The saga continues in United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890 (9th Cir. 2017), a False Claims Act case alleging that Gilead concealed information from FDA regarding the contamination of certain drugs, leading to false claims being paid by the government. We have been closely following this case because of the implications it could have on the materiality analysis applied in FCA cases post-Escobar. (See prior posts here and here.)

Although the Campie’s case was twice dismissed by the district court, the Ninth Circuit Court of Appeals overturned the dismissal, concluding that whether allegations are material for purposes of an FCA claim raised matters of proof that could not be resolved prior to discovery. Late last year, Gilead filed a petition for a writ of certiorari requesting the U.S. Supreme Court rule on the following question: Whether an FCA allegation fails when the Government continued to approve and pay for products after learning of alleged regulatory infractions and the pleadings offer no basis for overcoming the strong inference of immateriality that arises from the Government’s response. For a discussion of this Writ, see our prior post here.

On March 5, 2018, Respondents filed a response outlining three primary arguments against granting certiorari in this case. First, Respondents argue that Gilead misrepresents the holding of the Ninth Circuit as overly restrictive. Contrary to Petitioner’s characterization, Respondent’s assert that the holding “properly followed Escobar’s holistic approach to materiality.” Respondents rely on the Ninth Circuit’s conclusion that the contested issues, including materiality, “are matters of proof, not legal grounds to dismiss relators’ complaint,” and claim the complaint satisfies the pleading requirements of Rule 12(b)(6). Note, however, that the Ninth Circuit specifically reserved a ruling on whether the relators’ complaint would satisfy the heightened pleading standards under Rule 9(b), a basis that other courts have used to dismiss FCA cases.

It also is significant that Respondents make affirmative use of DOJ’s recently issued Granston memo, discussed here, to support its position that this case does not undermine FDA’s regulatory authority. Respondents suggest that the government’s ability to dismiss FCA cases, and its failure to do so here, means that its suit advances the government’s interest. As Granston noted, however, “a decision not to intervene in a particular case may be based on factors other than merit, particularly in light of the government’s limited resources.”

Respondents also argue that there is no circuit split, and that even if there was, this case is a “poor vehicle” to clarify the materiality standard because it is not clear that the government actually had knowledge of the fraudulent conduct at the time it made the payments. Respondents contend that dismissing the case at this juncture is premature given that Gilead will have another chance to contest materiality at the summary judgment stage.

Per the Rules of the Supreme Court, Gilead can file a reply within 14 days of the Brief in Opposition, which would be no later than March 19, 2018.

On March 5, 2018, GAO released to the public a report titled “Food Safety and Nutrition: FDA Can Build on Existing Efforts to Measure Progress and Implement Key Activities.” The report confirms that FDA’s Food and Veterinary Medicine (FVM) Program has been primarily preoccupied with implementation of the Food Safety Modernization Act (FSMA) and other food safety activities. In the period between January 2011 (when FSMA was enacted) and September 2017, FDA published “33 key proposed or final regulations” – 21 of which related only to food safety – and “111 key draft or final guidance documents” – 82 of which related only to food safety. (A list of the regulations and guidance documents is included in Appendix I). The numbers for staffing and expenditures are considerably more lopsided, with approximately 98% of FTEs and expenditures dedicated to food safety-related activities.

The GAO report gives FDA credit for setting goals for food safety and nutrition related activities via the FVM Program Strategic Plan, but notes that the Agency “cannot fully assess progress” because performance measures have not been developed for all of the FVM Program’s strategic objectives. In addition, GAO notes that the Strategic Plan as yet lacks an implementation plan that would lay out “specific actions, priorities, and milestones” to execute the identified strategies. GAO also notes that it is not clear and FDA does not document how the Agency determines whether it will issue a regulation or guidance. Consequently, FDA cannot ensure consistency and transparency in this determination.

Based on its findings, GAO recommends that FDA: (1) “develop performance measures with associated targets and time frames for all eight of its food safety- and nutrition-related objectives”; (2) “complete a plan that includes specific actions, priorities, and milestones for implementing the FVM Program’s strategic plan”; and (3) “uniformly document the bases for their decisions for issuing either regulations or guidance related to food safety and nutrition.”

In its comments on the report, FDA concurred with GAO’s recommendations. On the day the report was issued, Commissioner Gottlieb issued a statement announcing FDA’s commitment to modernize and streamline its food and nutrition programs, and summarizing some of the Agency’s recent safety and nutrition related activities. Dr. Gottlieb also stated that he will soon “provide more details on a nutrition strategy to reduce preventable death and disease through better nutrition.” It remains to be seen what form that strategy will take, and whether the Agency will shift more of its resources toward nutrition-related activities, given the work that remains to be done on FSMA implementation.

As stated in our post last week, on February 28, 2018, Commissioner Gottlieb announced FDA’s release of a draft guidance document addressing certain requirements under the 2013 Drug Supply Chain Security Act (DSCSA) concerning standardization of data and documentation practices for product tracing. The purpose of the draft is to help trading partners “understand” data elements that they should include as part of product tracing information, and details when partners are permitted to omit certain data that otherwise would be required. The draft guidance also recommends documentation practices that trading partners can use to satisfy product tracing requirements set forth in the DSCSA, FDCA Section 582. FDA notes that “product tracing requirements” mean the exchange of product tracing information between trading partners, including transaction information, transaction history and the transaction statement (TH/TI/TS). The guidance also intends to help trading partners in “standardizing” the information captured, maintained and provided to subsequent purchasers or those that request it.  What is a tad interesting about the draft guidance is its timing: Trading partners have been providing TH/TI/TS pursuant to the DSCSA for quite a while now, as required by the statute. The draft guidance helpfully walks through elements of TH/TI/TS for those entities that are required to provide such information under FDCA Section 582 (i.e., manufacturers, wholesaler distributors, repackagers, and dispensers). Each is addressed below:

Manufacturers: To the extent that there are business relationships that involve multiple manufacturers (application holder, co-licensed partner, affiliates) those entities should document by written agreement which of those entities will be carrying out the activities required by manufacturers under Section 582(b) (manufacturer requirements).

Dispensers: The draft describes various recommendations for dispensers including when there are “dispenser to dispenser sales to meet a specific need.” In that case, dispensers are not required to provide tracing information if the product is sold from one dispenser to another dispenser to “fulfil a specific patient need” (i.e., a sale from one pharmacy to another for dispensing to an individually identified patient). Such sales do need to be appropriately documented in the event there is an investigation concerning a recall, or notification of a suspect or illegitimate product. Licensed health care practitioners that may prescribe or administer medications under state law, or those under their supervision, are exempted from product tracing requirements, as described in the guidance. (Draft Guidance at 5). FDA also provides that dispensers may enter into third party agreements so that tracing information may be maintained by that third party. Notwithstanding use of third party agreements for the maintenance of product tracing information, such agreements do not relieve dispensers from their statutory obligations under 582 (i.e., among others, notification and reporting requirements).

The rest of the Draft Guidance addresses the Agency’s thoughts on standardization of product tracing data. Although the elements of what should be included are generally set forth in the DSCSA (and are being exchanged between trading partners), the Draft Guidance walks through in more detail (than FDA’s initial guidance issued in November 2014 [here]) what information should be included in TI/TH/TS.

Standardizing the Transaction Information (TI)

The DSCSA sets forth ten elements that should be included in TI. The Draft Guidance provides detail on these elements, and describes when certain detail may be omitted. Some but not all additional details on data elements include:

• Proprietary or established name of the product. The name should not be truncated, unless space limitations make it necessary to do so. FDA also provides instructions on products with multiple APIs, and names or abbreviations that the Institute for Safe Medications Practices (ISMP) has identified as being misinterpreted on prone to medication errors.
• Strength and dosage form. This information should remain consistent from one trading partner to the next in each transaction involving the product. FDA details the unit of measure, symbols and abbreviations that should be used.
• National drug code.  FDA advises that manufactures and repackagers that are creating the first TI for the product that they are introducing into commerce should use their respective NDC number. Subsequent partners should use the same NDC and the same configuration that is on the TI received from the product’s previous owner. Repackagers “should provide the NDC number that they have assigned to the repackaged product.”
• Container size. This should reflect the configuration of the “individual saleable unit, and not a larger shipping size of a “box, case, or tote.”
• Number of containers. FDA says that this should be the quantity of individual saleable units of a product of the same lot number that is included in a transaction.
• Lot number. The manufacturer should use the lot number it assigns to identify a batch or portion thereof that has “uniform character and quality within specified limits.”   If a repackager assigns a new lot number, it should use that number in the TI it provides to subsequent trading partners. If more than one lot number is used, then each should be reflected in the TI provided to the subsequent purchaser.
• Date of transaction. FDA considers this to be the date on which ownership of the product involved in the transaction transferred between trading partners. It may be a contract date or a shipment date, depending on the transaction.
• Date of shipment if more than 24 hours after date of transaction. The date should reflect the date shipped.
• Business name and address of the person from whom ownership is being transferred. FDA “recommends using the address of the facility from which the product is being shipped as the business address of the trading partner that is transferring ownership of the product,” although it states that this is a business decision between partners. If product is shipped from a third party logistics provider facility, the partner should still use the address of the entity from which ownership is being transferred.
• Business name and address of the person to whom ownership is being transferred. FDA’s recommendation concerning use of the appropriate business name and address is the same for the receiver of the product as it is for the sender (above). Use the address of the facility to whom the product is being shipped.

Standardizing the Transaction History (TH)

FDA’s guidance document also sets forth the Agency’s recommendations for standardization of the product’s transaction history as it passes between trading partners. The transaction history should be a compilation “of the transaction information for each prior transaction involving that product.” FDA outlines the two ways in which trading partners may provide TH, how it should be organized, and what does and does not need to be included in that TH. (Draft Guidance at 11).

Standardizing the Transaction Statement (TS)  

FDA’s Draft Guidance sets forth the statutory definition of “transaction statement” and all of its requisite elements indicating compliance with the DSCSA. In addition, the Draft Guidance discusses the “direct purchase statement” that may be included with certain products. If a distributor purchases a product directly from the manufacturer, exclusive distributor of the manufacturer, or a repackager that purchased directly from the manufacturer, then the direct purchase statement must be included. The Draft Guidance sets forth at page 13 the statement that FDA recommends that such partners use.   FDA notes that this will help partners understand why TH may not include certain transaction information back to the manufacturer.  FDA is also recommending the passing of such statements when a wholesaler purchases the product from another wholesaler that directly purchased the product from a manufacturer or repackager. (Draft Guidance at 13).

Documentation Practices

Finally, the Draft discusses various documentation practices for subsequent transactions where the statute permits certain transactions to omit certain elements of TH/TI/TS. These transactions include direct purchases by a wholesaler, drop shipments to a dispenser, and transactions involving grandfathered products. Those entities that participate in such transactions should focus on FDA’s draft detailed recommendations for documentation involving such transactions at pages 14-18 of the Draft Guidance.

Got questions or comments? Please submit them to Docket No. FDA-2018-D-0688, by May 1, 2018.

For this blogger, paging through and poring over FDA exclusivity determinations is about as much fun as sitting down with a hot cup of coffee and reading the Sunday newspaper. We recently came across an interesting FDA decision on 180-day exclusivity for generic LIALDA (mesalamine) Delayed-release Tablets, 1.2 g, approved under NDA 022000, that we thought was worth sharing. It concerns the familiar failure to obtain-timely tentative (or final) approval forfeiture provision at FDC Act § 505(j)(5)(D)(i)(IV), which states that eligibility for 180-day exclusivity is forfeited if:

The first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.

The 2007 FDA Amendments Act clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition, the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .” (FDC Act § 505(q)(1)(G)).

According to FDA’s Paragraph IV Certifications List, the first ANDA for a generic version of LIALDA containing a Paragraph IV certification was submitted to FDA on December 16, 2009. That submission was made by Zydus Pharmaceuticals (USA), Inc. (“Zydus”) under ANDA 091640 and made the company a “first applicant” eligible for a period of 180-day exclusivity. Thirty months after that ANDA submission was June 16, 2012, but several more years went by without an FDA approval action on the ANDA. Finally, on June 5, 2017, FDA approved Zydus ANDA 091640 after the company responsed to a December 2016 Complete Response Letter. As to 180-day exclusivity, FDA’s approval letter says that the Agency decided to “punt” on whether or not exclusivity would be available to Zydus:

With respect to 180-day generic drug exclusivity, we note that Zydus was the first ANDA applicant for Mesalamine Delayed-Release Tablets USP, 1.2 g, to submit a substantially complete ANDA with a paragraph IV certification. Therefore, with this approval, Zydus may be eligible for 180 days of generic drug exclusivity for Mesalamine Delayed-Release Tablets USP, 1.2 g. This exclusivity, which is provided for under 505(j)(5)(B)(iv) of the FD&C Act, would begin to run from the date of the commercial marketing identified in section 505(j)(5)(B)(iv). The Agency notes that Zydus failed to obtain tentative approval of this ANDA within 30 months after the date of which the ANDA was filed. See section 505(j)(5)(D)(i)(IV) of the FD&C Act (forfeiture of exclusivity for failure to obtain tentative approval). The Agency is not, however, making a formal determination at this time of Zydus’s eligibility for 180-day generic drug exclusivity. It will do so only if a subsequent paragraph IV applicant becomes eligible for full approval (a) within 180 days after Zydus begins commercial marketing of Mesalamine Delayed-Release Tablets USP, 1.2 g, or (b) at any time prior to the expiration of the ‘720 patent if Zydus has not begun commercial marketing. Please submit correspondence to this ANDA informing the Agency of the date commercial marketing begins.

But just a few months later, apparently FDA was put into a position of having to resolve whether or not Zydus forfeited eligibility for 180-day exclusivity (presumably because a subsequent Paragraph IV applicant became eligible for full approval). Upon review of the Zydus ANDA file, FDA resolved this exclusivity punt in favor of Zydus. And, in doing so, FDA confirmed that it is when the Agency communicates to a particular ANDA applicant a prior determination on bioequivalence standards that counts (here, from a Citizen Petition Response), and not necessarily when an issue is decided by the Agency, for purposes of the failure to obtain timely tentative (final) approval forfeiture provision.

As initially submitted, Zydus ANDA 091640 contained, among other things, the results of a clinical endpoint bioequivalence study. But just 8 months after the submission of ANDA 091640, FDA changed course. In an August 20, 2010 Citizen Petition Response (Docket Nos. FDA-2010-P-0111 and FDA-2008-P-0507) concerning mesalamine extended-release products, FDA ruled that:

in light of new data from PK and comparative clinical endpoint studies in modified-release mesalamine products, as well as recent developments in regulatory science concerning the analysis of PK data, the Agency . . . no longer recommends comparative clinical endpoint studies to show bioequivalence for these products. Rather, . . . applicants should show bioequivalence to certain NDAs for mesalamine extended-release products (Asacol and Pentasa) through a combination of PK studies and in vitro dissolution testing.

According to an October 25, 2017 FDA Exclusivity Determination for Zydus ANDA 091640, this change in bioequivalence standard was not communicated to Zydus until a couple of years later:

In its February 23, 2012 bioequivalence review for ANDA 091640, FDA determined that the principles described in the Citizen Petition Response should apply to generic versions of Lialda as well and that Zydus must conduct comparative PK studies (under both fasting and fed conditions) and in vitro dissolution studies to demonstrate bioequivalence instead of the in vivo studies Zydus had previously conducted. This change in bioequivalence requirements for approval, which required Zydus to plan and conduct additional studies, was first communicated to Zydus as Bioequivalence Comments on March 13, 2012, three months before the forfeiture date of June 16, 2012 for ANDA 091640. Zydus later received a Complete Response Letter for this ANDA on March 13, 2013, which included the same bloequivalence deficiencies communicated in the Agency’s March 13, 2012 Bioequivalence Comments.

Zydus promptly responded to the March 2013 Complete Response Letter in October 2013, and, as noted above, eventually obtained ANDA approval in June 2017. But it was Zydus’ active pursuit to address the bioequivalence deficiencies communicated by FDA in March 2012 (and based on an August 2010 Citizen Petition Response) that saved the company from forfeiting eligibility for 180-day exclusivity. According to FDA:

On October 23, 2013, Zydus responded to the Agency’s March 13, 2013 Complete Response Letter, which included information to address the bioequivalence deficiencies communicated in the Agency’s March 13, 2012 Bioequivalence Comments and March 13, 2013 Complete Response Letter for ANDA 091640. A review of this information shows that Zydus’s application was not ready for approval at the forfeiture date due, in part, to the fact that while Zydus’s application was pending there was a change in the bioequivalence studies expected for approval. At the time of the forfeiture date of June 16, 2012, Zydus was actively addressing the bioequivalence deficiencies described above and communicated to Zydus in the March 13, 2012 Bioequivalence Comments, and Zydus had not yet demonstrated bioequivalence under the new methodology as of the June 16, 2012 forfeiture date. . . .

Based on these facts, we conclude that Zydus failed to obtain tentative approval within 30 months and this failure was caused by a change in the requirements for approval. As described above, Zydus was actively addressing the change at the forfeiture date. We conclude that Zydus’s efforts to comply with the new bioequivalence methodology for modified-release mesalamine products, which methodology was revised while Zydus’s application was pending, was a cause of its failure to obtain tentative approval by the June 16, 2012 forfeiture date.

We’ve said it before, and we’ll say it again: timing is everything when it comes to Hatch-Waxman. That’s certainly true in the case of Zydus ANDA 091640, where a Citizen Petition Response issued shortly after ANDA submission that changed bioequivalence standards was not determinative of 180-day exclusivity forfeiture, but rather when FDA communicated the substance of that petition decision to a particular ANDA applicant requesting new bioequivalence data and information.

On February 28, 2018, Commissioner Gottlieb announced FDA’s release of two draft guidance documents addressing certain requirements under the 2013 Drug Supply Chain Security Act (DSCSA), concerning standardization of data and documentation practices for product tracing (here), and definitions of suspect and illegitimate products (here).  In announcing the release of the two draft documents, however, Commissioner Gottlieb also stated that FDA intends to release later this year regulations revisiting FDA’s interpretation of the express preemption provisions in the DSCSA for state licensure and product tracing.  The Commissioner noted that, in 2014, FDA interpreted DSCSA’s preemption provision to mean that “states are not preempted from doing their own licensing of wholesale distributors and third party logistic providers so long as the state regulations did not contradict or fall below the minimum standards established by federal law.”  Thus, states could still impose requirements more restrictive than the “federal scheme.”  Based on comments received concerning the scope of federal preemption, the continued patchwork of state laws that would ensue, and the fact that “Congress wanted the federal system to provide both a floor and a ceiling when it came to the issue of preemption,” FDA is taking another (welcomed) look at its earlier guidance.  In what is surely a positive change for industry and one that will lead to more consistency and less confusion, FDA plans to release later this year new regulations that will apply to “all state and federal licenses issued to wholesale distributors and 3PLs.”

Concerning the new draft guidance documents, FDA’s definitional guidance on suspect and illegitimate products intends to clarify what “suspect” and “illegitimate” products are in order to help the industry meet notification requirements if they identify such products in their possession. (FDA released draft guidance on such notification requirements back in December 2016.)  FDA also clarifies interpretations of the terms “counterfeit,” “diverted,” “fraudulent transaction,” and “unfit for distribution” to aid trading partners in determining whether a product is suspect and/or counterfeit. Note that “unfit for distribution” would include drugs that are considered adulterated under FDCA Section 501 or conditions rendered nonsalable because certain conditions (including return, recall, damage or expiry) “cast doubt on the drug’s safety, identity, strength, quality, or purity.”

The second recently released draft guidance document addresses standardization of data and documentation practice for product tracing. The guidance document intends to help trading partners understand data elements that should be included in product tracing information, and details when partners are permitted to omit certain data that otherwise would be required.  Because that lengthy guidance document deserves its own blog post, stay tuned, one will be forthcoming in later this week.

Early each morning, when most folks are still sleeping (or perhaps just getting up to have their first cup of coffee and read the newspaper), this blogger is usually already in the office poring over FDA-related news, citizen petitions, and new legislation to update the FDA Law Blog trackers (here, here, and here) and to rev up the @FDALawBlog Twitter feed. One day last week, as we were looking at new legislation, one bill in particular caught our attention.  The bill carried the following title: “A bill to amend the Federal Food, Drug, and Cosmetic Act to ensure that valid generic drugs may enter the market.”

Hmmm . . . . What could that mean? Perhaps a bill to implement the Trump Administration’s recent budget proposal that we think would cheapen 180-day exclusivity (see our previous post here)?  Or maybe something entirely different?  We went on a mission to find out.  And when we finally did obtain a copy of the bill several hours later and took a look through the text, we were struck with a case of déjà vu.

The bill, S. 2476, is called the “Expanding Access to Low Cost Generic Drugs Act” and was introduced by Senator Tina Smith (D-MN) on February 28, 2018.  Although S. 2476 is styled as the “Expanding Access to Low Cost Generic Drugs Act,” it’s really just a new name for nearly identical bills introduced in 2011 (S. 1882) and 2015 (S. 131) as the “Fair And Immediate Release of Generic Drugs Act, or the “FAIR GENERxICS Act” (and even before that in another form in 2009 as S. 1315, the “Drug Price Competition Act of 2009” – see our previous post here).  As we noted back in 2011 when the “FAIR Generics Act” was introduced by Senators Jeff Bingaman (D-NM), David Vitter (R-LA), Sherrod Brown (D-OH), and Jeff Merkley (D-OR), the bill is pretty complex, but essentially concerns parked 180-day exclusivity.  According to a summary of the bill made at that time:

The legislation would prevent “parked exclusivities” from delaying full, fair, and early generic competition by:

• Granting the right to share exclusivity to any generic filer who wins a patent challenge in the district court or is not sued for patent infringement by the brand company.
• Maximizing the incentive for all generic challengers to fight to bring products to market at the earliest possible time by holding generic settlers to the deferred entry date agreed to in their settlements.
• Creating more clarity regarding litigation risk for pioneer drug companies and generic companies by requiring pioneer companies to make a litigation decision within the 45 day window provided for in the Hatch-Waxman Act.

The same summary applies to S. 2476, the current version of the “FAIR Generics Act.” But let’s take a closer look at the current bill.  Here’s how it would amend the FDC Act’s 180-day exclusivity provisions, and other portions of the FDC Act and the patent laws (additions in bold red typeface and deletions in bold strikethrough typeface).

FDC Act § 505(j)(5)(B)(iv) (AMENDED)

(iv) 180-DAY EXCLUSIVITY PERIOD.—

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

(II) DEFINITIONS.—In this paragraph:

(aa) 180-DAY EXCLUSIVITY PERIOD.—The term “180-day exclusivity period” means the 180-day period ending on the day before the date on which an application submitted by an applicant other than a first applicant could become effective under this clause.

(bb) FIRST APPLICANT.—As used in this subsection, the term “first applicant” means an applicant that, on the first day on which a substantially complete application containing a certification described in paragraph (2)(A)(vii)(IV) is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a certification described in paragraph (2)(A)(vii)(IV) for the drug.

(cc) (bb) SUBSTANTIALLY COMPLETE APPLICATION.—As used in this subsection, the term “substantially complete application” means an application under this subsection that on its face is sufficiently complete to permit a substantive review and contains all the information required by paragraph (2)(A).

(dd) (cc) TENTATIVE APPROVAL.—

(AA) IN GENERAL.—The term “tentative approval” means notification to an applicant by the Secretary that an application under this subsection meets the requirements of paragraph (2)(A), but cannot receive effective approval because the application does not meet the requirements of this subparagraph, there is a period of exclusivity for the listed drug under subparagraph (F) or section 505A, or there is a 7-year period of exclusivity for the listed drug under section 527.

(BB) LIMITATION.—A drug that is granted tentative approval by the Secretary is not an approved drug and shall not have an effective approval until the Secretary issues an approval after any necessary additional review of the application.

FDC Act § 505(j)(5)(B)(v) (NEW)

(v) FIRST APPLICANT DEFINED.—As used in this subsection, the term “first applicant” means an applicant—

(I)(aa) that, on the first day on which a substantially complete application containing a certification described in paragraph (2)(A)(vii)(IV) is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a certification described in paragraph (2)(A)(vii)(IV) for the drug; and

(bb) that has not entered into a disqualifying agreement described under clause (vii)(II); or

(II)(aa) for the drug that is not described in subclause (I) and that, with respect to the applicant and drug, each requirement described in clause (vi) is satisfied; and

(bb) that has not entered into a disqualifying agreement described under clause (vii)(II).

FDC Act § 505(j)(5)(B)(vi) (NEW)

(vi) REQUIREMENT.—The requirements described in this clause are the following:

(I) The applicant described in clause (v)(II) submitted and lawfully maintains a certification described in paragraph (2)(A)(vii)(IV) or a statement described in paragraph (2)(A)(viii) for each unexpired patent for which a first applicant described in clause (v)(I) had submitted a certification described in paragraph (2)(A)(vii)(IV) on the first day on which a substantially complete application containing such a certification was submitted.

(II) With regard to each such unexpired patent for which the applicant described in clause (v)(II) submitted a certification described in paragraph (2)(A)(vii)(IV), no action for patent infringement was brought against such applicant within the 45-day period specified in clause (iii); or if an action was brought within such time period, such an action was withdrawn or dismissed by a court (including a district court) without a decision that the patent was valid and infringed; or if an action was brought within such time period and was not withdrawn or so dismissed, such applicant has obtained the decision of a court (including a district court) that the patent is invalid or not infringed (including any substantive determination that there is no cause of action for patent infringement or invalidity, and including a settlement order or consent decree signed and entered by the court stating that the patent is invalid or not infringed).

(III) If an applicant described in clause (v)(I) has begun commercial marketing of such drug, the applicant described in clause (v)(II) does not begin commercial marketing of such drug until the date that is 30 days after the date on which the applicant described in clause (v)(I) began such commercial marketing.

FDC Act § 505(j)(5)(B)(vii) (NEW)

(vii) AGREEMENT BY FIRST APPLICANT TO DEFER COMMERCIAL MARKETING; LIMITATION ON ACCELERATION OF DEFERRED COMMERCIAL MARKETING DATE.—

(I) AGREEMENT TO DEFER APPROVAL OR COMMERCIAL MARKETING DATE.—An agreement described in this subclause is an agreement between a first applicant and the holder of the application for the listed drug or an owner of one or more of the patents as to which any applicant submitted a certification qualifying such applicant for the 180-day exclusivity period whereby that applicant agrees, directly or indirectly, (aa) not to seek an approval of its application that is made effective on the earliest possible date under this subparagraph, subparagraph (F) of this paragraph, section 505A, or section 527, (bb) not to begin the commercial marketing of its drug on the earliest possible date after receiving an approval of its application that is made effective under this subparagraph, subparagraph (F) of this paragraph, section 505A, or section 527, or (cc) to both items (aa) and (bb).

(II) AGREEMENT THAT DISQUALIFIES APPLICANT FROM FIRST APPLICANT STATUS.—An agreement described in this subclause is an agreement between an applicant and the holder of the application for the listed drug or an owner of one or more of the patents as to which any applicant submitted a certification qualifying such applicant for the 180-day exclusivity period whereby that applicant agrees, directly or indirectly, not to seek an approval of its application or not to begin the commercial marketing of its drug until a date that is after the expiration of the 180-day exclusivity period awarded to another applicant with respect to such drug (without regard to whether such 180-day exclusivity period is awarded before or after the date of the agreement).

FDC Act § 505(j)(5)(B)(viii) (NEW)

(viii) LIMITATION ON ACCELERATION.—If an agreement described in clause (vii)(I) includes more than 1 possible date when an applicant may seek an approval of its application or begin the commercial marketing of its drug—

(I) the applicant may seek an approval of its application or begin such commercial marketing on the date that is the earlier of—

(aa) the latest date set forth in the agreement on which that applicant can receive an approval that is made effective under this subparagraph, subparagraph (F) of this paragraph, section 505A, or section 527, or begin the commercial marketing of such drug, without regard to any other provision of such agreement pursuant to which the commercial marketing could begin on an earlier date; or

(bb) 180 days after another first applicant begins commercial marketing of such drug; and

(II) the latest date set forth in the agreement on which that applicant can receive an approval that is made effective under this subparagraph, subparagraph (F) of this paragraph, section 505A, or section 527, or begin the commercial marketing of such drug, without regard to any other provision of such agreement pursuant to which commercial marketing could begin on an earlier date, shall be the date used to determine whether an applicant is disqualified from first applicant status pursuant to clause (vii)(II).

FDC Act § 505(j)(5)(B)(ix) (REDESIGNATED)

(v) (ix) 180-DAY EXCLUSIVITY PERIOD FOR COMPETITIVE GENERIC THERAPIES.—

FDC Act § 505(j)(5)(D)(i)(IV) (AMENDED)

(IV) FAILURE TO OBTAIN TENTATIVE APPROVAL.— The first applicant The first applicant, as defined in subparagraph (B)(v)(I), fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.

FDC Act § 505(j)(14) (NEW)

(14)(A) The holder of an abbreviated application under this subsection shall submit to the Secretary a notification that includes—

(i)(I) the text of any agreement entered into by such holder described under paragraph (5)(B)(vii)(I); or

(II) if such an agreement has not been reduced to text, a written detailed description of such agreement that is sufficient to disclose all the terms and conditions of the agreement; and

(ii) the text, or a written detailed description in the event of an agreement that has not been reduced to text, of any other agreements that are contingent upon, provide a contingent condition for, or are otherwise related to an agreement described in clause (i).

(B) The notification described under subparagraph (A) shall be submitted not later than 10 business days after execution of the agreement described in subparagraph (A)(i). Such notification is in addition to any notification required under section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

(C) Any information or documentary material filed with the Secretary pursuant to this paragraph shall be exempt from disclosure under section 552 of title 5, United States Code, and no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding. Nothing in this paragraph is intended to prevent disclosure to either body of the Congress or to any duly authorized committee or subcommittee of the Congress.

FDC Act § 301(e) (AMENDED) (Prohibited Acts)

(e) The refusal to permit access to or copying of any record as required by section 412, 414, 417(j), 416, 504, 564, 703, 704(a), 760, or 761; or the failure to establish or maintain any record, or make any report, required under section 412, 414(b), 417, 416, 504, 505 (i) or (k) 505 (i), (j)(14), or (k), 512(a)(4)(C), 512 (j), (l) or (m), 572(i), 515(f), 519, 564, 760, 761, 909, or 920 or the refusal to permit access to or verification or copying of any such required record; or the violation of any recordkeeping requirement under section 204 of the FDA Food Safety Modernization Act (except when such violation is committed by a farm).

35 U.S.S. § 271(e)(7) (NEW)

(7) The exclusive remedy under this section for an infringement of a patent for which the Secretary of Health and Human Services has published information pursuant to subsection (b)(1) or (c)(2) of section 505 of the Federal Food, Drug, and Cosmetic Act shall be an action brought under this subsection within the 45-day period described in subsection (j)(5)(B)(iii) or (c)(3)(C) of section 505 of the Federal Food, Drug, and Cosmetic Act.

 We’re still in the process of sorting out how all of these new and amended provisions would operate. And not all of them seem to make complete sense (e.g., How can an agreement described in the proposed text control when an applicant may seek an approval of its ANDA? Isn’t that really an FDA decision?)  In any case, whether renewed interest in changes to the statutory 180-day exclusivity provision, as a result of the Trump Administration’s recent budget proposal, will lead to passage of the “Expanding Access to Low Cost Generic Drugs Act” or another bill remains to be seen.

On March 1, 2018, FDA announced the release of several guidance documents: final guidance on Scientific Evaluation of the Evidence on the Beneficial Physiological Effects of Isolated or Synthetic Non-digestible Carbohydrates Submitted as Citizen Petition; final guidance on Reference Amounts Customarily Consumed: List of Products for Each Product Category Product Category; a small entity compliance guide on the new regulations regarding serving sizes; Questions and Answers for Industry on Dietary Fiber; and a Draft Guidance on Declaration of Added Sugars on Honey, Maple Syrup, and Certain Cranberry Products. The dietary fiber guidance and the added sugar in honey maple syrup and cranberry products guidance raise new issues.

Dietary Fiber Guidance

As we previously reported, in May 2016, FDA published a final rule amending the nutrition labeling regulations. Among other things, FDA redefined dietary fiber as non-digestible soluble and insoluble carbohydrates (with three or more monomeric units) and lignin that are intrinsic and intact in plants, and isolated or synthetic non-digestible carbohydrates (with three or more monomeric units)(hereinafter “added NDCs”) that FDA determines to have a physiological effect that is beneficial to human health.  In November 2016, FDA issued a draft guidance describing FDA’s criteria in evaluating the evidence that an added NDC has a beneficial physiological effect. Using the approach described in the draft guidance, FDA determined that the available evidence for 26 added NDCs was insufficient to meet the standard. Therefore, these added NDCs did not qualify as dietary fiber for purposes of nutrition labeling.

As described in the final guidance, FDA has reconsidered some of its criteria and approaches used in the evaluation of evidence for added NDCs.  Appendix A to the final guidance discusses the main changes in FDA’s position.  Specifically:

• FDA will consider clinical studies conducted in diseased populations.
• In the draft guidance, FDA had taken the position that since foods are intended for the general U.S. population, it would not consider results from studies on individuals with a specific disease. However, as explained in the final guidance, FDA has decided that it will consider evidence from studies on individuals with a disease under certain circumstance, namely when “extrapolating to individuals who do not have the disease is scientifically appropriate.” For example, FDA would consider studies on constipated individuals when evaluating the effect of an added NDC on laxation.
• FDA also has reconsidered its position on evaluating whether a combination of two NDCs has a beneficial physiological effect. If a combination of isolated NDCs will be used as an ingredient, there are two options. Either the citizen petition provides data on a specific (fixed) combination of the added NDCs, or it provides evidence regarding the beneficial physiological effect of each individual NDC included in the combination.
• The final guidance also includes additional examples of physiological endpoints that FDA may consider, e.g. satiety and fecal output/fecal weight as measured on the basis of grams/day as a measure of laxation. However, FDA maintains its position that fermentation and changes in microbiota in the large intestine are not valid physiological endpoints.
• FDA will consider studies in which there is a statistically significant difference in baseline values between groups, provided that the statistical analysis includes adjustments for these differences or otherwise corrects for these differences.
• The final guidance provides more information about how FDA will weigh the strength of the evidence.
• In its request for data on added NDCs, FDA provided for a process to submit unpublished data. Although FDA maintains that it will consider unpublished data in its determination of whether the added NDC is a dietary fiber, it does encourage submission of publicly available data. Amending the regulation to include an additional added NDC that meets the definition of dietary fiber requires notice and comment rulemaking. This is a public process. Thus, data critical for the evaluation of the evidence of a beneficial physiological effect will need to be available to the public.

It remains to be seen to what extent FDA’s changes in its position regarding inclusion and exclusion criteria for the evaluation of evidence will affect its assessment of the data for the 26 added NDCs in 2016.As readers of this blog know, several Petitions regarding added NDCs have been submitted. The timing of FDA’s responses to these Petitions remains uncertain. In the updated Questions and Answers regarding Dietary Fiber, FDA states that it remains committed to completing the review process in the “near future.” Although the publication of the final guidance and the reconsiderations regarding key issues are a step forward, much uncertainty remains. Among other things, clarification as to what constitutes an added NDC vs. what is an intrinsic and intact NDC is needed.

Declaration of Added Sugars on Honey, Maple Syrup, and Certain Cranberry Products; Added Sugars with A Twist 

FDA’s draft guidance on declaration of added sugars on honey and maple syrup and cranberry products is – for lack of a better word – interesting.

As readers of this blog may recall, a major issue in the amendment to the nutrition labeling regulations was the inclusion of the new requirement to declare added sugars. The final rule defines “added sugars,” in part, as “sugars that are either added during the processing of foods, or are packaged as such.” (Emphasis added).  As a result, the term includes single ingredient products such as honey and syrups; e.g. a jar of honey and a bottle of maple syrup would need to declare added sugars in the nutrition facts panel.  FDA got a large number of comments by the honey and maple syrup industries about this requirement.  Specifically, the comments raised concerns that declaring added sugars on single ingredient honey and maple syrup products would suggest to consumers that the pure products contain added table sugar because added sugars are listed in the Nutrition Facts panel. Both of these product categories have a history of economic adulteration with cheaper sweeteners, and according to the comments, the declaration of added sugars might lead consumers to believe sweeteners are added.

FDA’s draft guidance provides a possible solution to this issue. FDA proposes to exercise enforcement discretion for products that use a “†” symbol immediately following the added sugars percent Daily Value in the Nutrition Facts panel. The “†” symbol may direct consumers to a truthful and non-misleading statement on the package outside the Nutrition Facts panel.  In that statement, manufacturers may explain that no sugar was added to the pure honey or pure maple syrup.  In short, the Nutrition Facts panel will state that the product contains added sugars but a statement outside the Nutrition Facts panel will state that these are not added sugars, but are naturally occurring.

The added sugar labeling requirement also puts certain cranberry products in a bad light. The cranberry industry submitted comments to FDA explaining that the added sugars declaration would be detrimental to the cranberry industry by implying that cranberry products are less nutritious than competing products that have similar amounts of total sugars and nutrients.  Cranberries naturally contain little sugar and are extremely tart, so sugars usually are added for palatability.  Other fruits that naturally contain more sugar and are palatable without additional sugar would not need to declare added sugars.  For example, sweetened dried cranberries contain 29 grams of total sugars including 25 grams of added sugars per serving while raisins contain 29 grams of total sugars with zero added sugars per serving.

As with the honey and maple syrup products, FDA proposes to exercise enforcement discretion when such products use a “†” symbol immediately following the added sugars percent Daily Value in the Nutrition Facts panel. The “†” symbol may direct consumers to a truthful and non-misleading statement outside the Nutrition Facts panel explaining that addition of sugar to the cranberry product is meant to increase the palatability of the naturally tart fruit and that the amount of total sugars per serving is at a level that does not exceed the amount of total sugars in a comparable product with no added sugars.

Although these solutions might be palatable to some stakeholders, FDA’s proposed approach seems to undercut the basis for the requirement to declare added sugars. Undoubtedly consumer education will be crucial to explain that in some products added sugars are not a concern, whereas in other products these same added sugars are a concern.

To ensure consideration, comments to the draft guidance must be submitted by May 1, 2018.

While likely not FDA’s intent, the net effect of FDA’s requirements surrounding importation of active pharmaceutical ingredients is driving manufacturing of investigational finished drug products outside the United States. In its most egregious implementation, FDA’s current interpretation sets up a Catch-22 in which a batch of investigational API cannot be imported for manufacture of finished drug product without an IND, but an IND cannot be obtained without analyses and stability data on that drug product.  As a result, investigational API and drug product, from a practical perspective, must be made entirely within or entirely outside the US. Because API manufacturing is largely done outside the U.S., FDA’s requirements have the effect of encouraging sponsors to manufacture outside the U.S. to the detriment of pharmaceutical developers, U.S. contract manufacturers and patients.

An active pharmaceutical ingredient (API), or bulk drug substance, is “any substance that is intended for incorporation into a finished drug product and is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body,” but does not include intermediates used in the synthesis of the API. 21 C.F.R. § 207.1. Because API is intended to diagnose, cure, mitigate, treat, or prevent disease, or to affect the structure or function of the body according to this regulation, it meets the definition of a drug under the Federal Food, Drug, and Cosmetic Act (FD&C Act). See 21 U.S.C. § 321(p). Generally, API undergoes further manufacturing into a drug product, or finished dosage form, that contains the API and excipients (see, e.g., 21 C.F.R. § 210.3(b)(4) for a definition of drug product). Recent estimates from FDA indicate that approximately 80 percent of APIs used in the U.S. drug supply are manufactured in more than 150 countries. United States Government Accountability Office, Drug Safety: FDA Has Improved Its Foreign Drug Inspection Program, but Needs to Assess the Effectiveness and Staffing of Its Foreign Offices, at 1 (Dec. 2016).

Like all FDA-regulated products, API is subject to examination when it is imported or offered for import into the United States and must meet applicable statutory and regulatory requirements. FDA has the authority, under the FD&C Act, to refuse admission to any drug that “appears” to be misbranded or in violation of the requirements for new drugs, such as the need for an approved marketing application. 21 U.S.C § 381(a)(3). In general, the FD&C Act requires that any drug must have labeling that provides adequate directions for use or be subject to a regulatory exemption from this requirement. Id. § 352(f). API, because it is not yet a finished drug product, is unavoidably misbranded within the meaning of the FD&C Act as its labeling cannot bear such adequate directions for use. Therefore, any API imported into the United States must be subject to a regulatory exemption from the labeling requirements, such as existence of an active IND, and comply with all regulatory exemption requirements.

To see this in operation, one can examine the impact of regulatory exemption requirements at certain points in the drug development cycle. Early in the drug development cycle, manufacturers may utilize a single lot of API to conduct preclinical testing, manufacture drug product for analytical and stability testing and for use in initial clinical trials. Certain preclinical testing, as well as the manufacture and testing of drug product must be completed prior to filing an investigational new drug application (IND) to initiate human testing of a drug. See 21 C.F.R. § 312.23(a)(7). Initial U.S. clinical trials, on the other hand, can only occur after an IND is opened and in effect. Before the IND is opened and in effect, the importing pharmaceutical company can bring the API into the country for laboratory research so long as it complies with an exemption for API not intended for clinical use. The importer must provide information on this intended use to FDA at the time of import.

A separate import shipment that complies with a different exemption must be made in order to lawfully manufacture clinical trial material from the API. Under this exemption, the API must be labeled with the statement “Caution: For manufacturing, processing, or repacking in the preparation of a new drug limited by Federal law to investigational use.” In addition, the API must be used only in the manufacture of such new drug limited to investigational use as provided under the IND regulations. 21 C.F.R. § 201.122(b). The importer must provide information on this intended use to FDA at the time of import and, if the clinical trial is to be conducted under an IND, the IND number must be provided.

The practical effect is that pharmaceutical firms who wish to import API from outside the U.S. but manufacture drug product in the U.S. must undertake at least two separate imports prior to initiation of clinical trials. Even then, however, there are more hurdles. Because imported API for clinical drug product can enter the U.S. no earlier than the day the IND becomes effective (no sooner than 30 days after submission of the IND), drug product for use in clinical trials can not be available for use on day 30, when the clinical trial would otherwise be able to begin enrolling subjects. Instead, the clinical trial cannot begin until that API is manufactured into drug product and subjected to sufficient testing for release. Thus, the use of imported API to manufacture clinical trial material in the United States will result in a delay to beginning the clinical trial—a delay imposed by FDA’s overly rigid interpretation of its regulations. On the other hand, the manufacturer could produce clinical trial material outside the U.S. in time to import it into the U.S. and ship it to investigators on day 30, without delaying the start of clinical trials.

Once all necessary clinical and nonclinical studies have been completed to support an NDA, the manufacturer will want to begin producing finished drug product—the final dosage form in finished packaging “suitable for distribution to pharmacies, hospitals, or other sellers or dispensers of the drug product to patients or consumers” (21 C.F.R. § 207.1)—in anticipation of marketing the product upon FDA approval of the NDA. Because the finished drug product is not for investigational use, the API used in its manufacture cannot be imported under the previously described exemption. A separate exemption covers API intended for use in the manufacture of a finished drug product that is subject to a pending NDA. See 21 C.F.R. § 201.122(c). FDA regulations state that API can be subject to this exemption if an NDA has been “submitted but not yet approved, disapproved, granted, or denied, the bulk drug is not exported, and the finished drug product is not further distributed after it is manufactured until after the new drug application . . . is approved.” Id. Alternatively, manufacturers could produce commercial scale batches of finished drug product outside the U.S. and import them into the U.S. once the NDA is approved or utilize FDA’s Pre-Launch Activities Importation Request to stage finished product in advance of approval.

FDA has significant concerns about API imports, as is reflected in its Import Alert 66-66, requiring detention without physical examination for APIs that appear to be misbranded because they do not meet one of the exemptions provided in the regulations. FDA, Import Alert 66-66 (Dec. 1, 2017). Import Alerts are issued when FDA identifies a potentially recurring problem with imported articles. A drug placed on import alert shifts the burden to the importer to prove that its drug does not violate the FD&C Act. FDA issued the Import Alert for APIs because of concerns that importers obtained entry of their APIs by supplying legitimate NDA or IND numbers when the number did not cover the source of the API or when the importer had no right of reference to the NDA or IND number.

In essence, FDA’s current interpretation of its regulations may delay the importation of API at critical times during the development cycle and thus result in an overall delay to drug development. It may also present substantially increased costs involved with manufacturing the same finished drug product twice, but for different uses. Manufacturing drug product outside the U.S. may be a viable strategy for eliminating certain delays imposed by regulatory requirements. Therefore, the unintended consequence of FDA regulations covering the importation of APIs may be to drive the manufacturing of drug product outside the United States.

FDA should interpret and enforce the law and regulations to allow for the intended use of imported API to “evolve” through the drug development cycle.

February 28, 2018 is Rare Disease Day. In honor of that day, we thought it would be the perfect time to provide our annual rundown of the past calendar year in orphan drug designations and approvals.  And what a year 2017 was for orphan drugs!  As we’ve previously said, hardly a day goes by that we don’t see a press release or announcement that a company has requested or received from FDA’s Office of Orphan Products Development (“OOPD”) designation of its drug or biological product as an “orphan drug.”  And there’s a good reason for that: FDA received orphan drug designation requests at a near record rate of 1.4 per day (more than 2 per work day) in 2017, and  granted designation requests at a record rate of 1.3 per day (more than 2 per work day) in 2017!

In 2017, FDA’s orphan drug program continued to break new ground. Orphan drug designations and approvals (which include not only approvals of NDAs for new molecular entities and BLAs for original biological products, but also applications approved for new orphan uses of previously approved drugs and biologics) skyrocked compared to previous years.  FDA granted 77 orphan drug approvals, and granted 476 orphan drug designation requests.  Those numbers obliterate the previous records of 49 orphan drug approvals (2014) and 355 orphan drug designation requests (2015).  The increase in orphan drug designations may be attributed to FDA’s Orphan Drug Designation Modernization Plan, which targeted the elimination of  the backlog of pending designation requests.  FDA’s OOPD also received a near record 526 requests for orphan drug designation in 2017.  That’s a slight dip over the 2016 record of 582, but still not too shabby! Since 1983, FDA has granted more than 650 orphan drug approvals, has granted nearly 4,500 orphan drug designations, and has received more than 6,300 orphan drug designation requests.

Below are three tables – one for each metric we track – showing the year-by-year numbers since 1983. The numbers are largely based on information from FDA’s Orphan Drug Designations and Approvals Database.

New efforts FDA announced this week could mean that new records will be set in 2018. Those new efforts include a pilot program for more efficient orphan designation requests.  The components of the pilot program include a fillable form intended to make the designation process easier for sponsors and more efficient for FDA to review, an on-line tutorial to guide sponsors through the submission process, and a new inter-center consult process to streamline and standardize the Agency’s communications process.

Today the PEW Charitable Trusts released a detailed report on the general state of pharmacy compounding of human drug products in the United States. The Report focuses on compounding pharmacies, but addresses both sterile and non-sterile compounding regulation by states.  The Report also touches on states’ regulation of Outsourcing Facilities, which Congress created when it enacted Title I of the Drug Quality and Security Act (The Compounding Quality Act).  The detailed Report provides a helpful roadmap of where states stand concerning their widening role in the regulation of human drug compounders in a post-NECC world.  Given the morass of inconsistent state laws covering both traditional pharmacy compounding and Outsourcing Facilities (for both sterile and non-sterile human drugs) the roadmap is a welcome tool for industry, and those curious about what states are doing to address these important issues. The press release accompanying the Report notes the following points:

• Thirty-two state pharmacy boards require pharmacies that engage in sterile human drug compounding to be in “full compliance” with the quality standards for sterile compounding set forth in USP<797>.
• An additional ten states have requirements that are “’equivalent to or stricter than’” USP<797>, while an additional four states have pending policy changes that, if they are passed, would require USP<797> compliance or additional, more stringent requirements. The Report notes that, in 2015, 26 states required compliance with USP <797> or an equivalent quality standard.
• Thirty-nine states and the District of Columbia prohibit pharmacies from human drug compounding of sterile office stock formulations. This contrasts with responses to a PEW survey back in 2015 from two-thirds of the responding state boards that permitted office use compounding “to at least some extent.”

The Report does note, however, that only 22 states and D.C. report that they routinely inspect their in-state sterile compounders at least annually, which is down from 26 states in 2015.  The Report states that “interviews with state officials underscore the need for more financial resources and inspection capacity.”

The Report contains recommendations for states on best practices for compounders to ensure a safe supply of compounded formulations. Those recommendations include a focus on quality assurance and emphasis on adherence to at least USP guidelines, alignment with federal law regarding office stock compounding (which law remains controversial among the pharmacy compounding community and some members of Congress about the appropriate parameters of office use compounding pursuant to FDCA Section 503A).

Although the content of the Report itself addresses in detail each of these and other points, even more interesting components of the Report appear in its Appendices. As anyone who works in the compounding world knows, understanding positions of various states on issues such as sterile and non-sterile compounding, inspections, state licensing fees, permissibility of office stock compounding, and Outsourcing Facility licensing requirements  — to name a few — can induce both hand-wringing and hair pulling experiences for those that grapple with compliance with the myriad state requirements.

The Appendices set forth the questionnaire that PEW provided to states, and include several tables and charts specifically describing where states stand on these and other important issues (below). With respect to the Appendices, PEW sought states’ verification of data collected.  Forty-three states and D.C. responded, but seven did not respond.

• Quality Standards for Section 503A Pharmacies that Compound Sterile Drugs for Humans (App. C, Table C1): Addressing which states require compliance with USP <797> or an equivalent or stricter quality standard; whether a regulatory change will be needed to require compliance with revised <797> (not yet released); whether the state requires compliance with other quality standards; whether there is pending state legislation, and its effect if passed.

• State Policies on Section 503A Pharmacies Drugs for Humans in the Absence of Patient-Specific Prescriptions (App. C, Table C2): Addressing which states permit office use compounding and any restrictions on the same for sterile and non-sterile products; whether state legislation is pending.
• State Licensure and Registration of Outsourcing Facilities (App. C, Table C3): Addressing whether states license or register Outsourcing Facilities; the type of license required; the fees required for Outsourcing Facility state licenses; whether there is pending legislation affecting Outsourcing Facilities. Note that Table clarifies the confusing morass of state registration/licensing requirements for Outsourcing Facilities, which are both complex and at times inconsistent among states (and with the federal Compounding Quality Act).
• Inspections of In-State 503A Pharmacies that Perform Sterile Compounding for Humans (App. C, Table 4): Addressing the frequency of routine inspections; specific circumstances that trigger inspections.
• State Oversight of Out-of-State 503A Pharmacies that Perform Sterile Compounding for Humans (App. C, Table 5): Addressing applicable quality standards; whether inspections are required; frequency of inspections; who performs the inspections; whether there is pending legislation or regulations and what would happen if they passed.

Obtaining FDA decisions detailing when one orphan drug has been determined by the Agency to be “clinically superior” to another orphan drug – either to obtain approval of a product notwithstanding another company’s orphan drug exclusivity for the same drug for the same indication, and/or to obtain a separate period of orphan drug exclusivity – has historically been a bit of a task. First, we members of the public had to comb through FDA’s Orphan Drug Designations and Approvals Database to identify instances in which clinical superiority based on greater efficacy, greater safety, or a major contribution to patient care might have been an issue.  Then we had to submit – and wait for FDA to respond to – a Freedom of Information Act request to obtain FDA’s letter decision and orphan drug designation package.  The fruits of our labor are apparent in various FDA Law Blog posts that compile and categorize FDA’s various orphan drug clinical superiority decisions – see here, here, and here.  But those days of research and waiting might now be behind us!

As we previously noted in a summary memorandum, the 2017 FDA Reauthorization Act (“FDARA”) amended the FDC Act – and the Orphan Drug Act in particular – to add Section 527(e), which states:

(e) DEMONSTRATION OF CLINICAL SUPERIORITY STANDARD.— To assist sponsors in demonstrating clinical superiority as described in subsection (c), the Secretary—

(1) upon the designation of any drug under section 526, shall notify the sponsor of such drug in writing of the basis for the designation, including, as applicable, any plausible hypothesis offered by the sponsor and relied upon by the Secretary that the drug is clinically superior to a previously approved drug; and

(2) upon granting exclusive approval or licensure under subsection (a) on the basis of a demonstration of clinical superiority as described in subsection (c), shall publish a summary of the clinical superiority findings.

It’s FDC Act § 527(e)(2) that really got us excited! (Yes, this blogger gets excited about that kind of stuff.)  We had to sift through FDA’s website to find out how the Agency implemented the new statutory requirement, but we finally found a website titled “Clinical Superiority Findings.”  As of now, FDA’s website identifies only a single clinical superiority determination.  That determination concerns MYLOTARG (gemtuzumab ozogamicin), and it’s a greater safety clinical superiority determination:

The new approval for Mylotarg is for a lower dose and different schedule than the previous approval. In a cross-study analysis of clinical outcomes for patients with relapsed or refractory acute myeloid leukemia treated with single-agent Mylotarg, in comparison to the regimens using the previously approved regimen, patients treated with the new dosing regimen had less early mortality, less hepatotoxicity, less veno-occlusive disease, more rapid platelet recovery and less hemorrhage.  Therefore, the sponsor has demonstrated that the newly approved dosing regimen is safer than the previously approved dosing regimen, and thus clinically superior for the purposes of orphan-drug exclusivity.  21 CFR 316.3(b)(3), 316.34(c).

New clinical superiority determinations will be added as they are made by FDA. As for previous determinations, we assume that FDA will not add those to the website.  So, you’ll have to refer back to our previous postings for descriptions of those precedents.

On February 21, FDA published a final rule amending its regulations on the acceptance of data from clinical investigations for medical devices (83 Fed. Reg. 7366). These amendments are designed to ensure the quality and integrity of clinical data and the protection of human subjects.  FDA simultaneously released a guidance listing frequently asked questions about the new final rule. The final rule is effective for all studies in which enrollment begins on or after February 21, 2019.

Overall, the new rule seeks to provide a consistent approach to acceptance of clinical data, regardless of whether the data were collected inside or outside the United States (OUS). To this end, however, the amendments mostly affect the requirements for clinical investigations conducted OUS.  As noted in FDA’s guidance, these amendments appear to be, in part, the result of sponsors’ increased reliance on data from clinical investigations conducted OUS.

For Investigational Device Exemption (IDE) applications or premarket submissions supported by clinical data from investigations conducted OUS, the final rule adds a new provision to the IDE regulations (21 C.F.R. § 812.28) to ensure that the investigations comply with good clinical practices (GCP). This new provision states that FDA will accept data from a clinical investigation conducted OUS if the investigation is “well-designed and well-conducted” and the following information is provided:

1. A statement that the investigation was conducted in accordance with GCP;
2. The names of the investigators and the names and addresses of the research facilities and sites where records relating to the investigation are maintained;
3. The investigator’s qualifications;
4. A description of the research facility;
5. A detailed summary of the protocol and results;
6. Either a statement that the device used in the investigation is identical to the device that is the subject of the submission, or a detailed description of the device used in the investigation and a comparison to the device that is the subject of the submission;
7. If the investigation is designed to support the safety and effectiveness of a device, a discussion demonstrating that the data constitute valid scientific evidence within the meaning of 21 C.F.R. § 860.7;
8. The name and address of the Independent Ethics Committee (IEC) that reviewed the investigation;
9. A summary of the IEC’s decision to approve or modify and approve the investigation;
10. A description of how informed consent was obtained;
11. A description of any incentives provided to the subjects to participate;
12. A description of how the sponsor monitored the investigation; and
13. A description of how investigators were trained to comply with GCP and to conduct the investigation in accordance with the protocol.

For the purposes of this provision, GCP is defined as a “standard for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical investigations in a way that provides assurance that the data and results are credible and accurate and that the rights, safety, and well-being of subjects are protected.” 83 Fed. Reg. 7366, 7386 (new § 812.28(a)(1)).

As noted in items 8 and 9 above, GCP includes review and approval by an IEC. An IEC is defined as an “independent review panel that is responsible for ensuring the protection of the rights, safety, and well-being of subjects involved in a clinical investigation and is adequately constituted to ensure that protection.”  83 Fed. Reg. 7366, 7385 (new § 812.3(t)).  The regulation notes that an Institutional Review Board (IRB) is one type of IEC.

For significant risk devices, all of the items in the list above are required. For devices other than significant risk devices, the sponsor only needs to provide items 1, 2, 5, 6, 8‑10, and 12 from the above list in the submission.

If a sponsor is not able to comply with all of the GCP requirements listed above (e.g., because a requirement conflicts with a requirement in the country where the study is conducted), the sponsor may request a waiver from FDA.

The final rule also made conforming revisions to the premarket approval (PMA) application regulations in Part 814. The PMA regulations will now provide that if any clinical investigation in support of a PMA application was not conducted in compliance with Part 50, Part 56, or GCP, FDA may deny or withdraw approval of the PMA.

Now all IDE applications and medical device premarket submissions with OUS data must confirm compliance with GCP, as defined in the new provision described above. Submissions with data collected inside the United States must include a statement that each investigation was conducted in compliance with the applicable requirements in the protection of human subjects regulations (21 C.F.R. Part 50), IRB regulations (21 C.F.R. Part 56), and the IDE regulations (21 C.F.R. Part 812).  If any of these regulations do not apply (e.g., for IDE-exempt, non-significant risk studies), or the investigation was not conducted in compliance with these regulations, an explanation must be included in the submission.

In practice, it might be a good idea to for anyone submitting a 510(k) to add a new section that would include the statement of compliance, along with whatever additional information is required under the new rule. One can imagine that FDA will eventually add this statement as another item on the 510(k) “Refuse to Accept” checklist, so a separate section will provide greater clarity that the information is there.

These new provisions and FDA’s guidance will hopefully provide greater clarity to sponsors about how to demonstrate that clinical data collected from clinical investigations conducted OUS are adequate under FDA’s standards. However, now that the requirements are explicitly listed in FDA’s regulations, FDA will have less flexibility or discretion to accept OUS clinical data if compliance is not shown.  The new regulations will also increase the burden on sponsors, who must now affirmatively produce and/or describe in their IDE applications or premarket medical device submissions the items listed above.

* Law Clerk

On February 15, FDA’s Office of Combination Products (OCP) announced the draft guidance, “How to Prepare a Pre-Request for Designation (Pre-RFD).” Don’t let the name fool you though.  Unlike the similarly named Pre-Submission, a Pre-RFD does not need to precede a formal RFD.  A Pre-RFD is, in essence, an informal RFD through which a sponsor may receive a preliminary, non-binding jurisdictional assessment.  The practice of requesting informal, non-binding feedback from OCP prior to or in lieu of a formal RFD is not new and has been occurring for many years.  The guidance provides additional details regarding the process for doing so.

The draft guidance indicates that a Pre-RFD should include a product description, proposed indications for use, and a description of how the product achieves its intended use. A Pre-RFD can also, optionally, include other information, such as a description of the product’s manufacturing processes, data/studies supporting the primary mode of action, information regarding jurisdictional assignment (e.g., classification, primary mode of action, sponsor’s recommendation), and description of similar or related products.  There is no page limit for a Pre-RFD, a significant advantage over an RFD, which is capped at 15 pages.  This feature of the Pre-RFD process will be particularly useful for sponsors with substantial data supporting their primary mode of action.

Once prepared, the draft guidance indicates that a Pre-RFD can be submitted to OCP by email or in hard copy through mail. As with most submissions these days, the draft guidance includes a short screening checklist that OCP will use to perform an administrative review of a Pre-RFD within five business days of receipt.  Once accepted for substantive review, OCP aims to review and provide written feedback regarding a Pre-RFD in 60 days.

The draft guidance appears to envision an interactive review process, stating that sponsors may contact OCP with questions at any time during the review process. OCP anticipates that it can provide jurisdictional feedback based on the information provided in a Pre-RFD.  The draft guidance, however, indicates that a sponsor may request a meeting with OCP to provide a better understanding of how the product works.  A sponsor can request a meeting at any time and should include in its meeting request an explanation of the issues to be addressed and any supportive information.  OCP estimates that it will need approximately four weeks to prepare for such a meeting.  The guidance appears to contemplate that such a meeting would take place prior to OCP’s feedback on a Pre-RFD. It seems to us, though, that such a meeting could also be helpful after receiving  OCP’s feedback.

The draft guidance indicates that (similar to an RFD) if a product is changed after OCP’s review, the Pre-RFD feedback may no longer be applicable. Changes can include both physical changes to the product as labeling changes such as the indications for use.  If changes are made, the guidance recommends contacting OCP suggesting that a Pre-RFD could be an iterative process.  For example, if there are particular elements of a product that put it in one category or another, those could be changed and a new Pre-RFD submitted for the modified product in an effort to receive a different (potentially more favorable) jurisdictional assignment.

In sum, we think this draft guidance is informative and useful for sponsors that are interested in a more flexible, non-binding process for getting jurisdictional feedback from OCP, as compared to the traditional RFD process.

Overprescribing and inappropriate prescribing of controlled substances are significant causes of the nationwide opioid abuse epidemic. We have long believed that to effectively address the opioid epidemic, the Drug Enforcement Administration (“DEA”) must focus on physicians and other practitioners who fail to comply with legitimate prescribing and dispensing practices.  Two recent actions by the DOJ and DEA acknowledge that data collected by DEA since 1971 can be an effective enforcement tool and in certain cases can assist manufacturers and distributors to identify potential outliers.

We reported here that in November, Attorney General Jeff Sessions announced several initiatives addressing opioid abuse to include a new Louisville, Kentucky, Field Division and designated Opioid Coordinators in every district. More recently, on January 30, 2018, the Attorney General announced that DEA is attacking the opioid epidemic by launching a “surge” over the next six weeks by special agents, diversion investigators, and intelligence specialists targeting pharmacies and prescribers that dispense “unusual or disproportionate amounts of drugs.”  Attorney General Sessions Delivers Remarks on Efforts to Reduce Violent Crime and Fight the Opioid Crisis (Jan. 30, 2018) (here). Sessions noted that DEA annually collects 80 million controlled substance transaction reports from manufacturers and distributors that contain distribution quantities and inventory information.  The Attorney General said that “DEA will aggregate these numbers to find patterns, trends, statistical outliers-and put them into targeting packages.”  Sessions concluded that the surge will lead to “more arrests, secure more convictions-and ultimately help us reduce the number of prescription drugs available for Americans to get addicted to or overdose from these dangerous drugs.”

The Attorney General did not identify the transaction reports by name, but it is clear that he was referring to the Automation of Reports and Consolidated Orders System (“ARCOS”) reports that manufacturers and distributors submit to DEA.  Since regulations were first promulgated in 1971, DEA has required manufacturers and distributors of bulk and dosage form controlled substances to report inventories, acquisitions and dispositions of schedule I and II substances, and narcotic substances in schedule III as well as other selected substances such as Gamma-Hydroxybutyric Acid (“GHB”).  21 C.F.R. § 1304.33(c).  Manufacturers must also report synthesizing activities involving those substances in addition to certain schedule III and IV psychotropic controlled substances.  Manufacturers and distributors submit transaction reports to DEA at least quarterly.  21 C.F.R. § 1304.33(b).

Manufacturers and distributors must file ARCOS reports monthly, or in some cases quarterly, for every covered transaction to include the date, customer and amount of controlled substance distributed. Thus, DEA is able to track the specific quantity of drugs sold to wholesale distributors and the amount then distributed to each pharmacy.  The DEA ARCOS Unit has routinely aggregated the data from all reports and provides information to DEA agents and investigators, and other federal and state law enforcement and regulatory agencies, to identify diversion from licit to illegal channels.

Attorney General Sessions’ announcement that DEA would use this data to increase enforcement action against prescribers and other practitioners is not surprising except we wonder why DEA has not previously taken such action. DEA has certainly taken aggressive action against manufacturers and distributors for failing to report suspicious orders of controlled substances at the same time that DEA already possessed a database on the purchasing patterns of practitioners.  Unlike manufacturers and distributors, DEA has visibility to all ARCOS-reportable transactions, including purchases by pharmacies and practitioners; visibility that other stakeholders lack.  Manufacturers and distributors can only see with certainty what they themselves sell to pharmacies.

The industry has made repeated requests over the years for DEA to share information that could be helpful in identifying potential suspicious orders. Finally, last Wednesday, DEA announced that is adding to its ARCOS Online Reporting System the ability for manufacturers and distributors “to view the number of competitors who have sold a particular controlled substance to a prospective customer in the last six months.”  DEA Creates New Resource to Help Distributors Avoid Oversupplying Opioids (Feb. 14, 2018) (here).  DEA trumpeted that “this new tool will provide valuable information for distributors to consider as part of their assessment” of suspicious orders and may present a “red flag” that the customer may be diverting drugs.

While the new ARCOS tool is a useful first step, its usefulness is limited and could be improved. For example, it would also be useful if DEA would routinely publish information about trends in purchases of controlled substances by city or region, especially identifying areas where DEA believes there is a concern about sales relative to geography and population.  We understand there are limits to what DEA can and should provide given the highly confidential nature of individual sales and purchase data.  However, more coordination with industry on diversion trends would be very useful to manufactures and distributors, in particular.  The regulated industry should consider that DEA may now expect that industry will use this information in evaluating customers and customer orders, e.g., suspicious orders.

It will be interesting to see the results of the DOJ/DEA enforcement effort. We suspect that DEA will also utilize state Prescription Drug Monitoring Program (“PDMP”) data, to further evaluate whether certain prescribing and dispensing practices are for legitimate medical purposes.  State PDMPs track prescribing by practitioners and dispensing by pharmacies, hospitals and physicians.  The ARCOS and PDMP data used together allow DEA investigators to identify prescribers and pharmacies that are dispensing, as the Attorney General characterizes, “unusual or disproportionate amounts of drugs.”

While DEA has used ARCOS data to support enforcement efforts against manufacturers and distributors, we appreciate the Attorney General’s announcement that such data will be used in a comprehensive enforcement effort to target the primary source of the opioid crisis, overprescribing, and to that we say, it is about time.

The years-long battle over 5-year New Chemical Entity (“NCE”) exclusivity for Ferring Pharmaceuticals Inc.’s (“Ferring’s”) colonoscopy preparation, PREPOPIK (sodium picosulfate, magnesium oxide, and citric acid) for Oral Solution (NDA 202535; approved on July 16, 2012), may finally be at an end (pardon the pun). Last week, the U. S. District Court of the District of Columbia issued a Memorandum Opinion denying Ferring’s July 2018 Motion to Enforce Judgment (opposition and reply briefs available here and here) filed after FDA reversed course and issued a 9-page Letter Decision on June 9, 2017 concluding that under the Agency’s structure-centric interpretation of “active moiety” (rather than an activity-based interpretation), PREPOPIK is not eligible for 5-year NCE exclusivity.

As we previously reported, there’s quite a bit of back story to the PREPOPIK NCE exclusivity dispute. In short, after denying NCE exclusivity for PREPOPIK, FDA seemed to indicate that the Agecny would grant the exclusivity in light of the D.C. District Court’s September 2016 ruling in Ferring Pharmaceuticals, Inc. v. Burwell.  Judge Rudolph Contreras’s September 2016 Memorandum Opinion granted a Motion for Reconsideration filed by Ferring requesting reconsideration of the court’s March 2016 ruling that FDA’s pre-October 10, 2014 interpretation of the FDC Act’s NCE exclusivity provisions as applied to a newly approved Fixed-Dose Combination (“FDC”) drug product containing an NCE and a previously approved drug was not arbitrary and capricious. Although Judge Contreras initially backed FDA’s decision to deny NCE exclusivity for PREPOPIK, he reversed course after considering several precedents identified by Ferring in the company’s Motion for Reconsideration and remanded the matter to FDA.

Then came FDA’s June 9, 2017 Letter Decision concluding that PREPOPIK is not eligible for 5-year NCE exclusivity:

Upon further evaluation of the structure of sodium picosulfate during FDA’s consideration on remand, the Agency determined that sodium picosulfate is the di-sodium salt of a di-sulfate derivative of bis-(p-hydroxphenyl)-pyridyl-2-methane (BHPM) (Figure I). After excluding the salt and ester portions of sodium picosulfate, as FDA’s regulations require, what remains is BHPM. Therefore, BHPM is the active moiety in sodium picosulfate. BHPM is also the same active moiety as that of the drug substance bisacodyl, which was approved years before Prepopik.

Ferring promptly filed a Motion to Enforce Judgment with the DC District Court requesting that the court order FDA to recognize NCE exclusivity for PREPOPIK, and characterizing FDA’s exclusivity decision as an end-run of the court’s order. But in his 22-page February 13th Memorandum Opinion, Judge Contreras said that he is not persuaded by Ferring’s arguments:

Ferring [] argues that the FDA’s change in position regarding sodium picosulfate’s prior approval status violates the law of the case; that the agency is judicially estopped from changing its position in this manner; that the agency’s eleventh hour chemical analysis of sodium picosulfate impermissibly retroactively applies a new interpretation of the term “ester” and violates due process; and that the agency’s actions are arbitrary and capricious. . . . [T]he Court finds that the FDA’s actions on remand do not violate the law of the case and that the FDA is not judicially estopped from asserting its change in position concerning sodium picosulfate’s prior approval status. The Court also finds that Ferring’s arguments regarding retroactivity, due process, and arbitrary and capriciousness are not suitable for consideration within the context of a motion to enforce judgment.

Importantly, while the baseline for Ferring’s arguments was an apparent (and initial) shared understanding with FDA that focused on whether picosulfate was a NCE, Judge Contreras said that the court never relied on that understanding in his remand decision:

[T]he Court did not “rely” on the parties’ shared understanding that picosulfate was the active moiety in sodium picosulfate in reaching its decision, but rather focused on the issue presented to it: whether the application of the FDA’s original interpretation of the NCE five-year exclusivity provision to Prepopik was arbitrary and capricious, violating the APA. The identity of the active moiety in sodium picosulfate was not essential to the Court’s reasoning in reaching its decision, nor was it actually decided by the Court. Accordingly, although this remand gave Ferring the right to have its application adjudicated without the application of a particular arbitrary and capricious rule, it did not dictate a result in Ferring’s favor. Nor did it constrain the FDA’s decisionmaking process beyond the non-application of the rule that the Court had deemed arbitrary and capricious. On remand, agencies are permitted to come to the same conclusions as they had come to in the first instance, as long as they come to those conclusions for permissible reasons. . . . If there is a post-remand arbitrary and capricious, or otherwise invalid, final agency action that Ferring wishes to challenge, it may do so, but not through a motion to enforce the Court’s prior judgment.

As of this date, there’s been no indication that Ferring will appeal to the DC Circuit.