By Ricardo Carvajal –

In an apparent effort to leverage against the scientific resources of other federal agencies, FDA’s National Center for Toxicological Research (“NCTR”) has entered into a Memorandum of Understanding (“MOU”) that provides for the sharing of nanotoxicology information with the Air Force Research Laboratory, 711 Human Performance Wing, Human Effectiveness Directorate, Biosciences and Protection Division (“AFRL”).  According to the MOU, FDA and AFRL “intend to coordinate research efforts so as to identify and expedite research and development of new tools and technologies that can be implemented that promote new understanding of the mechanisms of biological responses to environmental stressors, including toxic injury, and to identify biomarkers of exposure and disease that can be used to improve and protect human health.”  The MOU identifies a number of specific objectives, some of which relate to issues that have been the subject of much  discussion in the scientific and regulatory communities (e.g., toxicity of nanomaterials and the blood brain barrier, and identification of biosignatures of exposure).

NCTR’s mission is to conduct scientific research in support of FDA’s regulatory needs.  Those needs are evident in the area of nanotechnology, as recognized by FDA’s Nanotechnology Task Force.  In its 2007 report on nanotechnology, the Task Force recommended that FDA promote and participate in “research and other efforts to increase scientific understanding, to facilitate assessment of data needs for regulated products.”  The Task Force specifically recommended that FDA leverage against activities of other Federal agencies, and that FDA participate in collaborative efforts “to further understanding of biological interactions of nanoscale materials.”  The MOU with AFRL is clearly in line with those recommendations, and follows the announcement of a similar collaborative effort with the Alliance for NanoHealth (see our prior post here).  These collaborative efforts are likely to be of substantial importance to FDA, given that the agency receives no funding from the National Nanotechnology Initiative.

By Susan J. Matthees –

After years of anticipation, FDA has finally published a final rule establishing a specific small number of animals for each of the seven major species for purposes of the Minor Use and Minor Species Animal Health Act of 2004 (MUMS Act).  The final rule, codified in 21 C.F.R. § 516.3(b), defines a small number of animals as “equal to or less than 50,000 horses; 70,000 dogs; 120,000 cats; 310,000 cattle; 1,450,000 pigs; 14,000,000 turkeys; and 72,000,000 chickens.” 

In the Federal Register notice announcing the final rule, FDA explained that the agency will “periodically reevaluate the definition of ‘small number of animals’” because the number of animals affected by a disease may change over time.  FDA also noted that the agency could change the definition if the development cost versus market value of the drug changes.  FDA will make any changes to the definition through proposed rulemaking.  

By David B. Clissold & Ricardo Carvajal –

As required by the Family Smoking Prevention and Tobacco Control Act (“Tobacco Act”), FDA has established the Tobacco Products Scientific Advisory Committee (“TPSAC”) and is requesting nominations for voting and non-voting members.  The Commissioner will select the chair of the 12-member committee, which will consist of nine voting members (seven scientists, one government official, and one representative of the public) and three non-voting members that represent industry interests (one manufacturing industry representative, one small manufacturer representative, and one representative of tobacco growers). 

Establishment of the TPSAC is critical to FDA’s timely implementation of the Tobacco Act because the TPSAC may (and in some cases must) be involved in a wide range of regulatory activities, including actions on premarket approvals, approvals of modified risk tobacco products, establishment of tobacco product standards, and establishment of good manufacturing practice requirements.  In particular, “immediately upon the establishment of” the TPSAC, FDA must refer to it the politically and emotionally charged  “issue of the impact of the use of menthol in cigarettes on the public health, including such use among children, African-Americans, Hispanics, and other racial and ethnic minorities.”  FDCA Sec. 907(e).  The TPSAC’s report and recommendations on this issue are due back to FDA within one year.  The TPSAC must also consider the impact of dissolvable tobacco products on the public health, including their use by children, and report back to FDA within two years.

Nominations for members of the TPSAC are due on October 13, 2009.  However, industry is being afforded the opportunity to select the three non-voting members of the TPSAC, and that process is moving on a different timetable.  Industry organizations interested in participating in the selection process must confirm their interest in writing and submit nominations by September 25, 2009.  Within 30 days of those submissions, FDA will provide a list of all nominees to participating industry organizations.  Within 60 days of the receipt of that list, industry organizations must confer and select nonvoting members or the Commissioner will do so.

By Kurt R. Karst –      

FDA’s recent response denying and granting in part two citizen petitions submitted by King Pharmaceuticals, Inc. (“King”) to FDA in September 2007 and January 2009 provides helpful guidance for companies developing generic versions of drug products containing a device component, such as a pen, jet, or related injector device.  Among other things, the King petitions requested that FDA decline to approve (or stay the approval of) ANDAs that reference a drug product containing an auto-injector device component – and in particular ANDAs for a generic version of IMITREX (sumatriptan succinate) Injection – unless the auto-injector is “identical” to that in the Reference Listed Drug (“RLD”) in terms of performance, physical characteristics, and labeled instructions.  (A product consisting of drug and device components is considered a “combination product” under FDA’s regulations at 21 C.F.R. § 3.2(e).  In April 2009, FDA issued a draft guidance for industry and FDA staff providing recommendations on the submission of NDAs and BLAs for combination products with an auto-injector component.)

Prior to responding to the King petitions, FDA provided only minimal guidance on how similar the device component in a proposed generic drug must be to that of the RLD.  For example, FDA’s April 2003 “Guidance for Industry: Bioavailability and Bioequivalence Studies for Nasal Aerosols and Nasal Sprays for Local Action” states that “[a]ssurance of equivalence on the basis of in vitro tests is greatest when the test product uses the same brand and model of devices . . . as used in the [RLD].”  In addition, in a February 13, 1996 response to citizen petitions (Docket No. 1994P-0139) submitted to FDA concerning generic albuterol, FDA noted that “the generic delivery device should be functionally equivalent to that of the [RLD].  Although the identical valve and actuator may not be available to the generic firm, the generic drug product incorporating the valve and actuator selected by the generic firm must be similar in its comparative in vitro tests, and result in a product that meets in vivo requirements for bioequivalence.” 

FDA’s response to the King petitions notes that when reviewing an ANDA for a generic version of a combination product with an auto-injector component, the Agency evaluates the auto-injector component “to ensure that its performance characteristics and critical design attributes will result in a product that will perform the same as the RLD.”   FDA clarifies, however, that “[t]his does not mean . . . that all design features of the auto-injector in the ANDA and its RLD must be exactly the same.”  Instead, “[s]ome design differences may be acceptable as long as they do not significantly alter product performance or operating principles and do not result in impermissible differences in labeling.”  FDA further notes that:  

ANDA applicants . . . would be required to provide details on attributes such as auto-injector design, materials, operating principles, and comparative performance tests between the auto-injector constituent of the RLD and the auto-injector constituent of the product described in the ANDA.  If FDA determines that the auto-injector constituent of a product proposed in an ANDA is not equivalent to the auto-injector constituent of the RLD in terms of performance and critical design, FDA will refuse to approve the ANDA for that product.  Similarly, if the labeling is not the same (with the exception of certain pennissible differences due to difference in manufacturer), ANDA approval will be denied.

Importantly, FDA’s petition response highlights the concept of “clinical usability” as a critical factor in assessing product “sameness,” and that could foreclose the ANDA approval route.  FDA states:

For ANDAs for a product with labeling that describes use by patients without physician supervision and further requires training of patients by a physician prior to initial unsupervised use, FDA considers whether patients can be safely switched to a new product without retraining by a physician or health care professional.  For an ANDA for a product intended for emergency use by patients without professional supervision (such as a prefilled auto-injector indicated for emergency treatment of allergic reactions), it is particularly important to ensure that patients in an emergency situation can use the product safely and effectively in accordance with instructions provided for the RLD without additional physician intervention or retraining prior to use.  A similar standard may be applied to certain products not intended for emergency use, if appropriate. . . .

Clinical usability or human factor studies may also be required, depending on the indication and the patient population, the nature of the auto-injector design, and differences from the auto-injector constituent part of the RLD, to ensure that the proposed product is safe and effective.  If required, such studies are beyond the scope of studies that can be reviewed and approved in an ANDA. [(emphasis added)]

In the case of sumatriptan auto-injectors, we note that individuals experiencing migraines (the indication for which sumatriptan auto-injectors are indicated) may experience varying degrees of mental impainnent, and this may affect the usability of an autoinjector, leading to possible errors or misadministration ofthe product. . . .  [I]n reviewing an ANDA referencing this product, FDA will have to consider whether, given the characteristics of the proposed auto-injector constituent, the product can be safely substituted for the RLD without additional physician intervention or retraining prior to use.

Although FDA’s petition response is specific to combination products with an auto-injector component, it is reasonable to conclude that the Agency applies similar requirements and concepts when evaluating applications for generic versions of other device-containing combination products.  As such, companies would be well advised to seek FDA’s input when considering developing and seeking FDA approval for their combination products. 

By Kurt R. Karst –      

The recent controversy over the approval of generic versions of  Sanofi-Aventis U.S. LLC’s (“Sanofi’s”) colon cancer drug ELOXATIN (oxaliplatin) is one for the books and will most certainly go down in Hatch-Waxman lore.  The story begins in 2007 with patent infringement lawsuits filed against several generic drug manufacturers – including  Sandoz, Inc., Mayne Pharma Inc., Teva Pharmaceutical Industries Ltd., and Hospira Inc. – stemming from their Paragraph IV certifications to U.S. Patent No. 5,338,874 (“the ‘874 patent”) listed in the Orange Book as covering ELOXATIN.  Fast forward to June 30, 2009, when the U.S. District Court for the District of New Jersey entered a judgment of non-infringement of the ‘874 patent (based on the court’s June 18, 2009 ruling), and then denied Sanofi’s request for a stay.  See Sanofi-Aventis, et al. v. Sandoz, et al., No. 3:07-cv-2762 (D.N.J. Jun 30, 2009).

Sanofi promptly appealed the decision to the U.S. Court of Appeals for the Federal Circuit, and on July 1, 2009, the Federal Circuit temporarily stayed the district court judgment, pending that court’s consideration of a petition for writ of mandamus and a motion for a stay pending appeal.  See Sanofi-Aventis v. Sandoz, et al., No. 2009-1427.  On July 10, 2009, the Federal Circuit granted Sanofi’s motion for a stay, pending appeal, of the district court’s judgment.

On July 16, 2009 Hospira and Teva submitted an emergency motion to the Federal Circuit seeking clarification of the July 10, 2009 stay order – specifically, whether the July 10th order was intended to: (1) enjoin FDA from granting final approval to their applications; or (2) to enjoin Mayne and Teva from launching their products upon FDA approval during the pendency of appeal, even though Sanofi did not request or obtain an injunction.  Hospira and Teva noted in their emergency motion papers that a stay of judgment is “ambiguous on these topics,” and that Sanofi had earlier stated that the company was seeking a writ of mandamus vacating the district court’s judgment of non-infringement because “a stay . . . may not result in maintaining the status quo.”  The emergency motion, which Sanofi did not oppose, also requested that if the court intended for the stay order to function as an injunction, then the matter should be remanded to the district court to fix an appropriate bond to compensate for delay in market entry.  On July 24, 2009, the Federal Circuit denied the motion for clarification and ordered that “the motion for a limited remand is deemed moot.”  The Federal Circuit did not explicitly clarify its intent regarding the effect of the stay of judgment on FDA approval of the pending applications or on Hospira’s/Teva’s ability to market any approved product.

Meanwhile, FDA was considering whether the district court’s entry of judgment that the ‘874 patent is not infringed permitted the Agency to approve applications pursuant to FDC Act § 505(j)(5)(B)(iii)(I) (ANDAs) and § 505(c)(3)(C)(i) (505(b)(2) applications) notwithstanding the Federal Circuit’s subsequent stay of the district court’s judgment.  Under these statutory provisions, which were enacted in 2003 by the Medicare Modernization Act (“MMA”), approval of an ANDA or 505(b)(2) application is made effective upon the expiration of the 30-month stay, except that “if before the expiration of such [30-month] period the district court decides that the patent is invalid or not infringed . . . the approval shall be made effective on (aa) the date on which the court enters judgment reflecting the decision. . . .” (emphasis added).  Pre-MMA, the comparable statutory provisions provided that “if before the expiration of such [30-month] period, the court decides that such patent is invalid or not infringed, the approval shall be made effective on the date of the court decision.” (emphasis added)

In a March 2000 guidance document interpreting the pre-MMA statute, FDA stated that the term “court” would mean “the first court that renders a decision finding the patent at issue invalid, unenforceable, or not infringed,” and that when the district court renders such a decision, “FDA may approve the ANDA as of the date the district court enters its decision.”  Importantly, the guidance document further states that:

Neither a stay nor a reversal of a district court decision finding the patent invalid, unenforceable, or not infringed will have an effect on the approval of the ANDA or on the beginning, or continued running, of exclusivity.  Should the NDA holder or patent owner wish to prevent an applicant with an approved ANDA from marketing its product during the course of an appeal, it must obtain an injunction from the court.

Although the post-MMA statutory provisions cited above are silent as to the effect of a stay or appeal of a district court’s judgment on the timing of approval of an ANDA or 505(b)(2) application, we understand that FDA, consistent with its pre-MMA statutory interpretation, determined that nothing in the text or structure of the FDC Act suggests that a stay of the district court’s decision finding the patent invalid or not infringed requires that the Agency delay approving an otherwise approvable ANDA or 505(b)(2) application until the stay is lifted or until there is additional finality to the district court's decision regarding invalidity or non-infringement.  As such, on Friday, August 7, 2009, FDA approved several applications for generic ELOXATIN.

On Monday, August 10, 2009, Sanofi filed an emergency motion with the Federal Circuit to enforce the court’s July 10, 2009 stay order, arguing that FDA lacked the legal authority to lift the 30-month stay and approve generic applications in light of the Federal Circuit’s stay of the New Jersey district court’s judgment giving FDA approval authority.  On that same day, Sanofi filed a complaint (under seal) in the U.S. District Court for the District of Columbia against FDA seeking a Temporary Restraining Order (“TRO”) and a Preliminary Injunction (“PI”) that would require FDA to rescind generic ELOXATIN approvals.  See Sanofi-Aventis et al. v. Food & Drug Admin. et al, No. 2009-1495.  As with its emergency motion filed with the Federal Circuit, Sanofi argued that FDA should not have approved any generic applications because the 30-month stay was still in effect.  The district court denied Sanofi’s motions from the bench during an emergency hearing held on the same day the complaint was filed, and later issued a memorandum opinion explaining its ruling.  Sanofi appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit (again, in a case under seal).  See Sanofi-Aventis et al. v. Food & Drug Admin. et al, No. 2009-5278. 

On August 11th, the Federal Circuit denied Sanofi’s August 10th emergency motion.  Sanofi moved for panel review and for reconsideration of that order, and on August 13th, the court issued an order granting panel review, but denying the motion for reconsideration.  Circuit Judge Moore, in his concurrence in the denial of reconsideration took issue with FDA’s decision to approve generic applications in light of the Federal Circuit’s stay, stating that “FDA’s position is dubious at best,” but also stating that despite this “our inability to rectify the problem is due to Sanofi’s failure to file for a preliminary injunction against the generics seeking to prevent them from entering the market.”  Oral argument in the Federal Circuit is scheduled for September 2, 2009.

Meanwhile, in Sanofi’s lawsuit against FDA, the D.C. Circuit issued an order on August 13th suspending the approvals of generic ELOXATIN.  According to the court order, “[t]he purpose of this administrative injunction is to give the court sufficient opportunity to consider the merits of the motion for injunctive relief pending appeal . . . .”  Accordingly, we understand that FDA issued letters formally suspending application approvals and removed the drugs from from the Orange Book.

Finally, on August 18th, the D.C. Circuit ruled that Sanofi et al. “have not demonstrated the requisite likelihood of success on the merits to warrant either injunctive relief pending appeals or expedition, . . . nor have they shown that summary reversal is warranted” and  denied Sanofi’s emergency motion for an injunction and ordered the dissolution of the court’s August 13th administrative injunction suspending the approvals of generic ELOXATIN.  FDA promptly reinstated the approvals. 

So for now, it appears that this saga over FDA approvals is effectively over.  But who knows what surprises the coming weeks might bring . . . . 

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst will be speaking at two upcoming conferences on various Hatch-Waxman issues.  The first conference is the American Conference Institute’s (“ACI’s”) popular Maximizing Pharmaceutical Patent Life Cycles (10th Anniversary Edition), and is scheduled for October 6-10, 2009 at the Helmsley Park Lane Hotel in New York City.  A copy of the conference brochure is available here.  Mr. Karst will be presenting on generic drug bioequivalence issues at a pre-conference workshop.  ACI is extending a special anniversary “thank you” discounted rate of $1,695 for those who register for the conference by Tuesday, September 1st.  This special rate ($500 off the full price of $2195) is for the main conference only, pre and post-conference workshops are available at an additional cost.  If you are interested in taking advantage ofthis special rate, please contact ACI’s Lisa J. Piccolo at L.Piccolo@americanconference.com.

The second conference is the Center for Business Intelligence’s (“CBI’s”) 2nd Annual Pharmaceutical Congress on Paragraph IV Disputes and Settlements, which is scheduled for October 22-23, 2009 at the Doubletree Hotel Philadelphia in Philadelphia, PA.  This popular CBI conference brings together representatives from both the brand name and generic drug industries to discuss litigation strategies, statutory guidelines, current cases and their landmark decisions.  A copy of the conference brochure is available here.  Mr. Karst will be presenting on a session titled “Differences of Opinions on New Chemical Entities – What Are the Scope and Limits?” 

Special FDA Law Blog Discount – CBI is offering FDA Law Blog readers a $300 discount off of the registration fee.  To register for the conference, go to the CBI website and enter the following code: TZZ895.

As directed by the Family Smoking Prevention and Tobacco Control Act (“Tobacco Act”), FDA has created its new Center for Tobacco Products (“CTP”).  CTP will be led by Dr. Lawrence Deyton of the George Washington University School of Medicine and Health Sciences.  FDA’s press release emphasizes the importance of promoting tobacco cessation and Dr. Deyton’s prior experience with tobacco cessation programs.  Hyman, Phelps & McNamara, P.C.’s  David Clissold and Ricardo Carvajal will be presenting a webinar on the Tobacco Act on August 25.

By Susan J. Matthees–

The United States District Court for New Jersey recently denied a motion by the Federal Trade Commission (“FTC”) to hold Lane Labs-USA, Inc. (“Lane Labs”), Andrew Lane, and William Lane in contempt for allegedly violating a consent decree.  Lane Labs entered into a consent decree with the FTC in 2000, agreeing not to make any health statements about its products without the support of competent and reliable scientific evidence.  In 2007, the FTC filed suit, alleging that Lane Labs had violated the consent decree by making unsubstantiated claims for its calcium supplement, AdvaCAL, and a supplement intended to improve male fertility known as Fertil Male. 

At the trial, the FTC presented two experts who testified that Lane Labs did not have competent and reliable scientific evidence to support claims made for AdvaCAL and Fertil Male.  In turn, Andrew Lane testified as to the process the company followed for substantiating the claims it made for its supplements.  Mr. Lane explained that he or other employees met with researchers, conducted multiple studies when necessary to substantiate a claim, and hired a compliance officer to insure that the company remained in compliance with the consent decree.  Lane Labs also offered two experts who testified that the company had competent and reliable substantiation for its claims. 

The court found that Lane Labs’ experts were credible and that the Lane Labs had taken sufficient efforts to comply with the consent decree, including submitting “multiple voluminous compliance reports” to the FTC.  In reaching its decision, the court was particularly concerned that the FTC had never reviewed these submissions until they brought this action.  The court reasoned that it would be “disingenuous” to punish the company after it had been making submissions to the FTC for years without any indication from the agency that it was not in compliance with the consent decree.  Finally, the court noted that there was no evidence that consumers were harmed by the company’s supplements, and therefore financial penalties for consumer injury would not be fair. 

By Kurt R. Karst & Frank J. Sasinowski –      

A Senate floor amendment to the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 2010 (H.R. 2997) would establish within FDA two new review groups to recommend solutions for the prevention, diagnosis, and treatment of rare diseases and neglected diseases of the developing world.  The amendment, reportedly backed by recently-confirmed NIH Director Dr. Francis Collins, and co-sponsored by Senators Sam Brownback (R-KS) and Sherrod Brown (D-OH), was first proposed in the Senate in July, and was agreed to on August 3; however, we understand that the amendment could be further changed in Conference Committee. 

The Brown/Brownback Amendment follows recent significant discussions about how to improve the process for developing and approving products for rare and neglected diseases.  In May 2009, the National Organization for Rare Disorders (“NORD”) held a “Partners in Progress Summit” at which thought leaders, including Dr. Collins, several FDAers, and Hyman, Phelps & McNamara, P.C.’s Frank Sasinowski, discussed ways to encourage innovative research and ensure that patients have access to treatments for rare disorders.  In addition, the non-profit Kakkis EveryLife Foundation has advocated for a new Office of Drug Evaluation for Rare Biochemical and Genetic Disorders as part of a larger science driven regulatory policy approach to accelerate treatments for rare diseases.  Dr. Emil Kakkis, President of the Foundation, told FDA Law Blog that “We are pleased with the support of Dr. Collins and Sen. Brownback in advocating for practical changes at the FDA, and with the broad support we have received from others for our initiatives.”  

Under the Brown/Brownback Amendment, which is included as Section 745 in H.R. 2997, the FDA Commissioner may establish within the Agency “a review group which shall recommend to the Commissioner of Food and Drugs appropriate preclinical, trial design, and regulatory paradigms and optimal solutions for the prevention, diagnosis, and treatment of rare diseases.”  The rare disease review group would be composed of 8 FDA employees who must have “specific expertise relating to the development of articles for use in the prevention, diagnosis, or treatment of rare diseases, including specific expertise in developing or carrying out clinical trials.”

With respect to “neglected diseases of the developing world” (i.e., “tropical diseases” as defined in FDC Act § 524(a)(3) concerning priority review vouchers), the FDA Commissioner may establish within the Agency “a review group which shall recommend to the Commissioner of Food and Drugs appropriate preclinical, trial design, and regulatory paradigms and optimal solutions for the prevention, diagnosis, and treatment of neglected diseases of the developing world.”  The neglected diseases review group would also be composed of 8 FDA employees, but who have “expertise relating to the development of articles for use in the prevention, diagnosis, or treatment of neglected diseases of the developing world, including specific expertise in developing or carrying out clinical trials.”

The Brown/Brownback Amendment also requires FDA to submit a report to Congress describing the Agency’s findings and recommendations of the rare and neglected disease review groups, and to issue guidance and develop internal review standards based on their recommendations.

The Brown/Brownback Amendment appears to be a more evolved and specific version of language included in the Senate Report accompanying the version of the Agriculture/FDA Appropriations Bill introduced in the Senate (S. 1406).  The Senate Report accompanying S. 1406 stated:

Neglected Diseases.— The Committee is concerned about the challenge of increasing the number of approved treatments for diseases that, although not necessarily rare, may have few if any therapeutic options.  The Committee recognizes that the definition of a rare disease or condition under the Orphan Drug Act includes many tropical diseases or conditions that affect more than 200,000 persons in the United States.

Because the Orphan Drug Act already embraces therapies to treat many tropical diseases, the Committee urges FDA to take active steps to stimulate orphan status and support their development.  Where appropriate, FDA should engage in partnerships and collaborations to identify compounds that may be suitable to treat this subset of orphan diseases and work in a proactive way to identify compounds to treat such diseases.

Sens. Brown and Brownback have a longstanding interest in backing neglected disease product development.  They are the authors of  FDC Act § 524 – “Priority Review to Encourage Treatments for Tropical Diseases” – that was added to the statute by the 2007 FDA Amendments Act.  FDC Act § 524 provides for a transferable priority review program – the so-called “treat and trade” program – in which applicants for certain new drugs and biologics for “tropical diseases” that have received priority review may receive a priority review voucher entitling the holder to a 6-month priority FDA review of another application that would otherwise be reviewed under FDA’s standard 10-month review clock.  As we previously reported,  FDA granted the first priority review voucher earlier this year when it approved COARTEM (artemether; lumefantrine) for the treatment of acute, uncomplicated malaria infections in adults and children weighing at least five kilograms. 

By JP Ellison –

With the seemingly endless flow of news reports announcing yet another unsealed False Claims Act (“FCA”) case, and the regular announcement of FCA settlements for what would have only a few years ago been unheard of amounts, it is easy to lose sight of the complexity of the FCA and the issues that plaintiffs and defendants must navigate in such cases.  The 1st Circuit’s recent decision in United States ex rel Duxbury v. Ortho Biotech Products serves as a reminder that prosecuting and defending FCA cases raises a host of complicated factual and legal issues.

The Duxbury case concerned allegations of unlawful promotion of the drug Procrit.  The qui tam relators alleged that the unlawful promotion included publication of an “inflated” average wholesale price (“AWP”), marketing the “spread,” offering kickbacks to providers, and promoting the drug for off-label use.

The complicated factual and procedural history of the case (and related FCA cases) implicated several provisions of the FCA.  First, the court addressed the FCA’s jurisdictional public disclosure bar, and the distinct but related issue of whether the relators fit within the original source exception to the public disclosure bar.  In resolving this issue, the 1st Circuit joined the 4th Circuit in holding that the plain language of the FCA requires a relator to provide information to the government before filing an action that is based on the information, but did not adopt more stringent requirements imposed by other circuits. 

In reaching this conclusion, the 1st Circuit discussed the alternative interpretations adopted by the 2nd and 9th Circuits (relator must be the source to entity that publicly disclosed) and the D.C. and 6th Circuits (information must be provided before any public disclosure).  In explaining the basis for its decision, the 1st Circuit examined the structure and history of the FCA along with the statute’s plain language and in the process identified several of the public policy issues raised by the FCA.

The second issue that the court addressed was whether the amended complaint met the requirement of pleading fraud with particularity as required under Federal Rule of Civil Procedure 9(b).  On this point, the Court distinguished its recent ruling in United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 733 (1st Cir. 2007).  See our prior postings discussing the Rost case here, here, and here.  Beyond distinguishing Rost, and ruling in Duxbury that the complaint met the fraud with particularity requirement, without identifying specific claims, the Court offered little guidance for the future.  Indeed, the Court specifically stated that it was “‘limit[ing its] holding to the facts.’”

The last issue addressed by the court was whether the FCA’s’ “first to file” bar required the dismissal of off-label allegations contained in an amended complaint.  In concluding that the off-label allegations were barred by the first to file rule, the court compared the original and amended complaints filed by the relators and also looked at another complaint filed by a different relator that had been filed after the original complaint but before the amended complaint.  Based on this analysis, the court held that the original complaint did not contain the essential facts of the alleged off-label promotion scheme, and as a result, such allegations in the amended complaint were barred by an earlier filed complaint in another action.

In light of the intensely fact specific analysis in Duxbury, the case raises more questions than it answers.  Those questions are present in many FCA cases and warrant careful attention from any counsel handling such a case.

By Susan J. Matthees –

FDA has published a new draft guidance titled Guidance for Industry: Labeling of Certain Beers Subject to the Labeling Jurisdiction of the Food and Drug Administration.  Last month we reported that the Alcohol and Tobacco Tax and Trade Bureau ("TTB") issued a ruling clarifying that certain beer drinks that are not made from both malted barley and hops (e.g., beer made with sorghum, rice, or wheat), are not malt beverages as defined by the Federal Alcohol Administration Act ("FAA Act").  As such, these products are subject to the labeling requirements of the FDC Act. 

FDA’s draft guidance is intended to help industry comply with the labeling requirements for these products.  The guidance document explains that beer must conform to the requirements set forth in 21 C.F.R. Part 101.  These requirements include a statement of identity, which FDA explains “can be similar to the statement of composition that is required for malt beverages . . . such as ‘Beer made from sorghum’ or ‘Sorghum Beer;’” the net quantity of contents; the name and place of business of the manufacturer; packer, or distributor; a statement of ingredients; and nutrition labeling, unless exempt under 21 C.F.R. § 101.9(j).  In addition, beers subject to the FDC Act must include allergen labeling pursuant to FDC Act §§ 201(qq) and 403(w)(1).  Beer must also comply with FDA requirements for food additives, color additives, and ingredients. 

FDA understands that manufactures will need time to change their labels.  FDA has stated that it will exercise enforcement discretion until January 1, 2012 to give time to manufacturers to revise their labels.  However, the Agency recommends that manufacturers change their labels at the next printing or use stickers to place on the labels in the short term.

By Ricardo Carvajal –

Last year, a New Jersey district court held in favor of federal preemption of a state law consumer fraud claim against the manufacturer of a beverage that contains high fructose corn syrup (HFCS) and is labeled as “all natural” (see Holk v. Snapple Beverage Corp., 574 F.Supp.2d 447 (D.N.J. 2008)).  Last week, the Third Circuit reversed.  According to the appellate court, neither FDA’s policy statement on the use of “natural” nor correspondence issued by FDA that addresses the use of “natural” in the labeling of foods that contain HFCS “have the force of law required to preempt conflicting state law.”  The appellate court held that plaintiff’s claims are thus not impliedly preempted (defendant waived the question of whether the claims are expressly preempted).

Earlier this year, a California district court similarly ruled that there is no federal preemption of an unfair competition claim against the manufacturer of a food that contains high fructose corn syrup ("HFCS") and is labeled as “all natural” (see our prior post here).  That court rejected as unpersuasive the reasoning relied on by the New Jersey district court in Holk to hold in favor of preemption.  Evidently, the Third Circuit also was not persuaded.   Although it’s too early to declare the issue settled, the climb for those who would argue in favor of preemption in cases such as these appears to be getting steeper.

By Ricardo Carvajal & JP Ellison –

It’s been a busy month at the Alliance for Natural Health.  In addition to suing FDA over its handling of health claims, the Alliance (in conjunction with other plaintiffs) has sued FDA to invalidate certain provisions of the agency’s Current Good Manufacturing Practice (“CGMP”) regulation for dietary supplements.  In part, the complaint maintains that FDA cannot lawfully issue a regulation under FDCA section 402(g) that deems a dietary supplement adulterated unless that supplement violates FDCA section 402(f) (under section 402(f)(1)(A), a dietary supplement is adulterated if it presents a significant or unreasonable risk of illness or injury under the conditions of use recommended or suggested in labeling, or in the absence of those conditions, under ordinary conditions of use).  The complaint takes aim at the many recordkeeping requirements imposed under the regulation, and the fact that a dietary supplement can be deemed adulterated if any of those requirements is not met.

FDA has issued other regulations that deem certain foods adulterated if specified recordkeeping requirements are not met.  Generally, those regulations are partially grounded in FDCA section 402(a)(4), which deems a food adulterated if it has been processed, packed, or held "under conditions whereby it may have been rendered injurious to health.”  FDA’s reasoning has been that appropriate recordkeeping is essential to ensure that those foods are not produced under conditions that might render them injurious to health.  By comparison, section 402(g) deems a supplement adulterated if it has been prepared, packed, or held "under conditions that do not meet current good manufacturing practice regulations.”  Section 402(g) authorizes FDA to issue CGMP regulations for dietary supplements that are “modeled after current good manufacturing practices for food.”  Thus, there is no explicit reference in section 402(g) to the potential for injury to health.  FDA can therefore be expected to argue that is has considerable discretion in fashioning GMP requirements for dietary supplements, and that those requirements need not be contingent on the potential for injury to health.

An issue likely to be central to resolution of the case is whether the CGMP requirements imposed by FDA under the authority of section 402(g) derive from the text of the statute, in which case they would pass muster under step one of Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), or are grounded in a reasonable interpretation of that text, in which case they would pass muster under Chevron step two.  The complaint appears to take the position that the CGMP regulation fails under Chevron step one.  FDA will argue that the regulatory analysis should be conducted under Chevron step two, in which case FDA's interpretation of section 402(g) would be entitled to substantial deference.

The case is Alliance for Natural Health US et al. v. Sebelius et al., No. 1:09-cv-01523-CKK (D.D.C. filed August 12, 2009)

By Michelle L. Butler – 

Today, August 14, 2009, is the anniversary of the passage of the Consumer Product Safety Improvement Act of 2008 (“CPSIA”), which means that a number of new requirements will go into effect.  It also means that the Consumer Product Safety Commission (“Commission” or “CPSC”) continues to promulgate rules and statements of policy as it continues to implement the various CPSIA requirements. 

First, the CPSIA requires the lead content of children’s products (products designed or intended primarily for use by children 12 and younger) to be reduced from 600 parts per million (“ppm”) to 300 ppm on August 14, 2009.  A draft of a final rule to address determinations that certain materials do not exceed the lead content limit was recently submitted to the Commissioners seeking their approval to publish the rule in the Federal Register.  (The Ballot Vote Sheet identified a due date of August 13, 2009 for the Commissioners to vote whether to publish the document in the Federal Register – as of now, the results have not been posted on the CPSC website.)  The draft final rule identified specific categories of materials that do not exceed the lead content limits as long as the materials have not been treated or adulterated with the addition of materials that could result in the addition of lead:  certain precious and semiprecious gemstones; natural or cultured pearls; wood; paper and similar materials made from wood; certain printing inks; textiles (excluding after-treatment applications, including screen prints, transfers, decals, or other prints) consisting of certain dyed or undyed natural fibers and certain manufactured dyed or undyed fibers; and other plant-derived and animal-derived materials.  The draft final rule also identified certain metals and alloys that do not exceed the lead content limits.  The preamble to the draft final discussed certain component parts that would not be exempt from the lead content limits, such as zippers, buttons, and other applied decorations, and which therefore would continue to be subject to the lead content limit and testing and certification requirements.  The preamble also stated that the Commission is aware that there are many questions regarding component part testing and certification and that it would address these issues in an upcoming rulemaking.

The CPSC also issued a final interpretative rule providing guidance as to what product components or classes of components are considered inaccessible such that the lead content limits do not apply.  The final rule references the accessibility probes specified in the sharp points or edges regulations, as well as the use and abuse tests for various age groups in existing regulations.

Second, the CPSIA increased the maximum civil penalties applicable to each knowing violation of the Consumer Product Safety Act (“CPSA”), Federal Hazardous Substances Act (“FHSA”), and Flammable Fabrics Act (“FFA”) from $8,000 to $100,000.  The CPSIA also increased the maximum penalty amounts for any related series of violations from $1,825,000 to $15,000,000.  These increased civil penalty amounts go into effect August 14, 2009.  The CPSIA also required the Commission to issue by August 14, 2009 a final regulation providing its interpretation of civil penalty factors in the CPSA, FHSA, and FFA.  On August 7, 2009, a Ballot Vote Sheet with a return date of August 13, 2009 was submitted to the Commissioners regarding publication of an interim final rule interpreting the factors to be considered when seeking civil penalties and withdrawal of a previously proposed interpretive rule on civil penalty factors.  The results of the vote have not yet been published on the CPSC website.  The interim final rule would be effective upon publication since the increased penalties went into effect on August 14, 2009.

The Commission also recently issued a statement of policy regarding testing of component parts for phthalates in children’s toys and child care products.  The Commission determined that the phthalate limits in the CPSIA apply to each component part of a product rather than the product as a whole.  The Commission stated that it believed this is supported by the language of the CPSIA and is more protective of public health.  The Commission also recently published a Standard Operating Procedure for the Determination of Phthalates (Test Method: CPSC-CH-C1001-09.2) in toys and child care products.

Finally, the Commission continues to request input from interested parties in a number of areas.  For example, the Commission is required by the CPSIA to examine and assess, in consultation with consumer groups, juvenile product manufacturers, and independent child product engineers and experts, the effectiveness of the ASTM toy safety standard, ASTM-F963-07.  Accordingly, in July, the Commission issued a request for comments on this topic, which are due by August 20, 2009.  The Commission will also be holding a public hearing to receive views concerning its agenda, priorities, and current strategic plan for fiscal year 2011 (which begins October 1, 2010).  This hearing will begin on August 25, 2009 at 10 am.  Participation by members of the public is invited, and requests to make oral presentations (as well as the written text of any such presentations) must be received by the Office of the Secretary no later than 5 pm on August 18, 2009. 

This is not a catalog of all ongoing activities by the CPSC, but rather provides a look at some of the activities that are keeping the CPSC so busy these days.

By Susan J. Matthees –

The Federal Trade Commission (“FTC”) recently announced that an Administration Law Judge (“ALJ”) upheld FTC’s charges against a company, Daniel Chapter One, and its officer, James Feijo, for making claims that its shark cartilage and herbal supplements prevent, treat, and cure cancer. 

The ALJ wrote that the company “did not possess or rely upon competent and reliable scientific evidence to substantiate their claims.”  The ALJ ordered the company and its officer to stop making claims that their products inhibit tumor growth, eliminate tumors, treat or cure cancel, or heal the effect of radiation or chemotherapy unless the claims are true, not misleading, and based on reliable scientific evidence.  

The FTC first charged Daniel Chapter One in September 2008 as part of the FTC’s Operation False Cures, an enforcement initiative against companies that market false cancer remedies.  In September, the FTC announced actions against 11 different companies allegedly making unsupported claims to cure, treat, or prevent cancer.  Six of the companies targeted in the sweep settled with the FTC and the remaining 5, including Daniel Chapter One, were sued.