The Sixth Circuit recently dealt another blow to relators seeking damages under the False Claims Act (FCA) based on allegations of off-label promotion. In a 2-1 decision, the court, in United States ex rel. Ibanez v. Bristol-Myers Squibb Co., affirmed the district court’s dismissal of relators’ (the government declined to intervene) second amended complaint and denial of relators’ motion to file a third amended complaint because, inter alia, relators could not plead a false claim with the specificity required under Federal Rule of Evidence 9(b).

The court affirmed the dismissal of FCA conspiracy counts, explaining that, while alleged conduct involving off-label promotion to increase the number of drug prescriptions “may be condemnable” (if true), such an alleged plan “does not amount to a conspiracy to violate the FCA.” The court held:

Even if it was foreseeable that somewhere down the line off-label prescriptions of [the drug] would be submitted to the government for payment, that foreseeable consequence does not subsume the aim of the agreement. In other words, to adequately allege an FCA conspiracy, it is not enough for relators to show there was an agreement that made it likely there would be a violation of the FCA; they must show an agreement was made in order to violate the FCA.

Slip Op. at 10.

The court’s discussion regarding the heightened pleading standard under Rule 9(b) is also of particular note to drug and device manufacturers facing FCA complaints alleging off-label promotion. The court noted that pleading with specificity in such cases is “awkward” and requires a specific representative example demonstrating the following three elements:

1. The physician to whom manufacturer improperly promoted the product must have prescribed the medication for an off-label use;
2. The patient must have filled that prescription; and
3. The filling pharmacy must have submitted a claim to the government for reimbursement of that prescription.

Id. at 6-7.

The court also rejected several examples attached to the proposed third amended complaint, which relators claimed satisfied the heightened pleading standard:

• An exhibit identifying reimbursement for prescriptions paid by state Medicaid for pediatric patients before the drug had a pediatric indication (the court noted that nothing connected the prescribing physicians to defendants’ alleged improper promotion).
• Exhibits showing that a patient obtained prescriptions for an off-label use from a pharmacy (the court explained that there was no corresponding allegation that the prescriptions were presented to the government for payment, and no link to defendants’ alleged improper promotion).

The dissent rejected the notion that relators had not pled with sufficient specificity in their third amended complaint. Instead, the lone-dissenting judge noted that other circuits have found specificity when the relator alleges “particular details of a scheme to submit false claims” along with “reliable indicia that lead to a strong inference that claims were actually submitted.” Id. at 21. The judge wrote: “I cannot agree with the . . . majority opinion because the relators have pled facts sufficient to satisfy Rule 9(b) by identifying specific claims and supplementing those identifications with personal knowledge and statistical evidence.” Id. at 23.The Rule 9(b) pleading standards vary by circuit, particularly as to whether inferences supported by “reliable indicia” can constitute sufficiently plead allegations as they apply to CMS-related claims involving alleged violations of the FDC Act and FDA’s regulations (see our previous post here). The lack of a consistent standard among the circuits invites forum shopping by relators’ counsel and would benefit from Supreme Court review.

Despite relative inaction on drug pricing at the federal level so far this year, 2017 has been a banner year for state legislation involving pharmaceutical pricing, price reporting, and discounting. Because it is becoming increasingly difficult to keep track of these recent laws, we thought it might be helpful to our readers to identify them and briefly summarize their key provisions.

California

1.    Senate Bill 17 (enacted Oct. 9, 2017) (see our blog post here)

• Effective Jan. 1, 2018, requires a manufacturer of a prescription drug whose cost of therapy exceeds $40 to notify state purchasers and third party payors in writing 60 days in advance of a wholesale acquisition cost (“WAC”) increase if the increase, combined with WAC increases during the previous two calendar years, exceeds 16%.
• Effective Jan. 1, 2019, requires manufacturers described above to submit quarterly reports explaining the factors considered in making the WAC increase, a list of WAC increases over the previous five years, and other specified information. Information may be limited to that which is in the public domain or publicly available.
• Effective Jan. 1, 2019, requires manufacturers that introduce into the market a new drug that exceeds the Medicare Part D specialty drug threshold ($670/month in 2017 and 2018) to notify the state at least three days before the launch, and submit a report within 30 days thereafter describing the marketing and pricing plans used in the launch and other specified information. Submitted information may be limited to that which is in the public domain or publicly available.

2.    Assembly Bill 265 (enacted Oct. 9, 2019, effective Jan. 1, 2018)

• Prohibits prescription drug manufacturer from providing subsidy for an individual’s copayments or other out-of-pocket expenses if a lower cost, therapeutically equivalent (i.e., A-rated) drug is covered under the individual’s health insurance, or if the active ingredients in the drug are available in a lower cost OTC drug. Certain exceptions apply.

Louisiana:  Act 220 (enacted June 14, 2017, effective Aug. 1, 2017)

• Requires drug manufacturers marketing to Louisiana prescribers to report quarterly the current WAC of all of the manufacturer’s drugs marketed in the state.

Maryland:  House Bill 631 (enacted May 27, 2017, effective Oct. 1, 2017) (see our blog post here)

• Prohibits price gouging in the sale of an “essential or off-patent generic drug”
  • “Essential” off-patent generic drugs to be designated by Maryland Secretary of Health.
  • “Price gouging” means an “unconscionable increase.”
• If an essential or off-patent generic drug exceeding a specified cost threshold had a WAC increase of 50% or greater in a one-year period, or an increase that resulted in an increase of 50% or more in the amount that Maryland Medical Assistance paid within the preceding one-year period, the Maryland attorney may request, and the manufacturer must then submit, specified information justifying the price increase, as well as relevant documents requested by the Attorney General.
• The Attorney General may seek an order enjoining price gouging and requiring restitution to state health programs and consumers.

Nevada:  Senate Bill 539 (enacted June 15, 2017, effective Oct. 1, 2017) (see our blog post here)

• Nevada Department of Health and Human Services (DHHS) must compile a list of drugs “essential for treating diabetes” in Nevada, along with the WAC of each drug on the list (“List #1”), and a second list containing the subset of such drugs whose WAC has increased by a percentage equal to or greater than either the Consumer Price Index, Medical Care Component (“CPI Medical”) during the preceding calendar year or twice the CPI Medical during the preceding two years (“List #2”).
  • Annually by April 1, manufacturers whose drugs appear on list #1 must report information on cost of production, marketing and advertising, profit, aggregate PBM rebates, and other information.
  • Annually by April 1, manufacturers whose drugs appear on List #2 are required to report each factor that contributed to the increase in WAC along with the percentage of the increase attributable to each factor, the role played by each factor in the WAC increase, and any other information prescribed by DHHS regulation.
• Manufacturers must provide DHHS with a list of sales representatives marketing prescription drugs (not just diabetes drugs) to Nevada practitioners. Annually before March 1, sales representatives who are on the list must provide a report to DHHS of all HCPs that were provided with any type of compensation exceeding $10 in individual value or $100 in aggregate value during the preceding calendar year; as well as information on drug samples provided.

New York: A03007B/S02007-B (enacted April 20, 2017, effective April 1, 2017)

• If Medicaid drug expenditures exceed specified annual growth limitations, the NY Department of Health may identify drugs to be referred to the state drug utilization review board for a determination whether a supplemental Medicaid rebate should be requested from the manufacturer, and the target amount for such a rebate. If a target rebate is recommended and the manufacturer does not agree to provide it, the manufacturer must report to the Department information on costs of manufacturing, distribution, research and development, marketing and advertising, prices and rebates offered to purchasers, and other information.

Extending our survey to 2016, see also:

Vermont:  Senate Bill 216 (enacted and effective June 3, 2016) (see our blog post here)

• Each year, the Green Mountain Care Board, in collaboration with the Department of Vermont Health Access, will identify 15 drugs on which the state spends significant health care dollars, and for which the WAC has increased by 50% or more over the past five years or by 15% or more over the past 12 months. The Board will provide this list to the Vermont Attorney General (AG), which will require the manufacturer of each drug on the list to provide a justification that the AG determines to be “understandable and appropriate”. The list, and the respective WAC increases, will also be posted on the Board’s web site.

Numerous additional states are considering legislation or regulations affecting drug pricing, price reporting, discounting, and marketing (see, for example, our recent post on a New Jersey proposed regulation limiting gifts to practitioners).  We will continue to report on significant new state laws in this blog.

On October 31st, FDA made its long anticipated announcement recognizing the first European drug regulatory authorities capable of conducting inspections of manufacturing facilities that meet FDA requirements. The eight countries that were announced are: Austria, Croatia, France, Italy, Malta, Spain, Sweden and the United Kingdom.

The agency is expected to announce additional countries that meet FDA requirements in the first quarter of 2018, and believes that the progress made so far puts them on track to meet their goals of completing all 28 national capability assessments in the European Union (EU) by July 2019.

Commissioner Gottlieb explained the benefits to the program this way:

At a time in which medical product manufacturing is truly a global enterprise, there is much to be gained by partnering with regulatory counterparts to reduce duplicative efforts and maximize global resources while realizing the greatest bang for our collective inspectional buck…By partnering with these countries we can create greater efficiencies and better fulfill our public health goals, relying on the expertise of our colleagues and refocusing our resources on inspections in higher risk countries.

Historically, one of the main stumbling blocks to such an agreement has been the disparate regulatory structures between the U.S. and the EU, as the 28 EU member states have their own medicines authorities, in addition to the European Medicines Agency (EMA), which is the EU agency responsible for the protection of public health through the scientific evaluation and supervision of medicines. This web of overlapping state and super-state drug authorities had made it difficult for FDA to reach agreement with the EU.

Another stumbling block has been the sharing of trade secret information between FDA and the EMA. The EMA has been sending unredacted summaries of EU inspections to FDA for some time, however, the FDA’s reports to the EMA were redacted, as by law it was only allowed to share trade secret information with a foreign government if the FDA Commissioner certifies that the foreign government has the ability to protect the information from disclosure (Section 708 FDASIA).

What remains unclear from the October 31st announcement is when FDA will be sharing its inspectional reports with the EU, and which member states it will be sharing them with (see our previous post here). We will keep you posted on all developments.

I understand if this title made you think for a minute, did I read that right? You probably did. Another Citizen Petition regarding pyridoxamine was filed. This one asks that FDA essentially undo what it did in 2009.

Pyridoxamine is a form of vitamin B6. In July 1999, BioStratum Inc., a pharmaceutical company, filed an IND with FDA to study pyridoxamine’s potential use as a drug for diabetic nephropathy. In 2005, Biostratum Inc. filed a citizen petition asking that FDA stop the marketing of pyridoxamine as a dietary supplement, pursuant to section 201(ff)(3)(B) of the Federal Food, Drug, and Cosmetic Act, which excludes from the dietary supplement definition an ingredient that was subject to substantial clinical investigations and the existence of these clinical investigations had been made public before the ingredient was first marketed as a dietary supplement or food. In 2009, FDA agreed, concluding that there was no evidence that pyridoxamine was marketed as a food or dietary supplement before the IND was filed. Thus, the marketing of pyridoxamine as dietary supplement was illegal as the substance was excluded from the dietary supplement definition under FDC Act § 201(ff)(3)(B) (see our previous post here).

Eight years later, the INDs for pyridoxamine were withdrawn and a new joint venture, Vi Guard Health Inc. (Petitioner), now wants to market an oral formulation of pyridoxamine as a dietary supplement. In order to do so, action by FDA is required. Last week, Vi Guard Health Inc. submitted a citizen petition requesting that the Agency declare or issue a regulation that pyridoxamine is not excluded from the definition of, and may legally be marketed as, a dietary supplement.

Petitioner requests that FDA issue either a regulation declaring that pyridoxamine is no longer excluded from the definition of dietary supplement or a regulation authorizing that pyridoxamine may be marketed as a dietary supplement even though it was subject to clinical investigations prior to the first marketing of the substance as a food or dietary supplement.

The FDC Act, as amended by the Dietary Supplement Health and Education Act (“DSHEA”) of 1994, excludes from the definition of dietary supplement any article that is approved as a new drug and any article “authorized for investigation as a new drug . . . for which substantial clinical investigations have been instituted and for which the existence of such investigations have been made public” unless the article was “before such approval, . . . or authorization marketed as a dietary supplement or as a food.”  FDC Act § 201(ff)(3)(B). FDA has the authority to over-ride the exclusion by regulation.

The exclusionary clause provision is intended to protect investments by pharmaceutical companies; it prevents the marketing of a substance as a dietary supplement when these products are being developed into drugs. Petitioner claims that in the case of pyridoxamine, “the pharmaceutical industry’s interests are no longer at stake.” All clinical investigations on pyridoxamine have ceased and, according to Petitioner and available evidence, there is no drug industry interest in resuming them. In addition, because pyridoxamine has various beneficial effects that other forms of vitamin B6 may not have, “[g]ranting [the requested] exception would give consumers access to a beneficial article.”

To our knowledge, this is the second time FDA has been asked to issue a regulation authorizing the marketing of a substance as a dietary supplement even though the substance was the subject of an IND before it was marketed as a food or dietary supplement. A 2009 Petition by OVOS Natural Health, Inc. to allow the marketing of homotaurine as a dietary supplement was the first (see our previous post here). FDA denied that Petition because, according to FDA, homotaurine was not a dietary ingredient. FDA never reached the issue of its authority under FDC Act § 201(ff)(3)(B). Since pyridoxamine is a member of the vitamin B6 family, and thus falls well within the definition of a dietary ingredient under FDC Act § 201(ff)(l )(A), FDA cannot punt on that issue this time.

The 21st Century Cures Act (Cures), signed into law in December 2016, established a program to provide priority review and management attention for breakthrough devices. We discussed the new section of the law in our earlier post on Cures (here). The law required FDA to issue a draft guidance regarding this program by November 7, 2017. On October 25, 2017, CDRH issued the required draft guidance, nearly two weeks ahead of the statutory deadline.

The guidance outlines the elements of the breakthrough device program, the key components of which were set out in Cures. Cures set out the definition of a breakthrough device, and the guidance provided additional clarification regarding how it will interpret these definitions. For example, one prong of the definition is that a proposed device “provides for more effective treatment.” The guidance explains that the Agency cannot know for certain at the early stage of development when breakthrough status is requested if a device will in fact provide more effective treatment. Therefore, the Agency will consider “whether there is a reasonable expectation that a device could provide for more effective treating or diagnosis relative to the current standard of care.” Similarly, when assessing whether a device offers “significant advantages over existing approved or cleared alternatives,” the Agency will consider the “potential” as compared to commercially available alternatives.

Another element of the definition is that a device be a “breakthrough technology.” When considering this prong, the Agency will evaluate “the potential for a device to lead to a clinical improvement in the diagnosis, treatment (including monitoring of treatment), cure, mitigation, or prevention of life-threatening or irreversibly debilitating condition.” Combination products that include a device constituent part will also be eligible for breakthrough device designation.

To request breakthrough status, a sponsor should submit a pre-submission. The draft guidance provides an example of such a request. A request should explain how a proposed device meets the definition of a breakthrough device as set out in Cures. The draft guidance indicates that the Agency will review and respond to such a request within 60 calendar days. It is worth noting that this timeline is twice as long as the current EAP program. The Agency intends to interact with the sponsor by day 30 and may request additional information, if needed in order to make a decision regarding breakthrough status.

The guidance indicates that manufacturers participating in the program will have the option of several ways in which to interact with the Agency during the review process. These options include:

• Sprint Discussions. This type of interaction is essentially a high-speed pre-submission with the goal of resolving a disagreement in a pre-specified time period (a timeline is proposed by the sponsor in the meeting request). A sponsor requests a sprint discussion through the pre-sub process. It is intended to be a “highly interactive” process. The guidance provides an example of a sprint discussion including a timeline.

• Data Development Plan (DDP). A sponsor can request that the Agency review and come to an agreement on a DDP prior to execution. A DDP can cover all clinical and non-clinical testing planned for a proposed breakthrough device. Review of a DDP is requested through a pre-submission. The DDP is an optional element of the breakthrough device program whereas it was a key aspect of the Expedited Access Program (EAP), its predecessor.

• Clinical Protocol Agreement. A sponsor can request that the Agency review and agree to a planned clinical protocol for a breakthrough device prior to execution. The Agency agreement will be binding, with a few exceptions enumerated in the guidance. A clinical protocol agreement is requested through the pre-submission process.

• Regular Status Updates. A sponsor can request regular periodic updates with the Agency (presumably the reviewing Division, including management, but the guidance does not say specifically). Regular status updates will be scheduled by FDA and the sponsor; a pre-submission is not required.

The guidance also expands on a number of elements of the program. For example, the guidance specifies that CDRH staff working on breakthrough devices will undergo specific training and “will be experienced with innovative approaches to regulatory science and clearly communicating FDA’s expectations during the device development process.” There are no specifics as to what specific criteria breakthrough device reviewers will need, but it is a good sign that the guidance commits to using experienced reviewers for these novel, clinically meaningful devices.

The guidance also states that breakthrough devices will receive priority review. The guidance also acknowledges that breakthrough devices often take longer to review because of the novel elements contained in these devices. In order to expedite the review process for breakthrough devices, CDRH requests that sponsors equally commit to resolving scientific and regulatory issues expeditiously during the review process.

For PMA devices, the guidance indicates that based on FDA’s discretion, the Agency will allow sponsors to provide less manufacturing information for breakthrough devices. Specifically, the guidance says that it may forego a preapproval inspection in certain circumstances. The guidance indicates,

• Manufacturers with no inspectional history will require a preapproval inspection; and

• FDA may postpone a preapproval inspection to after approval for:

manufacturers inspected within two years prior to the PMA filing date if the inspection results were No Action Indicated (NAI) or Voluntary Action Indicated (VAI) and FDA deems the inspectional results relevant to the pending PMA; and

manufacturers inspected between two and five years prior to the PMA filing date if the inspection results were No Action Indicated (NAI) or Voluntary Action Indicated (VAI) and FDA deems the inspectional results relevant to the pending PMA so long as the manufacturer provides:

a declaration stating that all activities at the relevant manufacturing site comply with the QSR; and

risk management documentation (e.g., in compliance with ISO 14971) indicating that risks associated with the device under review have been reduced to acceptable levels.

Once finalized, this guidance will replace the current Expedited Access Pathway (EAP) program. The EAP program was only established two years ago, in 2015. The breakthrough device program is very similar to and contains significant features of the EAP program. However, the draft breakthrough guidance does not address what will happen to devices that have been granted EAP status under the existing program. Industry relied on the existing EAP program to gain appropriate priority status for novel devices. It would be unreasonable for CDRH to require that manufacturers with EAP status for devices under development to obtain a new breakthrough device status. We hope that CDRH will address this gap before the breakthrough guidance is finalized.

On October 2, 2017, the New Jersey Attorney General and Division of Consumer Affairs published Proposed New Rule N.J.A.C. 13:45J, Limitations On and Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers.  According to the preamble, the proposed rule responds to a concern about the “exponential growth in the amount of money that is being paid to prescribers.”  The preamble cites information about payments to prescribers in New Jersey that is available in the federal Open Payments database.

In order to “minimize the potential for conflicts of interest between prescribers and pharmaceutical manufacturers [and] to ensure that patient care is guided by the unbiased, best judgment of the treating prescriber[,]” the proposed rule would amend New Jersey’s health care professional licensing regulations to limit the gifts that may be received from pharmaceutical manufacturers by New Jersey providers authorized to prescribe medications: physicians, podiatrists, physician assistants, advanced practice nurses, dentists, and optometrists.

Under the proposed rule, New Jersey prescribers could not accept the following from pharmaceutical manufacturers:

• Any financial benefit or benefit-in-kind, including, but not limited to, gifts, payments, stock, stock options, grants, scholarships, subsidies, and charitable contributions.
• Any entertainment or recreational items, such as tickets to theater or sporting events, or leisure or vacation trips.
• Items of value that do not advance disease or treatment education, including, but not limited to,
  • Pens, note pads, clipboards, mugs, or other items with a company or product logo;
  • Items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork; and
  • Items that may have utility in both the professional and non-professional setting, such as electronic devices.

Under the proposed rule, New Jersey prescribers could accept the following permitted gifts and payments from pharmaceutical manufacturers:

• Items designed primarily for educational purposes for the patients or prescriber that have minimal or no value to the prescriber outside of his/her professional responsibilities. Items that may have independent value to the prescriber may only be accepted if the items are used by patients and remain in the common area of the prescriber’s office.
• A subsidized registration fee at a continuing education event, if that fee is available to all participants.
• Modest meals, worth no more than $15 per prescriber, at a continuing education event.
• Modest meals, worth no more than $15 per prescriber, at a promotional activity, no more than four times in a calendar year.
• Compensation, based on fair market value, for providing bona fide services as a speaker or faculty organizer or academic program consultant for a continuing education event or promotional activity. A prescriber may also accept reasonable payment for travel, lodging, and other expenses associated with such services.
• Compensation, based on fair market value, for participation on advisory bodies or under consulting arrangements.
• Sample medications or devices intended to be used exclusively for the benefit of the prescriber’s patients.

The rule would impose a limit of $10,000 per calendar year on the amount of compensation that a single prescriber may receive in the aggregate from all pharmaceutical manufacturers for speaking at promotional activities, participation on advisory boards, and consulting. Payment for speaking at continuing education events would not be subject to the $10,000 cap.

The proposed rule is modeled on the Pharmaceutical Research and Manufacturers of America Code on Interactions with Health Care Professionals (“PhRMA Code”), but includes certain limitations that are more stringent than the PhRMA Code. For example, under the PhRMA Code, manufacturers may provide modest meals to physicians on an occasional basis, but “modest” is not defined and there is no dollar limit.  In contrast, the New Jersey rule would limit the value of meals to $15 per prescriber.

Similarly, the PhRMA Code permits fair market value compensation and expense reimbursement for consulting services with no specified cap, whereas the New Jersey proposed rule would impose a $10,000 aggregate limit on the amount a prescriber could receive from all pharmaceutical manufacturers in a calendar year for providing bona fide services as a speaker at promotional activities, for participation on advisory bodies, and under consulting arrangements.

Importantly, the proposed rule would not specifically exempt compensation for serving as an investigator in a clinical trial or otherwise conducting bona fide research. Even if such research payments were considered “consulting arrangements,” they would be subject to the $10,000 aggregate annual cap applicable to each prescriber.  Unless a specific research exemption is added to the final regulation, participation of New Jersey physicians in studies sponsored or funded by drug manufacturers will be severely restricted, and clinical trials in which New Jersey prescribers currently serve as investigators could be adversely affected.

The proposed rule would provide the various New Jersey prescriber licensing boards with authority to take enforcement action against prescribers who accept prohibited gifts or payments from pharmaceutical manufacturers. Although the proposed rule would not impose penalties on, or otherwise increase the state’s authority over, pharmaceutical manufacturers, the limitations in the proposed rule could dramatically impact how manufacturers interact with prescribers in New Jersey.

A public hearing about the proposed rule was held on October 19, 2017. Written comments may be submitted to the Division of Consumer Affairs by December 1, 2017.  We will continue to monitor this proposed regulation.

On October 26, 2017, Par Sterile Products, LLC and Endo Par Innovation Company filed a Complaint in the United States District Court for the District of Columbia against the Food and Drug Administration. At the heart of the Complaint is FDA’s Interim Policy addressing compounding using bulk drug substances by outsourcing facilities pursuant to Section 503B of the Federal Food, Drug, and Cosmetic Act (FDCA) (see earlier posts on FDA’s Interim Bulks Policy (here, here, and here). Generally, FDA’s Interim Policy permits outsourcing facilities to compound formulations using bulk substances that are on FDA’s “Bulks List 1.” FDA describes its Bulks List 1 to include those substances nominated with sufficient supporting information for FDA to consider them, and they do not appear on any other list. FDA’s Interim Policy states that it intends to finalize the policy via the statutorily required notice and comment rulemaking, but it implemented the Interim Policy to permit compounders to provide medications and not disrupt patient access pending completion of the mandated rulemaking process. The Complaint alleges, however, the FDA’s rulemaking concerning its Bulks List and FDA’s creation of what the Complaint deems the “Clinical Needs List” was moved to “inactive” status and “indefinitely” postponed. Complaint ¶ 50.

Not so fast, say plaintiffs. They allege in their three-count Complaint that FDA’s Interim Policy violates the Administrative Procedure Act. Among other things, plaintiffs allege that Section 503B requires that, to add a bulk drug substance to Bulks List 1, FDA must make a “record-based determination” about a clinical need for compounding of that particular bulk substance pursuant to specific statutory notice and comment procedures. (Complaint ¶ 88 (citing 21 U.S.C. § 353b(a)(2)(A)(i)). Plaintiffs also claim that Section 503B(a)(5) also prohibits compounding “essentially copies” of approved drugs. By compounding drug products using the bulk ingredient vasopressin (which FDA added to Interim Bulks List 1 in July 2017), Plaintiffs allege FDA is permitting not only compounding in violation of the statutory directive to engage in appropriate rulemaking proceedings concerning the list, but is also permitting compounders to compound “essentially copies” using that bulk ingredient without a requisite “clinical difference” determination for the particular compounded vasopressin product.   Plaintiffs’ three counts allege FDA is acting in violation of the APA because it has no legal authority to permit the marketing of an unapproved drug, and is not free to “create its own exceptions” via its interim bulks nomination policy to not engage in notice and comment rulemaking. They allege that the Interim Policy is “final agency action,” not a lawful exercise of FDA’s enforcement discretion, and is inconsistent with the plain langue of the FDCA, including the Act’s drug approval requirements. In addition, Plaintiffs allege that FDA’s review of the July 2017 vasopressin nomination was arbitrary and capricious concerning, among other thing, the failure to appropriately address the clinical need for the bulk substance prior to its inclusion on the list. Plaintiffs also seek attorneys’ fees. Note that Section 503B does specifically permit FDA to promulgate an “Interim Policy.” See Section 503B(c)(3)(A). But that interim policy provision does not cover bulk substances that may be used in compounding: Congress limited that statutory provision to include only those substances in subsection (a)(6) of section 503B – those that present “demonstrable difficulties” for compounding.

There are several (somewhat familiar) issues that make this case especially interesting for those following the ongoing drug compounding saga since the events leading to the enactment of the Drug Quality and Security Act in November 2013. First, FDA approved vasopressin pursuant to what press accounts have described as a “little known safety program:” FDA’s so-called “Unapproved Drugs Initiative.” In other words, use of vasopressin is far from a “newly used” drug, notwithstanding its relatively recent FDA new drug approval. (See here – “Thanks at least partially to the FDA program, the price of vasopressin, a drug useful in cases of cardiac arrest and often found on crash carts, has risen 10-fold.”)   Although FDA’s various guidance documents on compounding “essentially copies” explicitly do not permit copies based on the price of the approved drug alone, drug manufacturers’ “significant” (and well-reported) price hikes of long-used drugs such as vasopressin (and colchicine, pyrimethamine, and hydroxyprogesterone) likely creates an opportunity for compounders to formulate a product that they may demonstrate is in fact not essentially a copy of the approved drug — at a significantly less expensive cost to the health care facility or provider. Second, although the present litigation may ultimately prove successful and change the way FDA considers bulk substances for use in compounding pursuant to Section 503B, the Complaint makes no mention of compounding under Section 503A, which is compounding by “traditional” compounding pharmacies or physicians pursuant to individually identified patient prescriptions. Unlike Section 503B outsourcing facilities, these compounders may indeed compound formulations from bulk substances using components of approved drug products. Thus, because vasopressin – as a result of FDA’s relatively recent approval – is now a “component of an approved drug product,” the thousands of compounding pharmacies across the United States may compound using that ingredient, so long as they do so lawfully and in accordance with the other provisions of Section 503A.

Earlier this week, the U.S. District Court for the District of Columbia issued a Memorandum Opinion granting summary judgment to FDA in a lawsuit Lannett Company Inc. and Lannett Holdings, Inc. (collectively “Lannett”) filed in June 2016 challenging FDA’s rescission of Lannett’s ANDA 202750 for the oral chemotherapy drug Temozolomide Capsules, 5 mg, 20 mg, 100 mg, 140 mg, 180 mg, and 250 mg. (Copies of the briefs filed in the case are available here, here, here, and here.)

As we previously reported, on May 17, 2016 FDA issued a letter to Lannett rescinding the approval of ANDA 202750 for Temozolomide Capsules, which the Agency had approved on March 23, 2016. According to FDA, the Agency approved the ANDA in error.  ANDA 202750 identified Chinese company Chongqing Lummy Pharmaceutical Co. Ltd. (“Lummy”) as the manufacturer of the active pharmaceutical ingredient for the drug product.  FDA inspected Lummy in mid-March 2016, and on April 19, 2016, the Agency placed Lummy on Import Alert, pointing to concerns over the company’s Current Good Manufacturing Practices (“CGMPs”) as the reason for the Import Alert.  On June 21, 2016, FDA issued a Warning Letter to Lummy summarizing significant CGMP deviations.

Lannett alleged in a five-count Complaint that FDA’s rescission of ANDA 202750 violates the Administrative Procedure Act (“APA”) and the Fifth Amendment’s due process right to a hearing in connection with deprivation of a property right. Lannett asked the DC District Court to, among other things, set aside and declare as unlawful FDA’s ANDA approval rescission, and to enjoin FDA from revoking the approval of ANDA 202750 without a hearing and the procedures established at FDC Act § 505(e).

In a 17-page Opinion granting FDA’s Cross-Motion for Summary Judgment and denying Lannett’s Motion for Summary Judgment, Judge Reggie B. Walton concluded that FDA’s approval rescission of ANDA 202750 is not final agency action subject to APA judicial review, and that Lannett failed to exhaust available administrative remedies under 21 C.F.R. § 314.110(b) before filing its June 2016 Complaint.

FDA argued that Lannett’s lawsuit is essentially an attempt to bypass the administrative process, and that the doctrine of exhaustion of administrative remedies is a conclusive factor that should prevent the Court from consideration of Lannett’s claims at the present time. After all, argued FDA, the Agency “has not made a final, judicially reviewable decision on the manufacturing compliance status of the facilities named in Lannett’s ANDA,” because “[a]fter [the Agency] afforded Lannett due process and properly rescinded the ANDA approval, the application returned to pending status and was subject to regulatory requirements described in [FDA’s] Complete Response Letter.”

In response, Lannett argued that FDA’s ANDA approval rescission meets the test for a final agency action under the APA because it “was the consummation of the agency’s decision-making process to revoke the approval (not a tentative or interlocutory decision), and definitively adjudicated and revoked Lannett’s legal right to market Temozolomide capsules.” Lannett also asserted that the company “was not required to exhaust administrative remedies before filing this case” because FDA’s ANDA approval rescission “formally and definitively deprived [the company] of its legal entitlement to market Temozolomide capsules.”

After noting that “[a]An agency action is final if it ‘1) marks the consummation of the agency’s decision making process’ and 2) affects the ‘rights or obligations . . . [or the] legal consequences’ of the party seeking review,” and that whether “FDA’s rescission of a mistakenly approved ANDA and placement of that ANDA back into the review process queue is a final agency action” seems to be a case of first impression, Judge Walton proceeded with his analysis.

As to Lannett’s position that FDA’s action resulted in the “consummation of the agency’s decision-making process to revoke the approval” of ANDA 202750, Judge Walton said that that position “is too narrow for the Court to accept, primarily because Lannett’s position focuses solely on the rescission of the approval, which Lannett equates as a final agency action.”

Applying the principle that a court must look at the way in which an agency subsequently treats a challenged action when assessing whether a particular agency action qualifies as final for purposes of judicial review, Judge Walton concluded that “although the FDA did rescind Lannett’s ANDA approval, the FDA expressly advised Lannett that its ANDA was ‘now in pending status,’” among other things. As such, “FDA’s rescission action did not represent the conclusion of its decision-making process regarding the review process for Lannett’s ANDA or its ultimate decision to either approve or deny Lannett’s ANDA.”

And even if FDA’s ANDA approval rescission “could be perceived as the consummation of its decision-making process,” Judge Walton was not convinced that Lannett’s action satisfies the second prong of the finality doctrine above. Quoting from American Therapeutics v. Sullivan, 755 F. Supp. 1 (D.D.C. 1990) (here), a case that also involved FDA’s rescission of an ANDA approval because of CGMP concerns, Judge Walton wrote that Lannett “pictures itself, quite incorrectly, as having been deprived of a vested right.  [Rather, i]t had no right to put on the market a drug when facts were available indicating that the public health might be injured.”

Moving on to the doctrine of exhaustion of administrative remedies, Judge Walton concluded that “FDA’s rescission action cannot be considered final because Lannett has yet to exhaust all of its available administrative remedies.” Citing FDA’s regulation at 21 C.F.R. § 314.110(b) concerning Complete Response Letter actions, Judge Walton said that “Lannett was obligated to comply with the procedures provided in the FDA’s regulations by either resubmitting or supplementing its ANDA, withdrawing its ANDA, or requesting an opportunity for a hearing.”  But, instead of pursuing one of the specified actions, as the company should have done, “Lannett opted to file this action seeking judicial review.”

Our April 16^th blog post regarding 510(k) exemptions (here) garnered a lot of comments from our readers. So we thought it was worth a second post.

As you will recall, the .9 limitation says that a device of the generic type in a 510(k)‑exempt classification regulation is exempt so long as its characteristics were “existing and reasonably foreseeable” as compared to the generic type of device subject to the exemption. The regulation elaborates on what this phrase means by way of examples. Our original post covered the two main examples – intended use and fundamental scientific technology – applicable to all devices. In our original post, we explained that 510(k) clearances occurring prior to issuance of a 510(k) exemption for a category of devices can shape whether a new device’s characteristics are considered “existing and reasonably foreseeable.” This position has been acknowledged by FDA. See 63 Fed. Reg. 59222, 59224 (Nov. 3, 1998) (here).

We also indicated that post-exemption 510(k) clearances set the bounds of devices that fall outside the exemption and similar devices would also require 510(k) clearance prior to marketing. Based on our research, FDA has not articulated an official position as to what (if any) affect a post-exemption clearance has on the scope of a 510(k). Absent an interpretation from FDA, we performed our own analysis. The .9 regulations indicate that a 510(k) exemption applies to a new device in an exemption category, “to the extent that the device has existing or reasonably foreseeable characteristics of commercially distributed devices within that generic type.” The .9 regulations do not state when the characteristics of the exempt category were set or if they can change over time. It seemed reasonable to us that the characteristics must have been reasonably foreseeable at the time of the 510(k) exemption. If a type of device falls outside the exemption, it would require a 510(k) clearance. It did not seem to us that FDA would likely agree that such a 510(k) would modify the foreseeability of a subsequent device’s characteristics as it related to the exemption. Thus, if a device’s characteristics were not foreseeable, a future device with similar characteristics would also not be foreseeable as it relates to the exemption.

As stated above, based on our prior research, we have not identified any official statement from FDA regarding the effect of post-exemption clearances on the scope of the 510(k) exemption. In an effort to get some sort of an answer, we reached out to the 510(k) Premarket Notification Section within the Office of Device Evaluation. Last week, we received the following response:

When a company submits a 510(k) for a device under a 510(k) exempt regulation, it is because the device exceeded the limitations of exemption for that regulation.  If the device is then found substantially equivalent, the technology and/or indications newly cleared within that 510(k) would then expand the limitations of exemption within that regulation.

This response clearly articulates that a post‑exemption 510(k) clearance permanently adds to or broadens the scope of a 510(k) exemption. In the recent past, we have received responses to this same question from other Office of Device Evaluation (ODE) officials that have been either contrary to the above position or less clear. None of this correspondence “between representatives of FDA and an interested person outside FDA on a matter within the jurisdiction of the laws administered by [FDA],” is likely to be considered final agency action subject to judicial review. 21 C.F.R. § 10.65(a). Nonetheless, the response above is unambiguous and it does come from an office that is located within the Office of the ODE Director, so it seems to us reasonably definitive.

It is noteworthy that the foregoing position could lead to a competitive disadvantage for companies filing a 510(k) for a device believed to trip the .9 limitation. Competitors looking to enter the market after a post-exemption clearance will be able to enter the market immediately, because the clearance expanded the scope of the exemption. The company that obtains a post-exemption clearance must do all the work to expand it. The second comers will not have to do anything from a premarket perspective. This approach could deter companies from obtaining post-clearance exemptions, and some may wait until they receive an untitled or warning letter from FDA indicating that they must do so.

A reader also requested that we address the IVD-specific limitations in the .9 regulations. IVDs are subject to the same general limitation that its characteristics must be “existing and reasonably foreseeable” at the time the generic type of device became exempt from the 510(k) requirements. In addition to the intended uses and fundamental scientific technology examples, the .9 regulations also include a number of IVD specific examples for when the .9 limitations are tripped. Specifically, a 510(k) is required if the proposed device is intended:

• For use in the diagnosis, monitoring, or screening of neoplastic diseases with the exception of immunohistochemical devices;

• For use in screening or diagnosis of familial or acquired genetic disorders, including inborn errors of metabolism;

• For measuring an analyte that serves as a surrogate marker for screening, diagnosis, or monitoring life-threatening diseases such as acquired immune deficiency syndrome (AIDS), chronic or active hepatitis, tuberculosis, or myocardial infarction or to monitor therapy;

• For assessing the risk of cardiovascular diseases;

• For use in diabetes management;

• For identifying or inferring the identity of a microorganism directly from clinical material;

• For detection of antibodies to microorganisms other than immunoglobulin G (IgG) or IgG assays when the results are not qualitative, or are used to determine immunity, or the assay is intended for use in matrices other than serum or plasma;

• For noninvasive testing as defined in 812.3(k) of this chapter; and

• For near patient testing (point of care).

These examples are much more specific than the broad intended use and fundamental scientific technology examples. In addition, they are additive to the other two examples for IVD companies looking to take advantage of a 510(k) exemption. Thus, IVD manufacturers should be aware of these examples and ensure that a new IVD potentially fitting within a 510(k)-exempt category does not trip the .9 exemption for any of these reasons.

FDA finalized a guidance that clarifies FDA and EPA jurisdiction over mosquito-related products, including mosquitoes produced through the use of biotechnology.  FDA had issued the draft guidance as part of a batch of biotech-related documents that were released in the final days of the Obama administration (see our prior post here).

The final guidance takes greater pains to explain the factors that govern whether FDA or EPA have jurisdiction over a given product, and makes explicit the conclusion that “products intended to reduce the population of mosquitoes” are pesticide products regulated by EPA – regardless of “whether the product is a traditional chemical product or involves a different technology (e.g., a recombinant DNA construct or bacteria intended to reduce the population of mosquitoes)” (emphasis ours).  Consistent with that conclusion, FDA announced that Oxitec’s genetically engineered mosquito falls under EPA’s regulatory authority because it claims to control the population of a certain species of mosquito.  As we discussed in a prior posting, FDA had given a green light to investigational release of the Oxitech mosquito.  In accord with the final guidance, FDA will have no further involvement in the regulation of the Oxitech mosquito, absent a change in its intended use.

No, the first part of the title of this post is not some Halloween reference to Jigsaw, the game master of the “Saw” movie franchise.  Instead, it’s a reference to a more gentle game.  If you have (or have had) young children, then you’ve probably played a “What’s Missing?” memory-type game with them.  For example, in the board version of the game, a player removes one object from play, hiding it somewhere.  The other players then search the table to try to decipher what’s missing, yelling out the answer as soon as they think they know.  Today, we’re going to play a Hatch-Waxman version of the “What’s Missing” memory game.  Good luck!

Assuming, as we do, that our readers know what the typical ANDA “fact board” looks like, here’s what our Generic COPAXONE 40 mg/mL “memory board” looks like:

• On January 28, 2014, FDA approved a supplement to Teva Pharmaceuticals USA’s (“Teva’s”) NDA 020622 for COPAXONE (glatiramer acetate) Injection to add a “new dosing strength of 40 mg per mL administered three times per week.”
• Mylan Pharmaceuticals Inc. (“Mylan”) submitted ANDA 206936 to FDA on February 12, 2014 seeking approval to market a generic version of Glatiramer Acetate Injection, 40 mg/mL.
• On or about February 26, 2014, information on seven patents (five expiring on May 24, 2014, and two expiring on August 19, 2030) appeared in the Orange Book for COPAXONE NDA 020622. The two patents expiring on August 19, 2030 are U.S. Patent No. 8,232,250 (“the ‘250 patent”) and U.S. Patent No. 8,399,413 (“the ‘413 patent”). Subsequently, information on U.S. Patent No. 8,969,302 (“the ‘302 patent”); U.S. Patent No. 9,155,776 (“the ‘776 patent”); and U.S. Patent No. 9,402,874 (“the ‘874 patent”) was added to the Orange Book.
• FDA’s ANDA Paragraph IV Certifications List identifies February 26, 2014 as the first date on which an ANDA was submitted to FDA containing a Paragraph IV ccertification to patents listed in the Orange Book for COPAXONE Injection, 40 mg/mL.
• Teva timely sued Mylan in the U.S. District Court for the District of Delaware (Civil Action Nos. 14-cv-1278) and in the U.S. District Court for the Northern District of West Virginia (Civil Action No. 14-cv-0167), alleging infringement of the ‘250 and ‘413 patents (and later, the later-listed patents). The West Virginia District Court identified a 30-month stay “deadline” expiring “on or about February 28, 2017.” The Delaware District Court also identified a 30-month stay “deadline” expiring “on or about 2-28-2017.”
• On January 31, 2017, Mylan, in In Re Copaxone Consolidated Cases, prevailed with respect to, among other patents, the ‘250 and ‘413 patents.
• On October 3, 2017, FDA approved Mylan’s original ANDA 206936 for generic Glatiramer Acetate Injection, 40 mg/mL, and noted that Mylan, as a “first applicant,” is eligible for a period of 180-day exclusivity.
• According to FDA’s approval letter for Mylan ANDA 206936:

Your ANDA contains paragraph IV certifications to each of the patents¹ under section 505(j)(2)(A)(vii)(IV) of the FD&C Act stating that the patents are invalid, unenforceable, or will not be infringed by your manufacture, use, or sale of Glatiramer Acetate Injection 40 mg/mL, under this ANDA. You have notified the Agency that Mylan Pharmaceuticals Inc. (Mylan) complied with the requirements of section 505(j)(2)(B) of the FD&C Act and that litigation was initiated within the statutory 45-day period against Mylan for infringement of the ‘250 and ‘413 patents in the United States District Court for the District of Delaware and the Northern District of West Virginia [Teva Pharmaceuticals USA Inc., Teva Pharmaceutical Industries Ltd., Teva Neuroscience, Inc., and Yeda Research and Development Co. Ltd. v. Mylan Pharmaceuticals Inc., Mylan Inc. and Natco Pharma Ltd., Civil Action Nos. 14-cv-1278 and 14-cv-0167] and for infringement of the ‘302, ‘776, and ‘874 patents in the United States District Court for the District of Delaware [Teva Pharmaceuticals USA Inc., Teva Pharmaceutical Industries Ltd., Teva Neuroscience, Inc., and Yeda Research and Development Co. Ltd. v. Mylan Pharmaceuticals Inc., Mylan Inc. and Natco Pharma Ltd., Civil Action Nos. 15-cv-0306, 14-cv-1171, and 16-cv-1267].

• The “¹” reference is to an endnote in the ANDA approval letter stating: “The Agency notes that the ‘250, ‘413, ‘302, ‘776 and ‘874 patents were submitted to the Agency after submission of your ANDA. Litigation, if any, with respect to these patents would not create a statutory stay of approval.” (Note that the last sentence is typical for an approval letter – see, e.g., here, here, and here.)

Given these game pieces on our board, what’s missing? (Cue up the Jeopardy Theme)

If you take a look at the three approval letters linked to above, you’ll notice that in each case FDA addresses – either implicitly or explicitly – the absence, existence, or termination of a 30-month litigation stay that is triggered as a result of timely filed patent infringement litigation for patents listed at the time of ANDA submission. This occurs at the end of the paragraph of an ANDA approval letter beginning with either “Your ANDA contains paragraph IV certifications to each of the patents¹ under section 505(j)(2)(A)(vii)(IV) of the FD&C Act. . . ,” or “With respect to the ‘XXX and ‘XXX patents,¹ your ANDA contains paragraph IV certifications under section 505(j)(2)(A)(vii)(IV) of the FD&C Act. . . .” For example, FDA may conclude the paragraph with “You have also notified the Agency that the cases have been dismissed,” or with “this litigation is ongoing,” or with “Although these litigations remain ongoing, the 30-month period identified in section 505(j)(5)(B)(iii) of the FD&C Act, during which FDA was precluded from approving your ANDA, has expired.”

The paragraph in the approval letter for Mylan ANDA 206936 beginning with “Your ANDA contains paragraph IV certifications to each of the patents¹ under section 505(j)(2)(A)(vii)(IV) of the FD&C Act” ends rather abruptly and without any mention or allusion to a 30-month stay. That’s the missing piece!!  Instead, the “¹” reference – which is usually in a footnote, but appears in an endnote in the Mylan approval letter – says that the ‘250 and ‘413 patents that Mylan intially certified to (as well as the later-listed ‘302, ‘776 and ‘874 patents) do not create a statutory 30-month stay of ANDA approval.

So, what’s the deal?? After all, the statute and FDA’s regulations state that a patent is considered timely listed if information is submitted to FDA within 30 days of patent issuance or within 30 days of an NDA approval. And Teva appears to have timely submitted information to FDA on both the ‘250 and ‘413 patents for Orange Book listing after the January 28, 2014 approval of Glatiramer Acetate Injection, 40 mg/mL, under NDA 020622. Moreover, both the West Virginia District Court and Delaware District Court identified a 30-month stay “deadline” expiring “on or about February 28, 2017.” So, wouldn’t the timely listing of the ‘250 and ‘413 patents, combined with Paragraph IV certifications to them as of the date the patents were listed in the Orange Book, give rise to a 30-month stay?

While you’re chewing on that, we also note that the statute states, with respect to the availability of a 30-month litigation stay that:

If the applicant made a [Paragraph IV] certification . . . , the approval shall be made effective immediately unless, before the expiration of 45 days after the date on which the notice described in paragraph (2)(B) is received, an action is brought for infringement of the patent that is the subject of the certification and for which information was submitted to the Secretary under subsection (b)(1) or (c)(2) before the date on which the application (excluding an amendment or supplement to the application), which the Secretary later determines to be substantially complete, was submitted. If such an action is brought before the expiration of such days, the approval shall be made effective upon the expiration of the thirty-month period beginning on the date of the receipt of the notice provided under paragraph (2)(B)(i) or such shorter or longer period as the court may order because either party to the action failed to reasonably cooperate in expediting the action. . . .

FDC Act § 505(j)(5)(B)(iii) (emphasis added).

From what we gather, there was probably some ruckus at FDA about whether or not a stay on the approval of Mylan ANDA 206936, which was presumably initially submitted with a Paragraph I or “No Relevant Patents” certification, had been triggered by Mylan’s Paragraph IV certification amendment. In the end, it didn’t matter, because by the time FDA approved Mylan ANDA 206936 on October 3, 2017 any stay would have expired long ago, in February 2017. Nevertheless, FDA addressed the issue – rather covertly (or perhaps even inadvertently) – in the approval letter for ANDA 206936; and specifically in an endnote (instead of in a footnote) stating that Mylan’s February 26, 2014 Paragraph IV certifications the ‘250 and ‘413 patents did not create a statutory 30-month stay of ANDA approval.

While it’s relatively rare that an ANDA is submitted to FDA within 30 days of the date of the NDA reference listed drug approval, the scenario above shows that it can happen. What this means for all parties involved (NDA sponsors and ANDA applicants) is the need for speed. NDA applicants should submit patent information quickly after approval, and ANDA applicants should pounce at the opportunity to avoid a 30-month litigation stay by submitting as soon as possible after NDA approval.

In January 2017, the Federal Trade Commission (FTC) and New York Attorney General (collectively, “Plaintiffs”) announced a lawsuit charging that Quincy Bioscience, related entities, and two individuals (collectively “Defendants”), the marketers of the dietary supplement Prevagen, made false and unsubstantiated claims that Prevagen improved memory.  Challenged claims included “Prevagen improves memory,” Prevagen “has been clinically shown to improve memory,” and the claim that “A landmark double-blind and placebo controlled trial demonstrated Prevagen improved short-term memory, learning, and delayed recall over 90 days.” Plaintiffs alleged that Defendants relied on a single study that failed to show that Prevagen works better that a placebo on any measure of cognition.

Defendants moved to dismiss the complaint on several grounds, including the argument that Plaintiffs’ Complaint failed to adequately allege that the advertising claims for Prevagen violate the FTC Act. On September 28, 2017, the District Court of the Southern District of New York granted the motion.

As described in the decision, Defendants claims were based on a clinical study that met the “gold standard,” i.e., a double blind, placebo controlled human clinical study using objective outcome measures using 218 subjects.” Plaintiffs did not take issue with the design of the study. However, they did take issue with the Defendants’ analyses of that study in support of its marketing claims. Namely, after the study failed to show a statistically significant improvement in the experimental group over the placebo group, Defendants conducted a “number” (more than 30) post hoc analyses of the results, looking at data for smaller subgroups. Doing so, they did find some statistically significant differences. These statistically significant results provided the basis for Defendants’ challenged marketing claims. Plaintiffs argued that this post hoc subgroup analysis did not constitute valid support for the claim because the post hoc analyses increased the probability of finding a significant improvement in a subgroup for one of the parameters. They argued that ‘[g]iven the sheer number of comparisons run and the fact that they were post hoc, the few positive findings on isolated tasks for small subgroups of the study population do not provide reliable evidence of a treatment effect.’ In other words, according to the Plaintiffs, the finding of a significant difference was merely the result of the number of analyses; if you throw a dice often enough, you will get the result you want.

The Court rejected Plaintiffs’ arguments, and concluded that their challenge to Defendants’ substantiation was theoretical. They had no evidence that the claim was not supported, but only showed there was a possibility that the study results did not support Defendants’ claims. This mere possibility rather than plausibility did not entitle Plaintiffs to relief.

Not surprising, FTC has not given much publicity to this loss. Plaintiffs may be considering whether to appeal the decision. We will be monitoring further developments.

Paul Simon sang about the 50 ways to leave your lover but there are more ways to go to jail if you are regulated by FDA. Congress has increased the regulatory powers of FDA significantly in the past 20 years but largely unnoticed has been the dramatic increase in criminal offenses under the Federal Food, Drug, and Cosmetic Act (FDC Act).  The relevant statutory provision is section 301 of the FDC Act which contains a list of prohibited acts, each of which is a potential criminal violation.  There are currently 56 subsections under 301, many of which contain multiple ways to violate the law.

As many well know the FDC Act is a strict liability criminal statute with respect to misdemeanor violations. That means that intent to violate the law is not required.  Subsection 301(a) is the quintessential criminal offense.  It makes illegal the “introduction or delivery for introduction into interstate commerce” of a food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded.  That prohibition is bolstered by subsection (b) which makes it a crime to adulterate or misbrand any of these products while they are in interstate commerce, subsection (c) which makes it illegal to receive in interstate commerce adulterated or misbranded products and subsection (k) which makes it a crime to adulterate or misbrand a product after shipment in interstate commence.  These provisions have been at the core of FDA civil and criminal enforcement actions over the years.

When this law firm was started in March 1980 section 301 had 18 subsections — (a) through (r). In September 1980 Congress added subsection (s) which criminalized the failure to comply with requirements for infant formulas.  It was not until 17 years later that Congress completed the first alphabet by enacting subsections (x), (y) and (z) as part of the FDA Modernization Act.  Congress has been on a roll since, adding an entire second alphabet of criminal offenses — subsections (aa) through (zz) — in 11 years from 2000 to 2011.  Congress is now in the third alphabet.  The most recent addition is (ddd) which makes it illegal to manufacture or introduce or deliver for introduction into interstate commerce “a rinse-off cosmetic that contains intentionally added plastic microbeads.”  Who knew this was a problem worthy of Congressional action?  The legislative history shows that this prohibition is an environmental measure to address the presence of microbeads in the Great Lakes.

Many of these new criminal penalties were enacted as part of broader legislation that expanded FDA regulatory authority into new areas such as tobacco or enhanced the Agency’s powers, and correspondingly industry’s obligations, in areas that FDA has long regulated, such as food.

Among other prohibited acts is the “charitable contribution of tobacco products,” something that would have been welcomed by the troops serving in World War II, Korea, Vietnam and maybe even today in Iraq and Afghanistan. Another recent example is subsection (jj) which makes it illegal to fail to submit information on clinical trials to Clinicaltrials.gov.  Congress also significantly expanded the potential criminal liability of those in the food business.  Subsections (uu) through (zz) make criminal the failure to comply with very detailed and complicated requirements relating to food safety.  For example, the owner, operator or agent in charge of a facility is required to identify potential food safety hazards, institute preventive measures, monitor the effectiveness of those preventive measures and verify compliance, among other things.  A failure to do any of those things correctly is a criminal violation irrespective of intent.

As the Supreme Court said in 1943 in US v. Dotterweich, 320 U.S. 277 (1943) “Hardship there doubtless may be under a statute which thus penalizes the transaction though consciousness of wrongdoing be totally wanting.”  The potential for such hardship has increased dramatically since 1943 as Congress has expanded the scope of FDA’s authority and criminalized the inadvertent failure to comply with these wide-ranging regulatory requirements.  Although FDA and the Department of Justice have yet to bring prosecutions under most of these newer prohibitions, that should provide little comfort to those who work in FDA-regulated industries.