Anyone who has recently (on Tuesdays and Thursdays at least) tried – and we mean tried – to wander on to www.regulations.gov to do a little FDA docket research has likely been redirected to a new URL: https://outage.regulations.gov/beta-redirect/.  And the first thing you see on that redirected webpage is the following message:

You are being redirected to Beta.Regulations.gov.

Why is this happening?

In order to get important user feedback, www.regulations.gov will be redirecting users to the Beta site at https://beta.regulations.gov every Tuesday and Thursday in June and July for 24 hours starting at 8:00 am ET.  Please note that all comments that are submitted through the Beta, both during the redirect and regular operations, are provided to agencies.

Read the GSA Blog Post

We went ahead and read the blog post from the U.S. General Services Administration (“GSA”), titled “GSA Steps Forward to Modernize Electronic Rulemaking,” and also viewed an Introduction Video.  Afterwards, we had the same question the GSA proffers above: “Why is this happening?”

According to the GSA’s blog post:

GSA’s eRulemaking program is modernizing Regulations.gov, the source for information on the development of federal regulations and other related documents issued by the U.S. government.  On Regulations.gov, you can find, read, and comment on regulatory issues that are important to you.  The Regulations.gov beta version is a re-envisioning of the site, with enhanced search capabilities, a simplified commenting process, and a brand new design to improve user experience in public commenting.

The existing Regulations.gov site is planned to be formally decommissioned in September 2020 and replaced with the modernized version that is currently available for evaluation at beta.regulations.gov.

In another document with Frequently Asked Questions the GSA states:

Why is Regulations.gov beta necessary?

Regulations.gov has received almost 10 million comments since 2006, making it a heavily trafficked site that is critical to government transparency and the public’s ability to comment on agency documents and regulations.  To ensure Regulations.gov is continually improving to meet the needs of this user base, the site’s user interface, commenting process, and behind-the-scenes architecture require enhancements to reflect updated design and technology standards.

While the Beta site may provide for “a brand new design to improve user experience in public commenting,” it’s certainly a step down for researching those public comments and other documents.

FDA moved from the Agency’s now-legacy docketing system to Regulations.gov back in January 2008 (here).  Though it took a little getting used to at first, the then-new Federal Dockets Management System quickly grew on us.  It provides an easy-to-use search feature that allow one to create daily docket sheets by agency and to search across dockets.  That’s important to us.  We need to know what’s going on each day at the Agency.

Unfortunately, the new, but not improved, Beta site is not so easy to maneuver.  It seems to us that in an effort to simplify things, the GSA has made searching dockets a tedious and frustrating process.  Give the Beta site a quick spin and you’ll see what we mean.  We even had to come up with a workaround to create quick daily docket sheets.  Here are example URLs: “https://beta.regulations.gov/search?agencyIds=FDA&postedDateFrom=06-09-2020&postedDateTo=06-10-2020&sortBy=title&sortDirection=desc” (for documents) and “https://beta.regulations.gov/search/comment?agencyIds=FDA&postedDateFrom=06-09-2020&postedDateTo=06-10-2020&sortBy=postedDate&sortDirection=desc” (for comments).  These URLs search FDA docket entries on the Beta site from June 9, 2020 to June 10, 2020, from newer to older postings, under the “Documents” and “Comments” tabs, respectively.  You just have to modify the dates in the URLs when you want a different time period.  But two searches are necessary.

If you’re up to it, there’s a “Feedback” button where you can submit comments on the Beta site.  Maybe if enough people comment, the GSA will do some retooling to add better search and other capabilities.  Here are some of our specific comments:

• Add the ability to sort search results by “ID number,” which amounts to Docket Number. This is critical.  There can be hundreds – and sometimes thousands – of entries each day.  Folks need to maximize the ability to sort by “ID number” to group dockets together.
• In Beta, you have to separately search “Documents” and “Comments.” That means running each search twice . . . . and reviewing the results twice.  That’s a lot of unnecessary work.
• Currently on the Beta site, the “old” Regulations.gov links do not work (e.g., https://www.regulations.gov/docket?D=FDA-2007-D-0369). It is unclear whether this will be the case once the Beta site is fully live.  If so, then a lot of our old blog posts with links to Regulations.gov will no longer work.  The same is true for other publishing outlets.  So, there should be automatic forward-linking between the old and new platforms.

FDA’s recent announcement (see our previous post here) that after 40 years the Orange Book may get a bit of a facelift – as well as a comment in a new draft guidance that folks could obtain prior editions of the Orange Book through the Freedom of Information Act – got us thinking: Wouldn’t it be nice if the entire Orange Book – that is, all of the prior editions and supplements from the 1979 draft edition to the current 2020 BPCIA Transition edition and beyond – were available online so that folks could see how the publication has evolved over the past 40 years??  So we’ve gone ahead and done just that.  Please give a warm welcome to the Orange Book Archives!

The Orange Book Archives is the culmination of several years’ worth of work at hunting down each of the annual editions and supplements and then scanning them into PDF format.  We are still missing a few of the monthly supplements from the early 1980s.  So if you happen to have one of them handy, please send us a PDF so that we can add it to the collection.  We will add the missing supplements from 2002 and 2003 once COVID-19 stay-at-home orders are lifted and we are allowed to return to the office.

Putting together the Orange Book Archives has been a labor of love . . . and probably not so different than trying to put together a full set of the difficult-to-find 1933 Goudey baseball cards.  Along the way we had help from some folks, including Bruce Pokras (now Editor-in-Chief of the Orange Book Companion), Erika Lietzan (Associate Professor of Law, University of Missouri School of Law), and the Office of Generic Drugs, which allowed us to borrow Donald Hare’s Orange Book collection (Don is the Father of the Orange Book and passed away earlier this year).  Of course, we supplied FDA with a copy of the collection we assembled.

We hope you enjoy the Orange Book Archives as much as we enjoyed putting together the collection.  Over time, we will try to make modifications and add extra materials related to the Orange Book, such as historical versions of the Reference Listed Drugs by ANDA Reference Standard List and the Orange Book Patent Listing Dispute List.

FDA issued another COVID-related guidance for immediate implementation last week.  Citing a substantial increase in the number of requests for individual patient expanded access requests for COVID-19 investigational drugs (which we will use here to include biological products), on June 2, 2020, FDA released a guidance for investigational review boards (IRBs)  and clinical investigators entitled “Institutional Review Board (IRB) Review of Individual Patient Expanded Access Requests for Investigational Drugs and Biological Products During the COVID-19 Public Health Emergency Guidance for IRBs and Clinical Investigators”.

As in many of the other guidances issued during the ongoing COVID-19 public health emergency, FDA states that it intends this guidance to remain in effect only for the duration of the emergency, but notes that the within 60 days following termination of the public health emergency, the agency intends to review and revise the guidance taking into consideration its experience with implementation and any comments received.

As its title suggests, the guidance applies only to requests under FDA’s individual patient expanded access pathway (21 C.F.R. §312.310), sometimes referred to as “compassionate use,” and does not apply to expanded access programs for intermediate-size or treatment expanded access requests (under 21 C.F.R. § 312.315 or 312.320).  Under the regulation, individual patient expanded access allows a patient with a serious or immediately life-threatening disease or condition to gain access to an investigational drug when there is no comparable or satisfactory alternative therapy, the potential benefits to the patient justify the potential risks, and the requested use will not interfere with clinical investigations that could support marketing approval.  The primary purpose of providing individual access to an investigational drug under this pathway is for diagnosing, monitoring, or treating the patient, rather than generating scientific safety or effectiveness data.

A request for individual patient expanded access can be submitted to FDA by a licensed physician as a new investigational new drug application (IND) or by the sponsor of an existing IND as a protocol amendment.  An emergency request does not require prior IRB approval, but the IRB must be notified within 5 working days of treatment initiation, and subsequent use is subject to IRB review.  Prior IRB approval is required for non-emergency requests for individual patients.  A physician submitting a non-emergency request may request a waiver from the ordinary requirement for full IRB approval.  As FDA has outlined in previous guidance (“Expanded Access to Investigational Drugs for Treatment Use – Questions and Answers”), such a waiver is appropriate when the physician obtains concurrence from the IRB chairperson or another designated IRB member.

FDA states that it is providing recommendations about the key factors and procedures IRBs  should consider when reviewing individual patient access requests, including IRB reviews conducted by an individual member, because the agency has become aware that during the existing public health emergency IRBs are seeking clarity on how to comply with their obligations under 21 C.F.R. part 56.

FDA recommends that IRBs consider establishing procedures for a single IRB member to review an expanded access submission for an individual patient when a waiver from full IRB review is requested, including procedures that outline relevant factors to be reviewed and procedures for documenting the decisions made.

FDA suggests that review of an expanded access request for an individual patient focus on assessing the risks and benefits for the patient involved, and notes that the information must be adequate to assess whether these risks have been minimized and are reasonable in relation to the anticipated benefits.  FDA does not expect that a protocol will be necessary to provide sufficient information to determine if those criteria are satisfied (although if the request is submitted by the sponsor it is likely that a protocol is already available).

FDA lists the following as information that should be included, noting that the information may be included in a thorough patient history and treatment plan:

• proposed daily dose, route, and frequency of administration, duration of planned treatment, criteria for discontinuation of treatment, and planned dose modifications for adverse events;
• planned monitoring for adverse events, response to treatment, and changes in clinical status, as well as proposed modifications to the treatment plan to mitigate risks to patients if appropriate;
• key details of the patient’s history, including diagnosis and summary of prior therapy (including response to such therapy), and information regarding a patient’s relevant clinical characteristics (such as comorbid conditions and concomitant medications); and,
• summary of the known risks of the drug.

The guidance also provides that the IRB’s review of an expanded access request for an individual patient should include:

• an assessment of the qualifications of the requesting physician submitting the individual patient expanded access request;
• if the request is for a pediatric patient, confirmation that adequate provisions are included for soliciting age-appropriate assent from children and permission from a parent or guardian; and,
• confirmation that the informed consent document contains the information required under 21 C.F.R 50.25. Given that the drug used under expanded access is investigational, FDA considers a statement in the informed consent document indicating that although the primary use of the drug is for treatment, the drug is investigational and FDA has not determined that the drug is safe or effective for use in treating COVID-19, to satisfy the requirement under 21 C.F.R §50.25(a)(1) that the informed consent provide a statement that the use of the product “involves research.”

The U.S. Department of Agriculture (“USDA”) continues to consider and approve state and tribal hemp production plans, announcing the approval of plans for the U.S. Virgin Islands, Cheyenne River Sioux Tribe, Chippewa Cree Tribe, Lac Courte Oreilles Band of Superior Chippewa Indians, and Red Lake Band of Chippewa Indians on May 27th.  To date, USDA has approved 47 hemp production plans: 18 for state/territory plans and 29 tribal plans.  USDA, USDA Approves Hemp Production Plans for U.S. Virgin Islands, Cheyenne River Sioux Tribe, Chippewa Cree Tribe, Lac Courte Oreilles Band of Superior Chippewa Indians and Red Lake Band of Chippewa Indians (May 27, 2020).

The Agricultural Improvement Act of 2018, popularly known as the Farm Bill, established general requirements for the oversight of hemp producers.  The USDA exercises primary regulatory authority over hemp producers in the United States under the Agricultural Marketing Act of 1946 (“AMA”), as amended by the Farm Bill.  USDA regulates hemp production under a federal regulatory framework in states and within tribal boundaries that do not have a USDA-approved plan.

The AMA also authorizes the states and Indian tribes desiring to exercise regulatory authority over hemp production within their boundaries to submit plans for approval by USDA.  The AMA gives USDA sixty days to review state and tribal plans.  USDA issued its interim final rule in October 2019 establishing a domestic hemp production program, including implementing the requirements for state and tribal plans set forth in the Farm Bill.  State and tribal regulatory plans must include:

• Maintaining relevant information about the land on which hemp is produced, including a legal description of the land, for at least three years;
• A procedure for testing hemp THC concentration levels;
• A procedure for disposal of plants that exceed hemp THC levels, and products from those plants;
• A procedure to comply with the enforcement provisions specified in the AMA;
• A procedure for conducting random, annual inspections of hemp producers;
• A procedure for submitting information to USDA; and
• Certification that the state or tribe has adequate resources and personnel to implement required hemp production procedures.

In addition, USDA is reviewing one state and four tribal plans, and has reviewed and returned three state plans as well as a tribal plan for editing or amendment.  USDA, Status of State and Tribal Hemp Production Plans for USDA Approval (updated Apr. 29, 2020).  Four states and three tribes have expressed interest or intent to submit a plan, one state will apply USDA’s plan, and eighteen states continue to operate under the 2014 agricultural pilot program.  In sum, there are or will be over 80 hemp production regimens in play around the country.  

The American Conference Institute (“ACI”), together with the Council for Responsible Nutrition, are sponsoring ACI’s Annual Legal, Regulatory, and Compliance Forum on Dietary Supplements. The virtual conference is scheduled to take place on June 23-24, 2020.

This “must-attend” event for legal, regulatory, and compliance stakeholders in the dietary supplement industry will not only provide “state of the union updates,” but will also allow for the opportunity to discuss and assess the politics and policy shaping the industry’s current political, legislative, and regulatory atmosphere. Conference speakers will provide their insights into the most pressing topics affecting the space.

Highlights from this year’s agenda include:

• Focus Session on Addressing Inconsistent Interpretations of the Dietary Supplement Definition
• Case Study on the Best Way of Establishing Ingredient Safety: NDI notification vs. GRAS determination
• Spotlight on the Current Status of a Legal Path for CBD in Dietary Supplements
• Think Tank on Increased State Consumer Protection Activity
• Risk Assessment of Innovative Claims and the Use of Influencers in Product Promotion

Hyman, Phelps & McNamara, P.C.’s Ricardo Carvajal will be speaking at a session titled “Defining a “Dietary Supplement” as Intended by DSHEA: Examining Questions Surrounding Synthetic Botanical Constituents, Drug Exclusions, and Other Inconsistent Interpretations of the Dietary Supplement Definition.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-669-669CX06. You can access the conference brochure and sign up for the event here.  We look forward to “seeing you at the conference.”

Much to our delight, the Orange Book is getting quite a bit of attention from FDA in 2020.  And why not?!?  After all, the Orange Book is celebrating its 40th anniversary this year.  There was even a special “BPCIA Orange Book Transition Edition” published in March.  And here at the FDA Law Blog we too have been celebrating the Orange Book.  Although COVID-19 has temporarily prevented us from continuing our popular Orange Book World Tour (see here, here, here, here, and here for example), we will soon be publishing the “Orange Book Archive” so that folks have easy access to all of the old editions.

With the publication of three (!!!) notices in the Federal Register today, FDA is finally taking the steps to make the Orange Book more accessible that the Agency promised in February 2019.  As part of FDA’s “transparency initiative,” today’s Federal Register notices provide a little bit of Orange Book love for newbies and experienced Orange Book users alike.  For newbies, FDA published the long-promised guidance, “Orange Book: Questions and Answers,” while the old pros were asked a series of questions about general Orange Book improvements and patent listings.

For those less familiar, the Orange Book is an incredibly handy tool in drug development.  Its formal name is the “Approved Drug Products With Therapeutic Equivalence Evaluations,” and it lists drug products approved by FDA (other than those determined to have been withdrawn from sale for safety or effectiveness reasons) and patent and exclusivity information related to approved drug products.  It also contains therapeutic equivalence evaluations for approved multisource prescription drug product, which are frequently used for purposes of drug substitution and containment of health care costs.  The print edition of the Orange Book contains a detailed “Preface,” which explains the Orange Book in detail.

In a new guidance, “Orange Book: Questions and Answers,” the Orange Book staff put together a list of frequently asked questions with respect to the content and format of the Orange Book, “Petitioned” ANDAs (ANDAs with a suitability petition), the Active and Discontinued sections of the Orange Book, and patent listings.  The guidance explains that some products are notably absent from Orange Book specifically those products discontinued prior to 1987, products with tentative approval, DESI drugs, BLAs, and marketed drugs not subject to an NDA or ANDA (i.e. compounded drugs or OTC monograph drugs).  The guidance explains the frequency of Orange Book updates, how to access data files, how to move products from the Active to Discontinued section of the Orange Book, and how to timely update or remove patent listings.  The guidance also provides details on notifying FDA that a product is or will be withdrawn from sale under section 506I of the FDCA.

For those who have already mastered the Orange Book basics, FDA has some questions.  Specifically, FDA has opened two dockets: one soliciting comments on improving the Orange Book generally and one soliciting comments on the listing of patent information in the Orange Book.  The Federal Register notice soliciting general comments on the Orange Book is part of FDA’s Drug Competition Action Plan.  It provides a detailed explanation of the contents of the Orange Book and an interesting history of the updates FDA has made to it since 1985.  Then, as part of FDA’s “continued effort to provide more accessible and useful information in the Orange Book,” FDA announces questions to guide FDA’s priorities in enhancing the Orange Book.  These questions focus on the users and uses of the Orange Book, information or features that would make it more useful, the utility of the therapeutic equivalence codes and related information, and any other information that users would like to provide.

Finally, the third effort, soliciting comments on the listing of patent information in the Orange Book, is intended to address very important considerations with respect to generic competition.  As we recently discussed (in an only tangentially related blog post), only patents listed in the Orange Book are eligible for the Hatch-Waxman “patent dance” and are considered artificially infringed upon the filing of an ANDA.   FDA regulations limit the types of patents that can be listed in the Orange Book to drug substance (ingredient) patents, drug product (formulation or composition) patents, and method-of-use patents.  Process patents, packaging and container patents, and patents claiming intermediates or metabolites are not eligible for listing.  But not all patents that are relevant to drug products fit neatly into one of these categories: in particular, device patents for combination drug-device products and REMS patents.  FDA has avoided addressing these types of questions for at least 15 years, and the First Circuit recently intervened in one case.

Not prepared to let anyone steal its thunder, FDA seems poised to update its Orange Book listing requirements to address combination products and REMS patents.  FDA notes in the Federal Register notice that it is “aware that some NDA holders have submitted patents for listing in the Orange Book, including certain types of device-related patents and REMS-related patents, for which there may be uncertainty regarding whether these are in fact the type of patents that must be submitted.”  Because there are benefits and challenges in the listing and omission of certain patents—specifically including the opportunity to challenge a patent while applications are under review and the possibility of a 30-month stay, FDA wants stakeholder input on:

• The listing of patents that claim a device constituent part of a combination product approved under section 505 of the FDCA (e.g. a drug delivery device);
• The listing of patents that claim a device whose use is referenced in approved drug labeling;
• The listing of patents associated with an established REMS; and
• The listing of patents associated with digital applications (e.g. clinical decision support software, software as a medical device).

FDA also includes 14 specific questions for stakeholders to address.

FDA is providing stakeholders with a great opportunity to provide insight and advice on potential revisions to the Orange Book.  Given that FDA has ignored some of these issues for a decade and a half, these solicitations present a rare opportunity to shape the Orange Book.  Indeed, those who want to “squeeze all of the juice” out of the Orange Book should definitely submit comments in response.  Comments on both the solicitations and the Questions and Answers guidance are due on September 1, 2020.

Two new guidances, both issued by FDA on May 11, 2020, focus on drugs and biological products proposed for use against COVID-19.  The first is entitled COVID-19 Public Health Emergency:  General Considerations for Pre-IND Meeting Requests for COVID-19 Related Drugs and Biological Products (the “Pre-IND Guidance”) and the second is COVID-19:  Developing Drugs and Biological Products for Treatment or Prevention (the “Clinical Guidance”).  Both provide more insight into FDA’s expectations for drug development programs for new treatments for COVID-19.  FDA intends that these guidances will remain in effect only for the duration of the COVID-19 public health emergency, although FDA expects to revise and reissue the Clinical Guidance within 60 days of termination, taking into consideration lessons-learned from its experience and comments received to the extent appropriate.

In the Pre-IND Guidance, FDA cites the numerous inquiries and applications it has received from prospective sponsors and the Agency’s need to obtain key information in order to efficiently address proposals and ensure they are properly evaluated in a timely manner.  It may be that the Agency has been inundated with pre-IND meeting requests (as well as requests for an Emergency Use Authorization (“EUA”) under its Coronavirus Treatment Acceleration Program (“CTAP”) many of which do not include the type of information essential to evaluation.  FDA’s CTAP web page states that as of April 16, 2020, FDA had received 950 inquiries and proposals for COVID-19 related drug development.  These guidances appear to be an effort to improve the quality of those inquiries and proposals, and to highlight that the vast majority of proposed therapies are more appropriate for the investigational new drug (“IND”) route rather than the EUA route which requires more fully developed data to support.

The Pre-IND Guidance

For sponsors that already have an active IND for a drug in development, FDA recommends submitting a new pre-IND meeting request for a proposed COVID-19 indication, rather than amending their current submissions, in order to allow FDA to quickly identify, prioritize and assess the proposed study.  FDA also recommends that drug development discussions be initiated under the pre-IND program, rather than a pre-EUA request, noting that submitting a pre-IND request does not preclude submitting an EUA request if it becomes appropriate and that, in most cases, at the time a sponsor seeks to initiate discussion with FDA the available information is insufficient to determine effectiveness.  Until enough information is available for FDA to make a determination that the potential benefits outweigh the potential risks, an EUA is not the appropriate mechanism.

The Pre-IND Guidance lays out a list of general content recommendations most of which are comparable to what would be expected for any pre-IND meeting (e.g., drug name and description, brief description of manufacturing, proposed indication, existing pharmacokinetic, nonclinical and clinical data, suspected mechanism of action).  FDA cautions that while it may, in the case of a proposal for an unapproved use of an approved drug, exercise some flexibility in the type and amount of nonclinical data required to proceed, typically nonclinical in vivo data will be required.  The guidance also describes the types of nonclinical studies needed for small molecule drugs and biological products, and calls out inhalation drugs, in particular, as requiring toxicology studies to support the proposed dose and route of administration.   FDA also advises, however, that for cellular and gene therapies, blood products, vaccines and other complex biological products regulated by the Center for Biologics Evaluation and Research (“CBER”), there may be additional considerations. Inclusion of a draft protocol in the pre-IND meeting request is strongly encouraged.

Specific to COVID-19, FDA notes that some sponsors may seek development advice in the very early stages, and directs sponsors who do not yet have antiviral activity information, but have reason to believe the drug may have potential activity against the COVID-19 virus to the National Institutes of Health (NIH) Division of Microbiology and Infectious Diseases web page which contains information about preliminary screening activities that may be available.

Finally, the guidance provides the email addresses for questions about the process for CDER-regulated drugs and for CBER-regulated drugs (COVID19-productdevelopment@fda.hhs.gov and CBERProductJurisdiction@fda.hhs.gov, respectively), as well as one for sponsors unsure of how their drug would be regulated ( COVID19-productdevelopment@fda.hhs.gov ).

The Clinical Guidance

Vaccines and convalescent plasma are specifically excluded from the scope of the Clinical Guidance which focuses on Phase 2 and Phase 3 studies of drugs and other biologics (we refer to both as drugs unless a distinction is necessary), with recommendations specific to COVID-19 studies.  The key considerations covered include study population, trial design (including length of study, use of standard of care (“SOC”), early stopping criteria), efficacy endpoints, and safety and statistical considerations.  Many of the recommendations are not unique to studies involving COVID-19.

For treatment trials, FDA recommends that the baseline severity of the enrolled population be documented and provides criteria for defining categories of severity.  The population should include persons at high risk of complications such as the elderly, those with underlying cardiovascular or respiratory disease, diabetes, or chronic kidney disease, and the immunocompromised.  Due to the disproportionate effects seen on the elderly, sponsors are directed to consider conducting trials in nursing homes and other elder care facilities.  The need for racially and ethnically diverse populations is noted.  Specific to COVID-19, the possible need to close some sites and open new ones during the study due to the expected fluctuation of disease in regions should be anticipated and addressed in the study design.  FDA notes that children should not be categorically excluded, and encourages enrollment of pregnant and lactating individuals in Phase 3 studies.

It is no surprise that FDA strongly recommends that drugs for preventing or treating COVID-19 be evaluated in randomized, placebo-controlled, double-blind clinical trials using a superiority design, and that background SOC be maintained in all treatment arms.  The evolving nature of the SOC should be taken into consideration, as well as whether the SOC has the same mechanism of action as the investigational agent.  FDA advises limiting in-person data collection to the extent possible due to infection control concerns.  The appropriate length of the study will depend, in part, on the population being treated with shorter arms for trials involving mechanically ventilated patients (e.g., four weeks) and longer for studies of those who are less ill.  Whether it is appropriate to move directly to conducting a trial of sufficient size and design to provide substantial evidence of effectiveness and characterization of safety or a smaller pilot study is needed first will depend on how much preclinical and preliminary clinical evidence is available and how compelling it is.

FDA also encourages sponsors to use an independent data monitoring committee (“DMC”) and take into consideration the possibly rapid enrollment rate and incorporating a potential pause in enrollment to allow the DMC to assess data before dosing the entire study population.  Prospectively planned stopping criteria are also recommended.

In its recommendations on efficacy endpoints, FDA notably states that virologic measures may be appropriate for a Phase 2 trial, but will not be appropriate as a primary endpoint in a Phase 3 trial because of the lack of an established predictive relationship between viral reduction and the clinical benefit of how a patient feels, functions or survives.  FDA considers viral measurements as appropriate secondary endpoints in Phase 3 trials.

Examples of important clinical outcome measures in treatment trials are provided and include all-cause mortality, respiratory failure (e.g., need for mechanical ventilation), a move to ICU or hospitalization, objective measures of improvement (e.g., return to room air or other baseline oxygen requirement), and resolution of symptoms.  The choice of endpoint and the time of measurement should take into consideration the population being studied.  FDA advises that potential relapses should be addressed in the endpoint definition to ensure an adequate assessment of the durability of response.

For prevention trials, FDA states that the primary endpoint should be the occurrence of laboratory-confirmed infection with the virus (with or without symptoms) or infection with symptoms through a specified time point.  FDA also notes that ascertaining whether COVID-19 is milder in those receiving preventive treatment is of interest and recommends collecting clinical outcome data (e.g., hospitalization) and data on symptoms for this purpose.

Among the statistical considerations listed in the guidance are a few specific to COVID-19.  In particular, FDA recommends that if the study enrolls a mix of patients with varying baseline severity levels, a subgroup or interaction analysis by baseline severity should be conducted to assess for differences in treatment effect.

Last week, FDA announced availability of a guidance that would temporarily  provide flexibility regarding certain labeling requirements during (and possibly after) the COVID-19 pandemic.

This is the fifth time since the start of the pandemic that FDA announced flexibility regarding labeling regulations for foods.  The temporary policies are intended to ease manufacturers’ problems due to supply-chain issues associated with the pandemic.

FDA’s latest action addresses FDA’s position regarding manufacturers’ substitution of certain hard-to-get ingredients in their products without changing the label.  Under the temporary guidance, manufacturers may make some minor formulation changes without changing the labeling provided the changes do not pose a health or safety issue and do not cause significant changes in the finished food.

The  guidance discusses various factors that FDA will consider and provides several examples illustrating when FDA would not object to substitution without a conforming label change.  Not surprisingly, the formulation change can not cause any potential adverse health effect, e.g., the replacement ingredient may not be a major allergen,  a sulfite, or another ingredient associated with food sensitivity, e.g., aspartame.  Replacement of a characterizing ingredient, e.g., cinnamon in cinnamon rolls, would not be appropriate either.

With the exception of bleached flour, minor formulation changes to food(s) that involve a food standard are not covered under this guidance.  Bleached flour is subject to a standard of identity.  However, because of a shortage of the bleaching ingredient, benzoyl peroxide, FDA will not object to substitution of unbleached flour for bleached flour without a corresponding label change.

The labeling flexibilities associated with formulation changes set out in this guidance remain in place only as long as needed to help ensure an adequate food supply during and after the pandemic.  FDA encourages manufactures to use digital disclosures, stickers and point of sale labeling as alternative ways to inform consumers about the formulation changes.

In the same guidance, FDA also provides flexibility regarding disclosure of calorie declaration for food from vending machines under 21 C.F.R. § 101.8.  This flexibility applies for the duration of the pandemic.

As noted above, this is not the first time that FDA provided flexibility regarding food labeling rules.  Previous guidances address nutrition labeling on food packages intended for restaurants and food manufacturers that may not be labeled for retail sale, menu labeling at chain restaurants, and the packaging and labeling of eggs during the pandemic.

In addition, separate from any guidance, FDA announced in March 2020, that it would work “cooperatively with manufacturers for the remainder of the year [i.e., Dec. 31, 2020] regarding using updated Nutrition and Supplement Facts labels and will not focus on enforcement actions during this time.”  Previously, FDA had announced that it would do so until July 1, 2020.

Hyman, Phelps & McNamara, P.C. seeks to add a 1st to 4th year associate to its enforcement and litigation team.  Our team investigates and defends against threatened enforcement actions by government prosecutors and regulators, including the FDA and DEA.  Types of matters include:

• Representing clients in False Claims Act investigations or in criminal investigations by the U.S. Department of Justice;
• Assisting clients in investigations by U.S. Attorney’s Offices, DEA, or Main Justice, including responding to administrative and criminal subpoenas;
• Conducting internal investigations;
• Representing FDA-regulated entities and DEA registrants in administrative hearings and federal courts; and
• Litigating affirmative and defensive civil litigation matters.

The boutique, collaborative nature of this firm provides junior attorneys unique opportunities to work directly with clients and to contribute in substantive ways to sophisticated, high-end matters.  Strong verbal and writing skills are required.  The ideal candidate will have experience working at FDA, DOJ, or DEA, prior big firm experience, including litigation experience, and a federal judicial clerkship.  E-discovery expertise is a bonus.

Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.  Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

Drug Development Attorney

We are seeking an attorney to work with our drug development team. The attorney must possess at least two years of relevant experience in the drug development arena, either by working at FDA or by assisting companies develop product development strategy or navigate the regulatory process.  Strong verbal and writing skills are required.  Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

The U.S. Government Accountability Office (GAO) released a report titled “Food Safety: FDA and USDA Could Strengthen Existing Efforts to Prepare for Oversight of Cell-Cultured Meat.”  This report was requested by Rep. Rosa DeLauro (D-Conn.), and concerns the federal oversight of cell-cultured (or cell-based) meat, poultry and seafood, specifically the extent to which FDA and USDA are cooperating.

Based on the GAO’s findings from a literature review, analysis of documentation from FDA, USDA and stakeholder groups, review of public comments and site visits to select cell-cultured meat firms, the GAO outlined several recommendations for executive action, including a more effective collaboration between the FDA and USDA and identification of specific outcomes and a method for monitoring and evaluating progress towards those outcomes. In addition, the GAO noted that the USDA/FDA interagency agreement on cell-cultured meat does not cover cell-cultured seafood other than catfish. FDA and USDA purportedly have agreed that those seafood products will be regulated exclusively by FDA – a decision that GAO recommended be formally documented so as to provide greater clarity to industry.

As readers of this blog know, for meat and poultry (and catfish, which is also under the jurisdiction of USDA), a major issue has been which agency, FDA or USDA should regulate these cell-cultured products.  After several meetings, hearings, etc., FDA and USDA announced that the Agencies had come to an agreement that FDA would oversee the early phases of cell-cultured meat production, i.e., obtaining cell samples, cell selection, storage, and cell growth/product through the point of harvest and at that point, USDA would take over the oversight for meat and poultry (not for seafood other than catfish).  The memorandum of understanding (MOU) was short on details.

GAO noted that the Agencies have created three working groups: a pre-market assessment working group lead by FDA, a working group that is focused on developing joint principles for product labeling and claims led by USDA, and a working group that addresses procedures for the transfer of inspection authority, co-led by FDA and USDA.  However, GAO concluded that developing a strategy as to how to evaluate the safety of cell-cultured meat, poultry and seafood products is hindered by a lack of information about technologies used in production.  Specifically,  information about the technology being used and the eventual commercial production methods as well as the final products is lacking.  Questions that remain include:

• Use of source animals used for biopsy samples (and how frequently will new cells need to be collected).
• Use of genetic engineering: Some companies plan to use genetic engineering to select/create desirable traits in the cells used to culture, whereas other companies have represented that they will not use such techniques.
• Use of antibiotics: Initially, many companies represented that they would not use (or need) antibiotics in the production of cell-cultured meat.  However, there is uncertainty as to whether the large-scale production of cell-cultured products will be possible without their use.
• Other unknowns include the composition of the growth medium, use of scaffolding, and product composition. This type of information is needed for evaluation of safety.
• Naming of the final products is also uncertain. As we have previously reported, the traditional (animal) industry (and farmers) has opposed naming the cell-based products using terms that have been used for products derived from whole animals. Several states have enacted laws reserving the meat and poultry terms for the traditionally produced products.  At this time, it is not clear whether those laws will stand.
• Environmental benefits: Proponents of cell-cultured meat claim that cell cultured meat is environmentally friendly. However, there exists disagreement about the potential benefits, and absent information about scaled up production, use and disposal of growth media, possible need for antibiotics, etc., it is not possible to evaluate the potential environmental, animal welfare and health impact.

Now that most of the country has been in lockdown for about two months, everyone is undoubtedly aware that COVID-19 has been declared an “official” public health emergency.  In addition to the official declaration in January, HHS issued an additional and separate declaration – called a PREP Act declaration – that COVID-19 constitutes a public health emergency under section 319 of the Public Health Service Act.  As we explained in some of our earlier COVID-19 coverage, this PREP Act declaration provides broad statutory immunity from liability under federal and state law for public health activities related to combatting COVID-19, such as the manufacture, testing, development, distribution, administration, or use of one or more “covered countermeasures,” defined as a drug, biologic, or device intended to address the public health emergency, to address side effects of such products, or to enhance the effect of such products.   While the PREP Act is critical to the COVID-19 response, it also  offers incentives for the development of drugs to treat “material threats” –but right now, that incentive cannot be utilized to address COVID-19.

As an added incentive to develop more medical countermeasures, defined as “FDA-regulated products (biologics, drugs, devices) that may be used in the event of a potential public health emergency stemming from a terrorist attack with a biological, chemical, or radiological/nuclear material, or a naturally occurring emerging disease,” the 21st Century Cures Act added section 565A to the Federal Food, Drug, and Cosmetic Act.  Section 565A requires FDA to award a priority review voucher (PRV) to sponsors of certain medical countermeasure applications.  The application must be eligible for Priority Review, approved by FDA, and the first instance of approval for the active ingredient of the drug, including an ester or salt of the active ingredient.  Most importantly, the medical countermeasure must be an application for a drug intended to prevent or treat harm from a material threat or intended to mitigate, prevent, or treat harm arising from the administration of a drug or biological product against a material threat.  “Material threats,” defined under 42 USC 247d–6b(c)(2), are threats “sufficient to affect national security” that have been determined to be a priority by the Department of Homeland Security (DHS), in conjunction with Health and Human Services (HHS).  PRVs will be awarded only to sponsors of drug applications for products that have been designated a “material threat.”

As critical as it is to develop drugs to treat COVID-19, we recently learned that even though COVID-19 has been declared a national emergency and is a pandemic wreaking havoc on the world, “a Material Threat Determination (MTD) has not been issued for SARS-CoV-2 (COVID-19).”  This means that the country has not yet decided that we need to incentivize drug development to treat COVID-19 with a PRV, one of the most valuable incentives that FDA has to offer.  PRVs are incentives to spur the development of drugs to treat much-needed drugs to treat serious disease.  The voucher entitles the holder to designate a subsequent 505(b)(1) drug or biologic application as “priority” even if it would not otherwise have qualified for Priority Review.  Such a voucher is used to accelerate FDA’s review process of any drug by four months, allowing a drug to come to market earlier – potentially with more patent protection.  Additionally, they can be sold to other companies for substantial profit: sales of PRVs have ranged from $50 million to as much as $350 million back in in August 2015 (most seem to go for around $125 million).

Arguably, COVID-19 is the most “serious” disease this country has seen – at least in the last 100 years, and definitely since the adoption of the PREP Act.  And it certainly meets the definition of “material threat.”  But, for some reason, DHS and HHS have not yet declared it a material threat.  Ebola has been declared a material threat.  Pandemic influenza is a material threat.  Smallpox, the plague, and typhus are all medical threats.  But not COVID-19.

The major question is why doesn’t COVID-19 merit “material threat” status?  Is it because the country fears that any drug or vaccine developed to treat COVID-19 would be such a blockbuster drug that a PRV would be windfall for the developer?  Is it because companies are already striving to develop these products anyway and don’t need incentives?  Or maybe it has something to do with the public outcry that arose when FDA designated Gilead’s remdesivir an orphan drug back in March?  Regardless, there are many companies that could really benefit from any incentives to develop a COVID-19 product.  An incentive that requires very little of the agency, like a PRV, could make drug development financially feasible where it otherwise might not be.  There seems to be little reason not to declare COVID-19 a material threat, especially because a PRV is awarded only once a drug is ultimately approved.  And even if the development of a COVID-19 drug actually leads to the award of a PRV is a blockbuster drug, would it really be so bad to reward the developer with administrative priority?  Ultimately, that leaves us with a single question: why is the country not doing everything it can to incentivize drug development for COVID-19?

There’s legislation pending that may provide that incentive.  On February 28, 2020, Rep. Jeffries introduced H.R. 6019, the Cure the Coronavirus Act, which indirectly addresses the consequences of the lack of “material threat” status for COVID-19.  Congress does not have the authority to designate COVID-19 material threat, but it can find other ways to offer priority review vouchers as incentives to drug development.  This bill would do just that: instead of a “medical threat counter measure” priority review voucher, COVID-19 would become eligible for a “tropical disease” priority review voucher.  All the bill does is expand the definition of a “tropical disease” to include COVID-19.  COVID-19 is not your typical tropical disease.  FDA has explained that tropical diseases usually those that disproportionately affecting poor and marginalized populations and are found primarily in developing countries.  Obviously, COVID-19 is a lot more widespread than that.  But, even if COVID-19 is not a typical tropical disease, does it matter?  The priority review voucher for medical threat countermeasures and tropical diseases are the same.  So it provides the same incentive.

The bill hasn’t made any traction on the hill yet, as it hasn’t yet been addressed by the House Committee on Energy and Commerce.  Hopefully, it will.  It’s a clever piece of legislation that would go a long way to address the issues raised by the lack of a material threat designation.  That priority review voucher could be the incentive needed to get the right company involved in treatment development.

The Pharmaceutical Manufacturing Research Services (“PMRS”) appears to abide by the proverb “If at first you can’t succeed, try try again.”  After several denied Citizen Petitions, striking out in the Eastern District of Pennsylvania, and bringing then dismissing another suit against FDA in that same court, PMRS has tried its hand at influencing FDA’s abuse deterrence policy for opioids in the courts once again.  PMRS filed suit against FDA in the D.C. Circuit in December 2018 alleging violations of the Administrative Procedure Act (“APA”) when FDA refused to approve its abuse deterrent oxycodone product.  And once again, PMRS lost.

As a quick refresher, PMRS is a contract drug manufacturer that has made a habit of challenging FDA’s approval of abuse-deterrent opioids.  Most of its challenges have failed, so PMRS decided to submit to FDA its own New Drug Application (“NDA”) for an immediate-release abuse-deterrent oxycodone formulation containing a dye intended to create a “visual deterrent” to abuse by suggesting that the product was contaminated.  FDA refused to approve the NDA, determining that the proposed product labeling was false and misleading because there was no evidence that the product was, in fact, less prone to abuse by patients.  Further, there were no abuse-deterrent properties of the formulation itself, meaning that it could not be considered an “abuse-deterrent formulation.”  PMRS refused to reformulate the product and insisted that the product had abuse-deterrent dosing instructions.  PMRS argued that FDA’s approach to abuse deterrence was “misleading, unscientific, and dangerous” and requested a hearing on the agency’s approach to abuse deterrence more generally.  FDA denied this request on the grounds that legal and policy objections have no bearing on the approvability of the NDA.  After PMRS requested a hearing, FDA refused to review a labeling resubmission.

PMRS challenged the denial of its NDA approval and FDA’s procedural denials.  First, PMRS argued that a false or misleading label is not a sufficient ground to deny approval under the FDC Act.  Second, PMRS contended that denying approval of an NDA on the basis of labeling was arbitrary and capricious under the APA.  In a decision that is unlikely to surprise anyone, the D.C. Circuit found that the statute does provide FDA the authority to deny an NDA based on false and misleading labeling and that FDA’s denial of NDA approval was not arbitrary and capricious.

The Court first addressed FDA’s authority to deny an NDA based on false or misleading labeling.  The Court acknowledged that section 505 of the FDC Act states an “irreconcilable contradiction” in that it states that FDA shall approve an application if none of the grounds for denying approval in subsection (d) applies while subsection (d), containing grounds (1)-(7), states that FDA shall approve an application if grounds (d)(1) through (d)(6) do not apply.  Given this inconsistency in the statute, the Court looked to the context.  It determined that “the totality of the statutory context confirms that the FDA must deny an application if the label is false or misleading. . . .”

With respect to PRMS’s claim that denial of NDA approval was arbitrary and capricious, the Court looked at whether the decision was reasonable and reasonably explained.  In the context of a challenge to the FDA’s decision-making, the Court noted that it gives “a high level of deference” to the agency’s scientific analysis of the evidence before it.  FDA explained its reasoning in detail in the Denial Order—even if “not a model of clarity”—and “examined the material factors” and “considered the record as a whole.”  Further, FDA gave a rational explanation for its refusal to consider a resubmission with a revision to draft labeling since FDA regulations require an applicant to choose a hearing or a resubmission, and PMRS chose a hearing.  In sum, FDA provided a reasonable explanation for its decision to deny PMRS’s application and resubmission, and that’s all the APA requires.

Finally, the Court admonished PMRS for its use of the court system to convince FDA to accept its “preferred approach to abuse deterrence.”  Noting that dosing and labeling have nothing to do with abuse deterrent formulation, the Court explained that referring to the product as an “abuse-deterrent formulation” is plainly false and misleading.  PMRS provided no evidence to support its claim that its product was an abuse-deterrent formulation and therefore could not remedy the false misleading nature of its labeling.  As such, there is no relevant factual dispute providing a basis on which to grant a hearing.  Further, FDA regulations clearly state that hearings will not be granted on issues of policy and law under 21 C.F.R. § 12.24(b)(1).

Given PMRS’s litigation track record, this probably isn’t the last FDA or the courts will hear from them.

These are unsettling times as COVID-19 impacts our personal and professional lives, as well as those that we love.  During these unprecedented times, Hyman, Phelps & McNamara, P.C. is pleased to bring you the next installment of the FDA Law Alert.  This is the fifth installment of our quarterly newsletter highlighting key postings from our nationally acclaimed FDA Law Blog.  Please subscribe to the FDA Law Blog to receive contemporaneous posts on government regulatory and enforcement activities affecting the broad cross-section of FDA-regulated industry.  As the largest dedicated FDA law firm, we are happy to help you or your clients navigate the nuances of the laws and regulations affecting them.

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COVID-19

• Impact on Clinical Trials: James Valentine, Dave Clissold, and Jeff Shapiro discuss FDA’s Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 that addresses the unprecedented set of challenges that make conducting clinical trials difficult during a pandemic.  In a second post, the trio describes FDA’s update to the Guidance, which provides 10 responses to commonly asked questions.  This Q&A portion addresses two of the largest decisions sponsors must make as a result of this pandemic: (1) whether to continue the study and (2) whether to continue administering the investigational product.  Other Q&A’s address managing protocol deviations and amendments, helping navigate a number of contingency measures (e.g., initiating virtual visits, switching to home delivery or infusion of the investigational product, alternative monitoring), and documenting informed consent from a patient in isolation.

• State Regulations: Kalie Richardson describes in these posts (here and here) how certain states have issued COVID-19-related waivers or suspensions affecting pharmacy staffing, facility licensure, and controlled substances distribution and inventory.  These waivers meet the dual objectives of enhancing pharmacy response to the ongoing COVID-19 pandemic while also allowing pharmacy staff to responsibly practice social distancing.

• Postmarketing Reporting: Anne Walsh discusses FDA’s initiative to alleviate companies’ postmarketing reporting obligations for their routine, non-COVID-19-related products during a pandemic.  Recognizing that a pandemic can result in a shortage of FDA and industry resources and staff, FDA will exercise enforcement discretion for delayed reporting of certain required adverse events reports, with the expectation that such reports will be submitted within 6 months when operations resume to pre-pandemic levels.  Walsh’s key takeaways are for companies to document any inability to meet their obligations to submit postmarket reports and to develop a robust Continuity of Operations Plan to make seamless their decision-making should (heaven forfend) another pandemic occur.

• Compounding: In this post, Karla Palmer discusses FDA’s temporary guidance addressing the unprecedented disruptions to the supply chain caused by COVID-19 that permits the compounding of certain drug products for hospitalized patients by outsourcing facilities that have registered with FDA under FDCA § 503B.  Palmer discusses the 4 criteria outsourcing facilities must meet in order to avoid FDA action for compounding a drug product that is essentially a copy of an FDA-approved drug, for using a bulk substance not on FDA’s 503B Bulks List, or for not meeting cGMP requirements.  In a follow-up post, Palmer describes a second FDA guidance to address drug shortages during the pandemic.  This unprecedented policy allows 503A compounders to compound certain identified shortage medications for patients in hospitals without a prescription for an individually identified patient and essentially permits compounding for “office use.”

Other News

• Healthcare: In this post, Faraz Siddiqui, Michelle Butler, and Alan Kirschenbaum describe a recent court decision out of the D.C. District Court that construed the term “original new drug application” in a manner that may offer rebate relief to companies marketing drugs approved under FDA’s pre-Hatch-Waxman paper NDA policy as well as those approved under literature-based applications submitted under FDCA § 505(b)(2).
• Devices: Jeff Gibbs, Gail Javitt, and McKenzie Cato discuss FDA’s new approach to regulating pharmacogenomic (PGx) tests in this post.  FDA acknowledged that PGx tests could play a useful role in informing the selection or dosing of some medications for certain individuals and specifically recognized that gene-drug interactions could be adequately supported by professional guidelines, which is a step forward and a change from FDA’s prior communications.
• Cannabis: In this post, Larry Houck describes DEA’s March 23^rd Notice of Proposed Rulemaking (NPR) that would permit the issuance of additional registrations to manufacture marijuana for research and, notably, allow the agency to insert itself in the manufacturer-to-researcher equation by buying, taking possession of, and directing marijuana to researchers.  Houck discusses the NPR, subsequent U.S. obligations under the Single Convention on Narcotic Drugs of 1961, and possible implications of DEA being an active player in the marijuana enterprise.

In this post, Kalie Richardson describes the state regulatory landscape as it pertains to telemedicine and medical marijuana.  Several states, including Minnesota, Massachusetts, Ohio, and the District of Columbia, have issued policies waiving the requirement that patient certification be made only during an in-patient visit to be eligible for the state medical marijuana program.  Additionally, some states have deemed medical cannabis licensees as essential businesses that may remain open.

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Hyman, Phelps & McNamara, P.C. has its finger on the pulse of FDA law.  Our technical expertise and industry knowledge are exceptional in scope and depth.  Our professional team holds extensive experience with the myriad of issues faced by companies.  Please contact us with any questions you may have related to the issues described here or any other FDA-related issue affecting your industry.

On Wednesday, May 6, 2020, from 12:00pm-1:00pm (Eastern) the Maryland/Israel Development Center will hold a webinar, “Israeli COVID-19 Vaccine Developments.”  The event will discuss how Israel has mobilized its scientific and technological talents to address COVID-19, and will feature the following speakers:

• Yaky Yanai, CEO of Pluristem Therapeutics, who is working on a placenta-based cell therapy treatment for respiratory and inflammatory complications associated with COVID-19.
• Vered Kaplan, CEO of Orgenesis, a global biotech company, which is unlocking the potential of cell and gene therapy including anti-viral technologies relevant for COVID-19 to provide life changing personalized medical treatments at the point-of-care to patients.
• Dr. Mark Levitt, Medical Director from RedHill Biopharma, a specialty biopharmaceutical company that is working on an experimental drug, Opaganib, which has shown anti-viral and anti-inflammatory properties to help reduce lung inflammation in COVID-19 patients.

Zoom information will be given upon registration. For more information contact, bbogage@marylandisrael.org.  To register: https://midcisraelcovid19.eventbrite.com

As unfortunately happens during every national disaster or emergency, unscrupulous individuals and companies see an opportunity to make money.  A lot of it.  When that happens, there are always immediate calls to prosecute individuals and companies for “price gouging” certain products and taking advantage of the dire and devastating circumstances.  During natural disasters, it’s gasoline and generators; during a health emergency and pandemic, it’s PPE, hand sanitizer, and toilet paper.

Hyman, Phelps & McNamara, P.C. has worked extensively with clients on all aspects of federal government drug and device pricing (here, here) and state drug price reporting and the related penalties. We have worked with drug and device clients on whether certain price concessions or services constitute fraud and abuse, or whether they fit into a Department of Health & Human Services (HHS) safe harbor (here and here). And we’ve blogged about state laws targeting generic drug price gouging.  That is a long way of saying that HPM has done a great deal of work in the area of pricing.  To an already complicated system, Covid-19 has added a whole new layer of craziness for companies, adding a price-gouging regulatory framework that is a patchwork of little-used state laws, brand new federal and state executive orders, and a federal law that was passed during the Korean War, that applies to so-called essential commodities and services (which may or may not be defined, depending on what law or executive order you are looking at).

Some may find it surprising that there is no federal law that expressly prohibits price gouging. What we do have is the aforementioned Korean War-era law, the Defense Production Act, and the President signed an Executive Order on March 23rd instructing the HHS and the Department of Justice (DOJ) to enforce the anti-hoarding provisions of that Act.  The Attorney General also set up a Covid-19 Hoarding and Price Gouging Task Force, led by the US Attorney in the District of New Jersey, with assistance from the DOJ Antitrust Division’s Criminal Program.  On April, 24, 2020, DOJ indicted the first person under the Executive order alleging the hoarding of face masks, face shields, surgical gowns, and disinfecting products at a Long Island warehouse and selling them at inflated prices.  While the Federal Trade Commission (FTC) has been largely silent on price gouging and has never brought a price gouging case in its history (they have no express mandate to target excessive pricing) they are aggressively targeting companies for false Covid-19 treatment claims, false lenders targeting small businesses, and Covid-19 related robocalls.  My colleagues recently did an excellent blog post on the many recent enforcement actions by FTC, DOJ and the FDA.

At the state level, 38 or so states (and some municipalities) have some form of price gouging law, and there is legislation pending in other states.  Like the Defense Production Act, these laws are usually triggered by the declaration of a state of emergency by the Governor. There are helpful summaries of the state laws at FindLaw and FMI – The Food Industry Association, among others.  In addition to the state laws, there have been quite a number of state Executive Orders issued within the last two months regarding price gouging.

These state laws, regulations and orders typically are enforced by the State Attorneys General, and fall into three categories:

• A percentage increase cap making it unlawful for anyone to raise prices on certain products by more than a certain percentage (usually ranging from 10% to 25%), with certain exceptions.
• A ban on “unconscionable” or “grossly excessive” price increases (sometimes defined, sometimes not)
• Outright prohibition of any increase that raises the price higher than what was offered before the emergency declaration.

In addition, private companies have also started policing price gouging through their own policies and litigation.

Given the regulatory chaos and laser focus of government and private entities on price gouging, it is clear that there is no safe harbor for price increases. Companies who are considering pricing decisions should consider the following:

• Has a state of emergency been declared?
• Is the product an essential commodity or service?
• Is the price excessive as defined by the state?
• Is the price the result of a justifiable cost increase to the seller? Many state laws have exceptions for situations that may include passing along cost increases from suppliers.

If a company is considering any pricing decisions, they should, among other things, be aware of all the applicable federal, state and local laws, and executive orders that might regulate your product, consult with counsel, focus on their costs, build in a typical (non-emergency) margin, and make sure those decisions are well-documented and justified.