By William T. Koustas –

The Red Flags Rule (“the Rule”) requires entities covered by it to establish and implement an identity theft prevention program.  We have been following this issue for some time now and have previously reported that the FTC last delayed enforcement of the Rule to December 31, 2010 at the suggestion of members of Congress.  It took up legislation in an effort to better define the entities covered by the Rule.  Congress has now passed the Red Flag Program Clarification Act of 2010 (“the Act”) that amends the Fair Credit Reporting Act (“FCRA”) to more clearly define who the Rule applies to.  Prior to this legislation being passed, the FTC determined that the Rule applied to a variety of entities that are not generally considered creditors, such as legal and medical practices, simply because they usually bill clients after the services are rendered. 

The FCRA currently applies to creditors as defined in the Equal Credit Opportunity Act (“ECOA”) which defines a creditor as “any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit;” or “any person…who participates in the decision to extend, renew or continue credit.”  ECOA § 702(e).  The FTC interpreted this definition to apply to any entity that regularly bills customers or clients for services rather than requiring payment at the time the service is rendered.  This effectively meant that companies and professions were creditors, although they had never considered themselves creditors before.  As creditors, the Rule required that they create and implement a written program to prevent and mitigate identity theft. 

However, the Act would amend the FCRA to clearly state that the definition of a creditor, for the purpose of the Rule, “does not include a creditor…that advances funds on behalf of a person for expenses incidental to a service provided by the creditor to that person.”  Act § 2(a)(4).  Therefore, billing customers or clients for services rendered would no longer be a basis for treating an entity as a creditor for the purpose of the Rule.  We presume that the President will sign the Act before the end of the year.

By Kurt R. Karst –      

Speculation was running high that the U.S. Supreme Court would be petitioned on whether a patent settlement agreement (what opponents call “pay-for-delay” agreements or “reverse payments”) involving manufacturers of Ciprofloxacin HCl (CIPRO) is per se lawful under the Sherman Act after the U.S. Court of Appeals for the Second Circuit denied earlier this year a Petition for Rehearing and Rehearing En Banc filed on behalf of certain plaintiffs-appellants in In Re Ciprofloxacin Hydrochloride Antitrust Litig.  That Petition for Writ of Certiorari was filed with the U.S. Supreme Court earlier this week.

As we previously reported (here and here), in September 2010, the Second Circuit denied without comment a Petition for Rehearing and Rehearing En Banc that a panel of the judges on the Court invited in their April 2010 decision affirming (3-0) a 2005 decision by the U.S. District Court for the Eastern District of New York granting summary judgment for defendants (i.e., Ciprofloxacin HCl manufacturers) (In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514 (E.D.N.Y. 2005)).  In the April decision, the Court affirmed the district court decision because the Court believed its 2005 decision in Joblove v. Barr Labs., Inc., (, compelled it to do so.  According to the Court, “[s]ince Tamoxifen rejected antitrust challenges to reverse payments as a matter of law, we are bound to review the Cipro court’s rulings under the standard adopted in Tamoxifen.”  The Department of Justice and the Federal Trade Commission (“FTC”), which has been a vocal opponent of patent settlement agreements, filed amicus briefs in the Cipro case advocating that the Second Circuit grant rehearing en banc and apply an “inherently suspect” standard to patent settlement agreements, under which such agreements would be considered presumptively unlawful, but could nevertheless be proven to be procompetitive.  (This standard is similar to that in legislation introduced in Congress to address patent settlement agreements.)  The government is sure to actively support the petition to the U.S. Supreme Court.

According to the Petitioners, a group or purchasers including Louisiana Wholesale Drug Company, Inc. and Arthur’s Drug Store, Inc.:

This Court has repeatedly “emphasized the necessity of protecting our competitive economy by keeping open the way for interested persons to challenge the validity of patents which might be shown to be invalid.”  The Second Circuit nevertheless held, contrary to the decisions of three other circuits and the views of the United States and the [FTC], that, except in very limited circumstances, a pharmaceutical patentee may lawfully pay a generic drug manufacturer to forgo judicial testing of the patent’s validity and stay out of the market.  The Second Circuit’s decision cannot be squared with those of other circuits or with this Court’s prohibition on patentees “muzzling” those who otherwise would have an “economic incentive to challenge the patentability of an inventor’s discovery.” . . . .

The Court should grant review to resolve the circuit split, reject the Second Circuit’s precedents that favor judicial testing of patent validity, and restore the Hatch-Waxman Act balance by prohibiting brand manufacturers from paying competitors to forgo judicial examination of patents and thereby preserve unwarranted monopolies. [(internal citations omitted)]

The circuit split over the proper standard for determining whether an exclusion payment is actually a three-way split. . . .

The Sixth Circuit and the D.C. Circuit have adopted (and the FTC has applied) a “patent strength” standard, “which bases the but-for amount of competition on the patent litigants’ own view of the likely outcome of the litigation, as reflected in their objective conduct,” according to the petition.  This standard was applied by the Sixth Circuit in In re Cardizem CD Antitrusty Litig., 332 F.3d 896 (6th Cir. 2003), relied on by the D.C. Circuit in Andrx Pharm. Inc. v. Biovail Corp. Int’l, 256 F.3d 799 (D.C. Cir. 2001), and applied by the FTC in an administrative proceeding – In re Schering-Plough Corp., F.T.C. Docket No. 9297 (Dec. 8, 2003). 

The Eleventh Circuit has rejected the “patent strength” standard and instead applies a “patent relitigation” standard, under which “it determines the amount of but-for competition by engaging in an ex-post judicial determination of the patent issues as part of the antitrust case,” according to the petition.  The Eleventh Circuit applied this standard in Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1303 (11th Cir. 2003) and in Schering-Plough Corp. v. Fed. Trade Comm’n, 402 F.3d 1056 (11th Cir. 2005). 

Finally, the Second Circuit and the Federal Circuit, which have rejected the “patent strength” standard and have refused to apply the “patent relitigation” approach, apply a “sham litigation” standard, under which “[t]hey have conclusively presumed for purposes of the antitrust case that the patent was valid, and thus that no competition was likely to result from the patent litigation, unless the patent was obtained by fraud or the patent cliam was a graud,” according to the petition.  This is the standard applied by the Second Circuit in Tamoxifen and Cipro, and by the Federal Circuit in In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323 (Fed. Cir. 2008).

The U.S. Supreme Court has previously denied certiorari in several of the cases mentioned above, but perhaps this will be the time that it is granted.

By Ricardo Carvajal –

As required by its Good Guidance Practices regulation, FDA published its annual guidance document agenda and request for comment on “possible topics for future guidance document development or revisions of existing [guidance documents].” 

Among the food-related topics that caught our eye are new dietary ingredient notifications, use of dietary guidance statements, calorie declaration (think FOP labeling), menu labeling, and effect of the use emerging technologies on the safety and regulatory status of ingredients and food contact substances (think nanotechnology).  It appears that the agency also intends to address the safety of nanoscale materials in cosmetics.

On the tobacco side, FDA is considering addressing rotational warning plans for smokeless tobacco, use of descriptors such as “light,” restrictions on distribution of cigarettes and smokeless tobacco to minors, “harmful and potentially harmful constituents,” and issues of interest to retailers such as training programs and civil money penalties.

As swimmers in the social media pool, we also note with interest that CDER will (hopefully) address the promotion of prescription drug products using social media tools.

By Kurt R. Karst –      

Does “federal law, which imposes a strict set of labeling requirements on manufacturers of Final Monograph [Over-the-Counter (‘OTC’)] drugs, including mandatory product warnings authored by the FDA, [preempt] state-law product liability actions premised on theories of failure to warn[?]”  That is the question posed by McNeil-P.P.C., Inc. (“McNeil”) in a recent Petition for Writ of Certiorari filed with the U.S. Supreme Court.

The petition stems from the tragic events of April 24, 1999, when 16-year old Armando Valdes, III collapsed during a roller hockey game.  Armando allegedly consumed McNeil’s OTC drug Tylenol Cold (and/or Tylenol Flu) containing pseudoephedrine for a head cold, along with a caffeinated beverage, the morning of the roller hockey game.  Doctors diagnosed Armando with having suffered a heat stroke and cardio-respiratory arrest which resulted in a brain injury, hypoxic ischemic encephalopathy, and left Armando completely disabled.

Armando and his parents filed a negligence and products liability suit against McNeil (as well as the hockey club and equipment vendor, which settled with the Valdes family) for Armando’s injuries.  They contend that McNeil’s product “increased the risk of heat-related illness and heart-related risks when ingested with caffeinated products and coupled with strenuous or athletic events in a hot environment like that of South Florida,” and asserted that McNeil’s failure to warn of these risks breached Florida state law requirements. 

McNeil asserted, among other affirmative defenses, federal preemption.  After discovery, McNeil moved for final summary judgment on federal preemption grounds – specifically, that “federal law, which governs [OTC] and non-prescription drugs, and the FDA’s labeling requirements, which did not require McNeil to include the risk of heat-related illness on the label, preempted the state law claims in the Valdeses’ complaint.”  The Circuit Court for Miami-Dade County agreed with McNeil and granted final summary judgment, finding that “implied conflict pre-emption applied because it would have been impossible for McNeil to comply with federal regulations that mandate the exact warnings for labels of all OTC pseudoephedrine-containing products (including those sold by McNeil) while also meeting state common law jury determinations of whether the FDA-crafted warnings were adequate.”  The Valdeses appealed the decision to the Third District Court of Appeal of Florida.

In December 2009, the Third District Court of Appeal of Florida reversed the final summary judgment for McNeill on the basis that the U.S. Supreme Court’s March 2009 decision in Wyeth v. Levine “controls the issue of federal preemption presented in this case.”   (In Wyeth, the Court ruled, by a 6-3 vote, in the context of a brand-name prescription drug, that FDA labeling approval does not preempt state laws.)  Although McNeil argued that Wyeth is distinguishable because it dealt with prescription drugs and not OTC drugs, the court disagreed with McNeil that “the distinction carries the weight to allow it to circumvent the reasoning of the Court in Wyeth.”  McNeil sought discretionary review of the Third District Court of Appeal’s decision by the Supreme Court of Florida; however, that petition was denied on August 2, 2010.

McNeil’s November 30, 2010 petition argues that the Court should grant review to “correct” Florida’s rejection of impossibility conflict preemption in a case where the law does not contain a provision permitting a manufacturer to unilaterally change its product labeling by adding a warning.  (Although we note that there are procedures to amend an OTC drug monograph).  According to McNeil:

In rejecting Wyeth's implied conflict preemption argument, this Court relied on specIfic statutes and regulations applicable to manufacturers of brand-name prescription drugs, which allow the manufacturer to strengthen product warnings without prior FDA approval, pursuant to a "changes being effected" ("CBE") procedure.  The appellate court in Valdes ignored the fact that prescription and OTC drugs are subject to differnt federal regulatory regimes.  The appellate court failed to recognize that federal laws applicable to manufacturers of OTC products do not provide a mechanism similar to the CBE procedure that would permit a manufacturer to unilaterally change the warnings on product labeling crafted by the FDA.

Under FDA’s regulations at 21 C.F.R. Part 330, OTC drug labeling “shall be stated in the exact language where exact language has been established and identified by quotation marks in an applicable OTC drug monograph regulation.”  In addition, FDC Act § 751 (National Uniformity for Nonprescription Drugs) provides that in general “no State or political subdivision of a State may establish or continue in effect any requirement” for an OTC drug “that is different from or in addition to, or that is otherwise not identical with, a requirement under [the FDC Act], the Poison Prevention Packaging Act of 1970 (15 U.S.C. 1471 et seq.), or the Fair Packaging and Labeling Act (15 U.S.C. 1451 et seq.).” 

In addition to the Florida court reading Wyeth “so broadly as to preclude the assertion of implied conflict pre-emption based on impossibility under any circumstances,” McNeil notes that Wyeth has been misapplied by other courts in the OTC drug context.  For example, McNeil cites the Seventh Circuit Court of Appeals’ August 2010 decision in Robinson v. McNeil Consumer Healthcare, 615 F.3d 861 (7th Cir. 2010) concerning the preemptive effect of FDA’s decision not to add a warning to Children’s Motrin.  In that decision, Judge Posner cited Wyeth for the proposition that courts are free to hold “that state law requires warnings on the label of an [OTC] drug beyond what the FDA has required.” 

“Without preemption,” McNeil states, “OTC drug manufacturers would be deprived of the ability to rely on FDA’s directives as to matters that Congress delegated to the Agency and that fall within the Agency’s unique regulatory and scientific expertise.”  In addition, “[w]ithout pre-emption, McNeil, and all other OTC drug manufacturers, would be deprived of the ability to comply simultaneously with their federal and state obligations or even to ascertain what those obligations are without resort to litigation.”

Hyman, Phelps & McNamara’s Paul Hyman and Ricardo Carvajal recently published an article in Food Chemical News on the cost of inadequate substantiation of health-related claims made in the labeling and advertising of foods.  Although FDA appears reluctant to take an aggressive stance with respect to claim substantiation, FTC has forged ahead with a number of investigations of allegedly false or misleading advertising that have resulted in restrictive settlements – and the plaintiffs’ bar has taken notice.

By Ricardo Carvajal –

In a strongly worded opinion, a federal judge has ordered that genetically modified sugar beet stecklings (seedlings) planted pursuant to permits issued by USDA be pulled from the ground.  As we noted in a prior blog posting, USDA/APHIS was found in violation of the National Environmental Policy Act for deregulating Roundup Ready sugar beets without preparing an Environmental Impact Statement.  The agency’s subsequent decision to issue permits for the production of the stecklings was not well received by the presiding court.  Now that court has concluded that Plaintiffs have demonstrated a likelihood of irreparable harm from the production of the stecklings based on the potential for “significant risk of environmental harm” (including potential incidents of contamination), and the “significant procedural injury stemming from the NEPA violations.”  Finding Defendants’ and Intervenor-Defendants’ assertions of economic harm to lack credibility, and that the “legality of Defendants’ conduct does not even appear to be a close question,” the court granted Plaintiffs’ request for an injunction requiring that the stecklings be removed from the ground.  An appeal is certain.

By Ricardo Carvajal

No sooner had we blogged on Senate passage of the Food Safety Modernization Act than Roll Call reported that the bill might be doomed by a constitutional flaw – namely that § 107 of the bill proposes fees, and Article I, section 7 of the U.S. Constitution states that “all bills for raising Revenue shall originate in the House of Representatives.” The procedural complications that this flaw gives rise to, coupled with the rapidly approaching close of this Congress, could push further consideration of food safety legislation into the next Congress.

By Karla L. Palmer and Peter M. Jaensch

On November 24, 2010, using its emergency authority under section 202 of the Controlled Substances Act (“CSA”) (21 U.S.C. § 812), the U.S. Drug Enforcement Administration (“DEA”) published a Notice of Intent to temporarily place five synthetic cannabinoids in Schedule I of the CSA.  75 Fed. Reg. 71635 (Nov. 24, 2010). The five chemicals, JWH-018, JWH-073, JWH-200, CP-47,497, and cannabicyclohexanol, are used to make “fake pot” products.  These “smokable herbal blends” have been marketed as being legal substances, and have been increasing in popularity among teenagers and young adults because they produce a high similar to that produced by marijuana (also a Schedule I substance).

The DEA announced in its related press release that the products consist of “plant material that has been coated with research chemicals that mimic THC, the active ingredient in marijuana.”  Brands that the DEA specifically referenced include “Spice, “K2”, “Blaze” and “Red X Dawn,” and are typically labeled as “incense” in order to disguise their actual and intended purpose.  Although the products typically are marketed with disclaimers that they are not intended for human consumption, retailers promote the fact that a routine urinanalysis will not detect their presence, and they specifically market the products to young adults and teens.  See 75 Fed. Reg. at 71637.  The FDA has not approved these chemicals for human consumption, and the products are not safe for use under medical supervision.  Nor is there any oversight concerning their manufacturing process.  The DEA’s call for emergency scheduling was driven in part by the increase in incident reports from poison control centers, hospitals and various law enforcement agencies concerning the abuse of these synthetic cannabinoids.

Under its emergency authority, to which the DEA may turn as necessary to avoid an imminent hazard to the public safety, these substances will remain in Schedule I  for one year, with the possibility of a 6-month extension.  During the temporary scheduling period, the DEA and the Department of Health and Human Services will study the propriety of a permanent controlled substance status.  In order to temporarily schedule the substances using its emergency authority,  the DEA was required to consider three of the eight factors in 21 U.S.C. § 811(c).  The DEA set forth its findings with respect to the following factors 4, 5, and 6: (4) history and current pattern of abuse (finding that the increasing popularity of these products has led to both long term and acute public health and safety problems); (5) the scope, duration and significance of abuse (since appearing in the United States in 2008, there have been over 1500 reported health-related communications related to the use of these spiked products; and (6), what, if any risk to the public health exists (finding for several detailed reasons that the products pose an imminent threat to public health and safety).

Schedule I controlled substances are those substances that, in addition to having a high potential for abuse, have no recognized medical use. The five chemicals will be subject to the “regulatory controls, and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, possession, importing and exporting of a Schedule I controlled substance under the CSA.”  75 Fed. Reg. 71637. As of October 15, 2010, 15 states and European and Scandinavian countries have taken measures to control these synthetic products.

By John A. Gilbert & Karla L. Palmer –

The Drug Enforcement Administration (“DEA”) recently published a decision that considers the scope of a pharmacist’s “corresponding responsibility” under 21 C.F.R. § 1306.04(a).  East Main Street Pharmacy (Affirmance of Suspension Order) (Docket No. 09-48) (75 Fed. Reg. 66149 (Oct. 27, 2010)) (“EMS”).  As background, 21 C.F.R. § 1306.04 provides that while “the responsibility for the proper prescribing and dispensing of controlled substances is upon the prescribing practitioner . . . a corresponding responsibility rests with the pharmacist who fills the prescription.”  21 C.F.R. §1306.04.  The regulation further states, “the person knowingly filling such a purported prescription, as well as the person issuing it [is] subject to the penalties provided for violations of the provisions of law relating to controlled substances.” Id.  Thus, a pharmacist is prohibited from filling a prescription for controlled substances “when he either knows of or has reason to know that the prescription was not written for a legitimate purpose.” 75 Fed. Reg. at 66163.  Further, when prescriptions are not issued for a legitimate medical purpose, a “pharmacist may not intentionally close his eyes and thereby avoid [actual] knowledge of the real purpose of the prescription.”  Id. (Quotations and citations omitted) (emphasis added).

Pharmacists are well trained and aware of their “corresponding responsibility.” They must only fill valid prescriptions for controlled substances issued by a legitimate practitioner for a legitimate medical purpose.  Nevertheless, the standard for what exactly is – and, specifically, what exactly is the extent of — a pharmacist’s “corresponding responsibility” has been a troublesome concept for practitioners and pharmacies alike.  Admittedly, the pharmacist in the EMS matter allegedly engaged in egregious dispensing and recordkeeping misconduct, and the case involved one bad doctor (who the Deputy Administrator called a “drug dealer”).  And, although this may be a case where over-the-top facts indeed make bad law, both pharmacists and practitioners should be mindful of the EMS opinion because the DEA has taken significant strides to clarify the scope of a pharmacist’s corresponding responsibility. 

First, faced with respondent’s assertion that the “corresponding responsibility” standard is vague, “unknown” and “ambiguous,” the DEA stated that the standard is constitutional: Federal courts have had “little problem” applying the DEA regulation, which gives “fair notice that certain conduct is proscribed.”  Id. at 66163. 

The DEA next addressed certain “red flags” that should have given the respondent pharmacist a “reason to know” that the prescriptions patients presented to him were not legitimate.  Importantly, the DEA did not focus on whether the pharmacist had “actual knowledge” that the prescriptions were not issued for a legitimate medical purpose, but instead whether the pharmacist had “reason to know [they] were not issued for a legitimate medical purpose by a practitioner acting in the usual course of professional practice.” Id.

In reviewing the pharmacist’s conduct (and citing the government’s unrefuted expert), the DEA stated that the pharmacist ignored several signs that the prescriptions written by the physician were not legitimate.  These flags include the following: (1) “ample evidence” showing that the respondent repeatedly dispensed “cocktailed” prescriptions for oxycodone, hydrocodone, alprazolam, and carisoprodol; finding that this combination prescription is “well known in the pharmacy profession as being used by patients abusing prescription drugs;” (2) no individualization of dosing by the prescribing physician; (3) filling multiple prescriptions for the strongest formulations of hydrocodone and alprazolam; (4) requests for early dispensing of refills; (5) refilling prescriptions of patients or doctors located hundreds of miles away from the pharmacy; (6) an overwhelming proportion (95%) of prescriptions filled by the pharmacy were controlled substances prescriptions; (7) the pharmacist did not reach out to or otherwise contact other pharmacists to determine why they were not filling a particular doctor’s prescriptions; (8) filling prescriptions of patients that travelled to the pharmacist in groups; (9) filling a larger percentage of cash prescriptions. (“This too, was a red flag as ‘[a]ny reasonable pharmacist knows that a patient that wants to pay cash for a large quantity of controlled substances is immediately suspect.’”); and (10) “verification” of a prescription as “legitimate” was not satisfied simply because the practitioner performed MRI’s and blood tests on the patients.  Id. 

Presented with the above evidence, the DEA stated that even if the pharmacist had verified with the physician “each and every” prescription, the evidence showed he still violated his corresponding responsibility because many of the prescriptions “patently served no legitimate medical purpose.” Id. 

The DEA also stated that the single fact that the pharmacist dispensed high quantities of commonly abused drug cocktails containing oxycodone, hydrocodone, and alprazolam and carisoprodol should have called into question the legitimacy of the prescriptions.  Id. at 66164-65.  The DEA added that “the other evidence,” including all of the evidence referenced above, was “simply icing on the cake” that the pharmacist violated his corresponding responsibility to fill only legitimate prescriptions issued for a legitimate medical purpose.  Id. at 66165.  When respondent presented some evidence concerning his refusal to fill prescriptions from pain clinics after he received notice to stop filling from the Ohio Board of Pharmacy, the DEA responded that a “responsible DEA registrant should be able to make these determinations without the authorities having to provide him the information on a silver platter.” 

Pain experts would certainly argue that in many cases DEA's red flags are in fact the basis for legitimate pain treatment, e.g., the “pain cocktail” is often prescribed because of the anxiety and muscle tension experienced by pain patients.  However,  pharmacists must be attentive to these factors, “red flags,” or signs — as part of their corresponding responsibility to fill only prescriptions that are issued for a legitimate medical purpose.

By Ricardo Carvajal - 

FDA announced that its Food Advisory Committee will meet on March 30 and 31, 2011, “to discuss whether available relevant data demonstrate a link between children’s consumption of synthetic color additives in food and adverse effects on behavior.”  Earlier this year, the European Union ("EU") moved to require the use of a health warning on food (including beverages) containing certain colors after the publication of a study that suggested a possible association between those colors and hyperactive behavior in children.  In the EU, the label of a food that contains one or more of the affected colors and that is produced after July 20, 2010, must state: "may have effects on activity and attention in children."  Among the colors subject to the EU warning requirement are FD&C Yellow 5, FD&C Yellow 6 and FD&C Red 40.

By Jeffrey K. Shapiro & Carmelina G. Allis –

FDA’s review of 510(k) program continues to cause concern in Congress. 

On November 24, 2010, the Minnesota delegation, including unlikely collaborators Senator Al Franken and Representative Michele Bachmann, sent a letter to Dr. Hamburg asking “FDA to review the impact of its recommendations [to the 510(k) program] on patient access as well as [Minnesota’s] economy.” 

They stated:  “As members of the Minnesota delegation, we want to work with the FDA toward a larger goal of saving and improving patients’ lives. . . Changes that may jeopardize that goal should not be made unless there is clear evidence that the changes are necessary to address a demonstrated public health problem.” 

The Minnesota lawmakers made clear that FDA should ensure that changes to the 510(k) program not stifle innovation or delay patient access to new treatments.

We previously reported on FDA’s August 2010 report recommending changes to the 510(k) program.  Our earlier post briefly discussed the proposed changes, and raised concerns with some of the agency’s recommendations because of their potential negative effect on the medical device industry and the 510(k) program. 

We also previously reported on an October 12, 2010, letter sent by House lawmakers to FDA’s Commissioner Dr. Hamburg asking to delay the implementation of certain changes that the agency is considering for the 510(k) program.  In the letter, the lawmakers raised concerns with the agency’s recommendations regarding rescission authority, split and multiple predicates, intended use and indications for use, mandatory pre-market inspections and clinical data for a subset of Class II devices, and proprietary information.

By Ricardo Carvajal –

By a vote of 73 to 25 (see the roll call here), the Senate has passed S. 510, the Food Safety Modernization Act.  As we noted in a prior posting, the Senate HELP Committee released a compromise agreement in August that would impose numerous new requirements on industry, and bestow numerous new authorities on FDA.  The version of the legislation passed by the Senate retains the major elements of the compromise agreement.  Given that the House of Representatives passed a similar bill last year, the stage is now set for a vote on, and possible enactment of, the Senate bill (perhaps within the next week).

Thanks to our faithful readers, we made the list for the annual American Bar Association (“ABA”) Journal Blawg 100 for the second year in a row.  The editors of the ABA Journal announced the top 100 best law blogs by lawyers, for lawyers earlier this week.  The top 100 blogs are organized in 12 categories (we’re in the “Torts” category).  Readers can now vote for their favorite blogs from among the top 100 in each of the 12 categories.  Voting ends at close of business on December 30th.  Winners will be announced in January. 

One again, we thank our readers.  We are honored by the recognition we have received.  

By Kurt R. Karst –      

Recent judicial setbacks for the Federal Trade Commission (“FTC’) in actions challenging patent settlement agreements (or what opponents call “pay-for-delay” or “reverse payment” agreements) and opposition from both Republicans and Democrats to the inclusion of the Preserve Access to Affordable Generics Act (S. 369) in the Fiscal Year 2011 Financial Services and General Government Appropriations Bill (S. 3677) may cause the FTC to consider “Plan C” to address such agreements, according to Commissioner J. Thomas Rosch.

During the World Generic Medicine Congress Americas 2010 earlier this month, Commissioner Rosch remarked that the FTC is mulling issuing its own rules next year that would shift the burden of proof to require companies to prove that patent settlement agreements are not anti-competitive.  In late July, the U.S. Senate Committee on Appropriations approved the inclusion of the Preserve Access to Affordable Generics Act in the report (Senate Report No. 111-238) accompanying S. 3677.  The legislation would make patent settlement agreements presumptively anticompetitive and unlawful if challenged by the FTC, unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”  The patent settlement provisions were added to the report accompanying S. 3677 after the Senate decided to drop the House patent settlement agreement provisions passed as part of a package of amendments to the War Funding Bill (H.R. 4899) – see our previous post here.

In September and October, some Republicans and Democrats sent separate letters (here and here) to their respective party leaders requesting that the provisions of S. 369 not be included in any appropriations bill this Congress.  The letters also note substantive concerns with the provisions of S. 369.  For example, the Republican letter alleges that S. 369 gives “excessive power over such settlements to the FTC – a power that the FTC has shown itself in the past to be unable to exercise in a responsible or economically rational manner – and that the bill would do serious violence to the Hatch-Waxman process for the market entry of generic drugs.”  It is unclear how an FTC “Plan C” to address patent settlement agreements would address such concerns. 

During his speech, titled “The Antitrust/Intellectual Property Interface: Thoughts on How To Best Wade Through the Thicket in the Pharmaceutical Context,” which primarily focused on patent settlement agreements, but also touched on myriad other issues, including patent use codes, authorized generics, citizen petitions, and so-called “product hopping,” Commissioner Rosch commented that although he supports a legislative fix to address patent settlement agreements – and specifically pending legislation (with the possible exception of the “clear and convincing” standard) – he thinks any legislation should stand or fall on its own merits.  According to Commissioner Rosch:

. . . . I believe a legislative fix is likely the only way to eliminate these anticompetitive settlements.  Nevertheless, where I depart from the Chairman and perhaps the rest of the Commission (although I can’t say for sure) is on process. In my view, the legislation should rise or fall on its own merit; put differently, I think tacking it on to the war funding bill is a terrible idea.  If the goal is to put money back in consumers’ pockets, then that is what we should be doing – not funding the war.

Commissioner Rosch also waded into the FTC’s challenge concerning a patent settlement agreement on generic ANDROGEL (testosterone gel) 1% (i.e., In re: AndroGel Antitrust Litigation), commenting that the case “should be winnable, not withstanding the popularly-held view that the FTC’s chances are slim . . . .” 

As we previously reported, this case stems from a February 2009 challenge by the FTC and the California Attorney General concerning Solvay’s ANDROGEL in which the FTC alleged that Solvay and generic companies violated various federal antitrust laws when they agreed to dismiss patent infringement litigation in exchange for a profit-sharing arrangement and provided the generic competitors would not launch their generic versions of ANDROGEL until 2015.  In February 2010, in a setback to the FTC, the U.S. District Court for the Northern District of Georgia (Atlanta Division) largely dismissed the case.  In June, the FTC filed a notice of appeal to the U.S. Court of Appeals for the Eleventh Circuit.  As  reported by our fellow bloggers over at PatentDocs, the defendants-appellees in the case recently filed a brief arguing that the district court’s judgment should be affirmed.

By Susan J. Matthees –

Congresswoman Louise Slaughter (D-NY) recently sent a letter to FDA Commissioner Margaret Hamburg requesting that FDA ban the use of triclosan in consumer products.  Triclosan is commonly used as an antibacterial agent in topical antiseptic products, such as soaps and hand sanitizers, and is also found in some toothpastes, mouthwashes, and similar consumer health products.  The ingredient is included in FDA’s ongoing review of over-the-counter (OTC) healthcare antiseptic and first aid antiseptic drug products, but the use of triclosan in toothpaste was approved via an NDA.  Although FDA states that “[t]riclosan is not currently known to be hazardous,” some recent studies have suggested that triclosan may be an endocrine disrupter and may contribute to antibiotic resistance.  Congresswoman Slaughter’s letter points to those recent studies as a cause for concern and justification for a ban on the use of triclosan in consumer products.  In particular, the letter states that that antibiotic resistance and contaminated water, due in part to the use of triclosan, “have created a public health crisis in the United States.”  The letter also points to studies that suggest that triclosan may harm the environment and human health as reason for the ban. 

Slaughter’s letter comes just months after the Natural Resources Defense Council (“NRDC”) filed a Complaint in the U.S. District Court for the Southern District of New York against FDA to try to force the Agency to finalize its topical antimicrobial drug products monograph.  We posted on the suit in August.  The NRDC subsequently filed a Motion for Summary Judgment asking the court to declare unreasonable FDA’s delay in finalizing the Agency's topical antimicrobial drug products monograph and to order FDA to finalize the monograph within ninety days.  FDA is in the process of reviewing the safety of triclosan and intends to make those findings public in spring 2011.