By Larry K. Houck –

In a departure from US DOJ policy, Attorney General Eric Holder announced formal federal guidelines for U.S. Attorneys in states that have authorized marijuana for medical use.  The guidelines, set out in an October 19, 2009 memorandum authored by Deputy Attorney General David Ogden, were sent to the U.S. Attorneys in the fourteen states that have enacted laws authorizing marijuana for medical treatment.  Marijuana is a Schedule I controlled substance under the federal Controlled Substances Act.  Schedule I drugs are those that lack a currently accepted medical use in treatment in the United States.

U.S. Attorneys will continue reviewing marijuana cases on an individual basis consistent with DOJ resource allocation and federal priorities set out in the guidelines.  Investigation or prosecution of activities that are legal under state medical marijuana laws conflict with the federal resource allocation and priorities.

The guidelines mandate that the federal government not investigate or prosecute “individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.”  This would include individuals using marijuana for medical treatment and their caregivers that provide marijuana to them.  Prosecution of “commercial enterprises that unlawfully market and sell marijuana for profit,” including operations that hide behind local or state law, remain an enforcement priority.

While the guidelines preclude investigation and prosecution of activities clearly and unambiguously compliant with state law, the memorandum states that it is to serve only as a guide to investigative and prosecutorial discretion.  The guidelines state that nothing precludes investigation or prosecution when there is reasonable basis that state law compliance is but a pretext for illegal activity or when it serves other important federal interests.  The guidelines list the following indications of conduct not “in clear and unambiguous compliance with applicable state law that may indicate “illegal drug activity of potential federal interest”:

• Unlawful possession or unlawful use of firearms;
• Violence;
• Sales to minors;
• Financial and marketing activities inconsistent with state law;
• Amounts of marijuana inconsistent with state or local law;
• Illegal possession of other controlled substances; or
• Ties to other criminal enterprises.

The guidelines state that the list is not exhaustive.  So, the presence of these or other factors can trigger investigation and prosecution of activities legal under state law.

The Drug Enforcement Administration (“DEA”) announced on October 22 that the agency welcomes the guidelines, asserting that “[i]t is not the practice or policy of DEA to target individuals with serious medical conditions who comply with state laws authorizing the use of marijuana for medical purposes.”  But what about the not-for-profit cooperatives or even the for-profit dispensaries that provide marijuana to ill individuals?  DEA stated that consistent with DOJ’s guidelines, it “will continue to identify and investigate any criminal organization or individual who unlawfully grows, markets or traffics marijuana or other dangerous drugs.”  But “criminal” or “unlawful” under which laws, the federal laws or individual state laws?

By Ricardo Carvajal –

FDA has issued a letter to industry stating that the agency intends to take enforcement action against front-of-package ("FOP") or shelf labeling that provides false or misleading information (including implied nutrient claims that don't comply with regulatory requirements).  Further, the letter states that FDA is developing a proposed regulation to "define the nutritional criteria that would have to be met by manufacturers making broad FOP or shelf label claims concerning the nutritional quality of a food."  If the regulation becomes final, manufacturers and retailers would remain free to develop and use their own labeling systems, but the systems would have to satisfy the nutritional criteria specified in the regulation.  If that effort doesn't result in a "common, credible approach," FDA is signaling that it may establish a single, uniform system for FOP and shelf labeling.  

In April, FDA and USDA jointly issued a letter directed to the Smart Choices ProgramTM, an FOP labeling system that features symbols and other information intended to “help guide consumers in making smarter food and beverage choices.”  That letter stated that the agencies would be monitoring implementation of Smart Choices and would be “concerned if any FOP labeling systems used criteria that were not stringent enough to protect consumers against misleading claims; were inconsistent with the Dietary Guidelines for Americans; or had the effect of encouraging consumers to choose highly processed foods and refined grains instead of fruits, vegetables, and whole grains.”  Since then, Smart Choices has come under attack from several quarters, most notably Connecticut’s Attorney General (see here).

It is too soon to know if this latest action by FDA is more bark than bite.  However, the fact that the agency is prepared to wade into a controversial arena with a proposed rule suggests that whatever reticence there may have been at FDA about grappling with voluntary labeling issues is rapidly dissipating.

By Kurt R. Karst –   

Earlier this week, the U.S. District Court for the Central District of California  a  filed by Mutual Pharmaceutical Company, Inc. (“Mutual”), and AR Scientific, Inc. and AR Holding Company, Inc. (“AR”) in a Lanham Act case concerning the continued marketing of unapproved oral dosage form drug products containing colchicine.  The court also declined to address a  filed by the defendants in the case, deciding instead to grant a Motion to Transfer the case to the District of New Jersey for the convenience of the witnesses and parties. 

Colchicine is a near-200 year-old drug FDA approved NDAs for in July 2009 for Mutual and AR (here and here) for the treatment of gout flares (NDA No. 22-351, for which FDA granted 3-year exclusivity) and for the treatment of Familial Mediterranean Fever (“FMF”) (NDA No. 22-352, for which FDA granted 7-year orphan drug exclusivity).  The drug products, marketed under the trade name COLCRYS (colchicine) Tablets, were also approved earlier this week for the prevention of gout flares.  In February 2008, FDA took enforcement action against companies marketing unapproved injectable colchicine drug products, but the Agency noted that its action was limited to the injectable dosage form of the drug – “FDA is not taking any orally administered colchicine products off the market at this time, whether approved or unapproved.”         

The Mutual/AR colchicine case stems from two complaints ( and ) Mutual and AR filed in August 2009 (later consolidated) – just days after FDA approved COLCRYS Tablets – seeking an injunction against both suppliers of colchicine Active Pharmaceutical Ingredient used in unapproved single-entity colchicine prescription drug products and manufacturers and marketers of unapproved single-entity colchicine prescription drug products.  Mutual and AR allege in their complaints that the defendants violated the Lanham Act § 43(a) (15 U.S.C. § 1125(a)) the California Business and Professions Code §§ 17200 and 17500, and California unfair competition and misappropriation common law in that they “unlawfully and unfairly advertised, marketed, promoted, distributed, and/or sold in competition with Plaintiffs’ colchicine product (COLCRYS™).”  Specifically, Mutual and AR allege that the inclusion of the defendants’ colchicine drug products on various integrated drug dispensing databases and pricing services (“Price Lists”) and drug ordering systems confuses pharmacists into incorrectly believing that the defendants’ products are FDA-approved, and that the labeling for the defendants’ colchicine drug products falsely imply that they are FDA-approved and safer than COLCRYS Tablets.  (Mutual and AR did not allege that the defendants made any literally false statements.)

The defendants in the case argued that the injunctive relief sought by Mutual and AR is within FDA’s primary jurisdiction, and that certain “consumer surveys relied upon by [Mutual and AR] to support their false advertising claims do not establish that Defendants have made any false statements and that Plaintiffs’ requested relief is barred by the doctrine of unclean hands.”

Under Lanham Act § 43(a), a party may be held liable for placing into interstate commerce a “false or misleading description of fact, or false or misleading representation of fact” that “in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.”  And to prevail on a false advertising claim under the Lanham Act, a plaintiff must meet six factors:

(1) the defendant made a false statement either about the plaintiff’s or its own product; (2) the statement was made in commercial advertisement or promotion; (3) the statement actually deceived or had the tendency to deceive a substantial segment of its audience; (4) the deception is material; (5) the defendant caused its false statement to enter interstate commerce; and (6) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to the defendant, or by a lessening of goodwill associated with the plaintiff’s product. [(Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 n.4 (9th Cir. 2002).)]

In support of their Motion for Preliminary Injunction, Mutual and AR primarily rely on a 2006 decision by the U.S. District Court for the Central District of California (Mutual Pharm. Co. v. Ivax Pharm., Inc., 459 F. Supp. 2d 925 (C.D. Cal. 2006) in which Mutual brought a similar Lanham Act action against companies marketing unapproved quinine sulfate after FDA approved Mutual’s QUALAQUIN (quinine sulfate) Capsules.  In that case, the court granted (in part) the requested preliminary injunction, and in so doing, rejected the defendants’ primary FDA jurisdiction argument and found that Mutual had established the requisite probability of success on the merits:

Accordingly, the Court finds that the FDCA does not stand as a bar against Mutual litigating its false labeling claim.  As this is the only argument raised by defendants as to why Mutual lacks a probability of success on this claim, the Court finds that Mutual has shown a likelihood of success as to its false advertising claim to the extent that claim is based upon defendants’ false representations contained on its product labels.

The court in Mutual’s colchicine Lanham Act case, however, expressed its reluctance to “view the Lanham Act’s false advertising provisions as broadly as did the Ivax court.”  The court also stated that:

Defendants have not just relied on the primary jurisdiction doctrine.  They also attack the merits of Plaintiffs’ false advertising claim, the sufficiency of the evidence presented by Plaintiffs, and the equities of enjoining Defendants from engaging in the very same behavior that Plaintiffs were also engaged in until days before they commenced this litigation.  Even assuming that some portion of Defendants’ marketing activities are [sic] not within the primary jurisdiction of the FDA, this Court still concludes that Plaintiffs have not established a likelihood of success on the merits. . . .

Here, the survey evidence relied upon by Plaintiffs largely establishes only that pharmacists are confused about what the inclusion of a drug on a Price List or drug ordering system means concerning the FDA approval status of a particular drug.  As a preliminary matter, the Court is not convinced that having drugs listed on a Price List or drug ordering system maintained by a third party even constitutes a “false statement” in “commercial advertising or promotion” to fall within the scope of the Lanham Act’s false advertising provisions.  Moreover, there is little evidence that Defendants have in any way created the confusion experienced by pharmacists, or that this confusion is limited to colchicine products. Plaintiffs’ contentions concerning the product labels and inserts are even weaker, both because the evidence of confusion is weaker and because disputes concerning the content of those labels and inserts falls even more squarely within the primary jurisdiction of the FDA.

Although the case has been transferred to the District of New Jersey, it seems unlikely that a New Jersey court will disagree with the California court’s decision that the matter lies within FDA’s primary jurisdiction.  Whether FDA plans to take enforcement action against companies manufacturing and marketing unapproved colchicine tablets drug products is unclear.  FDA’s 2006 compliance policy guide provides the Agency’s enforcement priorities with respect to marketed unapproved drugs and states that one of the circumstances in which FDA may take enforcement action is when marketed unapproved drugs “present direct challenges to [the drug approval system], as do unapproved drugs that directly compete with an approved drug, such as when a company obtains approval of a [NDA] for a product that other companies are marketing without approval . . . .”  Interestingly, in late 2006, FDA took enforcement action with respect to marketed unapproved quinine sulfate drug products shortly after the Ivax decision.  FDA generally allows a grace period for the distribution of unapproved competitive products to secure approval of a marketing application before taking enforcement action, unless FDA perceives the unapproved drugs to pose a health risk. 

By Ricardo Carvajal –

The Chief Administrative Law Judge (“ALJ”) at the Federal Trade Commission (“FTC”) has issued a decision that, if upheld by the Commissioners of the FTC, would dismiss an FTC complaint which alleged that a marketer of dietary supplements “disseminated” or “caused to be disseminated” false advertisements on an internet website in violation of sections 5(a) and 12 of the Federal Trade Commission Act.  The challenged advertisements were alleged to falsely represent that the supplement prevented, treated, or cured cancer.  However, the ALJ did not reach the question of whether the advertisements were false or misleading because he ruled that the FTC staff lawyers prosecuting the case failed to meet their burden of demonstrating that the respondents “disseminated” or “caused to be disseminated” the advertisements.  The ALJ found in part that (1) there was no evidence that respondents had created or played a role in creating the advertisements, (2) merely referring consumers to a website did not constitute “dissemination” of the advertisements on that website, and (3) neither unsupported assertions that respondents participated in the website nor assertions that they had a business relationship with the supplement manufacturer were sufficient to give rise to liability for false advertising on the website.

By Kurt R. Karst –      

Consistent with recent wins concerning generic PROGRAF (tacrolimus) and generic ZOSYN (piperacillin sodium; tazobactam sodium) Injection (here and here), the U.S. District Court for the Central District of California recently ruled that FDA’s April 2008 denial of a citizen petition and decision to approve Spear Pharmaceuticals, Inc.’s (“Spear’s”) ANDA No. 77-524 for a generic version of Valeant Pharmaceuticals International’s (“Valeant’s”) EFUDEX (fluorouracil) Topical Cream, 5%, did not violate the Administrative Procedures Act (“APA”).

EFUDEX (also known as 5-FU) is a locally-acting antineoplastic drug product FDA first approved in July 1970 for the topical treatment of multiple actinic or solar keratoses (“AK”).  In 1976, FDA approved the drug for a second indication – for the topical treatment of superficial basal cell carcinomas (“sBCC”) when conventional methods are impractical.  As we previously reported, in December 2004, Valeant submitted a citizen petition to FDA requesting that the Agency not approve any ANDA for a generic version of EFUDEX Cream unless the application contains data from an adequately designed comparative clinical study conducted in sBCC subjects.  Specifically, Valeant argued in the company’s petition that:

The inadequate treatment of sBCC can lead to serious complications for patients, including the growth of their cancer. In that light, . . . is critical that FDA not make assumptions about whether a proposed generic product will be safe and effective in treating sBCC, based on a showing of comparable efficacy in patients with AK. These two conditions occur at different sites of drug action and exhibit different growth patterns. Comparable absorption of a drug to one site of action does not demonstrate comparable absorption to another, more difficult to reach site of action. Similarly, comparable efficacy in an easier to treat condition does not demonstrate comparable efficacy in a more difficult to treat condition. 

For these reasons, FDA must not allow onto the market generic versions of Efudex Cream until a demonstration of bioequivalence has been made, at a minimum, in patients with sBCC.

On April 11, 2008, FDA denied Valeant’s petition and approved Spear’s ANDA.  Citing judicial precedent upholding FDA’s authority to determine the appropriate methods to determine bioequivalence, the Agency stated in its petition response that “even when clinical trials are needed, it has not been the Agency’s policy to require that bioequivalence be shown in every indication if drug release from the dosage form and appearance at the or sites of activity has been demonstrated.”  Furthermore, FDA concluded that “an AK bioequivalence study is sufficient to establish that the generic topical 5-FU formulation will be available in the epidermis and the upper dermis to act on both AK and sBCC lesions to an extent that is comparable to Efudex Cream.” 

Valeant promptly sued FDA in the U.S. District Court for the Central District of California for declaratory and injunctive relief pursuant to the APA.  Spear intervened in the case.  After discovering a “potential conflict of interest . . . that could cause it to revisit the approval status of the ANDA,” FDA issued an Administrative Reconsideration and Stay of Action to Spear staying the approval of ANDA  No. 77-524.  After resolving that issue, FDA reaffirmed the approval of the Spear ANDA.  Valeant moved for summary judgment on the basis that FDA – specifically, the Office of Generic Drugs (“OGD”) – failed to defer to the views of scientists within the Division of Dermatology and Dental Products in FDA’s Office of New Drugs (“OND”), who had determined that a study in AK patients alone was insufficient to establish bioequivalence, but rather that “both AK and sBCC should be studied to yield independent confirmation of bioequivalence for these indications.”  FDA and Spear also moved for summary judgment (here and here) on the basis that FDA’s approval action was proper under the APA, in that “the authorized decision maker in connection with Spear’s original approval was [OGD], not the dermatologists in [OND] . . . .”

In granting FDA’s and Spear’s summary judgment motions, the court commented that:

Valeant has offered no evidence that the FDA actually ignored the opinions of its dermatology experts.  The FDA simply did not defer to those opinions. . . .  [D]eference is owed to the decisionmaker authorized to speak on behalf of the agency, not to each individual agency employee. . . .  In this case, the authorized decision maker in connection with Spear’s original approval was the Office of Generic Drugs, not the dermatologists in the Office of New Drugs . . . . [(internal quotation and citation omitted)]

The district court’s decision leaves intact FDA’s stellar batting average in bioequivalence decision court challenges.  Courts have uniformly held that FDA’s bioequivalence determinations fall squarely within the broad discretion of the Agency – see, e.g., Glaxo Group v. Leavitt, AMD 06-469 (D. Md., Mar. 6, 2006) (Davis, J.) (unpublished opinion); Schering Corp. v. FDA, 51 F.3d 390 (3d Cir. 1995); Schering Corp. v. Sullivan, 782 F. Supp. 645 (D.D.C. 1992), vacated as moot sub nom. Schering Corp. v. Shalala, 995 F.2d 1103 (D.C. Cir. 1993); Somerset Pharms., Inc. v. Shalala, 973 F. Supp. 443 (D. Del. 1997); Bristol-Myers Squibb Co. v. Shalala, 923 F. Supp. 212 (D.D.C. 1996); Fisons Corp. v. Shalala, 860 F. Supp. 859 (D.D.C. 1994).

Interestingly, FDA has been asked to rule on another bioequivalence issue similar to that raised by Valeant in its citizen petition, but this time in the context of ALDARA (imiquimod) Cream, 5%, which is approved for AK, sBCC, and External Genital Warts (“EGW”).  Earlier this year, Graceway Pharmaceuticals, LLC ("Graceway") submitted a citizen petition to FDA requesting that the Agency refrain from approving any ANDAs for a generic version of ALDARA Cream unless an ANDA contains data from bioequivalence studies conducted in patients with each of ALDARA’s approved conditions, including sBCC and EWG, and pharmacokinetic studies under maximal use conditions in patients with EGW and AK.  Graceway states in its petition that “[t]he straightforward application of FDA’s reasoning in the Efudex matter mandates that an ANDA for a generic version of Aldara contain data from a bioequivalence study in patients with EGW and a separate study in patients with sBCC.” 

By Ricardo Carvajal –

In an unusual step, FDA and FTC have issued a joint warning letter to the internet marketer of a dietary supplement promoted as helpful in preventing swine flu, seasonal flu, and colds.  According to the letter, the product “has not been approved, cleared, or otherwise authorized by FDA for use in the diagnosis, mitigation, prevention, treatment, or cure of the H1N1 Flu Virus,” and is both adulterated and misbranded.  In addition to threatening seizure and injunction, the letter threatens a referral for criminal prosecution if there is a failure to take corrective action.  Following a determination by the Secretary of Health and Human services that swine flu poses a public health emergency that “has the significant potential to affect national security,” FDA provided Emergency Use Authorization for certain unapproved or uncleared swine flu related products – but not for the product at issue. 

The letter further states that the FTC Act requires claims that a product prevents H1N1 infection to be supported by “well-controlled human clinical studies,” and prohibits health claims that are not supported by “rigorous scientific evidence.”  The letter notes that violations can result in an injunction or Administrative Order that can require restitution for consumers.
 
The 48-hour time frame afforded for a response to a joint agency action is a standard part of recent warning letters to companies selling illegal products for prevention of swine flu, and shows that there is a high level of concern surrounding the marketing of these products at both FDA and FTC (also see FDA's recent press release regarding illegal H1N1 drugs marketed on the internet here).  Marketers of products high on the agencies’ priority lists had better take note.

By John R. Fleder –

Numerous states have filed lawsuits across the country alleging that pharmaceutical companies have defrauded the Medicaid system by “publishing” inflated prices, namely “AWP” and “WAC” prices, that do not accurately reflect the prices at which those companies actually sell their products.  The cases generally allege that the states have over-reimbursed pharmacists and others because those states relied on “false” AWP and WAC prices for Medicaid reimbursement purposes.  The defendants have presented numerous arguments to defend these cases. (Hyman, Phelps & McNamara, P.C. is actively involved in that defense.)

On October 16, 2009, the Supreme Court of Alabama dealt a fatal blow to the cases that the State of Alabama commenced against AstraZeneca, GSK, and Novartis. It ruled that the lower court had erred in denying the defendants’ post-trial motions seeking a verdict in their favor.  The appellate court ruled that judgment should have been rendered in favor of the defendants, thus apparently ending the cases in that state against these defendants.  The Court ruled that the State failed to produce evidence that it reasonably relied on the alleged misrepresentations by the defendants with regard to their prices.  There was also a concurring opinion and a dissenting opinion.

Beginning on October 20, Stoel Rives LLP will present a three-part webinar on “business and legal issues related to the development of environmentally sustainable food products.”  The titles and dates for the sessions are:

• Session 1: Where to Start? Developing and Financing Sustainable Food Products (Tuesday, October 20, 2009)

• Session 2: Making Good Marketing Claims: Product Labeling Pitfalls, Third-Party Certification, and "Green Washing" (Tuesday, November 3, 2009)

• Session 3: Sustainable Foods Increase Litigation Risks: Developing Strategies to Minimize Exposure (Tuesday, November 17, 2009)

Hyman, Phelps & McNamara, P.C.’s Ricardo Carvajal will discuss FDA, USDA, and FTC approaches to sustainability claims during Session 2.  You can register for the webinar free of charge here.

By Kurt R. Karst –      

On October 14, 2009, Sens. Jeanne Shaheen (D-NH) and David Vitter (R-LA) announced the introduction of S. 1778, the Access to Affordable Medicines Act.  The bill would amend the FDC Act’s ANDA provisions at § 505(j) to add a new subsection stating that:

If the proposed labeling of a drug that is the subject of an application under this subsection is different from the labeling of the listed drug at the time the Secretary evaluates the application under this subsection, the drug that is the subject of such application shall, notwithstanding any other provision of this Act, be eligible for approval and shall not be considered misbranded under section 502 if –  

(A) a revision to the labeling of the listed drug has been approved by the Secretary within 60 days of the expiration of the patent or exclusivity period that otherwise prohibited the approval of the drug under this subsection;

(B) the Secretary has not determined the applicable text of the labeling for the drug that is the subject the application under this subsection at the time of expiration of such patent or exclusivity period;

(C) the labeling revision described under subparagraph (A) does not include a change to the ‘Warnings’ section of the labeling;

(D) the Secretary does not deem that the continued presence in commerce of the labeling of the listed drug (as in effect before the revision described under subparagraph (A)) adversely impacts the safe use of the drug;

(E) the sponsor of the application under this subsection agrees to submit revised labeling of the drug that is the subject of such application not later than 60 days after the notification of any changes to such labeling required by the Secretary; and

(F) such application otherwise meets the applicable requirements for approval under this subsection.

The bill, dubbed the “Generic Loophole Bill,” is intended to “increase access to lower cost generic drugs by closing a loophole some brand name drug companies exploit that needlessly and unfairly delays the entry of safe, lower-cost generic drugs to the consumer market,” according to Sen. Shaheen.  Specifically, Sen. Shaheen commented that:

As the law currently stands, when brand name manufacturers make labeling changes, generic drug labeling must reflect this change prior to the drug being approved and introduced in the market. . . .  [L]ast minute [labeling] changes are often used by brand name pharmaceutical companies to purposefully delay the introduction of cost-saving generic drugs by weeks or months. . . . .  My bill would stop these costly practices by providing a 60-day grace period for the generic drug company to submit the new labeling for approval and marketplace distribution, while preserving safeguards if the new labeling truly presents a safety issue.

It appears that a recent change to the labeling of CASODEX (bicalutamide) Tablets led the Senators to introduce the bill.  According to Sen. Shaheen, “consumer access to the generic version of this drug was delayed by more than 3 months due to a last minute pediatric labeling change . . . .” 

Meanwhile, in the House of Representatives, Rep. Alcee Hastings (D-FL) has introduced H.R. 3777, the Drug Price Competition Act of 2009.  This is a companion bill to S. 1315, which was introduced in the Senate earlier this year by Sen. Bill Nelson (D-FL).  As we previously reported, the bill would amend the definition of “first applicant” at FDC Act § 505(j)(5)(B)(iv)(II)(bb) with respect to 180-day exclusivity eligibility so that certain subsequent ANDA applicants could trigger exclusivity.

Upon introducing H.R. 3777, Rep. Hastings commented that the bill would “help achieve some of the goals that are essential to health care reform: ensuring fair market competition and increasing access to affordable drugs.”  In particular, Rep. Hastings commented that the bill:

allows generic companies that win patent challenges to share the 180-day exclusivity period with the generic companies that first submitted an application to the FDA.  However, no subsequent challenger would be eligible to share in the exclusivity reward once the generic drug has been launched.

If enacted, first-to-file generic manufactures would be less likely to accept a late entry date because this would mean that another generic manufacturer could win a patent challenge and share the 180-day exclusivity period.

The amendments proposed in the Drug Price Competition Act of 2009 appear to be consistent with a paper Apotex, Inc. issued earlier this year.  In that paper, Apotex recommends that Congress work for legislation “that gives shared (if not sole) exclusivity to a generic challenger who, although not first to file a paragraph iv certification, is first to succeed in addressing the listed patents.”

The Access to Affordable Medicines Act and Drug Price Competition Act are just two pieces of legislation Congress is considering with the backdrop of health care reform that could affect the generic drug industry.  On October 15th, the Senate Judiciary Committee held an Executive Business Session to discuss, among other things, a substitute amendment to S. 369, the Preserve Access to Affordable Generics Act, concerning so-called “reverse payment” settlements.  The amendment passed by a 12-7 vote with minor revisions.  (Another amendment proposed by Sen. Tom Coburn (R-OK) that would have changed the evidentiary standard in the Kohl substitute amendment when considering settlements was withdrawn).  Federal Trade Commission Chairman Jon Leibowitz commended the Judiciary Committee on its passage of the bill.  Also, as we previously reported, Sen. John Cornyn (R-TX) is pushing for legislation that would preempt tort suits against generic drug makers.

By Douglas B. Farquhar –

In the second day of the Enforcement and Litigation Conference sponsored by the Food and Drug Law Institute (“FDLI”), speakers from FDA and private industry discussed the trends in international trade in FDA-regulated products, and debated when companies  are required to disclose potential financial conflicts of interest.

David Elder, Director of FDA’s Office of Regional Operations, described how FDA has ramped up its efforts to inspect imported drugs, foods, and medical devices, and how FDA is increasing its overseas inspections of facilities regulated by FDA.  The PREDICT system (he was at pains to remember what the acronym stands for) has been inaugurated in one District of FDA, he said, and will be rolled out shortly to all 20 districts.  He said that the system, which addresses FDA-regulated products offered for import, enables inspectors to determine which import entries should be reviewed further by looking at the company and country of origin, type of product, and compliance history of recipient, among other criteria.  He said that he expects the system to enable FDA to automatically release for importation (rather than requiring that the product to be held, returned to the country of origin, or inspected) much more than the 20 percent of imported FDA-regulated products that are already automatically released.  He also said that he anticipates that FDA inspections overseas will increasingly be conducted in conjunction with regulatory authorities in those countries.

Katie McDermott, a partner at the law firm Morgan, Lewis & Bockius in Washington, D.C., referred to recent Corporate Integrity Agreements entered into by medical device or drug companies, and noted that the CIAs are beginning to require reporting to the government any in-kind contributions to physicians or their offices.  She noted that, for example, if representatives of a company provide training on the use of a drug or device to a physician or other medical personnel, the company may be required to report that type of activity.  Corporate Integrity Agreements, which are generally required when a mainstream drug or medical device company enters into a settlement with the federal government because of allegations of kickback or off-label promotion violations, have been executed and are in effect for dozens of companies.

Bradley Thompson, an attorney with Epstein, Becker & Green in Washington, D.C., argued that FDA needs to demonstrate increased transparency.  He noted that his firm has determined that FDA’s Center for Drug Evaluation and Research had promulgated 64 draft Guidances more than five years ago that have not been finalized or withdrawn.  He also stated that his clients are increasingly frustrated by filing comments on draft or proposed rules or guidances, and the comments are not addressed when the final rules or guidances are addressed.

In an additional update about the Conference, we should also report that Dan Miller of the Delaware Medicaid Fraud Control Unit ("MFCU"), yesterday reported that MFCU units around the country now have access to a centralized databank that can aggregate data from different Medicaid programs around the country, and match up diagnosis codes for Medicaid beneficiaries with drugs dispensed.  This enables investigators to determine, on a national basis, the amount of Medicaid reimbursements for a drug used by patients in off-label indications that may have been induced by a company’s off-label marketing.  The database can also be used to show increased prescriptions by specific physicians that government agents believe have received kickbacks.  Dan also mentioned, in response to a question, that some MFCU units around the country receive a percentage of the recoveries (much like a contingency fee for attorneys) when they successfully achieve a settlement with a targeted company, although his unit does not.

Further information about the conference, including audiotapes, will be available from FDLI.

Doug Farquhar co-chairs the FDLI Enforcement and Litigation Conference.

By Douglas B. Farquhar –

At the FDA Enforcement and Litigation Conference sponsored by the Food and Drug Law Institute ("FDLI"), the Compliance Directors of three of FDA's Centers, representatives of other components of the Food and Drug Administration, and a Justice Department official today forecast where FDA will concentrate its enforcement efforts under the new FDA Commissioner, Dr. Margaret Hamburg.

Aside from discussing Commissioner Hamburg’s initiatives, announced in a speech before FDLI on August 6, 2009, the common threads announced by the Compliance Directors were that FDA inspections and compliance efforts will be risk-based, meaning that the agency will focus on inspecting firms and products that have histories of noncompliance and where problems with the products could cause serious health consequences for consumers.  The Compliance Directors also emphasized the use of concentrated enforcement techniques to block imports of violative products from overseas, using, especially, Import Alerts, a technique which permits the agency, in cooperation with the United States Customs and Border Protection, to block products from entering the country without any prior involvement of a court or the United States Department of Justice.

More specifically,

• Gene Thirolf, the Director of the Office of Consumer Litigation (the branch of the Department of Justice responsible for prosecuting violations of the Federal Food, Drug, and Cosmetic Act), announced that False Claims Act cases, he expects, will begin to be filed and pursued against drug companies for manufacturing drugs that do not comply with relevant manufacturing specifications, and for distributing drugs when the companies have failed to report adverse events which have occurred with their drugs.  As Mr. Thirolf stated, False Claims Acts cases, which have resulted in recoveries for the government in numerous cases in the hundreds of millions of dollars, and in two recent cases, in billions of dollars, have traditionally been brought for drugs which were marketed using off-label claims or where there were allegations relating to kickbacks for doctors to encourage them to prescribe products, although some cases have already been brought under the False Claims Act for failure to report adverse events.  The discussion indicates that the Department of Justice will likely continue to broaden the scope of these types of claims.  The False Claims Act enables the federal government, in claims either brought with or without whistleblowers, to secure multiple damages and large penalties for claims submitted to the government for products on the basis of false statements. 

• Deborah Autor, the Director of Compliance at FDA’s Center for Drug Evaluation and Research, stated that her office is also looking at a firm's overall ability to meet FDA requirements as a possible indicator of whether the firm should be a compliance concern.  For example, she said that her office is noticing that poor quality of applications for FDA approval of drugs or faulty Adverse Event Report systems tend to show a likelihood of poor compliance in other areas, such as cGMP (current Good Manufacturing Practice). 

• Roberta Wagner, the Director of Compliance at FDA's Center for Food Safety and Applied Nutrition, indicated that her office is now sending requests to FDA District Offices to inspect specific food establishments, instead of leaving to the District Offices’ discretion which companies to inspect.  She said that her Center is basing its identification of companies on the degree of risk posed by the companies due to type of product, compliance history,  and health risk caused by violative products.

• Tom Abrams, the Director of DDMAC (FDA’s Division of Drug Marketing, Advertising and Communications), emphasized that there will be a series of hearings in early November on how FDA should regulate the use of social media (such as YouTube, Twitter, Facebook) in drug marketing.  This announcement follows on the heels of new Guidelines issued by the Federal Trade Commission just last week on a similar subject.

• Tim Ulatowski, the Director of Compliance for FDA’s Center for Devices and Radiological Health, pointed to a recently issued guidance on the registration of device companies.

• Dan McChesney, Director of Compliance at FDA’s Center for Veterinary Medicine, indicated the Center will focus on drug compounding establishments.

More information about the conference is available through FDLI.

Doug Farquhar co-chairs the FDLI Enforcement and Litigation Conference.

On October 27, 2009, the European Food Law Association (“EFLA”) will hold its first international EU-US Food Law Conference at the Brussels Sofitel, Place Jourdan 1 – 1000, Brussels.  EFLA is an international scientific association whose primary goal is to study and to promote Food Law.  The title of the conference is “Placing Products on the Market.”  A copy of the conference brochure is available here.  According to EFLA:

This first EFLA Conference, specifically devoted to International Relations in the Food Law Sector, will foster the exchange of ideas and experiences between European and American practitioners. This exchange will focus on the respective substantive laws and their practical effects as seen by practitioners over the years and at present.  The speakers will present general outlines of the topics, and the audience will be invited to actively participate in the debates and contribute their own views and insights.

Hyman, Phelps & McNamara, P.C.’s Diane B. McColl will chair a session at the conference comparing the main aspects of the substantive EU and US food laws, which will include a presentation from Wim Debeuckelaera of the European Commission Directorate General for Health and Consumer Affairs. 

By Ricardo Carvajal –

FDA has issued a draft guidance document that addresses FDCA section 201(rr)(4), which prohibits a tobacco product from being “marketed” in combination with any other FDA-regulated product.  The guidance provides the following as an example of prohibited conduct: "Nicotine that is derived from tobacco is added to water, juice, or soda (which are foods under the FDCA) and the water, juice, or soda is identified as containing a tobacco product."

This example suggests that, if a food is not “identified” as containing a tobacco product, then the prohibition in section 201(rr)(4) does not apply because the tobacco product has not been “marketed.”  This result is consistent with FDA’s interpretation of the term “marketed” as used in FDCA section 201(ff)(3)(B), otherwise known as the dietary supplement exclusionary clause.  In part, the exclusionary clause excludes from the definition of a dietary supplement an article that is approved as a new drug unless it is first “marketed” as a dietary supplement (or as another type of food).  In applying the exclusionary clause, FDA has taken the position that an article is not “marketed” as a supplement when it is merely present in a supplement that is offered for sale; rather, the article must have been sold or offered for sale as a supplement, or as a component of a supplement where the labeling or advertising for the supplement identified the presence of the article.

What FDA’s draft guidance leaves unsaid is that one can circumvent the prohibition in section 201(rr)(4) by not “identifying” a food as containing a tobacco product, but still run afoul of several adulteration and misbranding provisions of the FDCA.

By Kurt R. Karst –      

In what could shape up to be a very interesting (and important) precedent, the U.S. District Court for the Eastern District of Michigan (Southern Division) recently ruled and issued an Order and Injunction requiring Novo Nordisk, Inc. (“Novo”) to change an Orange Book-listed patent use code for a patent (U.S. Patent No. 6,677,358 (“the ’358 patent”)) on its drug product, PRANDIN (repaglinide) Tablets.  Novo has appealed the decision to the U.S. Court of Appeals for the Federal Circuit.  The district court’s decision follows an earlier decision in which the district court ruled that the counterclaim provisions at FDC Act §505(j)(5)(C)(ii)(I), as added by the Medicare Modernization Act (“MMA”), could be used to correct or delete a patent use code, and not only the patent number and expiration date.

For the uninitiated, patent use codes are listed in an Orange Book Addendum with a number and a descriptor.  Those patent use codes correspond with various patents with method-of-use claims listed in the Orange Book for a particular approved drug product.  Although FDA created patent use code descriptors prior to the Agency’s June 2003 finalization of its revised patent submission and listing requirements, with the new regulations, NDA sponsors are now required under 21 C.F.R. § 314.53(c)(2)(ii)(P)(3) to supply the descriptor language on Form FDA 3542. 

This case has quite a bit of back-story.  It stems from a patent infringement action Novo brought against Caraco Pharmaceutical Laboratories, Ltd. (“Caraco”) and Sun Pharmaceutical Laboratories, Ltd (“Sun”) with respect to the ’358 patent.  It is also related to two citizen petitions Novo and Caraco initially submitted to FDA in 2008 (FDA-2008-P-0343  FDA-2008-P-0441 – see our 505(q) Citizen Petition Tracker) concerning generic drug labeling carve-out and split patent certification (i.e., a Paragraph IV Certification and a “section viii” statement to the same patent) issues.  Novo submitted its petition to FDA after the Agency required the company to amend PRANDIN’s labeling to reflect a new Indications and Usage statement.  Previously, the PRANDIN Indications and Usage labeling statement discussed both monotherapy and combination therapy.  FDA required a unitary indication statement stating: “PRANDIN is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus.” 

In FDA’s December 2008 citizen petition decision, the Agency ruled that an ANDA for repaglinide that omits patent-protected information on metformin combination therapy would not be less safe or effective for the remaining, non-protected conditions of use, and that a split certification is appropriate as to the ’358 patent.  Novo subsequently filed a Petition for Reconsideration (“PRC”) and a Petition for Stay of Action (“PSA”) requesting FDA to reconsider its December 2008 petition decision and to stay the response and to refrain from taking any regulatory action consistent with the petition response (including granting any tentative or final approval for an ANDA for a generic version of PRANDIN that omits metformin combination information from the labeling).   

During FDA’s consideration of Novo’s PRC and PSA, Novo amended its Orange Book patent listing for the ’358 patent.  Previously, the ’358 patent was listed in the Orange Book with a “U-546” code, which is defined as “USE OF REPAGLINIDE IN COMBINATION WITH METFORMIN TO LOWER BLOOD GLUCOSE.”  The new use code, “U-968,” is defined as “A METHOD FOR IMPROVING GLYCEMIC CONTROL IN ADULTS WITH TYPE 2 DIABETES MELLITUS.” 

FDA, as a result of this use code change, denied Novo’s PRC and PSA as moot, stating that:

Because the use code for the ‘358 patent has changed since our issuance of the Citizen Petition Response and because our analysis and conclusions regarding labeling carveouts in that Citizen Petition Response were based on the previous use code, the factual predicate on which our previous response was based no longer applies.  As a result, your PRC and Petition for Stay are denied as moot. 

Although FDA denied the Novo PRC/PSA as moot, the district court deciding the patent infringement action has stated that “[a]s a result of the revised use code, the FDA will no longer permit Caraco to file a ‘section viii statement’ carving out the patented repaglinide-metformin combination therapy as a predicate for securing approval of Caraco’s ANDA to market its generic repaglinide for non-infringing uses.”  In other words, FDA has apparently required a “full” Paragraph IV Certification from Caraco as to the ‘358 patent as a result of the use code change.

Caraco challenged Novo’s use code change in a counterclaim submitted pursuant to FDC Act §505(j)(5)(C)(ii)(I) seeking an order from the court requiring Novo to amend the ‘358 Orange Book patent listing to revert back to the U-546 use code.  In granting Caraco’s Motion for Summary Judgment, the court found that Novo “improperly filed with the FDA for listing in the Orange Book the use code narrative for the method of use of claim 4 of the ’358 patent relating to Prandin,” and that Caraco and Sun “are entitled to a mandatory injunction requiring Novo to request the FDA to delist the U-968 listing for Prandin, and reinstate its former U-546 listing for Prandin.”  The court issued an Order and Injunction requiring Novo to submit to FDA a revised Form FDA 3542 reinstating the former U-546 listing for PRANDIN within twenty days from the date of the Order and Injunction.  Novo promptly appealed the decision to the Federal Circuit, where the company is seeking a stay of the district court’s Order and Injunction.

The district court’s decision is, to our knowledge, the first instance in which a court has interpreted the counterclaim provisions at FDC Act §505(j)(5)(C)(ii)(I) added by the MMA to order a company to correct or delete patent use code information.  That provision states:

If an owner of the patent or the holder of the approved application under [FDC Act § 505(b)] for the drug that is claimed by the patent or a use of which is claimed by the patent brings a patent infringement action against the applicant, the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under [FDC Act § 505(b)] or (c) on the ground that the patent does not claim either – (aa) the drug for which the application was approved; or (bb) an approved method of using the drug. [(emphasis added)]

Under FDC Act §§ 505(b) and (c), an NDA holder must submit with its application and after NDA approval “the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture use, or sale of the drug” (emphasis added).

As it did in the district court, Novo argues in its Emergency Motion to Stay the district court’s injunction that the statute authorizes only two specific counterclaims by an ANDA filer for correction of the patent information submitted by an NDA holder; namely, the correction of the patent number and the patent expiration date.  

By Ricardo Carvajal &  Susan J. Matthees –

When the Federal Trade Commission (FTC) sought comments in 2008 on proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising, we noted that endorsers (including expert endorsers and celebrities) and bloggers should beware.  FTC has now announced its adoption of the revised Guides.  That same day, senior FTC officials spoke about these changes at a National Advertising Division (NAD) of the Better Business Bureaus conference.  David Vladeck, Director of the FTC's Bureau of Consumer Protection and Mary Engle, Associate Director for Advertising Practices at the FTC, commented on the new guidelines.

The FTC last updated these Guidelines in 1980.  According to the FTC, under the revised Guidelines, advertisements that feature a consumer and convey his or her experience with a product or service as being "typical" when that is not the case, will be required to clearly disclose the results that consumers can generally expect.  In addition, the FTC has now made it clear that advertisers must clearly disclose "material connections" between the advertiser and the person endorsing a product or service.  This disclosure would apply to typical marketers of products, but also to "bloggers" who receive an inducement to review a product or service.  The Guidelines also address "celebrity endorsers" by stating that such endorsers can themselves be liable for false or unsubstantiated claims in advertisements.  In fact, the Guidelines state that when a celebrity makes statements about a product or service on talk shows or in social media, the celebrity is required to identify his or her connection to an advertiser.

Anyone with even a casual interest in the use of endorsements and of advertising through “new media” (e.g., blogs and other forms of consumer-generated content) should give the revised Guides a close read.  Below we paraphrase parts of some of the examples that FTC modified since FTC published the proposed Guides last November, and provide citations to those examples and the views of the FTC as to the legality of those practices:

• A consumer joins a network marketing program through which she receives free products for which she can choose to write reviews.  If she receives a free product and writes a positive review, that review is an endorsement.  Section 255.0, Example 8.
• A blogger who participates in a blog advertising service and agrees to promote an advertiser’s product is liable for any misleading or unsubstantiated representations the blogger makes (as is the advertiser), and is liable if the blogger fails to disclose that she has been paid for her services.  Section 255.1, Example 5.  
• A celebrity endorser touts a medical service provider to fans in real time via her social networking site (think Twitter).  She should disclose her relationship with that medical service provider because the nature of that medium is such that consumers may not realize that she is a paid endorser.  Section 255.5, Example 3.
• An influential blogger writes a positive review of a valuable product given to him by a manufacturer that has given him similar products in the past.  The blogger should disclose that he received the product for free; moreover, the manufacturer should advise him of the need for disclosure and should monitor his postings to ensure he complies.  Section 255.5, Example 7.

Also of interest:

• If an advertisement is likely to convey that a consumer’s experience with a product is representative of what consumers generally achieve, but consumers cannot generally expect to achieve that result, the advertisement should disclose the result that consumers can expect to achieve in whatever circumstances are depicted.  Section 255.2, Example 4.

A drug company provides substantial payments to an outside entity to design and conduct research on one of its products.  In its advertising, the company represents the research results as the findings of the outside entity. The company should disclose the fact that it funded the research.  Section 255.5, Example 1. 

The FTC received a number of comments urging it to steer away from new media in its revisions to the Guides.  However, as noted by FTC, whether or not the Guides address new media “does not affect the potential liability of those who use these media to market their products and services.”  That liability purportedly arises not under the Guides, but under section 5 of the Federal Trade Commission Act (FTC Act), which prohibits unfair or deceptive practices.

At the NAD conference, someone asked what an advertiser should do if one of its paid bloggers doesn't disclose the relationship.  Ms. Engle responded that the company should have a policy in place that all bloggers must disclose their relationship and if a blogger doesn't follow this policy, the company should "fire" the blogger.  Ms. Engle said that the FTC wouldn't sue "right away" for a violation of the failure of a blogger to disclose a connection (the audience laughed quite a bit at this comment).  Nevertheless, the revised Guides are already raising a ruckus in the blogosphere.  Finally, Ms. Engle commented that if employees of a company contribute to a work board that is public or post comments about the company on Facebook or Twitter, they need to disclose their relationship to the company.  

There are two enforcement points that people, including but not limited to bloggers and other users of new media, may want to keep in mind.  First, the Guides are guidance, not law.  In any given case, FTC must still show a violation of section 5 of the FTC Act.  Indeed, Ms. Engle reminded the NAD audience that the FTC guidance is merely that- a guidance, not rules, and the FTC still needs to show a violation of the law even if conduct appears to violate the Guides.

Second, the FTC can be expected to direct its limited enforcement resources toward big fish.  In fact, Ms. Engle also reminded the NAD audience that the FTC has limited resources and is only going to go after the "big fish" bloggers- a mom who gets free Pampers a few times and then writes a report on them is not going to surface on the FTC's radar.  That’s little comfort to big fish, but given that the evolution of new media has been propelled mostly by small fry, we expect that they may not be immune from FTC scrutiny.

At the NAD conference, Director David Vladeck spoke more generally about the FTC's priorities, and stated that the FTC is particularly concerned about food advertisements directed to children, internet advertising, testimonials, and green claims.  He indicated that the FTC is also trying to work more closely with FDA, EPA, and other relevant agencies in order to focus on these areas. There was also discussion about disclaimers.  Ms. Engle made it clear that a footnote comment on the results is not sufficient to act as an adequate disclaimer.  Instead, the FTC will consider the net impression of the entire ad.