Hyman, Phelps & McNamara, P.C.’s Anne Marie Murphy will present at the International Consumer Product Health and Safety Organization’s (“ICPHSO’s”) 16th Annual Meeting and Training Symposium, which is scheduled to take place from February 24-27, 2009 at the Florida Hotel and Conference Center in Orlando, Florida.  A copy of the conference agenda is available here.  Ms. Murphy, along with other panel members, will discuss questions arising from the potential effects of the Consumer Product Safety Improvement Act of 2008 ("CPSIA”) on FDA-regulated products, such as:

• Jurisdictional overlaps between the FDA and the Consumer Product Safety Commission on safety of products regulated by both agencies;
• How to prepare properly qualified General Conformity Certifications for products regulated by both agencies;
• How third-party testing for dual-regulated children's products may affect product development and manufacture; and
• How new enforcement authorities in the CPSIA potentially may affect dual-regulated products.

To register for the conference, visit ICPHSO’s website.

By Ricardo Carvajal & Susan J. Matthees –      

The FDA Globalization Act (“FDAGA”) of 2008 was “meant to stimulate discussion about how to provide adequate funding and authority for FDA to ensure safety” of products over which the agency has jurisdiction.  When we commented on that proposed legislation, we couldn’t help but make special mention of the many fees that were included.  FDAGA 2009 brings back the fees, and adds a number of new authorities – and responsibilities – for FDA and for industry.  Below we summarize some of the principal changes that are not fee-related.

FDAGA 2008 proposed several new requirements and authorities applicable to foods, including establishment of a food safety plan, safety standards for fresh produce, periodic inspections, certification of facilities and accreditation of laboratories, and mandatory notification and recall, among others.  FDAGA 2009 retains these and adds others, including:

• All facilities would be required to develop and implement a HACCP plan (conduct a hazard analysis, implement preventive controls, monitor effectiveness of those controls, and keep records).
• FDA’s access to records would be significantly strengthened, perhaps finally putting to rest the decades-long debate over the extent of FDA’s authority to access records during a food inspection. In addition, farms and restaurants would be subject to recordkeeping requirements.
• FDA’s administrative detention authority would be significantly strengthened.
• Some of the violations that were previously categorized as “prohibited acts” (e.g., failure to register or pay fees) would now render a food misbranded.
• Making false statements to a facility or laboratory certifying agent would be a prohibited act.
 
Many of these provisions (as well as those carried over from FDAGA 2008) would require FDA to issue implementing regulations or guidance, for which tight timeframes are provided.  It is not clear whether the costs of doing so would be covered by the fees that would be raised under FDAGA.  In addition, the Department of Health and Human Services (“HHS”) is tasked with taking numerous additional measures to improve surveillance and understanding of food borne illness.  If those efforts meet with success, they could result in greater capabilities to link outbreaks to specific foods, thereby helping to overcome one of the historic obstacles to successful product liability actions in the food arena – that of establishing causation.  Finally, we couldn’t help but notice that FDAGA 2009 requires HHS to conduct research to “develop methods to reduce or destroy pathogens before, during, and after processing.”  Unfortunately, getting those methods approved by FDA is another matter, as illustrated by the ongoing difficulties in getting irradiation technologies to market.
 
The sections of FDAGA 2008 that pertained to drugs included provisions for FDA inspections of manufacturing facilities, requirements for risk management plans, detailed supply chain requirements, greater recall authority for FDA, country of origin labeling, and requirements for testing of purity and identity for drug products.  The drug section of FDAGA 2009 retains many of these same provisions and includes others, such as: 
 
• Failure to pay registration fees would render a drug misbranded, but FDAGA 2009 exempts orphan drugs and certain not-for-profit medical centers from paying registration fees and allows for a waiver or reduction of fees for drugs that are necessary for public health or where the fee would be a financial hardship for the company. 
• New inspection requirements call for drug facilities to be inspected every 2 years unless the Secretary determines that once every 4 years would be sufficient. 
• No personal use exemption from the requirement that imported drugs have information demonstrating compliance with FDA requirements. 
• A drug is misbranded if the manufacturer’s Website does not list the country of origin of the active pharmaceutical ingredients and finished dosage form of the drug. 
• New “voluntary” procedures for manufacturers to follow for a recall.
 
As with the food section of FDAGA, many of the provisions in the drug section would require FDA to issue regulations or guidance.
 
FDAGA 2008 proposed several new requirements for cosmetic products, including good manufacturing practice and adverse event reporting requirements.  FDAGA 2009 retains these, expands some of them, and adds a few new ones.  Of particular interest:
 
• FDAGA 2009 retains the requirement that cosmetic manufacturers register and adds more detailed registration requirements, including annual registration of both foreign and domestic facilities and  the requirement that the Secretary keep a list of registered establishments.
• Cosmetic companies will be required to submit an ingredient list for every cosmetic manufactured. 
• More comprehensive requirements for adverse event reporting

Finally, for those of you who have been following the bouncing ball on preemption, section 2 of FDAGA 2009 makes clear that no preemption of state law is intended.

FDAGA 2008 proposed several new requirements for cosmetic products, including good manufacturing practice and adverse event reporting requirements.  FDAGA 2009 retains these, expands some of them, and adds a few new ones.  Of particular interest:

• FDAGA 2009 retains the requirement that cosmetic manufacturers register and adds more detailed registration requirements, including a requirement for annual registration of both foreign and domestic facilities and a requirement that the Secretary keep a list of registered establishments.
• Cosmetic companies will be required to submit an ingredient list for every cosmetic manufactured. 
• More comprehensive requirements for adverse event reporting

Finally, for those of you who have been following the bouncing ball on preemption, section 2 of FDAGA 2009 makes clear that no preemption of state law is intended.

By Ricardo Carvajal –      

USDA has suspended, and proposes to debar, Peanut Corporation of America ("PCA") from “participating in government contracts or subcontracts, as well as federal non procurement programs,” among other activities.  The suspension is for one year and is effective immediately.  The proposed debarment would be effective for three years.  PCA has 30 days to object to USDA’s actions. In its press release announcing the actions, USDA had harsh words for PCA, alleging that the firm “lacks business integrity and business honesty.”

Meanwhile, in a written statement submitted by FDA/CFSAN Director Stephen Sundlof to the Senate Committee on Agriculture, Nutrition and Forestry, FDA reiterated its confidence that the PCA facility in Georgia is the source of the current Salmonella outbreak, and confirmed that FDA’s Office of Criminal Investigations is investigating.  FDA has taken the somewhat unusual step of posting the Form 483 issued at the conclusion of its recent inspection of the Georgia facility on the internet.  The inspectional observations listed in the Form 483 detail numerous apparent failures to adhere to good manufacturing practice requirements.

The Center for Business Intelligence (“CBI”) will hold its 2nd Annual Summit on Biosimilars and Follow-On Biologics on March 10-11, 2009.  The Conference will be held at the Marriott Baltimore Inner Harbor at Camden Yards in Baltimore, Maryland.  A copy of the conference brochure is available here.  Hyman, Phelps & McNamara’s Kurt R. Karst will present at the conference on the patent and non-patent market exclusivity provisions of follow-on biologic legislation that has been introduced. 

The CBI conference is intended to provide participants with the opportunity to evaluate follow-on biologic legislation while also investigating the guidelines being used in other countries – and most importantly, how these guidelines have affected company strategies, profits and the economic landscape.  Key topics to be addressed at the conference include:

• WHO Guidance, expectations and implications for globally accepted biosimilar standards
• The similarities, differences and potential impact of Canadian biosimilar legislation
• Naming concerns for biosimilar products and post-launch tracking
• The FTC’s perspective on biologic fair competition
• The exclusivity issues in proposed legislation
• Lessons learned from pharmaceutical patent litigation
• How the criteria for comparability is being/should be established
• The economic implications of the EU approval pathway
• The testing, distribution and pricing of biosimilars in India, China and Brazil

Special FDA Law Blog Discount – CBI is offering FDA Law Blog readers a $400 discount off of the registration fee.  To register for the conference, go to the CBI website and enter the following code – KZG958.

By Kurt R. Karst –      

The American Intellectual Property Law Association (“AIPLA”) recently submitted a letter to FDA concerning § 4 of the recently enacted “QI Program Supplemental Funding Act of 2008” (the “QI Act”).  (The "QI" stands for Qualifying Individual).  As we previously reported, 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. 

In November 2008, FDA issued a draft guidance document describing the Agency’s current thinking on the implementation of § 4(b)(1), which includes three transition provisions on Orange Book patent listing, certification, and 180-day exclusivity for each ANDA applicant that not later than 120 dates after enactment of the QI Act (i.e., February 5, 2009) amends a pending application to contain a Paragraph IV certification to a newly listed antibiotic drug patent.  FDA’s latest Paragraph IV Certification List shows two entries with a “PIV received prior to 2/5/2009” notation: (1) DORYX (doxycycline hyclate) Delayed-Release Tablets; and (2)  SOLODYN (minocycline HCl) Extended Release Tablets.  Patent infringement lawsuits have been initiated with respect to the Orange Book patent listings for each drug product – see the compalints here (DORYX), here (DORYX), and here (SOLODYN).  (Also, as a point of interest, earlier this week, FDA responded to a citizen petition concerning generic SOLODYN.)

AIPLA’s letter to FDA requests that the Agency establish a docket requesting public comment on QI Act implementation, similar to the docket FDA established after the enactment of the 2003 Medicare Modernization Act (“MMA”).  In addition, AIPLA raises three issues for FDA to consider as the Agency works to implement the QI Act: (1) the availability of 30-month stays with respect to patents submitted to FDA for Orange Book listing under the QI Act transition provisions; (2) the availability of additional exclusivity given the limitations described in FDC Act § 505(v)(3)(A); and (3) the availability of exclusivity for old antibiotics covered under FDC Act § 505(v)(2)(A).  With respect to the availability of a 30-month stay, AIPLA comments that:

If FDA interprets the law such that the amendments made to the FDC Act by the MMA apply, then presumably no 30-month stay would apply to an ANDA applicant with a pending ANDA that amends such application to add a Paragraph IV certification to a newly-listed Orange Book patent.  It is unclear, however, whether FDA intends to interpret the law in such manner, or whether FDA believes that the law could be interpreted to permit a 30-month stay under such circumstances, similar to pre-MMA version of the FDC Act. 

FDA’s February 3, 2008 approval of an ANDA for generic SOLODYN (with 180-day exclusivity) does not address the availability of a 30-month stay, because a patent infringement lawsuit was not brought within the statutory 45-day period. 

FDC Act § 505(v)(3)(A) – “Limitations — Exclusivities And Extensions” – states that FDC Act §§ 505(v)(1)(A) and (2)(A) “shall not be construed to entitle a drug that is the subject of an approved application described in [FDC Act §§ 505(v)(1)(B)(i) or (2)(B)(i)], as applicable, to any market exclusivities or patent extensions other than those exclusivities or extensions described in [FDC Act §§ 505(v)(1)(A) and (2)(A)].”  AIPLA comments that “[w]hile FDC Act § 505(v)(3)(A) clearly places limits on how the new law can be interpreted, it is unclear whether it is also intended to limit the availability of” pediatric and orphan drug exclusivity under FDC Act § 505A and § 527, respectively. 

Finally, FDC Act § 505(v)(2)(A) states that an application for an antibiotic drug submitted to FDA after October 8, 2008, and which antibiotic drug was the subject of an application submitted under FDC Act § 507 but not approved by FDA before the enactment of the 1997 FDA Modernization Act “may elect to be eligible for, with respect to the drug,” a period of 3-year exclusivity “and” a period of 5-year NCE exclusivity, or a PTE under 35 U.S.C. § 156, subject to the requirements for obtaining such patent or non-patent exclusivity.  AIPLA’s letter notes that:

The use of the conjunctive “and” in FDC Act § 505(v)(2)(A) is curious.  It is unclear how a drug can simultaneously qualify for both 3-year “new use” exclusivity and 5-year [New Chemical Entity] exclusivity. . . . Congress’ use of the word “and” might have been intentional, such that an old antibiotic drug covered under FDC Act § 505(v)(2) can qualify for 3-year exclusivity for a new condition of use after an initial NDA approval that would qualify for 5-year exclusivity or a [Patent Term Extension] – as an old antibiotic drug covered under FDC Act § 505(v)(2) does not appear to convert to an old antibiotic drug covered under FDC Act § 505(v)(1) once it is initially approved. Under this interpretation, 3-year and 5-year exclusivity are not granted simultaneously, but rather sequentially, provided the requirements for granting such exclusivity are met.

Given the interest we have seen in QI Act implementation issues, FDA will likely receive substantial comment from interested parties if the Agency decides to open a public docket.   

LATE-BREAKING NEWS:

• FDA has received a citizen petition requesting that the Agency address whether the 30-month stay provisions of the Hatch-Waxman Amendments apply to a pending ANDA for a generic version of an old antibiotic drug (i.e., DORYX), which ANDA contains a Paragraph IV certification to a patent listed in the Orange Book in accordance with the QI Act.  The petition argues that the plain language of the QI Act requires application of the 30-month stay provisions of the original Hatch-Waxman Amendments, instead of the version of the statute amended by the MMA.

By Ricardo Carvajal –      

In January 2008, FDA received a citizen petition asking it to “issue a formal determination that when applied to foods and dietary supplements, California's Proposition 65 causes consumer confusion, ‘misbrands’ safe and wholesome products, and frustrates FDA's ability to carry out its statutory mandates.”  California’s recent Proposition 65 action against lead in dietary supplements appears to be reinvigorating that effort.  FDA has received a supplemental submission to the docket established for the petition noting that California’s action is founded on an FDA survey showing that the products at issue posed no safety concerns.  The supplemental submission also highlights the cooperation between California’s Attorney General (AG) and private plaintiffs in the case, and attacks the AG’s inclusion of claims under the state’s unfair competition law, which would give rise to additional penalties and extend the statute of limitations.  If the recent news about the potential presence of mercury in high fructose corn syrup begets another Proposition 65 action, we’re betting that this citizen petition will find a few more friends.

By Kurt R. Karst –      
 
On February 2, 2009, the Federal Trade Commission (“FTC”) announced that the Commission filed a complaint in federal district court challenging agreements in which Solvay Pharmaceuticals, Inc. allegedly paid two generic drug companies to delay generic competition to Solvay’s drug product ANDROGEL (testosterone gel) 1%.  Specifically, the FTC’s complaint alleges that in 2006, Solvay agreed to share its profits with certain  generic competitors – one of whom already has ANDA approval and is eligible for 180-day exclusivity – provided they would not launch their generic versions until 2015.  Under FDC Act § 505(j)(5)(D)(i)(V), which the Medicare Modernization Act (“MMA”) made retroactive to pre-MMA cases, if there is a final court decision that an agreement violates antitrust laws, then 180-day exclusivity is forfeited.

On the heels of the FTC’s announcement, Senators Herb Kohl (D-WI) and Chuck Grassley (R-IA) introduced S. 369, “The Preserve Access to Affordable Generics Act.”  According to a press release issued by Sen. Kohl, “[t]he legislation would make illegal anti-competitive, anti-consumer patent payoffs in which brand name drug companies pay generic manufacturers millions of dollars to keep generic competition off the market.”  (Check out our new “FDA Legislation Tracker” for a copy of the bill and other FDA legislation.)  Sen. Kohl introduced similar legislation in the 110th Congress – S. 316.  Rep. Henry Waxman (D-CA) introduced the House version of the bill – H.R. 1902.  Similar to previous versions, the latest iteration of the bill (S. 369) would:  

• Amend the Clayton Act to add new § 29 (Unlawful Interference With Generic Marketing) making it unlawful for a person, in connection with the sale of a drug product, to be a party to any agreement resolving or settling a patent infringement claim in which: (1) an ANDA applicant receives anything of value; and (2) such generic applicant agrees not to research, develop, manufacture, market, or sell the generic product for any period of time;

• Amend MMA § 1112 to set forth additional filing requirements related to agreements between brand name and generic drug companies; and

• Amend the 180-day exclusivity forfeiture provision at FDC Act § 505(j)(5)(D)(i)(V) to provide that an ANDA applicant that is a “first applicant” forfeits exclusivity if an agreement violates new § 29 of the Clayton Act.

By Kurt R. Karst –      

Representative Jo Ann Emerson (R-MO) has introduced a bill to amend the FDC Act that would prohibit the marketing of authorized generics during a generic applicant’s 180-day exclusivity period.  The bill, H.R. 573, is almost identical to the bill Rep. Emerson introduced during the 110th Congress – H.R. 806.  The Senate version of that bill was introduced by Senator Jay Rockefeller (D-WV) – S. 438, the Fair Prescription Drug Competition Act.  A Senate companion bill to Rep. Emerson’s latest bill has not yet been introduced. 

Interest in authorized generics has steadily increased over the past few years, particularly after FDA denied citizen petitions in 2004, concluding that “[t]he marketing of authorized generics during the 180-day exclusivity period is a long-standing, pro-competitive practice, permissible under the FDC Act,” and legal challenges upheld FDA’s determination.  (See an article we published on the topic in RAPS Focus.)  The Federal Trade Commission (“FTC”) is currently studying the competitive effects of authorized generics.  Some legislative action has already been taken with respect to gathering information on authorized generics.  As we previously reported, the FDA Amendments Act amended the FDC Act to create new § 505(t) – “Database for Authorized Generic Drugs” – that requires FDA to compile and publish a complete list of all authorized generic drugs identified in annual reports submitted to the Agency since January 1, 1999.  FDA has issued a direct final rule, as well as a companion proposed rule, to implement FDAAA § 920.  Among other uses, this list is intended to assist the FTC as the Commission moves ahead with its study.

Pundits have predicted that a large amount of FDA-related legislation will be introduced in the 111th Congress.  To help our loyal FDA Law Blog readers follow these legislative developments, we have decided to create a new tracker feature on the blog – the “FDA Legislation Tracker.”  The legislation tracker, along with our “FDC Act § 505(q) Citizen Petition Tracker,” appear on the right-hand side of FDA Law Blog.  We will update the legislation tracker as new bills are introduced.  To access the text and a summary of legislation identified in the tracker, press and hold the control key on your keyboard and click on the pdf icon.

Hyman, Phelps & McNamara, P.C. today posted on its website an updated version of its outline entitled “Application of Health Care Fraud and Abuse Laws to Pharmaceutical Marketing."  This 89-page outline, authored by Alan Kirschenbaum and Jeff Wasserstein,  provides a comprehensive overview of how the federal health care program antikickback law, the Federal False Claims Act, and other federal and state laws affect pharmaceutical marketing activities.  The outline focuses on the major problem areas for drug marketing under these laws, and, for each area, describes the pertinent safe harbors, OIG advisory opinions, and major enforcement actions.  The outline also provides general guidelines for evaluating marketing proposals. 

This outline was first published by Hyman, Phelps & McNamara, P.C. in 1996, and has been updated periodically.  The new version is current as of January 31, 2009.  Although the primary focus is on marketing of pharmaceuticals, much of the outline is equally applicable to the marketing of medical devices, and the major government actions against device companies are discussed.

By Anne Marie Murphy –

We previously reported on the Consumer Product Safety Improvement Act of 2008 (“CPSIA”), which makes sweeping changes to the laws enforced by the Consumer Product Safety Commission (“CPSC”).  CPSIA Section 102(a), paragraph (1), amends the Consumer Product Safety Act (“CPSA”) to require each importer or domestic manufacturer of any product that is subject to any CPSC rule, ban, standard, or regulation to issue a certificate based on specific tests or a reasonable testing program that the product complies with such CPSC requirements.  CPSIA Section 102(a), paragraphs (2) and (3), require that certification of compliance for certain children’s products be based on third-party testing, and set forth a timeline for implementation of the third-party testing requirements.

On Friday evening, even as the regulated industry continued to scramble to comply, the CPSC announced a one-year stay of enforcement (with certain exceptions) of the certification and testing requirements.  The CPSC explained: 

The Commission is aware that there is substantial confusion as to which testing and certification requirements . . . apply to which products under the Commission’s jurisdiction, what sort of testing is required where the provisions do apply, whether testing is necessary for children’s products that may not by their nature contain lead, whether testing to demonstrate compliance must be conducted on the final product rather than on its parts prior to assembly or manufacture, whether manufacturers and importers must issue certificates of compliance to address the labeling requirements under the Federal Hazardous Substance Act (“FHSA”), and what sort of certificate must be issued and by whom.

In addition to substantial confusion over the requirements, the CPSC noted industry complaints concerning the expense of testing products that will ultimately be exempt by regulation and the Commission’s own lack of resources as reasons for the stay. 

The stay covers all testing and certification requirements except the following:

1. Any testing and certification requirements that were in place prior to CPSIA.
2. Four requirements (when they become effective) for third-party testing of children’s products for which the CPSC has already issued criteria for acceptance of third party testing laboratories:
• lead paint;
• cribs and pacifiers;
• small parts; and
• metal components of children’s metal jewelry.
3. Any certifications that are expressly required by CPSC regulation (e.g., bicycle helmets).
4. Certifications required by the Virginia Graeme Baker Pool & Spa Safety Act.
5. Certifications of compliance required for all terrain vehicles (“ATVs”).
6. Any voluntary guarantees provided for in the Flammable Fabrics Act (“FFA”).

The CPSC emphasized that the stay applies to testing and certification requirements.  Products must comply with the underlying safety requirements, including the upcoming CPSIA limits on lead and phthalates in children’s products.

By Kurt R. Karst –      

As a follow-up to our recent post on obtaining orphan drug designation and approval based on a major contribution to patient care – the so-called “MC-to-PC” orphan drug designation and approval – we thought we would post on another rarity in the orphan drug world: the “cost recovery” orphan drug designation and approval. 

The FDC Act, as amended by the Orphan Drug Act, and FDA’s orphan drug regulations at 21 C.F.R. Part 316 provide two routes for obtaining designation and approval of a drug for a rare disease or condition (i.e., an “orphan drug”).  Orphan drug designation and approval may be granted: (1) on the basis that a product is intended to treat a disease or condition that has a U.S. prevalence of less than 200,000 persons (FDC Act § 526(a)(2)(A)); or (2) if a disease or condition affects 200,000 or more individuals, then if a sponsor can show that there is no reasonable expectation that the costs of developing and making available the drug will be recovered from U.S. sales (FDC Act § 526(a)(2)(B)). 

An orphan drug designation request citing cost recovery as a designation basis must include certain documentation (with appended authoritative references) to demonstrate that “there is no reasonable expectation that costs of research and development of the drug for the indication can be recovered by sales of the drug in the United States.”    Such documentation must include the following information (from FDA’s orphan drug regulations at 21 C.F.R. Part 316):

• “Data on all costs that the sponsor has incurred in the course of developing the drug for the U.S. market,” including “nonclinical laboratory studies, clinical studies, dosage form development, record and report maintenance, meetings with FDA, determination of patentability, preparation of designation request, IND/marketing application preparation, distribution of the drug under a ‘treatment'’ protocol, licensing costs, liability insurance, and overhead and depreciation.”  In addition, the sponsor must “demonstrate the reasonableness of the cost data.  For example, if the sponsor has incurred costs for clinical investigations, the sponsor shall provide information on the number of investigations, the years in which they took place, and on the scope, duration, and number of patients that were involved in each investigation.” 

• “If the drug was developed wholly or in part outside the United States,” then the designation request must also include: (1) “[d]ata on and justification for all costs that the sponsor has incurred outside of the United States in the course of developing the drug for the U.S. market,” including an explanation of “the method that was used to determine which portion of the foreign development costs should be applied to the U.S. market, and what percent these costs are of total worldwide development costs,” and “[a]ny data submitted to foreign government authorities to support drug pricing determinations;” and (2) “[d]ata that show which foreign development costs were recovered through cost recovery procedures that are allowed during drug development in some foreign countries” (e.g., revenues from charging for investigational drug). 

• “[A] clear explanation of and justification for the method that is used to apportion the development costs among the various indications” where “the drug has already been approved for marketing for any indication or in cases where the drug is currently under investigation for one or more other indications (in addition to the indication for which orphan-drug designation is being sought).” 

• “A statement of and justification for any development costs that the sponsor expects to incur after the submission of the designation request.” 

• “A statement of and justification for production and marketing costs that the sponsor has incurred in the past and expects to incur during the first 7 years that the drug is marketed.” 

• “An estimate of and justification for the expected revenues from sales of the drug in the United States during its first 7 years of marketing,” which should “assume the total market for the drug is equal to the prevalence of the disease or condition that the drug will be used to treat.”    

• Information on “each country where the drug has already been approved for marketing for any indication,” including “the annual sales and number of prescriptions in each country since the first approval date.” 

• “A report of an independent certified public accountant in accordance with Statement on Standards for Attestation established by the American Institute of Certified Public Accountants on agreed upon procedures performed with respect to the data estimates and justifications submitted pursuant to [21 C.F.R § 316.21].” 

In addition to the above-referenced documentation, a sponsor requesting orphan drug designation pursuant to FDC Act § 526(a)(2)(B) must, “at FDA’s request, allow FDA or FDA-designated personnel to examine at reasonable times and in a reasonable manner all relevant financial records and sales data of the sponsor and manufacturer.” 

To our knowledge, of the more than 325 designated and approved orphan drugs, there are only three drugs have been designated and approved based on a showing that a disease or condition affects 200,000 or more U.S. individuals and where the sponsor showed that there is no reasonable expectation that the costs of developing and making available the drug will be recovered from U.S. sales: (1) SUBUTEX (buprenorphine HCl) Sublingual Tablets; (2) SUBOXONE (buprenorphine HCl; naloxone HCl dehydrate) Sublingual Tablets; and, most recently, (3) EVISTA (raloxifene HCl) Tablets.

FDA approved SUBUTEX (NDA #20-732) and SUBOXONE (NDA #20-733) on October 8, 2002 for the treatment of opioid dependence.  FDA designated SUBUTEX as an orphan drug for this indication on June 15, 1994, and designated SUBOXONE for this indication on October 27, 1994.  In each case, the sponsor put forth two arguments for designation – based on FDC Act § 526(a)(2)(A) (prevalence) and § 526(a)(2)(B) (cost recovery).  Although FDA did not agree with the sponsor’s prevalence figures, the Agency concluded that the economic analysis and supporting documentation submitted by the sponsor were sufficient to support a cost recovery designation.

FDA approved EVISTA (NDA #22-042) on September 13, 2007 for reduction in risk of invasive breast cancer in postmenopausal women with osteoporosis and reduction in risk of invasive breast cancer in postmenopausal women at high risk for invasive breast cancer.  Despite some questions concerning the sponsor’s cost recovery analysis, FDA designated the drug as an orphan drug on July 14, 2005 pursuant to FDC Act § 526(a)(2)(B) for the reduction of the risk of breast cancer in postmenopausal women.  Interestingly, FDA notes in its designation recommendation that the sponsor should present certain information to the Agency post-approval to support the cost recovery designation.  FDA states that “[t]his information should be presented . . . after a certain period of postmarketing experience is available . . . .  At each of these time points, [FDA] will need to determine if the designation and/or marketing exclusivity should remain in place or whether the designation and/or exclusivity should be revoked as permitted under 21 CFR 316.29.” 

The latest issue of the Food and Drug Law Institute’s “Update” magazine features articles written by four Hyman, Phelps & McNamara, P.C. attorneys.  The first article, titled “Imported Products – FDA Is Not Fooling Around,”  was written by Dara Katcher Levy and John R. Fleder.  It provides background information on FDA’s regulation of imports, discusses inconsistencies in FDA’s enforcement actions against imported articles, and analyzes FDA’s increasing use of very broad import alerts and the adverse effects that these are having on importers. 

The second article, titled “FDA’s Implementation of FDAAA’s Food-Related Provisions: A Work In Progress,” was written by Ricardo Carvajal and Diane B. McColl.  It discusses sections 417 and 301(ll) of the FDC Act, which were added by the FDA Amendments Act of 2007.  Section 417 requires FDA to establish a reportable food registry and an electronic portal to which  responsible parties must submit instances of reportable food.  FDA is expected to implement the reportable food registry in Spring 2009.  Section 301(ll) makes it a prohibited act to market a food to which has been added a new drug, a licensed biologic, or a “drug” or “biological product” for which substantial clinical investigations have been instituted and their existence made public (with certain exceptions). 

By Wes Siegner & Ricardo Carvajal – 

Last August, FDA published data that the Agency had gathered on the content of lead in 324 vitamin products labeled for use by women or children. FDA made clear that its estimates of lead exposures for all of the products surveyed were below the safe/tolerable exposure levels for children, pregnant and lactating women, and adult women.  However, it appears that FDA’s estimates of lead exposures for some products fell above the safe harbor levels for lead established under California’s Proposition 65. 

Not surprisingly, California’s Attorney General, joined by a number of county district attorneys, has filed suit against dozens of dietary supplement manufacturers alleging that they marketed vitamin supplements containing lead “without first giving clear and reasonable warning,” as required under Proposition 65.  The complaint asks for civil penalties and injunctive relief, among other things.  It is easy to imagine that this scenario could repeat itself with other contaminants that are the focus of future FDA surveys or of FDA’s increased inspectional activities under the recently promulgated dietary supplement Current Good Manufacturing Practices regulation.

By John A. Gilbert & Larry K. Houck –

The Drug Enforcement Administration (“DEA”) has published advance notice of proposed rulemaking that solicits comments on the disposal of controlled substances by non-registrants.  This proposal for the first time could authorize DEA registrants to accept controlled substances back from patients for disposal.  It could also place additional burdens on registrants, particularly pharmacies, who may be inundated with requests to dispose of unused controlled substances. 

Under the Controlled Substances Act (“CSA”) and its regulations, controlled substances may be transferred only between DEA registrants, including manufacturers, distributors, pharmacies and practitioners.  Patients for obvious reasons, are exempt from DEA registration.  Long term care facilities such as nursing homes, retirement facilities and other institutions that provide extended health care to resident patients are also exempt because they hold prescribed controlled substances in a custodial capacity for their patient-residents.   

Because DEA registrants may not receive controlled substances from non-registrants, patients and long term care facilities cannot transfer unused or unwanted controlled substances to a DEA registrant.  For example, current law prohibits patients and long term care facilities from returning controlled substances to the dispensing pharmacies or transferring the drugs to reverse distributors, the registrants specifically authorized to receive and dispose of controlled substances.  Such prohibition would seem to contradict DEA’s mission to prevent the diversion of legitimate controlled substances because it could lead to non-registrants stockpiling unwanted drugs.

Under current law, patients and long term care facilities who wish to dispose or destroy controlled substances and do not want to just throw them away or flush them down the drain must submit a letter to the local DEA office for authorization.  The authorization may include transfer of the drugs to a registrant, delivery to a DEA agent or local DEA office, or destruction in the presence of a DEA agent.  Few consumers are aware of this regulation and the requirement can present a burden on long term care facilities who may need to dispose of controlled substances on a frequent basis.

On a case-by-case basis, DEA recently granted temporary permission to law enforcement agencies who have requested authorization to accept unwanted controlled substances from patients for disposal. 

The advanced notice of proposed rulemaking recognizes that there may be additional appropriate methods for disposing unwanted controlled substances held by non-registrants and DEA is requesting public comments on disposal options that minimize the risk of diversion, are consistent with the CSA and its regulations and which are environmentally sound.

Comments should be submitted to DEA on or before March 23, 2009.

By Jamie K. Wolszon –

On January 22, Senators Herb Kohl (D-WI) and Charles Grassley (R-IA) introduced the Physician Payments Sunshine Act of 2009, which would require drug, biologic, medical device, and other medical supply manufacturers to disclose to the Secretary of Health and Human Services the amount of payments or other transfers of value they provide to physicians.  The reporting requirement would apply to manufacturers of products for which payments are made under Medicare, Medicaid, or the State Children’s Health Insurance Program (“SCHIP”). 

We previously reported on a predecessor of this bill, the Physician Payments Sunshine Act of 2007.  We also previously reported that Representatives Peter DeFazio (D-OR) and Pete Stark (D-CA), Chairman of the Ways and Means Subcommittee, introduced a bill in the House similar to the Senate 2007 version in March of 2008. 

Some of the more significant changes between the 2007 and 2009 versions of the Senate legislation are as follows:
 
Frequency of Reports; Threshold for Reporting.  Unlike the 2007 legislation, which required quarterly reporting, the 2009 version requires manufacturers to submit the specified information about each transfer or payment to physicians in annual reports.  The annual reporting requirement is triggered by transfers of value or payments of $100 or more per year per “covered recipient.” Covered recipients include a physician, a medical practice or a group practice.  However, if the annual report requirement applies, the manufacturer must report each payment or transfer, regardless of how small the value.  Manufacturers would need to submit their first annual report to the Secretary of HHS on March 31, 2011 under the 2009 legislation.

No Exclusion for Small Businesses.  Whereas the 2007 legislation would have applied only to “an entity with annual gross revenues that exceed $100,000,000,”  the 2009 legislation contains no such annual gross revenue minimum. The Advanced Medical Technology Association (AdvaMed) has issued a statement which identifies the lack of an exemption for small businesses as a possible area of concern:

As we review this legislation, we also will be mindful of the unique needs of medical device companies, many of whom are small businesses that may lack the resources to meet the administrative requirements set forth in the bill, and the need to include physician-owned entities, distributors and a group purchasing organization (GPO) in the compliance requirements set forth in the legislation. 

Disclosure of Ownership Interests.  The 2009 legislation includes a new provision that would require drug, biologic and device manufacturers, and group purchasing organizations that purchase, arrange for, or negotiate the purchase of a covered drug, device, biologic or medical supply, to report information regarding certain ownership interests in the company that a physician or a physician’s immediate family member has in the manufacturer or GPO during that year.  The ownership interests that require reporting do not include interests in certain publicly held securities or mutual funds.

Exclusions.  The list of exclusions from reportable transfers has been considerably expanded in the 2009 bill.  Excluded from the reporting requirements are samples, educational materials for patients, trial loans of devices, items provided under a warranty, discounts and rebates, in-kind charity donations, returns on investments in a publicly traded security or mutual fund; and transfers of value to a physician who is a patient.

Preemption. Several states, including Minnesota, Massachusetts, Vermont, Maine, West Virginia, and the District of Columbia have existing gift disclosure laws.  Unlike the 2007 version, the 2009 legislation includes language, effective January 1, 2010, pre-empting state laws that require reporting of payments or other transfers of value to physicians.  However, the bill would not preempt state requirements for reporting of information not required under the bill.

Federal preemption was an important to concession to industry.  As stated by AdvaMed in its press release: “[I]t is important that any federal disclosure legislation create a uniform national standard to prevent a patchwork approach by all 50 states.”

Penalty Scheme Differentiates between Accidental and “Knowing” Failure to Report.  The 2007 version of the legislation subjected any manufacturer who fails to report to a civil monetary penalty of $10,000 to $100,000 for each offense.  The new legislation, however, levies greater penalties on the “knowing failure” to report.  A failure to report exposes the manufacturer to a civil monetary penalty of not less than $1,000, but not more than $10,000, for each payment or other transfer of value or ownership or investment interest that the manufacturer does not report, with a maximum penalty of $150,000 per annual report. By contrast, a knowing failure to report is subject to a civil monetary penalty of $10,000 to $100,000 for each offense, with up to $1 million in civil monetary penalties per annual report.

Delayed Reporting for Payments Under Product Development Agreements and Clinical Investigations.  The 2007 legislation included a provision that exempted payments made for the general funding of a clinical trial.  The 2009 legislation instead includes a provision that would delay the reporting requirement for payments that manufacturers make under product development agreements and in connection with clinical investigations.  The manufacturer would not have to report those payments until the earlier of: (1) FDA approval or clearance of the product; or (2) two calendar years after the date of the payment.