By Kurt R. Karst –      

The U.S. District Court for the Western District of Kentucky (Bowling Green Division) denied a Motion for Preliminary Injunction in a case concerning the Constitutionality of the recently enacted Family Smoking Prevention and Tobacco Control Act (“FSPTCA”).  As we previously reported, five tobacco manufacturers (including R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, and Commonwealth Brands, Inc.) and a retailer of tobacco products filed a Complaint in August alleging that certain FSPTCA provisions concerning Modified Risk Tobacco Products (“MRTP”) violate their First Amendment right to engage in commercial speech. 

The MRTP provisions of the FSPTCA (FDC Act § 911) prohibit the introduction into interstate commerce of any tobacco product that is “sold or distributed for use to reduce harm or the risk of tobacco-related disease,” which means a product:

(i) the label, labeling, or advertising of which represents explicitly or implicitly that –

(I) the tobacco product presents a lower risk of tobacco-related disease or is less harmful than one or more other commercially marketed tobacco products;

(II) the tobacco product or its smoke contains a reduced level of a substance or presents a reduced exposure to a substance; or

(III) the tobacco product or its smoke does not contain or is free of a substance;

(ii) the label, labeling, or advertising of which uses the descriptors “light”, “mild”, or “low” or similar descriptors; or

(iii) the tobacco product manufacturer of which has taken any action directed to consumers through the media or otherwise, other than by means of the tobacco product's label, labeling, or advertising, after June 22, 2009, respecting the product that would be reasonably expected to result in consumers believing that the tobacco product or its smoke may present a lower risk of disease or is less harmful than one or more commercially marketed tobacco products, or presents a reduced exposure to, or does not contain or is free of, a substance or substances.

To market an MRTP, a company must first file an application with the Department of Health and Human Services Secretary.  The application is made available for public comment and is referred to the Tobacco Products Scientific Advisory Committee for a recommendation.  An MRTP application may be granted if it is determined that the applicant has demonstrated that “the product, as it is actually used by consumers, will (1) significantly reduce harm and risk of tobacco-related disease to individual tobacco users; and (2) benefit the health of the population as a whole taking into account both users of tobacco products and persons who do not currently use tobacco products.”

The Plaintiffs contended in their briefs (here, here, and here), among other things, that the MRTP provision is: (1) “a viewpoint-based restriction on core First Amendment speech . . . subject to strict scrutiny” which fails to pass review because “it is not necessary to serve the asserted interest;” (2) an unconstitutional prior restraint because it “lacks any of the constitutionally-mandated procedural safeguards that the Supreme Court requires of prior restraints under any level of scrutiny;” and (3) void for vagueness.  FDA countered in its brief that “the statutory provisions regulating [MRTPs] do not restrict speech; they restrict the distribution of certain products without FDA review,” that strict scrutiny is inapplicable, and that even if the commercial speech test applies, “[t]he dangers of products sold or distributed as modified risk tobacco products that do not in fact reduce risk are so high that there is a compelling governmental interest in ensuring that statements about modified risk tobacco products are complete, accurate, and relate to the overall disease risk of the product” and the FSPTCA is narrowly tailored to advance that important governmental interest.  (Eleven non-profit public health organizations and consumer advocacy groups, including the Campaign for Tobacco-Free Kids and the American Cancer Society, supported FDA’s position in an amicus brief.) 

After assuming “for purposes of this preliminary injunction motion that the MRTP provision regulates speech and must satisfy the First Amendment,” the court stated that “it seems likely that its restrictions on speech are constitutionally permissible” using the familiar test for government regulation of commercial speech that was announced by the Supreme Court in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980).  In particular, the court noted that the government has a substantial interest in protecting consumers from misleading tobacco industry claims about allegedly reduced risk tobacco products because of the “significant health risks associated with the use of tobacco products and the history of marketing ‘low tar’ and ‘light’ cigarettes, that the government adequately demonstrated that “the harms it recites are real” and that the FSPTCA’s MRTP provision will “alleviate [the harms] to a material degree,” and that there is “at least a reasonable fit between the means and ends of the MRTP regulatory scheme.” 

After considering each of the factors for granting a preliminary injunction, the court ruled that such a remedy is unwarranted.  The court did note, however, that the Plaintiffs have some likelihood of success on the theory that the MRTP provision operates as a prior restraint and lacks a reasonable time limit for review:

Under the MRTP provision, tobacco manufacturers must submit not only the would-be modified risk product but any “proposed advertising and labeling” and “sample product labels and labelling” to the FDA for review. . . .  Thus, any such proposed speech about a modified risk tobacco product is effectively silenced until the FDA issues a decision. Because this is so, the reasonable time limit safeguard is necessary to satisfy the “principle that the freedoms of expression must be ringed about with adequate bulwarks.”  Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 66 (1963).  At this point, such a time limit is missing.  While Congress has charged the FDA with “establish[ing] a reasonable timetable for the Secretary to review an application under this section,” it has given the FDA two years to come up with one. . . .  The Court thinks it likely that this two-year delay is unconstitutional given that certain portions of the MRTP provision have been in effect since June 22, 2009.

On that basis, the court concluded that the first factor of the preliminary injunction analysis – i.e., whether the Plaintiffs have a strong likelihood of success on the merits – was not determinative and proceeded to analyze the other three preliminary injunction factors.

It is unclear whether the Plaintiffs in the case will appeal the ruling.  There has been significant speculation that the U.S. Supreme Court will ultimately be asked to rule on the Constitutionality of the FSPTCA.  Meanwhile, FDA continues to flex its new enforcement muscles granted to the Agency under the FSPTCA.  Last week, FDA announced that it issued several Warning Letters to companies marketing illegal flavored cigarettes.  FDA has also been sued by a cigar importer and distributor in connection with FDA statements regarding flavored cigarettes.

By Anne Marie Murphy –

The Consumer Product Safety Improvement Act of 2008 (“CPSIA”) made significant changes to the laws enforced by the Consumer Product Safety Commission (“CPSC”).  CPSIA Section 102 amended the Consumer Product Safety Act (“CPSA”) to require that manufacturers certify that their products are in compliance with any applicable CPSC rule, standard, or ban.  In February of this year, citing industry confusion as to which testing and certification requirements apply to which products, the CPSC announced a one-year stay of enforcement of the CPSIA testing and certification requirements.  Unless extended by the CPSC, the stay of enforcement will expire about three months from now in February 2010.

Yesterday, the CPSC posted on its website a draft guidance document that explains the two types of certification of compliance required by CPSIA: a general conformity certificate, based on a reasonable testing program; and, for children’s products, a certificate based on CPSC-recognized third-party testing.  Previously, the CPSC has taken the position that the general conformity certification requirement applies broadly to any product subject to a CPCS rule, standard, or ban, including for example any product that requires child-resistant packaging under the Poison Prevention Packaging Act (“PPPA”).  In December 2008, CPSC posted Frequently Asked Questions (“FAQs”) that specifically address how the certification requirement would apply to PPPA products.  

The new guidance document, which has been sent to the Commissioners for their vote, however makes no mention of PPPA products.  The CPSC will hold a public meeting on Monday November 9, 2009 to discuss the document.  We will attend the meeting and report back any significant developments.

By Ricardo Carvajal –

Several Congressional representatives wrote a letter to FDA asking the agency to “fully implement” a provision of the FDCA that allows marketing as a dietary supplement of an article previously investigated for use as a drug.  Section 201(ff)(3)(B)(ii) excludes from the definition of a dietary supplement any article for which an IND was authorized and for which substantial clinical investigations were instituted and made public, unless the article was marketed as a food or supplement before the IND was authorized.  However, the dietary supplement exclusion can be rendered inapplicable to an article by FDA’s issuance of a regulation.  This somewhat cumbersome mechanism allows for the marketing of an article as a supplement even if it was previously studied as a drug.  Although the letter does not reference any specific products, a citizen petition pending with FDA asks the agency to issue a regulation allowing the marketing of homotaurine as a dietary ingredient under the rulemaking authority described above (see our prior post here). 

The Congressional representatives also expresses dismay over FDA’s request for comment on the issue of whether section 301(ll) applies to dietary supplements, given the “the absence of any indication that Congress intended for [section 301(ll)] to replace any existing law.”  For more on issues raised by FDA regarding its implementation of section 301(ll), see our prior post here. 

By Kurt R. Karst –      

A recent report from the Government Accountability Office (“GAO”), titled “FDA Needs to Enhance Its Oversight of Drugs Approved on the Basis of Surrogate Endpoints,” finds that weaknesses in FDA’s monitoring and enforcement process have hampered the Agency’s ability to effectively oversee postmarketing studies conducted under FDA’s accelerated approval regulations.  Senate Finance Committee Ranking Member Charles Grassley (R-IA) requested that the GAO examine FDA’s oversight of drugs approved under FDA’s accelerated approval regulations based on surrogate endpoints.  

In December 1992, FDA promulgated final regulations under which the Agency will accelerate the approval of certain new drugs and biologics for serious or life-threatening illnesses, and when such products provide a meaningful therapeutic benefit to patients over existing treatments. These regulations, which are commonly referred to as “accelerated approval,” are located in Subpart H (21 C.F.R. § 314.500) of FDA’s drug regulations, and in Subpart E (21 C.F.R. § 601.40) of the Agency’s biologics regulations.  If a product meets these criteria, then FDA may grant marketing approval based: (1) on a demonstrated effect on a “surrogate endpoint” and a sponsor’s commitment to complete with “due diligence” the required postmarketing studies to demonstrate the product’s clinical benefits; or (2) on restrictions to assure safe use (that is, when FDA determines that a drug can be used safely only if distribution or use is modified or restricted).  (In clinical trials, a “surrogate endpoint” is an alternative measurement of the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms.)   Importantly, FDA may expedite the withdrawal of approval of an application approved under the accelerated approval regulations if a sponsor “fails to perform the required postmarketing study with due diligence,” or if “[a] postmarketing clinical study fails to verify clinical benefit.”  A list of accelerated and restricted approvals is available here. 

Interesting, the GAO report notes a shift in the types of products approved under the accelerated approval regulations:

Since FDA began using the accelerated process in 1992, there has been a general shift in approvals based on surrogate endpoints from applications for HIV/AIDS drugs to applications for cancer drugs.  In the first 9 years of the accelerated approval process, from 1992 through 2000, applications for drugs to treat HIV/AIDS made up 48 percent of the approvals, while applications for drugs to treat cancer made up 26 percent of these applications.  Conversely, from 2001 through 2008, applications for drugs to treat cancer made up over half—59 percent—of the applications approved, while drugs to treat HIV/AIDS accounted for only 18 percent of approved applications. [(See the figure below from the GAO Report)]

Percentage of Approved Applications Granted Accelerated Approval for Cancer and HIV/AIDS Drugs, June 19, 1992–November 20, 2008

According to the GAO report, from June 19, 1992, through November 20, 2008, FDA approved a total of 90 applications (for 64 different drugs) based on surrogate endpoints.  During that period, FDA required drug sponsors to conduct 144 postmarketing confirmatory studies associated with those surrogate endpoint accelerated approvals.  Of those 144 confirmatory studies, FDA classified 92 of them (64 percent) as “closed” (that is, the studies were completed or FDA released the sponsor from conducting the studies), and 52 of them (36 percent) as “open.”  Of the 92 closed studies, sponsors had fulfilled 73 of them (and FDA released sponsors from the remaining 19), according to the GAO report.  In general, “sponsors were able to fulfill about two-thirds of their study requirements in less than 5 years, with time frames ranging from 7 months to more than 12 years.  In contrast, nearly one-third, or 23, of these studies took over 5 years to fulfill,” with products to treat cancer comprising 61 percent of this group.

The GAO report is critical of FDA’s postmarketing study oversight and lack of enforcement of postmarket study requirements, stating that:

FDA has not been routinely monitoring the status of postmarketing studies, primarily because oversight of these studies is not considered a priority. Regarding its enforcement of postmarketing study requirements, we found FDA has not fully utilized its available enforcement tools, even when sponsors have failed to complete required studies.   

FDA reportedly has three initiatives in place to address oversignt weaknesses.  First, “to ensure FDA has current information on the status of open postmarketing studies and facilitate the timely review of [Annual Status Reports (‘ASRs’)], FDA retained [a]  contractor in 2008 to review ASRs for all postmarketing studies classified as open.”  Second “is the creation of a new tracking coordinator position within each medical review division with responsibility for a variety of tasks related to the tracking of postmarketing studies.”  And third is FDA's Web-based Document Archiving, Reporting and Regulatory Tracking System (“DARRTS”), which “should allow FDA staff greater access to information and provide enhancements over the current database, such as creating management reports on specific drugs and their respective studies.”

With respect to enforcing postmarket study requirements, the GAO report states:

FDA has not fully utilized its two enforcement tools – issuing administrative action letters and withdrawing a drug from the market in certain cases – to encourage and compel drug sponsors to complete required confirmatory postmarketing studies.  FDA has the discretion to issue administrative action letters to drug sponsors if 1) sponsors are late or fail to submit ASRs, or 2) FDA determines that sponsors are not sufficiently progressing in completing their studies.

Indeed, FDA has never withdrawn approval of an application for a sponsor’s failure to complete a required postmarketing study with due diligence or because a postmarketing study failed to verify clinical benefit (under either Subpart H or Subpart E).  (FDA could have pursued withdrawing approval of IRESSA (gefitinib) when the sponsor’s postmarketing study failed to verify clinical benefit.  Instead, FDA approved new labeling that limits IRESSA use to patients with cancer who are currently benefiting, or have previously benefited, from IRESSA treatment.)   With respect to withdrawing approval of an application for a sponsor’s failure to complete a required postmarketing study with due diligence, the report states:

Our review of the 90 applications approved based on a surrogate endpoint under the accelerated approval process revealed several circumstances that appeared to meet the regulatory conditions for withdrawal, but FDA was hesitant to use its enforcement authority.  Specifically, we found that for 36 of the 90 applications, drug sponsors had not fulfilled their confirmatory study requirements by establishing the clinical effectiveness of those drugs.  This includes several applications for drugs that FDA had approved more than 10 years ago and for which sponsors had not yet completed all of their required studies, and others where the studies failed to confirm the drug’s clinical effectiveness. 

The example used in the GAO report of a sponsor not completing confirmatory studies is  Shire’s PROAMATINE (midodrine hydrochloride) Tablets, which FDA approved in September 1996 under the Agency’s Subpart H (surrogate endpoint) regulations for the treatment of symptomatic orthostatic hypotension.  (FDA  subsequently approved several generic versions of the drug.)  The labeling for PROAMATINE includes the following warning: 

The indication for use of ProAmatine® in the treatment of symptomatic orthostatic hypotension is based primarily on a change in a surrogate marker of effectiveness, an increase in systolic blood pressure measured one minute after standing, a surrogate marker considered likely to correspond to a clinical benefit. At present, however, clinical benefits of ProAmatine®, principally improved ability to carry out activities of daily living, have not been verified.

To verify the drug’s clinical benefit to conclude that the drug is safe and effective, FDA required the sponsor of PROAMATINE to conduct certain postmarketing studies.  According to FDA’s Postmarketing Study Commitments Database, the official status of the required postmarketing studies is “delayed.”  This makes PROAMATINE the accelerated approval with the longest outstanding commitment. 

We previously reported (here and here) on letters FDA has posted in a docket (Docket No. FDA-2007-N-0475) concerning the conduct and completion of confirmatory studies for PROAMATINE. 

An August 7, 2007 letter FDA sent to companies marketing approved versions of midodrine HCL raised the possibility that generic sponsors might conduct the required confirmatory studies, and also raised the possibility of withdrawing approval for all midodrine applications if those studies are not conducted.  FDA stated in an August 2008 letter that “[i]f an application or supplement containing studies that verify clinical benefit for midodrine hydrochloride is not approved soon, we will issue a Notice of Opportunity for a Hearing on the Center’s proposal to withdraw the approval of the midodrine hydrochloride new drug application (NDA) (and all ANDAs referencing that NDA) pursuant to 21 CFR 314.530.” 

FDA took an even more forceful tone in an August 2009 letter stating again that “[i]f an application or supplement containing studies that verify clinical benefit for midodrine hydrochloride is not approved in a timely manner as described herein, we will issue a Notice of Opportunity for a Hearing on the Center's proposal to withdraw the approval of the midodrine hydrochloride NDA (and all abbreviated NDAs (ANDAs) referencing that NDA) pursuant to 21 CFR §§ 314.530; 314.150, and 314.151,” but adding that the required studies must have “50% enrollment by April 12, 2010,”  “100% enrollment by June 12, 2010,” and that full study reports of the requested trials must be submitted “on or before October 12, 2010.”  Whether FDA will take action to withdraw approval remains to be seen. 

The GAO report recommends that FDA clarify its enforcement authority under the accelerated approval process to identify – perhaps in a guidance document – the conditions under which the Agency would would utilize its expedited withdrawal authority if a sponsor either fails to complete required confirmatory studies with due diligence, or if completed studies fail to demonstrate the clinical effectiveness of the drugs.  FDA responded that in light of certain compexities and the need for a case-by-case assessment, the Agency “believes it would be difficult, if not impossible, to provide further clarification as to when it might utilize its authority to expedite withdrawal of drug approval on the basis of surrogate endpoints.” 

By Carrie S. Martin –

On November 30, 2009, the United States Supreme Court will hear oral argument in Merck & Co. v. Reynolds, No. 08-905, a securities class action.  The case concerns the standard of inquiry required to start the clock running on the statute of limitations in a private securities “fraud” case.  Plaintiffs have alleged that Merck defrauded investors by not disclosing safety concerns about Merck’s product Vioxx, the nonsteroidal anti-inflammatory drug (“NSAID”) that was pulled from the market in 2004.  Merck argues that plaintiffs had sufficient notice of the alleged fraud, and that the statute of limitations prohibits the lawsuit from proceeding.  Merck points to a 2001 FDA Warning Letter in which FDA accused Merck of deceptive and misleading conduct by misrepresenting Vioxx’s safety profile, media coverage about study results pointing to safety concerns, and other suits filed against Merck as constituting inquiry notice.  Plaintiffs argue that the statute of limitations was not triggered by the Warning Letter because the fraud cause of action requires a suspicion of scienter, i.e., Merck’s intent to deceive or defraud , and the Warning Letter etc. did not cover that subject.  Under section 804(a) of the Sarbanes-Oxley Act of 2002, a private action claiming fraud under section 10(b) of the Securities Exchange Act of 1934 must be brought “not later than the earlier of – (1) 2 years after the discovery of the facts constituting the violation; or (2) 5 years after such violation.” 

In Merck, the district court granted Merck’s motion to dismiss, concluding that the two-year statute of limitations provision barred the suit.  In re Merck, 483 F. Supp. 2d 407, 418 (D.N.J. 2006).  The district court pointed to “storm warnings” that Vioxx increased the risk of myocardial infarction, including the FDA’s 2001 Warning Letter.  Id. at 419.  These storm warnings stemmed from a study called the Vioxx Gastrointestinal Outcomes Research (“VIGOR”) study, which showed an increase of myocardial infarction in patients treated with Vioxx as compared to naproxen.  Id. at 411-12.

The Third Circuit reversed, based on the heightened pleading requirement of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) requiring that a plaintiff plead facts with particularity that the defendant acted with scienter.  543 F.2d 150, 164 n.12 (3rd Cir. 2008).  Although the Third Circuit admitted that several published articles and the 2001 FDA Warning Letter discussed the negative VIGOR findings, the court concluded that the plaintiffs had no reason to suspect that Merck misrepresented the drug’s safety profile.  Merck publicly hypothesized that the results were due to the cardioprotective effects of naproxen rather than any harmful effect of Vioxx.  Id. at 171-72.  The plaintiffs, therefore were not on inquiry notice that Merck intentionally misrepresented the study results.  Only when an independent study found an increased risk of heart attack in patients taking Vioxx as compared to placebo, were Merck’s reassurances of Vioxx’s safety questioned and inquiry notice triggered.  Id. at 172.

In August 2009, PhRMA submitted an amicus brief supporting Merck’s arguments.  PhRMA argued that the “limitations period should commence when a reasonable investor of ordinary intelligence would suspect that he has been defrauded” without which information “suggesting scienter.”  Brief of PhRMA as Amicus Curiae in Support of Petitioners at 12 (Aug. 17, 2009).  The United States, in its amicus brief filed in October 2009, argued that notice “arises only if circumstances suggest a misrepresentation or omission made with scienter.”  Brief of the United States as Amicus Curiae Supporting Respondents at 26 (Oct. 26, 2009). 

The Supreme Court will now have the opportunity to decide whether the Third Circuit’s interpretation of “inquiry notice”, as supported by the United States’ amicus brief, is correct.  If the Supreme Court affirms, it will likely restrict the statute of limitations as a bar to private securities fraud cases.

By Ricardo Carvajal, David B. Clissold & Jeffrey K. Shapiro –

FDA has published a draft guidance for industry on the listing of ingredients in tobacco products that manufacturers and importers are required to submit to the agency under FDCA section 904(a)(1).  The FDCA does not define the term “ingredient” for purposes of section 904(a)(1), but that section calls for the submission of a listing of “all ingredients, including tobacco, substances, compounds, and additives that are. . . added by the manufacturer to the tobacco, paper, filter, or other part of each tobacco product.”  In part, section 900(1) broadly defines “additive” to mean:

any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting  he characteristic of any tobacco product (including any substances intended for use as a flavoring or coloring or in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding).

Perhaps teeing off of the broad definition of “additive” and its inclusion by reference in section 904(a)(1), the draft guidance states that “FDA considers ingredients that are introduced in packaging and that are known or may be reasonably expected to become incorporated into the consumed product to be ingredients that are added by the manufacturer to the tobacco product.”  The guidance further states that, under certain circumstances, reaction products are considered to be “ingredients”:

When a material is known or reasonably expected to be formed through a chemical reaction during tobacco product manufacturing, FDA considers the resultant material to be an ingredient that is added by the tobacco product manufacturer. As such these reaction products are to be listed in the ingredient listing. Reaction products may result from, among other things, reactions that occur during a mixing operation, during an in-process holding step, or during a storage period. The reaction product(s) may result from a reaction between ingredients in the same part of a product (e.g., reconstituted tobacco) or between ingredients added to different parts of the product (e.g., tobacco, paper) or added at different manufacturing steps.

For those who would like to submit comments, time is short.  Comments are due by November 13.

By John A. Gilbert and Larry K. Houck –

Senate Special Committee on Aging Chairman Herb Kohl (D-WI) and Member Sheldon Whitehouse (D-RI) have sent a letter to U. S. Attorney General Eric Holder seeking improved access to needed pain and other medications for long-term care and hospice patients.  Their October 19, 2009 letter states current federal Controlled Substance Act (“CSA”) requirements lead to delays in patients receiving needed medication.  The letter notes that nurses in long-term care facilities and hospices often act as the agents of prescribing physicians by transcribing medication orders and transmitting them to pharmacies serving the facilities.  The letter observes, however, that the CSA does not allow pharmacies to dispense Schedule II controlled substances to patients based on such orders, instead requiring practitioners to sign hard copy prescriptions prior to dispensing, which leads to delays.  The letter observes that delays in timely access to needed medication can lead to unnecessary re-hospitalizations and “needless suffering.” 

The letter states that the Drug Enforcement Administration (“DEA”) has heard concerns from patient advocates for years that the CSA “is ill-suited to the unique needs of this patient population and the practice protocols of those is who provide their care.” 

Noting that the CSA and regulation provisions relevant to this issue remain unchanged since 1994 when DEA permitted long-term care prescriptions to be faxed, the Committee submitted draft legislation with the letter.  The draft legislation, cited as the “Long-Term Care Patients’ Access to Medically Necessary Controlled Substances Act of 2009,” would amend the CSA to allow nurses to act as the agent of the practitioner to enter medication orders on patient charts and for pharmacies to dispense controlled substances pursuant to those medication orders.  The draft legislation sets the conditions and restrictions for the nurses and for the medication orders and, according to the letter, “strikes the appropriate balance between the legitimate law enforcement interest in preventing diversion and maintaining adequate controls, and the urgent needs of frail long-term care patients to prompt access to medically necessary prescription medications.”

This has been an ongoing issue, particularly as it applies to DEA regulations involving emergency prescriptions.  DEA regulations provide that a Schedule II prescription may be “called in” only if the criteria for an emergency prescription is met.  DEA recently clarified these conditions which has still left many in the long term care and hospice industry unsatisfied.

The letter asks for review and comment within twenty days.  We will provide updates as they occur.

By Alan M. Kirschenbaum & Kurt R. Karst –

Last Thursday we reported on the release by the House of H.R. 3962, the health care reform bill that will soon be considered on the House floor.  As we have done with other health care reform proposals, we have prepared a summary of the provisions of H.R. 3962 that are of direct interest to pharmaceutical and medical device manufacturers.  Our summary can be found here.  The full text of the bill can be found here. 

By Ricardo Carvajal –

FDA has again posted a warning letter to Procter and Gamble stating that the company’s VICKS DayQuil Plus Vitamin C and VICKS NyQuil Plus Vitamin C are unapproved new drugs and are  misbranded.  The letter states that, when “drug and dietary ingredients are combined into a single dosage form, the combination becomes a drug under section 201(g)” of the FDCA.  As noted in the letter to P&G, FDA previously staked out that position in warning letters in October 2008 to Bayer for its products combining aspirin with either phytosterols or calcium, and in 2001 to Omni Nutraceuticals for its products combining acetaminophen with either glucosamine sulfate or glucosamine sulfate and chondroitin sulfate, and to B.F. Ascher its product combining  acetaminophen and melatonin. 

FDA first posted a warning letter to P&G over VICKS on October 14, but then removed the posting, citing an administrative error.  The fact that this latest posting is accompanied by a press release emphasizes that this time it’s for real.

By Ricardo Carvajal –

We’re used to seeing the Center for Science in the Public Interest ("CSPI") take a stick to food marketers.  It seems that CSPI now has plenty of friends.  First, Connecticut’s Attorney General trumpeted his success in gaining agreement from food companies to stop using the Smart Choices logo, at least until FDA decides what to do about point-of-purchase labeling (for more on that controversy, see our prior post).  Then according to Sustainable Food News, Hain Celestial  called for industry to stop using misleading front-of-pack labeling and to stop playing fast and loose with its use of “natural.”  Hain Celestial is proposing the adoption of standards for “natural” similar to those used for “organic” (for our primer on “natural,” “organic,” and other “green” claims, see here).  Now The Economist is piling on with an opinion that calls for greater scrutiny of health-related promotional claims. 

For food marketers, it’s bad enough that regulators, the media, and even some in industry are on the case.  But as the Food Liability Blog points out, it may yet be the plaintiffs’ bar that does the most damage.

JP Ellison –

In March of 2008, we reported on a Wisconsin federal district court opinion that dismissed a plaintiff’s Lanham Act claim against three manufacturers of generic prescription drug products.  On October 29, 2008, the Seventh Circuit issued a decision in an appeal of that same case.  As we noted in our earlier post, Hyman, Phelps & McNamara, P.C. represented one of the defendants in the case. 

Between March of 2008 and October 2009, the district court had modified its dismissal from with prejudice to without prejudice and the plaintiff and two of the defendants had appealed and cross-appealed, respectively.

The central issue before the Seventh Circuit was whether a Lanham Act claim could proceed when the claim was based upon FDA-required labeling. On appeal, the panel (in an opinion written by Judge Posner) agreed with the district court’s reasoning that such a claim could not proceed unless and until FDA had made a finding with respect to that labeling, which it had not yet done.  In concluding that FDA had not yet made a finding, the Seventh Circuit reached the same conclusion as the district court, namely that letters from an FDA employee to the defendants did not constitute final agency action.

The Seventh Circuit also affirmed the district court’s denial of the plaintiff’s motion for partial summary judgment based upon a claim of “literal falsity.”  In doing so, Judge Posner observed:  “William Blake declared that ‘to Generalize is to be an Idiot.  To Particularize is the Alone Distinction of Merit.’  That is a bit extreme, but uncritical generalization is the path to error.”  We’re not sure the quote is central to the court’s holding, but it seemed a shame to omit a William Blake quote from a report on an appellate court opinion.

By William T. Koustas –

On October 29, 2009, Judge Walton of the United States District Court for the District of Columbia ruled for the American Bar Association (“ABA”) and prevented the controversial Red Flags Rule (“the Rule”) from being enforced on November 1, 2009 with respect to lawyers.  (See our previous post here.)

The ABA filed suit against the Federal Trade Commission (“FTC”) on August 27, 2009.  On September 23rd, the ABA filed a motion for summary judgment and declaratory and injunctive relief insofar as the Rule could be deemed to apply to attorneys.  According to media reports, Judge Walton had trouble accepting the FTC’s characterization of lawyers being considered “creditors.”  He noted that the FTC’s definition of a creditor could even include a plumber who bills a customer for work and said he has “…a real problem with concluding that Congress intended to regulate lawyers when these statutes were enacted.” 

The ABA released a short statement following its victory which states, “[b]y voiding the FTC’s interpretation of a statute that was clearly not intended to apply to the legal profession, the court has ensured that lawyers stay focused on the mission of their work…”  

Though this decision apparently only applies to lawyers, it is possible it could have broader implications. 

UPDATE:

• FTC extends enforcement deadline for Red Flags Rule until June 2010.

By Kurt R. Karst –      

A recent report issued by the London School of Economics and Political Science (“LSEPS”), and commissioned by the Swedish government, urges governments to create new incentives to promote the research and development of antibiotics in light of the growing concern over resistance to existing antibiotics, such as the emergence of drug-resistant “superbugs” like Methicillin-resistant Staphylococcus aureus, which reportedly kills approximately 18,650 Americans each year.  Sweden, which currently holds the rotating European Union (“EU”) Presidency, will reportedly lobby EU and U.S. officials to push for legislation creating new incentives for antibiotic drug development.

According to the report, titled “Policies and incentives for promoting innovation in antibiotic research”:

The potential for an impending health crisis due to the lack of new antibiotics, along with the inherent externalities in the market and the likely cost-savings from improving treatment, provide ethical and economic justification for some intervention in the market by a public body.  However, the design of the incentive – in terms of the timing and size of the prize, the organisational driver, and the target beneficiary – will determine its chances of success.

The LSEPS report goes on to divide “traditional” R&D incentives into two main types – “push” and “pull” methods.  “Push incentives focus on removing barriers to developer entry largely by affecting the marginal cost of funds to the developer for investments in R&D and tend to impact the earlier stages of the development process,” and include tax credits and grants, according to the report.  Meanwhile, “pull mechanisms involve the promise of financial reward only after a technology has been developed,” and include monetary prizes, and intellectual property extensions.  (The idea of creating a “Medical Innovation Prize Fund” and abolishing non-patent market exclusivity has been proposed in the U.S. by one member of Congress; however, the idea has not gained traction.  The recent creation of priority review vouchers in the U.S. is one new “pull” mechanism, but because the priority review voucher market is untested, it is unclear how successful this incentive mechanism will be.)  The report goes on to note that:

The basic elements of push and pull mechanisms can also be combined to create hybrid mechanisms. . . .  Hybrid mechanisms may provide crucial impetus to overcome developer reticence at the different (and perhaps key) stages of product development: early stage push funding provides greater financial space to explore early discovery ideas without needing to understand their full potential, whilst the larger pull element entices them to undertake the latter phases of development, including expensive Phase III trials.  The evolution between the respective incentive forces within a hybrid incentive (push to pull) is important in that developers have been understood to respond more to profit incentives at the later stages of the research process than at the earlier stages. In combining push and pull incentives, hybrid mechanisms also spread risk between the funder and the developer.

Among other incentives identified in the 199-page report, the report discusses regulation-based incentives, such as reducing clinical trial requirements.  This could include delaying Phase 3 clinical trials until post-approval for drugs for very serious infections, and accepting more evidence based on modelling predictions.  To that end, earlier this year, legislation co-sponsored by Senators Sam Brownback (R-KS) and Sherrod Brown (D-OH) was enacted that requires FDA to establish two new review groups to recommend solutions for the prevention, diagnosis, and treatment of rare diseases and neglected diseases of the developing world.  These two groups must recommend to FDA “appropriate preclinical, trial design, and regulatory paradigms and optimal solutions for” rare and neglected diseases.

The report also notes that “pharmaceutical companies may hesitate to initiate new clinical trials for antibiotics because guidelines for clinical trials in this therapeutic area remain unclear.”  Over the past couple of years, FDA has held several meetings to discuss clinical trial design issues for antibiotic drug development, and recently scheduled a meeting of the Anti-Infective Drugs Advisory Committee to discuss clinical trial endpoint and design issues in the development of antibacterial products for the treatment of community-acquired bacterial pneumonia.  In addition, the FDA Amendments Act of 2007 – at Title XI, Subtitle B (Antibiotic Access and Innovation) – requires FDA to convene a public meeting on serious and life-threatening diseases due to antimicrobial resistance and to make available on FDA’s website any clinically susceptible concentrations (i.e., values that characterize bacteria).

Also of interest, the LSEPS report addresses the issue of so-called “wildcard” patent term extensions (“PTEs”).  “Under wildcard patent extensions, also known as transferable IP protection, a company that successfully develops a new antibiotic is granted a patent extension for another drug that is approaching patent expiration in its portfolio.  Suggested lengths of the patent extension range from 6 months to 2 years in the US and to up to 5 years in the EU or proportional to therapeutic benefit,” according to the report.  After noting the various advantages and disadvantages of wildcard PTEs (“The main advantage of the scheme is that it would present a significant reward for large companies with lucrative products to protect or for small companies who could sell the extension to them. . . . [T]he main disadvantage of the scheme is the significant social costs of a wildcard patent extension. The estimated cost of allowing wildcard patents for just 10 drugs exceeds US $40 billion.”), the report concludes that “[w]ildcard patent extensions should not be considered for promoting R&D in antibiotics.” 

The idea of creating a wildcard PTE has been proposed and rejected in the U.S.  This pull mechanism was most recently proposed in the Biodefense and Pandemic Vaccine and Drug Development Act of 2005 (Bioshield II), which is intended to stimulate the development and approval of countermeasures to biological weapons.  Bioshield II was signed into law, but without the proposed wildcard PTE provision.

By Jeffrey N. Wasserstein –
 
On October 28, 2009, Michael Loucks, the Acting U.S. Attorney for the District of Massachusetts, announced that his office has recovered over $6.8 billion in healthcare fraud cases over the last 15 years, which is almost 30% of the total healthcare fraud recoveries in that time period in the U.S.  This includes the recent $2.3 billion settlement with Pfizer.  If you read the list of companies in the press release that have paid more than $50 million, twelve of the 14 companies are pharmaceutical or medical device companies. 

Where will the prosecutors from Boston be trick or treating next?  Scary times for pharma and the medical device industries. 

By Alan M. Kirschenbaum & Kurt R. Karst –

Earlier today, House Speaker Nancy Pelosi (D-CA) unveiled the Affordable Health Care for America Act (H.R. 3962).  The bill, which is the latest version of the House’s healthcare reform proposal and the one that will go to the House floor, is almost 2,000 pages in length.  A section-by-section analysis of the bill is available here.  Various other documents related to the bill are posted on the House Energy and Commerce Committee website.  (A second, and much shorter bill – H.R. 3961, the Medicare Physician Payment Reform Act of 2009 – was also introduced.)

Some of the provisions that will be of most interest to FDA Law blog readers are the following:
 
Federal Food, Drug, and Cosmetic Act and Public Health Service Act amendments

• Pathway for licensure of biosimilars established (§§ 2575-2577)
• National directory for Class III and certain Class II devices established (§ 2571)
• Patent infringement settlements between brand and generic manufacturers that delay generic entry (“reverse payments”) prohibited (§ 2573)
• Nutrition labeling required for standard menu items at chain restaurants (§ 2572)

Public Option

• HHS may negotiate payment rates for items and services, including prescription drugs (§ 323)
• Federal health care program fraud and abuse laws apply to public option (§ 326).

Medicare Part D

• Drug manufacturers provide discounts of 50% on brand drugs dispensed to enrollees in the coverage gap (§ 1182)
• Coverage gap phased out by 2019 (§ 1181)
• Repeal of non-interference provision:  HHS may negotiate prices with drug manufacturers (§ 1186)
• Drug manufacturer rebates required for drugs dispensed to Medicare/Medicaid dual eligibles (§ 1181)

Physician Payment Sunshine

• Requires reports on payments of value by drug and device companies to physicians and other health care providers (§ 1451)

Medicaid

• Federal upper limits on Medicaid payment for multiple source drugs changed to 130% of weighted average of AMPs (§ 1741)
• AMP definition amended to exclude sales to most non-retail pharmacy entities (§ 1741)
• Minimum Medicaid Rebate for innovator drugs increased to 22.1% of AMP and rebates increased for new formulations  (§ 1742)
• Rebates required for drugs dispensed to Medicaid managed care enrollees (§ 1743)

340B Program

• Program expanded to certain cancer hospitals, critical access hospitals, and other new covered entities (§ 2501)
• HRSA oversight enhanced (§ 2502)

Other provisions

• New 2.5% excise tax on non-retail sales of medical devices (§ 552)
• HHS to conduct study on use of physician prescriber information in sales and marketing by drug manufacturers, and recommend ways to protect providers from biased marketing (§ 239)

We’ll be posting a more detailed summary of these and other H.R. 3962 provisions of interest to our readers in the near future.

The House Democratic Leadership intends to begin floor debate on the bill beginning on Thursday, November 5, and members have been asked to be  prepared to vote over the following weekend in order to complete the bill.