On June 12th, the U.S. House of Representatives voted 307-97 on final passage of H.R. 1256 – The Family Smoking Prevention and Tobacco Control Act.  The U.S. Senate overwhelmingly passed the bill on June 11th with a 79-17 vote.  President Obama is expected to sign the bill into law shortly.  Copies of the House Report on the bill are available here (Part 1) and here (Part 2).  As we previously reported, the bill gives FDA the authority to regulate tobacco products, including cigarettes and smokeless tobacco.  Hyman, Phelps & McNamara, P.C. is analyzing the 218-page bill and will post on it in the near future.

By Ricardo Carvajal –

Much ink has already been spilled detailing the burdens that draft federal food safety legislation would impose on industry (click here for the latest version of the  Food Safety Enhancement Act of 2009 (“FSEA”)).  Little has yet been said about the burdens that the legislation would impose on FDA.  A quick tally suggests that FDA would be required to issue or amend six regulations, and perhaps as many as ten (some provisions give FDA the option of issuing a guidance document instead of a regulation).  FDA would be given discretionary authority to issue or amend four additional regulations (perhaps as many as eight).  In addition, the legislation would impose continuing reporting requirements on FDA in several areas.  All of these burdens are in addition to those that would result from the aggressive inspection schedule that the legislation would impose on the agency.

The draft legislation’s rulemaking and other requirements would surely soak up substantial resources within FDA.  To gauge their potential impact, one need look no further back than 2002, when the rulemaking requirements associated with the Bioterrorism Act appeared to derail a number of the agency’s other food-related initiatives.  Even with substantial increases in funding, a similar outcome seems likely if FSEA passes in anything resembling its current form. 

By Kurt R. Karst –      

On June 10th, the Federal Trade Commission (“FTC”) announced the release of its highly anticipated report on Follow-On Biologics (“FOBs”).  The 120-page report, titled “Emerging Health Care Issues: Follow-On Biologic Drug Competition” is the product of an FTC Roundtable held in November 2008 (see our previous post here) and public comment on competitive issues involving FOBs.  The report comes at a time when Congress is poised to consider FOB legislation (see our previous posts here and here)  with varying periods of market exclusivity and patent resolution processes.  (Another FOB bill is expected soon from Senator Ted Kennedy (D-MA).)  Earlier this week, Representative Henry Waxman (D-CA), who is the sponsor of one FOB bill, sent a letter to President Obama praising the President for his support of FOBs in the FY 2010 Budget, and urging him “to consider what steps can be taken under current law to prepare and even begin to approve safe and effective generic biologics, in advance of legislation.”  On June 11th, the Subcommittee on Health of the House Energy and Commerce Committee will hold a hearing on FOB competition issues that will specifically focus on the FTC report. 

Below are some of the general conclusions taken from the FTC report. 

1.    Competition Between a Biologic Drug and an FOB is Much More Likely to Resemble Brand-to-Brand Competition than the Dynamics of Brand-Generic Competition under Hatch-Waxman.

• The substantial costs to obtain FDA approval, plus the substantial fixed costs to develop manufacturing capacity, will likely limit the number of competitors that undertake entry with FOB products. 

• Given these high entry costs, FOB entrants are likely to be large companies with substantial resources, and it is likely that only two to three FOB entrants will seek approval to compete with a particular pioneer biologic drug.

• The lack of automatic substitution between an FOB product and a pioneer biologic drug will slow the rate at which an FOB product can acquire market share and thereby increase its revenues.

• An FOB drug also may have difficulty gaining market share due to concerns about safety and efficacy differences between a pioneer biologic drug and the competing FOB.

• The specialty pharmaceutical characteristics of FOBs also are likely to constrain the ability of an FOB entrant to obtain market share.

• Biologic drugs currently are not reimbursed pursuant to strategies that payors often use to incentivize the use of lower-priced drugs; this, too, may limit market share acquisition by FOBs.

• As a result of these factors, FOB competition against a pioneer biologic drug is likely to develop as follows:  FOB entry is likely in biologic drug markets of greater than $250 million. Only two or three FOB manufacturers are likely to attempt entry for a given pioneer drug product. These FOB entrants are unlikely to introduce their FOB products at price discounts any larger than between 10 and 30 percent of the pioneer products’ price.  Although not as steep a discount as small-molecule generic drugs, a 10 to 30 percent discount on a $48,000 drug product represents substantial consumer savings. Pioneer manufacturers are expected to respond and offer competitive discounts to maintain market share. This price competition is likely to lead to an expanded market and greater consumer access.  Nonetheless, the lack of automatic substitution will slow significant market share acquisition by FOB products. As a result, pioneer manufacturers are likely to retain 70 to 90 percent of their market share and, therefore, will likely continue to reap substantial profits years after entry by FOB drugs.

2.    Existing Incentives that Support Brand-to-Brand Competition Among Biologic Drugs – Patent Protection and Market-Based Pricing – Are Likely to be Sufficient to Support FOB Competition and Biologic Innovation.

• A Twelve- to Fourteen-Year Exclusivity Period is Unnecessary to Promote Innovation by Pioneer Biologic Drug Manufacturers.

• Special Procedures to Resolve Patent Issues Between Pioneer and FOB Drug Manufacturers Prior to FDA Approval Are Unnecessary and They Could Undermine Patent Incentives and Harm Consumers.

• FOB Drug Manufacturers Are Unlikely to Need Additional Incentives to Develop Interchangeable FOB Products.

By Kurt R. Karst –      

The U.S. Court of Appeals for the Federal Circuit’s recent decision in Abbott Labs. v. Sandoz, Inc. concerning U.S. Patent No. 4,935,507 (“the ‘507 patent”) covering OMNICEF (cefdinir) has been discussed at length in the blogosphere for its possible implications on the future of product-by-process patents (see e.g., Patent Baristas and Patent Docs).  The court’s decision, which considered appeals from both the U.S. District Court for the Eastern District of Virginia (Lupin Ltd. v. Abbott Laboratories, 484 F. Supp. 2d 448 (E.D. Va. 2007)) and the U.S. District Court for the Northern District of Illinois (Abbott Labs. v. Sandoz, Inc., 486 F. Supp. 2d 767 (N.D. Ill. 2007)), is also important in that it means a court will not likely soon address the issue of multiple Patent Term Extensions (“PTE’s”).

We previously reported that the U.S. Patent and Trademark Office (“PTO”) granted two PTEs with respect to two patents following FDA’s December 4, 1997 approvals of NDAs for OMNICEF.  One PTE was for U.S. Patent No. 4,559,334 with respect to NDA No. 50-739 for OMNICEF Tablets.  Another PTE was for the ‘507 patent with respect to NDA No. 50-749 for OMNICEF Oral Suspension.  As we discussed in our previous post, the PTE statute states (at 35 U.S.C. § 156(c)(4)) that “in no event shall more than one patent be extended . . . for the same regulatory review period for any product.”  The PTO interprets 35 U.S.C. § 156(c)(4) to permit multiple PTEs under certain circumstances – specifically, for a drug product covered by several patents the PTO may extend a different patent for each NDA approved on the same first day (even when multiple NDAs share common “testing phase” and a “review phase” dates).  That is, the PTO considers each NDA “regulatory review period” to be distinct and for which a PTE is available. 

There are only a few cases in which the PTO has granted or companies have been eligible for multiple PTEs for different patents covering the same product approved under separate NDAs on the same first day.  For example, in addition to OMNICEF, the PTO has granted multiple PTEs for LYRICA (pregabalin) – one for U.S. Patent No. 6,001,876 with respect to NDA No. 21-723, and another for U.S. Patent No. 6,197,819 with respect to NDA No. 21-446.  FDA also approved two NDAs on the same first day for MYCAMINE – NDA No. 21-506 for MYCAMINE for prophylaxis of Candida infections in patients undergoing hematopoietic stem cell transplantation, and NDA No. 21-754 for MYCAMINE for the treatment of esophageal candidiasis.  In that case, the NDA sponsor applied for two PTEs based on these approvals – one for either U.S. Patent Nos. 5,376,634, 6,265,536, or 6,107,458 for NDA No. 21-506, and one for either of these same patents for NDA No. 21-754 – but ultimately decided not to elect a second PTE.  More recently, FDA approved two NDAs on the same first day for VIMPAT (lacosamide) – NDA No. 22-253 for VIMPAT Tablets and NDA No. 22-254 for VIMPAT Injection – and the NDA sponsor is seeking a PTE for different patents with respect to each NDA approval (see PTE applications here and here).

Lupin argued as part of its ‘507 patent infringement case in the U.S. District Court for the Eastern District of Virginia that “[t]he issuance of two PTEs for regulatory review periods involving cefdinir as the active ingredient was not authorized under 35 U.S.C. § 156,” and requested that the court declare the ‘507 patent PTE invalid.  However, Abbott and Lupin later entered into an agreement (a Stipulated Order of Dismissal) concerning the ‘507 patent.  As part of that agreement, Lupin’s claim concerning the PTE for the ‘507 patent was dismissed without prejudice.  However, the Stipulated Order of Dismissal also stated that Lupin may reassert that claim in the event that the court’s final judgment on other claims in the litigation are not affirmed, and are remanded, on appeal.  The Federal Circuit in Abbott Labs. v. Sandoz, Inc. affirmed that the “Eastern District of Virginia properly concluded on summary judgment that Lupin’s cefdinir product did not infringe” certain claims in the ‘507 patent.  Given this ruling, Lupin will not need to reassert its claim that the PTE for the ‘507 patent was invalid.  

By Kurt R. Karst –      

Galderma Laboratories L.P. (“Galderma”) recently submitted a citizen petition to FDA (also see our Citizen Petition Tracker) requesting that the Agency interpret the QI Program Supplemental Funding Act of 2008 (“QI Act”) to impose a 30-month stay of approval of an ANDA referencing an old antibiotic drug product if that ANDA contains a Paragraph IV certification to a patent that was listed in the Orange Book in accordance with § 4(b)(1) of the QI Act.  The QI Act was enacted on October 8, 2008 and amended the FDC Act to add new § 505(v) – “Antibiotic Drugs Submitted Before November 21, 1997” – to create Hatch-Waxman benefits for so-called “old” antibiotics. 

Earlier this year, FDA received and responded to four citizen petitions arguing that a 30-month stay should apply.  Those petitions argued, among other things, that the plain language of the QI Act requires application of the 30-month stay provisions of the original Hatch-Waxman Amendments, rather than the version of the statute amended by the Medicare Modernization Act, which limits 30-month stays such that a generic applicant with a pending ANDA that amends its application to add a Paragraph IV certification to a later-listed patent is not subject to a 30-month stay in connection with that certification.  FDA determined that:

under the QI Act, no 30-month stay of approval will apply to an ANDA referencing an old antibiotic based on the grounds that the ANDA contains a paragraph IV certification to a later-listed patent and the NDA holder or patent owner has sued the ANDA applicant for patent infringement as a result of notice of the paragraph IV certification.  We note that, under current law, a 30-month stay will apply to an ANDA referencing an old antibiotic if that ANDA contains a paragraph IV certification to a patent submitted to the Agency before the ANDA was submitted, and the NDA holder or patent owner sues the ANDA applicant for patent infringement as a result of notice of the paragraph IV certification.

Galderma’s petition concerns the old antibiotic drug product ORACEA (doxycycline).  According to Galderma, Mylan submitted an ANDA to FDA containing a Paragraph IV certification to patents listed in the Orange Book for ORACEA in accordance with the QI Act, and Galderma timely sued Mylan for patent infringement.  (FDA’s Paragraph IV Certification List does not yet identify this ANDA submission.) 

Galderma states that its citizen petition is “entirely distinguishable” from the previous QI Act 30-month stay citizen petition submitted to FDA: “Unlike prior petitioners, Galderma does not contend that Congress, via the QI Act, directed FDA to apply the applicable statutory provisions of the original Hatch-Waxman Amendments as enacted in 1984, rather than as subsequently amended by Congress.”  Furthermore, Galderma states that the company “agrees with FDAs Denial Letter that ‘it is reasonable, both as a matter of statutory construction and sound public policy, to interpret section 505(v)(4) [of the QI Act] to require the application of the current law to old antibiotics . . . there is a strong argument that Congress intended this result.’” 

Indeed, according to Galderma, “this is precisely Galderma’s position – that Congress clearly intended to treat ‘old antibiotics’ consistent with ‘new antibiotics’ pursuant to current law, and that a single 30-month stay should apply to both classes of products.”  Galderma summarizes its argument as follows:

In sum, no previous petitioner argued, as this petitioner does, that the intent of Congress, embodied in the terms of the transition provisions of the QI Act, was to grant the opportunity to obtain both a single 30-month stay of ANDA approval and 180-day generic exclusivity to the holders of NDAs and ANDAs covered by the Q1 Act.  Although FDA addressed certain issues related to this petition in its recent Denial Letter, FDA has not directly addressed the issues raised herein as applicable to ORACEA.

It is unclear how fast FDA will act on this new petition.  FDA responded to the other four QI Act petitions witin several weeks of submission.

By Kurt R. Karst –      

Recent decisions by the U.S. District Court for the Eastern District of Virginia and the U.S. District Court for the District of Columbia in PhotoCure ASA v. Dudas and Wyeth Holding Corp. v. United States, respectively, concerning certain Patent Term Extension (“PTE”) issues have been appealed to the U.S. Court of Appeals for the Federal Circuit.  The PhotoCure case is of particular interest because the Federal Circuit’s decision will likely have broad implications. 

PhotoCure concerns a PTE request for U.S. Patent No. 6,034,267 (“the ‘267 patent”) covering the human drug product METVIXIA (methyl aminoevulinate hydrochloride), which FDA approved on July 27, 2004 under New Drug Application (“NDA”) No. 21-415.  As we previously reported, the U.S. Patent and Trademark Office (“PTO”) denied a PTE for the ‘267 patent based on an analysis of the “first permitted commercial marketing” criterion in the PTE statute.  (Under 35 U.S.C. § 156(a)(5)(A), the term of a patent claiming a drug shall be extended from the original expiration date of the patent if, among other things, “the permission for the commercial marketing or use of the product . . . is the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred.” (emphasis added))  Specifically, the PTO applied an “active moiety” interpretation of the PTE law (rather than an “active ingredient” interpretation) and determined that METVIXIA does not represent the first permitted commercial marketing or use of the product because of FDA’s December 1999 approval of an NDA for LEVULAN KERASTICK (aminolevulinic acid HCl) Topical Solution, which contains the active moiety aminolevulinic acid (“ALA”).  Thus, according to the PTO, METVIXIA does not represent the first permitted commercial marketing or use of ALA and the ‘267 patent is ineligible for a PTE.  PhotoCure promptly sued the PTO. 

The court in PhotoCure ruled that the PTO’s decision to deny a PTE with respect to ‘267 patent was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” under the Administrative Procedure Act.  In issuing its decision, the court applied the “active ingredient” interpretation of the PTE law and determined that “the ‘267 patent covering Metvixia satisfies § 156(a)(5)(A) . . . .” 

Wyeth concerns a PTE request for U.S. Patent #4,916,154 (“the ‘154 patent”) covering Wyeth’s new animal drug CYDECTIN (moxidectin) Pour-On.  FDA approved CYDECTIN Pour-On on January 28, 1998 under New Animal Drug Application (“NADA”) No. 141-099.  The NADA was reviewed under FDA’s Phased Data Review Policy and Administrative NADA process (i.e., a process permitting rolling submission and review of marketing application sections).  FDA determined that the date NADA No. 141-099 was “initially submitted” to the agency for PTE purposes was January 13, 1998, when the final NADA component was submitted to the Agency, thus resulting in a 16-day approval period and a short PTE period for the ‘154 patent.  Wyeth sued FDA and contended that a 16-day approval period “is unreasonable,” and argued that the NADA was “initially submitted” to FDA on August 8, 1995 when the company submitted the first technical section to its application.  As we previously reported, the court ultimately ruled in FDA’s favor.

Both the PTO and Wyeth have appealed their respective district court decisions to the U.S. Court of Appeals for the Federal Circuit.  Both cases will be closely watched, and in particular the PhotoCure case.  The district court decision in PhotoCure has already been used to support a PTE request for reconsideration, arguments in a recent PTE case concerning enantiomers, and was cited in a recent FDA docket submission concerning the availability of New Chemical Entity (“NCE”) exclusivity for pro-drugs. 

Specifically, AstraZeneca has argued that the PhotoCure decision supports the company’s efforts to obtain a PTE for U.S. Patent No. 5,817,338 (“the ‘338 patent”) covering PRILOSEC OTC (omeprazole magnesium) Delayed-Release Tablets.  As we previously reported, the PTO determined that the ‘338 patent is not eligible for a PTE because the PRILOSEC OTC NDA was not the first permitted commercial marketing or use of omeprazole (and also because the PTE application was not timely submitted).  That is, the PTO applied an  “active moiety” interpretation of the PTE statute and concluded that PRILOSEC OTC is not the first permitted commercial marketing or use of the product, because the term “product” in the PTE statute ultimately means “the underlying molecule or ion (excluding those appended portions of the molecule that cause it to be a salt or ester) responsible for the physiological or pharmacological action of the drug.”

The PhotoCure decision has also been cited in post-trial communications (here and here) in a case concerning a PTE granted by the PTO with respect to U.S. Patent No. 5,053,407 (“the ‘407 patent”) covering Ortho McNeil-Janssen Pharmaceutical, Inc.’s enantiomer drug product LEVAQUIN (levofloxacin).  As we previously reported, the U.S. District Court for the District of New Jersey ruled last month that the PTE granted with respect to the ‘407 patent is valid.  Lupin challenged the validity of the ‘407 patent PTE on the basis that the “marketing of levofloxacin would not be the ‘first permitted commercial marketing or use’ of the active ingredient (levofloxacin) as either a single entity or in combination with another active ingredient” given FDA’s previous approval of the racemate drug FLOXIN (ofloxacin).  Both parties contend that the PhotoCure decision is consistent with their arguments.  The district court’s decision has been appealed to the Federal Circuit. 

In addition, the PhotoCure decision has been used to support a position that FDA should affirm its decision to grant a period of five-year NCE exclusivity for the pro-drug VYVANSE (lisdexamfetamine dimesylate) Capsules.  As we previously reported (here and here), FDA has been sued over its decision to grant NCE exclusivity for VYVANSE and its refusal to accept an ANDA for a generic version of the drug product.  That litigation has been put on hold while FDA solicits and considers public comment (Docket No. FDA-2009-N-0184) on pro-drug NCE exclusivity issues.  In a recent docket submission, one company argues that the PhotoCure decision “supports FDA’s decision that Vyvanse is entitled to five-year NCE exclusivity.”

By Jamie K. Wolszon –
 
FDA has announced the establishment of a cross-agency task force to craft recommendations on how to increase transparency regarding the agency’s operations, activities, processes and decisionmaking, including product approvals, enforcement actions, and product recalls, while protecting confidential information.  The agency has set up a docket and the task force plans to convene two public meetings to gather input: FDA’s task force will hold the first public meeting on June 24th, as announced in a June 3rd Federal Register notice, with a second meeting to follow in the fall.  Additional information on FDA’s Transparency Task Force is available here, and includes, among other things, the creation of an “FDA Transparency Blog.”
 
Principal Deputy Commissioner Joshua M. Sharfstein will chair the task force.  The task force also will include the center directors, the associate commissioner for regulatory affairs, the chief counsel, and the chief scientist.  The task force will report its findings and recommendations to the commissioner approximately six months after it is convened.  The task force is part of a broader effort by the Obama administration to bolster transparency and openness across the federal executive branch. 

FDA recently launch a redesigned website that is aimed at improving the “look and feel” of all FDA websites.  According to the Agency:

The new site organization is intended to allow you to find information more quickly:

• Information is categorized by topic for easier retrieval, with related subjects consolidated in sections on the site.
• Page design and navigation have been updated and are consistent throughout the site.
• Content has been reviewed for relevance, with redundant and outdated content removed.

As a result of the new design, current web page addresses (i.e., URLs) no longer work, including those URLs that FDA Law Blog has linked to in many posts.  We are working to update URLs from previous posts; however, if you encounter a broken link, please report it to us so that we may make any corrections.  Thank you!

The thought of federal agents storming the offices of an FDA-regulated company may seem far-fetched to some, but it is becoming a common reality, according to Hyman, Phelps & McNamara, P.C. attorneys John R. Fleder and William T. Koustas in a recent article in FDLI's Update publication. FDA, in coordination with other federal agencies, is more aggressively using criminal search warrants to collect evidence, catching unsuspecting companies by surprise.

Given FDA's increasing use of criminal search warrants, companies regulated by FDA should take precautionary steps to ensure that their business is prepared to deal with the possibility of a FDA criminal search, rather than risk the consequences of being caught unaware.

By Susan J. Matthees –

Last week, FDA announced a new grant program available to help support the development of new animal drugs to treat minor species or minor disease in major species (horses, dogs, cats, chickens, turkeys, cattle and pig).  The Minor Use and Minor Species Animal Health Act of 2004 amended the FDC Act to establish a grant program “to assist in defraying the costs of qualified safety and effectiveness testing expenses and manufacturing expenses incurred in connection with the development of designated new animal drugs.”  FDA finalized the implementing regulations in July 2007 and in March 2009, Congress appropriated $750,000 for MUMS grants for the fiscal year ending September 30, 2009.
    
FDA announced that grants will be available for up to $50,000 per year for up to 2 years for routine studies and up to $100,000 per year for up to 2 years for studies of unusual complexity, duration or size.  Interested parties can get a Request for Applications at Research Project Grant (R01) and must submit the application to Grants.gov (http://www.grants.gov/) by July 1, 2009. 

By Wes Siegner & Ricardo Carvajal –

The FTC has closed its investigation of Pharmavite’s advertising campaign for CholestOff dietary supplements, which contain free form phytosterols and are promoted to lower cholesterol.  According to the April 2009 letter, Pharmavite used “advertising and labeling claims that CholestOff is clinically proven to lower to lower cholesterol and, more specifically, that CholestOff lowers LDL cholesterol up to 24% or 42 points.”  FTC questioned whether there is adequate substantiation for these claims because most studies testing the effect of phytosterols on cholesterol involve either conventional foods, or dietary supplements that contain phytosterols in their esterified form (CholestOff contains phytosterols in their free form).  FTC also noted that the more specific cholesterol-lowering claims made by Pharmavite “singled out the most dramatic reductions” in the underlying studies.  FDA recently challenged similar claims made for General Mill’s Cheerios based on the allegation that the claims are illegal drug claims.

FDA regulations authorize health claims that “describe the relationship between diets that include plant sterol or stanol esters and reduced risk of heart disease,” but only in the labeling of certain types of conventional food and dietary supplements, and only those that contain esterified phytosterols (21 C.F.R. § 101.83).  In 2003, FDA issued a letter stating that the agency would consider exercising enforcement with respect to these requirements, thereby opening the door to the use of the claims in the labeling of other types of conventional food and dietary supplements, including those that contain phytosterols in their free forms. 

Citing FDA's letter of enforcement discretion and Pharmavite’s agreement to remove the claims to which the FTC had objected, FTC decided not to take action against Pharmavite’s more general claims even though in the FTC’s view there are concerns about whether even these claims are substantiated.

By Ricardo Carvajal –

The Obama administration’s Food Safety Working Group has launched a website through which it intends to keep the public informed of its activities (to date, the only activity listed on the website is a listening session and breakout discussion among stakeholders that took place on May 13). Curiously, a photo on the website shows a refrigerator in which raw ground beef (albeit wrapped and resting in a deep-edged plate) is stored above uncovered fresh produce.  Query: if you did this in a commercial context, would it constitute a violation of good manufacturing practice requirements (21 C.F.R. Part 110)?

By Jamie K. Wolszon & Jeffrey N. Wasserstein –

The Vermont legislature recently passed S. 48, a bill that would prohibit manufacturers of prescription drug, device, and biologics products from providing certain kinds of gifts or payments to physicians and other health care providers, and would require disclosure to the state of most other kinds of gifts or payments, regardless of amount.  We were told by the Vermont Governor's office that the bill is expected to be signed into law in the next week or so.  Vermont’s previous gift disclosure law required disclosure of gifts or payments of $25.00 or more to physicians and other health care providers in Vermont in connection with detailing or other promotional activities. This latest effort to limit pharmaceutical marketing further adds to the confusing patchwork quilt of state regulation, resulting in additional difficulty in complying with potentially 50 different sets of marketing requirements. While Justice Brandeis famously applauded states acting as laboratories and engaging in social and economic experiments, query whether he would view this level of experimentation to be the work of mad scientists. New State Ice Co. v. Liebmann, 285 U.S. 262, 52 S.Ct. 371, 76 L.Ed. 747 (1932) (Brandeis, J. dissenting).

The recently enacted law is far more sweeping than comparable gift disclosure laws in other states, particularly as it prohibits almost all gifts and requires disclosure regardless of amount. In comparison, the Minnesota law only prohibits the provision of certain gifts with an aggregate value of $50 per practitioner. The Minnesota law requires disclosure of certain types of gifts only if the value exceeds $100 in aggregate per practitioner per year.  Maine and Washington D.C. only require disclosure of gifts or payments of more than $25. West Virginia only requires disclosure of payments of more than $100 per year for a single health care practitioner (here and here). The Massachusetts law requires disclosure of the payment or gift of more than $50 made to a healthcare professional. We previously reported on the Massachusetts law (here and here).

The new Vermont law also is more encompassing than proposed federal legislation, the Physician Payments Sunshine Act, introduced by Senators Charles Grassley (R-IA) and Herb Kohl (D-WI). The proposed federal legislation only requires disclosure for transfers of value or payments of $100 or more per year per covered recipient. We previously reported on the proposed federal legislation.

Provision of Item of Value Prohibited Unless Allowable Expenditure or Specified Exempted Gift: The law bans any manufacturer of prescription drugs, devices or biologics, any wholesale distributor of medical devices, or their agents from giving gifts except for several categories of specified gifts. The law defines a manufacturer to include “any other person who is engaged in the production, preparation, propagation, compounding, processing, packaging, repacking, distributing, or labeling of prescribed products,” although it excludes a wholesale distributor of biological products or a licensed pharmacist.

The law’s definition of gift includes “anything of value provided to a health care provider for free” and “any payment, food, entertainment, travel, subscription, advance, service, or anything else of value provided to the heath care provider” that are not “allowable expenditures” or reimbursed by the health care professional at fair market value.

Items of value that do not fall within the definition of a gift because they are an allowable expenditure include:

• Payment to the sponsor of a significant educational, medical, scientific, or policy-making conference or seminar for bona fide educational purposes that do not discuss specific products, are objective and do not have industry control;
• Honoraria and payment of the expenses of a health care professional who serves on the faculty of a bona fide significant educational, medical scientific, or policy-making conference or seminar that meet certain criteria;
• Specified compensation, salary support and expenses related to a bona fide clinical trial or specified research projects;
• Reasonable expenses necessary for technical training of a health care professional on the use of a medical device if a written agreement between the health care provider and the manufacturer documents the amounts or categories of expenses;
• Certain royalties and licensing fees; and
• “Other reasonable fees, payments, subsidies, or other economic benefits provided by a manufacturer of prescribed products at fair market value.”

Items of value that are gifts under the law but are exempt from the prohibition include:

• Samples to be distributed for free to patients;
• Rebates and discounts provided in the normal course of business;
• Devices loaned for a period of less than 90 days to allow a health care provider or patient to evaluate the device;
• Reasonable quantities of demonstration or evaluation units of a device;
• Provision, distribution, dissemination or receipt of peer-reviewed academic, scientific, or clinical articles or journals and “other items that serve a genuine educational function provided to a health care provider for the benefit of patients”;
• Provision of FDA-approved labels; and
• Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific or policy-making conference of a medical or professional association if the association selects the recipient.

Disclosure: Even if a device, drug or biologics maker can provide an item of value to a physician, the manufacturer must disclose information about the value, nature and recipient for those permitted items regardless of how little the manufacturer spent. The disclosure requirement applies to both allowable expenditures and to exempted gifts, however, the manufacturer does not have to provide information for royalties or licensing agreements, and rebates and discounts provided in the normal course of business.

The manufacturer also does not have to provide the information about the value, nature and recipient for samples. However, the law directs the attorney general’s office, in consultation with the commission on health care reform, to review whether to require disclosure of samples in the future. To that end, the law requires the attorney general’s office to provide a report to the relevant House and Senate committees no later than December 15, 2009.

The new Vermont law includes a provision that would delay the reporting requirement for permitted payments related to clinical trials: Manufacturers do not have to report until the earlier of: the date of the product approval or clearance or two years after the payment.  The proposed federal legislation also contains this reporting delay. Under the Vermont law, the manufacturer would have to identify the clinical trial, the start date of the trial, and the web link to the clinical trial registration on the national clinical trials registry.

The manufacturer must report specified information about the value, nature and recipient for those permitted items on October 1 each year for the fiscal year ending the previous June 30. On July 1 of each year, the manufacturer must provide the name of the person in charge of ensuring compliance with the law.

Civil Monetary Penalties: The Vermont attorney general may impose civil monetary penalties of up to $10,000 per unlawful gift or $10,000 per failure to report.

Effective Date: The law generally takes effect July 1, 2009, with a phase-in of the disclosure requirements. Pharmaceutical manufacturers must file by November 1, 2009, disclosures for the time period of July 1, 2008 to June 30, 2009 based on the previous version of the Vermont gift disclosure law. Device and biologics manufacturers must file by October 1, 2010 their disclosures, under the provisions of the new law, for the time period of January 1-June 30, 2010.

Open Questions: The law leaves open several questions. For instance, it is unclear whether the law would permit the dissemination of promotional materials (other than FDA-approved labels), or Risk Evaluation and Mitigation Strategies (REMS)-type educational materials as “other items that serve a genuine educational function provided to a health care provider for the benefit of patients"? Or is this “other items” language limited to educational materials such as textbooks or anatomical models?

Moreover, how does one determine the value of items that are not easily assessed such as loaner devices, articles and FDA-approved labels?

By Kurt R. Karst –      

The recent addition of numerous patents to the Orange Book covering various GlaxoSmithKline (“GSK”) drug products, such as VENTOLIN (albuterol sulfate), FLOVENT (fluticasone propionate), ADVAIR (fluticasone propionate; salmeterol xinafoate), and SEREVENT (salmeterol xinafoate), begs the question why?  Many of the new patent listings concern patents issued years ago and are therefore late-listed patents.  (Generic applicants with pending applications need not certify to late-listed patents; however, subsequent applicants must certify to them.)  Nevertheless, the FDC Act and FDA’s regulations require each NDA sponsor to submit to FDA for Orange Book listing  “the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the [NDA] 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.”  The answer as to why GSK decided to submit the patents to FDA for Orange Book listing might be related to a January 2005 advisory opinion request the company submitted to FDA – and that the Agency has not yet responded to – raising important questions about Orange Book patent listing. 

We previously reported on the GSK request, as well as two similar requests submitted by AstraZeneca in 2006 and 2007.  GSK’s request asks FDA the following question:

If a patent claims a drug delivery device or elements of a drug delivery device approved as part of a New Drug Applicatin (“NDA”), but the patent does not specifically claim the active ingredient or mention the active ingredient or ingredients contained in the approved drug product, or if a patent claims the protective overwrapping of a drug delivery device, should information concerning that patent be submitted to the FDA for listing in the Orange Book? [(italics in original)]

The advisory opinion request was apparently prompted by FDA’s response to comments stated in the preamble to the Agency’s June 2003 regulations implementing the FDC Act’s patent listing provisions.  Those comments sought clarification as to whether patents claiming delivery devices or containers “integral” to a drug product should be submitted to FDA for Orange Book listing.  FDA did not directly address the issue, but rather stated that the key factor in determining whether a drug product patent must be submitted for Orange Book listing is “whether the patent being submitted claims the finished dosage form of the approved drug product.” 

Many of the patents now listed in the Orange Book for the above-referenced GSK drug products appear to cover drug delivery devices and components of such devices.  For example, one patent claims:

An inhalation device for use with a medicament pack having a plurality of containers for containing medicament in powder form wherein the containers are spaced along the length of and defined between two peelable sheets secured to each other . . . .

GSK’s decision to submit such patents to FDA for Orange Book listing could be a creative way of pushing the Agency to more promptly address the three outstanding advisory opinion requests.  It is also possible that FDA will address the issue of the Orange Book listing of drug delivery device and device component patents in upcoming regulations implementing the Medicare Modernization Act (“MMA”).  We understand that such regulations are in the works and will (eventually) be issued in two sets – one set addressing the 180-day exclusivity forfeiture provisions added to the FDC Act by the MMA, and the other addressing other amendments made to the FDC Act by the MMA. 

By Dara Katcher Levy & Roger C. Thies –

For the past several years, industry has relied on Warning and Untitled Letters to determine DDMAC’s  “current” thinking on the presentation of risk information in various promotional pieces. 

On May 26, 2009, FDA issued a draft Guidance for Industry: Presenting Risk Information in Prescription Drug and Medical Device Promotion.  The Draft Guidance largely sums up the “minimization of risk” issues cited in those DDMAC Warning and Untitled Letters with few surprises.  Of note, the Agency states that it will apply the “reasonable consumer standard” to prescription drug and medical device promotion as it does for dietary supplements and food.  While noting that presentation of risk information should be crafted to reflect the audience, FDA also reiterates that the same standards on presentation of risk information apply to both healthcare professional and direct-to-consumer promotion.  Although the content may differ, FDA defines its principles as “universal concepts of communication and understanding of risk information.”  To support its positions about appropriate content and format of risk information, FDA cites to articles that FDA states reflect “well-developed social science principles supported by decades of scientific research.” 

The Draft Guidance gives little credit to physicians – their training and ethical obligations and responsibilities – in analyzing physician understanding of information presented in product promotion.  The Draft Guidance notes that physicians are influenced by product advertising and are “subject to the same cognitive biases and processing limitations as non-experts.”  Later in the Draft Guidance, FDA states that one of the serious effects of missing certain risk information in a direct-to-consumer advertisement is that “it may cause consumers to fail to inform their healthcare professionals of important considerations, and healthcare professionals to prescribe inappropriately or even dangerously.”  Clearly, FDA does not contemplate physicians making informed, medically appropriate decisions when prescribing product that may also be the subject of promotion.

The Draft Guidance does not answer the “big” questions with regard to the most rapidly evolving area of product promotion – the Internet.  Although FDA includes “internet web sites” as “promotional material” that is covered by the Draft Guidance, FDA has not addressed the unique challenges posed by product information included on the Internet (font size and screen shot variations by computer, individual webpages on a larger website, hyperlinks to content not controlled by the product’s manufacturer, etc.,). 

Although much of the Draft Guidance is known to those who follow DDMAC letters, it is “must” reading.  It brings to one document DDMAC’s approach to labeling and advertising review.  The 20 examples of flawed approaches to presenting risk information, while simplistic, aptly demonstrate DDMAC’s concerns and should help industry with its promotional copy review activities.