Like the celebrated Texas dance of the same name, reporting controlled substance thefts and significant losses to the Drug Enforcement Administration (“DEA”) requires just that: two steps.  For the first time in eighteen years, DEA has revised its controlled substance theft and significant loss reporting regulations.  Since 1995, at least 28 registrants, primarily hospitals and pharmacies, have paid significant civil penalties ranging from $10,000 to $5,000,000 to settle allegations that they wholly or in part failed to report, or failed to report in a timely manner, controlled substance thefts or significant losses to DEA.  We thought it appropriate to take this opportunity to not only explain DEA’s revised regulations but also how registrants must now report controlled substance thefts and significant losses.

Step 2: DEA-106 Submission

DEA just published a final rule amending its theft and loss reporting regulations to require registrants to submit a “Report of Theft or Loss of Controlled Substances,” DEA Form 106 (“DEA-106”), electronically to the agency within 45 days of discovery of a theft or significant loss.  Reporting Theft or Significant Loss of Controlled Substances, 88 Fed. Reg. 40707, 40708 (June 22, 2023) (to be codified at 21 C.F.R. §§ 1301.74(c) and .76(b)). Attached here.

The rule now requires registrants to first report a theft or significant loss in writing within one business day of discovery (step 1), followed literally by a DEA-106 filed through the agency’s secure network application “within 45 calendar days” (for non-practitioners) and “within 45 days” (for practitioners) after discovery (step 2).  Id. at 40712.  DEA will no longer accept hardcopy DEA-106s as of July 24, 2023.  Id. at 40708.

DEA’s notice of proposed rulemaking would have required registrants to electronically file a DEA-106 within 15 calendar days after discovery, the original intent to align the shorter DEA-106 submission with the time required for submission of a “Report of Theft or Loss of Listed Chemicals,” DEA Form 107, for listed chemicals.  Id.  DEA expanded the proposed rule to allow 45 days, reasoning “that adequate time is needed in order to complete an accurate and thorough investigation” to submit a DEA-106.  Id. at 40709.  The 45-day timeframe within which to complete the second step allows registrants time to adequately investigate and make a final determination about the incident.  Id.  DEA justified requiring electronic submission of DEA-106s rather than a paper copy because it “will allow all report submissions to be received more quickly and stored in a central database, as well as allow for analysis.”  Id. at 40710.

Step 1: Initial Notification

The final rule does not revise the requirement that registrants must initially notify the DEA field division office in their area in writing within one business day of discovery of a theft or significant loss.  21 C.F.R. §§ 1301.74(c) and .76(b).  Notification by email or facsimile work; a telephone call does not.  Written notification eliminates misunderstanding that can arise with oral communication.  It documents what information was provided, when, and to whom.  Registrants should provide as much information about the incident as possible, including controlled substance quantity and the circumstances if known.  Reporting within one day of discovery allows the agency to know promptly about a theft or significant loss and to investigate immediately or undertake other appropriate actions.  88 Fed. Reg. 40707, 40709.

Thefts

Registrants must report all controlled substance thefts but only those losses that are “significant.”  The agency does not clarify what constitutes a “theft,” an intentional taking or diversion, while non-theft losses can include miscounting, dispensing an incorrect quantity, or misplacing or accidentally disposing of controlled substances.  In addition, registrants should also report thefts to local law enforcement.

Significant Loss

While DEA regulations require registrants to report all thefts, they must report only controlled substance losses that are “significant.”  21 C.F.R. §§ 1301.74(c) and .76(b).  Registrants have long wrestled with whether a particular loss they have experienced is significant and therefore reportable.  Over the years industry has requested DEA to define what constitutes a “significant loss.”  As with its 2005 revision of the regulations, the agency has again punted on defining “significant loss,” reasoning that what constitutes a significant loss for a manufacturer experiencing continuous losses in the manufacturing process may not be deemed significant by that registrant (but would need to be recorded in batch records).  88 Fed. Reg. 40707, 40709.  For non-manufacturer registrants, the loss of small quantities over time “may indicate a significant aggregate significant loss that must be reported to DEA, even though the individual quantity of each occurrence is not significant.”  Id.  DEA concluded once again that registrants are in the best position to determine whether their loss is significant, requiring reporting.

While not defining what constitutes a significant loss, DEA has again provided a list of factors that registrants should consider in determining whether a loss is significant.  Factors include:

1. The actual quantity of controlled substances lost in relation to the type of business;
2. The specific controlled substances lost (schedule IIs as opposed to schedule IIIs, IVs and Vs);
3. Whether the loss can be associated with access by specific individuals or attributed to unique activities that may take place involving the controlled substances;
4. A pattern of losses over a specific time period, whether the losses appear to be random, and the results of efforts taken to resolve the losses, and, if known;
5. Whether the controlled substances are likely candidates for diversion; and
6. Local trends and other indicators of diversion potential of the missing controlled substances. 21 C.F.R. §§ 1301.74(c) and .76(b).

Because DEA has abdicated defining whether a loss is significant, the agency should only seek enforcement for failure to report a significant loss in the most egregious cases.

Discovery

Registrants must report a theft or significant loss in writing within one business day of discovery, followed by a DEA-106 filed electronically within 45 days after discovery.  In 2005, DEA acknowledged that discovery can occur incrementally.  Reports by Registrants of Theft or Significant Loss of Controlled Substances, 79 Fed. Reg. 47094, 47095 (Aug. 12, 2005).  The agency has again declined to define discovery in the current final rule, but plans “on addressing the definition of Discovery in a future rulemaking.”  88 Fed. Reg. 40707, 40709.

DEA Field Division Office

The regulations require registrants to notify the DEA field division office in their area of thefts and significant losses.  Field division offices are the largest offices within a DEA field division where diversion program managers, diversion investigators, program analysts, and registration assistants are assigned, while resident and district offices are smaller offices, only some of which may be staffed by diversion investigators.  Strict adherence to the regulation requires reporting to the larger field division office despite geographic proximity or a relationship with a particular diversion group or investigator.

In-Transit Losses

Suppliers must report all in-transit controlled substance losses, not just those that are thefts or significant.  The agency also does not define “in-transit,” but uses the term in connection with use of a common or contract carrier.  21 C.F.R. § 1301.74(c).  So, suppliers must report any controlled substance lost while en route via common or contract carrier.  Purchasers must report any loss after they have signed for and taken custody of controlled substances.  DEA, Pharmacist’s Manual: An Informational Outline of the Controlled Substances Act (Rev. 2022), at 63.

Breaks and Spills

Breaks, spills, and other witnessed controlled substance losses do not require reporting to DEA.  DEA has reasoned that they are not actually lost “because they can be accounted for.”  Reports by Registrants by Registrants of Theft or Significant Loss of Controlled Substances, 70 Fed. Reg. 40576, 40578 (July 8, 2003).

Miscounts and Inventory Adjustments

Neither controlled substance miscounts nor inventory adjustments involving clerical errors should be reported.

ARCOS Reporting

Thefts and losses must be reported to DEA’s Automation of Reports and Consolidated Orders System (“ARCOS”).  Registrants should report thefts via ARCOS as “thefts” using the appropriate transaction code and report losses as “losses.”  Reporting to ARCOS is in addition to initial notification and electronic submission of a DEA-106.

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A one and a two…

The Center for Devices and Radiological Health’s (CDRH) Standards and Conformity Assessment Program (S-CAP) encourages medical device sponsors to use FDA-recognized voluntary consensus standards in their product submissions.  Use of voluntary consensus standards can reduce regulatory burden, streamline conformity assessment, harmonize requirements globally, and enhance the quality and safety of a device. As part of that effort, Accreditation Scheme for Conformity Assessment (ASCA) is designed to reduce FDA review time, reduce and/or remove Sponsor guesswork on documentation to provide in a premarket submission, and improve the quality of testing conducted.

ASCA was authorized under section 514(d) of the Federal Food, Drug, and Cosmetic Act (FD&C Act). In accordance with amendments made to section 514 by the FDA Reauthorization Act of 2017 (FDARA), and as part of the enactment of the Medical Device User Fee Amendments of 2017 (MDUFA IV), FDA was directed to issue guidance regarding the goals and implementation of the ASCA Pilot. The MDUFA V reauthorization converts the ASCA Pilot to a permanent program.

If a device manufacturer chooses to use an ASCA-accredited testing laboratory to conduct testing for premarket submissions to the FDA, the device manufacturer includes an ASCA declaration of conformity, an ASCA Summary Test Report and a cover letter that indicates that the submission contains ASCA testing as part of their premarket submission. For testing conducted under ASCA, the FDA will have confidence in the testing laboratories’ test methods and results and does not intend to request additional information regarding testing methodologies.

ASCA includes FDA-recognized consensus standards and related test methods across two scopes: biocompatibility and basic safety and essential performance. FDA selected these categories of standards because they are used for the majority of devices and are frequently associated with FDA requests for additional information.  For the nine most common biocompatibility test methods, there are nine ASCA Summary Test Report templates that are used to document results.  There is one ASCA Summary Test Report template available to document results for basic safety and essential performance.

2022 Device Submissions with ASCA Testing

According to the ASCA 2022 Annual Report, the “FDA received five submissions that contain ASCA testing: four with basic safety and essential performance testing and one with biocompatibility testing. The following conclusions were drawn from these submissions:

• The ASCA Summary Test Reports used the format provided in the ASCA standards-specific guidance documents and the declarations of conformity and Summary Test Reports included all critical data and testing conditions.
• FDA reviewers had greater confidence in the ASCA testing results, and because the ASCA Summary Test Reports were complete and because the internal FDA review checklists use a similar format, reviewers were able to conduct the conformity assessment elements of the device reviews efficiently.
• In one submission, a device sponsor used ASCA testing for one test (60601-1) and non-ASCA testing for another, similar test (60601-1-2). The results showed that the ASCA test review found zero deficiencies and the length of the report was one-tenth the length of a typical complete test report. The non-ASCA testing found four deficiencies (one major) and the report was approximately five times the length of the report with ASCA testing.”

Using an ASCA-accredited testing laboratory to produces test results using the ASCA template may reduce the need for a lead reviewer to request consultations on a submission and reduce the size of the report submitted, thereby saving time on during the premarket review.  FDA recently shared some statistics on the impact of ASCA during the FDA Small Business Regulatory Education for Industry (REdI) Annual Conference held on June 5-9, 2023.  Using an infusion pump as an example, the review time for six biocompatibility tests and electrical safety/EMC testing would go from approximately 21 hours to 3 hours, with no need for an additional consultation.

As industry is always looking for ways to improve speed to market and create more predictable timelines for regulatory submission, ASCA may provide that advantage, at least when it comes to biocompatibility and basic safety and essential performance. We look forward to reviewing the 2023 Annual Report when published to see if there are more statistics on submissions using ASCA.

On June 8, 2023, bipartisan legislation creating a new category of animal feed ingredients, named zootechnical animal food substances, was introduced.  This legislation, named the Innovative Feed Enhancement and Economic Development Act (Innovative FEED Act), is an effort to create an approval process for ingredients with environmental or food safety claims as food additives rather than as animal drugs. On June 15, 2023, an amendment modeled after the Innovative FEED Act, was proposed as an amendment to S.1844 – Animal Drug and Animal Generic Drug User Fee Amendments of 2023.

The proposed legislation appears to be an effort to resolve issues created by FDA’s Center for Veterinary Medicine’s (CVM) interpretation of the Federal Food, Drug, and Cosmetic Act (FDC Act) definition of food.

In September 1998, CVM published Policy and Procedures Manual (PPM) 1240.3605, Regulating Animal Foods With Drug Claims, which provides guidance on how CVM regulates substances for animals.  Under CVM’s PPM, nutritional ingredients or products with claims of an intended effect on the structure or function (structure/function claims) of an animal’s body would usually be regulated as animal feed or food (“regulated-as-foods”).  Nutritional ingredients or products with production claims and non-nutritive ingredients or products with structure/function claims would be regulated as animal drugs (“regulated-as-drugs”).  CVM’s interpretation, as expressed in the PPM, has severely limited development of animal feed ingredients with benefits for the environment and other benefits.

On October 18, 2022, CVM held a virtual listening session on the regulation of animal foods with certain types of claims. CVM invited the public and stakeholders to comment on FDA’s regulation of animal foods with certain types of claims, including claims of environmental benefits (e.g., reduced greenhouse gas emissions from animal digestive processes), enhanced animal health, and productivity, as well as claims about an effect on the animal microbiomes.  According to CVM, these claims would constitute drug claims and, therefore, animal foods with these types of claims would be regulated as animal drugs subject to a time-consuming and expensive premarket approval process. CVM held this listening session to get feedback on how it could modernize or improve PPM 1240.3605, what challenges the current approach presents, and what additional types of claims or ingredients should be considered.  CVM maintained that, without new legislation, it does not have the authority to regulate products with these types of claims as feed ingredients.

The proposed amendments to the FDC Act would provide CVM with the needed authority.  They establish a new category of substances, called zootechnical animal food substances, which act in the animal’s gut to provide health benefits, reduce emissions, or address human food safety concerns.  New FDC Act § 201(tt) would define zootechnical animal food substance, in relevant part, as a substance intended to:

(i) affect the byproducts of the digestive process of an animal;

(ii) reduce the presence of foodborne pathogens of human health significance in an animal intended to be used for food; or

(iii) affect the structure or function of the body of the animal, other than by providing nutritive value, by altering the animal’s gastrointestinal microbiome.

The category is limited to substances that achieve their “intended effect by acting solely within the gastrointestinal tract of the animal,” and does not include substances intended to diagnose, cure, mitigate, treat, or prevent a disease, hormones, and ionophores.  The proposed definition also specifically excludes substances approved as a drug under FDC Act § 512, conditionally approved under FDC Act § 571, indexed under FDC Act § 572, or for which “substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.”

These zootechnical animal food substances will be deemed food additives (under FDC Act § 201(s)) subject to approval  under amended FDC Act § 409.  In addition to information about safety, the petition for approval of a zootechnical animal food substance would need to  include data to support the claimed effect of the zootechnical animal food substance.  Furthermore, the label for the zootechnical animal food substance would need to include the statement: “Not for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in animal.”

The creation of the new category of animal food additives is intended to provide a route to market for zootechnical animal food substances that is faster than the animal drug approval route and has broad support by industry and trade associations.  Although the FDC Act describes a timeline for FDA’s review of food additive petitions, this timeline often has not been met without repercussions for FDA.

We will be monitoring further developments related to this legislation, as well as other developments concerning the issues brought up during the listening session in 2022.

Last fall, we blogged about the process FDA uses to review allegations of regulatory misconduct against device manufacturers, suggesting greater transparency on the FDA process was needed (see here).  FDA now seeks comments on this very program to support its continued collection of information as required under the Paperwork Reduction Act.  On June 12, 2023, FDA issued a public notice to solicit comments on the information collection related to the voluntary submission of allegations of regulatory misconduct to CDRH.  Specifically, FDA invited comments on:

1. Whether the proposed collection of information is necessary for the proper performance of FDA’s functions, including whether the information will have practical utility;
2. The accuracy of FDA’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Ways to enhance the quality, utility, and clarity of the information to be collected; and
4. Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.

Any comments to the public notice must be submitted by August 11, 2023.

FDA’s Collection of Information

As noted in our prior blog post, FDA requests that the following information be submitted with each complaint to help the Agency assess an allegation:

• Name of the company;
• Address and telephone number of the company;
• Name of the device and model;
• Lot/serial/part numbers;
• Unique Device Identifier (UDI); and/or
• Recall numbers.

FDA also requests a “detailed description of the allegation with any available supporting documentation.”  In our experience, the more detailed the documentation that accompanies the submission, the more likely FDA will follow-up on the submission.  We have seen companies submit screenshots of social media sites making misleading promotional claims, pictures of violative product labeling, and evidence of damaged or uncalibrated manufacturing equipment.

Supporting information is critical to illustrate the specific points of regulatory misconduct.  Companies typically already have this information collected internally, well before contemplating a voluntary submission to FDA, so it is not overly burdensome to collect the information.  More importantly, the proposed collection is necessary for FDA to identify the offending manufacturer and confirm its regulatory misconduct.

Estimate of Burden

In the public notice, FDA estimates that it receives 2,500 voluntary submissions a year, and that it takes FDA an average of 15 minutes to respond to each submission.  This statistic is quite disheartening.  Companies labor over the initial decision of whether to submit an allegation to FDA, and even after deciding to take action, dedicate significant resources to prepare a thoughtful submission, with supporting documentation, for FDA consideration.  FDA’s template responses appear to be generated automatically to simply acknowledge receipt and assign a document number (hardly a 15 minute endeavor).

We understand that 15 minutes is simply an estimate of the average time it takes FDA to review each submission, but it suggests nothing more than a cursory glance, if at all, on those submissions that allege, with supporting documentation, very serious offenses akin to those that have been cited in warning letters and 483s.  Further, it is hard to reconcile the 15 minute per response estimate with FDA’s recommendation to check on the status six months after an allegation has been submitted to FDA.

We can only conclude that the estimate of burden is grossly under-representative of efforts FDA should be taking to consider the information submitted to FDA under this program.

Ways to Enhance Information

There is little transparency in how FDA prioritizes and reviews the information submitted to it.  We understand that FDA prioritizes review based on the level of potential risks, as assessed by the allegation type and completeness of information.  FDA does not define, however, when information submitted is deemed to be “complete.”

To provide transparency to industry, and to assist FDA prioritize and conduct its review, FDA should bolster its website to include specific examples of appropriate information to include in voluntary submissions.  FDA could present this information in a Frequently Asked Questions (FAQ) section, like it uses on other webpages describing its programs.  Not only would this streamline the collection process, but it would enhance the quality, utility, and clarity of the information that is submitted to FDA to support allegations of misconduct.

Companies may decide to hold-off on private litigation against a non-compliant competitor to allow FDA to first address areas of public health concern.  Without any transparency on the process, however, companies do not know whether FDA has taken action, intends to take action, or does not deem the allegation meritorious.  Disclosure of this information, even in a redacted format, would further FDA’s public health mission and keep industry aware of, and compliant with, areas of urgent concern.  Under the current process, FDA recommends waiting six months after submitting the allegation(s) to submit a Freedom of Information Act (FOIA) request for related records.  As we discussed in our prior blog post, there needs to be a better way to understand the outcome of FDA’s review.  Those who submit an allegation should be notified directly, not asked to go through a laborious (and sometimes unfruitful) process of submitting a FOIA request to only receive redacted pages.

Ways to Minimize Burden of Information Collection

FDA currently accepts voluntary submission of allegations of regulatory misconduct through electronic form, email, or regular mail. There are drawbacks to the current communication channels: 1.) The electronic form does not allow for attachments; it requests that you separately email any attachments; 2.) We have usually received a same day acknowledgment to our email submission and no substantive follow-up; and 3.) It is not known how long it would take FDA to respond to allegations via regular mail.

For these shortcomings, we suggest the adoption of the CDRH Customer Collaboration Portal in its efforts to receive, track, and provide updates on the status of any voluntarily submitted allegation(s). In our experience, the portal has the ability to accept supporting documentation in the form of PDF attachments, no larger than 1 GB. That would create a central location for all documents and information regarding the allegation. Unlike the current state, which is to submit a FOIA request and receive redacted information six months (at the earliest), the CDRH Customer Collaboration Portal would allow a submitter to track FDA’s progress. We hope the status is more than just an “Under Review” label. Finally, a submitter would receive the potential benefit of more tangible information.

In conclusion, there is merit in FDA’s collection of information involving allegations of regulatory misconduct, but it can be improved. We recommend companies submit comments to FDA on the areas FDA can change to improve the user (submitter) experience and provide greater transparency on the outcomes of the information collected. Without improvements, companies may decide that this program is not a useful pathway for addressing regulatory misconduct, and the quality of information FDA receives will only decline.

HP&M’s James E. Valentine Named Top Lawyer Under 40; Only Food and Drug Lawyer Selected

Hyman, Phelps & McNamara, P.C. (HP&M) is pleased to announce that Law360 has recognized one of our firm’s Directors, James E. Valentine, as a 2023 Rising Star.  The honor was bestowed on only 183 attorneys, which is awarded to “top attorneys under 40 whose legal accomplishments belie their age.”  James was only one of five life sciences attorneys selected and the only food and drug lawyer to make the list.

Amongst his accomplishments, Law360 considered the role James has played in leveraging little-used pathways to FDA approval for often first-ever drugs to treat rare diseases (e.g., Duchenne, Friederichs’s Ataxia, Sickle Cell Disease, Chagas, ALS).  This includes both forging the application of the FDAMA 115 “single study plus confirmatory evidence” standard as well as expanding the use of accelerated approval for products in conditions outside of cancer.

James’s status as a 15-year champion for bringing patient voices to the table with FDA and industry decision-makers was also considered.  James is recognized as helping fundamentally shift the culture to consider the patient voice as an integral part of drug development.  He is proud to have helped establish the Patient-Focused Drug Development initiative while working at FDA and has since gone on to help organize nearly three-quarters of the 76 externally-led PFDD meetings to date.

We are proud as a firm of this honor and would also like to extend congratulations to all of this year’s Law360 Rising Stars!

HP&M’s Kurt R. Karst Awarded WWL: Life Sciences 2023 Global Elite Thought Leader

HP&M Director Kurt R. Karst was named by Who’s Who Legal: Life Sciences 2023 as one of only 14 “Global Elite Thought Leaders.”  This is an achievement that only around 5% of WWL-listed practitioners were accorded in 2023.  Mr. Karst, a co-author of the FDA Law Blog, provides regulatory counsel to pharmaceutical manufacturers on Hatch-Waxman patent and exclusivity, drug development, pediatric testing, and orphan drugs. He helps clients develop strategies for product lifecycle management, obtaining approval, managing post-marketing issues, and defining periods of exclusivity.

In addition to Mr. Karst, ten other HP&M Directors were tagged as “Recommended” by WWL: Life Sciences 2023:

• Ricardo Carvajal
• Robert A. Dormer
• Jeffrey N. Gibbs
• Paul M. Hyman
• Alan M. Kirschenbaum
• Allyson B. Mullen
• Frank J. Sasinowski
• Jeffrey K. Shapiro
• Anne K. Walsh
• Jeffrey N. Wasserstein

Congratulations to all of the WWL: Life Sciences 2023 awardees!

As we and others closely following drug pricing have predicted, multiple additional lawsuits have followed in the wake of Merck’s challenge to the Inflation Reduction Act (IRA) price negotiation provisions in the D.C. federal district court on June 6 (see our post here).  Since then, complaints have been filed in federal court in Ohio by the U.S. Chamber of Commerce (complaint here), in New Jersey by Bristol Myers Squibb (complaint here), and in Texas by Pharmaceutical Research and Manufacturers of America (PhRMA) and others (complaint here).

Both Merck (maker of Januvia, Janumet, and Keytruda) and BMS (maker of Eliquis and Opdivo) argue that the IRA is unconstitutional under the First Amendment because it compels speech and under the Fifth Amendment because it represents an uncompensated taking. PhRMA’s lawsuit makes a similar Fifth Amendment argument, but adds an Eighth Amendment excessive fines argument based on the exorbitant excise tax penalty, and a “separation of powers” argument—i.e., that Congress may not delegate to an agency the authority to arbitrarily set pricing while “barring judicial review of many decisions critical to pricing determinations under the Act.” PhRMA Complaint at 54.  The U.S. Chamber of Commerce makes all the arguments that the other plaintiffs have made, and also alleges that Congress has no power to levy the excise tax because it “compels” commerce.

September 1, 2023 will be the selection date for the 10 drugs that will be subject to “maximum fair price” ceilings under Medicare Part D starting in 2026.  After that date, we may see lawsuits brought by additional manufacturers whose drugs are on the list and who will then be able to demonstrate the requisite actual or imminent injury to achieve standing.

The Drug Enforcement Administration (“DEA”) has designated precursor chemicals, including 4-piperidone just last month, used in the illicit manufacture of controlled substances as List I and II chemicals over the years as “laboratory supplies,” but has never revised or updated its Special Surveillance List.  Until now.  The Comprehensive Methamphetamine Control Act of 1996 (“MCA”) amended the Controlled Substances Act (“CSA”) by providing for the Attorney General to publish a Special Surveillance List of chemicals and other “laboratory supplies” used in the clandestine manufacture of controlled substances.  21 U.S.C. § 842(a).  “Laboratory supply,” as defined by the MCA, is “a listed chemical or any chemical, substance, or item on a special surveillance list published by the Attorney General, which contains chemicals, products, materials, or equipment used in the [illicit] manufacture of controlled substances and listed chemicals.”  21 U.S.C. § 842(a).

DEA published the Special Surveillance List on May 13, 1999.  Special Surveillance List of Chemicals, Products, Materials and Equipment Used in the Clandestine Production of Controlled Substances or Listed Chemicals, 64 Fed. Reg. 25,910 (May 13, 1999).  Then last week DEA issued a notice with proposed updates to the Special Surveillance List.  Special Surveillance List of Chemicals, Products, Materials and Equipment Used in the Manufacture of Controlled Substances and Listed Chemicals, 88 Fed. Reg. 39,479, (June 16, 2023).  DEA’s notice of proposed updates is available here.

In determining updates to the Special Surveillance List, DEA consulted multiple levels of law enforcement, forensic laboratory authorities, intelligence groups, drug profiling programs and international organizations.  The agency reviewed clandestine lab seizure and drug profiling reports on illicit drug production methods as well as chemicals and their role in the clandestine manufacture and synthesis of controlled substances and listed chemicals.  DEA also considered legitimate uses of the chemicals.  Id. at 39,480.

The updated list, as with the original list, would include chemicals used in the manufacture of methamphetamine, PCP, and LSD, but also those being used now in the production of fentanyl, amphetamine, and other controlled substances and listed chemicals.  Id.  So, in addition to current List I and II chemicals, and the chemical mixtures and over-the-counter products and dietary supplements containing them, the Special Surveillance List would include 28 additional chemicals.  Id. at 39,481.  DEA would remove hypophosphorus acid and red phosphorus from the Surveillance List because as List I chemicals they are automatically included as laboratory supplies.  Id.  The Special Surveillance List has always included hydrogenators, tableting and encapsulating machines and 22-liter heating mantels, but DEA is proposing to specifically add “tableting machines, including punches and dies.”  Id.

DEA notes that the Special Surveillance List serves several purposes.  The list informs about the potential illegal uses of the listed chemicals and other items.  It also reminds that civil penalties of up to $250,000 (with inflation, now $470,640) may be imposed under 21 U.S.C. §§ 842(a)(11) and (c)(2)(C) on businesses who distribute or export a laboratory supply with reckless disregard for the illegal uses to which it will be put. Id. at 39,480. If manufacturers, distributors and others are not already doing so, they should take this opportunity to incorporate monitoring their distribution of chemicals, products, materials and equipment on the Special Surveillance List into their due diligence policies and procedures.

While the CSA does not require notice and comment for revisions of the Special Surveillance List, DEA is providing notice and comment of the proposed changes because the list has never been updated.  The agency will accept public comments on or before July 17th.

FDA has been clearing over-the-counter (OTC) in vitro diagnostic (IVD) tests nearly since the beginning of its premarket regulation of devices.  The first OTC IVD cleared by FDA was a qualitative dipstick urine glucose test in 1977, followed shortly thereafter by the first OTC pregnancy test clearance in 1978.  In the intervening decades, FDA has cleared approximately 1,200 OTC IVDs.  Though there has been a large number of OTC IVD clearances and decades of experience reviewing OTC IVDs, the bulk of OTC IVD clearances fall in just a few categories, such as pregnancy tests, drugs of abuse tests, and glucose monitoring devices.  FDA has cleared very few novel OTC IVDs.  In fact, in FDA’s entire history of OTC IVD regulation, according to FDA’s OTC IVD database, there has only been four de novo authorizations for OTC IVDs, of which three were granted to 23andMe for home collection of samples tested at a central laboratory, not home testing itself.

FDA has repeatedly voiced its support of OTC and home testing, particularly in the context of the COVID‑19 pandemic in which the value of home diagnostic testing has been undeniable.  Regarding COVID-19, Tim Stenzel, Director of CDRH’s Office of In Vitro Diagnostics, has stated that “in-home testing and home collections is a top priority” (June 2020 FDA Virtual Town Hall); “obviously home over-the-counter tests including rapid antigen tests are a high priority” (February 2021 FDA Virtual Town Hall).  FDA hailed its authorization of the Lucira OTC home test for influenza and COVID-19 as “underscor[ing] the Agency’s continued commitment to increase availability of accurate and reliable at-home diagnostic tests” (April 2023 FDA Update to CDC).

Ironically, Lucira filed for bankruptcy earlier this year; its CEO cited a “protracted [FDA] authorization cycle time” as a factor in the firm’s failure.  FDA, in turn, filed its own statement “to address misinformation” (see FDA’s statement here).  This type of public spat does not instill confidence in companies developing or investing in OTC IVDs.  Notably, FDA did not grant marketing authorization of an OTC COVID test until June 6, 2023, when Cue Health finally received de novo authorization.

Most recently, Jeff Shuren, CDRH Director, gave a speech at the 2023 Food and Drug Law Institute (FDLI) annual conference in which he identified facilitating “availability of and access to existing and novel home-use medical technologies” as a strategic priority for 2022-2023 to advance health equity.  He also identified “Next-Generation Home-based Testing Technologies, including new IVDs, Digital Lateral Flow Readers, and Reporting Technologies” as an opportunity to “extend care from the hospital and clinic into the home setting.”

Despite CDRH’s professed support for and “prioritization” of OTC home diagnostics, IVD sponsors of OTC home tests often run into strong resistance from CDRH in attempting to get such tests cleared.  This is particularly true if the test does not fall into one of the few established categories (e.g., pregnancy, glucose, drugs of abuse).

There are several factors that increase the difficulty of obtaining an OTC home clearance or authorization for an IVD, as opposed to a test that is done in a clinic following a physician order.

To obtain clearance of an OTC home IVD, a sponsor must provide the usual suite of analytical and clinical validation that would be required for any IVD, demonstrating adequate repeatability, stability, sensitivity, specificity, and so on.

On top of this standard IVD validation testing, a sponsor must perform its clinical validation in the hands of the intended user (i.e., lay users).  Additionally, the sponsor must demonstrate that the user can determine that they are an appropriate candidate for the test based on the labeling (e.g., have the relevant symptoms or fall within the correct demographics); correctly follow instructions to self-collect an adequate specimen; perform the test correctly according to instructions; interpret the results correctly; and understand the significance of the results and appropriate next steps (e.g., seeking treatment).  This usually requires human factors or usability testing and labeling comprehension testing.

However, even if an IVD sponsor is willing and able to provide robust data addressing all of these topics, in our experience, CDRH is nevertheless concerned about whether the test, by the nature of its intended use, is appropriate for consumers.  CDRH may express concerns that patients will not understand when the test is appropriate for them, that they will misinterpret or overly rely on results, or that they will forego or delay visits to a doctor.  Some of the concerns expressed by FDA today about home testing derive from paternalistic views that were debunked years ago in the context of HIV home testing.  See Steven R. Salbu, HIV Home Testing and the FDA: The Case for Regulatory Restraint, 46 Hastings L.J. 403 (1995).  FDA also expects that the performance in the hands of consumers will essentially match the results when the test is performed in the laboratory.

The stringency of these requirements makes it less appealing for IVD sponsors to undertake the burdensome testing necessary for an OTC home test because, even if adequate data are collected, CDRH can – and in our experience, does – still raise roadblocks preventing clearance.  This makes seeking clearance of an OTC home test a risky business endeavor.  As a result, novel IVD manufacturers are more likely to start with clearance of a prescription test intended for use in clinical settings with the thought that one day in the future, after several years of clinical experience demonstrating safe use, they may return to FDA to seek clearance of an OTC version.  However, even years of experience with the test in a lab setting does not mean that the OTC version will receive a favorable reception.

Companies are also experiencing significant regulatory obstacles with another related category: home collection devices.  Home tests of course require the use of devices that allow consumers to collect samples at home.  Home collection devices can also be used to obtain samples that are sent to central laboratories for processing.

Home collection devices are – or, at least were – typically cleared separately from the assays with which they are used.  Early in FDA’s clearance of home collection devices, the clearances were not specific to any analyte or clinical application.  A device such as the widely-used Vacutainer would be cleared for use with blood, without trying to limit the diagnostic uses of the blood.  However, in recent years, particularly for blood collection devices, FDA has required that collection device clearances be restricted to specific clinical applications.  Therefore, instead of a general tool-type indication for collection of a sample matrix (e.g., saliva, capillary blood), separate clearances are often required for each application (e.g., HbA1c, diagnosis of a particular virus, etc.).  As a thought experiment, consider what the state of the U.S. health care system would today be if each collection device had to be cleared for each clinical use separately.  (FDA has indicated that after a manufacturer has shown that a collection device is suitable for numerous different tests it could then have generic labeling, but that is obviously a monumental task.)

As a result, not only does each assay require analytical and clinical validation and clearance, but the home collection device paired with the assay may also require separate clearances and clinical validation for each application.  This is particularly true for home collection devices, where CDRH requires more data to demonstrate the ability of a lay user to collect an adequate sample for each individual test.

This approach to regulation of collection devices is overly burdensome and it discourages innovation.  Collection device manufacturers that develop innovative collection device designs, intended to make it easy for a lay user to collect an adequate sample of the correct volume and quality, are often thwarted when they approach the Agency seeking clearance.  Once manufacturers learn of the requirement to seek a new clearance for every new clinical application, the FDA process becomes even more daunting and the financial returns less attractive.  This is especially true for collection device manufacturers that do not also manufacture diagnostic tests; seeking clearance would require the manufacturer to anticipate the clinical applications for which their IVD manufacturer customers may want to use their collection device, or partner with kit manufacturers early in the process.

Requiring home collection devices to be cleared analyte by analyte should not be necessary in most situations.  Collection devices are designed to collect a specimen in a particular volume and with a particular storage method (e.g., dried blood, in viral transport media).  As with other devices with tool-type indications, manufacturers of home collection devices should be able to obtain tool-type indications for collection of specimens within certain parameters, outlined in labeling (we know, however, that CDRH has moved away from tool-type indications for all sorts of devices, see our prior post regarding surgical robots here).  Then, IVDs, including OTC home tests, can be validated for use with the home collection device if it collects an appropriate specimen with the requisite volume.  The sample matrix and type are already validated through analytical and clinical validation of the assay; it is unnecessary and duplicative to require separate analyte and application-specific validation for the collection device itself.  While there may be some particular analytes where extra testing is warranted due to unique concerns about a collection device, that should not be the default position.

In Dr. Shuren’s recent statements at the Food and Drug Law Institute’s Annual Conference, he declared that home access to healthcare, including diagnostics, was a priority.  The paucity of different types of OTC tests and the struggles of home collection devices belies, at least so far, this pronouncement.  If FDA is serious about making access to OTC home diagnostics a priority, it needs to provide clear, comprehensible, specific, and reasonable guidance to industry about the necessary validation testing.  If these guidelines are satisfied, regardless of the novelty of the intended use for the IVD, CDRH should be willing to clear the IVD.  Additionally, it needs to rethink the currently burdensome approach to clearance of home collection devices, to pave the way for clearance of innovative collection devices designed to make it easier for a lay user to self-collect adequate samples.

In considering OTC IVDs and home collection devices, FDA needs to give more weight to the benefits of these products.  COVID illustrated the significant public health value of at-home tests.  They can increase access to health care, and advancing access is itself an FDA goal.  They can also improve health equity, another FDA goal.  And they can reduce costs, which is a significant public health benefit.  Indeed, FDA acknowledges all of these benefits in its recent request for comment on “Increasing Patient Access to At-Home Use Medical Technologies,” including IVDs.  FDA is accepting comments on this topic, including questions like “How can the FDA support the development of medical technologies, including digital health technologies and diagnostics, for use in non-clinical care settings, such as at home?” through August 30, 2023.  A link to FDA’s announcement and the public docket can be found here and here, respectively.

On June 1, CDRH announced that it is seeking public comment on questions regarding how CDRH can facilitate access to medical technologies designed for use outside of traditional clinical settings, particularly in the home.  According to the announcement, enabling patients to access medical devices beyond traditional clinical settings can help close the healthcare gap by delivering care “directly to patients, wherever they are – at home, at work, in cities, in rural communities.”

Background – Strategic Priority to Advance Health Equity

In CDRH’s 2022-2025 Strategic Priorities, “Advance Health Equity” is listed as one of the three strategic priorities along with “Promote a Modern and Diverse Workforce” and “Enhance Organizational Agility and Resilience.” Embracing a sweeping vision, CDRH foresees that medical technologies, including digital health technologies, have the potential to bridge the healthcare gap and promote improved healthcare, enhanced quality of life, and overall wellness for everyone.  To advance health equity, CDRH states “Technology, including digital health technology, should be designed and targeted to meet the needs of diverse populations.”

As acknowledged in the Strategic Priorities document, certain demographic groups may have limited access to necessary treatments and diagnostics.  CDRH recognizes in the Strategic Priorities document that “Lack of access exists for a variety of reasons, including that necessary treatments and diagnostics are not available to the specific demographic groups, or treatments and diagnostics needed by those groups simply do not exist.”  As noted by CDRH, there are “innovation deserts” when it comes to conditions that primarily affect diverse populations.

At-home medical technologies hold promise in advancing health equity, because they can bring healthcare to patients wherever they are located, lowering healthcare costs and advancing access.  These technologies can also enable the participation of diverse populations in clinical studies and other initiatives aimed at collecting public health data.

FDA defines a Home Use Device as “a medical device intended for users in any environment outside of a professional healthcare facility. This includes devices intended for use in both professional healthcare facilities and homes.”  At-home medical technologies include, but are not limited to, monitoring and wearable devices (e.g., measure and track vital signs such as continuous glucose monitor, ECG monitor, blood pressure monitor, fall detector, actigraphy, etc.), telemedicine and telehealth solutions (e.g., enable individuals to have virtual consultations with healthcare providers through video calls or online platforms), at-home diagnostics (e.g., pregnancy tests, blood glucose monitoring systems, COVID-19 tests, etc.), and remote or wearable patient monitoring devices (e.g., non-invasive remote monitoring devices that measure or detect common physiological parameters and non-invasive monitoring devices that wirelessly transmit patient information to their healthcare provider or other monitoring entity).

The CDRH Strategic Priorities state that CDRH will “take steps to leapfrog the development of high-quality, safe, and effective health technologies, including digital health technologies.”  CDRH seeks to advance health equity, with a focus on medical technologies, by:

• Facilitating availability of and access to medical technologies for all populations,
• Empowering people to make informed decisions regarding their healthcare,
• Supporting innovation of novel and existing technologies that address health inequities, and
• Reducing barriers to increase participation by diverse populations in evidence generation.

To accomplish these goals, CDRH says it will aim to increase opportunities for participation by diverse populations in clinical trials; develop a framework for when a device should be evaluated in diverse populations to support a device premarket submission; and collaborate with patients, healthcare providers, industry, and payers to advance solutions that promote equity and access to care.  Implementation of these objectives would be welcome, given that in practice CDRH reviewers have not, in our experience, been particularly receptive to arguments that home use devices provide significant benefits precisely because they can improve access to health care.

CDRH’s Request for Public Comment

CDRH is now taking the first step to collaborate with stakeholders, as stated in the Strategic Priorities, by seeking comments from the public on the following questions:

• How can the FDA support the development of medical technologies, including digital health technologies and diagnostics, for use in non-clinical care settings, such as at home?
• What factors should be considered to effectively institute patient care that includes home-based care?
• What are ways that digital health technologies can (a) foster the conduct of clinical trials remotely and (b) support local or home-based healthcare models?
• How can the FDA facilitate individuals accessing medical technologies in remote locations when they are unable or unwilling to access care in clinical settings?
• What processes and medical procedures, including diagnostics, do you believe would be ideal for transitioning from a hospital and/or healthcare setting to non-clinical care settings, for example, home use or school/work use?
  • What medical technologies could be ideal to transition to use in non-clinical settings? What aspects of those technologies could potentially benefit from modifications to optimize use in non-clinical settings?
• What design attributes and user needs would facilitate the use of medical technologies, including diagnostic and therapeutic devices, for use in a non-clinical setting, for example home use?
• For digital health technologies, what design attributes could better facilitate their use by diverse patient populations outside of a clinical setting? What other factors are important to consider which may improve use and acceptance of different digital health technologies by diverse patient populations (for example, older adults, non-English speakers, lower literacy)?
• What potential methods and strategies for evidence generation and data analysis could facilitate the regulatory review of medical technologies intended to be used in non-clinical settings, for example home use or school/work use?

We encourage stakeholders with medical technologies – including existing products that can be used in non-clinical settings – that have the potential to increase access to care, to provide their perspectives on these questions.  FDA may consider the public comments in developing a regulatory framework or policy to increase patient access to at-home use medical technologies.  We also note this CDRH’s effort aligns with the FDA-wide effort to utilize digital health technologies that are discussed in recent draft guidance documents as follows:

• Draft Guidance on Decentralized Clinical Trials for Drugs, Biological Products, and Devices. We previously blogged on the draft guidance here. For those who are interested in learning more about the decentralized clinical trial draft guidance, please check out the FDA’s webinar on June 20, 2023.
• Draft Guidance on Digital Health Technologies for Remote Data Acquisition in Clinical Investigations.
• Draft Guidance on Electronic Systems, Electronic Records, and Electronic Signatures in Clinical Investigations Questions and Answers

The public comments for the questions posed by CDRH above may also inform FDA’s finalization of these draft guidances.

For those who are interested, comments should be submitted to the docket (FDA-2023-N-1956) by August 30, 2023.

On June 2, 2023, FDA issued the latest version of its guidance on Requests for Feedback and Meetings for Medical Device Submissions: The Q-Submission Program. The document provides minor updates on procedures, incorporating recent developments and experiences in how FDA interacts with industry.  For example, FDA expressly notes that feedback on EUAs is outside the pre-submission process, and pre-submission meetings include videoconferences.  We discuss several of the notable points in this post.

Timing Considerations

Traditionally, pre-submission meetings have occurred 60 – 75 days from FDA receipt of submission. Now FDA says that “[m]eeting dates between 70 – 75 … days are most likely to be feasible.” While the new time frame is within the old timeframe, it is a shift to the later side of the range and should be considered for planning purposes. The language also includes a greater level of uncertainty as compared to the previous 60 – 75-day estimate, and submitters should be aware that FDA may not always be able to meet its 70 – 75-day estimate. While this is not new, the language in the guidance may allow for this to occur more frequently. Sponsors will, however, have transparency as to the timing, thanks to FDA’s updates to the CCP, as discussed in our prior post (here).

Administrative Content

Beyond the table in the guidance document that summarizes Q-Sub types, method of feedback offered by each, and timeframe of written feedback or holding a meeting, FDA has taken the extra step to highlight that a submitter “should clearly indicate what type of feedback” is being requested. FDA has warned that failure to do so could result in feedback and meetings not being provided in a timely manner. This is a minor, but important, element and is a new consideration under administrative content for those Q-Subs with an option for the method of feedback (here). In fact, this element is incorporated in the new pre-sub eSTAR, which FDA recently announced (here).

Predetermined Change Control Plans

As our readers will know, FDA recently issued a draft guidance related to Predetermined Change Control Plans (PCCPs) (see our prior post here). In the revised Pre-Submission Guidance, FDA “highly recommends” submitting a pre-submission to obtain feedback on a PCCP, if a sponsor is considering including one in a future pre-market submission. As discussed in our prior post, PCCPs allow for modifications, within the bounds of the PCCP, following FDA authorization of the PCCP. An approved or cleared PCCP describes planned changes that may be made to the device that otherwise would have required a supplemental submission. FDA makes it a point to now encourage the pre-submission as a mechanism to work with FDA in the development of a PCCP and as a way to streamline premarket review. As noted in the PCCP guidance, however, PCCPs are not authorized through a pre-submission.  Such authorization is only done through a premarket submission, such as a 510(k) or de novo.

Draft Guidance

Finally, as part of MDUFA V, FDA has committed to issuing an updated draft of this Q-Sub guidance, by March 31, 2024. The new, draft guidance will include information to assist applicants and review staff in identifying circumstances in which informal communication is more appropriate than a pre-sub for an applicant’s question. In doing so, we hope FDA will adopt an open mind when it comes to expanding the topics on which it will consider providing informal feedback. We see this as being a “less burdensome” approach and a way to strengthen FDA’s vision of providing patients and providers with timely access to medical devices by providing real-time feedback.

Like other guidance documents that preceded it, the draft guidance will be open to the public for comment. Once the draft guidance document has been closed to public comment, FDA intends to issue a final guidance within 18 months. Once final, the guidance will be implemented and review staff will be trained.

The long-running saga of FDA regulation of laboratory-developed tests (LDTs) has taken yet another new turn.  In the most recent Unified Agenda, which is a list of planned regulatory actions published semi-annually by the Office of Management and Budget (OMB), FDA announced its intent to issue a proposed rule “to make explicit that laboratory developed tests (LDTs) are devices under the Federal Food, Drug, and Cosmetic Act.”  The Notice of Proposed Rulemaking (NPRM) for LDTs is scheduled to be published in the Federal Register in August.

Whether we will actually see a proposed rule in August is more than a little uncertain, however.  Take for example FDA’s Unified Agenda announcement for ISO 13485 harmonization, which first occurred in the Spring of 2018 and was re-issued until a proposed rule was published in early 2022 (see our post here).  Thus, simply because the Unified Agenda targets August, it doesn’t necessarily mean it will be August or even this year.  The difference between a proposed LDT rule and ISO 13485 is that the Unified Agenda categorizes LDTs as “Significant” priority as compared to ISO 13485, which was “Non-Significant.”

Timing aside, FDA’s plans should not come as a surprise.  In the wake of Congress’ failure to enact the VALID Act last year, Commissioner Califf and CDRH officials have made public statements affirming the Agency’s intent to take matters into its own hands and initiate LDT rulemaking.  The announcement in the Unified Agenda of a planned NPRM is the most concrete evidence that FDA is moving forward with this plan.

Over the years we have blogged many times on the twists and turns of the efforts to regulate LDTs.  These include FDA’s efforts to use guidance as the vehicle (see posts here, here, and here) and the multiple attempts to pass the VALID Act (see posts here and here).  So far, all of these efforts have been fruitless.  Given the make-up of the House and the aversion to expansion of FDA authority, it seems extremely unlikely that the newest version of the VALID Act, which was introduced in March 2023, will advance in the next two years.  And regulating LDTs through guidance documents is vulnerable to legal challenge on procedural grounds.  See, e.g., ACLA White Paper on LDTs here.  Rulemaking avoids the twin problems of dependency on action by Congress and the legal weakness of imposing substantive legal requirements through guidance.

Of course, the rulemaking process has its own uncertainties.  Once the NPRM is published, the public will have the opportunity to submit comments; given the wide range of stakeholders that would foreseeably be affected by FDA oversight of LDTs, the docket will no doubt be voluminous.  It will inevitably take FDA a substantial period of time to review these comments and incorporate responses in a final regulation.  Before a final rule can be issued, it will be scrutinized both by the Department of Health and Human Services and OMB.  FDA will also need to conduct an economic impact analysis pursuant to Executive Orders 12866 and 13563, which direct FDA to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including economic benefits).  All of this will take time.  And, of course, there is the political calendar.  If there is a change in administration, this process will almost surely be halted immediately, unless the current administration abandons the effort on its own, as it did in 2016 (see post here).

Even if a final rule is issued, that will not be the end of the story.  The NPRM merely says that the regulation would make explicit that LDTs are devices, but what that means and how the existing device framework would apply to LDTs remains a mystery.  Would there be a new regulatory framework, as is proposed in VALID and outlined in FDA’s 2017 discussion paper (see our prior post here), or something different?

Moreover, while rulemaking may shield FDA from some procedural challenges, the imposition of substantive new requirements on clinical laboratories would be very likely to prompt lawsuits on other grounds.  Opponents of LDT regulation received a boost with last year’s Supreme Court decision overturning an agency action based on the “major questions” doctrine, West Virginia v. EPA.  Depending on what happens in the next few weeks in Loper Bright Enterprises v. Raimondo, FDA may also lose the shield of Chevron deference in any litigation.

In sum, the notice of a projected NPRM is not the end of the LDT story, or the beginning of the end, or even the beginning of the beginning of the end.  We still expect to be blogging about FDA’s efforts to regulate LDTs for years to come.

On May 24, Minnesota enacted the Commerce and Consumer Protection Omnibus Bill, Senate File 2744 (SF 2744), which significantly expands the state’s existing drug pricing activities with serious implications for all drug manufacturers, and particularly generic drug manufacturers.

The drug pricing provisions of SF 2744 establish two mechanisms intended to curb rising drug costs: (1) a prohibition on generic drug manufacturers from taking price increases above a specified threshold and (2) a Prescription Drug Affordability Board to identify, review, and establish an upper payment limit on certain high-cost drug products sold in the state.  We address each below.

Prohibition on Excessive Price Increases

The law prohibits manufacturers from imposing or causing to be imposed an “excessive price increase,” whether directly or through a wholesale distributor, pharmacy, or similar intermediary, on the sale of any generic or off-patent drug sold or dispensed to any consumer in the state.  A price increase is considered “excessive” when the increase, adjusted for inflation using the Consumer Price Index (CPI), exceeds $30 for a 30-day supply or course of treatment lasting under 30 days, and:

• 15% of the wholesale acquisition cost (WAC) over the immediately precedent calendar year; or
• 40% of the WAC over the immediately preceding three calendar years.

Importantly, “price increase” is not defined in this statute.  It appears not to mean a WAC increase, because the term WAC is specifically used in defining the price increase triggers, but not in reference to the manufacturer’s price increase.  If a price increase is not an increase in WAC, its meaning is unclear.  Is it an increase in average price, and if so, averaged over what period?  Is it an increase in AWP/SWP?  Best price?  Some other price?  Is the price that in Minnesota only or in the U.S. generally?  The ambiguity in this critical term makes it impossible for manufacturers to know how much they can increase prices without incurring severe penalties, and leaves the law vulnerable to legal challenge for unconstitutional vagueness.

Note also that the thresholds for violating Minnesota’s excessive price increase prohibition are below that which triggers generic drug price increase reporting to the state.  Under Minnesota’s Prescription Drug Price Transparency Act, manufacturers must submit detailed pricing information for any generic prescription drug with a WAC of at least $100 for a 30-day supply or shorter course of treatment for which it increased the WAC by 50% or greater over the previous 12-month period.  In other words, with the enactment of SF 2744, any manufacturer that triggers Minnesota’s price increase reporting for generics will also be in violation of Minnesota law.

Similar to state drug pricing reporting requirements, any manufacturer that takes an excessive price increase will receive notice from the commissioner of health and must submit a drug cost statement to the state attorney general within 45 days of such notice.  The statement must itemize the cost components related to production of the drug, identify increases in materials or manufacturing costs, and provide other information that the manufacturer believes relevant to determining whether a violation has occurred.

A range of steep penalties could befall a manufacturer who violates this prohibition.  After a manufacturer submits (or fails to submit) the required drug cost statement, the AG may petition a court to issue an order to, inter alia:

• compel the manufacturer to provide the required drug cost statement or additional information, including by answering interrogatories, producing documents, or being examined under oath;
• restrain or enjoin the violation, including by requiring drug prices to be restored to a non-violative level;
• require the manufacturer to repay to all Minnesota consumers, including any third-party payers, any money acquired as a result of the violative price increase; or

impose a civil penalty of up to $10,000 per day for each violation.  The statute confuses the issue by providing that “every individual transaction in violation of [the excessive price increase prohibition] is considered a separate violation,” making it unclear whether this is a per-day or per-transaction penalty, and, if the latter, what the transaction is.  SF 2744 also provides a private right of action to enforce the prohibition.

In case some manufacturers decide to pull their products from Minnesota rather than face its excessive price increase prohibition, SF 2744 also prohibits manufacturers from withdrawing a generic or off-patent drug from sale or distribution within the state for the purpose of avoiding the prohibition on excessive price increases.  In other words, a violative manufacturer not only pays penalties, but is also compelled to continue marketing the drug in Minnesota (at a reduced price).  As a separate requirement, a manufacturer that intends to withdraw a generic or off-patent drug from sale or distribution within the state must provide written notice of the withdrawal to the AG at least 90 days in advance.  Failure to comply with either of these withdrawal requirements will subject the manufacturer to a $500,000 penalty.

Prescription Drug Affordability Board

The law also establishes a nine-member Prescription Drug Affordability Board and an 18-member stakeholder advisory council to provide advice to the Board on drug cost issues.  Initial appointments to both the Board and advisory council will occur by January 1, 2024.

The Board, in consultation with the advisory council, is tasked with identifying certain prescription drug products based on the following criteria:

• brand name drugs or biologics for which the WAC increased by more than 15% or more than $2,000 during any 12-month period or course of treatment lasting under 12 months, adjusting for changes in the CPI;
• brand name drugs or biologics with a WAC of $60,000 or more per calendar year or course of treatment;
• biosimilar drugs with a WAC that is not at least 20% lower than the referenced brand name biologic at the time the biosimilar is introduced; and
• generic drugs for which the WAC:
  • is $100 or more for a 30-day supply, course of treatment under 30 days, or one unit of the drug if its labeling does not recommend a finite dosage; and
  • increased by 200% or more during the immediately preceding 12-month period, adjusting for changes in the CPI.

The Board is not required to identify all drugs that meet the above criteria and may, in consultation with the advisory council and the commissioner of health, identify drug products that fall outside these criteria but otherwise could create “significant affordability challenges” for Minnesota’s healthcare system or Minnesota patients.  Identified drugs and related price information will be publicly disclosed, except for information the Board determines to be proprietary, not public, or trade secret.

The Board may then initiate a cost review of any such identified drug product.  In conducting the cost review, the Board will determine whether appropriate utilization of the drug has led or will lead to affordability challenges for the state’s healthcare system or patients, which may include a review of the following factors:

• the price at which the drug has been and will be sold in the state, and the price of therapeutic alternatives;
• manufacturer price concessions, discounts, rebates, and drug-specific patient assistance;
• measures of patient access, including cost-sharing;
• the cost to group purchasers based on patient access;
• in the case of a generic or off-patent prescription drug, the extent to which the AG or a court has determined that the price increase was excessive in violation of the prohibition discussed above; and
• any information the manufacturer chooses to provide.

Note that any information submitted by the manufacturer will be publicly disclosed except information the Board determines to be proprietary, not public, or trade secret, based on standards the Board will establish.  There will be a public comment period to develop these standards.  For now, the law makes no reference to the manufacturer’s role in claiming trade secret exemption, but we expect manufacturers to make these claims when submitting any information it considers to be trade secret.

Given the possibility of public disclosure of likely sensitive business information, manufacturers with drugs under review may be reluctant to provide information to the Board.  At the same time, providing this information could influence whether the Board determines that the drug product creates an affordability challenge—a determination which has significant implications for the manufacturer.

If the Board makes such a determination, it will establish an upper payment limit (UPL) that will apply to all purchases of and payer reimbursements for that drug in the state.  The UPL may take effect no sooner than 120 days after the Board publicly releases this decision.  Any person affected by a Board decision may request an appeal within 30 days of that decision, but note that it is the Board who makes the initial decision, hears the appeal, and renders the appeal decision.  The appeal decision is subject to judicial review by a Minnesota court.

The establishment of a UPL is not the only consequence that manufacturers may face for its pricing activities under this provision of SF 2744.  Upon a determination that a manufacturer is noncompliant with the UPL requirements, the AG may pursue enforcement through civil or criminal penalties.

Potential Legal Challenges

In enacting the law, Minnesota lawmakers ignored opposition not only from trade groups like PhRMA and the Association for Accessible Medicines (see here and here), but also organizations including the Minnesota Society of Clinical Oncology, and the Association for Clinical Oncology (here), the Council for Citizens Against Government Waste (here), and the National Taxpayers Union (here).  We expect the Minnesota law to face Commerce Clause, vagueness, and possibly other constitutional challenges, similar to those brought against a generic price gouging prohibition in Maryland that was struck down by the Fourth Circuit in 2018 (see our post here).  For now, we will continue to monitor the law, its future implementing regulations, and any legal challenges as they develop.

“Total Product Life Cycle Advisory Program or TAP pilot — the most exciting thing in MDUFA V. This is about reducing the time and cost and increasing the predictability of going from concept to commercialization.” – Dr. Jeff Shuren

During a presentation at the May 17, 2023 Food and Drug Law Institute (FDLI) Annual Conference, CDRH Director, Dr. Jeff Shuren discussed TAP with enthusiasm.  In the ever-changing landscape of medical device development, FDA is touting steps it is taking that it says will enhance efficiency, foster innovation, and address key challenges faced by developers. He highlighted the following key features of TAP:

An Innovative Approach

To provide proactive support and guidance to medical device manufacturers, FDA has introduced a new CDRH position known as the “TAP Advisor.”  CDRH previously described the TAP as a voluntary program that is intended “to de-risk the medical device valley of death by providing industry with earlier and more frequent interactions with CDRH, more strategic input from stakeholders, and proactive, strategic advice from CDRH to spur more rapid development of high-quality, safe, effective, and innovative medical devices first in the world that are critical to public health.” At the FDLI Annual Conference, Dr. Shuren reinforced this by stating that TAP is about “reducing the time and cost and increasing the predictability of going from concept to commercialization to address the valley of death.”

The striking phrase “valley of death,” is generally understood to refer to the tendency for innovative technologies to fail to reach market, whether due to reimbursement and/or physician or patient preference. Given Dr. Shuren’s propensity to use the phrase, we have yet to see it formally defined by CDRH. According to Dr. Shuren, the TAP Advisor acts as a consultant, engaging with companies to identify key questions, challenges, and areas requiring strategic problem-solving. The TAP Advisor is supposed to serve as a conduit between the company and the FDA review team, facilitating proactive engagement and collaborative discussions.

The following enrollment criteria are used during the current TAP Pilot Soft Launch:

• Devices will be those with a granted Breakthrough Device designation;
• Potential participants will not have submitted a Pre-Submission about the device after being granted a Breakthrough Device designation;
• Devices will be early in their device development process (e.g., have not yet initiated a pivotal study for the device) at time of enrollment; and
• Each potential participant will have a maximum of one device enrolled in the TAP Pilot per fiscal year.

It remains to be seen how FDA would define and actually implement the role of a TAP Advisor. As of March 1, 2023, FDA had enrolled four cardiovascular devices in the TAP Pilot. FDA did not share whether a single TAP Advisor has overseen these four devices, or whether each device has its own TAP Advisor. Also, it is unclear which office within CDRH appoints the TAP Advisor, e.g., center-level, OPEQ-level, or division-level. Review teams already appoint a lead reviewer to each submission and sometimes assign a project manager to an extensive project.  It would be beneficial to understand how the TAP Advisor could actually further improve the interaction with companies to facilitate the FDA’s review beyond what is being done by a lead reviewer, project manager, or review division’s management.

“This is really a potential game changer.” – Dr. Jeff Shuren

Since its pilot launch in January, FDA has enrolled four cardiovascular devices in the TAP Pilot. Dr. Shuren stated that some of the manufacturers of these devices have already experienced more interactions in the past few weeks than they otherwise would have over the entire development course of their devices. (While that observation is intended as praise for the TAP Pilot, it can be considered a sad commentary on the general state of manufacturer-CDRH interactions.) FDA plans to expand the program to other device areas with the following goals:

• In FY 2023, enroll up to 15 products in a “soft launch” in one Office of Health Technology (OHT); selection of the OHT will include consideration of the OHT’s historical number of granted Breakthrough designations, workload, and available staffing and expertise.
• In FY 2024, continue to support products enrolled in the previous fiscal year and expand to enroll up to 45 additional products in at least two OHTs (i.e., up to 60 total products enrolled through FY 2024).
• In FY 2025, continue to support products enrolled in previous fiscal years and expand to enroll up to 65 additional products in at least four OHTs (i.e., up to 125 total products enrolled through FY 2025).
• In FY 2026 – FY 2027, continue to support products enrolled in previous fiscal years and expand to enroll up to 100 additional products each fiscal year within existing OHTs or expand to additional OHTs, depending on lessons learned from FY 2023 – FY 2025 experience (i.e., up to 225 total products enrolled through FY 2026 and up to 325 total products enrolled through FY 2027).
• For FY 2024 – FY 2027, in addition to the considerations above, selection of the OHTs will include consideration of experience from prior years and input from industry and other stakeholders.

Dr. Shuren described the TAP program and other programmatic changes at CDRH as a “potential game changer” in the medical device industry. We welcome CDRH’s effort and hope to see that TAP does, indeed, prove to be a “game changer” – at least for the 325 devices over the next 4 years that participate.  To put this in numerical context, in FY 2022 alone, there were 45 PMAs (original and panel-track supplements), 77 de novos, and 3,759 premarket notification 510(k)s (data from 2^nd Quarter FY2023 MDUFA IV Performance Report).

Enhancing Review Capacity

Recognizing the value of real-time interactions, particularly highlighted during the COVID-19 pandemic, FDA aims to expand review capacity. Dr. Shuren said the ability to engage with developers in near-real-time was essential to expediting the authorization of over 2,800 devices during the pandemic. FDA intends to build on its experience by moving away from rigid stage-gate processes and fostering more fluid interactions throughout the review process.

To accomplish the goals set forth in the TAP Pilot, FDA has made a commitment, as part of MDUFA V performance goals, to implement and track the following quantitative performance measures, starting with fiscal year 2024:

• CDRH will engage in a teleconference with the participant on requested topic(s) pertaining to the TAP device within 14 days of the request for 90% of requests for interaction.
• CDRH will provide written feedback on requested biocompatibility and sterility topics(s) pertaining to the TAP device within 21 days of the request for 90% of such requests for written feedback.
• CDRH will provide written feedback on requested topic(s) pertaining to the TAP device other than biocompatibility and sterility within 40 days of the request for 90% of requests for written feedback.

Understanding Stakeholder Perspectives

FDA has acknowledged the importance of incorporating voices from patients, providers, and payors into the decision-making process and evidence-generation strategies. One mechanism to incorporate payors’ voices is through the Payor Communication Task Force. The task force facilitates communication between device manufacturers and payors. CDRH can engage with the Centers for Medicare & Medicaid Services (CMS) for parallel review – the mechanism for FDA and CMS to simultaneously review the submitted clinical data to help decrease the time between FDA’s approval of a premarket application and the subsequent CMS national coverage determination (NCD). Participating in TAP, and thus having access to payors, offers the potential benefit of less time between FDA’s marketing authorization and coverage decisions by CMS.

Currently, 16 payors including CMS participate in the Early Payor Feedback Program where device sponsors can obtain payor input on clinical trial design or other plans for gathering clinical evidence needed to support positive coverage decisions. If a firm would like to request that one or more participating payor organizations join a Pre-Submission meeting, they may contact FDA prior to submitting a Pre-Submission to CDRH for review by sending an email to CDRHPayorCommunications@fda.hhs.gov.

Strategic Priorities

Besides TAP, Dr. Shuren also noted CDRH’s 2022-2025 strategic priorities during his presentation – “Enhance Organizational Agility and Resilience.” By December 31, 2025, CDRH intends to reduce the average amount of time spent on “at least 10 core business processes” without reducing performance or adversely impacting outcomes. The initial target for this simplification effort is the pre-market phase.

Other CDRH strategic priorities include:

• Reduce Barriers and increase opportunities for participation by diverse populations in evidence generation,
• Support Innovation of novel technologies that address health equity gaps,
• Empower People to make informed decisions regarding their healthcare, and
• Facilitate Availability of and access to existing and novel home-use medical technologies for all populations.

Suggestion

One of the goals of TAP is to publish an assessment of the TAP Pilot on the FDA web site no later than January 30, 2026. For a successful implementation of TAP, we believe it is essential that FDA shares information about TAP in a timely manner. While we recognize it may take a few years to gather information from TAP, 2026 is toward the end of MDUFA V and may be too late for any meaningful insight for participants at that time. We suggest that FDA publish an assessment of the TAP Pilot every year, beginning this fiscal year. Such effort may lead innovative developers to decide whether participation is worthwhile and would provide a mechanism for FDA to assess how well the project is working.

We also suggest outlining any commitments and obligation for device manufacturers once they sign up for TAP. Without knowing the details of the program, it may be challenging for manufacturers to understand the benefits and any potential risks of participating in TAP.

For those who are interested in the TAP, please check out the FDA’s website for the TAP and our previous blog posts on it (here and here).

After about a year without any untitled letters from OPDP, Xeris Pharmaceuticals received an untitled letter for their promotion for Recorlev (levoketoconazole) for misleading safety and efficacy claims.  To quote everyone’s favorite flautist (and TikTok sensation) Lizzo, “it’s about d@mn time!”  (Sorry for the bowdlerization, but we’re trying to make it past everyone’s filter and HR warned us in any event.)

MISLEADING PRESENTATION OF RISK INFORMATION

Recorlev is a drug for endogenous hypercortisolemia in adult patients with Cushing’s syndrome for whom surgery is not an option or was not curative.  It has boxed warnings for hepatoxicity and QT prolongation and is contraindicated in numerous patient populations and has 17 adverse reactions with an incidence of >20%.  In other words, this is a drug that requires serious risk information to be presented.

Apparently, however, Xeris treated Recorlev as if it was “fabulous” (sorry Lizzo, we’ll stop, we promise) and merely noted that monitoring was important for patients on Recorlev and that “Side effects can occur with Recorlev, including some that are serious.”  FDA took issue with that presentation considering that the product has boxed warnings for hepatotoxicity and QT prolongation which can cause death.  Moreover, the presentation of risk information suggested that monitoring would be sufficient to help patients avoid these potentially fatal adverse events.  Would that it were so!  But alas, FDA didn’t think this presentation of risk information was appropriate.  This is so even though elsewhere on the webpage the risk information was presented in the “INDICATION AND IMPORTANT SAFETY INFORMATION” section.  But the presentation did not mitigate the misleading effect of the “Monitoring and side effects” presentation because the boxed warnings were buried in the middle of a consolidated risk section.

MISLEADING CLAIMS ABOUT EFFICACY

On top of the misleading presentation of risk information, which would have been enough for a letter in our opinion, Xeris was apparently feeling fussy, walkin’ in [their] Balenci-ussy’s, tryna bring out the fabulous and made misleading claims about efficacy (sorry, we will stop quoting Lizzo, don’t take our blog away).  Without getting too complicated with numbers (we were promised there was no math in law), Xeris played fast and loose with the clinical trial data by inflating the numbers of who benefitted from Recorlev, such as claiming that 52% of patients had normal cortisol levels at the end of the trial without disclosing that more than half the patients had dropped out of the study due to adverse events or lack of efficacy.  Moreover, they tried to imply that 67% of patients who moved on to the second part of one of their studies had normal cortisol levels by the end of the study.  Which would be true, if one defined “end of the study” as “the end of the titration phase and we’ll ignore the other two phases of the study that would actually get us to the end of the study.”

TAKEAWAYS

First, as should be clear, these bloggers should never be trusted with pop culture.  We will only ruin it.  Second, as we have been stating for years (decades at this point), Important Safety Information (ISI) is not sufficient to present risk information and accurate risk information needs to be presented in the context of the main presentation.  An accurate summary in the ISI is not necessarily going to save an inadequate presentation of risk and safety information in the body of the promotional piece, especially if that presentation is itself inaccurate or misleading.

Lastly, and we’re unsure why this requires repeating, and yet, here we are, don’t mess with the clinical trial numbers.  The reviewers at FDA (unlike your loyal bloggers) are pretty good with numbers and can read the prescribing information.  They know when you’re juking the stats.  We’ve blogged on this previously almost exactly a year ago (we did a slightly better job on not offending pop culture).  Interestingly, in both instances, FDA’s Untitled Letters lead with the allegations about misleading efficacy claims and focus on the numbers presented.

This letter ticks several boxes regarding FDA priorities for enforcement – Xeris launched Recorlev in 2022 and it is a drug with significant risks.

In summary, stick to the basics – present safety information accurately and in the body of the presentation and don’t play around with the numbers and then turn up the music, turn down the lights, [we] got a feelin’ [we’re] gonna be alright.

FDA regulates pet food similar to other animal foods. The Federal Food, Drug, and Cosmetic Act (FDC Act) requires that all animal foods, like human foods, be safe to eat, produced under sanitary conditions, contain no harmful substances, and be truthfully labeled. As anyone familiar with pet (and other animal) food regulation knows, many states require premarket label review and approval and registration of the manufacturer/distributor and/or product for a fee. Moreover, ingredients used in pet food must be approved by FDA, affirmed or listed as Generally Recognized as Safe (GRAS) by FDA, or go through the AAFCO definition process. Many states require that ingredients used in pet food be included in the Association of American Feed Control Officials (AAFCO) Official Publication or included in an FDA regulation, and do not accept ingredients that are self-GRAS.  AAFCO also publishes model regulations, including model pet food labeling regulations which states may adopt.

Over the past few months the Pet Food Institute (PFI) has discussed a new system to federally regulate pet food.  PFI expressed some of its frustration with the current state of regulation of pet food by individual states in its comments on the Center for Veterinary Medicine (CVM) Virtual Public Meeting FDA and the AAFCO Animal Feed Ingredient Definition Process. As described in those comments, “[p]et food makers operate under two different sets of regulatory requirements. In one case, those issued by the FDA and separately those requirements found within each state’s commercial feed law. Enforcement for these regulations also occurs both by federal and state officials.” In its comments, PFI alluded to several instances of inconsistent interpretation across states resulting in labels for a pet product being approved in one state and a stop sale being issued for that same product (label) in another state, creating a “muddled” regulatory landscape and (costly) delays in bringing products to the market. PFI’s president has stated that “[t]he biggest issue is the inconsistency in state interpretation of AAFCO label definitions. Although many states adopt or reference AAFCO’s Model Bill for Pet and Specialty Pet Food, often the nuanced application or understanding of these model regulations by an individual state or individual regulator creates a barrier for compliance in one state, while the same product with the same packaging passes scrutiny in others.” PFI has noted that it is not feasible to develop and label products for an individual state.

PFI’s frustration and concern around the current regulatory process overseen by state governments was discussed during the Petfood Forum 2023 convention in Kansas City, MO. At that event, PFI proposed the creation of a federal system for regulating pet food including the creation of a new center within FDA, the Center for Companion Animal Nutrition, that will have federal regulatory authority over pet food and treats for dogs and cats. Based on various reports in the trade press and other public information, the proposed new framework would preempt and prohibit any state government from assessing registration fees, requiring label reviews and premarket approval, and any other measures to regulate pet food sales at the state level. The proposed new center would regulate only food and treats for dogs and cats. Moreover, PFI proposes to authorize the new center to collect user fees from pet food establishments and for ingredient submissions to support funding of the center.

On May 11, the Animal Feed Industry Association (AFIA) issued its initial comments on the proposed framework.  AFIA highlighted the impact the new framework could have for ingredient suppliers that provide products for all animals, including livestock, dogs, and cats. In AFIA’s view, such suppliers could potentially become subject to “a duplicative, dual registration process at the state and federal levels.” AFIA’s comments expressed interest in finding “common ground.”

On May 30, AAFCO released a statement  concerning the proposed framework. AAFCO does not believe that a federally regulated approach is in the best interest of pets or pet owners and asserts that “State feed programs are more accessible and equipped to inspect and regulate pet food. They have inspectors in the field everyday with eyes on the products, on the local manufactures, and on the distributors and retailers. A single federal regulatory system, without these local state partnerships, cannot have this level of awareness and surveillance in the marketplace to respond and take action on illnesses, recalls and issues quickly and effectively.” The AAFCO comment does not address the inconsistencies between states noted by PFI.

We will be monitoring further developments as industry and federal and state regulators continue to discuss potential changes to the current regulatory scheme for pet food.