We previously reported on the new voluntary Direct-To-Consumer (“DTC”) television ad user fee program established by the FDA Amendments Act (“FDAAA”) and FDA’s establishment of Fiscal Year 2008 DTC television ad user fee rates.  Due to inadequate funding by Congress, however, the new program will not launch.

FDAAA provides that the new DTC user fee program established under FDC Act § 736A will not commence if FDA fails to receive at least $11.25 million within 120 days after enactment of FDAAA (i.e., January 25, 2008).  Such funding consists of a combined total of the advisory review and operating reserve fees established by FDA.  Based on industry’s interest in participating in the program, it seemed that the program would commence.  FDAAA also provides, however, that the DTC fees “shall be collected and available for obligation only to the extent and in the amount provided in advance in appropriations Acts.”

On December 26, 2007, President Bush signed into law the Consolidated Appropriations Act, 2008.  (A copy of the new law, Pub. L. No. 110-161, is available by searching here.)  Among other things, the law makes appropriations to FDA for necessary Agency expenses, such as salaries.  The new law, however, does not appropriate user fee funds for the new DTC user fee program.  As such, FDA does not have the authority to collect and spend DTC television ad user fees, and invoices to those companies expressing their intent to participate in the program will not be sent.  Tomorrow, FDA will issue a notice in the Federal Register discussing the end of the program.

Instead of funding the new DTC television ad program, the Consolidated Appropriations Act reportedly increases the funds available from the U.S. Treasury for FDA ad review by $4 million, to $6.25 million.  These funds are only available for Fiscal Year 2008, however, so Congress will have to address the issue again next year when it considers Fiscal Year 2009 appropriations. 

By Kurt R. Karst

The United States Sentencing Commission (“Commission”), which sets the guidelines that are usually followed by federal judges sentencing defendants convicted of federal crimes, has issued proposed Sentencing Guidelines (“Guidelines”) that would likely greatly enhance the criminal penalties applied to some criminal violations of the Federal Food, Drug and Cosmetic Act (“FDC Act”), and has requested public comment whether to increase penalties for all other violations of the FDC Act.  We previously reported that the Commission was considering amending the Guidelines.

In our previous post, we noted that a Commission vote on proposed amendments to the FDC Act was likely in January 2008.  At its public meeting held on January 9, 2008, the Commission voted to publish proposed amendments to the Guidelines and to seek comments on certain issues relating to human growth hormone (“HGH”) offenses, Prescription Drug Marketing Act (“PDMA”) offenses, and other FDC Act offenses.  (The PDMA, which was enacted in April 1988, amended the FDC Act to, among other things, require State licensing of wholesale distributors of prescription drugs under certain Federal guidelines; ban the sale, trade, or purchase of drug samples; and require wholesale distributors to audit drug sample distribution and accounting.)

Once published in the Federal Register, the public will have 60 days to submit comments on the proposed amendments and issues raised in the notice.

The action by the Commission with respect to FDC Act violations committed by individuals (but not corporations) is a rare one.  More than 20 years ago, in connection with the initial promulgation of the Guidelines, the Commission issued § 2N2.1, which then, like now, applied to FDC Act regulatory offenses.  Section 2N2.1 has always contained a cross-reference to the fraud guideline (formerly § 2F1.1, presently § 2B1.1).  Approximately 11 years ago, in response to efforts by the federal government, the Commission proposed making all FDC Act violations subject to the tougher fraud guidelines.  After substantial industry opposition to that proposal, it was withdrawn, and the status quo was maintained.

Now, after more than a decade since it last showed any inclination to address the issue, the Commission appears prepared to consider fundamentally altering how the Guidelines are applied in cases involving FDC Act offenses, and not likely with an eye towards making them less harsh.  To date, § 2N2.1 Guidelines application issues have been simple as compared to other sentencing considerations. 

According to the Commission’s proposed amendments and issues for comment, “[t]he Commission has received some public comment stating that the penalties under §2N2.1 are inadequate to deter second or subsequent violations of the [FDC Act, and] [s]ome commentators also state that §2N2.1 does not adequately punish violations of the PDMA, which carry a 10 year statutory maximum term of imprisonment.”  Based on these comments and other considerations, the Commission has now asked “[s]hould the Commission provide alternative base offense levels, specific offense characteristics identifying aggravating factors warranting an enhanced sentence, or some combination of these to more adequately address these offenses?” Moreover, the Commission invites suggestions regarding “what should be the offense levels associated with alternative base offense levels and/or specific offense characteristics.”  These statements strongly suggest that any Commission action will result in harsher Guidelines.

Significantly, the Commission may, based upon public comment, vote to recommend a revised § 2N2.1 to Congress without ever first publishing for public comment the details of proposed amendments to § 2N2.1.  It seems clear that those advocating for stiffer Guidelines sentences for FDC Act offenses have made their voices heard and will continue to do so.  It would also seem clear that the regulated industry should present its views on this matter to try to affect any final Commission action, unless the regulated industry wants to concede the need for stiffer Guidelines and the resulting longer terms of imprisonment and increases in other associated criminal penalties.

In addition to its more open-ended invitation for comment, the Commission’s notice contains certain more concrete proposals, particularly with respect to setting forth a Guideline for HGH.  The proposed amendments to the Guidelines do the following with respect to HGH:

1.  Adds 21 U.S.C. § 333(e) – distribution of HGH – to the list of offenses to which § 2D1.1, the general controlled substance Guideline, applies.

2.  Makes a defendant convicted of an HGH offense subject to a two level enhancement under § 2D1.1(b)(6) for “mass marketing [HGH] by means of an interactive computer service.”  This existing specific offense characteristic currently applies to only controlled substances, which HGH is not..  Application Note 23 provides guidance regarding how this provision is applied as well as the definition of “interactive computer service.”

3.  Adds 21 U.S.C. § 333(e)(2) – distribution of HGH to a person under 18 years of age – to the § 2D1.2 Guideline, which presently applies to controlled substance offenses involving protected locations (e.g., schools) or pregnant or underage persons.

The notice also identifies various issues for comment regarding HGH offenses.

With respect to other FDC Act offenses, the proposed amendments:

4.  Add the first and only specific offense characteristic to § 2N2.1.  The purpose of this amendment appears to be to increase the Guidelines level for second or subsequent FDC Act convictions where the defendant is not convicted of committing the offenses with the “intent to defraud and mislead.”  At present, despite the second offense being a felony – regardless of intent to defraud or mislead – the Guidelines did not take that statutory difference into account.

5.  Add an application note to § 2N2.1 to include substantial risk of bodily harm as a basis for upward departure.  While actual death and physical injury are currently identified grounds for an upward departure under 5K2.1 and 5K2.2 respectively, for FDC Act and other offenses, those sections do not apply to the risk of death or injury.

As we previously reported, the Commission must submit Guideline amendments to Congress no later than May 1, 2008.  As we have noted, because a Guidelines amendment requires a public Commission meeting, such a meeting would have to take place in April at the latest, and could come up for a vote in March.  Prior to such a meeting, there is likely to be a public hearing.   

In sum, these proposed amendments and the issues raised in the notice could result in significantly increased penalties for persons regulated under the FDC Act, and therefore, those persons should carefully consider the potential impact of the proposed amendments and issues raised for comment in the notice and determine how to best to inform the Commission and staff of any improper or unduly harsh consequences that could flow from the Commission action on these Guidelines. 

By John R. Fleder, Douglas B. Farquhar, and J.P. Ellison

UPDATE:

• On January 28, 2008, the United States Sentencing Commission issued a notice in the Federal Register on the Commission’s proposed amendments to the Sentencing Guidelines.  The notice also states that “[t]he Commission will be scheduling a public hearing on its proposed amendments.”

UPDATE (February 7, 2008):

• Today, the Commission announced that the Public Briefing on the proposed amendments- which was the subject of our earlier update- will be held on February 13, 2008 from 9:30 AM to 11:30 AM.

• HPM Attorneys John Fleder and John Gilbert have been selected to participate in a panel testifying before the Commission regarding the proposed FDC Act and PDMA amendments.

On January 8, 2008, the District of Columbia Council passed the SafeRx Act of 2007 (“Act”), which requires pharmaceutical detailers to be licensed by the Board of Pharmacy.  The Act will be presented to Mayor Adrian Fenty for his signature and then to Congress if signed by the mayor.  Earlier versions of the legislation are available here.  Note that the final version as passed is not yet available.  A copy of the press release announcing the Act’s passage is available here. 

The Act defines the practice of pharmaceutical detailing as “the practice by a representative of a pharmaceutical manufacturer or labeler of communicating in person with a licensed health professional or an employee or representative of a licensed professional, located in the District of Columbia, for the purposes of selling, providing information about, or in any way promoting a pharmaceutical product.”  The qualifications for licensure include a college degree, a notarized statement that the applicant understands and agrees to the requirements of pharmaceutical detailing practice in the District of Columbia, and payment of a licensure fee to be set by the Board of Pharmacy.  The educational requirement can be waived for any applicant who has worked full time as a pharmaceutical detailer for at least 12 months preceding the effective date of the Act.  The Mayor is required to establish continuing education requirements as a condition of license renewal.  Under the Act, the penalty for detailing without a license would be a fine of up to $10,000.

A pharmaceutical detailer is prohibited from engaging in any deception or misleading marketing of a pharmaceutical product.  (Previous versions of the legislation deemed off-label information to be deceptive or misleading marketing.  We were informed by the D.C. Council’s Office of General Counsel that this language has been deleted from the bill as passed.)  Detailers are also prohibited from using a title or designation that might lead a licensed health practitioner or his/her employees to think that the detailer is a licensed health practitioner, unless the detailer is a licensed health practitioner.  In addition, detailers would not be able attend patient examinations without patient consent.

The Act also permits the Board of Pharmacy to establish a code of ethics for the practice of pharmaceutical detailing and to collect information from a pharmaceutical detailer regarding the detailer’s communications with licensed health professionals and their employees. 

By Bryon F. Powell

UPDATE:

A copy of the enrolled version of the Act is available here.

Earlier today, The Plain Dealer, a Cleveland newspaper, reported that Senator Sherrod Brown (D-OH) submitted a request to the Congressional Research Service (“CRS”) requesting information on FDA’s “Fast Track” designation program.  CRS provides policy and legal analysis to committees and to Members of both the U.S. House of Representatives and the U.S. Senate. 

Fast Track was created by the FDA Modernization Act in 1997 to help facilitate the development and expedite the review of drugs and biologics for serious or life-threatening conditions that demonstrate a potential to address unmet medical needs.  Under FDC Act § 506, companies may request Fast Track designation for their product at the time they submit an Investigational New Drug Application to FDA or at any time thereafter.  FDA must determine whether to grant such designation within 60 calendar days after receipt of a designation request.  The benefits of Fast Track designation include scheduled meetings to seek FDA input into development plans, the option of submitting an NDA for “rolling review” (i.e., submission in sections rather than all components simultaneously), and the option of requesting evaluation of studies using surrogate endpoints or clinically meaningful endpoints.  In addition, most drugs that are eligible for Fast Track designation are likely to be considered appropriate to receive a 6-month priority review instead of a 10-month standard review.  Information on FDA’s Fast Track designations is available here, here, and here.  FDA’s Fast Track guidance document is available here.  Statutory Fast Track under FDC Act § 506 is very similar to FDA’s “Accelerated Approval” regulations, and, according to FDA, “essentially codifies in [the] statute FDA’s accelerated approval regulations.”

According to the report in The Plain Dealer, Sen. Brown requested the information on FDA’s Fast Track designation program “to help determine whether a case exists for changing or eliminating the 10-year-old initiative that was intended to speed the availability of drugs for serious diseases.”  Sen. Brown’s request follows a series of articles that appeared in The Plain Dealer in December 2007 that concluded that Fast Track designation provides little actual benefit to consumers.  According to the Plain Dealer’s research, “[Fast Track] designation has amounted to a government blessing, which has served as a marketing tool for drug companies and a boon for investors looking to make quick money on the stock market. . . . Since 1998 . . .  Fast Track announcements for almost 200 drug treatments triggered one-day stock price increases that averaged 10 percent.”  Copies of The Plain Dealer articles are available here, here, here, here, and here.

On February 8, 2008, Hyman, Phelps & McNamara, P.C. (“HPM”) is sponsoring a Medical Device Seminar in Newport Beach, California.  The topic of this seminar will be “Striving for Regulatory Success in a Changing Environment.”  Scheduled speakers for the seminar are Jeff Gibbs, Brian Donato, Doug Farquhar, Jeff Shapiro, and Anne Marie Murphy.  The seminar will cover a wide range of medical device-related subjects and provide an update on developments at FDA’s Center for Devices and Radiological Health.  A copy of the brochure and registration form are available here.  Additional information on the seminar is available here.  HPM’s clients are entitled to a reduced registration fee for this event.

We previously reported on FDA’s plans to take enforcement action with respect to firms manufacturing and distributing unapproved drugs containing hydrocodone.  According to the October 1, 2007 FDA Federal Register notice:

Anyone marketing unapproved hydrocodone products that are currently labeled for use in children younger than 6 years of age must end further manufacturing and distribution of the products on or before October 31, 2007. Those marketing any other unapproved hydrocodone drug products must stop manufacturing such products on or before December 31, 2007 and must cease further shipment in interstate commerce on or before March 31, 2008.

FDA intended the notice to wrap up the Agency’s previous conclusions made under the Drug Efficacy Study Implementation (“DESI”) program for certain pre-1962 FDA-approved hydrocodone drug products, which were last addressed in 1982 Federal Register notices. 

In late December 2007, a group known as the “GRAS/E Coalition” submitted a petition for reconsideration and stay of action to FDA requesting that the Agency “reconsider its plan to take enforcement action against those persons who manufacture or ship liquid cough/cold hydrocodone products that are not labeled for use in children under six years of age” (emphasis in original).  The GRAS/E Coalition contends that FDA did not fully consider the possibility that such drug products are Generally Recognized As Safe and Effective (“GRAS/E”) and do not require an approved marketing application.  As an alternative action, the GRAS/E Coalition requests that FDA “stay its enforcement action against manufacturers and shippers of liquid cough/cold hydrocodone products in a manner consistent with its previous actions . . . by extending the grace period for two years until December 31, 2009.” 

The GRAS/E Coalition takes particular issue with a statement in FDA’s June 2006 Compliance Policy Guide on marketed unapproved drugs in which the Agency states that if a final DESI determination classified a drug as effective for its labeled indication, then “FDA still requires approved applications for continued marketing of the drug and all drugs [Identical, Related, or Similar (‘IRS’)] to it – NDA supplements for those drugs with NDAs approved for safety, or new ANDAs or NDAs, as appropriate, for IRS drugs. DESI-effective drugs that do not obtain approval of the required supplement, ANDA, or NDA are subject to enforcement action.”  According to the GRAS/E Coalition petition, this position is contrary to law: 

We believe that the correct interpretation of the law would be that those products that had safety-only NDAs or were IRS to safety-only NDA drug products, that had [Active Pharmaceutical Ingredients (“APIs”)] that were found to be effective under the DESI review, that have been marketed subsequently for a material time and extent for over thirty years without any significant safety issues, and that have been allowed to remain on the market for over forty years due with FDA’s implicit approval can be considered GRAS/E.

GRAS/E status should apply to marketed unapproved liquid cough/cold hydrocodone drug products, according to the petition, because:

(1) there is a long history showing that these products are safe and effective as antussives; (2) [they] are marketed in the same basic dosage form as versions found to be safe and effective; (3) [their] labeling . . . is similar to versions found to be safe and effective; and (4) [they] comport with the applicable compendial criteria, are manufactured in compliance with [current Good Manufacturing Practices], and are required to have all adverse events regarding their use reported to the Agency.

In addition, the GRAS/E Coalition contends that its position is further bolstered by the fact that the Drug Enforcement Administration has regulated the distribution of hydrocodone API for over thirty years as either a Schedule II or Schedule III controlled substance.

Last week, the United States Court of Appeals for the Seventh Circuit concluded that the Federal Trade Commission Act (“FTC Act”) does not require placebo-controlled, double-blind testing for consumer products. 

The ruling, issued in Federal Trade Commission v. QT Inc., upheld a decision by the United States District Court for the Northern District of Illinois (Eastern Division) that the Q-Ray Ionized Bracelet, a metal bracelet promoted as a “test-proven” cure for chronic pain, was a fraud.  Advertisements claimed that the bracelets were either gold or silver and wearing them enhanced “the flow of bio-energy.”  In fact, both courts found that the claims were not test-proven to help reduce pain, and the bracelets were made of brass and did nothing to enhance the flow of bio-energy, a phrase the lower court called “techno-babble.” 

The appeals court stated that “a person who promotes a product that contemporary technology does not understand must establish that this ‘magic’ actually works.”  The court noted that a placebo-controlled, double-blind test “is the best” way to support product claims, but acknowledged that such tests are expensive and may not be financially feasible for all products.  As such, the court held that “something less” than a placebo-controlled, double-blind test “may do.” 

The court did not provide any specific criteria that evidence must meet in order to be deemed reliable, other than to note that “a statement that is plausible but has not been tested in the most reliable way cannot be condemned out of hand.  The burden is on the [FTC] to prove that the statements are false.”  The defendant in the case did have one test that essentially discovered a placebo effect for people wearing the bracelet.  Outside of this test, which the court called “bunk,” however, the only support for the bracelet’s effectiveness came from testimonials, which the court held “are not a form of proof.” 

The ruling in this case is limited; it only applies to the FTC Act.  However, companies that market consumer products may rest easier knowing that one court has ruled that the FTC cannot require them to conduct placebo-controlled, double-blind studies.

Title VIII of the recently-enacted FDA Amendments Act (“FDAAA”) requires the responsible party of an applicable clinical trial (for both drugs and devices) to certify that the new requirements of Public Health Service Act (“PHS Act”) § 402(j) have been met.  Under PHS Act § 402(j)(2)(C), as amended by FDAAA § 801(a)(2), the responsible party of an applicable clinical trial that is initiated after September 27, 2007, or that is ongoing on December 26, 2007, must submit to the National Institutes of Health certain required information for inclusion in the clinical trial data bank (i.e., ClinicalTrials.gov) by December 26, 2007, or 21 days after the first patient is enrolled in the clinical trial, whichever is later, unless the clinical trial is ongoing on September 27, 2007 and is not for a serious or life-threatening disease or condition, in which case the information must be submitted by September 27, 2008. 

An “applicable drug clinical trial” is defined in new PHS Act § 402(j)(1)(A)(iii) to mean “a controlled clinical investigation, other than a phase 1 clinical investigation, of a drug subject to [FDC Act § 505] . . . .”  An “applicable device clinical trial” is defined in new PHS Act § 402(j)(1)(A)(ii) to mean “a prospective clinical study of health outcomes comparing an intervention with a device subject to section 510(k), 515, or 520(m) of the [FDC Act] against a control in human subjects (other than a small clinical trial to determine the feasibility of a device, or a clinical trial to test prototype devices where the primary outcome measure relates to feasibility and not to health outcomes); and a pediatric postmarket surveillance as required under [FDC Act § 522].”

Pursuant to PHS Act § 402(j)(5)(B), as amended by FDAAA § 801(a)(2), drug and device sponsors must include a certification with their regulatory submissions that they have complied with new PHS Act § 402(j).  Specifically, PHS Act § 402(j)(5)(B) states:

At the time of submission of an application under [FDC Act §§ 505, 515, 520(m), or PHS Act § 351], or submission of a report under [FDC Act § 510(k)], such application or submission shall be accompanied by a certification that all applicable requirements of [PHS Act § 402(j)] have been met.  Where available, such certification shall include the appropriate National Clinical Trial control numbers.

Therefore, as a result of the dates listed in PHS Act § 402(j)(2)(C), those drug and device sponsors that make a submission on or after December 26, 2007 must certify to FDA that the requirements of PHS Act § 402(j) have been met. 

On December 26, 2007, FDA announced the availability of a new form for the certification (Form FDA 3674).  According to the new form, drug and device sponsors must make one of the following certifications:

A.  I certify that the requirements of 42 U.S.C. § 282(j), Section 402(j) of the Public Health Service Act, enacted by [FDAAA], do not apply because the application/submission which this certification accompanies does not reference any clinical trial.

B.  I certify that the requirements of 42 U.S.C. § 282(j), Section 402(j) of the Public Health Service Act, enacted by [FDAAA], do not apply to any clinical trial referenced in the application/submission which this certification accompanies.

C.  I certify that the requirements of 42 U.S.C. § 282(j), Section 402(j) of the Public Health Service Act, enacted by [FDAAA], apply to one or more of the clinical trials referenced in the application/submission which this certification accompanies and that those requirements have been met.

FDAAA requires FDA to issue guidance on new PHS Act § 402(j), which should further discuss the types of clinical trials covered by the new certification requirement.  Information on registering clinical trials in the ClinicalTrials.gov data bank is available on the National Library of Medicine’s Protocol Registration System website.

On December 21, 2007, the United States Attorney’s Office for the District of Massachusetts announced that pursuant to a plea agreement reached on October 30, 2007, under Federal Rule of Criminal Procedure 11(c)(1)(C), under which the parties can agree to the particular sentence imposed (subject to court approval), Bryan Corporation pled guilty to misdemeanor violations of the federal Food, Drug, and Cosmetic Act (“FDC Act”) under 21 U.S.C. § 333(a)(1), and to obstruction of an administrative proceeding under 18 U.S.C. § 1505. 

Bryan Corporation agreed to pay a criminal fine of $4,514,700.  In addition, pursuant to a civil settlement agreement, the company agreed to pay $485,300 to resolve potential liability under the civil federal False Claims Act.  A copy of the plea agreement is available here.  In light of the small size of the company and its small sales figures, the penalty imposed was relatively large compared to settlements with larger companies. 

The criminal FDC Act conduct admitted by Bryan Corporation related to an interstate shipment of misbranded drug product and adulterated devices.  The criminal obstruction conduct related to the creation of false records regarding those drugs and devices during an FDA inspection, as well as hiding other documents and moving drugs and devices to avoid inspection.  The civil allegations focused on the lack of drug approval or device clearance and nonconformance with current good manufacturing practices.

Bryan Corporation’s owner and former president was indicted on July 19, 2007 on felony FDC Act charges, obstruction, mail fraud, and criminal conspiracy.  That case remains pending.

By J.P. Ellison

On November 27, 2007, the Drug Enforcement Administration (“DEA”) issued a proposed rule to implement a new format for DEA Official Order Forms (so-called “DEA-222s”).  DEA requires registrants to acquire Schedule I or II controlled substances using triplicate, carbon-paper DEA-222s.  DEA observes that processing transactions with carbon copies, which was developed more than 30 years ago, has become outdated.

DEA proposes the use of a single sheet DEA-222 order form that will require execution by registrants in the same manner as the three-part forms.  DEA will issue the order forms on a single sheet of sturdier paper with an embedded watermark, which DEA says will hinder counterfeiting.  Rather than send specific copies to their supplier, purchasers will send the original form to the supplier and make a copy of the form for their records.  Suppliers will annotate the number of commercial or bulk containers furnished and the date shipped to the purchaser on the original form, maintain the original form and send a copy to DEA.  The purchaser must record on its copy of the DEA-222 the number of commercial or bulk containers furnished and the dates they are received.

DEA will amend its regulations governing use of the single sheet DEA-222s.  Registrants will be able to use the triplicate DEA-222s until they are phased out within about 2 years following implementation of the single sheet DEA-222s.

DEA requests comments on the proposed rule by January 28, 2008.

It is worth noting that DEA has been working on an electronic DEA-222 for the last few years.  Registrant errors in completing DEA-222s have been a source of significant civil penalties.  This action may alleviate some of these issues.

By John A Gilbert & Larry K. Houck

The Drug Enforcement Administration’s (“DEA”) final rule allowing individual practitioners to issue multiple Schedule II prescriptions to individual patients to be filled sequentially went into effect on December 19, 2007.  The rule will allow practitioners to prescribe up to a 90-day supply of a Schedule II controlled substance. 

The federal Controlled Substances Act (“CSA”) and the regulations implementing the CSA prohibit the refilling of Schedule II prescriptions.  DEA’s final rule amends the regulations to allow individual practitioners to issue multiple prescriptions authorizing patients to receive “a total of up to a 90-day supply of a Schedule II substance,” provided:

1.         Each separate prescription is issued for a legitimate medical purpose by an individual practitioner acting in the usual course of professional practice;

2.         The practitioner provides written instructions on each prescription indicating the earliest date on which a pharmacy can fill the prescription;

3.         The practitioner concludes that providing multiple prescriptions to the patient “does not create an undue risk of diversion or abuse;”

4.         Issuing multiple prescriptions is permissible under applicable state law; and

5.         The practitioner fully complies with all other requirements under the CSA and regulations as well as state requirements. 

DEA asserts that nothing in the amended regulation should “be construed as mandating or encouraging” practitioners to issue multiple prescriptions or to see their patients only once every 90 days.  Practitioners “must determine on their own, based on sound medical judgment, and in accordance with established medical standards, whether it is appropriate to issue multiple prescriptions and how often to see their patients.”  In addition, practitioners must include instructions on each multiple prescription indicating that it shall not be filled until a certain date, and pharmacists cannot fill it before that date. 

The final rule asserts that the amended regulations do not alter the longstanding principle that neither the CSA nor the regulations contain a “specific limit on the number of days worth of a schedule II controlled substance that a physician may authorize per prescription.” 

By John A. Gilbert & Larry K. Houck

The Drug Enforcement Administration (“DEA”) recently issued an advisory announcing that as of January 1, 2008, manufacturers of methadone HCl 40 mg tablets have voluntarily agreed to limit distribution due to the reported increase of adverse events related to methadone.  This raises new issues for downstream distribution and prescribing of methadone.

The advisory states that manufacturers will instruct wholesale distributors to supply methadone 40 mg tablets only to authorized and DEA-registered opioid addiction detoxification and maintenance facilities and hospitals.  Retail pharmacies and other registrants (including practitioners) will be unable to purchase methadone 40 mg tablets for dispensing or administration.  The advisory states that methadone, a long-lasting opioid and a federally-controlled Schedule II substance, is used for pain management and opioid addiction treatment.  However, DEA’s statement asserts that methadone 40 mg tablets are indicated for detoxification and maintenance treatment of opioid addiction only and not pain management. 

The voluntary restriction follows an FDA public advisory and Substance Abuse and Mental Health Services Administration (“SAMHSA”) Center for Substance Abuse Treatment (“CSAT”) report.  FDA issued an advisory in November 2006 warning about death and serious side effects associated with the use of methadone for pain management.  SAMHSA CSAT convened a multidisciplinary meeting on methadone-associated mortality in 2003, which concluded, in part, the correlation between increased methadone distribution through pharmacies with a rise in methadone-associated mortality. 

By John A. Gilbert & Larry K. Houck

We previously reported that two pharmacy associations were challenging the implementation of a rule promulgated by the Centers for Medicare & Medicaid Services (“CMS”) setting forth how to calculate the Average Manufacturer Price (“AMP”), the new, and importantly lower, benchmark for pharmaceutical reimbursement by Medicaid. 

Finding that the plaintiffs had met the requirements to obtain a preliminary injunction, Judge Lamberth of the United States District Court for the District of Columbia held earlier this week that (1) plaintiffs were likely to succeed on the merits of their claim because the rule did not appear to follow either the “statutory definition of ‘average manufacturer price’ or the statutory definition of ‘multiple source drug,’” (2) the inadequate reimbursement plaintiffs members would receive under the new rule would force the member pharmacies to reduce hours and services or leave the Medicaid program – causing irreparable harm to the pharmacies, (3) this harm outweighs any potential harm to the government, and (4) it is in the public interest for agencies to comply with the law and Medicaid beneficiaries to obtain access to local pharmacies.

Based on these findings, the court enjoined the government from taking any action to implement the rule, although the government may continue to require drug manufacturers to make the calculations used to determine the rebates paid to states under the Medicaid program.  The court also enjoined the government from posting any AMP data online or disclosing the data to any entity except that the U.S. Department of Health and Human Services can distribute the data internally within the department and also to the U.S. Department of Justice for enforcement use.

Department of Defense (“DoD”) authorization bills currently pending in Congress (both H.R. 1585 and S. 1547) contain authority for a new, mandatory TRICARE retail pharmacy rebate program.  TRICARE is the military’s health care program serving active duty service members, retirees, their families, survivors and certain former spouses. 

If the legislation is enacted, then the TRICARE retail pharmacy rebate program would be “treated as an element of the [DoD] for purposes of the procurement of drugs by Federal agencies under [38 U.S.C. § 8126] to the extent necessary to ensure that pharmaceuticals paid for by the [DoD] that are provided by pharmacies under the program to eligible covered beneficiaries under this section are subject to the pricing standards in such section 8126” (H.R. 1585, § 701(a)).  This requirement would apply to prescriptions filled on or after October 1, 2007. The legislation would also require the Secretary of Defense to modify existing regulations to implement the new provision no later than December 31, 2007. 

The legislation described above is viewed as necessary to implement a TRICARE retail pharmacy rebate program in light of the decision last year 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 Department of Veterans Affairs (“VA”) to implement the program. 

Under section 603 of the Veterans Health Care Act of 1992, manufacturers of covered drugs are required to make their covered drugs available for purchase on the Federal Supply Schedule (“FSS”).  Covered drugs (generally, prescription drugs approved under a new drug application) listed on the FSS or purchased under “depot contracting systems” are required to be sold to the DoD, the VA, and other specified federal agencies at a price no greater than a statutorily determined federal ceiling price (“FCP”).  As stated in the October 2004 Dear Manufacturer Letter, in October 2002, the VA determined that the TRICARE retail pharmacy program “was a centralized pharmaceutical commodity management system that met the definition of ‘depot’ contracting system set forth in [the statute].”  According to the VA, covered drug purchases under the TRICARE retail pharmacy program, authorized and paid for by the TRICARE Management Activity’s (“TMA’s”) Pharmacy Benefits Office, qualified for rebates to the FCPs. TMA published procedures and guidelines for the program on its website and began implementation of the program effective October 1, 2004. 

On March 25, 2005, the Coalition for Common Sense in Government Procurement filed a Petition in the U.S. Court of Appeals for the Federal Circuit challenging the refund program.  The VA agreed to stay enforcement of the October 2004 Dear Manufacturer Letter pending judicial review.  In 2006, the Court determined that the 2004 Dear Manufacturer Letter was a substantive rule and concluded that it was required to set the letter aside as procedurally defective because the notice and comment procedures of the Administrative Procedure Act (“APA”) were not followed prior to the issuance of the letter.  Accordingly, the Court remanded the matter to the VA for compliance with the procedures required by the APA.  The Court did not reach the issue of the substantive validity of the TRICARE retail pharmacy rebate program.  To date, neither the DoD nor the VA has initiated rulemaking to implement the TRICARE retail pharmacy rebate program.

ADDITIONAL READING:

• TRICARE Program Information for Pharmaceutical Manufacturers
• December 6, 2007 Conference Report for H.R. 1585

By Michelle L. Butler

On November 2, 2007, FDA published an Advance Notice of Proposed Rulemaking (“ANPR”) to revise nutrition labeling requirements for foods and dietary supplements.  FDA’s ANPR commences perhaps the most sweeping food labeling modification effort since 1993, when FDA issued the nutrition labeling rules mandated by the Nutrition Labeling and Education Act of 1990 (“NLEA”).

Since 1990, new nutrition data and information has emerged that FDA believes warrants revisiting nutrition labeling requirements.  These data include the 2005 Dietary Guidelines for Americans, and the Institute of Medicine’s (“IOM’s”) series of reports on the Dietary Reference Intakes (“DRIs”) for vitamins and other micronutrients, minerals dietary antioxidants and related compounds, and energy and macronutrients published from 1997 to 2004.  In addition, the IOM released a 2003 report, “Guiding Principles for Nutrition Labeling and Fortification,” on recommended use of its DRIs in nutrition labeling.

In the ANPR, FDA requests input from stakeholders as to which nutrients should be listed in Nutrition Facts and Supplement Facts labels, what new reference values should be used to determine percent daily values (“DVs”) and which factors should be considered in calculating DVs, as well as several specific issues regarding calories, fats, cholesterol, carbohydrate, protein, dietary fibers, sugar alcohols, sodium, chloride, vitamins and minerals.  Of these topics, there are two particular areas that are likely to generate the most debate: (1) the method for determining percent DV values; and (2) the proposed dietary fiber definition.  The IOM report recommended using a population-weighted method of calculating the percent DV, rather than the current population-coverage method.  If FDA were to adopt this recommendation, the percent DVs for most nutrients would probably decrease.  The IOM also recommended three new categories of dietary fiber linked to the physicochemical properties of the fiber, which would have a major effect on how dietary fiber content is calculated for the purpose of nutrition labeling.   

The November 2007 announcement is only an ANPR, the very early initial step in the rulemaking process.  The deadline for submission of public comments in response to the ANPR is January 31, 2008, but this deadline is likely to be extended, possibly more than once, and the rulemaking process can be expected to require three years or longer.