For the past two years, FDA has been working to improve the 510(k) Third Party Review Program.  This program is meant to delegate the review of certain 510(k) submissions, freeing FDA’s limited resources to focus on the review of more complex devices and those that present a greater risk to users.  While this seems like a great program in theory, since its introduction it has been greatly underutilized due to FDA routinely re-reviewing the submission.  In September of 2018, FDA issued a draft guidance on an updated Third Party Review Program, which was finalized on March 12, 2020.  The final version is largely unchanged from the draft.  This post will focus on notable changes.  For a more detailed overview of the Program overall, visit our prior blog post, here.

Overview of the Prior Third Party Review Program

FDA’s Third Party Review Program, formerly known as the Accredited Persons Program, allows sponsors to submit 510(k) applications for devices with eligible product codes to a Third Party Reviewer, who uses FDA criteria to evaluate the submission.

The Final Guidance, like the draft, limits eligibility for Third Party Review to certain device types which generally present a lower risk to users.  It also outlines the same factors it will consider when determining eligible devices: (1) the risk profile of the device, (2) the extent to which a Third Party Reviewer would have access to the information needed to make a well-informed decision, (3) the extent to which the review requires multifaceted interdisciplinary expertise, and (4) the extent to which post-market safety data should be considered.  Product codes eligible for Third Party Review are identified on FDA’s product code classification database.

After its substantive review, the Third Party Reviewer sends the submission to FDA with a recommendation that the device is Substantially Equivalent (SE) or Not Substantially Equivalent.  FDA has thirty days to make a final determination.  Under the prior program, however, FDA regularly re-reviewed all or part of the 510(k) submission before making a final determination, essentially eliminating the program’s efficiency.  FDA accepted 75 Third party 510(k) submissions in fiscal year 2018 and 78 in fiscal year 2019.

Overview of FDA’s New 510(k) Third Party Review Program

As noted above, FDA’s final guidance is largely unchanged from the draft.  The most notable, non-substantive change is abbreviating the program as the “3P510k” Review Program, previously the “3P Review Program.”  Not only is this a mouthful, the reference to a 510(k) submission as “510k” makes many in the industry, the author included, cringe.  FDA provided no explanation for the change in name, or dropping the parentheses in 510(k).

A more substantive change is the expansion of international standards with which the 3P510k Review Organization can comply and still “be in compliance with most FDA 3P510k Review Organization requirements and meet FDA’s recommendations” in the guidance document.  While FDA does not elaborate on what it means by “most” requirements, it is notable that under the final guidance, 3P510k Review Organizations and Reviewers can comply with the Medical Devices Single Audit Program (MDSAP) and the International Medical Device Regulators Forum’s Good Regulatory Review Practices; whereas the draft only referenced reliance on standards in MDSAP.

FDA’s Final Guidance elaborates on the draft’s reference to forum shopping, explaining that 510(k) Submitters are not permitted to provide substantially the same submission to multiple 3P510k Review Organizations to find the one most likely to recommend an SE determination.  The final draft also adds trade secrets to the description of confidential information a 3P510k Review Organization is expected to protect.  Disclosure of confidential information or trade secrets is prohibited under the 3P510k Review Program and could result in a suspension or withdrawal of recognition of the organization.

When FDA issued the draft a year and a half ago, we expressed cautious optimism that the revamped program would provide a meaningful alternative to the 510(k) submission process for certain devices.  While that outcome is not yet clear, we look forward to tracking the use of this program and will keep our readers updated with any additional developments.

The COVID-19 pandemic has had a significant impact on day-to-day life for all of us in an attempt to “flatten the curve” to slow transmission of the coronavirus (SARS-CoV-2).  However, for those of us involved in the development of medical products, quarantines, site closures, travel limitations, interruptions in the supply chain, and infection add an unprecedented set of challenges that make it difficult to conduct clinical trials.  In an acknowledgement that protocol modifications may be required and protocol deviations may be unavoidable, FDA’s three medical product centers today issued a Guidance on Conduct of Clinical Trials of Medical Products during COVID-19.  Given this public health emergency, this guidance was developed and implemented without prior public comment and is effective immediately.

Considerations That May Result from COVID-19 Pandemic

FDA outlines considerations to assist in assuring the safety of trial participants, maintaining compliance with good clinical practice and minimizing risks to trial integrity during the COVID-19 pandemic.  Considerations for sponsors, investigators, and institutional review boards (IRBs) include:

• To ensure the safety of trial participants, consider whether to: (a) continue trial recruitment, (b) continue use of the investigational product for patients already participating in the trial, and (c) change patient monitoring during the trial. The key to this is insuring trial participants are kept informed of any changes to the study or monitoring plans that could impact them.
• If trial participants may not be able to come to the investigational site for protocol-specified visits, consider alternative methods for safety assessments (e.g., phone contact, virtual visit, alternative location). If in-person visits are not possible, and safety of trial participants cannot be assured by alternative means, consider whether to discontinue use of the investigational product (and, if so, whether withdrawal of active investigational treatment requires additional safety monitoring).
• If a trial, as designed, cannot be properly conducted, consider whether it is possible to delay some assessments or whether to stop ongoing recruitment or even withdraw participants.
• If onsite monitoring visits are no longer possible, consider use of central and remote monitoring programs.

Even if these considerations are not yet impacting a clinical trial, FDA requests sponsors, investigators, and IRBs to ensure they have policies and procedures in place to protect participants and manage study conduct during possible disruption as a result of COVID-19.

FDA Guidance on Specific Actions

Outside of these decision-making considerations, FDA provides guidance on other specific actions:

• COVID-19 Screening Procedures: If COVID-19 screening procedures are mandated by the health care system in which the clinical trial is being conducted, these do not need to be reported as an amendment to the protocol, even if done during clinical study visits, unless the sponsor is incorporating the data collected as part of a new research objective.
• Safety-Related Changes to Protocols and Informed Consent: If protocol or informed consent changes are anticipated as a result of COVID-19 that will help minimize or eliminate immediate hazards or to protect the life and well-being of participants (e.g., to limit exposure to COVID-19), these changes may be implemented without IRB approval or before filing an amendment to the IND or IDE (but are required to be reported afterwards), although early engagement with IRBs is encouraged.
• Protocol Deviations: Sponsors and investigators should work with IRBs prospectively define procedures to prioritize reporting of deviations that may impact the safety of trial participants.  While alternative processes should be consistent with the protocol to the extent possible, any contingency measures implemented should be documented with the reason taken. It is important to capture specific information in the case report form that explains the basis for missing data (e.g., due to changes in study visits schedules, missed visits, or patient discontinuations), including the relationship to COVID-19.
• Efficacy-Related Changes to Protocol: FDA recommends consultation with the review division, if feasible, regarding protocol modifications for the collection of efficacy endpoints (or other changes that would require changes to the statistical analysis plan (SAP)), such as use of virtual assessments, delays in assessments, and alternative collection of research-specific specimens. Failure to collect an efficacy assessment should be documented by identifying the specific limitation imposed by COVID-19 leading to the inability to perform the protocol-specified assessment.  Prior to locking the database for a study, sponsors should address in the SAP how protocol deviations related to COVID-19 will be handled for the prespecified analysis.

As an overarching action item for sponsors, investigators, and IRBS, the draft guidance requests that policies and procedures be put in place to describe approaches to be used to protect trial participants and manage study conduct during possible disruption of the study as a result of COVID-19 control measures at study sites.  The policies and procedures could address, for example, changes to the informed consent process, study visits and procedures, data collection, study monitoring, adverse event reporting, and changes in investigator, site staff, and clinical monitor due to travel restrictions, quarantine measures, or COVID-19 illness itself.

FDA established an email box for receipt of questions on clinical trial conduct during the COVID-19 pandemic: Clinicaltrialconduct-COVID19@fda.hhs.gov.

Documenting Actions Taken in Response

In addition, FDA requests that all actions taken by the sponsor, investigator, and IRB be documented.  Specifically, FDA states that the clinical study report or other separate study-specific document provide:

• A description of contingency measures implemented;
• A listing of all participants affected with a description of how participation was altered; and
• Analyses and discussions that address the impact of the implemented measures (e.g., trial participant discontinuation, alternative procedures) on the safety and efficacy results reported.

What Should Sponsors Do Now?

For each protocol, sponsors should evaluate whether new or modified procedures should be in place to protect trial participants and manage study conduct during possible disruption of the study as a result of COVID-19.  Sponsors should also prospectively develop plans for addressing different circumstances (e.g., quarantined study site, illness at the site, cancelled study visit) and regulatory responsibilities (e.g., informed consent, product accountability and administration, training and monitoring the sites).  Finally, sponsor should ensure that the investigators and study sites involved in their clinical studies are familiar with the recommendations in these new FDA guidelines as soon as possible.  Many of the FDA recommendations directly affect the study investigator, such as a need to document the relationship of COVID-19 to the conduct of the study including contingency measures, missing data, or protocol deviations.

With the growth of biosimilar applications, courts have been faced with a litany of questions arising from the interplay between reference product intellectual property and the biosimilar application process.  Though the BPCIA was designed to “learn” from FDA’s experience with the Hatch-Waxman Act, the procedural differences in the patent dance raise novel questions (for example, questions about whether the patent dance is mandatory and proper notice timing made it all the way to the Supreme Court).   The Federal Circuit, back in December, addressed another one of these questions arising from a significant difference between the Hatch-Waxman Act and the BPCIA: the role of process (or manufacturing) patents.

The patent safe harbor under 35 U.S.C. § 271(e), as we have discussed here and here, exempts drug development and approval from patent infringement provisions, and courts have interpreted the safe harbor to apply to broadly to FDA-regulated and approved products, including biologics.  Generally, the safe harbor protects the use of a patented technology for all development activities “reasonably related” to FDA approval.  Indeed, as long as there is a reasonable basis to believe that patented technology may be used for a non-routine FDA submission, the use is not an act of infringement.  Courts continue to grapple with the application of the safe harbor to different types of FDA submissions as the regulatory process has become more complex—and largely have continued to expand its scope.

However, now that biosimilars and the biosimilar patent dance are a thing, the courts have to assess the scope of the safe harbor with respect to types of patents.  This wasn’t an issue in the past because FDA regulations preclude the listing of process patents in the Orange Book, which means that process patents are not included in the Hatch-Waxman patent dance.  Indeed, the Federal Circuit has even held that, for purposes of patent infringement, the act of submitting an ANDA is only an artificial act of infringement with respect to a drug substance or drug product patent—thereby omitting process patents from the infringement calculus until the product has been placed into interstate commerce (obviating the need for the application of the safe harbor to process patents).  See Glaxo Inc. v. Novopharm Ltd., 110 F.3d 1562 (Fed. Cir. 1997).  But in the biosimilars context, where the manufacturing process may be integral to the safety, potency, and purity of the biological product, and is therefore critical to the product itself, process patents are included in the patent dance, raising questions of how the safe harbor actually works when the act of manufacturing itself is an act of infringement.

In December, the Federal Circuit was asked to opine on jury instructions with respect to the application of the safe harbor to process patents in patent litigation relating to Hospira’s biosimilar application referencing Amgen’s erythropoietin.  While no one argued that the safe harbor does not apply to process patents (likely because the safe harbor statute expressly applies to “the use” of a patented invention for FDA approval purposes) , the jury found that only 7 of Hospira’s 21 batches of drug substance were covered by the safe harbor; the other 14 therefore infringed on Amgen’s process patents.

Hospira argued that “no reasonable jury could have found that some, but not all, of Hospira’s drug substance batches were protected by the Safe Harbor defense.”  Instead, Hospira argued, the instructions to the jury with respect to the application of the safe harbor to process patents were flawed.  The instructions, in relevant part, stated:

You must evaluate each of the accused activities separately to determine whether the Safe Harbor applies.  If you find that an accused activity was reasonably related to the development and submission of information to the FDA for the purpose of obtaining FDA approval, then Hospira has proved its Safe Harbor defense as to that activity. If Hospira has proved that the manufacture of a particular batch was reasonably related to developing and submitting information to the FDA in order to obtain FDA approval, Hospira’s additional underlying purposes for the manufacture and use of that batch do not remove that batch from the Safe Harbor defense.

Hospira argued that this instruction focused on the intent of manufacturing batches rather than whether each batch was used for purposes reasonably related to Hospira’s submission.  Amgen, unsurprisingly, argued that the jury instruction clearly applies only to the use of the batches.

The Federal Circuit sided with Amgen.  The Court explained that because the patented inventions are “Amgen’s claimed methods of manufacture,” “[t]he relevant inquiry, therefore is not how Hospira used each batch it manufactured, but whether each act of manufacture was for uses reasonably related to submitting information to the FDA.”  In other words, the jury appropriately focused on the “why” of each use of the manufacturing process.  Regardless, the Court continued, “the instructions struck the appropriate balance by telling the jury that Hospira’s additional underlying purposes do not matter as long as Hospira proved that the manufacture of any given batch of drug substance was reasonably related to developing information for FDA submission.”  Because substantial evidence supports the jury’s findings that the 14 batches—which were admittedly made for commercial inventory but supposedly used for biosimilarity testing, revisions to release specifications, stability testing, and continued process verification—were not manufactured solely for uses reasonably related to the development and submission of information to FDA, as they were also used for routine submissions and therefore not protected by the safe harbor, the Court found the jury’s findings reasonable.

Hospira filed a Petition for Rehearing En Banc in January, arguing the Federal Circuit misapplied the safe harbor with respect to biosimilar process patents.  Instead of the underlying purpose for the use of the manufacturing process, Hospira contends that the jury must look at the ultimate use of the product manufactured through the potentially infringing process.   Looking at the broader application of the safe harbor, Hospira argues the Federal Circuit’s ruling “calls into question the continuing viability of the Safe Harbor” because “[i]f an act of manufacture infringes regardless of how the product batches produced by the patented method are used, then the statutory protection for ‘making’ a drug is rendered illusory for a large subset of the patents available to be asserted under the BPCIA.”  Therefore, the Court’s ruling that “subsequent uses that are objectively related to obtaining FDA approval cannot bring the making of the [erythropoietin] within the Safe Harbor if the manufacture itself was not ‘required,’ at the time of manufacture, for seeking FDA approval” must be erroneous.

According to Hospira, because it ultimately used all of the batches to generate data for its aBLA, its infringement of Amgen’s process patents is protected under the safe harbor regardless of its intent when manufacturing those 14 batches.  This is particularly true, Hospira argues, because of the nascent nature of the aBLA process.  Because, at the time of submission, FDA had only “issued limited draft guidance for the requirements for approval of [an aBLA],” Hospira did not know exactly what testing and how many batches would be necessary for approval.  Therefore, Hospira manufactured batches to preclude “giving the FDA less information than it deserves and/or needlessly prolonging the review process if FDA finds the initially submitted data to be insufficient.”

Amgen responded in late February, urging the Court to deny the Petition for Rehearing.  Amgen focuses on the wording of the jury instruction rather than the overarching policy debate, arguing that the jury instruction was consistent with the statute, as well as existing safe harbor case law.  Further, Amgen emphasizes that the testing performed on the batches was required only because the batches were made for commercial inventory.  The jury properly found, based on substantial evidence, that the tests performed were “routine testing” not subject to the safe harbor.  Indeed, Amgen explains, that “rather than use ‘how’ or ‘why,’” the panel correctly applied the language used in the statute: “whether each act of manufacture was for uses reasonably related to submitting information to the FDA.”

Ultimately, there is an underlying question of fact here—whether the Hospira actually used those batches for routine submissions or approval submissions—which may lead the Federal Circuit to reject the Petition for Rehearing En Banc.  While that would certainly be a bad outcome for Hospira—and arguably for any aBLA-filers mired in regulatory uncertainty— such an outcome may preclude clarity on the why vs. how issue.  But even if that happens, this is unlikely to be the last we hear from the Federal Circuit on the scope of the safe harbor as it applies to process patents.  As the biosimilar patent dance process unfolds, we expect that process patents will play a larger role, culminating in even more questions for the courts.

A month ago, we blogged on FDA’s emerging strategy of granting Emergency Use Authorizations (EUAs) for devices, drugs, and biologics that can be used to combat the spread of COVID‑19.  Since then, FDA has begun granting EUAs, with more in the pipeline.  In addition, the Secretary of Health and Human Services (HHS) has now issued a so‑called PREP Act declaration that triggers extremely robust product liability protection for medical products used pursuant to an EUA.

To help industry understand FDA’s legal tools and role in fighting the pandemic, the Food and Drug Law Institute (FDLI) is hosting a webinar on March 19 (Thursday).  It will be free to members and available for a low price to non‑members.  Hyman, Phelps & McNamara, P.C.’s Jeff Shapiro will be moderating the panel.  Here is FDLI’s description of the webinar:

FDA is actively working with companies to identify potential shortages and mitigate any impacts as early as possible. FDA has also recently approved several Emergency Use Authorizations (EUAs) for medical products used to diagnose or prevent transmission of COVID-19. What is FDA’s role in responding to public health emergencies such as COVID-19? What is FDA’s process for issuing drug, device, or biologics EUAs? What other tools does the agency have to decrease the impact of supply chain disruptions, product shortages, and disease outbreaks, and what are the legal limits to FDA’s authority? How does FDA work with other agencies and entities such as the Centers for Disease Control and Prevention and World Health Organization?

FDA is urgently seeking to authorize diagnostic tests (see this guidance just issued) but it is also approving EUAs for prevention devices (e.g., facial respirators) and, hopefully, there will be vaccines and drug therapeutics that qualify in the near future.

Come join us to learn about EUAs, the PREP Act and more!

Since as early as 2005, industry has asked FDA for its input on the listing of device patents in the Orange Book (see our previous post here).  FDA has, for the most part, refused to address this question.  As such, industry has decided to just go for it and list device patents in the Orange Book as long as the device is integral to the safety or efficacy of the drug product and the patent is reasonably likely to be infringed if a generic version of the drug is approved.  Consistent with its ministerial role in Orange Book patent listing, FDA has listed these patents.  Though former Commissioner Gottlieb implied that FDA would soon address this issue, it hasn’t.  Indeed, in the 15 years since industry has been doing this, FDA has not said a word.

While FDA has been silent, the First Circuit recently opined on the issue.  In a different context than we’d expect—antitrust litigation—the Court made a bold declaration that device component patents that do not explicitly claim the drug product cannot be listed in the Orange Book in In Re Lantus Direct Purchaser Antitrust Litigation.  Unfortunately for industry, the Court did not tease out what it means by “drug product,” merely stating that a patent must claim the drug for which the applicant submitted the application.

In Re Lantus Direct Purchaser Antitrust Litigation challenges Sanofi’s patent listings for Lantus, an insulin glargine approved by FDA in 2000.  At approval, Sanofi listed one patent covering the drug substance, which expired in August 2014.  In 2007, Sanofi received approval of Lantus Solostar, which contains the same active ingredient but is a combination product including a self-injection drug delivery device.  Sanofi submitted an additional patent covering the “drive mechanism” component of the Solostar self-injection delivery system to the Orange Book in 2013.  In 2013-2015, several competitors submitted 505(b)(2) applications to FDA referencing Lantus, including paragraph IV certifications to the Solostar drive mechanism patent; they each culminated in a licensing agreement between the parties.

As a result of the Solostar drive mechanism patent listing, the plaintiffs in In Re Lantus Direct Purchaser Antitrust Litigation, a putative class of direct insulin glargine purchasers, allege that Sanofi artificially restricted competition in the insulin glargine market.  Because, they allege, the Solostar drive mechanism patent was improperly listed in the Orange Book, any litigation commenced in response to Paragraph IV certifications for this patent was a “sham” initiated to trigger an automatic 30 month stay.  The District Court dismissed the plaintiff’s antitrust claims predicated on the improper listing of the Solostar drive mechanism patent because of the “ambiguities in the FDA’s listing requirements.”  On appeal, the First Circuit disagreed.

Interpreting the plain wording of the Hatch-Waxman provisions, the Court determined that a patent listed in the Orange Book must not only be a patent that claims a drug, but “it must be a patent that claims the drug (or method of using the drug) ‘for which the applicant submitted’ the sNDA.”  According to the Court, because the Solostar drive mechanism patent “does not claim or even mention the Lantus Solostar,” it does not “claim the drug” and was improperly listed in the Orange Book.  Though the patent may claim an “integral component” of the drug product, the Court stated that it sees “nothing in the statute or regulations that welcomes such a further expansion of the already stretched statutory terms, whereby an integral part of an injector pen becomes the pen itself, and in turn is a drug.”

Once the Court determined that Sanofi should not have listed the Solostar drive mechanism patent, it followed that Sanofi could be held liable for antitrust injury arising from the restricted competition.  Sanofi argued that because it was required to list all patents that reasonably relate to the drug product, it should not be liable for antitrust violations, as it was merely trying to fulfill its statutory responsibilities under the Hatch-Waxman Amendments.  While the Court agreed to some degree, it maintained that regulatory responsibilities do not immunize improper patent submissions from antitrust scrutiny.  Nevertheless, a good faith defense may be applicable here.  Thus, the Court held that the Solostar drive mechanism patents were improperly listed, but “the defenses to antitrust liability as a result of such an improper submission include proving that the submission was the result of a reasonable, good-faith attempt to comply with the Hatch-Waxman scheme. . . .”  The case will go back to the District Court to litigate this issue.

Because the patent at issue here claimed only a device component rather than the pen injector itself, the decision here is not at odds with industry’s current practices.  Indeed, it is arguable whether a specific device component is integral to the safety or efficacy of the drug product, particularly if it’s not detailed in product labeling.  Nevertheless, the Court’s decision is vague and open to interpretation.  When it states that the “drug” must be claimed in the patent to be properly listed in the Orange Book under the plain language of the statute, it is not clear whether the patent would need to include the drug substance or if a patent that claimed only the delivery device for the approved drug would suffice.  The Court doesn’t go that far; instead, it states the patent needed to claim either insulin glargine or Lantus Solostar to be eligible for listing: the question goes to whether “Lantus Solostar” means the drug substance for use with the Solostar pen, or whether the pen would have been enough.  Perhaps this is a question that the Court would rather defer to FDA, but, as we know, FDA isn’t offering up any opinions here.

The fact pattern here is narrow enough that this decision is not likely to be explosive—the patent claims only a component of the delivery device and two versions of the same product are approved under the same NDA with only one requiring use of the device—and the decision is limited to the First Circuit.  But the implication here is that if FDA doesn’t take a stance here, courts are going to make up their own rules.  It’s rare for a court to opine on a regulatory procedure when FDA won’t.  And if courts are making up their own procedures, those procedures could be completely at odds with industry practices—practices that industry was forced to adopt specifically because FDA would not make a determination on the issue.  And it is apparently not a full defense to antitrust allegations that the listing is consistent with the ambiguous FDA policies on device patent listing.

Again, the fact pattern here precludes widespread application to the practices adopted by most drug/device product manufacturers, and that’s likely why the Court could make such a sweeping assertion in this matter, but the implications of this decision suggest that courts will act even where FDA has not provided clear direction.  This raises significant risks where regulatory uncertainty pervades.  The takeaway, therefore, is that just because FDA hasn’t objected (even when asked repeatedly to opine on conduct), a court still may.

Last week, FDA submitted to Congress the report on CBD (“CBD Report”) that the agency was directed to prepare by the Further Consolidated Appropriations Act, 2020. Concurrently, the Commissioner issued a statement that summarizes the agency’s progress to date, and a consumer update that emphasizes the agency’s safety-related concerns. Altogether, the documents suggest that greater clarity on the regulatory path for some categories of CBD products is not on the near horizon.

At the heart of FDA’s difficulty in discerning that path is insufficient scientific data regarding the safety of CBD. The agency cites several potential risks that have come to light thus far (e.g., livery injury, drug-drug interactions, and possible male reproductive toxicity), and points to numerous questions that remain unanswered, particularly with respect to the potential effects of sustained use. Although FDA is conducting or sponsoring some research, the agency is reiterating its call for submission of data to the docket established in connection with the public hearing held last May. Yesterday, the agency issued a notice of the reopening of that docket for an indefinite time to facilitate submission of “data that may help to address uncertainties and data gaps related to the CBD.” FDA’s wish list is long, and includes studies that address:

• risk of liver injury
• toxicities of active metabolites
• impact on the male reproductive system
• effect of co-administration with other substances, including medicines, alcohol, and dietary supplements
• impact on neurological development
• sedative effects
• transdermal penetration and pharmacokinetics
• safety of long-term or cumulative exposure, including in vulnerable populations
• effects of different routes of administration on CBD’s safety profile
• effect on food and non-food producing animals
• potential for bioaccumulation

In the interim, FDA acknowledges in its CBD Report that the horse – neigh, the entire herd – has left the barn, with a “vast proliferation of CBD consumer products” since passage of the 2018 Farm Bill. FDA continues to view CBD products that make therapeutic claims as posing the greatest risk to public health, but also expresses “serious concerns” about contaminants such as heavy metals and THC, false claims pertaining to composition or levels of CBD, and marketing to vulnerable subpopulations such as children.  As a potential next step, FDA is considering the issuance of a “risk-based” enforcement policy; however, that policy “would need to balance the goals of protecting the public and providing more clarity to industry and the public regarding FDA’s enforcement priorities while FDA takes potential steps to establish a clear regulatory pathway.” In other words, even that won’t be easy – or quick.

Last Thursday, March 5, 2020, the FTC filed a formal complaint alleging deceptive marketing practices against tea and skincare company, Teami, LLC, and its co-founders, as well as a stipulated order for permanent injunction and monetary judgment.  In conjunction with the filings, the FTC also issued 10 warning letters to Instagram influencers regarding their failure to disclose material connections to Teami in Instagram posts about Teami products.   On Friday, the FTC issued a press release about its settlement with Teami, posted about the settlement to its Consumer Information blog, published a separate post on its Business Blog, published links to Teami endorsement videos from Cardi B, Brittany Renner and an Instagram post from Jordin Sparks, tweeted about the case using images of Cardi B, Brittany Renner and Jordin Sparks, and announced and hosted a conference call for media.  That’s a lot of content in a short amount of time –  all aimed at ensuring high media coverage of one of FTC’s latest enforcement actions around deceptive marketing practices and the use of social media influencers/advertisers.

But first, the complaint.  The FTC alleges that Teami disseminated false or unsubstantiated efficacy claims about its teas through express or implied claims about treating cancer, reducing cholesterol, decreasing migraines, preventing and treating colds, causing weight loss and burning body fat.  Specific examples provided in the complaint relate to content on the Teami website from as late as December 2018.  The FTC also alleges that Teami engaged in deceptive advertising by failing to disclose material connections.  The complaint notes that the FTC wrote to the company in April 2018 about several influencer product endorsements and that in May 2018, Teami had implemented a social media policy to ensure relationships were clearly and conspicuously disclosed.  The complaint notes that many paid influencers were contractually obligated to obtain Teami approval before posting about Teami products.  Despite this requirement, the FTC alleges that Teami did not enforce its own social media policy requirements and numerous influencer posts did not clearly and conspicuously disclose that they were paid by Teami.   As part of the complaint, the FTC identified influencers, excerpts from their posts, as well as the number of influencer followers, illustrating the size of the audience affected by the content.

The FTC warning letters to influencers reference the FTC complaint against Teami and state that “[I]ndividual influencers who fail to make adequate disclosures about their connections to marketers are subject to legal enforcement action by the FTC.”  The FTC requests responses from influencers describing actions that have been taken or will be taken to ensure that social media endorsement posts clearly and conspicuously disclose relationships.  Responses are due to the FTC by March 30, 2020.

FTC does acknowledge that, in many instances, influencers did disclose their relationship as a “#teamipartner,” however the disclosure was not clear and conspicuous.  FTC states that the information did not always appear in the first two or three lines of text accompanying pictures and videos, and, on mobile platforms, users would need to click “more” to see that disclosure.  And FTC also points out how different technology renders posts differently to users – reinforcing that marketers need to consider the different platforms in which users will access content and whether disclosures are clear and conspicuous in each of those platforms.

As part of the settlement, the FTC set forth the following as part of its definition for “Clear(ly) and Conspicuous(ly)”:

• A required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers, including
  • In any communication that is solely visual or solely audible, the disclosure must be made through the same means through which the communication is presented. In any communication made through both visual and audible means, such as a television ad, the disclosure must be presented simultaneously in both the visual and audible portions of the communication even if the representation requiring the disclosure is made in only one means
  • Visual disclosures, by size, contrast, location, the length of time it appears, and other characteristics, must stand out from accompanying text or other visual elements
  • Audible disclosures, including by telephone or video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand
  • When using an interactive electronic medium, the disclosure must be unavoidable
  • Disclosures must use diction and syntax understandable to ordinary consumers and must appear in each language in which the representation that requires the disclosure appears
  • Disclosures must comply with these requirements in each medium through which it is received
  • Disclosures must not be contradicted or mitigated by, or inconsistent with, anything else in the communication

The disclosure and monitoring language largely tracks the language in the FTC’s first case involving individual social media influencers in 2017, however this is the first case to challenge claims made in social media endorsements about the effectiveness of health-related products.  The FTC is requiring Teami (and in turn, its influencers) to have adequate substantiation for weight-loss and other claims.

What’s notable about the Teami case is the FTC media blitz around the settlement – in addition to utilizing a variety of platforms to communicate, the FTC also uses celebrity images and videos as a hook.  And, while there are references to the FTC allegations around unsubstantiated efficacy claims, the bulk of FTC’s content focuses on the second count in the complaint – deceptive failure to disclose material connections related to paid endorsements.

Advertisers’ use of endorsements is a priority area for the FTC, particularly given emerging technology and use of social media.  FTC’s Endorsement Guides have been in place in some form for about 40 years, with its most recent update in 2009.  As we recently blogged, last month, the FTC announced it is seeking public comment on whether changes should be made to the Guides, including questions related to what, if any, changes should be made to account for changes in technology.

The FTC seems to be taking a page from industry’s book on the use of technology and celebrity images to capture audience attention.  Industry should take note, and exercise caution and compliance in implementing promotional strategies.  Your marketing, if done improperly, may someday become part of the FTC’s self-promotion.

The recent opinion in FTC v. Quincy Bioscience Holding Co., 2020 U.S. Dist. LEXIS 36424*(S.D.N.Y. Mar. 2, 2020) (background here) is a primer on affirmative defenses in an FTC Act case alleging deceptive advertising of a dietary supplement.  The FTC and State of New York brought a case alleging deceptive advertising of the dietary supplement, Prevagen, which purports to improve one’s memory.  We have discussed this case in the past – here and here – and in this post we will focus on the eight affirmative defenses that the FTC  moved to strike.  The court granted some, and denied others.  As someone who hasn’t litigated in a while, but follows litigation, this opinion was a good refresher on some basics.

Laches and Waiver:  For those who haven’t thought of laches since law school, it is the legal doctrine that an unreasonable delay in seeking a remedy for a legal claim will prevent it from being enforced if the delay has prejudiced the opposing party.  The court dispenses with this defense quite quickly because, “It is well settled that the United States is not bound by state statutes of limitation or subject to the defense of laches in enforcing its right.”  U.S. v. Summerlin, 310 US 4144, 416 (1940).

Validity of FTC Quorum: As happens occasionally, the FTC had only two Commissioners vote to bring the action – two Commissioner seats were vacant, and one Commissioner declined to participate in the vote, so the vote to bring the case was 2-0. Defendants argued that this was an ultra vires act (beyond one’s legal authority), and there wasn’t a valid quorum.  In an earlier opinion (389 F.Supp. 3d. 211 (S.D.N.Y. 2019)), the court determined that Rule 4.14(b) of the FTC’s Procedures and Rules of Practice states, “A majority of the members of the Commission in office and not recused from participating in a matter (by virtue of 18 U.S.C. 208 or otherwise) constitutes a quorum for the transaction of business in that matter.” 70 Fed. Reg. 53296-01 (Sept. 8, 2005) (codified at 16 C.F.R. § 4.14(b)).  Quorum is not the number of votes, but the number of persons required to be present in order for the business of the meeting to be conducted: at the time of this case, the quorum was three, and they were all present.

Commercial Speech: Defendant next made the argument that the claims were protected by the right to commercial speech and immune from regulation. The court dispensed with this quickly, stating that “deceptive commercial speech has no constitutional protection,” and “since the purpose of the trial of this case is to determine whether or not the advertisement is deceptive, the motion to strike the defense is denied.”

Good Faith: Good faith – here, in conducting clinical studies and advertising the results – is not a defense to liability under Section 5 of the FTC Act, but it may be a valid defense to the granting of an injunction. The court denied the motion to strike this defense.

Primary Jurisdiction of the FDA: While there are times when an argument that the FDA retains primary jurisdiction might prevail (e.g., awaiting FDA guidance on “natural”), “[g]iven the two agencies’ ‘overlapping and concurring jurisdiction,’ the FDA’s supposed ‘primary jurisdiction’ is not a viable defense.”

State Claims:  Defendant argued that the New York General Business Law claims fail because the alleged conduct took place outside of New York.  As the court did with the Commercial Speech argument above, it pointed out that the purpose of the trial is to determine whether any deceptive conduct occurred in New York, and denied the motion to strike the defense.

Right to Raise Additional Defenses: This defense, at least in theory, appears in many motions, but the issue here is just how that defense should be drafted.  This court did not wish for defendants to reserve the “unilateral right to add new and different affirmative defenses as they became known to it at indeterminate times in the future” (quoting Cty. Vanlines Inc. v. Experian Info. Sols. Inc., 205 F.R.D. 148, 157-58 (S.D.N.Y. 2002).  The court indicates that defendants may raise other defenses “with the opposing party’s written consent or the court’s leave” under Fed. R. Civ. P. 15(a).

This opinion was a fascinating walk-through of the defenses that are fairly common in litigation that we see in our space, and a good primer for regulatory attorneys who may not delve too deep into the procedural aspects of litigation that they read about every day.

Judge Naomi Buchwald of the District Court for the Southern District of New York recently found that the Department of Health & Human Services (“HHS”) misinterpreted a federal law requiring it to collect and post data for certain clinical trials, resulting in a 10-year gap in data that must be made publicly available. This decision will affect many clinical trials conducted between the time of the passage of the FDA Amendments Act (“FDAAA”) in September 2007 and the effective date of HHS’s Final Rule in January 2017 – meaning drug companies, medical device manufacturers and academic institutions will be required to post clinical trial data from clinical trials conducted during this time period.

The plaintiffs in Seife v. HHS are Charles Seife, an investigative journalist, and Peter Lurie, a former FDA associate commissioner who is also president of the public health watchdog Center for Science in the Public Interest.

Background

To provide some regulatory context, the ClinicalTrials.gov platform was developed by HHS and the National Institutes of Health (“NIH”) pursuant to the Food Drug and Modernization Act of 1997 (“FDAMA”), which required these agencies to establish, maintain and operate a data bank of information of clinical trials that could be accessed by members of the public, healthcare providers and researchers. Section 801 of the FDA Amendments Act of 2007 (“FDAAA”) imposed further reporting requirements aimed to “increase the availability of information to the public” and to “communicate the risks and benefits of drugs” in order to “help patients, providers and researchers learn new information and make more informed healthcare decisions.” Among those other requirements, FDAAA obliged “responsible parties” to submit specified “Basic Results” to NIH for inclusion in ClinicalTrials.gov for certain applicable clinical trials (“ACTs”). See our detailed summary of FDAAA and other requirements relating to the clinical trials database here.

On September 21, 2016, almost 10 years after the enactment of FDAAA and nearly 6 years after the deadline imposed on HHS by FDAAA, HHS promulgated its implementing regulations which we blogged about here. Effective January 18, 2017, the regulations declared that for ACTs of a product that is approved, licensed or cleared by FDA, Basic Results must be submitted within a certain time period.  However, for ACTs of a product that is not approved, licensed or cleared by FDA, Basic Results must be submitted only if the ACT had a primary completion date on or after January 17, 2017. If the ACT was completed after the enactment of FDAAA but before the effective date of the HHS Final Rule, Basic Results were not required to be submitted or posted if the ACT was for a product that was approved after the ACT was completed (“pre-Rule, pre-approval ACTs”).

Issue 1: HHS’s Interpretation of Final Rule Implementing FDAAA

When a court reviews an agency’s interpretation of its own regulation, it must apply Auer deference, which requires courts to defer to an agency’s reasonable interpretation of a genuinely ambiguous regulation. But the Supreme Court has recently cautioned that Auer deference does not apply in all cases, which we blogged about here. One such instance is when an agency interprets a rule that “parrots” the statutory text since the words initially come from Congress.

The Court found that the FDAAA unambiguously requires responsible parties to submit, and defendants to include on ClinicalTrials.gov, Basic Results for pre-Rule, pre-approval ACTs. Judge Buchwald compared the text of FDAAA and HHS’s Final Rule relating to the reporting of Basic Results and found that the Final Rule language is virtually identical to FDAAA.  Because the Final Rule parrots FDAAA, Auer deference does not apply to HHS’s interpretation. FDAAA states that “the Secretary shall include in [ClinicalTrials.gov] for each [ACT] for a drug that is approved… or licensed or a device that is cleared… or approved…, the following elements: [Basic Results]” (42 U.S.C. § 282(j)(3)(C)). Looking to the plain language of the statute, “is” of “is approved…. or licensed” or “is cleared… or approved” means a drug or device that is presently approved, licensed or cleared and therefore obligates HHS to include Basic Results on ClinicalTrials.gov for each ACT that studied a product that is presently approved by FDA, regardless of the marketing status of the product at the time when the ACT was conducted.

Defendants argued that such an interpretation of the FDAAA would violate a canon of statutory construction that statutes should not be construed to apply retroactively. However, Judge Buchwald determined that responsible parties knew since the enactment of FDAAA in 2007 that they were required to submit Basic Results for each ACT of a product that is approved. It was only in the 2016 HHS Final Rule, where HHS told parties they weren’t required to submit Basic Results for pre-Rule, pre-approval ACTs, that this requirement changed. Because the Court found that FDAAA unambiguously requires responsible parties to submit, and the government to include on ClinicalTrials.gov, Basic Results for pre-Rule, pre-approval ACTs, the Court granted plaintiff’s motion for summary judgment to hold unlawful and set aside HHS’s interpretation of the Final Rule as contrary to the FDAAA.

Issue 2: FDA’s and NIH’s Failure to Engage in Enforcement Action

FDAAA also created enforcement mechanisms to ensure that responsible parties comply with their clinical trial reporting obligations. HHS was empowered to issue a notice of noncompliance to a responsible party that fails to submit or submits false or misleading clinical trial information. If a violation is not corrected with 30 days, the responsible party will be subject to a civil monetary penalty up to $10,000 for each day the violation is left uncorrected. HHS delegated this power to FDA. NIH must include in the ClinicalTrial.gov entry a statement that “the responsible party is not in compliance” by failing to submit or submitting false or misleading clinical trial information, the penalties imposed for the violation, and whether the responsible party has corrected the information. NIH must also provide a means for the public to easily search ClinicalTrials.gov for notices of noncompliance. To date, FDA has never issued a noncompliance notice under its authority, and NIH has neither posted a public notice of noncompliance nor created a search function for such notices on ClinicalTrials.gov.

Plaintiffs challenged FDA’s and NIH’s failure to issue a noncompliance notice to responsible parties who have failed to report clinical trial information and NIH’s failure to provide a search function for such notices. Defendants argued that their challenged inaction is not subject to judicial review under the APA because the text of the FDAAA assigns discretion to the agencies to decide whether or not to engage in such enforcement actions. The court determined that FDA’s obligation to issue noncompliance notices only arises after FDA determines that clinical trial information has not been submitted or submitted information is false or misleading.  However, that determination is within FDA’s discretion and, since FDA has never made such a determination, FDA has no obligation to issue noncompliance notices.

The court then determined that the NIH notices are required to include information that exists only after FDA exercises its discretion under the FDA notice provision. Requiring NIH to post noncompliance notices on ClinicalTrials.gov without FDA first issuing their noncompliance notice to the responsible party would be “nonsensical” according to Judge Buchwald. Similarly, NIH’s nondiscretionary obligation to create a search function is predicated on FDA’s discretionary obligation to issue noncompliance notices to responsible parties for failing to submit clinical trials data. NIH is not required to create a search function for FDA noncompliance notices that do not exist. The court therefore granted the plaintiff’s motion for summary judgment

What Now?

While the court’s decision requires the results of clinical trials conducted in unapproved products between September 2007 and January 2017 to be posted on ClinicalTrials.gov, it is unclear whether FDA will require responsible parties to report, how long responsible parties have to report, and for HHS to subsequently post, such data.

*Admitted to Maryland Bar. Work supervised by the Firm pending D.C. Bar Admission.

In a recent decision out of the Seventh Circuit, Antrim Pharms. Llc. v. Bio-Pharm, Inc., 2020 U.S. App. LEXIS 4772* (7th Cir. 2020), the court decided a battle of the experts: Bio-Pharm prevailed after Antrim unsuccessfully argued the court should preclude testimony by Bio-Pharm’s expert, HP&M’s own Mark Schwartz, on how the FDA regulates ANDA holders. BioPharm also successfully argued the court should preclude testimony by Antrim’s expert on industry practices and how Bio-Pharm’s alleged breach impaired the value of Antrim’s business.

While we won’t get into the specifics of the case, what is important for our readers’ purposes is that Antrim sought to preclude Bio-Pharm’s expert, Mark Schwartz, because “allowing an FDA officer to testify on a legal issue invades the province of the court.”  We all learned in trial practice 101 that experts generally may not testify on pure issues of law, such as the meaning of statutes or regulations – that is the province of the attorneys trying the case, right?  But, the decision point out, courts do permit regulatory experts – even those who are lawyers – to testify on complex statutory or regulatory frameworks when it might help the jury understand a complicated framework.  Indeed, Fed. R. Evid. 702(a) states “A witness who is qualified as an expert. . . may testify in the form of an opinion or otherwise if: the expert’s . . . specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue.” While the court called this issue of preclusion “complicated,” it ultimately denied the motion to preclude the expert and allowed Mark to testify.

The next issue before the Court was whether Antrim’s industry expert with over 20 years of experience in the pharmaceutical industry should have been precluded.  This preclusion hinged not on the expert’s qualifications, but his intention to testify about “well-known industry practice and norms” on the issue of the specific ownership interests at issue in the case.  The problem was that the expert admitted during deposition that he had no specific knowledge of the ownership interests of either of the parties, even though that was precisely the fact at issue. The court determined that the proffered testimony was not relevant to whether the parties had in fact entered into an agreement to share equity.

In short, this case is a study not only in selecting your experts well, but also ensuring that their testimony is relevant and will help jurors – and the court – better “understand the evidence or determine a fact in issue.”  Mark Schwartz – the expert in the case discussed above – has served as an expert witness in other FDA-related litigation, basing that expertise on his 13 years at the FDA in various capacities, including ten years in the Office of Chief Counsel and three years as CBER’s Deputy Director of the Office of Compliance and Biologics Quality.

HP&M is nationally known and ranked for its food, drug and device regulatory knowledge, and HP&M attorneys regularly serve as advocates in disputes, but our readers may not realize the depth of our bench in expert witnesses. That experience ranges from issues such as the FDA regulatory framework, drug and biologic manufacturing, FDA drug and biologic compliance and enforcement (Mark Schwartz) to Hatch-Waxman, drug approval, and biosimilars (Kurt Karst), to the appropriateness of a change to the device without a new 510(k) and device labeling/advertising (Jeff Shapiro) among other topics and experts.

On February 27, the U.S. Department of Agriculture (USDA) announced the delay of enforcement of certain requirements under the interim final rule (IFR) for the U.S. Domestic Hemp Production Program.

As we previously reported, on Nov. 7, 2019, USDA published its much-anticipated rule establishing the requirements for hemp production under USDA, state and tribal jurisdictions.  The rule was published as an IFR to allow for the quick implementation (in time for the next growing season) and still provide interested parties time to submit comments.  USDA indicated that it planned to publish a final rule two years later.

Based on comments received, it appeared that the IFR requirement to test the hemp 15 days before harvest was expected to create problems for the farmers.  Under the IFR, testing must be done by DEA Registered Testing Laboratories.  However, according to commenters, the capacity of these laboratories is insufficient to handle the number of samples anticipated; some states have no DEA Registered laboratories, whereas others only have one or just a couple.

To address this complication, USDA has decided to delay enforcement of the requirement for labs to be registered by the DEA.  As announced on February 27, 2020, USDA plans to delay the registration requirement until Oct. 31, 2021, or until the final rule is published, whichever comes first.  The laboratories must still meet all the other requirements in the IFR, including the requirement to test for total THC employing post-decarboxylation or other similarly reliable methods.  Also, all labs must work towards being compliant with the DEA registration requirements before the period of delayed enforcement expires.

Another major hurdle in the IFR is the disposal of “hot hemp,” i.e., hemp that has more than 0.3% THC on a dry weight basis.  USDA has delayed enforcement of the requirement that producers must use a person authorized to handle marijuana under the Controlled Substances Act, such as a DEA-registered reverse distributor or law enforcement, to dispose of non-compliant plants.  USDA has increased flexibility in disposal methods by adding some common on-farm practices for the destruction of non-compliant plants making them non-retrievable or non-ingestible. A list of allowed disposal techniques and descriptions is available on the U.S. Domestic Hemp Production Program web page and include plowing under non-compliant plants or composting into “green manure” for use on the same land.

Last month, former Theranos executives, Elizabeth Holmes and Sunny Balwani, convinced U.S. District Judge Davila to throw out criminal fraud charges, while denying other defense motions (see Judge Davila’s order here). The charges allege the pair misled patients on the basis that the government can’t prove that patients who received inaccurate test results were actually harmed. As a recap, Holmes and Balwani are charged with wire fraud and conspiracy to commit wire fraud against investors, physicians and patients based on claims that their promising and novel blood-test would revolutionize the healthcare industry (see indictment here).  We have previously blogged about the Theranos saga here and here.

On Monday, February 10th, a hearing was held in which the government and defendants’ counsel argued their positions with respect to Holmes’ and Balwani’s three motions to dismiss which were jointly filed on January 27th.

The first motion argued that the government’s indictment is unconstitutionally vague and does not provide defendants with adequate notice. Under the Federal Rules of Criminal Procedure, and to pass constitutional muster, an indictment must contain plain and concise statements of the essential facts constituting the offense charged such that a defendant can prepare for their defense.

Holmes’ counsel, Amy Saharia of Williams & Connoly LLP, argued that prosecutors hadn’t given the former Theranos executives notice of when the former executives allegedly made false and misleading statements or specified which statements are exactly at issue. Saharia further asserted that discovery has been “massive”. As of the February 10 hearing, the government has produced more than 20 million pages of documents which include statements made on Theranos’ website and marketing materials, news articles and presentations given by Homes relating to the company’s blood tests. However, Judge Davila, denied these arguments, finding that the indictment is constitutionally sound because it provides enough detail to establish the particular factual universe of the underlying investor and doctor/patient scheme and Holmes’ and Balwani’s acts in furtherance of that scheme..

Relatedly, defendants asked Judge Davila to order the government to specify their charges in a bill of particulars (BOP). A BOP gives the requesting party knowledge of what the opposing party has alleged so the requesting party can better prepare a defense and be protected from unfair surprise at trial. The government disputed the suggestion that a BOP was necessary, noting a fear of unfair surprise was unfounded because the defense has been litigating the case at a sophisticated level for nearly two years and thus already knows the “particulars” of the case. However, Judge Davila agreed with Holmes and Balwani and ordered the government to produce a BOP as to the specific misrepresentations underlying the doctor-patient fraud.

The second motion argued that the indictment does not support a conclusion that defendants’ alleged statements and omissions were material. The three alleged false statements at issue were regarding Theranos’ 1) partnership with Walgreens, 2) its supposedly profitable relationship with the U.S. Department of Defense and that its technology had been deployed to the battlefield and 3) statements made to doctors and patients concerning the accuracy and reliability of its blood tests. Defendants focused on details in the indictment, such as the meaning of “consistently.” Prosecutors pointed to Theranos’ claim that its tests had received clearance from the FDA, which could lend surety to investors, physicians and patients that the technology was accurate and legitimate. Ultimately, Judge Davila determined that materiality does not require alleged misstatements to be accurate – it only requires the alleged misstatements to have a “natural tendency to influence”. Relating to the statements at issue, Judge Davila felt the first two statements give the false impression to an investor that Theranos’ business was growing and that it was a good investment. Similarly, the third statement gives a false impression to physicians and patients that Theranos’ technology would provide accurate results. Judge Davila denied this motion to dismiss after determining the indictment sufficiently alleges a factual basis that the alleged misrepresentations were material.

There were four types of possible victims in the alleged doctor/patient scheme: paying patients, non-paying patients, doctors and insurance companies, the latter which were not mentioned in the indictment as being defrauded. With regards to doctors or patients, the third motion argued that counts two and nine through eleven of the indictment did not allege that defendants acted with the specific intent to obtain money or property from any doctors or patients through deceit. Defendants argued that many of the alleged patient victims did not pay for Theranos tests, but rather were paid for by medical insurance companies, and thus portions of the indictment relying on “non-paying” patient victims were invalid. Judge Davila ruled that the indictment didn’t show that defendants had a specific intent to obtain money from patients whose insurance paid for the tests because the indictment does not explain how these patients were deprived of money or property. Judge Davila also determined that the indictment didn’t show that doctors were a victim of fraud. Therefore, the third motion was granted to dismiss counts two and nine through eleven to the extent they depend on “doctor-victims” and “non-paying patient-victims” but not paying “patient-victims.”

Holmes and Balwani each face 20 years in prison and hundreds of thousands of dollars in fines. Things will heat up this summer if the trial begins in August, as currently scheduled.

*Admitted to Maryland Bar. Work supervised by the Firm pending D.C. Bar Admission.

Under current law, a Narcotic Treatment Program (“NTP”) registered with the Drug Enforcement Administration (“DEA”) can only provide treatment at its registered location.  With the current opioid epidemic, the need to ensure access to medication-assisted treatment is more acute than ever.  To help address this public health crisis, DEA has published a proposed rule that would increase accessibility to medication-assisted treatment for patients with substance use disorders, including opioid use disorder.  Registration Requirements for Narcotic Treatment Programs With Mobile Components, 85 Fed. Reg. 11,008 (Feb. 26, 2020).  DEA proposes to waive the requirement that registered NTP operating mobile units that dispense narcotic drugs for maintenance or detoxification treatment at remote locations would need to obtain a separate DEA registration as a coincident NTP activity.  The proposal would allow the NTPs to bring treatment via Mobile Narcotic Treatment Programs (“MNTPs”) to areas previously inaccessible and treat patients unable to travel.  The proposal would make maintenance and detoxification treatment more available while requiring safeguards to minimize the risk of methadone and other controlled substance diversion.

DEA authorized MNTPs to operate ad hoc prior to 2007, but placed a moratorium on authorizing additional MNTPs since that time.  Id. at 11,009.  We were unable to determine how DEA authorized NTPs to use MNTPs, but it appears that the NTPs made special arrangements with local DEA offices.  Id. at 11,015.  Nineteen NTPs operated MNTPs over the past five years, and eight NTPs continue to operate MNTPs authorized by DEA.  Id. at 11,009.  DEA notes that the authorized MNTPs complied with the Controlled Substance Act and DEA’s regulations so the proposed rule “builds on the existing experience and provides additional flexibility” for NTPs to operate MNTPs “subject to the regulatory restrictions put into place to prevent the diversion of controlled substances.”  Id.

DEA would define a “Mobile Narcotic Treatment Program” as “a motor vehicle . . . that serves as a mobile component (conveyance) that is operating under the registration of a narcotic treatment program, and engages in maintenance and/or detoxification treatment with narcotic drugs in schedules II-V, at a location remote from, but within the same State as, its registered location.”  The agency would further define “Motor Vehicle” as “a vehicle propelled under its own motive power and lawfully used on public streets, roads, or highways with more than three wheels in contact with the ground. This term does not include a trailer.”  Id. at 11,018.

NTPs would have to notify the local DEA office in writing of their intent to operate an MNTP, and must receive written approval from DEA before beginning operation.  MNTPs, as controlled premises, are subject to DEA inspections.  The MNTP can only operate in the state where the NTP is registered.  NTPs must provide valid proper city/county and state licensing and registration information to DEA for the MNTP at the time of inspection, and prior to transporting controlled substances.  MNTPs cannot reverse distribute, share, or transfer controlled substances to another MNTP while away from the registered NTP.  NTPs will not be permitted to modify their registrations to authorize the MNTPs to act as collectors.  Nor can the MNTPs function as hospitals, long-term care facilities, or emergency medical service vehicles, and they cannot transport patients.

Each MNTP must have a securely locked safe to store narcotic schedule II-V substances and an alarm system.  The MNTP’s storage area cannot be accessible from outside.  The person transporting controlled substances in the MNTP must retain control over them when transferring them between the NTP and the MNTP, from the MNTP to the dispensing location, and when dispensing at the dispensing location.  The controlled substances must be properly secured in the safe at all other times.  The MNTP must be immediately return to the registered NTP location at the end of the day, and all controlled substances removed and secured within the NTP.

NTPs with MNTPs will have to establish a standard operating procedure to ensure that the controlled substances are accounted for, removed from the MNTP, and secured at the NTP if the MNTP becomes inoperable.

Patients receiving medication at an MNTP must wait in an area physically separated from the storage and dispensing area by a door or entryway or outside if it lacks seating or a reception area separated.  The MNTPs must comply with standards established by the Secretary of Health and Human Services regarding narcotic drug take-home quantities.  DEA will exercise discretion regarding the security required for MNTPs based on factors such as the program location, the number of patients and the number of physicians, staff members and security guards.  An MNTP may only be supplied with narcotic drugs by the registered NTP operating the MNTP.

DEA’s proposal to authorize registered NTPs to operate MNTPs to dispense and administer remotely without having to obtain a separate registration should help expand accessibility to needed treatment.  DEA learned from authorizing MNTPs prior to 2007, and from the few MNTPs that continue to operate, that it is possible to dispense methadone remotely from non-registered locations without increasing the risk of diversion. This action complements prior action by DEA to expand the number of narcotic dependent patients that could be treated by qualified physicians.

We note that DEA’s proposal gives the local office the discretion to decide whether or not to allow the NTP to utilize an MNTP.  It is unclear whether an NTP would be able to appeal an adverse decision to DEA headquarters on any adverse decision.  Also, the requirement that the drugs be returned to the NTP each day will limit the geographic reach of an NTP to operate an MNTP.

Electronic comments on the proposed rule must be submitted, and written comments must be postmarked, on or before April 27, 2020.

Last week, FDA once again changed course in its approach towards regulating pharmacogenomic (PGx) tests.  We have blogged on this story several times before (see past blog posts here and here).  A brief recap follows.

On October 31, 2018, FDA issued a Safety Communication regarding PGx tests.  In this safety notice, FDA made sweeping statements regarding the risks these tests allegedly posed.  The safety notice barely noted that PGx testing could be extremely helpful to physicians in guiding decisions about what drug to prescribe.  In early 2019, FDA began contacting individual companies offering PGx services, asking them to cease including information about specific medications that could be affected by variants identified in the PGx test report.  One laboratory – Inova Health Systems – declined to do so.  FDA sent them a scathing Warning Letter, which included a broad assertion of authority to regulate all LDTs.

FDA continued to contact labs and software providers, creating massive confusion and uncertainty in the process.  In our experience, FDA told individual companies that they could not even include gene-drug information in PGx test reports that was derived directly from the FDA-approved drug labeling.  FDA also rejected the inclusion of PGx information from well-established authoritative third parties, such as the Clinical Pharmacogenetics Implementation Consortium (CPIC).  For those companies targeted, FDA refused to engage in meaningful dialogue or identify any specific violation of the law that the companies had committed.

FDA’s actions were heavily criticized (see, e.g., letter from the National Alliance on Mental Illness).  Multiple concerns were expressed, including interference with the practice of medicine; impeding dissemination of information of clinical value (as recognized by inclusion in approved drug labeling); inconsistency with FDA’s expressed goal of furthering personalized medicine through better understanding of individual genetic variation; and the utter lack of transparency in FDA’s process, in violation of the Administrative Procedure Act.  On January 9, 2020, we filed a Citizen Petition with FDA on behalf of the Coalition to Preserve Access to Pharmacogenomics Information requesting FDA reverse its position.  The Citizen Petition raised multiple legal and policy arguments, including that FDA’s suppression of truthful, non-misleading information violated the First Amendment.  The Citizen Petition also noted the significant dilemma FDA had created for laboratory directors, who are required under CLIA to ensure that test reports include pertinent information for test interpretation; under FDA’s restrictive approach, labs could report out the genetic variants that had been identified but could not include information about the potential clinical relevance of such findings to specific patients.

On February 20, FDA unveiled a new approach towards PGx.

FDA described the revised thinking as the result of a new “collaboration between FDA’s Center for Devices and Radiological Health and Center for Drug Evaluation and Research intended to provide the agency’s view of the state of the current science in pharmacogenetics.”  The announcement again asserted that some PGx tests are potentially dangerous.  At the same time, FDA acknowledged that PGx tests could play a useful role, stating “this type of testing offers promise for informing the selection or dosing of some medications for certain individuals.”  This document also announced that FDA was releasing a Table of Pharmacogenetic Associations (“PGx Table”), which lists gene-drug interactions that the agency believes are supported by FDA-approved drug labeling and/or “sufficient scientific evidence based on published literature.”

The agency opened a docket for public comment on the PGx Table.  FDA invited feedback on “specific pharmacogenetic associations that should or should not be included as the agency continues to update this table,” noting that the feedback should include the supporting rationale and underlying evidence that supports any new pharmacogenetic association proposed to be included in the list.

FDA’s announcement is a welcome change in FDA policy.   Even if there are instances in which companies make unsubstantiated gene-drug association claims, FDA’s effective ban on gene-drug information went way too far.  The agency’s acknowledgment that this information can be useful to doctors is a step forward, and a change from FDA’s prior communications, as is FDA’s acknowledgement that drug labeling is not the sole repository of scientifically valid PGx data.  FDA admitted that “not all supported gene-drug interactions may be found in current FDA labeling,” and specifically recognized that gene-drug interactions could be adequately supported by professional guidelines, such as CPIC, and scientific publications.

Nevertheless, FDA’s most recent corrective actions do not fully address the problems FDA unleashed back on October 31, 2018.  The agency once again has acted without first seeking public consultation or making formal requests for stakeholder input.  One consequence of this seemingly ad hoc and nontransparent approach is that the information in the new PGx Table reportedly includes some gaps that may have been addressed with public input.  For example, as noted by Teri Klein of Stanford University, a co-principal investigator at CPIC, there are instances in which the PGx Table advises physicians to refer to FDA labeling for PGx-specific dosing recommendations that are not in fact contained in the labeling (e.g., azathioprine).  In sum, the regulatory landscape for PGx testing is better than it was when we submitted the Citizen Petition about 45 days ago.  However, it is still worse off than it was on October 30, 2018.

CDRH has made commitments to stakeholders about completing reviews in a timely manner. For the fiscal year (FY) 2019, though, FDA acknowledged that it missed review-time goals for evaluating product recalls and Medical Device Reports (MDRs). FDA reviewed and classified recalls in a timely fashion 84% of the time in FY 2019, just one percent shy of its 85% goal. (They do not define “timely fashion”.) For Blue Code MDRs, although its goal had been to review 90% of them within 72 hours of receipt, FDA did so 88% of the time in FY 2019. (While these may not seem like major deviations, we have seen FDA be strict when sponsors barely miss their study endpoint.)

In addition to these missed goals, only 21 quality-related warning letters were issued to device manufacturers last year. CDRH does not have any goals – or at least public ones – for issuing warning letters, but it does mark the third year in a row of record low quality-related warning letters issued. This is down from a recent high of 121 – or about 80% – in 2015.

FDA attributes these drops to the CDRH reorganization, which did away with the Office of Compliance, the Office of Surveillance and Biometrics, and the Office of Device Evaluation. In their place, the Office of Product Evaluation and Quality “super office”, which centralized much of the device review into one office, came to be, and with it, many staff acquired new responsibilities. FDA blamed the missed goals on the inexperience of staff in these roles.

However, that doesn’t explain other curious instances we have seen where FDA has operated out of the norm.  In the last six months, FDA flat out declined a pre-submission meeting. The company received a meeting rejection nearly five months after submitting the pre-submission (and far exceeding the 60-75 days timeframe for sending feedback or scheduling a meeting).

In another example, FDA has yet to provide a revised version of meeting minutes within 30 days of acceptance, as would be consistent and expected based on the pre-submission guidance. The lead reviewer in this case cited “a large backlog of files.”

We have also seen a recent instance where the review team stayed consistent in discussions with the company yet missed its 510(k) goal. Despite a high level of engagement from the company over the last year and including during the review of the submission, FDA missed the MDUFA performance goal for a 510(k) of 90 days. On February 24, 2020, 111 days after the submission was received and three weeks after the 90 days performance goal, the company finally received FDA’s decision.

With respect to administrative tasks, we have noticed extended delays over posting decision summaries to the De Novo database, which is supposed to be updated weekly. It has been nearly a year since several De Novos were authorized with no decision summary posted.  When pressed, FDA has not identified unusual circumstances contributing to these delays. Nor has it committed to posting the documents anytime soon. In one particular instance, eleven months elapsed from the time of the granting of the De Novo before a decision summary was posted to the public database.

These examples are idiosyncratic and don’t make a trend. Even so, CDRH’s willingness to miss deadlines in multiple situations starts to form a troubling pattern.

CDRH certainly has many challenging tasks and projects. Still, the seemingly increased tendency to miss deadlines is troubling. While the reorganization might explain inconsistent reviews, it cannot explain all these failures to meet expectations.