As we previously reported, Section 912 of the FDA Amendments Act (“FDAAA”) added a new prohibition to the Federal Food, Drug, and Cosmetic Act (“FDCA”).  The new prohibition, found at FDCA § 301(ll) (21 U.S.C. § 331(ll)), prohibits the introduction into commerce of any food that contains an approved drug or a licensed biologic.  It also prohibits the introduction of a food containing a drug or biologic for which substantial clinical investigations were initiated and made public.  There are four narrow exceptions to this prohibition, including a first-to-market exception.  As we previously noted, the § 301(ll) prohibition may have far reaching consequences for the development of new functional food and dietary ingredients.  The full impact will remain unknown until FDA determines how to resolve the  numerous interpretative issues presented by the provision in the absence of legislative history.

On July 29, 2008, FDA published a Federal Register notice inviting public comment on the possible interpretations of the prohibition and their potential effects on industry and consumers. Comments may be submitted to FDA until October 27, 2008.

The notice does not discuss the various interpretations FDA may consider or has considered.  Instead, the notice invites comments to a series of open-ended questions about the interpretation of various ambiguous terms and the possible impact of the § 301(ll) prohibition.  Among other things, FDA asks for comment on ambiguities in the prohibition and exceptions including the meaning of the following terms:

1. “drug”: how should FDA determine the identity of a drug?  For purposes of section 301(ll) should FDA consider the chemical structure of a substance?

2.  “substantial clinical investigations”: are clinical investigations limited to studies in humans or do they include studies in animals?  Should clinical studies in humans bar the use of that substance in animal feed?  When are clinical investigations in humans and/or animals substantial?

3. “marketed in food”: substances that were “marketed in food” before they were approved as a drug are excepted from the prohibition.  FDA questions whether “marketed in food” means something different than “marketed as food,” the term used in the exclusionary clause for dietary supplements, 21 U.S.C. 321(ff), and interpreted in the Pharmanex litigation.  FDA also asks for input as to the significance of “marketing in food” outside the United States.

4. “an independent biological or therapeutic effect”: substances that are used “to enhance the safety of the food supply” and do not have an “independent biological or therapeutic effect” are also excepted from the prohibition.  FDA asks for input on the meaning of “a biological [and] a therapeutic effect” and when such an effect is “independent.”

FDA also requests comment on the range of products subject to the prohibition and the likely consequences to products in those categories.  In particular, FDA requests information on how the prohibition would affect marketing of infant formula, dietary supplements, animal feed, and food contact substances.

Perhaps most importantly, the § 301(ll) prohibition does not exempt substances that were permitted before the enactment of FDAAA.  Its impact may therefore extend beyond new functional food and dietary ingredients and bar products that are currently legally marketed.  FDA asks for examples of foods that may be affected and the consequences of prohibiting these products for the consumers that use (and rely on) these products. 

Clearly, FDA is grappling with interpreting FDCA § 301(ll) prohibition.  Given FDA’s discretion in interpreting the prohibition, and its potential widespread and serious impact, industry would be well advised to seize this opportunity to influence FDA’s thinking and provide the Agency with information that will facilitate a reasonable construction of the law.

By Riëtte van Laack & Diane B. McColl

On July 25, 2008, the Department of Defense (“DOD”) issued a proposed rule to implement section 703 of the National Defense Authorization Act for Fiscal Year 2008 (“NDAA-2008”).  Section 703 of NDAA-2008 provides that the TRICARE retail pharmacy program (“TRRx”) is to be treated as an element of the DOD to the extent necessary for prescription drugs provided by TRRx pharmacies and paid for by the DOD to be subject to the Federal Ceiling Price requirements of section 603 of the Veterans Health Care Act of 1992, 38 U.S.C. § 8126.  Under the latter statute, manufacturers of “covered drugs” (generally, prescription drugs approved under a new drug application) must, in order for their outpatient drugs to be federally reimbursed under Medicaid and Medicare Part B, enter into a Master Agreement and Pharmaceutical Pricing Agreement with the Department of Veterans Affairs (“VA”) agreeing to charge no greater than a statutory Federal Ceiling Price for drugs sold on the Federal Supply Schedule to four federal agencies:  DOD, the VA, the Public Health Service, and the Coast Guard.  Congress determined that Section 703 was necessary to establish a TRRx refund program in light of a September 2006 decision by the U.S. Court of Appeals for the Federal Circuit in The Coalition for Common Sense in Government Procurement v. Secretary of Veterans Affairs.  In that case, the Court set aside on procedural grounds an October 2004 “Dear Manufacturer” Letter issued by the VA that sought to establish authority for a TRRx refund program.

Although NDAA-2008 required promulgation of implementing regulations, the substantive provisions of the statute were effective as of the date of enactment of the statute, which was January 28, 2008.  DOD’s view has been that refunds are due on TRRx drugs dispensed as of that date, even in the absence of final regulations.  Written comments on the proposed rule are due by September 23, 2008.

The proposed rule would amend 32 C.F.R. § 199.21 (the TRICARE pharmacy benefit regulation) by adding a new paragraph (q) that would require written agreements to be entered into by manufacturers, and provide for refund procedures and remedies.  The proposed rule would define a “covered drug” for the purpose of this regulation as excluding, among other things, a drug that is not a covered drug under 38 U.S.C. § 8126, a drug that is not provided through a retail network pharmacy, and a drug for which the TRRx Pharmacy Benefits Program is the secondary payor. 

The proposed rule would require manufacturers to enter into written refund agreements, as a condition for inclusion of the manufacturer’s covered drugs on the TRICARE uniform formulary and the availability of covered drugs through the TRRx pharmacies without preauthorization.  A covered drug that is not the subject of a written agreement would require preauthorization in order to be provided through a TRRx pharmacy. 

The proposed rule would require the written agreements described above to include refund procedures to ensure that prescription drugs dispensed by network pharmacies under the TRRx program would be paid for by the DOD at the Federal Ceiling Prices available to the DOD pursuant to 38 U.S.C. § 8126.  The refund procedures would “incorporate common industry practices for implementing pricing agreement between manufacturers and large pharmacy benefit plan sponsors.”  Beyond this, the proposed rule does not prescribe any details of the refund procedures, except that manufacturers must be provided “at least 70 days from the date of the submission of the TRICARE pharmaceutical utilization data needed to calculate the refund before the refund payment is due.” 

Under the proposed rule, the refund due on a covered drug would be the difference between the Federal Ceiling Price and either (a) the most recent annual non-Federal average manufacturer price (“Non-FAMP”) reported to the VA, or (b), at the manufacturer’s option, “direct commercial contract sales prices specifically attributable to the reported TRICARE paid pharmaceuticals, determined for each applicable NDC listing.”

The proposed rule would also provide that refunds due are subject to the overpayments recovery regulation at 32 C.F.R. § 199.11.  The proposed regulation would further permit the Director of the TRICARE Management Activity to take any action authorized by law if a manufacturer of a covered drug fails to make or honor an agreement under the regulation.  Although the proposal does not state this, a failure to provide a section 703 refund to DOD might be viewed by the government as a violation of the manufacturer’s Master Agreement with the VA.  Termination of that Agreement for breach would result in the manufacturer’s covered outpatient drugs being ineligible for federal payment under Medicaid and Medicare Part B, and ineligibility of the manufacturer to sell its drugs to the federal government.

The preamble to the proposed regulation notes that the DOD has proposed to enter into voluntary agreements with manufacturers for prescriptions filled on or after the date of enactment of NDAA-2008, and specifically asks for comments on alternative legally permissible implementation approaches and/or dates. 

By Michelle L. Butler and Alan M. Kirschenbaum

In the second lawsuit in as many months, the Patent and Trademark Office (“PTO”) has been sued over a decision to deny a Patent Term Extension (“PTE”).  As we previously reported, Wyeth sued the PTO and FDA in June 2008 concerning the appropriate PTE regulatory review period determination for a patent covering the company’s new animal drug CYDECTIN (moxidectin) Pour-On.

On July 11, 2008, PhotoCure ASA (“PhotoCure”) sued the PTO after the Office denied the company’s PTE application for U.S. Patent No. 6,034,267 (“the ‘267 patent”) covering the human drug product METVIXIA (methyl aminoevulinate hydrochloride).  FDA approved METVIXIA on July 27, 2004 under New Drug Application (“NDA”) #21-415 for the treatment of actinic keratoses of the face and scalp in certain patients and granted PhotoCure a period of 3-year exclusivity for a “new ester or salt of an active ingredient.”  The PTO’s decision to deny a PTE for the ‘267 patent was based on an analysis of the “first permitted commercial marketing” criterion in the PTE statute at 35 U.S.C. § 156(a).  PhotoCure’s lawsuit comes on the heels of several recent PTO decisions denying a PTE based on the “first permitted commercial marketing” criterion. 

Under the PTE statute at 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 “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.”  In recent PTE memoranda, the PTO has heavily relied on decisions by the U.S. Court of Appeals for the Federal Circuit in Fisons v. Quigg, 8 U.S.P.Q.2d 1491 (D.D.C.1988), aff’d 876 F.2d 99 U.S.P.Q.2d 1869 (Fed.Cir.1989), Pfizer Inc. v. Dr. Reddy’s Labs., 359 F.3d 1361 (Fed. Cir. 2004), and Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392, 13 USPQ2d 1628 (Fed. Cir. 1990) to support the Office’s interpretation of the term “product” in 35 U.S.C. § 156(a)(5)(A) to mean “active moiety” (i.e., the molecule in a drug product responsible for pharmacological action, excluding any salt, ester, or other non-covalent derivative) rather “active ingredient” (i.e., the active moiety in a drug product, including any salt, ester, or other non-covalent derivative).

With respect to PhotoCure’s PTE request for the ‘267 patent covering METVIXIA, the PTO issued a final decision in May 2008 stating 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 Dusa Pharmaceuticals Inc.’s 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. 

Dissatisfied with the PTO’s decision, PhotoCure filed a complaint in the U.S. District Court for the Eastern District of Virginia (Alexandria Division) seeking declaratory relief.  Specifically, PhotoCure requests that the court declare that the PTO acted unlawfully in denying PhotoCure’s PTE application, declare that the company’s PTE application satisfies the statutory PTE criteria, and grant further relief as necessary.  PhotoCure alleges that the PTO’s interpretation of the “first permitted commercial marketing” PTE criterion should be rejected because it is “contrary to law and will frustrate the overriding purpose of [the 1984 Hatch-Waxman Amendments], which is to encourage research and innovation, including the development of new active ingredients.” 

Over the past several months, the PTO has denied several PTE applications based on the failure to meet the “first permitted commercial marketing” criterion using analyses similar to those used to deny PhotoCure’s PTE application.  Examples include decisions on patents covering SYMBICORT (budesonide; formoterol fumarate dihydrate) Inhalation Aerosol, PRILOSEC OTC (omeprazole magnesium) Delayed-Release Tablets, and EXELON (rivastigmine) Patch .  Presumably those applicants will be closely following the outcome of the PhotoCure litigation.

By Kurt R. Karst    

In a case brought by POM Wonderful under the Lanham Act and California state statutes governing false advertising and unfair competition, the U.S. District Court for the Central District of California held Purely Juice and its president liable to the tune of nearly $1.5 million.  In its opinion, the court cites substantial analytical evidence gathered by POM Wonderful that a Purely Juice product sold as “100% pomegranate juice” with “no sugar added” in fact contained low levels of pomegranate solids and contained added sweeteners.  Further, Purely Juice had been made aware of the problem with its product, but continued to market it, unlike other competitors with similar problems, who apparently took corrective action. 

Notably, the court also held that Purely Juice knew, or should have known, of problems with adulteration of foreign pomegranate juice concentrate.  In light of that knowledge, the court opinion suggests that Purely Juice should have availed itself of test methods that were readily available for determining the authenticity of pomegranate juice.

Pomegranate juice now joins the list of high value commodities, such as olive oil, linked to economic adulteration and misbranding in the public eye.  In the absence of a robust federal enforcement program, scrupulous manufacturers will continue to have to prosecute their own interests.  As for consumers, the messages are clear and ancient ones: “you get what you pay for” and “buyer beware.”

By Ricardo Carvajal

On July 15, 2008, FDA issued a final rule exempting investigational drugs used in phase 1 studies (as described in 21 C.F.R. § 312.21 of FDA’s IND regulations) from the Current Good Manufacturing Practice (“CGMP”) requirements in 21 C.F.R. Part 211.  This exemption does not apply to an investigational drug for use in a phase 1 study once the investigational drug has been made available for use by or for the sponsor in a phase 2 or phase 3 study, or the drug has been lawfully marketed.  If the investigational drug has been made available in a phase 2 or phase 3 study or the drug has been lawfully marketed, the drug used in the phase 1 study must comply with part 211. 

FDA states that it believes this change is appropriate because many of the issues presented by the production of investigational drugs intended for use in the relatively small phase 1 trials are different from the issues presented by the production of drug products for use in larger phase 2 or 3 trials or for commercial marketing.  Additionally, many of the specific requirements in the regulations in part 211, such as those relating to stock rotation, repackaging, or relabeling, do not apply to the conditions under which many drugs for use in phase 1 are produced.

The exempt phase 1 drugs are, however, still required to meet the statutory (as opposed to regulatory) requirements for CGMP.  To help companies determine what is required to comply with these statutory requirements, FDA simultaneously issued a final guidance document discussing CGMP for phase 1 drugs. This guidance provides both specific, detailed information for complying with CGMP, as well as general guidance. With respect to general guidance, it notes that adherence to CGMP during manufacture of phase 1 investigational drugs occurs mostly through: (1) well-defined, written procedure; (2) adequately controlled equipment and manufacturing environment; and (3) accurately and consistently recorded data from manufacturing (including testing).  The guidance further notes it is the manufacturer’s responsibility to provide and use methods, facilities, and manufacturing controls to ensure that the phase 1 investigational drug meets appropriate standards of safety, identity, strength, quality, and purity and that manufacturers should consider carefully how to best ensure the implementation of standards, practices, and procedures that conform to CGMP for their specific product and manufacturing operation.   

By Gwendolyn M. McKee

When Congress enacted the Federal Food, Drug, and Cosmetic Act (“FDCA”) in 1938, it required New Drug Applications (“NDAs”) for “any” new drug.  At the time, approximately half of the drugs in this country were compounded, not manufactured.  Today, while the percentage of compounded prescriptions has dropped significantly, millions of compounded drugs are dispensed each year.  One unresolved legal question was whether the NDA requirements applied to compounded drugs.  On July 18th, the United States Court of Appeals for the Fifth Circuit announced its answer to the question in Medical Center Pharmacy v. Mukasey.

In the early 1990s, FDA began asserting that the compounding of drugs without an NDA was unlawful.  FDA’s move spurred considerable controversy.  To resolve the dispute, Congress added section 503A to the FDCA when it enacted the FDA Modernization Act of 1997.  This provision stated that compounded drugs were exempt from the NDA, good manufacturing practice, and adequate directions for use requirements if they met certain criteria. 

One criterion was that pharmacies could not advertise the compounding of specific drugs.  A group of pharmacists successfully challenged this provision in Western States Med. Ctr. v. Shalala, 69 F. Supp. 2d 1288 (D. Nev. 1999).  The Ninth Circuit affirmed the Nevada district court’s ruling that the advertising restriction violated the First Amendment.  It also found that the provision was not severable from the rest of section 503A.  The Supreme Court affirmed the lower court rulings that the advertising restriction was unconstitutional, but declined to consider the severability issue.  Thompson v. Western States Med. Ctr., 535 U.S. 357 (2002).

Subsequently, another group of pharmacists filed suit in Midland, Texas challenging FDA’s regulation of compounded drugs.  The district court granted sweeping relief, holding that compounded drugs were “implicitly exempt” from the 21 U.S.C. § 321(p) “new drug” definition.  Med. Ctr. Pharm. v. Gonzales, 451 F. Supp. 2d 854 (W.D. Tex. 2006).  FDA appealed.

In the Medical Center Pharmacy opinion issued last week, the Fifth Circuit acknowledged that there are reasons to believe Congress did not intend to deem all compounded drugs unapproved “new drugs,” but nevertheless held that compounded drugs are not exempt from the “new drug” definition.  Rejecting the pharmacies’ argument that including compounded drugs within the “new drug” definition would absurdly but effectively outlaw the lawful practice of compounding, the court concluded that “Congress hid no such elephant in §321(p)’s mousehole.”  The court also found, however, that the advertising restrictions of section 503A are severable from the rest of the law.  Thus, the court disagreed with the Ninth Circuit and held that section 503A remains in effect.

The court also found that compounded veterinary drugs fall within the statutory definition of “new animal drug.” It acknowledged, however, that compounded veterinary drugs are exempt from the FDA approval requirement if they meet the criteria established by the 1994 Animal Medicinal Drug Use Clarification Act (“AMDUCA”).  Codified at 21 U.S.C. §360b(a)(4), (5), AMDUCA permits the compounding of veterinary drugs using FDA-approved human and animal drugs upon the order of a licensed veterinarian and subject to FDA discretion as to whether the drug poses a risk to public health.

The Fifth Circuit’s decision could increase the confusion over the legal status of compounding.  Pharmacists in the Ninth Circuit cannot claim protection by section 503A, while pharmacists in the 5th Circuit can.  The status of the law elsewhere in the country remains an open question.  The Fifth Circuit’s analysis, however, is more detailed than the Ninth Circuit’s, paving the way for pharmacists elsewhere in the country to claim that they, too, are protected by § 503A.

After the district court decision in Medical Center Pharmacy, FDA said it would honor the court’s ruling in only that one district, which is geographically large but sparsely populated.  It will be much more difficult for FDA to take the same tack with the Fifth Circuit decision.  It remains to be seen whether FDA and/or the pharmacies will seek Supreme Court review based on the circuit split.  Alternatively, FDA could ask Congress for a legislative fix.  In the meantime it appears that the controversy over the legal status of compounding will continue unabated.

By Jeff N. Gibbs & Jennifer B. Davis

On July 18, 2008, in a rare “win” (depending on which side you are on) on a motion for reconsideration, the U.S. District Court for the Southern District of Indiana (Indianapolis Division), vacated the court’s September 2007 decision in Tucker v. SmithKline Beecham Corp., in which Chief Judge David F. Hamilton had earlier dismissed, on federal preemption grounds, a wrongful death/failure-to-warn lawsuit brought under Indiana state law against GlaxoSmithKline (“GSK”) concerning the company’s antidepressant drug PAXIL (paroxetine HCl).  The recent decision, in which the court found no implied conflict preemption and declined to rely on FDA’s “preemption preamble” (see pages 3933-36) changes the Drug Preemption Scorecard kept by the folks at Drug and Device Law Blog.  The case is now reopened for adjudication on the merits, which the court promised to address in the “near future.”

The case concerns the death of Father Rick Tucker, a Roman Catholic priest who allegedly committed suicide in September 2002 after being prescribed PAXIL in August 2002.  Plaintiff Debra Tucker, Father Tucker’s younger sister, brought a wrongful death suit under Indiana state law against GSK claiming that her brother committed suicide as a result of taking PAXIL. Ms. Tucker contends that GSK breached its duty to warn of an increased suicide risk in adults taking PAXIL. GSK argued that the company could not be held liable for the alleged inadequacy of the PAXIL labeling because the United States Constitution’s Supremacy Clause mandates that the Federal Food, Drug, and Cosmetic Act (“FDC Act”) and FDA labeling requirements preempt Ms. Tucker’s state law claims.  In September 2007, the district court granted GSK’s motion for summary judgment because Ms. Tucker’s “state law claims stand in direct conflict with the FDA’s labeling requirements for Paxil issued pursuant to federal law. . . .” (i.e., conflict preemption).

Fast-forward 10 months and the district court has reversed course.  After the September  2007 decision, Ms. Tucker filed a Rule 59 motion asking the court to reconsider its decision.  Ms. Tucker argued that no conflict exists between Indiana state law and federal law because “FDA has not, in fact, precluded GSK from including in its current label Paxil-specific warning language,” and that even if there is a conflict as a result of class-wide antidepressant labeling changes implemented in 2007 concerning suicide, “no conflict existed in 2002 when GSK could have warned Father Tucker or his physician about Paxil’s alleged association with suicidality.”

GSK countered that although FDA’s labeling regulations give the company the right to adopt proper labeling, and that the company had the ability to change PAXIL’s labeling if there was a “reasonable association” between a serious adverse event and the drug, FDA retains exclusive regulatory authority over prescription drug labeling.  GSK also argued that the conflict between state and federal law that favors preemption is the risk that “drug manufacturers will be forced to walk a tightrope between being sanctioned by the FDA for ‘overwarning’ and sanctioned by the courts for ‘underwarning.’”  That is, there is a Catch-22 – a company could misbrand a drug by adding warnings against non-existent risks to avoid tort liability, or adhere to FDA labeling requirements and risk failure-to-warn tort liability.

In his latest ruling, Judge Hamilton was unconvinced by GSK’s arguments.  “In [earlier] finding conflict preemption, the court failed to appreciate the significance of the fact that the FDA regulations allow a manufacturer to modify pharmaceutical labels unilaterally and immediately, without prior FDA approval, when the manufacturer has reasonable evidence of a serious hazard.”  With respect to GSK’s argument that FDA retains exclusive authority over prescription drug labeling, the court stated that:

This argument fails to appreciate, as the court failed to appreciate, the fact that the ongoing ability, authority, and responsibility to strengthen a label still rest squarely with the drug manufacturer.  Although the FDA might later disapprove of a label strengthened pursuant to 21 C.F.R. § 314.70(c) and § 201.80, the FDA’s power to disapprove does not make the manufacturer’s voluntarily strengthened label a violation of federal law, which is what it would take to establish an actual conflict between state tort law and federal law. 

With respect to GSK’s Catch-22 argument, the court found this position flawed in one key respect:

[I]n spite of the FDA’s direction regarding Paxil’s label in May 2007, GSK still had (and has) the obligation to revise its label to strengthen a warning upon reasonable evidence of an association of a serious hazard, particularly with respect to this individual drug. If GSK were to receive such evidence, it would be obligated to revise its label in spite of the FDA’s directive in May 2007. In fact, when it issued its instruction that GSK revise Paxil’s label, the FDA advised GSK that if GSK disagreed with the FDA’s belief that Paxil-specific analysis should be included in the SSRI labeling revisions, GSK could request a meeting with the FDA. The FDA’s offer, upon which GSK did not act, is consistent with GSK’s ongoing obligations under the regulations. In other words, the FDA’s revisions were not necessarily the final word on Paxil’s label and did not put GSK into a position where it was impossible for GSK to comply with both state and federal law.

Judge Hamilton also took the opportunity to take issue with FDA’s “preemption preamble” in the Agency’s January 2006 final rule on prescription drug labeling.  There, FDA asserted that “FDA approval of labeling under the [FDC Act] . . . preempts conflicting or contrary State law,” that the Agency’s labeling requirements are not minimum standards but establish both a “floor and a ceiling,” that this preemption position was “long standing,” and that state failure-to-warn lawsuits have “directly threatened the agency’s ability to regulate manufacturer dissemination of risk information for prescription drugs.” 

Citing a recent essay authored by former FDA Commissioner Dr. David Kessler and Georgetown University Law Professor David Vladeck, Judge Hamilton states that “FDA’s current position on preemption is not ‘long standing’ but is in fact a ‘180-degree reversal’ from its earlier stance.”  Thus, “[t]he court, on reconsideration, gives relatively little weight to the FDA’s opinion on the preemptive effects of its regulations.” Moreover, Judge Hamilton opined that “failure to warn litigation can serve to reinforce the FDA’s regulations, which already place the obligation to strengthen the warnings on a drug’s label squarely on the shoulders of the drug’s manufacturer.”

By Kurt R. Karst 

As widely reported earlier this month, FDA and the Department of Justice (“DOJ”) intensified their investigation of Indian drug company Ranbaxy, Inc.  On July 3, 2008, the government moved to enforce administrative subpoenas directed at Ranbaxy and the company’s consultant, PAREXEL Consulting concerning information about drugs and drug products manufactured at Ranbaxy’s Paonta Sahib, India manufacturing facility.  The motion, filed in the U.S. District Court for the District of Maryland (Southern Division), alleges that Ranbaxy, among other things, falsified documents “that have resulted and continue to result in the introduction of adulterated and misbranded products into interstate commerce with the intent to defraud or mislead.”  Ranbaxy is in the midst of selling a majority stake in the company to Japan-based drug company Daiichi Sankyo for $4.6 billion.  Ranbaxy’s stock took a hit after news of the FDA/DOJ investigation surfaced.

Last week, Ranbaxy responded to the government’s motion and “unconfirmed allegations.”  In a clear attempt to bolster public confidence in the company, Ranbaxy made several commitments “to the Court, the FDA, the DOJ,” and to the company’s “employees, customers, and business partners.”  Among other things, Ranbaxy committed to cooperating with FDA and DOJ in their investigation and states that the company “is in the process of producing requested supporting documentation for its ANDA applications to DOJ.”  Ranbaxy also states that the company “is committed to develop and market high quality generic drug products.  Ranbaxy makes that commitment to its customers, business partners, and employees every day.” 

In addition, U.S. Representatives John Dingell (D-MI), Chairman of the Energy and Commerce Committee, and Bart Stupak (D-MI), Chairman of the Energy and Commerce Committee Subcommittee on Oversight and Investigations, announced late last week that the Energy and Commerce Committee “will soon commence a formal investigation into the Ranbaxy drug approvals and potential violations of GMP regulations.”  Representatives Dingell and Stupak question whether FDA “knowingly allowed drugs suspected of being fraudulently approved and manufactured in gross violation of Good Manufacturing Practices (GMP) to continue being sold by Ranbaxy, Inc., in the United States.” 

By Kurt R. Karst  

In previous postings (here and here), we have observed that § 912 of the 2007 FDA Amendments Act (“FDAAA”), which added the new § 301(ll) prohibition to the FDC Act, could represent a fundamental shift in the dividing line between foods and drugs, and has the potential to deter innovation in the research and development of new food ingredients.  That potential is slowly starting to be realized.  To understand why, a brief recap of the Generally Recognized as Safe (“GRAS”) concept is necessary. 

Research and development of new food ingredients and of new uses of existing ingredients is typically oriented toward attempting to establish that the proposed use of the ingredient is GRAS.  Under FDC Act § 201(s), the use of an ingredient is GRAS if it is generally recognized, among experts qualified by scientific training and experience to evaluate its safety, as having been adequately shown through scientific procedures to be safe under the conditions of its intended use.  A determination that the use of an ingredient is GRAS can be made independent of FDA, and does not require FDA approval.  However, because the marketplace generally demands it, ingredient developers seek FDA’s review of their GRAS determinations by submitting a GRAS notice to FDA.  If FDA has no questions about the notifier’s GRAS determination, FDA issues a letter saying so (a so-called “no questions” letter).  In its most recent “no questions” letter, issued to Mead Johnson & Co., FDA included the following paragraph on the new FDC Act § 301(ll) prohibition:

The Food and Drug Administration Amendments Act of 2007 that was signed into law on September 27, 2007, amends the FFDCA to, among other things, add section 301(ll). Section 301(ll) of the FFDCA prohibits the introduction or delivery for introduction into interstate commerce of any food that contains a drug approved under section 505 of the FFDCA, a biological product licensed under section 351 of the Public Health Service Act, or a drug or a biological product for which substantial clinical investigations have been instituted and their existence made public, unless one of the exemptions in section 301(ll)(1)-(4) applies. In its review of Mead Johnson’s notice that [its ingredient] is GRAS for use in infant formula powder, FDA did not consider whether section 301(ll) or any of its exemptions apply to foods containing [the ingredient]. Accordingly, this response should not be construed to be a statement that foods that contain [the ingredient], if introduced or delivered for introduction into interstate commerce, would not violate section 301(ll).

The inclusion of this paragraph is notable because “no questions” letters already contain a statement advising that it is the notifier’s continuing responsibility to ensure that food ingredients marketed by the notifier “are safe, and are otherwise in compliance with all applicable legal and regulatory requirements.”  Evidently, FDA feels it necessary to specifically put all parties on notice that a “no questions” letter offers no safe harbor from FDC Act § 301(ll).

Beyond the inclusion of a § 301(ll) disclaimer in its “no questions” letters, FDA has begun raising potential  issues as it becomes aware of them during its review of GRAS notices and in pre-submission meetings.  In effect, FDA has begun implementing FDAAA § 912.  During a symposium moderated by Diane McColl at the recent Institute of Food Technologists annual conference and trade show in New Orleans, an FDA representative recommended that § 912 be “part of the product development calculus.”  Sound familiar?

By Diane B. McColl & Ricardo Carvajal

Under the terms of a 1987 Memorandum of Understanding, the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) exercises jurisdiction over labeling of distilled spirits, wines, and malt beverages subject to the Federal Alcohol Administration Act (“FAA Act”), and FDA exercises jurisdiction over other alcohol beverages.  Last week, TTB issued a ruling clarifying that certain beverages that meet the definition of a “beer” under the Internal Revenue Code are not “malt beverages” subject to regulation under the FAA Act if they are produced from substitutes for malted barley, such as rice or corn, and are made without hops.  The ruling makes clear that such beverages are subject to FDA’s ingredient and other labeling requirements.  However, the ruling leaves open the possibility that beverages with relatively small amounts of malted barley or hops might conform to the definition of a “malt beverage,” and thereby escape FDA’s labeling requirements.  As an example, the ruling cites a recent TTB determination that “a neutral malt beer containing malted barley at one percent of the total dry weight of all ingredients contributing fermentable extract to the product” is a “malt beverage.” The ruling does not affect sake and other beverages that fall within the definition of “wine” under the FAA Act.  Those beverages continue to be subject to the requirements of the FAA Act as long as they contain at least seven percent alcohol by volume.

By Ricardo Carvajal

An interesting issue is percolating at the U.S. Patent and Trademark Office (“PTO”) concerning Patent Term Extensions (“PTEs”).  We hinted at this issue in our recent post concerning the PTO’s decision to deny a PTE with respect to U.S. Patent #5,674,860 (“the ‘860 patent”), which covers AstraZeneca’s SYMBICORT (budesonide; formoterol fumarate dihydrate) Inhalation Aerosol.  In that case, the PTO determined that the ‘860 patent is ineligible for a PTE because the SYMBICORT New Drug Application (“NDA”) was not the first permitted commercial marketing or use of either of the active ingredients, and because the PTE application was submitted on the 61st day after the date of NDA approval.  In a similar action, the PTO has determined that U.S. Patent #5,817,338 (“the ‘338 patent”), which covers AstraZeneca’s PRILOSEC OTC (omeprazole magnesium) Delayed-Release Tablets, is not eligible for a PTE on the same two statutory bases.  In both cases, AstraZeneca has challenged the PTO’s determination that the PTE applications were untimely because they were submitted to the PTO 61 days after NDA approval (including the date of NDA approval).

Under the PTE statute at 35 U.S.C. § 156, the term of a patent claiming a drug shall be extended from the original expiration date of the patent if, among other things, the PTE application is submitted to the PTO by the owner of record within 60 days of NDA approval.  Specifically, § 156(d)(1) states that a PTE application “may only be submitted within the sixty-day period beginning on the date the product received permission under the provision of law under which the applicable regulatory review period occurred for commercial marketing or use” (emphasis added).  The 60-day filing period is a hard and fast rule.  (At least unless Congress passes the latest iteration of the “Dog Ate My Homework Act,” which would amend the PTE statute to permit a late filing if there is an inadvertent delay in PTE application submission.)  Indeed, in Unimed, Inc. v. Quigg, 888 F2d 826; 12 USPQ2d 1644 (Fed. Cir. 1989), the U.S. Court of Appeals for the Federal Circuit addressed PTE application submission timeliness and observed that “section 156(d)(1) admits of no other meaning than that the sixty-day period begins on the FDA approval date.” Notwithstanding the specific language in 35 U.S.C. § 156(d)(1) and the Federal Circuit’s commentary in the Unimed decision, AstraZeneca asserts with respect to the company’s PTE applications for the ‘860 and ‘338 patents that the PTO recently changed the Office’s method for determining the 60-day filing period, and that both PTE applications should considered timely filed according to the PTO’s original method used for calculating the 60-day period. 

In 2004, the PTO and FDA determined that the PTE application for the ‘338 patent covering PRILOSEC OTC was “timely within the meaning of 35 U.S.C. 5 156(d)(l).”  Despite this initial determination, an April 1, 2008 letter from the PTO to FDA reverses course and states that “it is the position of the [PTO] that the subject [PTE] was not timely filed based on a plain reading of the statutory language of 35 U.S.C. § 156(d)(1) and the [PTO’s] implementing regulations at 37 C.F.R. § 1.720(f).”  Clearly unhappy with this turn of events, AstraZeneca petitioned the PTO to have the April 1, 2008 letter withdrawn and to prevent the PTO from retroactively applying “an apparently new method of determining timeliness that has not yet even been announced to the public.”  (In January 2008, AstraZeneca filed similar documentation with respect to the ‘860 patent covering SYMBICORT.  The PTO denied a PTE for that patent in June 2008.) 

According to AstraZeneca, “[f]rom at least 1986 until relatively recently, the PTO had consistently applied to numerous other PTE applications the Original Method for determining timeliness,” under which the 60-day statutory filing deadline was calculated beginning on the date after product approval.  AstraZeneca cites several examples of PTEs allegedly granted since 1986 in which the PTE application for the subject patent was submitted to the PTO based on a 60-day period calculated using the date after product approval as day 1.  AstraZeneca also cites: (1) a 1987 PTO-FDA interagency memorandum of understanding stating that in response to a request for assistance in making a PTE determination FDA will provide a written reply to the PTO “informing the [PTO] whether the [PTE] application was submitted within 60 days after the product was approved” (emphasis added); and (2) FDA’s “Frequently Asked Questions on the Patent Term Restoration Program,” which states, in relevant part, that an “[a]pplication for patent extension must be filed within 60 days of FDA approval of the drug product . . . .” (emphasis added).  AstraZeneca asserts that these publications, “which have not been superseded or withdrawn,” show that “the PTO and FDA interpret the timeliness provision of 35 U.S.C. § 156(d)(1) to mean that a PTE application must be filed within 60 days after FDA approval . . . .” (emphasis in original).

Notwithstanding the alleged inconsistencies in the PTO’s 60-day calculation method, AstraZeneca’s petition does not explain how to square the fact that the PTE statute states that the 60-day period begins “on the date the product” was approved for commercial marketing with the fact that the PTE applications for the ‘860 and ‘338 patents were submitted on day 61 according to such a calculation.  Perhaps more concerning, however, is the possibility that the PTO might have incorrectly granted PTEs based on an application submitted on day 61 according to the statutory calculation.   

By Kurt R. Karst    

On June 10, 2008, the Pharmaceutical Research and Manufacturers of America (“PhRMA”) announced the release of a newly revised version of the “Code on Interactions with Healthcare Professionals,” which is a voluntary code focusing on the industry’s interactions with healthcare professionals as they relate to the marketing of products.  The revised Code will take effect in January 2009.  According to PhRMA, the revised Code “reaffirms that interactions between company representatives and healthcare professionals should be focused on informing the healthcare professionals about products, providing scientific and educational information, and supporting medical research and education.”

The revised Code, which is substantially more restrictive than the July 2002 version, includes several changes, including a prohibition on the distribution of non-educational items (e.g., pens adorned with a company or product logo), a complete prohibition on entertainment and recreational activities, and a prohibition on company sales representatives from providing restaurant meals to healthcare professionals.  Hyman, Phelps & McNamara, P.C. has prepared a memorandum summarizing the most significant changes to the revised Code.

In June, the U.S. Patent and Trademark Office (“PTO”) determined that AstraZeneca’s U.S. Patent No. 5,674,860 (“the ‘860 patent”), which covers the drug product SYMBICORT (budesonide; formoterol fumarate dihydrate) Inhalation Aerosol, is ineligible for a Patent Term Extension (“PTE”).  The PTO’s decision is important in that it clarifies the Office’s position that a PTE is not available for a drug product containing two previously approved active ingredients that purportedly act synergistically to create a new product.

Under the PTE statute at 35 U.S.C. § 156, the term of a patent claiming a drug shall be extended from the original expiration date of the patent if: (1) the term of the patent has not expired; (2) the patent has not been previously extended; (3) the PTE application is submitted to the PTO by the owner of record within 60 days of New Drug Application (“NDA”) approval; (4) the product, use, or method of manufacturing claimed has been subject to a “regulatory review period” before it is commercially marketed; and (5) the NDA is the first permitted commercial use of the drug product.  In this case, the PTO denied AstraZeneca’s PTE request because the SYMBICORT NDA was not the first permitted commercial use of budesonide or formoterol fumarate dihydrate, and also because the PTE application was not submitted within the 60-day statutory period.  (Spoiler Alert: While this post deals solely with the first basis for the PTO’s denial, the second basis – i.e., not meeting the 60-day period criterion – is another issue simmering at the PTO that we will post on in the near future.)

FDA approved SYMBICORT on July 21, 2006 for the long-term maintenance treatment of asthma in patients 12 years of age and older.  SYMBICORT contains two previously approved active ingredients.  On September 19, 2006, AstraZeneca submitted a PTE application to the PTO.  AstraZeneca takes the position in its application that the ‘860 patent is eligible for a PTE because “the combination of budesonide and formoterol fumarate dihydrate as a new active ingredient required full scientific review by the FDA.”  AstraZeneca apparently relies on the PTO’s Manual of Patent Examining Procedure (“MPEP”), which states, in relevant part, that “an approved product having two active ingredients, which are not shown to have a synergistic effect or have pharmacological interaction, will not be considered to have a single active ingredient made of the two active ingredients.”  This statement seems to raise the possibility that two previously approved active ingredients could synergistically interact to yield a new product eligible for a PTE. 

The PTO first addressed (to our knowledge) the issue of PTEs for combination drug products containing previously approved active ingredients in a 1994 decision concerning EMLA (lidocaine; prilocaine) Topical Cream.  In that case, the PTO determined that, consistent with the legislative history of 35 U.S.C. § 156, a patent claiming a combination of two previously and separately approved active ingredients is not eligible for a PTE, “notwithstanding any enhanced effect of the combination.”  More recently, in 2004, the U.S. Court of Appeals for the Federal Circuit stated in Arnold Partnership v. Dudas that “this court doubts that synergistic effects are an appropriate distinction for [PTE] policies, particularly where the statutory language does not distinguish between synergistic and nonsynergistic combinations.”  Notwithstanding these decisions, patent owners have continued to raise the possibility of a PTE for a patent covering a combination drug product containing two previously approved active ingredients, presumably because of the ambiguity of the MPEP passage quoted above.

In June 2007, the PTO issued a preliminary analysis in which the Office determined that SYMBICORT “is nothing more than a combination of previously approved active ingredients” and therefore fails to meet the statutory PTE criterion that the NDA approval represents the first permitted commercial use of the drug product.  “Whether the product is a synergistic or nonsynergistic combination of active ingredients is of no consequence to a determination of compliance with [this statutory criterion],” states the PTO in reliance on the dicta in Arnold Partnership.  In a December 2007 letter to the PTO, FDA agreed that the ‘860 patent is ineligible for a PTE because the SYMBICORT NDA “does not represent the first permitted commercial marketing or use of either of the active ingredients in this ‘product.’”  FDA also states that the SYMBICORT NDA “was approved on July 21, 2006, which makes the submission of the [PTE] application on September 19, 2006, NOT timely . . . .” (i.e., the PTE application was submitted on the 61st day after the date of NDA approval).

On June 13, 2008, the PTO issued a final decision that the ‘860 patent is ineligible for a PTE.  The decision goes to great lengths to clarify the MPEP statement on synergistic effect:

The synersistic effect of the active ingredients formoterol fumarate dehydrate and budesonide has no relevance in determining “first permitted commercial marketing or use of the product” . . . .  Applicant’s reliance on MPEP § 2751 is misplaced.  The statement in the MPEP does not require that the USPTO treat an alleged synergistic combination drug product with two active ingredients as a single active ingredient made up of the two active ingredients for [PTE] purposes.  Rather, MPEP § 2751 merely explains that a product having two active ingredients, without synergy, will not be treated as a single active ingredient.  This does not imply that a showing of synergy in a product having two active ingredients, each of which was previously approved for commercial marketing or use, must be considered to be a single active ingredient for [PTE] purposes.

It is unclear whether AstraZeneca will submit a request for reconsideration of the PTO’s June 2008 decision.  The company has until later this summer to do so. 

By Kurt R. Karst    

On June 26, 2008, ranking Republican of the U.S. House of Representatives Energy and Commerce Committee, Representative Joe Barton (R-TX), along with several co-sponsors, introduced the “Strengthening of FDA Integrity Act of 2008” (H.R. 6378).  According to an Energy and Commerce Committee Republicans press release, the bill:

• Gives FDA the authority to debar any company or individual who is convicted of crimes relating to any drug or device.

• Gives FDA the authority to debar companies for any misconduct relating to the drug or device, not just over misconduct that takes place during a drug or device’s development or approval.

• Provides great accountability by requiring the FDA to bring debarment actions within one year of the date of conviction.

• Requires the FDA to report to Congress on the number of debarment proceedings initiated and imposed each year.

H.R. 6378 follows a February 2008 report prepared for Rep. Barton by the Energy and Commerce Committee Minority Staff highlighting what is characterized as a “record of weaknesses in FDA’s ability and authority to carry out its duties and to protect its own integrity.”  According to Rep. Barton, H.R. 6378 “fixes the problem by giving FDA the authority it currently lacks.”

The Federal Food, Drug, and Cosmetic Act (“FDC Act”) was amended in 1992 by the Generic Drug Enforcement Act (“GDEA”).  Specifically, the GDEA, which was enacted in response to the discovery in 1989 of widespread corruption in the generic drug approval process, amended the FDC Act to authorize debarment and other penalties for illegal acts involving the approval of Abbreviated New Drug Applications.  According to the Energy and Commerce Committee Minority Staff report, however:

Since the passage of the [GDEA], FDA has not debarred a single corporation. After more than 15 years with the Act, FDA has debarred 71 individuals (five of the permanent debarments were later terminated and one was withdrawn), but almost half of these debarments (32) occurred in about the first 2 years of the Act and involved convicted felons who figured in the generic drug scandal of the late 1980s. . . .

FDA’s ad hoc approach to carrying out its debarment authority is partly to blame for its paltry enforcement record. At FDA, responsibility for handling debarments is not centralized; rather the manner in which it is handled is left to each FDA center. Although it was signed into law over 15 years ago, FDA has never issued regulations implementing the debarment provisions in the [GDEA].

The report notes that although “Congress granted debarment authority to FDA to serve a remedial purpose, ” the Agency’s ability to carry out this intent has been hampered in two ways:

First, FDA lacks adequate authority.  Under the statute, the agency cannot debar companies other than those that submit generic drug applications. The FDA also lacks authority to debar companies for post-approval criminal conduct. Second, FDA lacks focus in its debarment actions. A review of some cases involving debarred and non-debarred individuals convicted of FDA-related crimes demonstrates FDA’s uneven application of its debarment authority.

To address these issues, the report recommends that Congress consider, among other things, extending the GDEA’s debarment provisions to innovator drug and medical device companies, as well as whether a company’s misconduct post-approval should be a basis for debarment.  (Interestingly, during debate of GDEA legislation in 1990, the limitation to generic drugs was critized as too narrow by Rep. Henry Waxman and by Acting FDA Commissioner James Benson.)

H.R. 6378 incorporates many of the changes recommended in the report.  The bill was referred to the Energy and Commerce Committee for further consideration.  A companion bill has not yet been introduced in the U.S. Senate. 

By Kurt R. Karst 

ADDITIONAL READING: 

• John R. Fleder, The History, Provisions, and Implementation of the Generic Drug Enforcement Act of 1992, 49 Food & Drug LJ 89 (1994) – available here.

On June 27, 2008, the U.S. Drug Enforcement Administration (“DEA”) published a much anticipated Notice of Proposed Rulemaking Regarding Electronic Prescriptions for Controlled Substances.  The proposed regulations are in addition to existing prescribing requirements for controlled substances and are expected to work in tandem with standards developed by the U.S. Department of Health and Human Services on transmitting electronic prescriptions.

The proposed regulations are voluntary and provide practitioners with the option of issuing prescriptions for controlled substances electronically.  However, the practitioner must follow strict controls to deter the diversion of controlled substances.  Such controls include implementing a physically secure information management system and monthly review by the practitioner of a system-generated controlled substance prescription log.  There is a corresponding duty to notify DEA of anything found to be “unusual” within a certain time period.  There are also strict guidelines imposed upon a practitioner on transmitting electronic prescriptions, such as authenticating the system just before signing and not printing or faxing an electronically transmitted prescription.  The burden in on the practitioner to ensure compliance with the proposed regulations and to prevent the diversion of controlled substances.  Among other things, practitioners will be held liable for knowingly permitting another individual to issue electronic prescriptions in the practitioner’s name and for failing to maintain adequate security measures in the handling of electronically transmitted prescriptions.

The proposed regulations also permit pharmacies to receive, dispense, and archive electronic prescriptions.  Again, this is voluntary.  Upon receipt of an electronic prescription, a pharmacy must check the validity of the prescriber’s DEA registration.  “A pharmacy that fails to check the validity of a controlled substance prescription before dispensing is legally responsible if the prescription is invalid.”  The proposal also places strict controls on the participating pharmacy to guard against diversion, such as an enhanced pharmacy information management system, internal audits and back-up systems.  For example, the pharmacy must establish and implement a list of auditable events, and the pharmacy’s system must analyze the audit logs at least once every 24 hours and generate an incident report that identifies each auditable event.  The pharmacy must then decide whether any auditable event poses a security incident that would have to be reported to DEA.

The DEA’s proposal has been long awaited to complement existing initiatives  to promote electronic prescribing, such as those under Medicare and the Health Insurance Portability and Accountability Act.  However, the cumbersome and strict framework proposed by DEA could be an obstacle to widespread adoption of electronic prescribing.  The ability to integrate these requirements into existing technology could be important to how extensively electronic prescribing is used, particularly by doctors.  The fear of DEA enforcement actions for failure to comply with these requirements will also play a role in whether a practitioner decides to adopt these procedures.  DEA should consider these issues in refining the proposed rule before issuing final regulations.  Comments on the proposed regulations must be submitted by September 25, 2008.

By John A. Gilbert & Serafina E. Lobsenz