By Kurt R. Karst –      

In a lawsuit filed in the U.S. District Court for the District of Columbia, Florida-based Hill Dermaceuticals, Inc. (“Hill”) is seeking declaratory and injunctive relief after FDA approved, on October 17, 2011, three ANDAs submitted by Identi Pharmaceuticals Inc. (“Identi”) – ANDA Nos. 091306, 201759, and 201764 – for AT-rated generic versions of Hill’s peanut-oil containing fluocinolone acetonide drug products Derma-Smoothe/FS Topical Oil, 0.01% (Scalp Oil and Body Oil) and Derm-Otic Oil Ear Drops, 0.01%, which are approved under NDA No. 019452 to treat certain moderate to severe skin conditions, such as eczema and atopic dermatitis.  Copies of the Complaint and Motion for a Preliminary Injunction are available here and here. 

The lawsuit comes more than two years after FDA partially granted and denied a citizen petition submitted by Hill in September 2004 (Docket No. FDA-2004-P-0215) requesting that FDA, in light of the “novel and innovative application and delivery systems” of Derma-Smoothe, withhold approval of any ANDA unless certain requirements are met concerning active ingredients, conditions of use, labeling, bioequivalence, and chemistry, manufacturing and controls.  Among other things in the petition decision, FDA, in response to Hill’s requests that the Agency require ANDA sponsors to set an upper limit for the amount of peanut protein that can be present in the vehicle and to demonstrate that their peanut oil meets this specification by using a test that is “validated and capable of quantifying very low levels of peanut protein,” stated that “[g]iven the gap between the quantity of orally administered peanut proteins required to cause an allergic reaction and the level of peanut proteins left in fully refined peanut oil, it is reasonable to conclude that the USP NF refining process reduces peanut protein to acceptable levels for the indications in question.”  Hill also requested that FDA categorically reject any request from an ANDA sponsor for a waiver of in vivo bioequivalence testing (i.e., “biowaiver”) for a generic Derma-Smoothe drug product.  FDA denied this request, stating that the Agency could grant a biowaiver because Derma-Smoothe “is a solution for purposes of 21 C.F.R. § 320.22(b)(3).”

FDA decided Hill’s citizen petition more than a year after the D.C. District Court denied Hill’s motion for a stay to prevent the approval of any ANDAs for generic Derma-Smoothe until FDA issues a substantive response to Hill’s September 2004 citizen petition.  At that time, the court stated that Hill “would have an opportunity to seek emergency relief from this Court once the FDA denied its citizen petition and improperly approved an ANDA.” 

Hill’s five-count Complaint alleges that FDA’s approval of the Identi ANDAs violates various provisions of the FDC Act and the Administrative Procedure Act (“APA”).  For starters, Hill alleges that contrary to the statutory requirement at FDC Act § 505(j)(2)(A)(v) that the labeling for a generic drug be “the same” as the labeling approved for the brand-name, reference listed drug relied on for approval, “the generic forms of fluocinolone acetonide that FDA has approved will almost certainly include labeling that is substantially different from the labeling used on Hill’s products.  In particular, the generic labeling cannot be the same as the labeling on Hill’s products because Identi’s products have not been subjected to the same tests that FDA has required Hill to perform to protect against serious risks associated with peanut allergies.”  And even if the Hill and Identi drug products do have the same labeling, says Hill, “then the generic drug is misbranded” under the FDC Act.  According to Hill:

[I]f the labeling for Identi’s products includes the same representation as the FDA-approved labeling for Hill’s products – namely, “that the, product is routinely tested for peanut proteins through amino acid analysis; the quantity of amino acids is below 0.5 parts per million (PPM)” – that would not be a truthful statement.  In addition, because the labeling does not provide accurate information about the quantity of residual peanut protein and suggests that Identi’s products have been tested in the same manner as Hill’s products, the labeling omits material facts and lacks adequate information for use.  Accordingly, because the labeling for Identi’s products are false and misleading and otherwise do not comply with the statutory requirements, the purported generic drugs are misbranded and may not be sold or marketed.

Moving on to the APA, Hill alleges that FDA violated the law by not treating like cases alike and by imposing arbitrary and unequal burdens on similarly situated parties.  “FDA has violated these settled principles of reasoned decision-making by, on one hand, compelling Hill to invest millions in developing and performing a proprietary test to determine and control the quantity of residual peanut proteins in its products on an ongoing basis and, then, on the other hand, not requiring generic manufacturers to satisfy the same onerous and important testing requirements,” says Hill in its Motion for a Preliminary Injunction.

Finally, Hill alleges that FDA violated the FDC Act in approving Identi’s ANDAs without adequate testing data:

[T]he FDCA requires applicants seeking to obtain approval through the ANDA process to demonstrate that the purported generic product is bioequivalent to the approved.  Identi cannot satisfy that requirement because its products have not undergone adequate testing. . . .  Nor do Identi’s products satisfy the regulatory criteria for waiving the requirement that Identi establish in vivo bioequivalence.  The products manufactured by Hill are topical oils and do not qualify as “solutions” subject to the limited biowaiver exception under 21 C.F.R. § 320.22(b)(3)(i).  Similarly, the products do not fall within the catch-all provision for products in a “similar other [solubilized] form.”  [(Citations omitted)]

Hill is seeking from the DC District Court declaratory and injunctive relief, including the entry of a preliminary and permanent injunction directing FDA to withdraw or suspend the Identi ANDA approvals, require Identi to conduct in vivo bioequivalence testing and to use the “same labeling” before approving such ANDAs, and to take any action necessary “to prevent the marketing and distribution of purported generic products that are not bioequivalent to, and do not use the same labeling as,” the Derma-Smoothe product line. 

By Carmelina G. Allis –

A persistent industry complaint is that CDRH too often changes data requirements in the middle of a review, or requires data for a new device that was not required for predicate devices.

It appears that CDRH has taken a step toward addressing this complaint.  A new SOP issued by FDA’s Center for Devices and Radiological Health (“CDRH”) tries to define the responsibilities of management when CDRH review staff has identified the need to make changes in data requirements from what was requested in other premarket submissions or previous communications with a manufacturer.  “[W]hen staff become[] aware of new information that may alter the information and data required for premarket review [for a generic category of devices], they should receive concurrence from the appropriate management level before taking any action.”

Concurrence from the branch chief should be obtained for data requests that apply to a single device based on specific issues applicable to that particular device, or that are deemed necessary to support a new indication or new technology that is different from the predicate.  If the data request is for clinical studies, then the branch chief should take the matter to the division level for concurrence.  In addition, division level sign-off should be obtained for situations where animal testing is imposed as a new requirement, or non-clinical data are required because of new information obtained by the agency about the device type (e.g., device failures).  Division sign-off should also be required for “minor” changes to a clinical study, such as minor adjustments to an endpoint, and for changes that impact devices in other branches within the same Division.

Concurrence from the CDRH Office of Device Evaluation would be required for situations where the changes to data requirements would affect multiple branches and/or divisions, where the request would diverge from statements in a guidance document or pre-submission with the sponsor, or the request would impose major changes to an ongoing clinical study (e.g., requiring a new clinical study, changes from a single arm to a randomized study, etc.).  Concurrence from CDRH’s Center Science Council would be required for circumstances where the data requirements are to change significantly from what was previously requested, such as asking for clinical data when such studies had not been requested in the past.

The SOP clearly emphasizes the importance of obtaining written concurrence (e.g., via email) from the appropriate management level prior to implementing the change in data requests.

It is apparent from this SOP that manufacturers will not be included in the decision process – that is, the decision to change data requirements will be implemented if the appropriate manager concurs with the change, but nowhere does the SOP require that the decision-making process weigh in the manufacturer’s opinion on the matter.  Prior public notice, such as in the form of guidance or rulemaking, will be pursued as deemed necessary, such as for changes in data requirements applied across a class of products.

Obviously, the impact of this new SOP remains to be seen, but it is a step in the right direction.

By Riëtte van Laack –

On November 8, 2011, Senator Durbin and Representative Waxman requested that the U.S. Government Accountability Office ("GAO") determine how the adverse event reporting ("AER") for dietary supplements system is working.  Since December 22, 2007, pursuant to the Dietary Supplement and Nonprescription Drug Consumer Protection Act, manufacturers, packers, and distributors of dietary supplements in the United States have been required to report information about serious AERs to FDA.  Congress requested that GAO collect information about the AERs reported thus far, e.g., number of AERs, dietary supplements associated with AERs, nature of AERs and who submits AERs.  In addition, GAO is to report on FDA’s efforts to ensure compliance with the law requiring serious AER reporting and whether, and to what extent, FDA has implemented the recommendations GAO made in its 2009 report.

By Kurt R. Karst –  

Politico recently published an opinion piece authored by Federal Trade Commission (“FTC”) Chairman Jon Leibowitz, who is up for reappointment for a second term on the Commission, in which he stated he wanted to throw in his “two cents” on how Congress (and specifically the Joint Select Committee on Deficit Reduction – a.k.a. the “Super Committee”) can work to reduce the deficit “by billions of dollars, put billions more back in consumers’ pockets and cut health care costs for businesses that create new jobs – all without any new taxes or cuts in government programs.”  How?  Yes, you guessed it – by curbing patent settlement agreements (or what opponents refer to as “pay-for-delay” or “reverse payment” agreements).  The opinion piece came out shortly after the FTC the announced the release of its annual summary of agreements filed with the Commission during Fiscal Year 2011 saying that “pharmaceutical companies continued a recent anticompetitive trend of paying potential generic rivals to delay the introduction of lower-cost prescription drug alternatives for American consumers.”  (See our previous post here.)

The Congressional Budget Office (“CBO”) recently estimated that the enactment of the Preserve Access to Affordable Generics Act (S. 27) “would reduce unified budget deficits by approximately $1.4 billion over the 2012-2016 period and by nearly $4.8 billion over the 2012-2021 period.”  In January 2010, the CBO initially estimated that an essentially identical version of the Preserve Access to Affordable Generics Act considered by the last Congress (S. 369) “would reduce unified budget deficits by approximately $0.8 billion over the 2010-2014 period and by roughly $2.0 billion over the 2010-2019 period.”   That estimate was updated to reflect the passage of the Affordable Care Act.

Chairman Leibowitz’s Politico piece drew sharp criticism from another FTC Commissioner, J. Thomas Rosch.  In a response published by Politico, Commissioner Rosch stated that he does not think the Preserve Access to Affordable Generics Act should be tacked onto any piece of legislation, but rather, should stand or fall on its own merits.  Moreover, “[a]ny projected savings [from the legislation] are inherently speculative,” wrote Commissioner Rosch. 

Commissioner Rosch also took the opportunity to once again express his disagreement with the “clear and convincing” evidence standard in the Preserve Access to Affordable Generics Act.  The bill would, among other things, amend the FTC Act to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 28] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product.”  Such agreements, if challenged, would be presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”  According to Commissioner Rosch, “[t]his heightened standard of proof has not been required in other types of settlements.  Indeed, the parties arguably should bear only the burden of producing some evidence justifying their settlement, and the commission arguably should always bear the burden of proving that the settlement is anticompetitive.”  His comments echo those he made during a speech earlier this year at the Sixth Annual In-House Counsel Forum on Pharmaceutical Antitrust, and that are shared by some Members of Congress (see our previous post here).

Hyman, Phelps & McNamara, PC, the nation’s largest boutique food and drug regulatory law firm, is seeking a recent law school graduate or junior attorney with prior experience in the pharmaceutical or biotech industries in either clinical or regulatory affairs.  Excellent academic credentials and strong writing skills are required.  Scientific or technical background would be desirable.  Compensation is competitive and commensurate with experience.  HPM is an equal opportunity employer.

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

By Kurt R. Karst –   

On November 15th, the U.S. Court of Appeals for the Federal Circuit will hear oral argument in Medicines Co. V. Kappos et al., Case No. 2010-1534, perhaps starting (or ending) another chapter in the saga over a Patent Term Extension (“PTE”) for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering The Medicines Company’s (“MDCO’s”) ANGIOMAX (bivalirudin).

As we previously reported, Section 37 of the Leahy-Smith America Invents Act (“AIA”) (Pub. Law No. 112-029), titled “Calculation of 60-Day Period for Application of Patent Term Extension” and referred to by some as “The Dog Ate My Homework Act” or the “Medco fix,” amended the PTE statute at 35 U.S.C. § 156(d), and was intended to legislatively resolve MDCO’s PTE battle.  Section 37 effectively codify Judge Claude M. Hilton’s August 3, 2010 decision in The Medicines Company v. Kappos, 731 F. Supp. 2d 470 (E.D. Va. 2010), in which Judge Hilton ordered the Patent and Trademark Office (“PTO”) to consider timely filed MDCO’s PTE application for the ‘404 patent under a next business day interpretation of the PTE statute.  (As folks might recall, FDA approved ANGIOMAX at 5:18 PM on Friday, December 15, 2000, and MDCO submitted its PTE application to the PTO on February 14, 2001 – 62 days after NDA approval, including the December 15, 2000 date of approval.)

We previously reported that shortly after the enactment of the AIA, MDCO sent a letter to the U.S. Court of Appeals for the Federal Circuit notifying the Court of the enactment of Section 37 and asserting that it resolves the merits of the ongoing ‘404 patent PTE litigation with ANDA sponsor APP Pharmaceuticals, LLC (“APP”).  APP vigorously disagreed that Section 37 resolved the case, however, and argued that Section 37 cannot constitutionally be applied and that Section 37 does not take effect for one year after the AIA‘s enactment (i.e., September 16, 2012).  The Federal Circuit ordered MDCO and APP to simultaneously file supplemental briefs addressing the effect of Section 37 of the AIA on the disposition of the case.  Those briefs were filed last month – along with the brief from a surprise intervenor – and the arguments they contain will be the focus of the November 15th oral argument.

APP argues in its briefs (here and here) that there are two reasons why AIA Section 37 does not save MDCO’s PTE request for the ‘404 patent, but rather confirms that the PTE application was untimely, and that as such, the Federal Circuit should reverse Judge Hilton’s decision and deem the ‘404 patent to have expired as of March 23, 2010:

(1) Section 37 will not go into effect until [September 16, 2012].  That is what Section 35 – the AIA’s default effective-date provision – plainly provides.  While Section 37 defines the set of PTE applications to which it will apply once it takes effect, nothing in Section 37 alters the September 16, 2012 effective date. Section 37’s silence is in stark contrast to AIA provisions not covered by Section 35’s default provision, all of which expressly indicate that they are changing the effective date.

(2) [R]egardless of when Section 37 takes effect, it could not constitutionally be applied to MDCO’s PTE.  Because MDCO’s PTE request was untimely when made, [the ‘404] patent expired [on March 23, 2010].  Under the Patent Act, any term extension granted by the PTO as a result of MDCO’s untimely request is invalid and void.  Because Congress did not enact the AIA until well over a year after the ’404 patent expired, Section 37 could not revive the patent.  The Constitution’s Copyright and Patent Clause prohibits Congress providing patent protection for subject matter that already has passed into the public domain.

MDCO, of course, has a slightly different take in its briefs (here and here) on the interpretation and applicability of the AIA and Section 37.  MDCO argues that AIA Section 37 codifies Judge Hilton’s next business day interpretation of the PTE statute and confirms that the ‘404 patent PTE application was timely.  “Section 37 expressly directs that it ‘shall apply’ to any PTE application – like MDCO’s – that ‘is pending on’ or ‘as to which a decision regarding the application is subject to judicial review on’ the ‘date of the enactment of this Act.’”  APP’s contention that AIA Section 37 does not govern the case before the Federal Circuit “ignores the provision’s plain text – not to mention its history and purpose – and asks the Court to adopt an interpretation that defies common sense,” says MDCO.  Equally insubstantial, argues MDO, is APP’s constitutional Claim: “APP’s argument turns on the untenable fiction that the [‘404 patent] entered the public domain even though it never expired.  Even if the patent had expired, moreover, APP’s argument would still be foreclosed by Supreme Court precedent” (italics in original).

Although the Government long ago bowed out of the case, it has entered as an intervenor and submitted a brief to defend the constitutionality of AIA Section 37.  First, says the Government, “Section 37’s next-business-day rule for computing the time for extension applications applies to any application that is ‘pending on,’ or as to which ‘a decision regarding the application is subject to judicial review on,’ the date of the AIA’s enactment,” and the PTE application for the ‘404 patent was “pending on” the date of the AIA’s enactment, because the PTO, “having lost in district court, was engaged in calculating the correct length of MDCO’s extension.”  Moreover, says the government “‘a decision regarding the application’ was ‘subject to judicial review” on the date of enactment (and still is).”  “Congress’s explicit direction to apply the next-business-day rule to pending applications, and to decisions subject to judicial review, places section 37 outside the ambit of the general effective-date provision in section 35, which applies ‘[e]xcept as otherwise provided in this Act.’”

With respect to the constitutionality of AIA Section 37, the Government maintains that “[n]othing in the Patent Clause of Article I precludes Congress from making section 37’s next-business-day rule applicable to MDCO’s pending extension request. . . .  [B]y virtue of interim extensions, MDCO’s ’404 patent has never expired, and MDCO’s drug has never entered the public domain.”  Regardless, says the Government, “the application of section 37 to this case does nothing more than give MDCO the same patent term that it would have been entitled to by filing a timely application.” 

While the Government contends that “[t]he existence of general legislative power to extend the term of patents after their expiration is confirmed by Supreme Court precedent and historical practice going back over 200 years,” and that “the constitutionality of section 37 is already clear,” the Government nevertheless suggests that the Federal Circuit may defer resolution of the Patent Clause challenge pending the Supreme Court’s decision in Golan v. Holder, Case No. 10-545, which was argued on October 5, 2011, and which presents a related issue of whether the Copyright Clause of the United States Constitution (Article I, § 8, cl. 8) prohibits Congress from taking works out of the public domain. 

What surprise twist might happen next in a more than decade-long PTE battle that has been full of surprises?  Will there be another attempt to change the PTE law or perhaps prevent the PTO from using funds to implement AIA Section 37?  Stay tuned. 

By Ricardo Carvajal –

FDA issued a press release announcing the issuance of more than 1,200 warning letters to tobacco retailers alleged to have violated the agency’s Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents.  Common alleged violations include the sale of cigarettes or smokeless tobacco to a minor, and failure to verify a purchaser’s date of birth by means of photographic identification.  The results of FDA’s compliance checks can be accessed online in a database that is searchable by retailer name and geographic location, among other parameters.  The press release also notes that FDA has begun inspecting tobacco product manufacturing facilities.

By Kurt R. Karst –      

The U.S. District Court for the District of New Jersey recently granted a Motion to Dismiss filed by Pfizer, Inc. (“Pfizer”) in an action brought by Impax Laboratories, Inc. (“Impax”) in an apparent attempt to trigger a forfeiture of 180-day exclusivity under the failure-to-market provisions at FDC Act § 505(j)(5)(D)(i)(I) for the first applicant to have submitted an ANDA to FDA with a Paragraph IV patent certification for a generic version of Pfizer’s DETROL LA (tolterodine tartrate) Extended Release Tablets, 4mg and 2mg.  In reaching its decision, the district court found the Federal Circuit’s rationale articulated in Janssen Pharaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353 (Fed. Cir. 2008), concerning declaratory judgment jurisdiction to be controlling, rather than the Federal Circuit’s decision in Caraco Pharm. Labs. Ltd. v. Forest Labs., Inc., 527 F.3d 1278 (Fed. Cir. 2008), given the existence of a stipulation to be bound by a final court decision on patent validity or non-infringement.

As we previously reported, DETROL LA is listed in the Orange Book with four patents: U.S. Patent Nos. 6,911,217 (“the ‘217 patent”), 5,382,600 (“the ’600 patent”), 6,630,162 (“the ‘162 patent”), and  6,770,295 (“the ‘295 patent”), which expire on Aug 26, 2019, March 25, 2012, November 11, 2019, and August 26, 2019, respectively, but are each subject to a 6-month period of pediatric exclusivity.  Impax was sued a few years back based on the company’s Paragraph IV certifications to the ‘600, ‘162, and ‘295 patents contained in ANDA No. 90-235, but was not sued with respect to its Paragraph IV certification to the ‘217 patent.  Pfizer subsequently granted Impax a covenant not to sue with respect to the ‘217 patent, and Impax stipulated to be bound by any decision regarding the validity or non-infringement of the ‘600 patent rendered in another action involving the first applicant. 

Like Impax, the first ANDA sponsor submitted an ANDA with Paragraph IV certifications to all four DETROL LA patents and was sued on all but the ‘217 patent.  The ‘600, ‘162, and ‘295 patents were the subject of a consent judgment of ingringement entered into between Pfizer and the first applicant in July 2011 and a settlement agreement, seemingly leaving the ‘217 patent – the subject of Impax’s declaratory judgment complaint – as the only patent on which to hang a claim of 180-day exclusivity. 

Impax argued that the company has two separate injuries upon which to maintain declaratory judgment jurisdiction: (1) ANDA approval delay resulting from the first ANDA applicant’s eligibility for 180-day exclusivity; and (2) patent uncertainty arising from the absence of a judicial declaration regarding the validity of the ‘217 patent.  Pfizer countered, arguing that Impax suffers no approval delay injury attributable to the ‘217 patent, because Impax voluntarily decided to forego its challenge to Pfizer’s ‘600 patent, thereby deferring approval of its ANDA until September 25, 2012, at the earliest, when pediatric exclusivity on the ‘600 patent is set to expire, and that Impax suffers no patent uncertainty injury, given the irrevocable covenant not to sue on the ‘217 patent.

Noting that “Janssen stands for the proposition that a stipulation to be bound will divest a federal court of declaratory judgment jurisdiction, as such stipulation is not fairly traceable to the Defendant’s actions and will prevent a judgment in Plaintiff’s favor from redressing the injury alleged,” the district court said that the Federal Circuit’s Janssen decision is controlling in the case “by virtue of [Impax’s] stipulation to be bound.”  The stipulation, “presents yet another obstacle to FDA approval, preventing Plaintiff from obtaining FDA approval until the expiration or finding of invalidity of the stipulated to patent.”  As such, the district court granted Pfizer’s Motion to Dismiss, noting that “a favorable judgment in Impax’s favor would not clear the path to FDA approval and does not provide the basis for declaratory judgment jurisdiction.” 

By Riëtte van Laack –

Last week, Rep. Dan Burton (R-IN) introduced the “Dietary Supplement Protection Act of 2011.”  Referencing the exemplary safety record of dietary supplements, the bill proposes to amend section 413(d) of the Federal Food, Drug, and Cosmetic Act (“FDC Act”) to significantly increase the number of “grandfathered” dietary ingredients.  Currently, section 413(d) defines a new dietary ingredient (NDI) as “a dietary ingredient that was not marketed in the United States before October 15, 1994 and does not include any dietary ingredient which was marketed in the United States before October 15, 1994.”  The amendment would move this date from October 15, 1994 to January 1, 2007.

As we previously reported, FDA’s recently issued draft guidance on NDIs suggests that, to qualify for grandfathered status, a manufacturer must possess both proof of prior marketing and proof that the current manufacturing method for the dietary ingredient is identical to the method used before the grandfather date.  This standard could be difficult to meet for many dietary ingredients due to the lack of information on manufacturing methods used before the grandfather date.  Moving the date for grandfather status to January 1, 2007, would reduce the number of dietary ingredients for which the manufacturing method may have changed, and reduce the chance that industry no longer possesses information about the manufacturing method for a grandfathered dietary ingredient.

Rep. Burton’s bill does not address any other issues raised by FDA’s draft guidance, e.g., FDA’s interpretation of what constitutes “chemical alteration” and the meaning of “presence in the food supply” as those terms are used in section 413(a)(1).

By Anne K. Walsh –

On November 2, 2011, DOJ’s Assistant Attorney General Tony West gave a keynote address at the Twelfth Annual Pharmaceutical Regulatory and Compliance Congress in Washington, DC.  During that speech, he touted DOJ’s “successes” against health care fraud achieved during the last three years he has headed up DOJ’s Civil Division.  In addition to noting the recent Executive Order on drug shortages, described here, he talked about the results of the HEAT task force (a not-so-precise acronym for the Health Care Fraud Prevention and Enforcement Action Team).  He stated that since May 2009, HEAT has opened more health care fraud investigations, charged more criminal health care fraud defendants, and recovered more money (over $8 billion) than ever before.   And there is no indication that the government’s focus is dissipating.

According to West, not only will DOJ continue to target off-label marketing and False Claims Act cases, but it also will look to bring more cases involving counterfeit drugs, drug diversion, kickbacks, and fraud in home health care and nursing homes.  And he claims that in doing so, DOJ intends to reach more aggressive resolutions.  West reiterated DOJ’s threat to use the familiar Park doctrine for holding corporate officials responsible, but also stated that providers, companies, and even physicians, should be held responsible for violations. 

West recognized, however, that there are other ways to combat fraud than merely scaring companies and people with enforcement.  He stressed that there is a need to promote a culture of compliance through deterrence and preventative efforts.  He also identified the need for creative non-monetary resolutions, such as obtaining post-conviction supervision over companies, to allow companies to prevent and detect future violations.   Lastly, he stressed that it is his priority to treat fairly companies that voluntarily disclose their fraud to the government, and cooperate fully during an investigation.  He specifically used as an example of cooperation the timeliness and thoroughness of document production.  West seeks to encourage more of this behavior from companies. 

These are all good strategies to keep in mind when negotiating with this Division. 

By David B. Clissold –

As we previously reported, a group of five tobacco companies (R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, Commonwealth Brands, Inc., Liggett Group LLC, and Santa Fe Natural Tobacco Company, Inc.) filed a complaint against FDA in the U.S. District Court for the District of Columbia challenging the Agency’s June 22, 2011 final rule, promulgated pursuant to the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”), requiring the display of nine color graphic  “health warning” images on cigarette packages and in cigarette advertisements.  The Tobacco Control Act states that the new textual and graphic warnings, among other requirements, will become effective “15 months after the issuance of” FDA’s final rule.

In a memorandum opinion issued on November 7, 2011, Judge Richard Leon of the U.S. District Court for the District of Columbia granted plaintiff’s motion for a preliminary injunction to halt FDA from enforcing the rule until fifteen months after resolution of plaintiff’s claim on the merits.  Judge Leon first determined that the mandatory warnings, as compelled commercial speech, were subject to the “strict scrutiny” level of analysis.  He noted that the warnings were not the type of “purely factual and noncontroversial disclosures” permissible under the Constitution, but were instead designed “to evoke emotion” and intended to “provoke the viewer to quit, or never start, smoking.”  Under the strict scrutiny test, the government must show that the speech is “narrowly tailored” to meet a “compelling government interest.”  Judge Leon wrote:

[T]he sheer size and display requirements for the graphic images are anything but narrowly tailored . . . to achieve the Government’s purpose (whatever it might be). To the contrary, the dimensions alone strongly suggest that the Rule was designed to achieve the very objective articulated by the Secretary of Health and Human Services: to “rebrand[] our cigarette packs,” treating (as the FDA Commissioner announced last year) “every single pack of cigarettes in our country” as a “mini-billboard.” (citing a June 2001 press briefing with Sec. Sebelius, and an FDA Tobacco Strategy Announcement).  A “mini-billboard,” indeed, for its obvious anti-smoking agenda!

In addition, the opinion notes that the Government failed to provide sufficient evidence of a “compelling government interest” since in this case “the Government’s actual purpose is not to inform, but rather to advocate a change in consumer behavior.”  Judge Leon was also persuaded to grant the motion because the plaintiffs would be unable to recover economic damages from FDA, and “the harm flowing from a First Amendment violation is per se irreparable.”

Such harm is not, as defendants conveniently claim, merely “the ordinary costs of complying with regulations.” Defs.’ Opp’n at 39. It is the residual effect of unconstitutionally compelled commercial speech designed to advocate, at a company's expense, a competing policy agenda.  Thus, plaintiffs have demonstrated that they will suffer irreparable harm in the absence of preliminary relief, and this factor also weighs in favor of granting an injunction.

Finally, the government was unable to show that the public or the government would be unduly prejudiced as a result of preliminary injunctive relief.

[W]hen one considers the logical extension of the Government’s defense of its compelled graphic images to possible graphic labels that the Congress and the FDA might wish to someday impose on various food packages (i.e., fast food and snack food items) and alcoholic beverage containers (from beer cans to champagne bottles), it becomes clearer still that the public’s interest in preserving its constitutional protections – and, indeed, the Government’s concomitant interest in not violating the constitutional rights of its citizens – are best served by granting injunctive relief at this preliminary stage.

The government will now try to perfect its arguments, either in opposition to the plaintiffs’ motion for summary judgment (filed on the same day as the motion for preliminary injunction), or at trial.

For the second year in a row, Hyman, Phelps & McNamara, P.C. has been ranked as a “Tier 1” law firm in the area of FDA Law (both nationally and in Washington DC) by the folks over at U.S. News & World Report, who teamed up again with Best Lawyers for the 2011-2012 “Best Law Firms” rankings.  Nearly 11,000 law firms were eligible to be ranked in the second survey conducted by U.S. News & World Report and Best Lawyers.  “Among the topics of evaluation were a firm’s expertise, responsiveness, cost-effectiveness, and civility, and whether it deserved to be recommended for work,” according to U.S. News Staff.

By Kurt R. Karst –      

For a few weeks now we’ve been hearing rumors that once the ball gets rolling in Congress with legislation to reauthorize the various user fee statutes (e.g., the  Prescription Drug User Fee Act and the Medical Device User Fee and Modernization Act) and other statutory provisions (e.g., the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act), along with legislation to create new law (e.g., the Generic Drug User Fee Act), there might be a push to open up and amend the Hatch-Waxman Amendments.  Although the 2003 Medicare Modernization Act made important changes to Hatch-Waxman, and in particular with respect to ANDAs and 180-day exclusivity, the brand-side of the equation concerning 5-year New Chemical Entity (“NCE”) exclusivity, 3-year new clinical investigation exclusivity, and Patent Term Extensions (“PTEs”) has remained largely untouched since 1984.  A new article out this week in Health Affairs might very well be an opening salvo in what could be a battle royal to more broadly open up Hatch-Waxman. 

The article, authored by Duke University professor emeritus of economics Henry G. Grabowski and four other co-authors (Margaret Kyle, Richard Mortimer, Genia Long, and Noam Kirson), is titled “Evolving Brand-Name And Generic Drug Competition May Warrant A Revision Of The Hatch-Waxman Act.”  Professor Grabowski’s research was supported in part by the Pharmaceutical Research and Manufacturers of America.  Professor Grabowski is a familiar face in the drug and biotechnology industries.  He published several papers on biosimilars and exclusivity leading up to the enactment of the Biologics Price Competition and Innovation Act of 2009, which amended the Public Health Service Act to, among other things, create an approval pathway for biosimilar and interchangeable versions of reference products and establish a 12-year exclusivity period for reference products.

The new study analyzes pharmaceutical data from 1995-2008.  According to the authors, the average period of “market exclusivity” (i.e., the time between launch of a brand-name drug and the launch of the first generic) has dipped from 1995-1996 to 2007-2008: “Between 1995 and 2008, the average market exclusivity periods for all new drugs were between 12.4 and 13.7 years.  The average length of exclusivity was 12.4 years in the most recent period in our study (2007-08), compared to 13.5 years in the initial period (1995-96).”  Meanwhile, Paragraph IV patent certification challenges have been on the rise in recent years and are occurring sooner after Reference Listed Drug product launch: “Only 9 percent of new drugs experiencing first generic entry in 1995 also experienced a Paragraph IV challenge at any point, but that share increased to 64 percent for drugs experiencing first generic entry in 2008. . . . For new drugs experiencing first generic entry in 1995 and also experiencing a Paragraph IV challenge, the average time between launch and the first challenge was 18.7 years.  That time fell to 8.2 years in 2008,” according to the authors’ analysis.  Exhibits from the study showing these data are below (used with permission).

So what does this mean in terms of amending Hatch-Waxman?  Well, the study abstract sums it all up:

The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act’s intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs’ patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators.  Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation.  It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.  

2012 is shaping up to be an exciting year, indeed!

ADDITIONAL READING:

• Generic Pharmaceutical Association Press Release

The Food and Drug Law Institute’s (“FLDI”) annual Enforcement, Litigation and Compliance Conference is being held in Washington, DC on December 6-7, 2011.  Hyman, Phelps & McNamara, P.C. Director John R. Fleder is speaking at the conference.  As a result, we were able to secure a discount code for our friends and colleagues.  To receive a 15% discount off registration, use the following promotional code: ENFSP2011.  To register for the event and to view a copy of the conference brochure, see here.

For nearly 10 years, FDLI’s Enforcement, Litigation and Compliance Conference has been a premier industry event in this field, educating  regulatory attorneys and litigators, regulators, compliance experts, consultants and people in academics in enforcement matters relating to the drug, medical device, biologic, diagnostic, food and dietary supplement industries.

Some of the most important developments from the past years will be discussed during this year’s program.  Examples include: the government’s crackdown on medical device firms failing to report adverse events, litigation relating to FDA’s import authority, stepped-up enforcement under the False Claims Act, and the latest on investigations and prosecutions related to the Foreign Corrupt Practices Act and potential SEC inquiries.   FDA Center Compliance Directors will speak on their priorities and resources for 2012.  Attendees will learn how to deal with: visits by government agents to the homes of companies that are under investigation; FDA consent decrees; and other important enforcement-related issues.

By Kurt R. Karst –      

In a decision handed down late last week by the U.S. Court of Appeals for the Tenth Circuit, a three-judge panel affirmed a November 2010 decision from the U.S. District Court for the District of Wyoming granting FDA’s Motion to Dismiss a lawsuit brought by Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) concerning the alleged grandfather status of Cody/Lannett’s marketed unapproved Morphine Sulfate Solution.  The Circuit Court also dismissed as moot Cody/Lannett’s claim of disparate treatment at FDA concerning the same drug submitted under an NDA. 

The Cody/Lannett lawsuit stems from FDA’s March 2009 Warning Letters to Cody and Lannett (among other companies) to stop manufacturing certain unapproved narcotic drugs, including morphine sulfate oral solutions.  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”  In subsequent communications with Cody/Lannett, FDA stated that the Agency would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution until July 24, 2010, which is 180 days after FDA approved Roxane’s NDA for the drug product.  Meanwhile, in late February 2010, Lannett submitted its own NDA (NDA No. 201517) to FDA for Morphine Sulfate Oral Solution, 100 mg per 5 mL (20 mg per mL), which NDA was not granted a 6-month priority review as was Roxane’s NDA. 

Cody/Lannett sued FDA arguing that the Agency should be enjoined from taking enforcement action after July 24, 2010 if such enforcement action is based on the Agency’s contention that Morphine Sulfate Solution Immediate-Release 20mg/mL is an unapproved “new drug,” and that the court should issue a declaratory judgment that FDA violated the Administrative Procedure Act (“APA”) in determining that the product is a “new drug.”  Cody/Lannett raised three issues in the litigation: (1) FDA’s alleged determination that Cody/Lannett’s product is a “new drug;” (2) FDA’s alleged failure to develop an administrative record for its determination that Cody/Lannett’s Morphine Sulfate Oral Solution 20mg/mL product is a “new drug;” and (3) FDA’s alleged disparate treatment of Cody/Lannett’s standard review NDA compared to Roxane’s priority review NDA. 

In a November 16, 2010 decision, District Court Judge Alan Johnson granted FDA’s Motion to Dismiss the case, and ruled that the court “does not have jurisdiction over any of the agency actions [Cody/Lannett] ask this Court to review, as the FDA has yet to complete a final agency action,” and that “[a]ny attempt to review such actions would be premature and contrary to law.”  Following Judge Johnson’s decision, Cody/Lannett appealed the decision to the Tenth Circuit.  On June 23, 2011, FDA approved Lannett’s NDA No. 201517.

Not long after FDA approved NDA No. 201517, the Agency filed a Motion to Dismiss the Tenth Circuit case on mootness grounds, arguing that as a result of the approval of NDA No. 201517, “there is no likelihood that FDA will undertake enforcement action against Cody for marketing unapproved morphine sulfate, which is what Cody sought to prevent when it filed its complaint.”  Cody/Lannett opposed FDA’s motion, arguing that the manufacture and sale of its morphine sulfate under an approved NDA will result in significant administrative and financial burdens (e.g., user fees) – see our previous post here.  Moreover, says Cody/Lannett, “FDA could still pursue enforcement actions with respect to past sales of the Product.”  Thus, the grandfather status of Cody/Lannett’s Morphine Sulfate drug product is not moot and is “still a live issue between the parties.” Likewise, Cody/Lannett argue that their disparate treatment claims are also live and subject to judicial review, because, among other things, they are capable of repetition with other allegedly grandfathered products the companies manufacture and distribute (e.g., oxycodone and topical cocaine) and for which they reportedly plan to seek FDA approval. 

Although the Circuit Court, in affirming in part and dismissing in part the district court decision, agreed that the approval of NDA No. 201517 did not moot Cody/Lannett’s grandfather drug claim, because “[b]y prevailing on its grandfathering claim, Cody could still obtain meaningful relief in the form of freedom from [certain user fee and labeling]  burdens,” the Court refused to reach the merits of Cody/Lannett’s grandfather drug claim.

Mootness aside, we cannot reach the merits of Cody’s grandfathering claim unless the FDA has engaged in “final agency action” under the APA. . . .  Cody’s failure to avail itself of available administrative remedies [(i.e., use of the citizen petition process)] defeats its claim even if we were inclined to hold that the FDA’s action [(i.e., Warning Letters)] were otherwise final. . . .  Given that grandfathering status hinges on the fact-intensive history of the drug’s marketing and use, we do not anticipate that the agency will blindly refuse to consider evidence submitted by Cody.  Accordingly, we decline to consider Cody’s grandfathering claim prior to exhaustion of the company’s administrative remedies. 

And with respect to Cody/Lannett’s claim of disparate treatment by FDA, the Court says that FDA’s approval of NDA No. 201517 mooted the claim, stating that Article III does not permit the Court to issue a retrospective opinion that Cody/Lannett were harmed.  “Nor does Cody’s disparate treatment claim fall under the exception to the mootness doctrine for disputes that are capable of repetition, but evading review.  To fit within that exception, a litigant must show a reasonable expectation that it would be subjected to the same adverse action in the future.”  Although Cody/Lannett say they plan to submit NDAs to FDA for certain allegedly grandfathered drugs, “Cody has not given us reason to expect that the agency will deny Cody’s request for expedited review while granting that of its competitors.  Thus, we conclude that Cody has not carried its burden of demonstrating its claim is capable of repetition, but evading review.”

Whether the Tenth Circuit’s decision marks the end of this long-running dispute remains to be seen.  Cody/Lannett could take further action in court or at FDA.