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  • Higher Medicaid Rebates Will Help to Fund COVID Rescue Plan

    Last Thursday March 11, the American Rescue Plan Act of 2021 was signed by President Biden.

    Out of the hundreds of pages of this COVID relief legislation, our pinpoint focus here is on several pages relating to Medicaid coverage and drug rebates.  The legislation requires Medicaid and the Children’s Health Insurance Program (CHIP) to cover COVID-19 vaccines, vaccine administration, testing, and treatments, without cost sharing, for all eligible beneficiaries during the public health emergency and for one year after it ends.  Sec. 9811(a)(1), (2).  The legislation also makes clear that COVID therapies and preventive measures are subject to rebates under the Medicaid Drug Rebate Program if they are “covered outpatient drugs” as defined in the Medicaid Drug Rebate statute.  Sec. 9811(a)(4).  As with other vaccines, COVID-19 vaccines remain excluded from the Medicaid Drug Rebate Program.  Sec. 9811(a)(4).

    A question arises whether an unapproved drug authorized under an emergency use authorization (EUA) is a covered outpatient drug subject to Medicaid rebates.  Under a literal reading of the definition of a covered outpatient drug, such a drug must be approved under section 505 or 506 of the FDC Act or section 351 of the Public Health Service Act.  An EUA is authorized under section 564 of the FDC Act and is not an approval pursuant to those provisions.  However, in a somewhat related context, CMS has suggested that an EUA is an “approval” under the FDC Act.  COVID-19 Frequently Asked Questions (FAQs) for State Medicaid and Children’s Health Insurance Program (CHIP) Agencies, p.18, fn. 3.   Hopefully CMS will provide guidance on this point.

    Of broader consequence to drug manufacturers generally, effective January 1, 2024, the legislation sunsets the cap on the total Medicaid unit rebate amount that was instituted by the Affordable Care Act.  Sec. 9816.  (The House version of the bill had this change taking effect January 1, 2023, but the effective date for the change was extended by one year by the Senate.)  The total calculated Medicaid rebate amount is comprised of the basic rebate and the additional rebate, which is a penalty imposed for raising a price at a rate greater than the rate of inflation.  Without a cap, the rebate can be more than the average manufacturer price (AMP) of the drug.  The Affordable Care Act capped the rebate at 100% of the AMP so that a manufacturer would not pay a higher rebate for a drug than its AMP.  According to the House Report, CBO estimates that eliminating this cap will increase the amount of rebates that manufacturers pay Medicaid and will reduce direct spending in Medicaid by $15.9 billion over the 2021-2030 period.

    Categories: Health Care

    Keeping Up With the Kardashians – OPDP Edition

    I would be lying if I said I hadn’t expected this most recent OPDP Untitled letter.  OK, maybe not THIS letter.  Some background: Back in November 2020, after an article was published about the ethical questions surrounding “Sponcon,” (sponsored content – for those not hip to the lingo), I pulled up Khloe Kardashian’s Twitter feed to check out her recent ad for Nurtec ODT.  I stared at the ad, and then spent an embarrassingly long amount of time debating with myself as to whether placing scrolling ISI right below Khloe Kardashian’s bust made it more OR less likely to be noticed.  I passed my phone to my husband and asked him to tell me about the Nurtec ODT safety information.  Eyes glazed, he responded, “there’s safety information?”  I had my answer.

    This most recent OPDP letter (the first Untitled Letter of 2021), objects to a sponsored video – and is similar to OPDP’s last Warning Letter to CooperSurgical.  Parallels between the two letters include the offending material being a sponsored video (not otherwise re-distributed by the company on different platforms), no Form 2253 submission, and complaints lodged through FDA’s Bad Ad program.

    This letter is significant for a number of reasons (not the least of which is that I now can’t simply refer to the “Kardashian Letter” as it may create confusion about which letter I’m referencing).  What’s fascinating (to me) is that OPDP includes in second place its allegations that risks were minimized in the video, prioritizing the offending efficacy claims.  And what are those efficacy claims?  The first of which is that Nurtec ODT “works in about 15-30 minutes.”   The second is that Nurtec ODT was a “gamechanger” and “other medications would give me rebound headaches, and this one doesn’t . . .”

    In 2012, an Untitled Letter based on these claims would be expected.  But in 2021, given the significant drop in OPDP enforcement letters and post publication of FDA’s Guidance on Medical Communications Consistent with the FDA-Required Labeling (Guidance), are these the type of claims to trigger an OPDP Untitled Letter?  The claims, themselves, seem awfully similar to specific examples FDA includes in its Guidance, which permits product communications consistent with the FDA-required labeling even if those communications are not based on substantial evidence.  From the FDA Guidance:

    Q.4.        What are examples of the kinds of information that could be consistent with the FDA-required labeling for a product?

    A.4.        The following are examples of some general types of information that could be consistent with the FDA-required labeling. . . Information based on a comparison of the safety or efficacy of a medical product for its approved indication to another medical product approved for the same indication . . . Information about the onset of action of the product for its approved indication and dosing/use regimen (e.g., the FDA-required labeling for a product approved to treat major depressive disorder does not contain information about onset of action before the point in time designated as the study’s endpoint, and a firm’s product communication provides information indicating that the product shows an effect relative to the control at 2 weeks).

    So what happened here?  What happened seems to be the absence of any evidence to support Ms. Kardashian’s claims other than her personal experience.  Consistency with the FDA-required labeling is not the only factor to consider when determining whether a communication is truthful and non-misleading.   Claims must still be supported by evidence that is scientifically appropriate and statistically sound.  “The amount and type of evidence needed to support a particular CFL promotional communication depends in part on the topic addressed by the communication. For example, different evidence would be needed to support a long-term efficacy presentation than would be needed to support a presentation about a product’s mechanism of action. The amount and type of evidence needed also depends on the particular representations or suggestions that are made about any given topic in the communication.”  Guidance at 12.  Therefore, despite these claims representing a truthful experience for Ms. Kardashian, the letter points out that they are misleading because OPDP is unaware of any data that supports these statements, generally.

    OPDP further cites the video as misleading “because it fails to present information relating to the contraindications, warnings, precautions, and adverse reactions for Nurtec ODT with a prominence and readability reasonably comparable with the presentation of information relating to the benefits of Nurtec ODT. Specifically, the video contains claims and/or representations about the benefits of Nurtec ODT in the audio portion, while the risk information is presented in text only format and in small font. Moreover, the risk information only appears briefly for four seconds at the end of the video, after the close of the Spokesperson’s presentation, where it is unlikely to draw the viewer’s attention.”   OPDP’s views as expressed in this letter are not new; 21 C.F.R. §202.1(e)(1) provides that advertisements broadcast through media such as radio or television include information relating to the major side effects in the audio or audio and visual parts of the presentation.  It is not sufficient to have safety information presented solely on screen when efficacy is provided through audio.   Content and format considerations with regard to presenting risk information in broadcast promotional material has been an issue reiterated in FDA’s (Draft) Guidance on Presenting Risk Information and has also been the subject of OPDP research.

    Circling back to initial perceptions about the similarities between this Untitled Letter and the recent CooperSurgical  Warning Letter, it’s notable that both relate to TV broadcast videos that were “sponsored” by the company, not re-distributed on other platforms, and not submitted to FDA on Form 2253.  With the increasing number of television shows that allow third parties to sponsor content, industry should be particularly cautious when availing itself of these opportunities.  Depending on the context, interviews with your spokespeople and sponsored TV/News segments about your products may subject you to liability even if you are not in complete control over the content and do not otherwise re-distribute it.

    FDA Warns Against Use of Registration Certificates: It Don’t Mean A Thing

    It’s not just drug companies that push the limit on marketing their products – see our posts about recent OPDP warning letters.  Medical device companies are fighting for any edge to differentiate their products too.  Even before COVID-19 brought an onslaught of new players to the FDA-regulated space, many sophisticated medical device companies used to include FDA’s logo on marketing materials to imply that FDA had endorsed their products.  The misuse of the logo became so pervasive that FDA issued an official “FDA Logo Policy,” which warns that “[u]nauthorized use of the FDA logo may violate federal law and subject those responsible to civil and/or criminal liability.”  Despite this threat, FDA continues to cite companies for misuse of the logo.  See, e g., Warning Letter issued to Silkprousa LLC (Aug. 18, 2020) (“Your device is also misbranded under section 502(a) of the Act, 21 U.S.C. § 352(a), because your labeling on the package of your device and your website uses the FDA logo.  The FDA logo is for the official use of the FDA and not for use on private sector materials.”).

    The COVID-19 pandemic has caused companies to exercise even more creative license in an attempt to differentiate products that might otherwise appear interchangeable (e.g., 3-ply disposable face masks).  We have seen the advent of the “FDA Registration Certificate,” which looks like an official government document, and sometimes includes the FDA logo (illegal by itself), the establishment registration number, or a screenshot of the FDA establishment registration database showing the company’s registration status.  Any savvy FDA lawyer knows that registration alone does not convey information about the company or product’s regulatory compliance status, and certainly does not imply FDA approval or endorsement of a product, but not all of us can be savvy FDA lawyers.

    On March 3, 2021, FDA announced that it had told 25 companies that produce these so-called “FDA Registration Certificates” to stop issuing them.  We have not yet seen the letters FDA issued to the certificate-producing companies, and it’s unclear whether FDA will follow-up with enforcement action if these companies fail to cease distribution of these documents (and if so, on what grounds).

    In conjunction, FDA released a new webpage titled “Are There ‘FDA Registered’ or ‘FDA Certified’ Medical Devices?  How Do I Know What is FDA Approved?”  Spoiler alert: the answer to the first question is No. The key points FDA highlights are:

    • When a facility registers its establishment and lists its devices, the resulting entry in the FDA’s registration and listing database does not denote approval, clearance, or authorization of that facility or its medical devices.
    • The FDA does not issue any type of device registration certificates to medical device facilities.
    • Firms that misleadingly display certificates alongside information about and photos of a device for sale in the United States to imply review or approval by FDA of the device misbrand the device in violation of the Federal Food, Drug, and Cosmetic Act.

    FDA also provided detailed directions for identifying a product’s status – whether it has been approved or cleared, or authorized under an Emergency Use Authorization.  Circling back to the grammatically curious title of this blog post, FDA’s point is that registration “don’t mean a thing” “if it ain’t got that” 510(k) clearance, PMA approval, de novo classification or EUA authorization – not as catchy as when Ella Fitzgerald and Duke Ellington sing it.

    Categories: Medical Devices

    HP&M’s Food, Beverage & Supplement Wrap Up: February 2021

    Welcome to the latest edition of Hyman, Phelps & McNamara, P.C.’s monthly wrap up of food, beverage and supplement news, including regulations, guidances, events, and whatever else is catching our eye.

    Food & Beverage

    • Transition: As of this writing, Janet Woodcock is Acting Commissioner of Food and Drugs; Norris Cochran is Acting Secretary of Health & Human Services; and Tom Vilsack was just confirmed as Secretary of Agriculture (again!).
    • 3D printed ribeye? An Israeli company unveiled what is being described as a “3-D printed rib-eye” made with  “3-D bioprinting technology.” The company claims to have been in discussions with USDA and FDA for the past two and a half years.
    • Food Supply Chain Focus at the WH. The President signed an Executive Order to help create more resilient and secure supply chains for critical and essential goods, and agricultural commodities and food production are a key sector that will be the focus of a year-long review.
    • Keep those essential workers safe! FDA published a new web page with information to help employees in the food and ag sector communicate about COVID-19 vaccines in their workplace.
    • Prop 65: OEHHA announced a (virtual) public hearing on March 11, 2021, at 10:00 a.m. and extended the time for submitting comments to the proposed rule regarding short form warnings to March 29 to accommodate the hearing.
    • Baby food report. The House Subcommittee on Economic and Consumer Policy, Committee on Oversight and Reform released a report alleging “dangerous” levels of heavy metals in baby foods. Shortly thereafter, FDA published a response in the form of a Constituent Update in which the agency assured the public that “FDA regulations and monitoring help to ensure the safety of baby foods sold or manufactured in the United States.”
    • US Food Supply is Safe! FDA and USDA issued a statement that food and food packaging have not been linked to spread of COVID-19.
    • Costs of Foodborne Illness: USDA published a report on the cost of foodborne illnesses; the report is a bit short on conclusions but the cost continues to increase. This is not particularly surprising since last year CDC reported a continued increase in incidence of foodborne diseases.
    • Speaking of Pathogens in Food: Center for Science in the Public Interest together with several other public interest organizations and individuals submitted a petition to FSIS/USDA requesting that FSIS engage in rulemaking to 1) establish enforceable finished product standards for Salmonella types of greatest public health concern and Campylobacter and 2) require poultry establishments to identify and control food safety risks within their supply chain. FSIS opened a docket on regulations.gov for comments which must be submitted by April 6, 2021.
    • Organic wild caught fish? NOP just announced a town hall meeting regarding wild caught fish.

    Supplements

    • More transition. Steven Tave is leaving the Office of Dietary Supplement Programs and moving to the Office of Regulatory Affairs at FDA.  Cara Welch will be acting director of ODSP starting March 15.
    • Warning Letters. FDA issued warning letters to 10 companies for selling dietary supplements that claim to treat depression and other mental health disorders.
    • Criminal Sentencing. A former dietary supplement company executive was sentenced to prison for his role in fraudulently selling popular workout supplements that caused liver damage.  A number of executives have already been sentenced in this ongoing fraud investigation.
    • Nanotech-related claim requires substantiation. NAD recommended discontinuation of a claim touting a nanotech oral delivery system for glutathione as the first effective alternative to injections. NAD found the supporting in vitro and in vivo pilot studies did not constitute a reasonable basis for the claim.

    More on Cannabis

    Coming up:

    • The deadline for submission of comments on labeling of cell-cultured seafood products is coming up on March 8.
    • The American Conference Institute’s popular “FDA Boot Camp” – now in its 36th iteration – is scheduled to take place (virtually, of course) March 24-25, 2021, and is co-chaired by HPM’s own Kurt Karst.
    • Riëtte van Laack will be discussing “Nutrient Content, Health and Other Claims” at FDLI’s Introduction to Food Law and Regulation, March 16-18.

     

    Area of Interest Funding – “There’s Always Money in the Banana Stand”

    If you tuned in to FDA’s weekly Virtual Town Hall Meeting on February 10th, 2021 you would have seen a short presentation by Toby Lowe (CDRH/OHT-7) describing a recent funding announcement from HHS OASH, Office of Assistant Secretary for Health, and the DoD. This “Area of Interest” (AOI) funding announcement is a call for proposals from industry.

    you may request investment funding for capacity expansion and provide price quotes for raw materials, test components, supplies, et cetera for COVID-19 point-of-care tests and other IVDs. This is an expedited process that’s coordinated by HHS and OASH and DoD to support the government’s COVID-19 response to rapidly increase manufacturing capabilities within the diagnostic supply chain.

    This funding announcement is not a unique occurrence, in fact, there is a whole group at HHS with a mandate to expand testing supplies and testing capacity through targeted investments.  The COVID-19 Testing and Diagnostic Working Group (TDWG) has been built around four central goals:

    • Understand the diagnostic supply chain, including projected production and potential constraints and bottlenecks;

    • Work with state public health and laboratory leadership, diagnostics manufacturers, and commercial labs throughout the country;

    • Provide technical assistance to leverage existing testing infrastructure and resources based on available tests; and

    • Distribute certain testing supplies, focusing primarily on point-of-care technologies, to support states’ testing goals.

    This funding announcement is yet another indication, in a string of recent public statements and actions on the part of FDA, that the federal government is shifting time, energy, and resources from the CLIA Lab base testing to testing in non-laboratory settings, like Point-of-Care and people’s homes.  HPM recently released a blog post on FDA’s changing priorities (“Beware EUA Deprioritization”).

    A link to the funding announcement can be found here.  The deadline to apply is March 7th.  (And for those Arrested Development fans, we’ll end with a link to the Banana Stand.)

    OPDP Issues Second Warning Letter of 2021. But Wait, Where Did the OPDP Warning Letters Go?

    Well, it’s been busy for OPDP (and the Rx Ad/Promo bloggers over at the FDA Law Blog).  After getting off to a slow start in 2021, OPDP issued yet another Warning Letter, apparently the day after its first.  Unlike the first letter, this OPDP Warning Letter to CooperSurgical appeared “quietly” on FDA’s general Warning Letters page, and without the accompanying fanfare of a CDER press release and Twitter campaign (as we blogged about previously).  When checking the status of OPDP’s Warning Letters page, we were surprised (shocked, really) to see that all Warning Letters had been removed and the page had been updated to reflect only Untitled Letters.  We’re not happy with this development – having OPDP letters in a single location was incredibly useful when evaluating enforcement trends.

    This newest Warning Letter about a video for Paragard (intrauterine copper contraceptive), ticks off several OPDP priority boxes – the product has a broad patient base with a video (airing on TV) that could be considered a wide-reaching promotional campaign, CooperSurgical was the subject of a previous OPDP letter for similar product promotion, and the video was brought to OPDP’s attention through the FDA Bad Ad program.

    The offending video, entitled “Paragard: Family Planning During The Pandemic,” is no longer available, but appeared on WBTS’s The Hub Today, a Boston lifestyle and entertainment show.  FDA states that CooperSurgical failed to submit a copy of the video at the time of initial dissemination under cover of Form FDA-2253, and FDA’s description of the issues is short and to the point.  The video is described as providing claims and representations about the uses and benefits of Paragard, but failing “to communicate any risk information about the product.”  FDA specifically notes that referring viewers to the product specific website for further information did not mitigate the “complete omission” of risk information from the video.

    CooperSurgical previously received an Untitled Letter in 2019 for a Paragard DTC TV advertisement for omitting important risk information.  OPDP so notes in this letter, stating that the new video appears to promote Paragard without presenting the serious risks in truthful and non-misleading manner, “despite concerns previously expressed by OPDP.”    The 2019 TV ad had also been reported to FDA under the FDA Bad Ad Program.

    It’s likely OPDP may have been moved to issue the Warning Letter because of the perception that the sponsor did not address FDA’s objections to the previous video in the new one.  Rather than making the safety information more thorough, the new video seems to omit even more risk information.  Another factor may have been the large viewing audience that may have seen the video, which was broadcast on television.  This may also make the corrective communication FDA requests in the Warning Letter more challenging.

    What is interesting and difficult to discern is whether CooperSurgical considered the video to be Paragard “promotion” and whether CooperSurgical had full control over the content of the video.  While the video is no longer available, OPDP describes the original broadcast on the lifestyle and entertainment show as promotional material that included the statement “sponsored by PARAGARD.”  Contrast this with OPDP’s 2019 Untitled Letter to Aclaris about a video interview that was broadcast on ABC’s The View, where OPDP cited the video as promotion and included reference to Aclaris’s Form 2253 submission, as well as the company’s re-posting of the video on the Eskata Facebook page and Aclaris LinkedIn page.  While industry may sponsor certain scientific and educational activities and not have those activities considered product promotion, there are guardrails, and DTC TV videos likely fall outside of them.   And, company intent about whether material is product “promotion” may ultimately be irrelevant to FDA’s determination.

    Beware EUA Deprioritization!

    As the end of the COVID pandemic appears into view, the Center for Devices and Radiological Health (CDRH) appears to be taking steps toward shedding at least part of its Emergency Use Authorization (EUA) caseload.

    Under Section 564(a)(1) of the Federal Food, Drug, and Cosmetic Act, FDA has discretion whether to issue an EUA.  Under Section 564(c), FDA may only issue an EUA if the following criteria are met:

    • The product may be effective in diagnosing, treating, or preventing the disease or condition.
    • The known and potential benefits outweigh the known and potential risks.
    • There is no adequate, approved, and available alternative to the product for diagnosing, preventing, or treating such disease or condition.

    CDRH is increasingly declining to review EUA requests and terminating pending EUAs.  Two rationales are typically offered.  One rationale is that, given the volume of EUAs, a particular EUA is simply not a priority.  CDRH usually provides little or no additional information about why a product is not a priority.

    A second rationale is that that there are already adequate supplies available in the market.  Based on this finding, the requirement in the last bullet, above, is not met and an EUA cannot issue.

    Even if CDRH has issued prior EUAs in a product category, supply conditions may change.  Indeed, the issuance of prior EUAs may have helped better supply the market.  CDRH’s position is that it cannot continue issuing EUAs if there are adequate alternatives in the market.

    CDRH has adopted deprioritization across a range of product categories.  Diagnostics have been particularly hard hit, but they are not alone.

    Here are three examples:

    • In the past few months, CDRH deprioritized antibody serology tests for COVID. It then proceeded to terminate pending EUAs and declined to accept new ones.
    • A PCR test for COVID may still receive an EUA if indicated for, e.g., point of care, but CDRH has deprioritized some tests on the ground that they were indicated only for laboratory use.
    • The umbrella EUA for face masks does not extend to masks made with antimicrobials. In theory, it should be possible to obtain an individual EUA for an antimicrobial face mask.  The reality is that CDRH is unwilling to expend resources reviewing such an EUA; they are deprioritized.

    There is little or nothing that can be done to challenge FDA’s prioritization decisions.  Section 564 gives the agency very broad discretion.  Therefore, if firms are considering pursuit of an EUA, they should be wary.  To avoid wasting money, firms need to assess the deprioritization risk carefully.

    Of course, it is not that easy to assess this risk, especially when FDA institutes deprioritization based on changing market conditions.  Also, not all product categories are treated the same way.  In some, CDRH may suddenly simply stop accepting new EUAs.  In other categories, CDRH may be skeptical but still be willing to authorize a product.  For instance, in some cases, they may be willing to review an EUA if (and only if) a manufacturer has the capability to produce in high volume or for a non-laboratory setting.

    CDRH could help everyone better assess deprioritization risk by creating a public database of deprioritized product categories, with designations as to whether they are entirely or only partially subject to deprioritization.  If not a database, CDRH could perhaps at least provide prioritization updates on their EUA FAQ web page.  This increased transparency would help firms better align themselves to CDRH’s priorities.

    Bottom line:  In every new EUA project, firms should factor in deprioritization as one of the risks to be concerned about.  Even after a firm expends considerable resources, a subsequent shift in CDRH’s priorities could prevent a product from obtaining an EUA.

    In the world of EUAs, caveat emptor rules the day.

    Categories: COVID19 |  Medical Devices

    Getting Into the Weeds of USDA’s Hemp Production Program Regulations

    It seems as if the “hemp” debate has been raging forever.  Yet only a little over two years have passed since enactment of the Agricultural Improvement Act of 2018, the “Farm Bill,” in December 2018 that amended the Agricultural Marketing Act of 1946 directing the Department of Agriculture (“USDA”) to establish the regulatory framework for a domestic hemp production program.  Now USDA has issued the final regulations governing that program at lightning speed compared with other federal cannabis-related initiatives.  Establishment of a Domestic Hemp Production Program, 86 Fed. Reg. 5596 (Jan. 19, 2021).  USDA’s Agricultural Marketing Service (“AMS”), the delegated authority to administer the domestic hemp production program, received almost 6,000 comments after issuing an interim final rule on October 31, 2019.  Agricultural Marketing Service, Establishment of a Domestic Hemp Production Program; Document IDs AMS-SC-19-0042-0001 & AMS-SC-19-0042-4666, Regulations.gov (last visited Feb. 23, 2021).

    The Farm Bill mandates that USDA establish and administer a national hemp production program.  As a reminder, “hemp,” as defined in the Farm Bill and final rule, is “the plant species Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”  7 C.F.R. § 990.1; see also 7 U.S.C. § 1639o(1).  Cannabis with a THC level exceeding 0.3 percent is marijuana, a schedule I controlled substance under the federal Controlled Substances Act.  Plants and plant material exceeding 0.3 percent THC concentration must be disposed of by a DEA-registered reverse distributor or law enforcement officer.  86 Fed. Reg. 5604.  In the alternative, non-conforming plants and materials can be “remediated” plowing the plants, composting into “green manure” for use on the same land, tilling, disking, burial, or burning.  Id.

    The Farm Bill allows States and Indian Tribes wishing to exercise primary authority over hemp production within their territory to submit their own production plans for USDA approval.   USDA has approved 45 State and Tribal plans though not all States and Tribes have implemented their programs.  86 Fed. Reg. 5596.  USDA has also accepted production applications under its program since October 2019 and has issued 380 producer licenses.  86 Fed. Reg. 5608.  Licenses issued prior to final rule’s publication will remain in effect until their original expiration.  Id.  USDA will not issue production licenses to producers within States or Tribal territories that have a production plan pending for USDA approval and will deny applications from individuals in States or Tribes with USDA-approved plans.  Id.

    The Farm Bill set general requirements on licensing, recordkeeping about the land where hemp is produced, testing for delta-9-tetrahydrocannabinol (“THC”), disposing of non-conforming plants, and conforming to compliance provisions and procedures for handling violations.

    USDA Hemp Production Program

    Hemp production in States or Tribal territories lacking a USDA-approved State or Tribal plan must comply with USDA hemp program requirements.  Producers must hold a valid license prior to producing hemp.  7 C.F.R. § 990.21(a)(1).  Applicants must provide contact information and a current criminal history report.  7 C.F.R. § 990.21(3).  A completed application serves as consent to comply with USDA requirements.  7 C.F.R. § 990.71(a)(3).  Persons with a state or federal felony conviction related to controlled substances are ineligible to produce hemp for ten years following the conviction date.  7 C.F.R. § 990.20(b).  Licenses are valid for three years and must be renewed prior to expiration.  7 C.F.R. § 990.21(a)(6), (b).  Producers of hemp for research must also obtain a USDA license.  7 C.F.R. § 990.21(d)(1) (effective Mar. 22, 2021).  Only research institutions registered with DEA to handle marijuana can maintain hemp testing over the acceptable THC level to the end of their study; all other licensees must ensure the disposal of non-conforming plants.  7 C.F.R. § 990.21(d)(2) (effective Mar. 22, 2021).

    Producers must

    1. Report hemp crop acreage to USDA’s Farm Services Agency (“FSA”) within 30 days of planting hemp;
    2. Provide street address and geospatial location where hemp will be produced, and acreage or indoor footage dedicated to hemp production and hemp license; and
    3. No earlier than 30 days prior to harvesting, have a trained agent collect samples from the flowering tops of the plant for THC level testing. 7 C.F.R. § 990.23; .24 (effective Mar. 22, 2021).

    Hemp cannot be harvested prior to samples being taken.  7 C.F.R. § 990.24(e).

    Producers cannot harvest any later than 30 days after sample collection and failing that, test a second pre-harvest sample of the lot.  7 C.F.R. § 990.26(a); (b) (effective Mar. 22, 2021).  Only lots with the acceptable THC level may enter commerce; plants exceeding that THC level are marijuana and must be disposed of by a DEA-registered reverse distributor or law enforcement or remediated on-site.  7 C.F.R. § 990.26(d); .27(a) (effective Mar. 22, 2021).  Producers must notify USDA of their intent to dispose of or remediate non-compliant plants and submit verification.  7 C.F.R. § 990.27(b) (effective Mar. 22, 2021).

    Laboratories must:

    1. Ensure the validity and reliability of test results;
    2. Have effective disposal procedures for non-conforming plants;
    3. Test samples for total THC using post-decarboxylation or other USDA-approved methods; and
    4. Hold a DEA registration to test after December 22, 2022. 7 C.F.R. § 990.25(a); (e); (g) (effective Mar. 22, 2021).

    Recordkeeping

    Producers must maintain records of hemp plant acquisition, production and handling, and storage, as well as disposal and remediation of non-conforming cannabis plants.  7 C.F.R. § 990.32(c) (effective Mar. 22, 2021).  They must maintain records and reports for at least three years, and records must be available for inspection by USDA employees and representatives.  USDA inspectors and representatives must have access to any premises where hemp plants may be held.  7 C.F.R. § 990.32(d) (effective Mar. 22, 2021).

    Reports

    Producers must report disposal or remediation within 30 days after completion.  Reports must include producer’s name and address, license number, geospatial location, or other valid land descriptor for the production area subject to disposal or remediation and date of completion.  7 C.F.R. § 990.71(b) (effective Mar. 22, 2021).  Producers must also annually report lot, location type, geospatial location, total planted acreage, total acreage disposed and remediated, and total harvested acreage.  7 C.F.R. § 990.71(c) (effective Mar. 22, 2021).  Producers are also responsible for ensuring that laboratories testing samples report test results to USDA (informal testing conducted throughout the growing season for THC concentration need not to be reported to USDA).  7 C.F.R. § 990.71(d) (effective Mar. 22, 2021).  The test report must contain for each sample tested:

    • Lot identification number for the sample;
    • Laboratory name;
    • Date of test and report;
    • Identification of any pre-harvest or post-harvest retest; and
    • Test result. Id.

    Audits

    USDA may audit hemp producers’ records for completeness and accuracy, and conduct on-site visits to farms, storage facilities, and locations affiliated with licensees’ hemp operation.  USDA audits may be conducted every three years and can focus on current crop year and previous crop years.  7 C.F.R. § 990.28(a), (b).  USDA will provide reports to producers within 60 days of an audit’s conclusion.  USDA requires a corrective action plan to correct a negligent violation, which USDA will approve or deny within 60 days of receipt.  7 C.F.R. § 990.28(d).  USDA may also revoke a producer’s USDA license for one year or until the producer becomes compliant.  7 C.F.R. § 990.28(d) (effective Mar. 22, 2021).

    Enforcement

    Producers are not subject to more than one negligent violation per calendar year.  7 C.F.R. § 990.29(a) (effective Mar. 22, 2021).  Negligent violations include failure to provide an accurate legal description of land where hemp is produced, production of hemp without a license, and production of cannabis that exceeds the acceptable hemp THC level.  7 C.F.R. § 990.29(a)(1)-(3).  USDA issues a notice of violation for each negligent violation requiring a corrective action plan from the producer.  Corrective action plans will be in place for a minimum of two years and include:

    • The date by which the producer will correct violations;
    • Steps the producer will take to correct violations; and
    • Procedures that will demonstrate compliance that must be submitted to USDA. 7 C.F.R. § 990.29(b).

    USDA will revoke the license of producers who commit negligent violations three times within five years, and they will be ineligible to produce hemp for five years.  7 C.F.R. § 990.29(e).

    If USDA determines that a producer has violated the terms of their license or the regulations with a “culpable mental state greater than negligence,” it will immediately report the licensee to the U.S. Attorney General and the chief law enforcement officer of the State or Indian territory where the production is located.  7 C.F.R. § 990.29(f)(1).

    USDA may issue a notice of suspension to a producer if they have violated a provision of the regulations or failed to comply with a written order from USDA related to negligence.  7 C.F.R. § 990.30(a).  Producers whose license has been suspended may appeal the suspension but cannot produce hemp during the suspension.  7 C.F.R. § 990.30(c), (d).  Producers whose licenses have been suspended and not restored on appeal may have their license restored after a waiting period of one year from the suspension date.  7 C.F.R. § 990.30(e).  USDA may also require a producer whose license has been suspended to operate under a corrective action plan to fully restore their license.  7 C.F.R. § 990.30(f).

    USDA will revoke a license immediately if the licensee:

    • Pleads guilty to, or is convicted of, any felony related to a controlled substance;
    • Made any materially false statement to USDA or its representatives with a culpable mental state greater than negligence; or
    • Is found to be growing cannabis exceeding the acceptable hemp THC level with a culpable mental state greater than negligence or has negligently violated the regulations three times in five years. 7 C.F.R. § 990.31.

    Producers can appeal license denials, suspension, and revocations.  7 C.F.R. § 990.40; .41.  The regulations, under 21 C.F.R. § 990.42, also set forth the process for States and Tribes to appeal USDA actions on their hemp production plans.

    State and Tribal Hemp Production Programs

    The USDA final rule, tracking the Farm Bill, requires USDA-approved State and Tribal programs to include many of the same components as USDA’s program.  USDA exercises oversight of State and Tribal programs first by reviewing and approving their plans, then by conducting audits to ensure compliance with the Farm Bill and final rule.  States and Indian Tribes must submit their program plan to USDA for approval before implementation.    

    State and Tribal plans must collect, maintain, and report to USDA, for each licensed or authorized producer, contact information, a legal description of the land on which the producer will produce hemp including geospatial location, and the producer’s license number and status.  7 C.F.R. § 990.3(a)(1).

    In addition, State and Tribal plans must include procedures for:

    • Sampling hemp, requiring agents to collect hemp within 30 days prior to harvest for THC testing. 7 C.F.R. § 990.3(a)(2)(i) (effective Mar. 22, 2021);
    • Identifying through testing whether the hemp sample contains THC concentration exceeding the acceptable hemp THC level by validated testing methods using post-decarboxylation or similar methods (only DEA-registered laboratories registered may test hemp after December 22, 2022). 7 C.F.R. § 990.3(a)(3) (effective Mar. 22, 2021);
    • Disposing of or remediating cannabis plants if the tests exceed the acceptable THC level by DEA-registered reverse distributors, law enforcement or remediation on-site. 7 C.F.R. § 990.3(a)(6) (effective Mar. 22, 2021); and
    • Conducting annual inspections of a random group of producers to verify compliance. 7 C.F.R. § 990.3(a)(7) (effective Mar. 22, 2021).

    USDA Approval and Audits

    USDA must approve or disapprove State and Tribal plans within 60 days of receipt.  States and Tribes must submit amended plans if, after disapproval, they still wish to have primary regulatory authority over hemp production within their territory.  7 C.F.R. § 990.4(a), (b).

    USDA may audit State and Tribal programs to determine compliance with their approved plans every three years but can adjust audit frequency based on performance, compliance issues, or other relevant factors identified and provided to State/Tribal governments.  7 C.F.R. § 990.5(a).  USDA audits can include:

    • Resources and personnel administering and overseeing programs;
    • Licensing and compliance review of hemp producers;
    • Sampling and lab testing requirements and components;
    • Disposal and/or remediation of non-conforming plants to ensure correct reporting;
    • Results of and methodology used for annual inspections of producers; and
    • Information collection procedures and accuracy. 7 C.F.R. § 990.5(b) (effective Mar. 22, 2021).

    USDA will provide reports to State and Tribal governments within 60 days after completing audits.  USDA will advise of non-compliance and corrective measures required to bring programs into compliance.  States/Tribes will develop a corrective plan that must be reviewed and approved by USDA.  7 C.F.R. § 990.5(c)(1).  If USDA determines the State or Tribe is non-compliant after the second audit, it may revoke approval for one year or until the program becomes compliant.  7 C.F.R. § 990.5(c)(2).

    Reports

    States and Tribes with approved plans must submit a monthly report to USDA providing contact information and license status for every producer.  Monthly reports to USDA must contain:

    1. For each new licensed producer who is an individual, their full name, license or authorization identifier, business entity Employee Identification Number, address, telephone number, and email address;
    2. For each new licensed producer that is an entity, their full name; business address; license or authorization identifier; and full name, title, and email address of each employee for whom the entity is required to submit a criminal history report;
    3. For producers in prior reports whose reported information has changed, the previously reported information and the new information;
    4. Status of each producer’s license; and
    5. Indication, if applicable, of no changes during the current reporting cycle. 7 C.F.R. § 990.70(a) (effective Mar. 22, 2021).

    States and Tribes must also submit monthly reports notifying USDA of any occurrence of non-conforming plants or plant material and the disposal or remediation record by the producer.  Disposal and remediation reports must include:

    1. Producer’s name and address;
    2. Producer’s license or authorization identifier;
    3. Location, such as lot number, location type, and geospatial location or other descriptor for the production area subject to disposal or remediation;
    4. Disposal or remediation completion date; and
    5. Total acreage. 7 C.F.R. § 990.70(b) (effective Mar. 22, 2021).

    State and Indian Tribes must also report annually to USDA the total acreage planted, harvested, and disposed/remediated within their territory.  7 C.F.R. § 990.70(c) (effective Mar. 22, 2021).

    Producers are responsible for ensuring labs testing their samples report results to USDA.  (Informal testing conducted throughout the growing season monitoring THC concentration do not need to be reported to USDA).  Test result reports must contain:

    1. Producer’s license or authorization identifier;
    2. Producer’s name and address;
    3. Lot identification number for the sample;
    4. Laboratory name and, no later than December 31, 2022, laboratory’s DEA registration number;
    5. Date of test and report;
    6. Identification of a pre-harvest or post-harvest retest; and
    7. Test results. 7 C.F.R. § 990.70(d) (effective Mar. 22, 2021).

    Enforcement

    State and Tribal plans must include enforcement provisions for “negligent” and “culpable” producer violations as well as felonies.  7 C.F.R. § 990.6(a)-(e).  The plans must prohibit anyone who materially falsifies any application information from program participation.  7 C.F.R. § 990.6(f).  Hemp producers cannot receive more than one negligent violation per calendar year.  7 C.F.R. § 990.6(b) (effective Mar. 22, 2021).  As with USDA requirements, negligent violations include:

    • Failing to provide a legal description of land where hemp is produced;
    • Producing hemp without a license; and
    • Producing cannabis exceeding the acceptable hemp THC level. Id.

    For each negligent violation, the State/Tribe must require a corrective action plan for a minimum of two years that includes the date by which the producer will correct negligent violations and the producer’s regular reporting on compliance.  7 C.F.R. § 990.6(c).  Producers who negligently violate their license three times within five years will have their license revoked and are ineligible to produce hemp for five years.  7 C.F.R. § 990.29(e).

    State/Tribal programs must also contain provisions relating to producers who commit violations with a “culpable mental state greater than negligence.”  86 Fed. Reg. 5606.  Programs must immediately report  licensees to the U.S. Attorney General, and the chief law enforcement officer of the State or Indian territory.  7 C.F.R. § 990.6(d).  State and Tribal programs must prohibit any person with a State or Federal controlled substance-related felony conviction from participation in hemp production for ten years from the conviction date.  7 C.F.R. § 990(e).

    It will be interesting to see how USDA will administer its own hemp production program while overseeing numerous State and Tribal programs.  As noted, the final rule is effective March 22, 2021.

    “Tongue and Done” – Just . . . No.

    Yesterday’s FDA Warning Letter, Press Release, and accompanying public relations campaign related to AcelRx’s promotional material for Dsuvia (sufentanil) are remarkable for exactly the reasons FDA intended them to be remarkable: these actions all signal to industry that despite anemic levels of FDA enforcement related to Rx drug promotion, when it comes to opioids, FDA is paying attention and ready to take action.  In addition to the Press Release, FDA’ers tweeted about the Warning Letter, including the following tweet (of three) by Dr. Janet Woodcock:  “False or misleading promotional communications will not be tolerated.  The agency is focused on reducing harm by decreasing exposure to opioids, while still enabling appropriate access for patients with medical need.”  FDA, in what appears to be a new approach, has already updated the OPDP 2021 Warning Letter website to include CDER’s press release, in addition to posting the Warning Letter and underlying promotional material.

    It should come as no surprise that the media blitz and OPDP’s first letter of 2021 relate to opioid promotion.  Before retirement, Tom Abrams, former Director of OPDP, regularly stressed OPDP’s enforcement priorities and, included among them, was promotion for drugs that have serious risks.  Just last month, Acting Director of OPDP, Katie Gray, provided an interview where she explicitly stated, in response to a question on which promotional materials were priorities, that OPDP would focus “on promotional materials for high-risk drugs, such as opioids. We want to make sure the promotional materials accurately convey the risks associated with these drugs, convey responsible use of opioids, and do not inadvertently contribute to the opioid epidemic.”  The last time an OPDP Warning Letter was accompanied by an FDA Press Release was back in December 2019, relating to a treatment intended to prevent relapse to opioid dependence.

    Back to the Dsuvia Warning Letter – there are a number of key takeaways for industry.  It is apparent that the letter was triggered, in this particular instance, by the use of the pithy tagline, “Tongue and Done” that emphasizes simplicity in administration.  Given FDA’s history with this product, and that administration was one of the issues cited as part of a complete response letter – it is not surprising that this type of promotion was likely to garner the agency’s attention.  (As an aside, knowing how much former FDA Commissioner Scott Gottlieb enjoys our song references, these bloggers spent an inordinate amount of time looking for clever references to music videos that would relate to this tagline.  Not surprisingly, after watching a few too many Kiss videos – featuring Gene Simmons – we abandoned the exercise.  Hence the name of this blogpost.)

    Putting the tagline trigger aside, FDA also called out the company’s failure to include information on the maximum dosing within a 24 hour period, despite otherwise calling out the ability to re-dose Dsuvia within an hour.    This is a practical concern, not simply for opioids, as there is a safety suggestion implied with re-dosing statements.

    Industry should pay close attention to other FDA comments in the Warning Letter with regard to the presentation of risk and benefit information.  The allegations relating to how the company presented the full indication and limitations for the product, as well as Important Safety Information, should be scrutinized as the techniques employed are often used by others.   From the Warning Letter:

    “the full indication with the limitations of use are intermingled with risk information in a paragraph format in a much smaller font size and a plain white background, and are accessible only if viewers “scroll” down the banner. Therefore, this does not mitigate the misleading impression.”

    These bloggers find it shocking that FDA would object to presenting the full indication, particularly one that is longer and includes limitations of use, with safety information and that FDA would particularly call out that it was against a plain white background.  One of the core tenets of any ad is ensuring that the full indication and safety information are legible – and FDA has a long history of calling out instances when safety information was minimized because it was presented against a colored background.   In fact, this very issue was addressed in FDA’s Draft Guidance on Presenting Risk Information, dating back to 2009, in a section on Contrast:

    “Contrast between text and background should not highlight the benefit information more than the risk information. Example 18: If benefit information in a piece is presented in white letters on a black background, risk information should be presented with similar contrast. If the piece presents risk information in a way that would make it difficult to discern (e.g., using white letters on a light gray  background or gray letters on a black background), the presentation may be considered false or  misleading. Even if the background is a color designed to attract attention, the contrast influences the prominence of the words once attention has been gained. In fact, printing words in some attention-grabbing colors (e.g., red) may make the words difficult to read.  Similarly, the placement of risk information over pictures or other visual elements with multiple colors can cause this information or portions of this information to lack prominence and be difficult to read. Furthermore, a print piece that superimposes risk information over a visual image could compromise the accuracy of the piece as a whole by drawing attention away from the risk information.

    While it may be fair to point out in the Warning Letter that the safety information was only visible after scrolling within the digital banner ad, it is absurd to think that by providing safety information in black font against a plain white background that the company has somehow minimized risk.

    In looking at the banner ad, it looks like the company employed a “20%” approach to the inclusion of safety information.  This approach includes a scroll bar for the user to obtain additional safety information, but devotes 20% of the visual field to safety information as balance.  In this Dsuvia banner ad, that amount of space was not enough to present the full, all caps title from the Boxed Warning.  Although somewhat consistent with how industry treats digital banner ads (although arguable that 20% of an ad would be sufficient balance for an opioid with significant safety concerns and a REMS), companies should be mindful, not only of spacing, but of the substantive safety information in view.

    FDA also cited both the digital banner as well as a print flyer for failing to present information relating to the Boxed Warning, Contraindications, Warnings and Precautions, and Adverse Reactions “with a prominence and readability reasonably comparable with the presentation of information relating to the benefits” of the drug.  FDA cites “typography, layout, contrast, headlines, paragraphing, white space, and other techniques” as affecting readability and emphasis. FDA also highlights that “risk information is relegated farther down in paragraph format with less prominence.”

    The key takeaways here are not new:  minimizing safety, particularly for a drug with serious risks, will likely trigger FDA enforcement (no matter how sleepy OPDP may seem).  The issues cited by OPDP are those clearly outlined in its 2009 Draft Guidance – which was not exactly revolutionary at the time it was originally published and simply summarized points made in prior DDMAC Warning and Untitled Letters.  Many of the techniques utilized by AcelRx, and objected to by OPDP, are those employed across industry.  One has to question whether lack of OPDP enforcement has led, to a certain degree, to industry falling back into old habits –  with safety information “below the line,” at the end of a piece, in small font with running text.  While it may have been the nature of this promotion in the midst of the opioid crisis that stirred FDA to action, the issues OPDP called out are nevertheless ones even non-opioid manufacturers might want to reconsider in light of this letter.

    ACI’s 36th FDA Boot Camp (Virtual Conference)

    The American Conference Institute’s (“ACI’s”) popular “FDA Boot Camp” – now in its 36th iteration – is scheduled to take place from March 24-25, 2021 (Eastern Time).  The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.  And like a lot of conferences over the past year, the ACI conference format has changed from a live, in-person event to an interactive, virtual conference.

    ACI’s FDA Boot Camp will provide you not only with the essential background in FDA regulatory law to help you in your practice, but also key sessions that show you how this regulatory knowledge can be applied to situations you encounter in real life. A distinguished cast of presenters will share their knowledge and provide critical insights on a host of topics, including:

    • The organization, jurisdiction, functions, and operations of FDA
    • The essentials of the approval process for drugs and biologics
    • Clinical trials for drugs and biologics
    • The role of the Hatch-Waxman Act in the patenting of drugs and biologics
    • Labeling in the drug and biologics approval process
    • cGMPs and other manufacturing concerns relative to products liability
    • Proactive adverse events monitoring and signal detection
    • Recalls, product withdrawals, and FDA oversight authority

    Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst is co-chairing the conference and will also present at a session titled “Understanding the Relevance of New FDA Initiatives and Policies and How They May Redefine the Life Sciences Industry in the Aftermath of COVID-19.”

    FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-874-874EX05.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you (virtually, of course) at the conference.

    HP&M’s Food, Beverage & Supplement Wrap Up: January 2021

    Welcome to the latest edition of HPM’s monthly wrap up of food, beverage and supplement news, including regulations, guidances, events, and whatever else is catching our eye. It’s been quite a January, hasn’t it?

    Food & Beverage

    • Transition: As of this writing, Janet Woodcock is Acting Commissioner of Food and Drugs; Norris Cochran is Acting Secretary of Health & Human Services; and Kevin Shea is Acting Secretary of Agriculture.
    • Whither regulation of bioengineered animals? USDA and HHS officials signed an MOU under which USDA would take the lead on regulation of bioengineered animals intended for agricultural purposes. Then-Commissioner Hahn quickly disavowed the MOU via Twitter, thereby suggesting that the future of that initiative is uncertain.
    • Another source of protein. EFSA has declared mealworms safe for human consumption. This is their first opinion on insects as a novel food and could help drive the category forward.
    • Uniformity is good. The FDA announced that January 1, 2024, will be the uniform compliance date for final food labeling regulations that are issued in calendar years 2021 and 2022. This action does not change existing requirements for compliance dates contained in final rules published before January 1, 2021.
    • Traceability is good too. The FDA published FAQs about the FSMA Food Traceability Proposed Rule to assist those considering submitting comments (due Feb. 21, 2021). FDA also updated its Food Traceability List to provide some clarity (without changing any of the listed foods).
    • Not-so Short Form. On January 8, 2021, California’s Office of Environmental Health Hazard Assessment (OEHHA) announcedproposed amendments to Proposition 65 warning regulations that would limit use of the short-form version of the safe harbor warning. Check out Riëtte’s blog post for more information.

    Supplements

    • Another try at CBD: Legislation was again introduced in Congress that would make lawful the use of hemp and its derivatives (including CBD) as dietary ingredients in a dietary supplement, provided that the supplement complies with all other applicable requirements. Hat tip to CRN, which posted the bill on its website.
    • And another NAD decision on “natural”: NAD took issue with the word “natural” in a brand name used for products in which the key ingredients are not naturally derived. Other aspects of the decision also make it a worthwhile read.

    More on Cannabis

    Other things that caught our eye:

     

    Categories: Dietary Supplements |  FDA News |  Foods

    ACI’s Advanced Legal, Regulatory, and Compliance Forum on OTC Drugs (Virtual Conference)

    The American Conference Institute (“ACI”) is sponsoring its Advanced Legal, Regulatory, and Compliance Forum on OTC Drugs Conference on February 26, 2021 (Eastern Time).  Like a lot of conferences over the past year, the ACI conference format has changed from a live, in-person event to an interactive, virtual conference.

    Hear from leading OTC industry counsel and regulatory executives who will provide timely analysis and best practices for:

    • Preparing for monograph reform under the CARES Act
    • Substantiating COVID-related claims
    • Identifying labeling and manufacturing missteps for imports, to avoid costly hold ups at the border
    • Leveraging lessons from recent Rx-to-OTC switch success stories to overcome complex legal and regulatory hurdles
    • Navigating recalls and adverse events protocols

    Hyman, Phelps & McNamara, P.C.’s Deborah L. Livornese will be speaking at a session titled “How to Prepare for a Modernized OTC Drug System under the CARES Act.”

    FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-826-826DX01. You can access the conference brochure and sign up for the event here.  We look forward to “seeing you at the conference.”

    OIG PBM Rebate Rule Delayed – Twice

    In late November, the OIG published a final rule that excludes from the Federal healthcare program safe harbor for discounts rebates paid to Medicare Part D plans, or their PBMs (see our post here).  The rule also establishes two new safe harbors: one for rebates paid to Medicare Part D plans and Medicaid Managed Care plans, or their PBMs, if the rebates are passed through by the plan or PBM to the dispensing pharmacy; and another for service fees paid to PBMs.  Together, these safe harbor amendments were intended to force PBMs to pass manufacturer rebates through to pharmacies to lower the out‑of‑pocket costs of government beneficiaries at the pharmacy counter.  The exclusion from the discount safe harbor had a delayed effective date of January 1, 2022, while the two new safe harbors were scheduled to go into effect on January 29, 2021 (last Friday).  However, since Friday, both the discount safe harbor exclusion and the new safe harbors have now been delayed further.

    On Friday, just under its deadline, the OIG issued a “correction” to the two new safe harbors delaying their effective dates until March 22, 2021.  The delay was pursuant to the regulatory freeze issued by the White House on inauguration day, which, among other things, directed federal agencies to consider delaying published rules that have not yet become effective for 60 days, and longer where necessary, to permit the agency and OMB to review factual, legal, and policy issues raised by the rule.

    On Saturday — the very next day — the new discount safe harbor exclusion was also delayed, this time by court order.  Earlier this month, before the change in administration, the Pharmaceutical Care Management Association (PCMA), a trade association of PBMs, had sued HHS to vacate the rule on procedural and substantive grounds.  Saturday’s Order delayed the effective date of the exclusion one year from January 1, 2022 to January 1, 2023, “pending the duration of HHS’ review of the November 20, 2020 rule,” with the consent of the parties.

    The fate of these safe harbor amendments under the Biden administration is in doubt.  As we pointed out in our previous post, the safe harbor amendments would reduce coinsurance for some federal program enrollees but would preclude PBMs from using rebates to reduce premiums across all enrollees.  The Congressional Budget Office estimated that the impact would be to increase Medicare and Medicaid spending by $177 billion over 10 years.  This Administration, like the previous one, has committed to reducing drug prices, but can be expected to favor price reduction measures that do not increase costs to the government.

    Conducting Virtual Inspections: EMA and MHRA do it, CMOs do it, why won’t FDA do it?

    At a conference sponsored by the Parenteral Drug Association on January 27, speakers demonstrated that:

    • Industry has developed best practices for auditors or regulatory inspectors to conduct virtual inspections of drug-manufacturing facilities (virtual inspections are those in which the auditor or inspector is not physically on-site, but, instead, conducts the inspection remotely through audio or video streaming techniques, or both).
    • Advanced technology is available and is easily controlled by remote auditors in such a fashion as to replicate the physical presence on-site of an inspector or even a team of inspectors.
    • Sponsors of approved applications for drugs regularly conduct virtual audits of their Contract Manufacturing Organizations (CMOs).
    • Other drug-manufacturing regulatory agencies worldwide routinely conduct virtual inspections, and have done so since COVID-19 began to shut down travel of inspectors.

    As we have previously reported (here, here, and here) and as my colleague Mark Schwartz wrote in a Bloomberg article, numerous FDA approvals of critically needed drugs are being blocked because FDA is insisting that the approvals must await in-person inspection of the facilities manufacturing either drugs or the Active Pharmaceutical Ingredients that are essential components of pharmaceuticals.  And yet FDA has not promulgated guidance or publicized policies on virtual FDA inspections so that the unnecessary blockade of drug approvals can be lifted.  FDA has claimed it has performed virtual inspections of food-manufacturing facilities, but has not claimed that it has performed a single virtual inspection of a drug-manufacturing facility.  By contrast, the European drug manufacturing regulatory body (the European Medicines Agency, or EMA) and its British counterpart (the Medicines and Healthcare products Regulatory Agency, or MHRA) have been performing such inspections since March.

    At the PDA webinar, which was attended by more than 350 individuals involved in drug manufacturing (and also apparently by some FDA officials: let’s hope they recognize the ease and promise of virtual inspections), presentations described the procedures that drug manufacturers should establish for the conduct of virtual inspections (including that video and audio should be streamed in real time, without alteration or enhancement) and discussed the practices that inspected entities need to embrace (such as ensuring that adequate wifi capabilities are available in all areas which are subject to inspection).  (This blogpost will be updated to provide a link to the presentations, when they are available.)  One presenter, Peter Miller of Dynamic Compliance Solutions, demonstrated a 360camera that provides viewers of the video feed the same capabilities that an inspector or multiple inspectors would have if they were personally present at the inspected facility.  As you can see in the brief video, viewers can:

    • Instruct personnel on-site to move the camera to particular places or in certain directions;
    • Remotely pan or tilt the view provided by the camera as the remote inspectors wish, and, if there are multiple remote inspectors, each viewer can tilt or pan the camera to view different areas, people, or equipment as they wish (by left-clicking and rolling the mouse), and can zoom in and out;
    • Interview plant personnel; and
    • Demand to view specific documents through a flexible and high-resolution document camera.

    Which brings us to the immortal lyrics of Cole Porter, popularized by Ella Fitzgerald.  “Let’s Fall in Love” suggested that “birds do it, bees do it, even educated fleas do it,” and implied, “Why don’t we do it?”  The same question could be asked of FDA about virtual inspections.  (This blogger’s question is rhetorical, only, because offering his honest response would be based on speculation and the content of the answer would be undignified.)  It is clear that COVID is going to prevent adequate FDA on-site inspections for months, if not years, and yet . . .

    UPDATE: A copy of the presentations noted above is available here.

    Categories: cGMP Compliance

    FDLI Publishes New Book on IVD Regulation Co-Edited by HP&M’s Jeffrey Gibbs and Allyson Mullen

    While receiving less public attention than some other types of health care products, in vitro diagnostics (IVDs) have for years been playing an increasingly important role in health care.  The COVID-19 pandemic has highlighted what has long been the case: IVDs are indispensable to public health.  Whether used as companion diagnostics to guide therapeutic treatment, or liquid biopsy to identify tumors from blood tests, or to detect an infectious disease, or to help determine whether a patient has had a heart attack, or in thousands of other ways, IVDs are essential in medicine.

    There has not, however, been a single source that someone could consult to learn about how IVDs are regulated today.  To fill that void, the Food and Drug Law Institute (FDLI) has just released Diagnostics at a Crossroads: Navigating IVD Regulation in a Changing Environment, the first book in over a decade that addresses the world of IVD regulation.

    The book comprehensively covers diagnostic regulatory issues, from premarket issues, e.g., analytical testing, statistics, clinical studies, and pathways to the market, to post-market issues, such as Quality System Regulation and Medical Device Reporting.  And, of course, it addresses two of our favorite topics: laboratory developed tests (LDTs) (see, e.g., our earlier posts here, here, here, here, here, and here) and research use only (RUO) products.  The authors represent a range of disciplines and expertise.  To name just a few, they include Dan Schultz, former director of CRRH; Nina El-Badry of BARDA; and Sally Hojvat, who was Director of one of the IVD Divisions at CDRH and now consults with WHO; and several colleagues at Hyman, Phelps & McNamara, P.C., and other law firms.  The book also covers other topics critical to IVD manufacturers and investors, such as reimbursement – simply getting on the market isn’t often enough for a test to be commercially viable – and the evolving European regulatory model.

    More information about the book can be found here: https://www.fdli.org/IVD-book.

    With the ongoing leaps in technology the importance of IVDs will only continue to grow.  We expect that this book will be a valuable resource for those who are seeking to learn how to better understand and navigate the world of IVD regulation.