Last month, the FTC announced and posted a prepublication of its proposed changes to its guides concerning the use of endorsements in advertising (Endorsement Guides).

The Endorsement Guides date back several decades. Since the publication of the original Endorsement Guides in 1975, FTC has made several amendments to address modern developments, such as internet advertising and social media.  The most recent version of Endorsement Guides dates from 2009.

In 2020, as part of its regulatory review process, the FTC issued a notice for comments  regarding the Endorsement Guides.  It posed 22 specific questions and received more than 100 comments in response.

The proposed rule, to be published in the Federal Register, is based on these comments.

Among other things, the proposed revisions include an expanded definition of endorser (to include fabricated endorser), a new definition of “clear and conspicuous disclosure” (tightening the standard), and clarification that endorsers and intermediaries, such as advertising agencies, may be liable for misleading or unsupported representations.

Disclosures are an important aspect of endorsements.  Disclosures must be clear and conspicuous.  FTC recognizes that in deciding whether the disclosure is clear and conspicuous, it is important to consider the target audience. Notably, FTC discusses various comments regarding disclosures in advertising to children and whether such disclosures would be effective. Before proposing guidance regarding advertising disclosures for this target group, several factors need to be considered, including the relevance of age and the type of advertising media. FTC has planned a public workshop on October 19, 2022 to discuss issues related to disclosures in advertising to children.

Comments on the proposed revision can be submitted until 60 days after the publication of the proposal in the Federal Register. Anyone involved in advertising using endorsements, testimonials and reviews would be well-advised to review the proposal and consider the potential consequences.

In 2017, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule to significantly decrease the rate the government will reimburse 340B hospitals in 2018 for outpatient prescription drugs from average sales price (“ASP”) plus 6% to ASP minus 22.5%.  82 Fed. Reg. 52494 (Nov. 13, 2017).  CMS noted that 340B covered entities already enjoy significant discounts purchasing these drugs under the 340B drug pricing program—estimated to be as much as 33.6%  of ASP—and that CMS’ generous reimbursement rates “generate significant profit” for these hospitals.  CMS estimated a savings of $1.6 billion annually, and continued the same reimbursement cuts for 2019.

Within days after the December 2017 rule was published, several hospital groups sued to enjoin HHS from implementing the rule.  The hospitals argued that the profits helped them offset the considerable costs of providing healthcare to the uninsured and underinsured in low-income and rural communities, something that Congress was well aware of and intended when it passed the Medicare Prescription Drug, Im­provement, and Modernization Act in 2003.  In 2019, we blogged that the District Court found for the plaintiffs, holding that CMS did not have the statutory authority to make such a change without first conducting a hospital acquisition cost survey data. See  42 U.S.C. §1395l.  The District Court opinion was subsequently reversed by the D.C. Circuit, but today, the Supreme Court reversed again and upheld the District Court’s opinion in American Hospital Assn v. Becerra, No. 20-1114, 596 U. S. ____ (2022).

Writing for a unanimous court, Justice Kavanaugh explained that the Medicare statute provides CMS a choice between two options on how to set reimbursement rates for drugs provided in the hospital outpatient setting.  See 42 U.S.C. § 1395l(t)(14)(A)(iii).  Under option 1, the agency must conduct a survey of the amount that hospitals pay to acquire the prescription drugs, and set a reimbursement rate based on the hospitals’ “average acquisition cost” for each drug.  Op. at 3 (citing §1395l(t)(14)(A)(iii)(I)).  Under this option, HHS may vary the reimbursement rate for different groups of hospitals.  Id. Option 2 applies only if HHS has not conducted such a survey.  In this case, the agency must set reimbursement rates using each drug’s “average price” charged by the manufacturers for the drug, as “calculated and adjusted by the Secretary as necessary for purposes of” this statutory provision.  See id. (citing §1395l(t)(14)(A)(iii)(II)).  The statute sets this  “average price” as ASP plus 6%.  See id. (citing §1395w–3a).  Critically, option 2, unlike option 1, does not authorize HHS to vary reimbursement rates for different groups of hospitals.  Id.  Before 2018, CMS always relied on option 2 to set reimbursement rates at ASP plus 6%, and set this rate uniformly for all hospitals.  See op. at 3-4.

In reducing the 2018 and 2019 drug reimbursement rates for 340B hospitals, HHS acknowledged that it had not conducted a survey of hospitals’ acquisition costs.  82 Fed. Reg. at 52496.  Nonetheless, HHS pointed to its statutory authority under option 2 to “adjust” the average price “as necessary for purposes of” the statute.  Id. at 52499.  HHS claimed that its authority to “adjust” the average price for each drug also implicitly encompassed the authority to vary the reimbursement rates by hospital group.  Op. at 5-6.

After finding that the statute was subject to statutory review, the Court turned to the merits of the case.  According to the Court, under the text and structure of the statute, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals because it did not conduct a survey of hospitals’ acquisition costs.  The Court held that when it is setting or adjusting rates under option 2, HHS may not vary the reimbursement rate by hospital group.  According to the Court, Congress carefully crafted the goals and the means of ensuring proper reimbursement rates. Op. at 9.  The statute expressly authorizes HHS to vary rates by hospital group but only if it has conducted such a survey.  Id. at 10.  The Court characterized the survey requirement as “an important procedural prerequisite” or protection before HHS may target particular groups of hospitals for lower reimbursement rates.  Absent that survey data, as Congress mandated, HHS may not make “’billion-dollar decisions differentiating among particular hospital groups.’”  Id. (citing 967 F. 3d, at 837 (Pillard, J., dissenting).  Responding to HHS’s argument that the 340B hospital rate cut was within its authority to “adjus[t]” the average price as necessary for purposes of” the statute, the Court held that the authority to adjust the average price up or down does not confer authority to vary the reimbursement rates by hospital group unless HHS has conducted the re­quired survey of hospitals’ acquisition costs.  To read option 2 to allow CMS to vary the reimbursement rate by hospital group would render option 1 irrelevant.

Although this case concerned rate setting for 2018 and 2019, CMS has continued the same drug payment cuts for 340B hospitals in 2020, 2021, and 2022.  After the District Court struck down CMS’s rate cut, but before the DC Circuit’s reversal of the lower court decision, CMS announced that it would initiate a survey of 340B drug acquisition costs for 340B hospitals for certain quarters of 2018 and 2019, which might then provide a basis under option 1 for reducing drug payment for 340B hospitals in those years and subsequent years.  See 85 Fed. Reg. 85866, 86042-86052 (Dec. 29, 2020).  It is uncertain when the survey will be completed, or whether its results will justify the rate reductions that CMS has sought to impose.  Unless and until CMS is able to lawfully reduce drug payment rates to 340B hospitals based on the acquisition cost survey results, compliance with the Supreme Court decision will presumably require CMS to align its drug payment policy for 340B hospitals with the ASP+6% payment rate applicable to other hospitals in all affected years.

Hyman, Phelps & McNamara, P.C.’s Dara Katcher Levy will be presenting at the DIA 2022 Global Annual Meeting being held this June 19-23 in Chicago, IL.  Dara will be joining an expert panel as part of the Medical Affairs and Scientific Communications Track to discuss manufacturer communications related to Healthcare Economic Information (HCEI) and engaging with payers and formulary decisionmakers as part of Pre-Approval Information Exchange (PIE).  Come join Session #135, Demystifying the Delivery of Healthcare Economic Information (HCEI) by Medical Affairs and Market Access Personnel on Monday, June 20th at 4-5 pm Central.  Information about the meeting and registration can be found here.

Market exclusivities—patent or otherwise—are a critical part of the Hatch-Waxman compromise, intended to encourage continued innovation in spite of the introduction of generic competition.  Even a month of market exclusivity is financially lucrative enough to fight for, so it is no surprise that a company would go to the mat for an extra 13 months of patent exclusivity.  And that’s exactly what Eisai did back in 2016 when it submitted a supplement to its request for a patent term extension (PTE) asking FDA to revise its “date of approval” calculation for purposes of PTE calculation for its anti-epileptic drug product, Fycompa (perampanel), after Congress passed the “Improving Regulatory Transparency for New Medical Therapies Act” (IRTNMTA).

IRTNMTA, as we explained back in 2016, amended the FDC Act, the PHS Act, the PTE statute, and the Controlled Substances Act (CSA) to provide, among other things, that the “date of approval” of an NDA, NADA, or Section 351(a) BLA for a controlled substance awaiting a scheduling determination by the DEA (or the “covered date” for PTE submission purposes) is the later of the date of NDA, NADA, or Section 351(a) BLA approval, or “the date of issuance of the interim final rule controlling the drug.”  This provision was necessary because controlled substances approved by FDA could not be marketed until the DEA issued a final determination scheduling the controlled substance, which sometimes takes years.  Such a delay can eat away at exclusivity and patent life periods, undercutting the incentives to innovate.  IRTNMTA served to correct that issue by pushing the date of approval—and the start of exclusivity—to the date of DEA scheduling.

Nearly 6 years after Eisai asked FDA to recalculate its PTE using its controlled substance scheduling date as date of approval rather than its actual date of approval, FDA flatly denied its request.  Though Eisai’s Fycompa was initially approved in October 2012, it wasn’t scheduled until January 2014, meaning that Eisai lost a little more than a year of patent life awaiting scheduling—in addition to the time spent in regulatory development and review.  Because IRTNMTA pushed the approval date for controlled substances back to the date of DEA scheduling, Eisai argued that the Fycompa date of approval should be pushed back, as its PTE application was pending at the time of the November 25, 2015 IRTNMTA enactment.  After all, Eisai argued, IRTNMTA was a remedial statute, designed to address the inequitable loss of exclusivity—including patent term—while the DEA controlled the product; retroactive application of the statute makes sense to remediate said issue in any outstanding PTE application, regardless of when the relevant product had already been scheduled or approved.

In what reads like a Motion for Summary Judgment, FDA dismissed every argument that Eisai made with respect to the retrospective application of IRTNMTA.  The crux of FDA’s point was that “Like the PTO, FDA concludes . . . that IRTNMTA does not apply to a patent term extension application for a drug approved by FDA and scheduled by DEA before IRTNMTA was enacted.”  Plain language, FDA explained, “evinces clear intent that it applies only to drugs scheduled after enactment.”  Because the statute “change[d] the process by which DEA makes a scheduling decision that identifies the controls under which a new drug with abuse potential can be marketed and sets a date by which that process must take place,” it logically follows that it applies only to scheduling decisions that have not yet occurred.   Eisai’s proposed reading of the statute would “yield absurd results,” as the Regulatory Review Period, and therefore the appropriate extension, could not be calculated.

FDA next looked to legislative intent.  Citing the presumption against retroactivity, FDA saw no evidence that Congress intended retroactive application.  In fact, legislative history showed the exact opposite: The Congressional Budget Office had interpreted the provision to affect drugs approved and scheduled after enactment, so Congress “could have amended the text to avoid ambiguity and foreclose this interpretation.”  Looking again to the plain language, FDA stated “Congress was aware that Fycompa and other already-scheduled drugs were impacted by the non-inclusion of post-approval DEA scheduling activities in the regulatory review period as the statutorily defined, and yet Congress did not draft IRTNMTA so as to apply to those drugs.”  On the same basis, FDA also denied Eisai’s argument that IRTNMTA should apply to pending applications.

Most interestingly, FDA rejected all of Eisai’s policy arguments.  Though Eisai argued that, as an innovator, it was entitled to the benefit of the Hatch-Waxman compromise, and the delay in scheduling wiped out a year of patent protection, FDA could not accept Eisai’s argument that IRTNMTA should be “construed liberally” simply because it was intended as a remedial statute—or at least as liberally as Eisai requested.  This is because, FDA explained, “liberal does not mean unfettered.”  Further, FDA countered with a policy argument of its own: Eisai argued that no generic reasonably could have relied on the patent expiration dates currently listed in the Orange Book—more than nine years away—and thus would not be hurt by a further patent term extension; in response, FDA stated that that position “seems to overlook that enabling and encouraging generic development to begin before expiration of innovator patents was a purpose of the Drug Price Competition and Patent Term Restoration Act of 1984 that created the patent term extension provisions at issue here.”  Two ANDAs referencing Fycompa had been submitted to FDA by October 2016, and the relevant patent listing in the Orange Book was directly relevant to the decision each applicant made to submit an ANDA referencing Fycompa.  Further extension of the patent would upset that reliance.

Consequently, FDA concluded “that application of IRTNMTA to Fycompa would be retrospective, that IRTNMTA should not be applied retrospectively, and that . . . applying IRTNMTA in these circumstances would have an impermissible retrospective effect.”  Ultimately, FDA denied Eisai’s request to change the date of approval, and the calculation of the extension remains the same, as does the expiration of the relevant patent listed in the Orange Book.  The decision does not have an impact on too many products, but the Agency’s position on retroactive application of statutes—particularly those statutes that would extend a market exclusivity—can probably be extrapolated to many situations.  And from the thoroughness of this decision, it seems like FDA is prepared to defend the presumption against retroactivity in court.  We have to wait to see if that happens, but exclusivity is always fodder for some interesting litigation.

Legal doctrines can be like parrots.  Sometimes it is hard to know if they are dead or just resting.

Under the False Claims Act (FCA), if a company’s fraudulent conduct induces a governmental entity to enter into a contract with the company, then any claims for payments under that contract are false.  This fraudulent inducement theory is well‑established by statute and case law.  An offshoot legal doctrine that relators invoke to expand this FCA theory of liability has been termed “fraud-on-the FDA,” and suggests that fraudulent conduct directed at one governmental entity (FDA) renders a claim for payment to a different governmental entity (CMS) to be false.

Back in 2016, the First Circuit’s decision in United States ex rel. D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016), was seen as a death knell for the fraud‑on-the-FDA theory in FCA cases.  The First Circuit essentially ruled that an allegation of fraud on FDA cannot simply allege that the defendant made material misrepresentations that may have induced FDA’s decision.  Rather, a relator must plead official FDA action demonstrating fraud in the inducement.  That rarely happens.

In subsequent years, however, it appears that not all courts have adopted the holding of the ev3 decision.  Specifically, last year, the Ninth Circuit allowed a fraud‑on‑the‑FDA claim to proceed, even though the supporting allegation was that material information was withheld that might have led FDA to a different approval decision.  There was no allegation of official FDA action confirming an alleged fraud.

So is fraud‑on‑the‑FDA dead or is it just resting?

The latest attempt to say the parrot is alive comes from the Southern District of Florida.  In that case, the DOJ filed a statement of interest, arguing that a violation of the Federal Food, Drug, and Cosmetic Act (FDCA) or implementing regulations may sometimes be “material to the government’s decision whether to pay for the affected product, and thus relevant in an FCA case.”

In the underlying case, the relator alleged that the defendant Trividia Health, among other things, hid material information that could have led FDA to require a product recall, and thus that payments for affected devices were based upon false representations.  The DOJ’s statement of interest claims that these or similar facts could potentially support a fraud-on-the-FDA theory of FCA liability.  The DOJ contends that a failure to report adverse events as required under FDA’s regulations could mask problems that would have led FDA “to institute or require a product recall.”

The DOJ notes that “device manufacturers are required to investigate adverse events and report information to the FDA within 30 days of becoming aware of information that the marketed device “[h]as malfunctioned . . . and would be likely to cause or contribute to a death or serious injury if the malfunction were to recur.” If there were a failure to comply, “subsequent claims relating to the affected devices could be rendered ‘false or fraudulent’ because the government would not have paid the claims for those affected devices but for the defendant’s conduct.”

This position directly contradicts the First Circuit’s ev3 decision.  The DOJ effectively is urging the trial court to accept a complaint based on mere theorizing that FDA would have instigated a recall had proper adverse event reporting taken place.  If the ev3 decision were applied instead, such allegations would be insufficient to establish causation.  It would be necessary for FDA to institute an actual recall or otherwise confirm the alleged fraud.

Many of the First Circuit’s reasons for rejecting fraud‑on‑the‑FDA also apply to the DOJ’s statement of interest.  As just one example, the First Circuit was concerned that allowing juries to find FDA has been defrauded in the premarket review process could lead to manufacturers to “swamp FDA with more data than it wants.”  Likewise, in the DOJ’s hypothetical, manufacturers would be incentivized to report all malfunctions to avoid the possibility of FCA liability, regardless of whether a malfunction met the regulatory standard for reporting.  The increased number of reports would likely swamp FDA’s data systems, creating even more signal to noise than already exists.

(Note the vagueness of the regulatory standard in the first place.  One of us has argued that this standard is so vague it potentially violates the constitutional requirements of fair notice and due process.)

There are other objections to the DOJ’s proposed use of adverse event reporting to support a fraud‑on‑the‑FDA theory.  The DOJ, however, does not attempt to answer any objections.  Rather, the DOJ merely suggests to the court that the fraud-on-the‑FDA theory might still be alive, without trying to argue persuasively for it.  The DOJ seemingly just wants to convince the court to refrain from any decision that would potentially preclude the DOJ from invoking a fraud‑on‑the‑FDA theory in future cases.

In other words, as far as the DOJ is concerned, the parrot is just resting.

While the Jackson 5 hit “ABC” predates even these rapidly aging bloggers (first performed on Dick Clark’s American Bandstand in 1970, and we challenge you to name all five members of the Jackson 5, we tap out after Michael, Tito, and Jermaine), its basic wisdom remains unchallenged when it comes to developing promotional materials.  Althera Pharmaceuticals, LLC would have been wise to follow this advice in formulating its professional piece for healthcare professionals for ROSZET (rosuvastatin and ezetimibe) tablets, for oral use (here and here).  ROSZET is indicated to reduce cholesterol in certain groups.  As discussed further below, Althera chose to mess with both the A, B, C’s and the 1, 2, 3’s and got the untitled letter.

Let’s take these in reverse order, as FDA did.

1, 2, 3, Or, Don’t Make Up the Numbers

FDA’s primary complaint about the piece is that Althera included claims of cholesterol reduction ranging from 64% to 72% depending on the dose.  Pretty impressive dose reductions, no?  There’s only one problem:  These numbers “are not the findings of any study of Roszet.  Rather, the analysis used to generate these percentages combines the results of two separate and unrelated studies” from the package insert.  (Untitled Letter at 2).  The two studies were a monotherapy study that included rosuvastatin and a combination study that added ezetimibe to ongoing statin therapy.  Here’s the kicker:  the latter study didn’t even include rosuvastatin as one of the statins under consideration.  FDA did all but write “we shouldn’t have to say this, but don’t make numbers up.”  FDA had similar complaints about other claims.

As seemingly obvious as this is, there is some more generalizable advice when creating promotional materials.  Companies can’t just average information from different studies.  If the studies have different time frames, different patient populations, different dosing regimens and the like, you can’t just combine the numbers and average them.  Care must be taken that the combination of studies is scientifically and statistically valid.  When in doubt, leave it out.  (budding lyricists here.)  And of course, don’t make up the numbers.

A, B, C, Or Size Does Matter

OPDP’s primary concern with the risk presentation is that the prominence and readability do not reasonably compare with the information on the benefits of ROSZET.  Whereas the claims of benefits are presented in conjunction with colorful graphics (much like the plaid shirts our mothers dressed us in when the Jackson 5 were big – check out the threads in these two originals of your bloggers here and here) and with large bolded headlines and lots of white space, the risk information, including contraindications and warnings and precautions were written in small font and paragraph format and relegated to the bottom of the first page.

Context matters not only to the substance of claims and safety information, but to the presentation of such information as well.  It need not be a 1:1 relationship, but it does need to reasonably compare.

Teacher’s Gonna Show You, How to Get an “A,” Or, Let’s Not Forget About 21 C.F.R. §202.1

Promotional pieces like this have us scratching our head.  On the efficacy side, maybe the focus was on the claims being “consistent” with the labeling, forgetting that the claims still needed to be adequately substantiated.[1]  And, on the safety side, maybe the inclusion of extensive “Important Safety Information” led to forgetting that fair balance is not just about quantity, but about comparable prominence and readability to the efficacy information presented.  It’s times like these when we would highly encourage a re-read of 21 C.F.R. §202.1 to level-set on regulatory requirements.

We wish there had been a TV or radio ad so we could work in the do, re, mi part of the chorus and really beat this dead horse, but there isn’t, so we’ll close with this.  Don’t get tripped up on the basics.  Make sure the numbers are scientifically valid and make sure the risk information is presented in a roughly equivalent manner to the claims of efficacy.  In other words, all members of marketing departments and promotional review committees would be well served to remember that:

Reading, writing, arithmetic
Are the branches of the learning tree
But without the roots of love everyday
Your education ain’t complete

[1]              As a reminder, FDA’s 2018 Guidance, Medical Product Communications That Are Consistent With the FDA-Required Labeling Questions and Answers, provided a mechanism for communicating “consistent” claims that are scientifically appropriate and statistically sound (SASS).  While the Guidance recognizes that the SASS standard may be a lesser standard than “substantial evidence,” claims still require scientifically appropriate substantiation.

CDRH appears to be taking another step towards returning to pre-pandemic life.  On May 31, Drs. Shuren and Maisel announced that OHT7 (formerly OIR) will now be accepting all types of pre-submissions (see announcement here).  As you’ll recall from our earlier post (here), OHT7 had only been accepting a limited number of non-COVID related pre-submissions since late last year and prior to that was only accepting pre‑submissions for COVID-related tests.

This update will likely come as a relief to many in the in vitro diagnostic space that have been wanting to seek feedback on their non-COVID related tests in anticipation of a premarket submission.  The announcement notes the sizable number of COVID and non-COVID related submissions – over 1,000 COVID EUAs and pre-EUAs for devices alone since the start of the year – that CDRH has been handling during the pandemic.

An unanswered question from the Center’s update, however, is how quickly these newly accepted pre-submissions will be reviewed.  In the Center’s December update, it noted that pre-submission review times were extended to 120 days, as compared to the usual 70-day time frame, in many of the busiest Offices, including OHT7.  While the announcement touts additions of personnel and funding to support this move, we expect industry may need to be patient while OHT7 adjusts to the inevitable influx of pre‑submissions headed its way.

Given the pent-up demand for pre-sub reviews and the continuing stream of COVID EUAs, companies should not expect that OHT7 will quickly return to the pre‑sub timeframes that pre-dated COVID.  This is particularly true because the pandemic is not over (despite everyone being over it!).  In fact, it is widely expected that HHS will extend the Public Health Emergency when it comes up for renewal in July.  With this most recent COVID wave, many industries are seeing an uptick in personnel being out sick, and OHT7 is presumably not exempt from this trend.  While it is welcome news that pre-subs will be accepted, companies should not be surprised if it takes weeks – or even months – longer to get OHT7’s feedback.

As the User Fee Acts move through Congress, it has been clear that FDA is using them as a vehicle to legislatively overturn some big court losses over the last few years.  As faithful readers of our blog know, FDA’s broad interpretations of its governing statute have not always fared that well in the courts.  In each of three cases—Genus v. FDA, Catalyst Pharms., Inc. v. Becerra, and Judge Rotenberg Educ. Ctr., Inc. v. FDA—the D.C. Circuit and the Eleventh Circuit Court of Appeals has limited the Agency’s discretion to interpret the statute as it sees fit.  Unsurprisingly, FDA hasn’t been too happy with these decisions and is now looking to Congress for a legislative fix to each of these losses.

While industry has been celebrating its judicial success, FDA has been quietly lobbying Congress to revise its governing statutes to reverse the agency’s losses.  This language was added without hearings or any public input.  This is not how the system is supposed to work.  If it were, the public notice provisions embedded into the Administrative Procedure Act would have no value; the agency could circumvent public input by going to Congress.  But that’s exactly what FDA is doing here.

Underscoring the unfairness of the legislative fix, several of the plaintiffs in cases overturning FDA interpretation were not even aware of the pending legislation until days before it went to committee for a vote.  This end-run obviates the purpose of public input and undermines democracy.  It also leads to bad outcomes, since Congress hears from a single stakeholder: FDA.  Though the American system of government is built to prevent the concentration of power in a single body, FDA’s actions here threaten the administrative process and basic notions of transparency, and, in the case of the JRC decision, federalism, as explained in this article by Rich Samp of the New Civil Liberties Alliance.

Hyman, Phelps & McNamara, P.C. Directors Jeffrey N. Gibbs and Sara W. Koblitz discuss FDA’s activities with regard to these three cases in an article published by the Washington Legal Foundation last week.  Gibbs and Koblitz raise concerns about the use of the legislative fix to negate the judiciary and eliminate the public’s participation in setting policy.  Unfortunately for industry, it seems that when FDA can’t get what it wants, it will go to Congress and lobby.

On June 3, FDA announced, via email to industry, that it plans to withdraw the guidance “Effects of the COVID-19 Public Health Emergency on Formal Meetings and User Fee Applications for Medical Devices–Questions and Answers (Revised).”  This guidance did two things: (1) automatically extended hold times for additional information requests (e.g., PMA major deficiency letters, 510(k) additional information requests) by 180 days; and (2) communicated that all advisory committee meetings would be held virtually.  This notice will be published in the Federal Register (here).  The guidance will formally be withdrawn 30 days after the notice is published in the federal register (the “Withdrawal Date”).

So, what does this mean for submissions that have already received a hold letter and were counting on the additional 180 days to respond?  Not to worry.  Submissions that received a hold letter on or before the Withdrawal Date will still have the automatic extension.  Submissions that receive a hold letter after the Withdrawal Date will not receive the extended response time – in other words, they will have to respond in the standard time (e.g., 360 days for a PMA major deficiency letter and 180 days for a 510(k) or de novo additional information request).

FDA’s notice acknowledges that the circumstances leading to this policy have not been completely resolved.  For example, many in industry are experiencing painfully long wait times at labs performing tests like biocompatibility.  Questions regarding biocompatibility and other tests that are typically performed by third-party laboratories or that require production units that may be constrained by on-going supply chain issues, are not uncommon in hold letters.  We are hopeful that FDA will consider extra flexibility even after the policy formally ends given that many sponsors may struggle to meet the standard deadlines in light of on-going industry conditions.

Finally, the notice states that FDA will “assess the appropriate venue for advisory committee meetings, keeping in mind FDA’s successful implementation of virtual advisory committee meetings.”  FDA will continue to announce the location of advisory committee meetings via the Federal Register.  There is no indication from this notice or other FDA communications as to when in-person advisory committee meetings or other industry meetings will resume.

Hyman, Phelps & McNamara, P.C.’s James Valentine and Ellis Unger will be presenting at the DIA 2022 Global Annual Meeting held this June 19-23 in Chicago, IL.  This meeting brings together industry, regulators, academics, and patients to discuss global and local challenges in the life sciences industry.  James and Ellis will be participating in sessions covering key topic areas that our firm’s drug development client face on a daily basis:

FDA and EMA Benefit-Risk Assessments: Can We Optimize and Is There an Enhanced Role for Sponsors and Patient Preferences? (June 20, 4-5pm Central)

Ellis Unger will be joining an expert panel to review the EMA and FDA benefit-risk frameworks and how to optimize these processes.  Topics will include the addition of sponsor input to highlight critical considerations in the submission and suggestions for effective public communications.  As the former Director of the Office of Drug Evaluation-I and the Office of Cardiology, Hematology, Endocrinology, and Nephrology in CDER’s Office of New Drugs, Ellis brings important insights into implementing benefit-risk assessments. More information can be found here.

Patient-Focused Drug Development: Reflecting on a Decade of Insights (June 21, 11am-12pm Central)

It’s been 10 years since the FDA’s Patient-Focused Drug Development initiative was launched, and James Valentine joins a panel to share his lessons learned and future opportunities for engaging FDA.  His experience dates back to his involvement in helping develop and launch the program when at the Agency and has continued, having worked with dozens of patient advocacy organizations, including having helped plan and moderate three-fourths of the 55+ externally-led PFDD meetings held to date.  More information can be found here.

FDA Rare Disease Town Hall with CDER & CBER Center Directors (June 22, 2-3pm Central)

A recurring annual session not to be missed, James Valentine will be moderating a discussion with FDA officials on trends in the development and review of medical products for rare disease, including new regulatory tools and strategies to support this area of development and review.  This year James will be joined by CDER and CBER’s Center Directors, Drs. Patrizia Cavazzoni and Peter Marks, as well as a rare patient community perspective provided by Annie Kennedy from the EveryLife Foundation for Rare Diseases.  More information can be found here.

Information about the meeting and registration can be found here.

A little less than a year ago, it was PANDA-monium at FDA when the Agency created a new category of drug applications called the PANDA—or the Pre-Hatch-Waxman Abbreviated New Drug Application—which referred to abbreviated drug applications submitted and approved prior to the enactment of the modern-day abbreviated new drug application (ANDA) as part of the Hatch-Waxman Amendments in 1984.  Since 1984, generic drugs have been approved under ANDAs pursuant to section 505(j) of the Federal Food, Drug, and Cosmetic Act (FDCA); before 1984, no formal mechanism for an ANDA existed so FDA used sections 505(b) and 505(c) to approve follow-on drugs based on the Agency’s previous findings of safety and efficacy.  The Hatch-Waxman Amendments essentially codified FDA’s existing practices but follow-on products approved before 1984 technically are not called ANDAs.

Until August 2021, the pre- and post-1984 ANDA was a distinction without a difference: FDA treated the pre-1984 follow-on applications as ANDAs and listed them in the Orange Book as ANDAs even though they technically are NDAs.  However, with the 2017 revision to the Orange Book, which added a distinction between Reference Standards (RS) and Reference Listed Drugs (RLD), the pre-1984 ANDAs led to confusion, as they are RSs without RLDs.  In reinventing the pre-1984 ANDA as a PANDA, FDA has now decided to designate the pre-1984 ANDA as RLDs and treat them as 505(b) NDAs.  To implement this change, FDA solicited comments in a Federal Register Notice in August 2021 (which, to be clear, was not a rulemaking).

Notably, back in 1984, Congress contemplated PANDAs and instructed FDA to treat PANDAs as ANDAs.  Indeed, Congress expressly authorized FDA to continue approving ANDA products under its pre-Hatch-Waxman ANDA regulations even after Hatch-Waxman’s passage—and made clear that such applications should be treated no differently from 505(j) applications even after the Hatch-Waxman Amendments took effect.  See Pub. L. 98-417 § 105(b).  To that end, recognizing that PANDAs and ANDAs are essentially the same, Congress exempted PANDAs from prescription drug user fees in 1997, specifically listing as an exception to prescription drug user fee requirements “the same product as another product that was approved under an abbreviated new drug application pursuant to regulations in effect prior to the implementation of the Drug Price Competition and Patent Term Restoration Act of 1984.”

In the upcoming reauthorization of the User Fee Acts (here and here), however, the PANDA exception has been quietly removed from the prescription drug user fee provisions.  In so doing, is FDA signaling its intent to change the regulatory treatment of PANDAs from ANDAs to NDAs by essentially erasing PANDAs from the FDCA?  FDA’s quite clear position in the Federal Register Notice was that it will start treating PANDAs as NDAs, despite the Agency’s long history of treating PANDAs “similarly to 505(j) ANDAs . . . over the decades after the enactment of the Hatch-Waxman Amendments.”  But FDA only recently requested comments on the transition of PANDAs from 505(j) treatment to 505(b) treatment and has neither published its findings related to PANDAs.  Nor has FDA initiated a rulemaking to implement its changes to the regulatory scheme governing PANDAs. For that reason, this change seems a bit premature.

It is important to note that the change from treating PANDAs as ANDAs to NDAs is not insignificant.  It gives FDA authority to impose post-marketing requirements on PANDA holders, and it could expose them to state tort liability by removing them from the Pliva v. Mensing protections from which post-1984 ANDAs benefit.  Both of these consequences may be enough to push PANDA sponsors out of the market given the low volume of sales for many of these products, and that unavailability would preclude follow-on versions of these products.  But if that were not enough, FDA is now imposing hundreds of thousands of dollars annually of user fees on PANDA holders with little fanfare.  Given that some PANDA sponsors may now be paying both PDUFA fees and GDUFA fees depending on their product portfolios, removing the exemption from prescription drug user fees could be the final nail in the coffin for many PANDA sponsors.

On June 14-15 in Washington, DC, the Food and Drug Law Institute (FDLI) will hold its first in-person Annual Conference since 2019.  The conference brings together leading regulators and a wide range of stakeholders to discuss current issues and trends of importance to FDA-regulated industries.  Hyman, Phelps & McNamara, P.C.’s (HP&M) Ricardo Carvajal will be moderating a breakout session with Susan T. Mayne, Director of FDA’s Center for Food Safety and Applied Nutrition (CFSAN), and Douglas W. Stearn, Deputy Director, Regulatory Affairs, CFSAN.  In addition, HP&M’s Sara W. Koblitz and Anne K. Walsh will be moderating or speaking in sessions on FDA’s food-related priorities, the impact of “skinny labeling” on generics and biosimilars, and the latest developments in medical device enforcement and litigation.  Learn more and register here.  Sign up with the discount code annual15 for 15% off registration.

Things are getting hectic for those of us who advise clients on FDA inspections: FDA is busy addressing its backlog of foreign and domestic inspections.

As COVID raged, FDA understandably postponed many GMP (Good Manufacturing Practice) and “Bi-Mo” (Bioresearch Monitoring, usually of sponsors of clinical trials or clinical trial sites) on-site inspections.  Less understandably, FDA performed very few remote inspections over the last two years (see prior blogposts here, here, and here).  FDA has avoided labeling these as “remote inspections”, preferring the terms “Remote Interactive Evaluation” for manufacturing sites and “Remote Regulatory Assessment” for Bi-Mo.  Indications are the agency is now shifting to just the “Remote Regulatory Assessment” term, but apart from some niceties associated with in-person inspections, the fact is that remote activities can and do lead to regulatory consequences just as inspections do.

Anecdotally, though, FDA inspections have resumed.  We have several clients whose BLAs, NDAs or ANDAs have not been approved awaiting pre-approval inspections, and, months after their PDUFA dates, inspections are finally being scheduled, both within the United States and abroad.  Similarly, we are hearing both from clients and indirectly about companies that are not clients that several inspections relating to ongoing or completed clinical trials are finally being performed, even months after submission of documents that normally would have resulted in earlier inspections.

This is good news for some and bad news for others.  The good news for those with pending applications that have passed all other regulatory requirements is that review of the applications may no longer be stalled by delayed pre-approval inspections, although it seems like inspections in China are still lagging due to the uptick in COVID restrictions there.  Some companies that have been placed on the Import Alert list pending reinspections may finally find relief.  The bad news for many sponsors of clinical trials, manufacturers, laboratories, or Clinical Research Organizations is that FDA may find serious regulatory violations (or, at least, regulatory violations FDA considers to be serious: we reserve the right to argue that the violations are not so serious) that can have disastrous enforcement consequences, including clinical holds, withholding approvals of New Drug Applications or Abbreviated New Drug Applications, import detentions, Warning Letters, and, worst of all, shutdown injunction[1] requests or criminal investigations.

Time for a plug: two of your three bloggers (Dave and Doug) will be speaking at GMP by the Sea, a usually annual conference on hot topics of cGMP compliance that may result in FDA inspections, linked here.  GMP by the Sea was postponed twice because of COVID.  It looks like we will finally be able to resume being wined, dined, educated, crabbed, and networked this summer (conference is August 15 through 17, 2022, in Cambridge, Maryland, on the Eastern Shore of the Chesapeake Bay).

[1] The term “consent decree” denotes a negotiated settlement of a civil action, usually an injunction.  This occurs when the defendants choose to negotiate rather than contest the action in court.  Consent decrees may also occur in connection with seizure actions, but most often they are associated with injunctions.

Thanks to years of watching @eavoss of New Rockstars, we have a pretty good handle on the Marvel Cinematic Universe (“MCU”).  We know that Earth-199999, known in-universe as Earth-616, is the designated universe number for the main MCU; that there are a multitude of other universes (such as Earth-838 where the Illuminati reside . . . or resided at least); and that so-called “incursions” occur when two MCU universes collide with one another, resulting in the complete destruction of either one or both of them.

The mind-bending Multiverse has been on this blogger’s mind as of late.  You see, we are fortunate enough to often get our hands on pieces of draft legislation thought up by folks – like FDA – who peddle ideas on how to change the law.  Some of those ideas are pretty interesting (even if not yet fully baked).  For example, there’s the draft legislation we saw (and understand FDA put together) that would create a 505(b)(2) NDA-type of submission and approval pathway for certain biological products under the Public Health Service Act).  But other ideas are . . . well . . . destructive.  They may exist on another Earth in the Multiverse, but bringing them into our “Exclusivity Earth-616” would result in an incursion.

And that brings us to FDA’s draft legislation to make reality one of the Legislative Proposals the Agency included in its Fiscal Year 2023 Budget Justification.  As we noted in a previous post, FDA’s first (of fourteen) legislative proposal targets 180-day generic drug exclusivity, stating:

Amend the 180-Day Exclusivity Provisions to Encourage Timely Marketing of First Generics

In practice, 180-day patent challenge exclusivity is not operating as expected to encourage early generic entry, because this exclusivity is often “parked” by first applicants who either receive approval but do not begin marketing for extended periods of time following approval, or by first applicants who delay receiving final approval of their ANDAs for extended periods of time.  This proposal would substantially increase the likelihood that generic versions of patent-protected drugs will come into the market in a timely fashion, and that multiple versions of generic products will be approved quickly (leading to significant cost savings).  FDA is proposing to amend sections 505(j)(5)(B)(iv) and (D)(i)-(iii) of the FD&C Act, which govern the 180-day patent challenge exclusivity provisions, to specify that FDA can approve subsequent applications unless a first applicant begins commercial marketing of the drug, at which point approval of subsequent applications would be blocked by 180 days, ensuring that the exclusivity actually lasts 180 days (i.e., from the date of first commercial marketing by a first applicant until 180 days later) rather than for multiple years, as can occur under current law.

We also commented at length about this proposal in our previous post stating:

If the scent of this proposal smells vaguely familiar, it is.  It’s regime change!  It’s an effort to rework the current and longstanding ANDA Paragraph IV 180-day exclusivity incentive regime by replacing it with a new 180-day exclusivity regime modeled after the Competitive Generic Therapy (“CGT”) 180-day exclusivity regime created with the passage of the FDA Reauthorization Act of 2017 for drugs for which there is inadequate generic competition and for which there are no unexpired patents or exclusivities listed in the Orange Book at the time of original submission of an ANDA.

And we went on to comment – without the benefit of any proposed legislative language – how such an exclusivity system would be disastrous:

While the CGT 180-day exclusivity regime has operated quite well for drugs with inadequate generic competition and for which there are no unexpired patents or exclusivities listed in the Orange Book (as evidenced by the 130 CGT approvals thus far), using it as a blueprint for the approval of generic versions of brand-name drugs with dense patent thickets makes no sense.  What generic drug companies would be willing to invest millions of dollars in generic drug development and patent challenges for the potential of a hollow exclusivity incentive?  That is, because patent challenges often result in patent settlements that allow for generic competition (i.e., launch) prior to patent expiration, a CGT-like exclusivity regime that triggers the exclusivity only upon launch—which may occur years after ANDA approval—means that by the time launch occurs and exclusivity is triggered there will be no further approvals to which the exclusivity would apply.

Now that we have our hands on FDA’s draft legislative language, also titled “Amend the 180-Day Exclusivity Provisions to Encourage Timely Marketing of First Generics,” we can say this: We were correct . . . and it’s perhaps even worse than we thought!  (Though, on the bright side – at least for FDA – it would make the Agency’s job of implementing 180-day exclusivity almost effortless . . . and maybe that’s the point!)

The draft legislation would amend FDC Act § 505(j)(5)(B)(iv) as follows (with additions and deletions in red typeface):

(iv) 180-day exclusivity period.-

(I) Effectiveness of application.-Subject to subparagraph (D), if the application contains a certification described in paragraph (2)(A)(vii)(IV) and is for a drug for which a first applicant has submitted an application containing such a certification and has commenced commercial marketing, the application shall be made effective on the date that is 180 days after the earliest date of the-first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant.

(II) Definitions.-In this paragraph:

(aa) 180-day exclusivity period.-The term “180-day exclusivity period” means the 180-day period starting on the earliest date of first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant. During the 180-day exclusivity period, an application submitted by an applicant other than a first applicant may not be made effective. The 180-day exclusivity period does not affect an application submitted by an applicant other than a first applicant that received effective approval before the period started. ending on the day before the date on which an application that was submitted by an applicant other than a first applicant and that did not receive effective approval before a first applicant commenced commercial marketing could become effective under this clause.

The draft legislation would also amend FDC Act § 505(j)(5)(D)(i) to remove two of the six current 180-day exclusivity forfeiture provisions – the “failure-to-market” (FDC Act § 505(j)(5)(D)(i)(I)) and “failure-to-obtain-timely-tentative-approval” (FDC Act § 505(j)(5)(D)(i)(IV)) forfeiture provisions – while maintaining the remaining four forfeiture provisions (though renumbering them).  Coincidentally (yeah, right!), both of the forfeiture provisions that would be removed are the two most difficult and controversial provisions for FDA to administer.

Turning back to the amendments that would be made to FDC Act § 505(j)(5)(B)(iv), FDA’s proposal would put a first applicant’s 180-day exclusivity into effect to prevent approval of a subsequent Paragraph IV ANDA only once commercial marketing by a first Paragraph IV applicant has commenced.  Before the time 180-day exclusivity is triggered, a first applicant’s eligibility for 180-day exclusivity would have . . . you got it . . . zero benefit.  That point is explicit in the proposed statutory change: “During the 180-day exclusivity period, an application submitted by an applicant other than a first applicant may not be made effective.  The 180-day exclusivity period does not affect an application submitted by an applicant other than a first applicant that received effective approval before the period started.”

FDA’s proposal sets up the scenario where not only would eligibility for 180-day exclusivity have zero benefit, but the exclusivity, once triggered, could also have zero benefit, as any subsequent Paragraph IV ANDAs may already have been approved by the time a first applicant is able to commercially launch.  That’s ridiculous!  It makes all the more relevant our prior commentary that such an exclusivity regime for Paragraph IV ANDAs means “fewer ANDA approvals and launches,” which “ultimately means fewer choices for consumers and higher costs to the U.S. healthcare system.”  In other words . . . an incursion for “Exclusivity Earth-616.”

Over the past few years, this blogger – in prior blog posts (here, here, here, and here) and in Congressional testimony – has been pretty critical of efforts to significantly revise and weaken the 180-day generic drug exclusivity incentive and framework first established with the passage of the 1984 Hatch-Waxman Amendments and amended with the passage of the 2003 Medicare Modernization Act.  That effort, which has most recently emerged in the forms of the “Bringing Low-cost Options and Competition while Keeping Incentives for New Generics Act of 2021” (H.R. 2853, or “BLOCKING Act”), the “Expanding Access to Low-Cost Generics Act of 2021” (S. 2910), and in President Biden’s Fiscal Year 2023 Budget Request, is antithetical to a primary goal of the Hatch-Waxman Amendments: getting high quality, low-cost generic drugs into the hands of consumers—fast.  And now there’s a report and analysis to back up that claim!

In a new report, titled “An Evidence-Based Assessment Of The BLOCKING Act,” co-authors William B. Schultz and Margaret M. Dotzel assess whether the stated goal of the BLOCKING Act – i.e., accelerating generic drug market entry – would actually be achieved.  And their conclusion is:

The BLOCKING Act, if passed, will not accelerate generic drug entry. Instead, it will upend the critical 180-day exclusivity incentive by making it far less predictable and therefore far less valuable.  As a result, fewer generic drug manufacturers are likely to make the significant investment needed to challenge patent estates on expensive brand-name drugs, even when those challenges could have been successful or resulted in favorable settlements.  The net effect will be that brand-name prices will remain higher for longer, and there will be fewer generic drugs available to patients.

We couldn’t have said it any better than Mr. Schultz, who previously served as the General Counsel at the U.S. Department of Health and Human Services and the Deputy Commissioner for Policy at FDA, and Ms. Dotzel, who previously served as the Acting General Counsel and Deputy General Counsel at the U.S. Department of Health and Human Services and the Associate Commissioner for Policy at FDA.  And although the BLOCKING Act was not the topic at hand – though definitely an undercurrent – we note that the conclusion that “there will be fewer generic drugs available to patients” was the topic of a segment on 60 Minutes earlier this week, titled “Life-saving generic drugs with low profit margins getting harder to procure.”  After all, 180-day exclusivity has helped some companies stay in the market for unprofitable – but important – drugs.  But as the 180-day exclusivity incentive has become diluted, and if it is even more unpredictable as a result of the BLOCKING Act, more companies will leave the market or discontinue manufacture of products, exacerbating the drug shortage problem.

The new action-packed and data-driven report has three primary sections.  Section I provides data demonstrating the importance of the 180-day exclusivity incentive to generic competition.  Section II picks apart the issues that BLOCKING Act proponents claim justify the legislation (and why those claims are often overstated).  Section III explains the BLOCKING Act’s mechanics and why the legislation will not work to achieve its goal of accelerating generic competition.  In particular, Mr. Schultz and Ms. Dotzel imagine a world in which BLOCKING is the law (gulp!) and apply the legislation’s mechanics to five cases alleged to be instances that the BLOCKING Act is intended to address:

• Case Study 1: Xifaxan® (rifaximin) Tablets, 550 mg
• Case Study 2: Revlimid® (lenalidomide) Capsules
• Case Study 3: Cialis® (tadalafil) Tablets
• Case Study 4: Rytary® (carpidopa/levodopa) Extended-release Capsules
• Case Study 5: Belbuca® (buprenorphine) Buccal Film

In each case study, Mr. Schultz and Ms. Dotzel methodically show that application of the BLOCKING Act would have resulted in the same outcome: generic drug entry and patient access would not accelerate!  That’s pretty powerful and compelling stuff!  And hopefully something that Congress will take note of as it considers what pieces of legislation should ultimately be included in the 2022 User Fee Amendments legislation currently being worked on.

As things stand right now, neither H.R. 7667, the “Food and Drug Amendments of 2022,” nor the Senate’s “FDASLA” (i.e., the “FDA Safety and Landmark Advancements Act of 2022”) include the BLOCKING Act.  But there’s still quite a ways to go to get to the finish line for the UFA legislation.  This is no time for the generic drug industry to let down its guard.  And don’t forget about FDA’s proposed 180-day exclusivity rework included in the Agency’s Fiscal Year 2023 Budget Justification Legislative Proposals.  We most definitely haven’t forgotten about that as you’ll soon read. . . .