “safe harbor” provision at 35 U.S.C. § 271(e)(1). After all, Chief Judge Rader, who lodged a blistering 29-page dissent in the case, urged rehearing by the full court, saying that the “decision should instead request the entire court to resolve the issue en banc.”
By way of background, 35 U.S.C. § 271(e)(1), which was added to the patent laws by the Hatch-Waxman Amendments, states:
It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.
As we previously reported, Momenta Pharmaceuticals, Inc. (“Momenta”) sued Amphastar for patent infringement alleging that Amphastar infringed U.S. Patent No. 7,575,866 (“the ‘866 patent”) assigned to Momenta and that generally relates “to methods for analyzing heterogeneous populations of sulfated polysaccharides” such as enoxaparin sodium (marketed as LOVENOX by Sanofi, and generic versions of which Sandoz and Amphastar have approval for under ANDAs). The U.S. District Court for the District of Massachusetts granted Momenta a preliminary injunction and denied two emergency motions filed by Amphastar for relief from the preliminary injunction. According to the District Court, Amphastar’s activity fell outside of the “safe harbor” provision at 35 U.S.C. § 271(e)(1), because “the alleged infringing activity involves use of plaintiffs’ patented quality control testing methods on each commercial batch of enoxaparin that will be sold after FDA approval,” and while the “safe harbor” provision “permits otherwise infringing activity that is conducted to obtain regulatory approval of a product, it does not permit a generic manufacturer to continue in that otherwise infringing activity after obtaining such approval.” Amphastar subsequently appealed each of the District Court’s preliminary injunction decisions to the Federal Circuit.
The Federal Circuit panel, after ascertaining the scope of 35 U.S.C. § 271(e)(1), ruled that the District Court “applied an unduly narrow interpretation of the Hatch-Waxman safe harbor,” vacated the grant of a preliminary injunction, and remanded the case for further proceedings consistent with the Court’s decision. According to the majority panel decision, the information at issue in the case falls under the 35 U.S.C. § 271(e)(1) umbrella, “because the information submitted is necessary both to the continued approval of the ANDA and to the ability to market the generic drug.” Moreover, “[h]ere, the submissions are not ‘routine submissions’ to the FDA, but instead are submissions that are required to maintain FDA approval,” according to the panel decision.
In coming to a decision, the Federal Circuit was faced with the Court’s prior decision in Classen Immunotherapies v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011), which is on appeal to the U.S. Supreme Court (Docket No. 11-1078). In Classen, the Federal Circuit held, among other things, that 35 U.S.C. § 271(e)(1) “does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained.” According to the Federal Circuit’s majority panel, Amphastar’s activities fit within the “safe harbor” provision:
Under a proper construction of 35 U.S.C. § 271(e)(1), the fact that Amphastar’s testing is carried out to “satisfy the FDA’s requirements” means it falls within the scope of the safe harbor, even though the activity is carried out after approval. Unlike Classen, where the allegedly infringing activity “may” have eventually led to an FDA submission, there is no dispute in this case that Amphastar’s allegedly infringing activities are carried out to “satisfy the FDA’s requirements.”
According to the rehearing petition filed by Plaintiffs-Appellees, given the “two conflicting interpretations of the scope of Section 271(e)(l)” in Classen and Momenta, the full Federal Circuit needs to address a precedent-setting question of exceptional importance: “What is the proper scope of Section 27l(e)(1)?”
Plaintiffs-Appellees contend that a proper interpretation of 35 U.S.C. § 271(e)(1) strikes a balance between patent protection and timely competition by allowing “a potential market entrant to perform the experimental conduct necessary to engage in the development of information to submit to the FDA to obtain FDA approval of commercial sales – conduct that does not impair the value of an unexpired patent – while not sanctioning otherwise infringing commercial conduct that derogates from, or destroys the value of, a patent during its unexpired term.” The Federal Circuit’s panel decision, however, “expands Section 271(e)(1)’s safe harbor into a safe ocean,” and “calls into question not only all manner of patents claiming methods of manufacturing and formulating drugs but also the viability of many patents claiming the active ingredient in the drugs themselves,” write Plaintiffs-Appellees.
The Defendants-Appellants in the case, including Amphastar, have urged the Federal Circuit in a Response to deny Plaintiffs’-Appellees’ rehearing petition. According to them,
The purported conflict in circuit law on which [Plaintiffs-Appellees] hinge their claim for rehearing en banc cannot survive a straightforward reading of the panel’s decision or of [Classen]. Specifically, this safe harbor case involves the unusual situation where both Congress and the FDA have mandated the use of a particular test, specified in the official USP compendium, as a continuing condition of approval pre-marketing for a generic drug. Classen, by contrast, involved the voluntary use of a research tool patent to obtain information for non-regulatory purposes that might nevertheless be “routinely reported to the FDA, long after marketing approval has been obtained,” and the Court expressly eschewed any ruling governing “submissions for regulatory approval of generic products” or “like policy considerations.” [Emphasis in original; Internal citation omitted.]
“Worse still,” say Defendants-Appellants, Plaintiffs-Appellees ask the Federal Circuit “to adopt en banc an atextual approach to interpreting the safe harbor provision that the Supreme Court has twice considered and twice rejected” in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990) and Merck KGaA v. Integra Lifesciences, Ltd., 545 U.S. 193 (2005). In those cases, the U.S. Supreme Court ruled that 35 U.S.C. § 271(e)(1) applies to FDA’s “entire statutory scheme of regulation” (Eli Lilly) and that the “safe harbor” provision did not “create an exemption applicable only to the research relevant to filing an ANDA for approval of a generic drug” (Merck).
Classen Immunotherapies, Inc. (“Classen”) has filed an amicus brief in support of Plaintiffs’-Appellees’ rehearing petition saying that the Momenta panel decision directly conflicts with the Classen decision. According to Classen:
Extending the safe harbor to cover post-approval activities, such as safety testing of pharmaceuticals, sounds like a good idea for judicial legislation, which would appear to save lives. However, the net result of foreclosing this area to patent protection will be the loss of tens of billions of dollars that are annually invested in developing new methods and devices for ensuring the safety of drugs and medical devices which regularly save and improve the lives of countless people. . . .
As was correctly found by this Court in Classen, nothing in the text or purpose of Section 271(e)(1) warrants a wholesale expansion of the safe harbor into the post-marketing approval period, where it would be totally divorced from the balancing of interests, and concerns about distortions to the patent term that the safe harbor was intended to address. The danger of the unintended consequences described above are too stark to ignore – or to allow to come to pass.
Indeed, the stakes are high. As we suggested in our previous post, a final decision could affect not only drug development, but the development of biolsimilar versions of biological products licensed under the Public Health Service Act. In the biosimilars space, method patents – and in particular analytical-method patents claiming FDA-mandated testing methods – are likely to be of great importance.
UPDATE:
Plaintiffs’-Appellees’ Reply Brief was filed on October 18th and is available here.
As the November 6 election draws near, debate over California’s Proposition 37 is heating up. If the measure passes, genetically engineered ("GE") foods sold at retail in the state would have to be labeled as such – a requirement that would have national (if not international) implications for the conventional food and dietary supplement industries. For those not yet familiar with the measure, the state’s Official Voter Information Guide provides the text, an analysis, and arguments for and against.
Among other things, Prop 37 would restrict the use of the term “natural” in relation to GE foods. One issue that has drawn attention is whether Prop 37 would also restrict the use of the term “natural” in relation to processed foods that are not GE. The analysis by the Legislative Analyst’s Office states:
Given the way the measure is written, there is a possibility that these restrictions would be interpreted by the courts to apply to all processed foods regardless of whether they are genetically engineered.
(Emphasis in original). In relevant part, the text of the measure reads as follows:
[I]f a food meets any of the definitions in subdivision (c) or (d) of section 110808, and is not otherwise exempted from labeling under section 110809.2, the food may not in California, on its label, accompanying signage in a retail establishment, or in any advertising or promotional materials, state or imply that the food is “natural,” “naturally made,” “naturally grown,” “all natural” or any words of similar import that would have any tendency to mislead any consumer.
(Emphasis added). The definitions referred to are those of the terms “genetically engineered” (subdivision c) and “processed food” (subdivision d) – and therein lies a potential source of confusion. As written, the reference to the definitions could be read to suggest that if a food is either GE or processed, then it may not be promoted as “natural.” The definition of “processed food” is so broad that essentially all foods other raw agricultural commodities would be affected. However, that outcome does not seem to be what the legislature had in mind, as signaled by the qualifying clause that immediately follows the reference to the definition of processed foods (i.e., “…and is not otherwise exempted from labeling under section 110809.2…”).
Section 110809.2 provides several exemptions from the GE labeling requirement, including for (1) a processed food that would be subject to the labeling requirement solely because it includes small quantities of GE ingredients (until July 1, 2019) or a GE processing aid or enzyme, and (2) a processed food that is not packaged for retail sale and is prepared and intended for immediate human consumption. Also exempt would be any “raw agricultural commodity or food derived therefrom [presumably including processed food] that has been grown, raised, or produced without the knowing and intentional use of genetically engineered seed or food.”
The debate over Prop 37’s impact on the use of “natural” claims is just one of several already spawned by the measure. Also noteworthy is the fact that the measure is very friendly to plaintiffs because it can be enforced by “any person,” and that person is not “required to allege facts necessary to show, or tending to show, lack of adequate remedy at law, or to show, or tending to show, irreparable damage or loss, or to show, or tending to show, unique or special individual injury or damages.” Further, plaintiffs can recover “reasonably attorney’s fees and all reasonable costs incurred in investigating and prosecuting the action.” Whatever the merits of Prop 37, one thing is clear: it will generate lots of work for lawyers.
Representative Edward Markey (D-MA) sent a written request to the U.S. Department of Justice on October 15th asking Attorney General Eric Holder to commence an investigation into whether the New England Compounding Center (“NECC”) violated the federal Controlled Substances Act and its implementing regulations. The letter states that NECC shipped nearly 18,000 vials of contaminated steroid products to 76 healthcare facilities in 24 states; an estimated 14,000 patients have been injected with the tainted products, which have sickened at least 214 individuals and resulted in 15 deaths. The letter notes that almost 1,000 specific formulations of recalled NECC drug products contain controlled substances such as cocaine, morphine, hydromorphone, meperidine, sufentanil, fentanyl and ketamine. (All of these substances are schedule II substances except for ketamine, which is a schedule III substance).
The letter further states that Drug Enforcement Administration (“DEA”) regulations require that “retail pharmacies that compound or sell controlled substances” must be registered with the DEA as retail pharmacies. DEA-registered compounding pharmacies can only sell directly to patients (specifically, the “end user” of the product) compounded pharmaceuticals that contain controlled substances pursuant to a patient-specific prescription from a DEA-registered practitioner. If the pharmacy compounds controlled substances and distributes the formulations to other DEA registrants, it must also be registered with DEA as a manufacturer. Citing to a letter from John Partridge, then-Chief of DEA’s Liaison and Policy Section, dated June 19, 2012, yet not citing to any statute, regulation or DEA guidance document (likely because there is none), Congressman Markey reiterates DEA’s “position” that “compounding a controlled substance other than pursuant to a valid patient-specific prescription or medical order, is manufacturing.” According to a conversation between Markey’s congressional staff and DEA on October 16, 2012, DEA stated that NECC is not registered with DEA as a manufacturer. (Manufacturing, in addition to requiring DEA registration as a manufacturer, also subjects the manufacturer to DEA quota, ARCOS reporting, labeling/packaging and DEA-222 official order form requirements.)
Representative Markey asserts that NECC requires “further investigation” by DEA to determine whether NECC, “already believed to have broken Massachusetts state law, has not also skirted federal law related to controlled substances.” The letter specifically asks the Justice Department to provide answers to the following questions and requests for information:
As a retail pharmacy, what types of controlled substances NECC was authorized to use to compound under DEA regulations?
Whether DEA has issued guidance for compounding pharmacies in handling controlled substances. If so, provide copies of such guidance.
For each drug on both NECC’s recall list and DEA’s list of controlled substances , whether NECC sold each substance (or compounded drug) in compliance with DEA regulations.
For each of the past ten years, a) how many DEA enforcement actions were brought against pharmacies that failed to comply with DEA regulations, and b) for each violation, the name and location of the pharmacy, the identity of the regulation that was violated and the resolution of that action (i.e., registration suspended, fines levied, warning letter, etc.).
A description of enforcement actions that DEA could take against a pharmacy that violates the DEA’s controlled substance regulations (including maximum fines, penalties, or other actions).
Whether the Department of Justice believes that it “has sufficient statutory authority and resources to perform its oversight and enforcement responsibilities with respect to compounding pharmacies” and if not, what recommendations can the Department put forth to strengthen its “capabilities to perform its duties” in this area.
The letter requests a response to all of the above questions by no later than November 2, 2012. Controlled substance compounders (both manufacturers and pharmacies) across the nation await the DOJ’s and DEA’s responses to Congressman Markey’s requests for information concerning what, in most respects, has been a relatively unregulated area of the pharmaceutical industry.
Last week, DEA continued the temporary scheduling of a single synthetic cathinone, methylone (3, 4-methylenedioxy-N-methylcathinone) in Schedule I of the Controlled Substances Act (“CSA”). The temporary scheduling will expire on April 20, 2013, or upon completion of rulemaking proceedings, whichever occurs first. 77 Fed. Reg. 64,032 (Oct. 18, 2012). DEA also initiated rulemaking proceedings to permanently schedule methylone on October 17, 2012. 77 Fed. Reg. 63,766 (Oct. 17, 2012). This represents DEA’s latest step in combatting synthetic drug abuse in response to increased reports of abuse of substances contained in products marketed as “bath salts” and “plant food” and incense. See 76 Fed. Reg. 55,616, 55,617 (Oct. 21, 2011). As previously reported, DEA Administrator Leonhart stated DEA is “committed to targeting these new and emerging drugs with every scientific, legislative and investigative tool at [its] disposal.”
As background, methylone was subject to DEA’s October 2011 final order temporarily scheduling it and two other synthetic cathinones in Schedule I on an emergency basis. See21 U.S.C. § 811(h); 76 Fed. Reg. 65,371 (Oct. 21, 2011). Then, after introduction of the Synthetic Drug Control Act (“SDCA”), Congress permanently scheduled 11 cathinones (including two of the three that DEA had temporarily placed in Schedule I in the October 2011 emergency order) as part of FDASIA. Methylone is the only substance from that order that Congress did not legislatively add to Schedule I when it enacted FDASIA, despite being in earlier drafts of the SDCA. See FDASIA, Pub. L. No. 112-144, § 1152 (2012); 77 Fed. Reg. 64032 (Oct. 18, 2012); H.R. 1254 112th Cong. (2012). See also S. 3189 112th Cong. (2012). DEA continued its synthetic drug war on yet another front through “Operation Log Jam.” On July 26, 2012, the operation seized 167,000 packets of synthetic cathinones (and products to produce an additional 392,000 cathinone products). In additional legislative efforts, in August 2012, a bill was introduced to place 15 cathinones in Schedule I, to include methylone. H.R. 6312, 112th Cong. (2012). The bill was referred to committee but no further action was taken.
It is unclear why methylone was left off of FDASIA’s Schedule I classification, which included other cathinones. It may be because, as lawmakers raised in debates about the SDCA concerning cathinones and other substances generally, it is more difficult to obtain a substance for research purposes (or any purpose) in Schedule I. See 112 Cong. Rec. H8238 (daily ed. Dec. 7, 2011). It appears, based on aggregate quotas that DEA has granted for the substance, that researchers are interested in methylone. See 77 Fed. Reg. 39,737 (July 5, 2012), 77 Fed. Reg. 55,500 (Sept. 10, 2012), 77 Fed. Reg. 59,980 (Oct. 1, 2012). Once scheduled, DEA limits via quotas the aggregate amount of a Schedule I substance that may be manufactured annually, making the product more difficult to obtain. 21 U.S.C. § 826; 21 C.F.R. § 1303.11.
It is significantly more onerous for DEA to pursue a scheduling classification through the rulemaking process than it is for a drug to be scheduled via legislative process. The administrative rulemaking process mandates that the agency procure a scientific and medical report from FDA, conduct a detailed, multifactor analysis, and provide the public an opportunity to comment, unlike the simpler statutory scheduling procedures observed with the passage of FDASIA. See21 U.S.C. § 811.
The scheduling of methylone is not the only scheduling proceeding that DEA could face in the near future. On October 29 and 30th, the FDA will convene a meeting to take public comment on the potential rescheduling of hydrocodone, likely a much more controversial initiative. 77 Fed. Reg. 34,051 (June 8, 2012).
We’ve been following litigation involving the Florida veterinary compounding pharmacy Franck’s Lab, Inc. (“Franck’s”) for a couple of years. We won’t get into all of the case details here – for that, see our previous posts here, here, here, and here – but here’s a summary . . . .
In September 2011, the U.S. District Court for the Middle District of Florida ruled that FDA did not have authority to enjoin the “long-standing, widespread, state-regulated practice of pharmacists filling a veterinarian’s prescription for a non-food producing animal by compounding from bulk substances.” The court reached its decision after wading through the various guidance documents FDA had issued through the years laying out the Agency’s criteria for when it would decline to exercise “enforcement discretion,” and instead initiate enforcement action against a compounding pharmacy. In November 2011, the government appealed that decision to the U.S. Court of Appeals for the Eleventh Circuit. Briefing in the case was completed, several amici weighed in, and oral arguent was scheduled to take place on November 1, 2012.
That’s right . . . we used the past tense in our last sentence.
Our hopes for a decision out of the Eleventh Circuit were dashed when the government and Franck’s filed a Joint Motion to Vacate and Dismiss as Moot that we expect the Court will grant. According to the motion, Franck’s was acquired by Wells Pharmacy Network, LLC (“Wells”) through an asset sale and “no longer engages in compounding and no longer owns or operates the facilities at issue.” “Nor is there any reasonable probability that [Franck’s] will resume the challenged conduct,” and the company “has turned in the permits required by Florida law to operate as a compounding pharmacy, sold all its assets, and terminated all its employees.” Moreover, Paul Franck, the owner of Franck’s and the individual defendant in the case, “is no longer engaged in veterinary compounding of any kind,” “has no intention of reentering that profession in the anticipated future,” and has “executed a seven-year non-competition agreement with Wells,” according to the motion.
Given these circumstances and controlling law (i.e., Laidlaw Envtl. Servs., 528 U.S. 167 (2000)), the parties agreed that the case has become moot and jointly moved the Eleventh Circuit not only to dismiss the appeal, but to vacate the Florida district court’s judgment, and remand the case with instructions to dismiss the complaint.
That’s unfortunate. As Hyman, Phelps & McNamara, P.C.’s Karla L. Palmer and Jeffrey N. Gibbs noted in a Legal Backgrounder published by the Washington Legal Foundation, if the Eleventh Circuit ultimately upheld the Florida federal district court ruling, the implications from such a decision would have extended broadly to other areas of FDA law, particularly as it relates to FDA’s increasing use of guidance documents to expand regulatory requirements (see our previous post here for more on that topic). Why? Because the decision “will be invoked by interested parties seeking to constrain FDA’s use of non-binding guidance documents to define prohibitions against which FDA may take enforcement action or impose new requirements on applicants, and to attack FDA assertions that it is entitled to Chevron deference,” wrote Ms. Palmer and Mr. Gibbs.
It is also unfortunate because an Eleventh Circuit ruling could have brought greater clarity to a contentious issue: whether all compounding is illegal, as FDA has maintained. Given recent developments and the renewed focus on FDA’s authorty to regulate compounding pharamcies (see our previous post here), such a decision would have been particularly timely. C’est la vie! Still, the logic of the district court decison will provide a roadmap for other parties disputing FDA’s use of guidance documents and FDA’s theory that pharmacists violate the law whenever they compound drugs.
Adieu Franck’s. We enjoyed the ride while it lasted.
The Federal Trade Commission (“FTC”) is seeking leave to file a second amicus brief in private antitrust litigation espousing the Commission’s views that a branded drug company’s commitment, as part of a settlement agreement, not to launch an Authorized Generic (“AG”) to compete with a generic version of the product approved under an ANDA – a “no-AG” agreement – constitutes a “payment” under the Third Circuit’s recent decision in In re K-Dur Antitrust Litig., 686 F.3d 197 (3d Cir. 2012). In K-Dur, the Third Circuit rejected the so-called “scope of the patent test” when considering whether patent settlement agreements violate the antitrust laws, and instead applied a “quick look rule of reason” under which “the finder of fact must treat any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market as prima facie evidence of an unreasonable restraint of trade, which could be rebutted by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.” K-Dur did not involve a “no-AG” agreement, but rather a cash payment, and is currently the subject to two Petitions for Writ of Certiorari (Supreme Court Docket Nos. 12-245 and 12-265).
The FTC’s latest amicus brief was filed earlier this month with the U.S. District Court for the District of New Jersey in litigation brought against GlaxoSmithKline (“GSK”) and Teva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals USA, Inc. (jointly, “Teva”) by direct purchasers of certain anti-epileptic drug products containing the active ingredient lamotrigine and marketed by GSK as LAMICTAL. According to the Complaint, GSK and Teva allegedly “delayed generic competition in the markets for Lamictal Tablets and Lamictal Chewables . . . and improperly manipulated the Hatch-Waxman Act to impede, rather than promote, generic competition as intended by the statute.” The direct purchasers allege that GSK and Teva violated Sections 1 and 2 of the Sherman Act when they entered into an agreement providing, among other thing, that GSK would not market an AG of Lamictal Tablets and Lamictal Chewables, and that such agreement was well beyond the exclusionary scope of a now-expired patent listed in the Orange Book for GSK’s lamotrigine drug products and constitutes a naked market allocation agreement.
GSK and Teva have each filed a Motion to Dismiss the case (see here and here), which the direct purchasers have opposed (see here). Both defendants have also filed a Joint Motion to Stay the litigation pending resolution of the appeal of the K-Dur case to the U.S. Supreme Court. The direct purchasers have also opposed that motion (see here). One motion the direct purchasers are unlikely to oppose is the FTC’s motion to file its amicus brief. According to the FTC:
[GSK and Teva] insist that the no-AG commitments cannot be payments under K-Dur. They claim instead that (1) Teva received nothing more than the ability to market its generic product based on a “negotiated entry date,” a type of settlement permitted under K-Dur; and (2) exclusive licenses are not subject to antitrust scrutiny.
Both of Defendants’ claims are incorrect. First, Teva received more than the right to enter on a negotiated entry date – it is undisputed that it also received commitments that GSK would not market AG versions of the two Lamictal products. As such, they guaranteed that Teva would be protected from generic competition on each of its generic Lamictal products for at least six months. In the unique context of the Hatch-Waxman Act, such commitments are often quite lucrative to the generic. Thus, as with the cash payment in K-Dur, it is logical to conclude that each of these commitments could have acted as the quid pro quo for Teva to accept a later entry date than it otherwise would have.
Second, while in many contexts exclusive patent licenses may be procompetitive, they are not necessarily so, nor are they immune from antitrust scrutiny. . . . In direct contravention of the Third Circuit’s holding in K-Dur, both of Defendants’ arguments rely on superficial labels rather than the actual substance of the agreements at issue. Although GSK and Teva effected the no-AG commitments through exclusive licenses, the legal form of the agreements does not alter the “economic realities,” which is the required focus of the Third Circuit’s rule.
The FTC’s proposed amicus brief is quite similar to the amicus brief the Commission proposed to file in private antitrust litigation concerning Wyeth Pharmaceuticals Inc.’s anti-depressant drug EFFEXOR XR (venlafaxine HCl) Extended-release Tablets. As in the LAMICTAL case, one issue in the EFFEXOR case is whether a “no-AG” agreement constitutes a “payment” under the Third Circuit’s ruling in K-Dur. The EFFEXOR case is also before the U.S. District Court for the District of New Jersey, but with a different judge. Interestingly, just three days before the FTC filed its motion for leave to file its brief in the LAMICTAL case, Judge Joel A. Pisano denied the FTC’s motion for leave to file its amicus brief in the EFFEXOR case. In denying the FTC’s motion, Judge Pisano found that “the FTC has not expressed an interest that is not represented competently in this case,” and that “the extent to which the FTC is partial to a particular outcome weighs against granting the agency’s motion.” Will Judge William H. Walls, who is presiding over the LAMICTAL litigation, come out the same way? Stay tuned.
A bipartisan group of thirteen congressional representatives penned a letter to Administrator Michele Leonhart last week requesting “clarification, guidance and collaboration” about the Drug Enforcement Administration’s (“DEA’s”) efforts to combat prescription drug abuse. While voicing strong support of DEA’s efforts to fight prescription drug abuse, the letter states that recently “pharmacies across the country have identified a disturbing trend that is threatening the ability of legitimate patients from getting needed, lifesaving prescription drugs.” It states that small pharmacies have experienced difficulty obtaining certain controlled substances because wholesalers have severely limited or shut off sales. The representatives expressed concern “that inconsistent interpretation and application of DEA policies, and a lack of clear guidance and communication from DEA to supply chain stakeholders, are leading to patient care issues and supply chain disruption.”
The letter highlights the ongoing issues created by DEA’s failure to clearly define the requirements for identifying and reporting suspicious orders. Couple this with aggressive government enforcement and the result is that manufacturers and distributors have needed to be ultra-conservative in decisions on distributing controlled substances. It is understandable that the impact has been that certain pharmacies in certain areas of the country have had difficulty obtaining needed medicines. Rather than continuing to rely on ad hoc guidance, DEA should engage the industry in a negotiated rulemaking to establish clear and concise standards for suspicious orders to protect against diversion while ensuring legitimate DEA registrants are able to obtain the needed medicines.
Prescription drug abuse is this nation’s fastest growing drug problem and DEA has considered innovative methods to combat it. The expanded role of pharmacies, distributors and manufacturers as controlled substance gatekeepers is a continuously evolving one. As the lawmakers’ letter asserts, improved communication between DEA and pharmacies, distributors and manufacturers “will ensure that these stakeholders understand and perform their legal and ethical responsibilities and will result in less prescription drug abuse.” Clarification, guidance and collaboration, and administrative rulemaking addressing these issues will also help ensure that legitimate patients have access to needed medication.
A few weeks ago, we posted on a decision by a divided three-judge panel of the D.C. Circuit Court of Appeals vacating FDA’s regulations that require graphic warnings on cigarette packages (see here). FDA has now petitioned the D.C. Circuit Court of Appeals for rehearing and rehearing en banc.
The petition draws heavily on the administrative record and the dissent to the panel’s decision to argue that the proposed graphic warnings are an effective means of conveying the health risks of smoking, and “directly advance a crucial government interest” without imposing undue burdens on industry. Rejecting the majority’s characterization of the warnings as “subjective – and perhaps even ideological,” the petition contends that the “extraordinary health risks identified in the warning text are indisputably accurate, and substantial evidence shows that the graphics help to ensure that this accurate health risk information is noticed and understood.” The petition further argues that the majority erred in considering the images selected by the agency divorced from their accompanying text, and that the fact that the images “’evoke emotion… does not mean that the health warnings are inaccurate.” The petition closes with a flourish borrowed from the dissent:
[N]othing in the Supreme Court’s commercial speech precedent would restrict the government to conveying these risks in ways that have already proved ineffective or would prohibit the government from employing the communication tools tobacco companies have wielded to great effect over the years.
We’ll continue to monitor this case as it inches closer to the Supreme Court.
The U.S. Pharmacopeial Convention (“USP”) recently announced at an Awards and Recognition Program for USP Expert Volunteers that the 2012 USP Award for an Innovative Response to Public Health Challenges went to the Food Ingredients Expert Committee. Hyman, Phelps & McNamara, P.C. Director Diane B. McColl is a member of the Food Ingredients Expert Committee, which is chaired by Andrew Ebert, Ph.D., and is responsible for the development and revision of monographs and their associated USP Reference Standards for food ingredients. The award is presented to a USP standards-setting body in recognition of efforts in addressing a special public health need or challenge. The Food Ingredients Expert Committee was selected for its outstanding work and exemplary leadership in transitioning the Food Chemicals Codex (“FCC”) from the Institute of Medicine to USP.
USP Council of Experts Chairman, Roger L. Williams, M.D., said that the “Food Ingredients Expert Committee not only provided its expertise and guidance for the transition of FCC to USP, but also ensured its growth and continuity as the leading international compendium of food ingredient standards.” Furthermore, commented Dr. Williams, the “Food Ingredients Expert Committee guided USP staff in a significant expansion of the scope of the FCC to include new and novel ingredients essential in keeping the FCC relevant to all stakeholders worldwide as well as specifically addressing the public health challenge of food adulteration. The Food Ingredients Expert Committee exemplified the volunteer spirit that defines USP’s commitment to address public health challenges.”
Congratulations to Diane and the other members of the Food Ingredients Expert Committee on their significant accomplishment.
It was 50 years ago today (October 10th) that President John F. Kennedy signed into law the Kefauver-Harris Amendments of 1962, Pub. L. No. 87-781, 76 Stat. 780 (1962), which amended the 1938 FDC Act to require, among other things, proof of the effectiveness of a drug product before approving it. FDA has been celebrating the anniversary with some wonderful historical information and storyboards (see here).
The Kefauver-Harris Amendments forever changed the way new drugs are approved and regulated in the United States. Like many significant changes to the FDC Act, the Kefauver-Harris Amendments were prompted by a tragedy. In 1961, as FDA was reviewing an NDA for the sedative drug KEVADON (thalidomide) for morning sickness, reports surfaced from Europe where the drug was approved that thousands of children whose mothers were taking the drug during pregnancy were born with severe birth defects. The thalidomide tragedy fueled the passage and enactment of the 1962 Drug Efficacy Amendments. (Coincidentally, October 11th is the 75th anniversary of the date on which the American Medical Association received a report of several deaths caused by Elixir Sulfanilamide, which led to the enactment of the FDC Act in 1938 requiring that new drugs be show safe.)
Fast-forward 50 years and we once again find ourselves faced with a tragedy – an outbreak of fungal meningitis caused by a reportedly contaminated injectable steroid prepared (see here and here). According to press reports, the contaminated injectable has already resulted in more than 10 deaths (and more than 100 confirmed cases). And, not surprisingly, there have been calls for changes to the law. Although what’s different this time is that 50 years ago FDA lacked specific legal authority to require proof of efficacy; in 2012, FDA would assert that it has the authority to take action against compounders, but uses it only at its discretion.
For years, FDA has struggled to establish an enforcement mechanism with respect to compounded pharmaceutical products that passes muster with Congress and the courts, as well as with FDA’s own resource constraints. We won’t recount the long history of compounding here, or FDA’s enforcement (or non-enforcement) of its compounding policies. We note, however, that there have been several cases in recent years, including the Franck’s Lab compounded veterinary drug case – see here – and the recent lawsuit over MAKENA and compounded 17p – see here – that show an inconsistent FDA posture. Under current FDA policy (Compliance Policy Guide 460.200 – Pharmacy Compounding), the Agency does not permit pharmacy compounding of drugs that are commercially available and approved by FDA, but exercises discretion in deciding whether or not to take enforcement action. Perhaps the breadth of FDA’s assertion of authority was best expressed in the Franck’s Lab case, where the Agency contended that the 1938 FDC Act prohibits all pharmacy compounding, which industry practice has continued only as a matter of FDA’s unreviewable enforcement discretion. Thus, according to FDA, when Congress enacted the FDC Act in 1938, it “quietly criminalized” all pharmacy compounding practices, yet had exercised enforcement discretion for decades. At the same time, FDA has acknowledged that pharmacy compounding is medically essential. Hyman, Phelps & McNamara, P.C. Director Jeff Gibbs discussed FDA’s oversight of compounding pharmacies and the current tragedy on The Diane Rehm Show on October 10th (see here).
Enter the legislators . . . .
Now that compounding is front page news, there are calls from Congress to strengthen FDA’s oversight of compounding pharmacies. Multiple letters were sent to FDA earlier this week saying that there is a clear and present need for stronger accountability and oversight, and querying the Agency about current regulations and oversight practices, including letters from Senator Richard Blumenthal (D-CT) (here) and Representative Ed Markey (D-MA) (here).
But that was only the beginning. Several members of the House Energy and Commerce Committee have now requested an investigation and hearings on the meningitis outbreak. The calls for legislative reform are also streaming in. Reps. Markey and Rosa DeLauro (D-CT) have separately stated their plans (here and here) to introduce legislation to require greater oversight by FDA of compounding pharmacies. Public Citizen has also entered the fray, saying in a press release that “Congress should conduct an investigation into this tragic situation and hold oversight hearings as soon as possible,” and that “Congress should act immediately to pass legislation” if there are holes in FDA’s existing legal authority.
We’re likely to see increasing interest in and calls for legislation as the fallout from this tragedy builds.
In a Complaint recently filed in the U.S. District Court for the District of New Jersey, Actelion Pharmaceuticals Ltd. and Actelion Clinical Research, Inc. (collectively “Actelion”) seek declaratory relief that Actelion is under no duty or obligation to supply prospective ANDA applicants, Apotex Corp. (“Apotex”) and Roxane Laboratories, Inc. (“Roxane”), with TRACLEER (bosentan) Tablets for purposes of bioequivalence testing and ANDA submission. TRACLEER is approved with a Risk Evaluation and Mitigation Strategies (“REMS”) program with Elements To Assure Safe Use (“ETASU”) because of the potential of the drug to cause serious side effects (see here). The REMS limits distribution of the drug through pharmacies, practitioners, and health care settings that are specially certified and that are “bound by contract to follow a strict protocol to monitor and protect patient health,” acording to Actelion. A prior case, brought by a prospective ANDA sponsor, that raised issues with providing a restricted distribution brand-name drug to an ANDA sponsor for biostudy purposes was eventually dismissed (see here). The Actelion case is the first preemptive strike by a brand-name company whose drug product is covered by an ETASU REMS. An on-the-merits decision would be the first of its kind since the REMS provisions were added to the FDC Act by the 2007 FDA Amendments Act (“FDAAA”).
According to Actelion, the lawsuit “concerns the fundamental right of a business to choose for itself with whom to deal and to whom to supply its products.” Apotex and Roxane both sent correspondence to Actelion seeking TRACLEER sample for use in bioequivalence testing. After Actelion refused to provide drug sample to Apotex and Roxane, “maintaining its right to choose with whom it does business” and citing certain REMS compliance issues, Apotex and Roxane allegedly threatened Actelion with antitrust litigation and with notifying the Federal Trade Commission (“FTC”). Instead of waiting for the other shoe to drop, Actelion took a proactive approach and sued the generic companies, saying that “Apotex and Roxane are seeking to force Actelion to supply them with product, turning well-settled law, not to mention basic free-market principles, on their head,” and that “Apotex’s and Roxane’s demands would also require Actelion to violate its regulatory obligations.”
In its Complaint, Actelion notes, among other things, that there is no provision in the FDC Act that the owner of a drug subject to an ETASU REMS is required to provide product sample upon the request of a potential generic competitor. Indeed, to the contrary, says Actelion, Congress twice rejected legislation to address the sale of product under a REMS to generic drug sponsors – once in 2007 when Congress was considering REMS legislation, and another time earlier this year when Congress was debating what provisions to include in the FDA Safety and Innovation Act (“FDASIA”).
As we previously reported, Section 1131 of the FDASIA bill as passed by the Senate would have amended FDC Act § 505-1 to state, among other things, that:
Notwithstanding any other provision of law, if a drug is a covered drug, no elements to ensure safe use shall prohibit, or be construed or applied to prohibit, supply of such drug to any eligible drug developer for the purpose of conducting testing necessary to support an application under [FDC Act § (b)(2) or § 505(j) or PHS Act § 351(k)] if the Secretary has issued a written notice described in paragraph (2), and the eligible drug developer has agreed to comply with the terms of the notice.
Even that language, which stopped short of requiring sale of a brand name drug to a generic competitor, was not enacted. Instead, current law merely states that “[n]o holder of an approved covered application shall use any element to assure safe use required by [FDA] under [FDC Act § 505-1(f)] to block or delay approval of an application under section 505(b)(2) or (j) or to prevent application of such element under [FDC Act § 505-1(i)(1)(B)] to a drug that is the subject of an [ANDA].”
FDA, for its part, has largely remained silent on the issues raised in the Actelion Complaint. In June 2009, Dr. Reddy’s Laboratories, Inc. submitted a citizen petition (Docket No. FDA-2009-P-0266) requesting that FDA “establish procedures to facilitate the availability of generic versions of drug products subject to a [REMS] and enforce the FDC Act to prevent companies from using REMS to block or delay generic competition.” FDA has not substantively responded to the petition.
FDA merely includes the following statement into REMS approval letters: “We remind you that section 505-1(f)(8) of FDCA prohibits holders of an approved covered application with elements to assure safe use from using any element to block or delay approval of an application under section 505(b)(2) or (j). A violation of this provision in 505-1(f) could result in enforcement action.” FDA does not comment on what sorts of actions the Agency might construe as use of an ETASU element to block or delay approval. FDA has also in at least one recent draft bioequivalence guidance stated, consistent with previous FDA-ANDA sponsor correspondence, that the Agency would be willing to notify the sponsor of the brand-name Reference Listed Drug (“RLD”) that the Agency has received sufficient assurance that the generic drug sponsor’s bioequivalence studies “will be conducted in such a manner as to ensure the safety of the subjects, and that the sponsor of the RLD may provide the sponsor of the BE studies or their agent with [sufficient drug product sample] for the purpose of conducting bioequivalence (including dissolution) testing.” Such language falls short of compelling sale. Absent Congress weighing in on the matter with legislation, debate over the next step in the process – supplying the product – will be an issue for the courts to address.
Under FDA’s regulations (10 C.F.R. § 10.75), the decision of an FDA employee (other than the Commissioner) is subject to supervisory review in four circumstances: (1) when an employee so requests; (2) when a supervisor initiates review; (3) when an interested person outside the agency so requests; and (4) when delegations of authority so require. Id. § 10.75(a)(1)-(4). Those in industry know, of course, that appeals can be triggered by interested persons outside the agency (circumstance #3, above). But there also can be appeals pursuant to an employee’s request (circumstance #1, above).
On September 4, 2012, CDRH released internal Standard Operating Procedures ("SOP"), titled "Resolution of Internal Differences of Opinion in Regulatory Decision-Making," to explain how to resolve internal differences of opinion in making regulatory decisions, implementing 21 CFR § 10.75 “for internal review of CDRH decisions, as it applies to supervisory review of regulatory decisions on the initiative of Center employees in the process of reaching those decisions.”
One can imagine such appeals occurring in a situation where an employee vehemently disagrees with a decision either favorable or unfavorable to a firm. Thus, those in industry do have some stake in the procedure governing FDA internal appeals.
Interestingly, the SOP permits an employee to approach CDRH’s Ombudsman to discuss the situation if the employee is uncomfortable with approaching management. The SOP gives the Ombudsman three additional duties: (1) reviewing the dispute (called the “Initiation Memo”), and determining if the dispute moves up the chain to higher management or if it is dead in the water; (2) suggesting alternative ways to resolve the dispute beyond the formal SOP procedures; and (3) if he sees fit, activating accelerated dispute review when an initiator believes the dispute “may have a significant and immediate impact on the public health.” None of these duties are in his job description, at least according to FDA’s website, which says the Ombudsman’s duty is to investigate “complaints from outside FDA and [facilitate] the resolution of disputes between CDRH and the industry it regulates” (emphasis added). On the other hand, making use of the Ombudsman in sensitive internal disputes does likely fall within the Ombudsman’s core competency.
Also interesting in the SOP is its allowance for use of outside experts in resolving disputes. “Reference to outside expertise may consist of an advisory panel meeting or a homework assignment to selected Special Government Employees (SGEs) with relevant expertise.” This use of outside experts could potentially conflict with 21 CFR § 10.75(d), which states: “Internal agency review of a decision must be based on the information in the administrative file. If an interested person presents new information not in the file, the matter will be returned to the appropriate lower level in the agency for reevaluation based on the new information.” Thus, it would seem possible that bringing in an outside expert to lend his or her expertise to resolve a dispute—a dispute of scientific, clinical, or regulatory opinion—would be “new information not in the file,” such that the issue should be bumped back down the chain and reevaluated, as opposed to the up-the-chain review prescribed in the SOP.
FDA might argue that “interested person” refers to an interested person “outside the agency” and that the requirement does not apply to internal employee appeals. However, the phrase “interested person outside the agency” appears elsewhere in this short supervisory appeals regulation, but not here. Thus, it could be argued that FDA knew how to specify whether an interested person was within or outside the agency, and in this case, did not limit the “no new information” requirement to persons outside the agency.
Just weeks after Federal Trade Commssion (“FTC”) Chairman Jon Leibowitz signaled in a speech that the Commission would appeal to the U.S. Supreme Court the U.S. Court of Appeals for the Eleventh Circuit’s April 2012 ruling (and subsequent July 2012 denial of the FTC’s Petition for Rehearing en banc) affirming a February 2010 decision by the U.S. District Court for the Northern District of Georgia largely dismissing multidistrict litigation brought by the FTC (and certain private plaintiffs) challenging certain drug patent settlement agreements in which Solvay Pharmaceuticals, Inc. (“Solvay”) allegedly paid some generic drug companies to delay generic competition to Solvay’s drug product ANDROGEL (testosterone gel) (see our previous posts here and here), the FTC filed a Petition for Writ of Certiorari asking the U.S. Supreme Court to take up the case (Supreme Court Docket No. 12-416).
In Androgel, the FTC filed a Complaint (originally filed in the U.S. District Court for the Central District of California) alleging that Solvay and certain generic drug companies violated various federal antitrust laws when they agreed to dismiss patent infringement litigation on U.S. Patent No. 6,503,894 in exchange for a profit-sharing arrangement and provided the generic competitors would not launch their generic versions of ANDROGEL until 2015. The Georgia District Court, in granting the defendants’ Motion to Dismiss, found that the settlements are not an unreasonable restraint of trade under applicable law and that the FTC failed to state an antitrust claim. In affirming the district court decision, the Eleventh Circuit held that, “absent sham [patent] litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” In late September, the Georgia District Court dismissed the remaining claims in the case brought by the private plaintiffs concerning sham patent infringement litigation and concluded that they were not objectively baseless as a matter of law.
The FTC’s Petition comes in the wake of two other Petitions for Writ of Certiorari (Supreme Court Docket Nos. 12-245 and 12-265) asking the U.S. Supreme Court to review the July 2012 decision by the U.S. Court of Appeals for the Third Circuit in In Re: K-DUR Antitrust Litigation. In that case, and in contrast to the Androgel decision, the Court rejected the so-called “scope of the patent test” when considering whether patent settlement agreements violate the antitrust laws, and instead applied a “quick look rule of reason” (see our previous posts here and here). Under that analysis, “the finder of fact must treat any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market as prima facie evidence of an unreasonable restraint of trade, which could be rebutted by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.”
The K-Dur Petitions have already drawn significant attention. Amicus briefs have been filed by PhRMA, GPhA, the Washington Legal Foundation, Bayer Corporation, and the New York Intellectual Property Law Association (available here, here, here, here, and here). Our friends over at Patent Docs have taken a close look at several of the amicus briefs in posts over the past couple of weeks.
In its Androgel Petition, the FTC presents the following question to the U.S. Supreme Court, juxtaposing the Androgel and K-Dur decisions: “Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the [Eleventh Circuit] held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit held).” In arguing for Supreme Court review, the FTC launches into why Androgel was wrongly decided:
The decision below is incorrect. In the Eleventh Circuit’s view, a reverse-payment agreement is lawful unless it imposes greater restrictions on generic competition than would a judicial ruling that the brand-name manufacturer’s patent is valid and infringed. That approach effectively equates a brand-name manufacturer’s allegation of infringement with a judgment in the manufacturer’s favor. But defendants oftent prevail in patent-infringement suits; the Hatch-Waxman Amendments are designed to facilitate judicial resolution of validity and infringement issues in the generic-drug context; and the federal antitrust laws flatly prohibit potential competitors from forming naked agreements not to compete. The anticompetitive potential of reverse-payment agreements – which are estimated to cost consumers billions of dollars annually – is sufficiantly clear that they should be treated as presumptively unlawful under the federal competition laws. [(Emphasis in original.)]
The FTC puts forth several reasons why Supreme Court review is warranted and says that Androgel “is a superior vehicle for addressing the question presented because it is brought by an agency charged by Congress with challenging unfair methods of competition, and it comes to the Court in the straightforward posture of a final judgment following the dismissal of the FTC’s complaint for declaratory and injunctive relief.”
These are the same reasons cited by FTC Commissioner J. Thomas Rosch in a speech given prior to the filing of the FTC’s Androgel Petition. In that speech, Commissioner Rosch shared his views as to what he believes are the six reasons the Supreme Court, despite having declined several prior Petitions on drug patent settlement cases, will grant certiorari in either or both of the K-Dur and Androgel cases, and why Androgel is better postured for Supreme Court review. According to Commissioner Rosch:
[T]he Androgel case would be the better vehicle for Supreme Court review of the pay-for-delay issue. First, the case was decided on a motion to dismiss so it presents a pure issue of law. In contrast, the K-Dur decision was decided on summary judgment. Second, the Eleventh Circuit’s decision was a final judgment; the Third Circuit’s decision was not. Further proceedings in the K-Dur case could help clarify the application of the Third Circuit’s new test. Third, the Androgel case was brought by one of the two federal agencies charged with protecting consumer interests through the enforcement of the antitrust laws. The K-Dur case was brought by private plaintiffs, and the FTC’s role has been limited to that of an amicus.
Commissioner Rosch also said that he expects Congress to remain relatively quiet on drug patent settlement legislation . . . at least until there is something out of the Supreme Court. “[I]f and when the Court rules on the issue, there is likely to be a strong push by the losing side for legislation to overturn the Court’s decision,” said Commissioner Rosch.
In other drug patent settlement news, we note that the U.S. District Court for the District of New Jersey recently denied the FTC’s motion for leave to file an amicus brief (see our previous post) in private antitrust litigation concerning Wyeth Pharmaceuticals Inc.’s anti-depressant drug EFFEXOR XR (venlafaxine HCl) Extended-release Tablets. One issue in that case is whether a branded drug company’s commitment not to launch an Authorized Generic (“AG”) to compete with a generic version of the product approved under an ANDA constitutes a “payment” under K-Dur. The FTC’s proposed amicus brief stated that a “No-AG” agreement is a “convenient method” for brand-name drug companies to pay generic patent challengers to delay their entry into the market, and that the Third Circuit’s K-Dur decision should not be limited to overt cash payments. In denying the FTC’s motion, the New Jersey District Court found that “the FTC has not expressed an interest that is not represented competently in this case,” and that “the extent to which the FTC is partial to a particular outcome weighs against granting the agency’s motion.”
Finally, in recent closing letters (here and here), the FTC concluded that “no further action is warranted” as a result of the Commission’s nonpublic investigation to determine whether certain companies engaged in any unfair methods of competition that violate the FTC Act by entering into agreements regarding the oral contraceptive drug products YASMIN and YAZ containing drospirenone and ethinyl estradiol.
