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  • Highlights of the Final CMS Medicaid Rebate Rule

    On July 6, 2007, the Centers for Medicare & Medicaid Services (“CMS”) posted on its website a pre-publication copy of a final rule with a comment period to implement the Medicaid Rebate Program.  The regulation, which finalizes a proposal that was published in the Federal Register last December, will be published in the Federal Register on July 17th. It will become effective on October 1, 2007, which means that quarterly Average Manufacturer Price (“AMP”) and best price submissions for the fourth quarter of 2007 and monthly AMPs for October will be required to comply with the regulation.  Although the rule addresses many aspects of the Medicaid Rebate Program, CMS has solicited comments only on the AMP and Federal Upper Limit (“FUL”) provisions.  Comments are due by January 17, 2008.  Below are some highlights of the most notable provisions of the rule (with page references to the pre-publication copy of the final rule). 


    • Quarterly AMP is no longer calculated by dividing net AMP-eligible quarterly sales dollars by net AMP-eligible quarterly units.  Instead, it is the weighted average of the three monthly AMPs for the quarter.  CMS does not specify whether the weighting is to be done on the basis of sales dollars or units (page 357).

    • In a departure from the proposed rule, manufactures should report subsequent revisions to monthly AMPs.  This should be done up to 36 months after the reporting month, but should not be done if the revision is due solely to data on lagged price concessions.  (pages 382-383).   Although FULs will be established based on monthly AMPs, subsequent revisions of monthly AMPs will not affect FULs (pages 383, 462).  Quarterly AMP must be restated when there is a restatement of one of the monthly AMPs on which the quarterly AMP is based (page 375).

    • In calculating monthly AMP, manufacturers must use a 12-month rolling average to estimate lagged price concessions (e.g., chargebacks and rebates) (pages 388-89).  The 12-month rolling period should include the reporting month (page 390).

    • Addressing for the first time the issue of whether a lagged price concession should be accounted for on a “paid” or an “earned” basis, CMS states in the preamble that it will allow manufacturers the flexibility to count chargebacks based on their Generally Accepted Accounting Principles, as long as they use one method uniformly (page 384).  Presumably, the same flexibility is permitted for rebates.

    • “Retail pharmacy class of trade” is defined for the first time.  It is any outlet that purchases drugs from a manufacturer, wholesaler, or distributor, and subsequently sells or provides them to the general public.

    • The final rule clarifies the treatment of a number of customer categories and transactions for which guidance has been lacking in the past.  For example:

      1. Physicians, home health care providers, outpatient clinics, surgical centers (if they provide drugs to the public), direct sales to patients, and mail order pharmacies (including those owned by PBMs) are retail and included in AMP (pages 172-199).
      2. Sales to hospitals for inpatients continue to be non-retail.  Sales for use in the hospital outpatient pharmacy are retail if there is adequate documentation of such use; otherwise, they are excluded along with inpatient sales (page 179).
      3. Long-term care pharmacies and hospices are considered non-retail and sales to them are excluded from AMP (pages 172, 176).
      4. Sales of units that are reimbursed by third-party payors that do not take possession, and rebates to those payors, are treated uniformly under the rule: the sales are included in AMP, but the rebates are excluded.  This applies to sales reimbursed by, and rebates paid to, HMOs and other managed care organizations, as well government programs such as Medicaid (including Medicaid supplemental rebates), SCHIP, Part D plans (including Medicare-subsidized retiree plans), State Pharmaceutical Assistance Programs (“SPAPs”), and TriCare TRRx (pages 205-230).  The same applies to Pharmacy Benefit Managers (“PBMs”), in a departure from the proposed rule (page 152).  Sales to HMOs that take possession continue to be excluded from AMP.
      5. Manufacturers may optionally choose, on a product-by-product basis, to restate their base date AMPs to ignore prompt pay discounts and otherwise conform to the final AMP rule.  Manufacturers have through the third quarter of 2008 to do this.  The restatements must be based on actual sales data, not estimates, and will be effective only prospectively from the quarter in which they are submitted to CMS (not retroactive to the first quarter of 2007) (pages 393-98).

    Best Price

    Noteworthy changes from prior CMS policy or from the proposed rule include the following:

    • PBM rebates (except mail order) are excluded from best price, in a departure from the proposed rule (pages 325-26).

    • Direct sales to patients are included (page 327).

    • In order for sales to an SPAP to be excluded, the SPAP must be designated by CMS as meeting the requirements of Release 68.  The preamble gives the web address of CMS’s list of designated SPAPs (page 318).

    Bona Fide Service Fees

    Bona fide, fair market value services fees, including administrative fees to Group Purchasing Organizations and distribution fees, are excluded from AMP and best price, as long as there is no evidence that the fees are passed on by the entity to any pharmacy or other entity included in AMP.  The rule adopts the definition of bona fide service fees in the Average Sales Price regulation at 42 C.F.R. § 414.804.  Fair market value is not defined, but should be determined consistent with industry accepted methods (pages 231-39, 245, and 329). 

    Bundled Sales

    Unlike the current Rebate Agreement definition, the rule’s definition of a “bundled sale” explicitly includes a contingent arrangement involving drugs (of different package sizes) that share the same nine-digit National Drug Code (“NDC-9”), or drugs with different NDC-9s, or drugs and other products.  Also, a bundle exists where a discount is conditioned, not only on the purchase of another drug or product, but on the achievement of some other performance requirement for another drug, such as achievement of market share or placement on a formulary tier.  As currently, the total discount must be proportionally allocated among all the items in the bundle (pages 94-106).

    Coupons, Vouchers, and Patient Assistance Programs

    In a change from the proposal, patient coupons redeemed, not only directly to the manufacturer, but also through another entity such as a pharmacy, are excluded from AMP and best price as long as the entity receives no payment other than a bona fide service fee (pages 263-64, and 322).  Free drug vouchers not contingent on a sale are also excluded (pages 267-68), as are free drugs provided under a patient assistance program (pages 269-70, and 322-23).

    Authorized Generics

    In a departure from the proposed rule, the final rule does not require an NDA-holder (primary manufacturer) to include in its AMP or best price the sales from an authorized generic distributor (secondary manufacturer) to its customers.  This eliminates the need for data sharing.  However, the sales price from the primary manufacturer (adjusted upward by license or royalty fees) to the secondary manufacturer must be included in best price.  It appears that the latter sales are not required to be included in AMP, though there is ambiguity in the rule and the preamble on this point (pages 331-56).


    Categories: Reimbursement

    Overwhelmed by Public Comment, USDA Publishes Interim Final Rule Amending the NOP National List

    We previously reported on a proposed rule issued by the U.S. Department of Agriculture (“USDA”) to amend the agency’s National Organic Program (“NOP”) regulations at 7 C.F.R. Part 205 to add 38 non-organic minor ingredients to the National List of Allowed and Prohibited Substances (“National List”) (§ 205.606) that may be included in foods labeled “organic.”  Pursuant to the Organic Foods Production Act of 1990, “organic” food products may contain 5% of non-organic minor ingredients. 

    To prevent a disruption of organic business, and to meet the deadline of June 9, 2007 imposed by the U.S. District Court of Maine in Harvey v. Johanns, NOP provided only 7 days for the public to comment on the proposed rule.  Despite the unusually short comment period, USDA received approximately 1,250 comments on the proposed rule.  Many of the comments opposed the 7-day comment period and suggest that the proposed rule constitutes a lowering of the standard for the label “organic.” 

    On June 27, 2007, USDA published an interim final rule.  The interim rule, which is effective as of June 21, 2007, provides a 60-day comment period on the amendments.  An NOP press release discussing the interim final rule states that the amendment is consistent with the law and does not lower the standard for “organic.”  As of June 9, 2007, a non-organic agricultural ingredient must be included on the National List before its use is permitted in organic foods.  Moreover, an organic handling operation may use any of the non-organic National List agricultural ingredients only after a certifying agent determines that the operation has sourced the organic form and confirmed that an organic version is not commercially available.  Before June 9, 2007, the only requirement for non-organic agricultural ingredients was the lack of commercial availability.  Thus, the 38 substances added to the National List have been used in foods marketed as “organic.”  The interim final rule merely permits organic businesses to continue the use of these 38 non-organic agricultural ingredients. 

    The interim final rule prevents disruption of organic business and provides the NOP with time to evaluate the comments.  A final rule will not be published before the NOP has considered all comments.

    By Riëtte van Laack

    Categories: Foods

    House Passes Omnibus FDA Reform Bill

    Late Wednesday, the House of Representatives passed, by a vote of 403-16, H.R. 2900, “the Food and Drug Administration Amendments Act of 2007.”  The Senate passed its version of omnibus FDA reform legislation in May 2007 — S. 1082, “the Food and Drug Administration Revitalization Act” (“FDARA”) (Unfortunately, the House version does not lend itself to a good acronym, “FDAAA”).  A draft House Report on H.R. 2900 (that when finalized will be assigned #110-225) circulating on Capitol Hill is available here.

    H.R. 2900, like S. 1082, reauthorizes the Prescription Drug Use Fee Act (as PDUFA IV) (FDC Act §§ 735-736), the Pediatric Research Equity Act (FDC Act § 505B) and the Best Pharmaceuticals for Children Act (FDC Act § 505A), and includes provisions amending the FDC Act with respect to so-called blocking citizen petitions, among other things.  There are differences between the two bills, however. H.R. 2900 does not include provisions on transferable priority review, enantiomer exclusivity, and “old” antibiotics.  In addition, H.R. 2900 does not include the “blockbuster drug” provision in S. 1082 that would limit pediatric exclusivity to 3 months for drugs with annual sales over $1,000,000,000.  These differences will be ironed out in conference committee debate.   

    Neither the House nor Senate FDA bills include provisions on biogenerics.  It is our understanding, however, that language similar to that included in S. 1695, “the Biologics Price Competition and Innovation Act of 2007,” will be added in conference committee.  S. 1695 would amend the Public Health Service Act to add § 351(k) to provide for an approval pathway for “biosimilar” and “interchangeable” biologics that rely, in part, on FDA’s previous licensure of an innovator’s product.  In addition, the bill provides a 12-year period of innovator marketing exclusivity, limited “generic” exclusivity under certain circumstances, and patent resolution provisions. 

    Categories: Miscellaneous

    FDA is Asked for a Third Time About Orange Book Patent Listings for Drug Delivery Systems

    For the third time in as many years, FDA has been requested to provide an advisory opinion on the Agency’s policy for the submission of patents for Orange Book listing that cover drug delivery systems (e.g., metered-dose and dry powder inhalers, and transdermal patches) that do not recite the approved active ingredient or formulation.  FDA’s failure to provide clear statements on the issue has led some companies to interpret the law and FDA’s patent listing regulations at 21 C.F.R. § 314.53 to require patent submission and Orange Book listing if such patents claim an integral part of an approved drug product rather than merely packaging (patents claiming packaging may not be submitted for Orange Book listing). 

    On June 21, 2007, AstraZeneca submitted a request for an advisory opinion (Docket No. 2007A-0261) requesting that FDA comment on two issues:

    (1) what constitutes an approved pre-filled drug delivery system for the purposes of determining whether patents relating to that system should be listed [in the Orange Book]; and

    (2)  whether patents relating to an approved pre-filled drug delivery system should be listed if they (a) disclose but do not claim the active ingredient or formulation of the approved drug product or (b) neither disclose nor claim the active ingredient or formulation of the approved drug product.

    Similar requests were submitted to FDA in 2006 by AstraZeneca (Docket No. 2006A-0318), and in 2005 by GlaxoSmithKline (Docket No. 2005A-0015), but the Agency has failed to substantively respond to either request thus far.  In those requests, FDA was asked whether “patents directed to drug delivery systems . . . that do not recite the approved active ingredient or formulation should be listed in the [Orange Book],” and whether “a patent [that] claims a drug delivery device or elements of a drug delivery device as part of [an NDA], but the patent does not specifically claim the active ingredient or mention the active ingredient or ingredients contained in the approved drug product, or if a patent claims the protective overwrapping of a drug delivery system,” should be submitted to FDA for Orange Book listing, respectively. AstraZeneca’s latest advisory opinion request differs from the previous requests in that it specifically asks FDA about “what types of products fall within the meaning of the term ‘pre-filled drug delivery systems.’” 

    In response to comments seeking clarification as to whether patents claiming delivery devices or containers “integral” to a drug product should be submitted for Orange Book listing, FDA stated in the preamble to the Agency’s June 2003 regulations implementing the FDC Act’s patent listing provisions that the key factor in determining whether a drug product patent must be submitted for Orange Book listing is “whether the patent being submitted claims the finished dosage form of the approved drug product.”  In this respect, FDA also noted in the preamble that Appendix C of the Orange Book includes a current list of approved drug product dosage forms. 

    Although FDA’s distinction between patents covering packaging and drug delivery systems is helpful in a very general sense, the Agency’s failure (or unwillingness) to provide more specific comment at that time (and in subsequent years) “leaves certain questions unanswered and in need of further clarification,” as AstraZeneca correctly points out in the advisory opinion request.  Specifically, AstraZeneca’s advisory opinion request states:

    First, it remains unclear as to what types of products fall within the meaning of the term “pre-filled drug delivery systems,” particularly when such products are not expressly identified in the definition of dosage forms or listed in Appendix C of the Orange Book.  This is also especially true when the agency has not in other contexts, such as guidance documents, expressed any opinion on such questions. . . .  Second, FDA has not directly addressed the question whether the listing requirement applies to patents for approved drug delivery systems where the patents disclose but do not claim, or neither disclose nor disclaim, the active ingredient or formulation of the approved drug product.

    In addition, AstraZeneca stakes out what could be a reasonable policy position on the issue:

    [L]isting in the Orange Book of patents claiming an approved pre-filled drug delivery system and/or one identified in the labeling of the product would further the goals of the Hatch-Waxman Amendments, even if the approved formulation or active ingredient is not claimed but is disclosed in the patent or the active ingredient is neither claimed nor disclosed in the patent.  Listing such patents would provide generic manufacturers with notice of their potential infringement and an opportunity to challenge the patents early on before introducing the generic product into the marketplace.  In fact, because such patents may not claim or disclose the formulation or active ingredient specifically, a generic manufacturer searching for patents that refer to the product might not uncover them if they are not listed in the Orange Book. . . .  Accordingly, AstraZeneca will continue to list these patents unless and until it otherwise receives guidance or an advisory opinion from FDA that such listings are improper.

    Categories: Hatch-Waxman

    Orphan Drug Designation Not Sacrosanct – FDA Revokes Orphan Designation for TheraCLEC for EPI, but Other Exclusivity Issues Remain

    In a July 3, 2007 filing with the Securities and Exchange Commission (“SEC”), Altus Pharmaceuticals Inc. announced that the company was notified by FDA’s Office of Orphan Products Development (“OOPD”) that the orphan drug designation granted in January 2002 to ALTU-135, also know as TheraCLEC, for the treatment of Exocrine Pancreatic Insufficiency (“EPI”) was being revoked.  OOPD only very rarely revokes orphan drug designation.  According to the Altus filing, “[t]he FDA based its decision on a finding that if one includes all patients with HIV/AIDS who suffer from fat malabsorbtion in this indication, the patient population in the United States appears to exceed 200,000 persons and is thus ineligible for orphan drug designation.”  A March 2007 Altus SEC filing noted that FDA first informed the company in December 2006 of the Agency’s plans to revoke the TheraCLEC orphan drug designation.

    TheraCLEC is a Pancreatic Exocrine Product (“PEP”) in clinical development that contains the enzymes amylase, lipase, and protease to break down the complex carbohydrates, fats, proteins, respectively, that are deficient in EPI patients and that causes poor absorption of essential nutrients (thereby often leading to malnutrition, impaired growth, and reduced survival). OOPD’s decision to revoke the Altus designation comes less than one year before the date FDA established in 2004 requiring the submission of NDAs for PEPs for EPI.  In addition, OOPD’s decision avoids the possibility that TheraCLEC, if it were the first product to obtain FDA approval with orphan drug designation, would be granted seven years of exclusivity, during which FDA could not approve an application for the “same drug” for EPI, absent a showing of “clinical superiority.” 

    PEPs have been marketed in the United States for EPI since before the enactment of the FDC Act in 1938.  In April 2004, FDA published a Federal Register notice announcing that all PEPs are “new drugs” under the FDC Act, and that sponsors of currently marketed PEPs must submit and obtain approval of an NDA by April 28, 2008, or be subject to FDA regulatory action.  FDA simultaneously published a guidance document to assist sponsors in submitting NDAs for their PEPs.  With regard to patient needs, FDA’s Federal Register notice states:

    [T]here is a need for a range of products to remain available for patient use.  The dosage requirements of patients vary, and the appropriate daily dose of pancreatic enzyme supplements must be individualized and adjusted when clinically indicated.  Furthermore, physicians have identified and stabilized their patients on currently available products with different ratios of lipase, protease, and amylase that meet the patients’ needs.  Thus, to meet the dosing requirements and to maintain compliance with treatment, pancreatic supplements are needed with varied concentrations of lipase, protease, and amylase. 

    This statement indicates that FDA anticipates the submission of multiple applications for different drugs to meet the varied needs of EPI patients.  By permitting a single applicant with orphan drug exclusivity to monopolize the PEP/EPI market, however, FDA would be unable to meet its stated public health need for “a range of [PEPs].”  FDA’s decision to revoke the Altus designation removes this impediment. 

    Presumably the next exclusivity battle over PEPs will concern whether each PEP is a new chemical entity eligible for 5-year exclusivity or whether 3-year “new use” exclusivity applies.  An FDA determination that all PEPs are different and eligible for 5-year exclusivity is arguably consistent with recent FDA policy conferring 5-year exclusivity “to products about which the Agency has insufficient information to know whether they contain a previously approved active moiety.”  Moreover, FDA has indicated (pages 15-21) that such a policy might be applicable to PEPs.       

    Categories: Hatch-Waxman

    FDARA: PET Drug User Fees

    Positron Emission Tomography drugs, or PET drugs (not to be confused with drugs approved for companion animals), would be accorded more equitable user fee status under PDUFA IV if the Senate-passed version of the FDA Revitalization Act (“FDARA”) is signed into law.  (A similar provision is included in the House version of PDUFA IV, H.R. 2900, introduced late last month.)  FDARA, if enacted, would also address an issue raised by The Council on Radionuclides and Radiopharmaceuticals (“CORAR”) in an August 2005 citizen petition, in which the organization requested that “FDA establish a class waiver under which manufacturers of PET drugs are exempt from multiple establishment user fees, and are subject, at most, to a single establishment fee for each approved ‘human drug application.’” 

    The FDC Act defines the term “compounded positron emission tomography drug” at § 201(ii) to mean a drug that “(A) exhibits spontaneous disintegration of unstable nuclei by the emission of positrons and is used for the purpose of providing dual photon positron emission tomographic diagnostic images; and (B) has been compounded by or on the order of a practitioner who is licensed by a State to compound or order compounding for a drug described in subparagraph (A), and is compounded in accordance with that State’s law, for a patient or for research, teaching, or quality control.”  The term includes “any nonradioactive reagent, reagent kit, ingredient, nuclide generator, accelerator, target material, electronic synthesizer, or other apparatus or computer program to be used in the preparation of such a drug.” 

    A more practical description is provided in the CORAR petition:

    PET drugs are produced by tagging (i.e., “labeling”) a substrate compound with a positron emitting isotope, which is produced in cyclotrons (i.e., devices that accelerate protons or deuterons to the high energies needed for a nuclear reaction to occur).  Once injected, the isotope travels through a patient’s bloodstream and is distributed in certain tissues.  Using a PET camera, nuclear physicians measure the different rates at which the isotope emits positrons, based, for example, on the different ways in which different types of tissue metabolize the drug’s substrate, and thereby produce computerized images of biochemical processes and tissue structures within the body.  Physicians use the resulting images to diagnose, stage, and monitor diseases (e.g., focal epilepsy, certain cardiac diseases, dementias, and lung, breast, prostate, and colorectal cancer).

    The FDA Modernization Act of 1997 placed a moratorium on FDA’s regulation of PET products as “new drugs” until the Agency establishes procedures by which PET drugs are to be approved under the FDC Act’s new drug approval process, and establishes appropriate PET drug current Good Manufacturing Practices (“cGMPs”).  During this moratorium, FDA has encouraged PET centers to voluntarily submit marketing applications for approval, and issued proposed regulations in September 2005 to establish PET drug cGMPs. 

    CORAR has been concerned that, because of the unique characteristics and properties of PET drugs, FDA will assess multiple establishment user fees for each approved PET drug.  The CORAR petition states that:

    Because of the unusual characteristics of PET drugs, and once all PET drugs are regulated as “new drugs,” the assessment of establishment user fees, in particular, will significantly and unfairly burden commercial PET drug manufacturers.  Due to the short half-lives of PET drugs, a commercial manufacturer that supplies PET drugs nationally, or even regionally, requires multiple manufacturing establishments located throughout the U.S. or the region (as the case may be).  Each of these establishments must be identified in any marketing application submitted to FDA.  Because establishment fees are assessed annually for “each prescription drug [manufacturing] establishment listed in [an] approved human drug application,” PET drug applicants would be assessed multiple establishment fees.  Such multiple fee assessments would be patently unfair, particularly for an industry that will soon be saddled with numerous new and expensive legal and regulatory burdens. 

    At a recent public meeting on PDUFA IV, CORAR provided the following example: “[O]ne PET drug manufacturer operates 44 cyclotron facilities nationwide.  If these were used to manufacturer and supply a particular PET drug under an NDA, this company would have to pay over $13 million annually in establishment fees (based on FY 2007 user fee rates).”

    FDARA would amend FDC Act § 736(a) to create special establishment user fee rules for PET drugs.  Under the Senate-passed version of FDARA:

    [E]ach person who is named as the applicant in an approved human drug application for a compounded [PET] drug shall be subject . . . to one-fifth of an annual establishment fee with respect to each such establishment identified in the application as producing compounded [PET] drugs under the approved application.

    FDARA would also exempt from all annual establishment user fees those PET drug sponsors who certify to FDA that they are not-for-profit medical centers with only a single PET drug manufacturing establishment, and provided at least 95% percent of the total number of doses of each PET drug produced by that establishment will be used within the medical center itself.

    Although FDARA does not place all PET drug sponsors on equal footing with therapeutic drug sponsors (in the example above, the PET drug sponsor would still have to pay the equivalent of almost 6 full establishment fees for its 44 establishments), it would, if enacted, provide significant relief for multi-establishment PET producers.   

    Categories: Drug Development

    Mylan Loses Again on Generic NORVASC

    On June 29, 2007, the U.S. District Court for the District of Columbia, in Mylan v. Leavitt, issued a memorandum opinion denying Mylan’s Emergency Motion for a Temporary Restraining Order that asked the court to order FDA to relist Pfizer’s U.S. Patent No. 4,879,303 covering NORVASC (amlodipine besylate) until the issue of Mylan’s claim to 180-day exclusivity is resolved.  FDA previously approved Mylan’s ANDA, but was prevented from approving subsequent generic applications due to various exclusivity issues. 

    In an April 18, 2007 FDA Letter Decision, and pursuant to the district court’s April 30, 2007 opinion substantially agreeing with FDA, the Agency concluded (with respect to pending ANDAs for generic NORVASC) that “where an applicant has challenged a patent and has received a decision of invalidity or non-infringment, that applicant will not be subject to the NDA holder’s pediatric exclusivity once that decision becomes effective.” Accordingly, FDA approved Apotex’s ANDA once the Federal Circuit issued its mandate in Pfizer, Inc. v. Apotex, Inc.  FDA’s Letter Decision also states that “[i]f the remaining claims [of the ‘303 patent] do not provide a basis on which to list the patent, . . . the patent would no longer be eligible for listing in the Orange Book.  In such a case, the patent must be withdrawn by Pfizer and any pediatric exclusivity that attached to the patent will no longer serve as a barrier to ANDA approval.” FDA and the court also concluded that Mylan’s 180-day exclusivity period expired when the ‘303 patent expired (without pediatric exclusivity) on March 25, 2007.  Mylan sought reconsideration of this issue, which the court denied in a May 14, 2007 order.  Mylan then appealed the issue to the D.C. Circuit, where the case is being briefed.

    On June 14, 2007, Pfizer notified FDA that the ‘303 patent no longer meets the Orange Book listing criteria with respect to NORVASC and requested that the Agency delist the patent from the Orange Book.  FDA delisted the patent on June 22, 2007 and notified ANDA applicants of this action on the same day.  FDA subsequently approved ANDAs submitted by Synthon and Teva on June 27 and June 28, 2007, respectively.  There are still several tentatively approved amlodipine besylate ANDAs awaiting final approval. 

    On June 26, 2007, Mylan submitted an application for a preliminary injunction seeking to enjoin FDA “from taking any action to issue an approval of any [ANDA] for amlodipine besylate products in derogation of Mylan’s right to 180-day exclusivity until the issue is finally decided on appeal.”  In Mylan’s accompanying memorandum, the company states “[n]ow that the FDA has delisted the Pfizer patent, Mylan’s claim to 180-day exclusivity has moved to the forefront. . . .  Mylan is likely to prevail on its claim to 180-day exclusivity in the Court of Appeals, but its victory will be hollow unless the Court maintains the status quo until the appeal has been decided.”

    FDA’s opposition memorandum states that “[u]nder the law of this Circuit, this Court has no jurisdiction to revisit [the 180-day exclusivity] issue at this time.  For this reason, Mylan’s application should be denied.  Even if the Court were to examine this issue, however, it has no merit and should be rejected.”  Teva’s opposition memorandum similarly states that “[b]eyond the fact that Mylan’s motion merely reiterates the same discredited arguments that this Court previously considered and rejected, its motion asks this Court to exercise jurisdiction it plainly does not possess.”  Mylan’s reply memorandum counters these arguments and states:

    The FDA and Teva would prefer that this Court avoid the merits of Mylan’s motion for injunctive relief pending appeal by ruling that it does not have jurisdiction now that the Court’s denial of Mylan’s earlier motion for a preliminary injunction is on appeal. But both the Federal Rules of Civil Procedure and case law from this Circuit make clear that the Court may maintain the status quo while the case is on appeal. That is exactly what Mylan seeks here –no more and no less. On the merits, the FDA relies on cases holding that eligibility for 180-day exclusivity does not survive patent expiration, ignoring the fact that here Mylan’s 180-day exclusivity had vested before the ‘303 patent expired.

    The district court, not persuaded by Mylan’s arguments, issued its memorandum opinion on June 29, 2007.  The court concluded that “[i]njunctive relief emanating from this court is wholly inappropriate.  [Mylan] has made no showing of irreparable harm.  The court maintains confidence in its substantive legal ruling regarding the 180-day exclusivity and its prior conclusion regarding the balance of harms to other parties and the public.  Moreover, its ruling is presently before the Circuit . . . .  Accordingly, the court denies the plaintiff’s request for a TRO and a stay pending appeal.”

    The reasons for Pfizer’s decision to request that FDA delist the ‘303 patent are unclear, as the continued listing of the patent in the Orange Book could prevent additional generic competition until September 2007.  Unless the D.C. Circuit reverses the district court’s decision on the issue of Mylan’s claim to 180-day exclusivity, FDA may continue to grant final approval to tentatively approved amlodipine besylate ANDAs.

    Categories: Hatch-Waxman

    Supreme Court to Hear Case Involving Scope of the Preemption Provision of the Medical Device Amendments

    On June 25, 2007, the Supreme Court agreed to hear Riegel v. Medtronic, Inc., which concerns whether the FDC Act preempts state tort claims regarding medical devices that entered the market pursuant to the Premarket Approval (“PMA”) process.  In 1996, the Supreme Court held in Medtronic, Inc. v. Lohr that certain state tort claims involving medical devices cleared under the premarket notification (i.e., 510(k)) process are not preempted. 

    In Riegel, the U.S. Court of Appeals for the Second Circuit joined a majority of circuits (i.e., the Third, Fifth, Sixth, Seventh, and Eighth Circuits) that have addressed this issue in holding that state tort claims regarding PMA-approved devices are preempted by the FDC Act.  Specifically, the Second Circuit decided that claims alleging liability despite adherence to the standards on which the PMA device was approved are preempted, but claims that are based on a manufacturer’s departure from such standards are not preempted. 

    Charles Riegel and his wife sued Medtronic for injuries allegedly suffered by Mr. Riegel when a balloon catheter manufactured by Medtronic ruptured during an angioplasty operation.  The suit raised several state common law causes of action, including negligence, strict liability, and breach of warranty.  The trial court and the Second Circuit addressed the scope of FDC Act § 521, which states, in relevant part: 

    [N]o State or political subdivision of a State may establish or continue in effect with respect to a device intended for human use any requirement –

    (1) which is different from, or in addition to, any requirement applicable under this Act to the device, and

    (2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this Act.

    The Second Circuit reasoned that because devices approved through the PMA process are subject to the standards set forth in their approved applications, such devices are subject to “a requirement applicable to the device under [the FDC Act].”  The court further held that the claims for strict liability, breach of warranty, and negligent design, testing, inspection, distribution, labeling, marketing, and sale would (if successful) impose state “requirements” that differed from, or added to, the PMA-approved standards for the device.  In contrast, the court held that the negligent manufacturing claim was not preempted to the extent that it was based on the allegation that the particular catheter used during Mr. Riegel’s angioplasty had not been manufactured in accordance with the PMA-approved standards.

    The Second Circuit emphasized that the scope of its decision is “actually quite limited,” because many Class III medical devices (i.e., those medical devices that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury) enter the market through the 510(k) process rather than the PMA process (that is, those Class III medical devices that are substantially equivalent to devices legally marketed before the enactment of the Medical Device Amendments on May 28, 1976, and for which a regulation calling for PMA has not been published).  In addition, the Second Circuit did not hold that all state tort claims as to PMA-approved devices are preempted; rather, only claims that allege liability despite the adherence of the device to standards set forth in the PMA are preempted.  The Supreme Court is expected to hear the case in the fall. 

    Riegel is the first of two preemption cases the Court may hear.  The second case, Wyeth v. Levine, concerns whether prescription drug labeling preempts state law product liability claims.  FDA asserted in the preamble to its January 2006 final rule (page 3934) on prescription drug labeling that “FDA approval of labeling under the [FDC Act] . . . preempts conflicting or contrary State law.”  The Supreme Court has not yet decided whether to hear the case and has requested the Solicitor General’s views. 

    In a recent development, on July 3, 2007, the U.S. District Court for the Eastern District of Louisiana issued an order in ongoing VIOXX (rofecoxib) product liability litigation denying Merck’s motion for summary judgment on federal preemption grounds.  With respect to FDA’s January 2006 position on preemption, the court stated:

    FDA’s current position on preemption is neither entitled to the deference suggested in Chevron, nor to the deference espoused in Auer.  The FDA’s current views on preemption were not promulgated pursuant to its rulemaking authority, nor do they seek to clarify any ambiguity in the FDA regulations.  Rather, the FDA added these views at the end of the rulemaking process in a preamble to the 2006 Final Rule, that is, “through the back door.”  Moreover, the FDA’s preemption statements in the preamble actually conflict with statements made in the original notice of proposed rulemaking out of which the 2006 Final Rule grew. At best, the preamble merely offers an opinion on the viability of the plaintiffs’ state-law claims given the existence of the federal regulatory scheme as a whole; it does not purport to interpret any specific statutory or regulatory provision, nor is it a regulation itself. (citations omitted).


    By Brian J. Wesoloski

    Categories: Medical Devices

    More Information about Nevada Compliance Program Law

    A colleague of your trusted bloggers spoke with counsel for the Nevada Board of Pharmacy (“BOP”) and reports the following about the new law in our post from yesterday:

    • A draft regulation will be posted on the BOP website next week. 
    • BOP welcomes comments on the draft rule.  Companies should send them to Jeri Walter at jwalter@pharmacy.nv.gov
    • The BOP will conduct a public workshop on the draft rule on July 26, 2007.
    • Based on comments at the workshop, a final rule will be developed and presented to the BOP for a vote on September 6, 2007. 
    • The rule will become effective 30 days after it is adopted.
    • As the rule is currently drafted, the first submission to the BOP will be due on June 1, 2008, and subsequent submissions will be due annually thereafter.
    Categories: Miscellaneous

    New Nevada Law Requires Companies to Adopt a Marketing Code of Conduct

    On June 14, 2007, Nevada Governor Jim Gibbons signed into law Assembly Bill 128, which is similar to the drug marketing compliance law that went into effect in California in July 2005.  Nevada’s new law, which goes into effect on October 1, 2007, requires a manufacturer or wholesaler who employs a person to sell or market a drug or device in the state to adopt a marketing code of conduct establishing the practices and standards that govern the marketing and sale of their products.  The marketing code of conduct must be based on applicable legal standards and should guarantee that the manufacturer’s actions are “intended to benefit patients, enhance the practice of medicine and not interfere with the independent judgment of health care professionals.”

    The new marketing code of conduct requirement can be fulfilled by adopting the most recent version of the Pharmaceutical Research and Manufacturers of America’s (“PhRMA’s”) “Code on Interactions with Healthcare Professionals,” which California currently requires drug companies to have adopted.  In California, companies must adopt new versions of the PhRMA Code within 6 months of any PhRMA Code update.  In Nevada, however, it is unclear whether a company that has adopted PhRMA’s Code is required to adopt subsequent revisions of PhRMA’s Code to remain in compliance and, if so, how long a company would have to do so.  The Nevada Board of Pharmacy may clarify this point in a future rulemaking.

    Unlike California’s law, the Nevada marketing law does not require that any particular elements be included in a company’s marketing code of conduct.  For instance, the Nevada law does not require companies to specify limits on gifts or incentives to health professionals.  While California requires companies to adopt the Office of Inspector General’s April 2003 “Compliance Program Guidance for Pharmaceutical Manufacturers,” Nevada does not.  Nevada also does not currently require a company to post its marketing code of conduct on its website, as is required in California.

    In addition to adopting a marketing code of conduct, each company marketing or selling drugs or devices in Nevada must take a number of complementary actions.  First, each company must adopt a training program to regularly train appropriate staff regarding the company’s marketing code of conduct.  All sales and marketing staff must receive this training.  Second, each company must conduct an annual audit to monitor compliance with its marketing code of conduct.  Third, a company must adopt procedures for investigating non-compliance with its code.  Finally, each company must identify a compliance officer responsible for developing, operating, and monitoring the code.

    Each company subject to this law must also make an annual report to the Nevada Board of Pharmacy.  The report must contain: (1) a copy of the company’s marketing code of conduct; (2) a description of its training programs; (3) a description of its investigation policies; (4) the name and contact information of the responsible compliance officer; and (5) a certification that the company has conducted its annual audit and is in compliance with the law.  The legislation also directed the Board of Pharmacy to “adopt regulations providing for the time of the submission and the form of the information required.”  The date of the initial report was not specified in the statute.

    By Bryon F. Powell

    Categories: Miscellaneous

    FDA Publishes Final Rule on Dietary Supplement cGMPs & Issues Interim Final Rule on Dietary Ingredient Identity Testing

    At long last, 13 years after the Dietary Supplement Health and Education Act (“DSHEA”) of 1994 authorized their creation, and four years after publication of the proposed rule, FDA issued its final current Good Manufacturing Practice (cGMPs) regulations for dietary supplements on June 25, 2007. FDA’s press release announcing the new regulations is available here.

    The highly anticipated final rule establishes the minimum level of GMPs for the manufacturing, packaging, labeling and holding of dietary supplements. The regulations aim at ensuring the identity, purity, strength, and composition of a dietary supplement and at guaranteeing that a “dietary supplement is manufactured, packaged, held, and labeled in a consistent and reproducible manner.”  Requirements address identity testing for incoming dietary ingredients, quality control, design and construction of manufacturing plants, personnel qualifications, use of written procedures, record keeping, returned dietary supplements, and consumer complaints.

    In response to the more than 400 comments FDA received in response to the March 2003 proposed rule, the Agency revised and reorganized the various regulatory provisions.  New 21 C.F.R. Part 111 now consists of 16 subparts rather than the original eight subparts.  The preamble to the final rule includes a chart of the reorganization and renumbering of various sections facilitating a comparison of the final and proposed rules. 

    The most important and obvious change is that the final rule does not apply to dietary ingredient suppliers and manufacturers.  The burden of compliance with cGMPs fully lies with the dietary supplement’s manufacturer and requires dietary supplement manufacturers to test 100% of the incoming dietary ingredients.

    Concurrent with the final rule, however, FDA published an interim final rule providing an alternative to the 100% identity testing requirement.  In the interim rule, FDA recognizes that under some circumstances “a system of less than 100 percent identity testing would [not] material[ly diminish the] assurance of the identity of the dietary ingredient.” Thus, the interim rule provides a petitioning process for exemptions to the100% testing requirement.  FDA requests comments on what type of information would satisfy the exemption. Comments are due by September 24, 2007.

    Other notable differences between the proposed and final rules include:

    • Increased requirements for written procedures for, among other things, manufacturing operations, quality control operations, training of personnel, laboratory operations, holding and distributing operations, and for the handling of returned dietary supplements.

    • Reduced requirements for testing finished batches.  The final rule allows testing of a “subset of finished dietary supplement batches [identified] through a sound statistical sampling plan” rather than testing of all finished batches.

    • Because validated testing methods for the identity of dietary ingredients often may not be available, the final rule allows use of a “scientifically valid method” instead of a “validated testing method.”

    • The final rule replaces the proposed requirement for a “quality control unit” with “a requirement for quality control operations performed by quality control personnel.”  Quality control personnel must have “distinct and separate responsibilities related to performing [their] operation” and non-quality control activities by these designated individuals are not restricted.  Quality control personnel must supervise and monitor the testing and evaluate the results and need not perform the actual testing and examination.

    • Increased flexibility regarding qualification of employees and design of manufacturing facilities.   For example, the final rule (unlike the proposed rule) does not exclude employees who are a potential source of microbial contamination from the premises, but excludes such individuals only from areas where contamination of the dietary supplement may occur. 

    Both the final GMP regulations and the interim final rule take effect on August 24, 2007, with a three-year phase-in process to limit disruption of businesses. Companies with more than 500 employees must comply by June 2008; those with 20-500 employees by June 2009; and those with less than 20 employees by June 2010.  FDA will review petitions for an exemption from the 100% identity testing requirement only once the compliance date for a particular manufacturer has passed.

    By Riëtte van Laack

    Congress Once Again Requests the GAO to Put Dietary Supplements Under the Microscope

    On May 14, 2007, Representatives John Dingell (D-MI), Henry Waxman (D-CA), and Bart Stupak (D-MI) sent a letter to the Government Accountability Office (“GAO”) requesting that the office update its July 2000 report on the safety of dietary supplements and functional foods.  Congress’ increased scrutiny of dietary supplement regulation has been anticipated since the November 2006 election and the change in control of Congress.

    In its July 2000 report, GAO identified three major weaknesses in the dietary supplement and functional food regulatory system: (1) a “lack of a clearly defined safety standard for new dietary ingredients;” (2) a “lack of safety-related information on [some product] labels;” and (3) FDA’s failure to investigate “reports [about] health problems potentially caused by” dietary supplements and functional foods.  Several changes have occurred since the report was issued.  For example, the congressional letter cites FDA’s 2004 ban on ephedra-containing supplements, the Bioterrorism Act of 2002 (requiring registration of dietary supplement manufacturers to improve traceability of products), and the enactment of the Dietary Supplement and Nonprescription Drug Protection Act of 2006 (introducing a mandatory adverse event reporting system for dietary supplements and non-prescription drugs) as significant improvements that may help FDA ensure the safety of dietary supplements.  Nevertheless, Congress continues to be concerned about the safety of dietary supplements, and the May 2007 letter asks GAO to determine “what challenges remain.”

    Specifically, the letter requests that GAO examine three different aspects of FDA’s activities concerning dietary supplements.  First, based on the ephedra experience, the lawmakers question FDA’s ability to monitor emerging safety concerns associated with dietary ingredients.  Although the Dietary Supplement and Nonprescription Drug Protection Act of 2006 does not become effective until December 22, 2007, the letter asks GAO to determine FDA’s progress in implementing this law and to evaluate whether it provides FDA with adequate authority to prevent a repeat of the ephedra experience. 

    Second, the letter raises a concern about the safety of the use of dietary ingredients in conventional food products (suggesting that such use is increasing), and requests that the GAO investigate FDA’s effectiveness in monitoring associated safety issues.

    Finally, the letter expresses concern about consumer confusion which, according to the lawmakers, “has increased as the number of dietary supplement claims have proliferated.”  Although this is not a safety issue, the letter requests information about FDA actions to “ensure that consumers understand label claims and have adequate information about the safety and efficacy of dietary supplements.”

    By Riëtte van Laack

    FDA Postponement of 2008 Annual Registration for All Registered Medical Device Establishments

    The FDA announced it is postponing the annual registration of medical device establishments for 2008. The agency said this is a temporary action and it expects to resume annual registrations in October or November 2007.  Establishments that are already registered for 2007 are valid until Dec. 31.

    The FDA said it is postponing registration because "upcoming changes may significantly change the way [device manufacturers] register . . . establishment[s] and list . . . devices," including the possibility of electronic registration and listing, simpler registration and listing requirements and provisions under the Bioterrorism Act and the Medical Device User Fee and Modernization Act.

    FDA also said that it is working to revise its registration and listing regulations to help foreign establishments meet the statutory requirements of  the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (P.L. 107-188, the “Bioterrorism Act”), which requires each foreign establishment to provide, as part of its registration, the name of each known importer of the establishment’s devices and the name of each person who imports or offers to import the device into the United States.

    Manufacturers with questions should call (240) 276-0111 or send an email to device.reg@fda.hhs.gov.

    Categories: Medical Devices

    Ex-FDA Official Publishes White Paper on Navigating Quality System Regulations for Combination Products

    In a recently published white paper (registration required), Steven Richter, a former FDA official and President and Chief Scientific Officer of Microtest Labs, discusses the regulatory challenges facing combination products.  The market for combination products is growing such that it is estimated to reach approximately $9.5 billion in 2009, up from $5.9 billion in 2004, according to one analyst.  Another survey estimates that 30% of new products in development are combination products.  This increased interest is due in part to the unique therapeutic benefits of combining drugs and medical devices, which can, for example, deliver drug to specific areas of the body. 

    FDA decides which center governs a combination product based on its primary mode of action (PMOA).  A product that has a pharmaceutical PMOA will be governed by the Center for Drug Evaluation and Research (CDER).  Likewise, a product with a device PMOA will be governed by the Center for Devices and Radiological Health (CDRH).  Different quality regulations, however, apply to each product:  good manufacturing practices (GMPs) (21 C.F.R. Parts 210, 211) apply to drugs, biologic product standards (21 C.F.R. Part 610) apply to biologics, and quality system regulations (QSR’s) (21 C.F.R. Part 820) apply to devices.  Richter maintains, however, that a combination product manufacturer’s “main regulatory foundation must be the drug GMP’s” and that the GMP system must “address[] some of the issues with the device QSR’s.”

    Richter predicts that, as FDA continues to shift its regulatory focus from product to process, the largest challenge for combination product manufacturers will be “during the scale-up process.”  This is in part because “additional quality control (QC) measures are required to determine process scale-up parameter shift.”  Richter also expects FDA to issue guidelines specific to combination products that incorporate Process Analytical Technology (PAT) initiatives and design of experiments (DOE) requirements “regarding both small molecule and large molecule process design and scale-up.”  Moreover, Richter believes FDA will “increase[] cGMP regulatory action that affects both laboratory and manufacturing” as a result of its guidelines. 

    By:  Carrie S. Martin

    Categories: Uncategorized