In November 2020, we blogged about a decision by the Federal District Court of Maryland dismissing a Federal False Claims Act (FCA) qui tam suit alleging that Forest Laboratories knowingly reported inflated best prices under the Medicaid Drug Rebate Program (MDRP), resulting in underpayment of rebates.  The relator claimed that Forrest knowingly failed to combine (“stack”) discounts on the same drug unit to two different customers when determining best price.  As we reported, on November 5, 2020, the District Court held that the relator could not plausibly plead the requisite scienter because Forest’s interpretation of the ambiguous statute was objectively reasonable and CMS did not warn Forest away from that interpretation through authoritative guidance.

The relator subsequently appealed to the 4th Circuit Court of Appeals but was unsuccessful.  In a January 25, 2022 decision, a three-judge panel upheld the District Court’s decision under a similar rationale.  Still undeterred, the relator requested and obtained en banc review.  Last Friday, September 23, the 4th Circuit issued an en banc per curiam judgment vacating the panel’s decision, and affirming the District Court’s decision by an equally divided court.  (The three-judge panel’s decision was vacated because, under the 4th Circuit’s appellate procedures, the granting of rehearing en banc vacates the previous panel judgment and the rehearing is a review of the lower court’s decision.)  The relator has until December 22, 2022 to petition for certiorari to the Supreme Court.

Apart from its importance in connection with best price stacking, the Sheldon case has been cited in a larger controversy about the intent standard under the FCA.  The 4th Circuit three-judge panel decision relied heavily on the Supreme Court’s decision in Safeco Insurance Co. of America v. Burr, 551 U.S. 47 (2007), which addressed the intent standard under the Fair Credit Reporting Act.  In Safeco, the Supreme Court set forth a two-step analysis for determining whether a defendant exhibited reckless disregard where a statute is ambiguous:  (1) was the defendant’s interpretation objectively reasonable; and (2) was there authoritative guidance that might have warned defendant away from that reading.  Id. at 69-70.  The three-judge panel in Sheldon held that the Safeco test should apply in determining whether a defendant had “knowing” intent under the FCA.  Other circuit courts have disagreed, holding that the defendant’s subjective understanding of an ambiguous statute at the time of the violation can support scienter, regardless of the objective reasonableness of a post-hoc interpretation.  See, e.g., United States ex rel. Phalp v. Lincare Holdings, Inc., 857 F.3d 1148, 1155 (11th Cir. 2017).

In a certiorari petition appealing a 7th Circuit case that also applied Safeco to the FCA, U.S. ex rel. Schutte et al. v. SuperValu Inc., the Petitioner’s reply brief cited the Sheldon case as evidence of a circuit split.  The petitioner wrote:  [T]he Fourth Circuit has now changed positions. That court previously agreed with the [7th Circuit’s] decision below. . . .  The relator, however, sought rehearing en banc, and . . .  the Fourth Circuit granted the petition and vacated the panel opinion pending rehearing.”  The Supreme Court has sought the views of the Department of Justice on this issue.

The controversy over the FCA’s intent standard where the applicable statute or regulation is ambiguous has special relevance when the FCA is used to target inaccurate government price calculations.  The AMP, best price, and ASP statute and regulations are complex and full of gaps and ambiguities.  CMS itself has recognized this by repeatedly inviting manufacturers to use reasonable assumptions where a question is not addressed in the statute, regulations, or CMS guidance.  We are closely following the SuperValu cert. petition, and will post updates in this blog.

As we  previously reported, about two years ago, the Natural Grocers, Citizens for GMO Labeling, Label GMOs, Rural Vermont, Good Earth Natural Foods, Puget Consumers Co-op, and the Center for Food Safety (“Plaintiffs”) filed a complaint against USDA challenging USDA’s the final rule implementing the National Bioengineered Food Disclosure Standard (NBFDS), also known as the BE labeling rule.  Plaintiffs challenged the use of the term bioengineered (rather than GMO or genetically engineered), the limitation of the mandatory disclosure being required only if the food contains detectable modified genetic material and the options of using a QR code disclosure or a text message for the disclosure statement.

On September 14, 2022, the U.S. District Court for the Northern District of California ruled on a motion for summary judgement filed by the plaintiffs.

The Court denied the motion on the points of the use of the term bioengineered and the limitation of a mandatory requirement to foods that contain detectable BE material as, according to the Court, these provisions were consistent with the statute.

However, the Court did grant the motion on the issue of the disclosure options.  As readers may recall, the current regulation provides for four options for a disclosure statement, i.e., text disclosure, symbol disclosure, electronic disclosure (QR code with a phone number for further information), and a text message disclosure. The statute itself – the National Bioengineered Food Disclosure Standard – requires use of one of three forms of disclosure: on-package text, a symbol, or an electronic or digital link.

USDA’s final rule includes the option for a QR code plus phone number even though a study (mandated by the statute) revealed significant access problems with this option.  To “fix” the potential problem of access, USDA added a fourth disclosure option of a text message.  The Court’s order explains that the text message “did nothing to fix the problem of the inaccessible electronic disclosure”.  USDA should have improved the electronic disclosure statement by “providing additional and comparable options to access the [electronic] bioengineering disclosure,” rather than adding a fourth option for a stand-alone text message. Thus, the Court concluded that addition of the standalone text message disclosure options was inconsistent with the statute’s mandate. The Court remanded to USDA, the BE labeling regulation provisions regarding these disclosure options without vacatur; in other words, the status quo is maintained (products using these disclosure options need not be revised immediately) while USDA revisits these two disclosure provisions of the BE labeling rule.

The New Jersey Supreme Court, in its August 25, 2022 opinion in Mirian Rivera v. Valley Hospital, Inc., 2022 N.J. LEXIS 679 (NJ Aug. 25, 2022), https://www.njcourts.gov/attorneys/assets/opinions/supreme/a_25_26_27_21.pdf?c=lmL, considered whether a provider’s use of a medical device that is the subject of an FDA safety communication constitutes per se evidence of wanton disregard, which would warrant punitive damages. The Court found that in this case it did not, although it left open that it could be evidence of negligence, which could result in compensatory damages.  The Court’s analysis also leaves open the possibility that other FDA communications could result in punitive damages.

Case Summary

Plaintiffs (heirs and executor) in this case filed complaints seeking compensatory and punitive damages on numerous counts after a patient’s death from leimyosarcoma, a rare cancer that cannot be reliably diagnosed preoperatively, following the hysterectomy the patient underwent at defendant Valley Hospital with the use of a power morcellation device by defendant Dr. Howard Jones. Approximately six months before the patient’s surgery, the FDA issued a Safety Communication discouraging the use of power morcellation due to the risk that the procedure could spread cancerous tissue in patients with undiagnosed uterine sarcoma.

The New Jersey Punitive Damages Act (PDA) provides that “punitive damages may be awarded . . . only if plaintiff proves, by clear and convincing evidence,” both “that the harm suffered was the result of defendant’s acts or omissions,” and that defendant’s acts or omissions were either “actuated by actual malice” or were “accompanied by wanton and willful disregard of persons who foreseeably might be harmed.”  Id. at 2; N.J.S.A. 2A:15-5.12(a). The PDA further defines “wanton and willful disregard” as “a deliberate act or omission with knowledge of a high degree of probability of harm to another and reckless indifference to the consequences of such act or omission.”  N.J.S.A. 2A:15-5.10. This is a higher standard than that required to prove ordinary or gross negligence.

The Court found that plaintiffs’ claims did not meet this standard for punitive damages. Notably, the Court found “the FDA Communication was purely advisory in nature, so the use of the power morcellator after that communication does not constitute per se evidence of wanton disregard” for plaintiff’s safety.  Rivera v. Valley Hosp., Inc., at 3. The Court also found that “nothing in the facts before the Court suggests that [Dr. Jones] acted with actual malice or with wanton and willful disregard of” the plaintiff’s health and, in fact, there was evidence he informed the patient of the procedure’s risks.  Id.  Specifically, the Court did not agree that FDA’s communication of a less than 1% risk that patients undergoing this treatment would have undiagnosed uterine sarcoma constituted the defendant’s “knowledge of a high degree of probability of harm.”  Id. The Court was even more persuaded that defendant Valley Hospital’s conduct did not constitute wanton and willful disregard, as it took proactive steps shortly after the issuance of the FDA Communication to respond to the advised risk of power morcellation.

The Court was careful to state that although defendants’ actions and omissions after the FDA Safety Communication did not demonstrate a wanton and willful disregard, a jury could still find those actions establish defendants’ negligence.  Thus, the Safety Communication could play a role in further proceedings in the case.

Why this Case Matters

This case demonstrates that a court can consider a provider’s actions taken in response to public FDA safety notices when determining whether a patient’s harm resulted from that provider’s negligence or recklessness, as well as the form of the communication.  Here, the court deemed FDA’s communication to be advisory and that it left ample room for provider discretion.  Depending on the wording of other FDA notices, that may not always be the case.

The specific actions a provider takes with regard to a safety communication could still provide evidence of actual malice or wanton and willful disregard, even though that standard was not met in this particular case. Additionally, providers could also be subject to ordinary negligence where, as here, an FDA Safety Communication discourages a certain type of product or procedure and directs providers to inform patients of the specific risk involved but the provider fails to properly inform patients (e.g., by obtaining appropriate informed consent). Thus, this decision serves as a reminder that the issuance and wording of FDA safety notices can potentially impact the civil liability exposure of the customers of medical device manufacturers.

Similar to what was done with COVID-19, the National Institute for Health (NIH) Rapid Acceleration of Diagnostics (RADx) initiative has established a Monkeypox Independent Test Assessment Program (ITAP) and it currently accepting new proposals on a rolling basis to address the outbreak.  The program began accepting proposals on September 7, 2022, from manufacturers that have existing technologies and can scale production, while meeting FDA quality requirements.

The focus of the program is for both molecular and antigen tests that can be used in either point-of-care settings or home use. The program is currently not accepting applications for antibody tests (HPM has blogged previously about FDA’s Monkeypox Policy here).  The program provides support to manufacturers by providing both analytical and clinical testing that meets FDA requirements for an EUA submission.

Manufacturers can apply if they meet the following criteria:

• Demonstrated capacity for manufacturing and distributing high-quality in vitro diagnostics, AND at least one of the following:
  • An existing technology adapted for POC or home detection of monkeypox virus, at design lock, with performance data
  • An existing monkeypox virus test kit available for POC or home diagnostic use in international markets
  • A self-collection kit for monkeypox virus samples which can be modified and optimized for at-home use

Getting accepted into the ITAP program may be your best bet in getting a subsequent EUA for your Monkeypox test, because (as of right now) there is only one cleared comparator to use for your clinical testing, CDC’s non-variola orthopoxvirus test.  It may be difficult to set up a clinical study on your own as use of the CDC’s assay is limited to Laboratory Response Network (LRN) designated laboratories. In addition, the ITAP program provides the manufacturer an entire project team and necessary resources to ensure the analytical testing is completed quickly and meets FDA requirements.

In addition to filling out the application for the ITAP program, manufacturers will still need to submit their intent to file an EUA with the FDA within 30 days of the FDA Monkeypox policy being announced in the Federal Register.  This means you should complete both your ITAP submission and your intent to submit an EUA to the FDA now — or you may miss being considered for priority review.

FDA recently published Alternative or Streamlined Mechanisms for Complying with the Current Good Manufacturing Practice Requirements for Combination Products; List under the 21st Century Cures Act in the Federal Register (FR Notice).  By way of background, 21 C.F.R. § 4.3 requires generally that manufacturing of a combination product (CP) must comply with the applicable current Good Manufacturing Practice regulations (cGMPs) for all of its components (i.e., a drug/device CP must follow the cGMPs for drugs as well as those for medical devices).  21 C.F.R. § 4.4 provides an optional alternative streamlined approach for current good manufacturing practices (cGMPs) for manufacturers of drug-device combination products (CPs).  The 21st Century Cures Act required FDA to publish in the Federal Register a list identifying types of CPs and manufacturing processes that may vary from the requirements of § 4.4, or that FDA proposes can satisfy the requirements in § 4.4 through alternative or streamlined mechanisms.  FDA must also review the list periodically.  FDA published a proposed list on June 13, 2018 (83 FR 27609), which we blogged about here.

The recent FR Notice does not modify § 4.4, but instead describes FDA policy on applying § 4.4, much like an FDA guidance document.  The FR Notice also emphasizes in several places that interaction with the Agency may be needed when applying alternative or streamlined mechanisms for complying with cGMP requirements for CPs.

For manufacturers of CPs that have established a quality system that complies with the full requirements of 21 C.F.R. Part 820 Quality System Regulation and additional provisions from 21 C.F.R. Part 211, Current Good Manufacturing Practice for Finished Pharmaceuticals, the list describes alternative mechanisms for complying with the requirements in § 211.165 Testing and Release for Distribution, § 211.166 Stability Testing, § 211.167 Special Testing Requirements, and § 211.170 Reserve Samples.

The list of alternative mechanisms for complying with Part 211 in this FR Notice is not different from what was proposed in the 2018 FR Notice.  Of the six comments FDA received on the 2018 FR Notice (five were published), only one raised Part 211. FDA added some clarifying language or examples (shown below in italics) to the Part 211 list:

• Section 21 C.F.R 211.165 – Testing and Release for Distribution: Manufacturers may be able to use product samples that are not finished combination products when performing the required testing, but they would need to establish that any differences in the manufacturing process for the sample used, as compared to the finished combination product, do not affect the drug constituent part (i.e., there is no difference in the quality attributes related to the drug constituent part in the representative sample as compared to the attributes related to the drug constituent part in the finished combination product).

• Section 21 C.F.R 211.166 – Stability Testing: Manufacturers may be able to leverage stability knowledge, data, or information for an already marketed combination product, for example, when the new combination product is a modification of an already marketed product and the modification does not impact the stability of the drug constituent part.
• Section 21 C.F.R 211.167 – Special Testing Requirements: Manufacturers may be able to define “batch” based on the drug constituent part rather than the finished combination product for purposes of special testing requirements involving pyrogens and endotoxins. This mechanism would only potentially be available if there would be no impact on the endotoxin and pyrogen levels for the finished combination product from subsequent manufacturing processes, including when the constituent parts are combined to produce the final combination product (e.g., there are no statistically significant differences in pyrogen or endotoxin test results for the combination product immediately following a drug coating process step as compared to the finished combination product).
• Section 21 C.F.R 211.170 – Reserve Samples: Manufacturers may be able to use validated surrogates as representative samples to meet the requirements of this regulation, provided the surrogate is appropriate, both in terms of the manufacturing process and the characteristics of the container closure. It may be permissible to maintain as a reserve sample only the drug-containing subassembly of a single-entity combination product, such as only the distal tip subassembly (with drug-containing collar) of a pacemaker lead without the associated internal electronic components, or the drug constituent part of a co-packaged combination product, such as the prefilled cartridge of a combination product that is distributed as a prefilled cartridge with an injector system.

For manufacturers of CPs that have established a quality system that complies with the full requirements of 21 C.F.R. Part 211 and additional provisions from 21 C.F.R. Part 820, the list provides information on integration of the design control requirements within a pharmaceutical development program and discussion of exemption from cGMP requirements for applicable device constituents.

The FR Notice notes that many design control requirements may be addressed by a robust pharmaceutical development program, but adds that it is important to align terminology with design control principles and ensure that any design control elements not covered by pharmaceutical development procedures are documented.  Emphasis is placed on ensuring that management of postmarket design changes to the CP follows the requirements of § 820.30.

Some low-risk devices  are exempt from cGMPs except for complaint handling and record keeping requirements, e.g., a liquid medication dispenser (21 C.F.R. § 880.6430).  The FR Notice clarifies that these devices may also be exempt from the provisions of Part 820 called out in §4.4.  For determining if the device constituent of a CP is GMP exempt, the FR Notice references the .9 regulations (e.g. § 880.9).  Although the .9 regulations describe limitations for 510(k) exemption and not GMP exemption, FDA intends to apply the same exemptions for purposes of determining if the device constituent of a CP is GMP exempt.

For any specific CP there can be nuances, so interaction with the Agency may be warranted to obtain FDA feedback prior to making a premarket submission or submitting a postmarket supplement.  The FR Notice provides guidelines on types of interactions and information to provide in a request.

Overall, the FR Notice provides additional options for CP manufacturers to reduce burdens by streamlining their approach to cGMPs, but FDA wants to be involved in decisions to use these approaches.

On September 14, 2022, FDA/CDER/Office of New Drugs, in collaboration with the Duke-Margolis Center for Health Policy, hosted a virtual meeting on advancing premarket safety analytics, including sessions on new FDA Medical Queries and standardized presentations of safety data. For a number of years, FDA has been including groups of related preferred terms in tables in the Adverse Reactions Section of drug labeling (Section 6), generally describing such groupings with the use of footnotes. For example, Table 20 in Section 6 of the current Latuda labeling includes the term “somnolence” with the footnote “Somnolence includes adverse event terms: hypersomnia, hypersomnolence, sedation, and somnolence.” Such groupings have generally seemed to appear in labeling on an ad hoc basis, without standardization. At the September 14 virtual meeting, FDA demystified these groupings by announcing the FDA Medical Queries (FMQs), followed by an open discussion. The FMQs include some 100 standardized groups of related MedDRA preferred terms to be used in the identification and labeling of adverse drug reactions.

Typically, clinical trial subjects are questioned regarding adverse events, and investigators record them in their own words. Such descriptions are called ‘verbatim terms,’ and may include medical shorthand. For example, ‘Hip Fx after fall’ might be recorded for a patient who fell and sustained a hip fracture. A verbatim term cannot be analyzed, however, until it is translated into its corresponding standard ‘preferred term,’ or in this case, two preferred terms: ‘Fall’ and ‘Hip Fracture.’ There are over 24,000 preferred terms, each serving essentially as a standard safety outcome that can be tabulated for a clinical trial(s). For example, one could calculate the percentages of patients in the drug and control groups with a hip fracture. The problem is that adverse reactions are generally broader than a single preferred term. In this case, for example, it seems likely that if a drug predisposes patients to hip fractures, it would predispose to other fractures. Thus, one would like to quantify all fractures—not only hip fractures. Thus, as illustrated by this example, the objective of a query is to combine similar terms to create meaningful analyses of adverse drug reactions, e.g., fractures, pneumonias, seizures.

FDA shared the following example to show how the use of queries can lead to a more accurate characterization of adverse drug reactions. In this example, only adverse events with a frequency >2% in the drug group were to be included as adverse drug reactions. When assessing anxiety as a single preferred term, the frequency in the drug group was slightly less than 2%; therefore, anxiety was not classified as an adverse drug reaction. When related preferred terms were included in an anxiety query, e.g., ‘nervousness,’ ‘general anxiety disorder,’ the frequency exceeded 2% and was included as an adverse reaction in the drug labeling. This example represents a situation where the existence of the adverse drug reaction depends on whether it is based on a single preferred term (‘anxiety’), or a grouping of anxiety-related preferred terms.

MedDRA, the Medical Dictionary for Regulatory Activities, maintains the list of preferred terms used internationally, and provides a large number of Standard MedDRA Queries (SMQs), which are used routinely by many companies. As I pointed out at the meeting however, as noted on the MedDRA web site, “SMQs are tools developed to facilitate retrieval of MedDRA-coded data as a first step in investigating drug safety issues in pharmacovigilance and clinical development.” Conversely, the FMQs have been developed specifically for use in assessing the safety of new drugs and biologics in clinical development. Dozens of FDA medical experts contributed to the development of the FMQs, all with longstanding interest in drug safety, which makes them fit-for-purpose. FDA is also beginning the development of “algorithmic” FMQs that combine preferred terms with laboratory data and temporal information.

The discussion on FMQs was followed by an introduction to FDA’s new “Standard Safety Tables and Figures: Integrated Guide.” FDA provided presentations on standard safety tables and figures, tabulation of adverse events, statistical considerations in the analyses of adverse events, discussion of relative risk vs. risk differences, and advice on pooling trials (including Simpson’s Paradox), ascertainment windows, standard laboratory analyses, and drug-induced liver injury.

It seems likely that FDA will encourage use of FMQs and these analytical methods and presentations for premarket safety data, but will not mandate these activities at this time. It also seems likely that FDA will be running these FMQs on many NDAs and BLAs under their review, and will be incorporating the results in labeling. Running FMQs on clinical datasets prior to, or during, NDA review could shed important light on FDA’s safety concerns and may become an industry best practice. Because we believe such information is highly important, HPM has developed the capacity to run the FMQs for our clients with a rapid turn-around time.

In a recent JAMA editorial (unfortunately behind a paywall), three authors called for increased use of the Park Responsible Corporate Officer doctrine, under which senior level officials at a company can be held liable under a strict liability theory even if they were not involved in, or even knew about, the alleged violations of the Federal Food, Drug, and Cosmetic Act (United States v. Park, 421 U.S. 658 (1975)).  While the authors did a yeoman’s job of combing through the criminal cases to identify what they view as a “handful” of cases and call for increased use of the Park doctrine, we at the FDA Law Blog respectfully disagree.  We note our prior writings on the subject, which extend to five pages of posts,.  We note further that the JAMA editorial cites our own John Fleder, which makes sense since John is one of the foremost experts on Park liability from his time at the Department of Justice’s Office of Consumer Litigation as well as private practice with our firm.  An interesting historical sidenote is that if one looks at the official Park decision from the Supreme Court, one will find our own Paul Hyman who was one co-author of the amicus curiae briefs.  Our own reactions to the decision when it came out was somewhat muted, given that we were in our low single digits at the time of the decision.

The JAMA editorial notes that there are few Park cases for two primary reasons:

[The government] may lead . . . favor cases of clear intentional wrongdoing over cases of mere negligent oversight. Others may be uncomfortable with the strict liability premise of the Park doctrine, adhering to the value that punishment should not be inflicted without proof that the defendant intended to commit wrongdoing. The public may harbor similar doubts, leading prosecutors to avoid putting Park cases before juries.

These intuitions about fairness weigh against policy interests designed to protect the public health. The logic of the Park doctrine in its special applicability to medical products is to bring special legal vulnerability for problematic products to the executives who participate in the lucrative marketplaces of human health and illness, rather than have that risk borne by the patients who depend on the products or only by impersonal corporate entities less responsive to sanctions. The drug and medical device industries present particularly compelling arenas in which to pursue deterrence through such prosecution because misconduct can carry high levels of public risk.

The editorial conflates a number of distinct but related principles of law and federal prosecution.  First, regardless of Park, under the FDC Act, any individual who commits an FDC Act violation can be held liable for a strict liability misdemeanor, regardless of whether the individual is a responsible corporate officer.   Second, because of this strict liability exposure, an individual can be charged with an FDC Act misdemeanor as a lesser included offense any time DOJ charges an FDC Act felony.  Therefore, as a matter of proof, DOJ can obtain a misdemeanor conviction even when a jury acquits on a felony.  Third, while the sanction in the original Park case was a $50 fine, DOJ can seek terms of imprisonment for misdemeanor violations and when multiple counts are involved, seek consecutive sentences.  Last, because of the tremendous power given government prosecutors under this strict liability misdemeanor statutory framework, it is critical that those prosecutors exercise prosecutorial discretion, which is why the Justice Manual identifies a host of factors that prosecutors should consider before bringing any criminal charge.  A Park case should be no different.  It’s one thing to prosecute a corporation for the actions of employees since a corporation, while a legal entity, can only act through the individuals that make up that entity.  And if the corporation lacks the regulatory and compliance functions necessary to ensure safe products, then it makes sense to punish that corporation.  It’s another thing entirely to prosecute individuals who were not involved in the misfeasance and were unaware of the alleged violations.  It’s a bedrock principle of criminal law that crimes require an actus reus (the prohibited act) and the requisite mens rea (mental state).  While strict liability criminal statutory schemes are an exception to that rule, we don’t agree that the government should bring a Park case just because it can.

On August 9, 2022, the Secretary of the Department of Health and Human Services (HHS) declared the outbreak of monkeypox virus a public health emergency (see announcement here).  On September 7, 2022, the Secretary of HHS declared that “circumstances exist justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of infection with the monkeypox virus, including in vitro diagnostics that detect and/or diagnose infection with non-variola Orthopoxvirus,” thereby opening the door for submission of requests for emergency use authorization (EUAs) of monkeypox tests.

On the same day, September 7, CDRH published a policy for monkeypox tests.  CDRH has also published templates for EUA requests.

This policy and the EUA templates mirror the approach taken by FDA for COVID-19.  With COVID-19, CDRH was forced to “build the plane while flying it,” in that it had to create the administrative infrastructure and related guidance and templates while simultaneously issuing the first round of EUAs.  This led to delays in releasing a uniform policy and templates for COVID-19, as well as many other problems (see blog post chronicling some of the challenges here).  Now that FDA has worked out an approach to EUAs through COVID-19, it seems the agency has more easily launched a similar framework for monkeypox on the same day as the HHS declaration permitting EUAs for IVDs.

The monkeypox test policy describes how FDA will prioritize review of EUA requests for monkeypox tests, stating that FDA intends to focus on requests for high-throughput tests, tests with home specimen collection, or rapid diagnostic tests, all from experienced developers with high manufacturing capacity.

We note that this policy defines an “experienced developer” more narrowly than the COVID-19 policy.  For monkeypox, an experienced developer is one who has “successfully been issued an EUA” or received approval or clearance for a diagnostic test.  For COVID-19, an experienced developer is one who has only “interacted with FDA through an EUA request or pre-EUA submission,” regardless of success.  This narrower definition of experienced developer may make it more difficult for new companies to break in compared to COVID-19, where many novice companies submitted EUAs.

Additionally, to be subject to prioritized review, test developers are advised to send preliminary information to FDA by email within 30 days after publication of this policy to indicate their intent to submit an EUA request for a monkeypox test.  The preliminary information should include a description of the test technology; manufacturing capacity; test throughput; expected timeline for development, validation, and submission of an EUA request; and any available validation data.  FDA intends to respond to developers by email to indicate whether they intend to prioritize the proposed test.  As with COVID-19, “prioritization” simply means that FDA will review the EUA; if the test is not a priority, FDA will decline to review.

This process for submitting preliminary information to FDA appears to be one area where CDRH is applying a lesson-learned from its approach to COVID-19.  With COVID-19, CDRH has similar criteria for priority review.  However, it was not always clear to developers, prior to submission of an EUA request, whether their test would satisfy the priority criteria.  This led to many developers spending the time and money to validate a test and prepare an EUA request, only for it to be rejected – or languish in regulatory limbo – as a non-priority.  With this new monkeypox policy, it appears test developers will have the opportunity to learn prior to completion of validation whether their test will be granted to priority review.

The policy states that FDA, at this time, does not intend to object to monkeypox tests developed and performed in a high-complexity, CLIA-certified laboratory “to address immediate capacity needs.”  Additionally, if a high-complexity, CLIA-certified laboratory modifies a cleared or authorized monkeypox test, and the modifications do not change the indications for use or change the analyte specific reagents, FDA does not intend to object to implementation of the modification without a new 510(k) or EUA.

The policy also addresses serology tests.  Incorporating some insights gained from its initial policy for COVID-19 serology tests, FDA is approaching monkeypox serology tests in a more restrictive manner.  The policy cautions that serology tests “can provide information that may further our understanding of the disease process,” but cannot diagnose infection and “are not tests of immunity.”  FDA does not intend to object to the use of monkeypox serology tests that are developed and performed by high-complexity, CLIA-certified laboratories that are “part of an entity that conducts research on diseases and is integrated into the direct medical care of the patient” (i.e., academic medical center laboratories).  Such laboratories are not required to submit an EUA, so long as they submit a notification to FDA and include disclaimer statements in test reports (exact language in the policy), which clarify that the test results are not for diagnosis.

Finally, the policy emphasizes the importance of validation data, and states that FDA is providing EUA templates.  While the policy notes that “recommendations in the templates are voluntary,” we have learned from experience with COVID-19 EUAs that CDRH will likely adhere closely to the template guidelines and will be resistant to deviate from the FDA-recommended approach to validation.  Compared to the COVID-19 templates, the monkeypox EUA template appears to include more detail about what is expected, and includes many check-the-box responses from lists of options (e.g., for interfering substances) rather than open-ended prompts in which developers can draft descriptive summaries.  This format may lead to more uniformity in initial EUA submissions, which may cut down on interactive requests from EUA reviewers for clarifying information.

As we have learned from COVID-19, CDRH’s monkeypox policy and EUA templates will likely evolve over time as CDRH begins to receive EUAs and learns more about the unique validation issues that may arise with monkeypox tests.  That said, monkeypox test developers are starting with much more guidance from CDRH compared to COVID-19, which will hopefully lead to submission of EUAs that are more likely to meet CDRH’s expectations, and in turn, lead to faster roll-out of high-quality tests.

In a speech last week, Deputy Attorney General Lisa Monaco touched on a number of topics that should interest readers of this blog.  First, although the topic of her speech was corporate criminal enforcement, DAG Monaco stressed that DOJ’s “number one priority is individual accountability.”  While individual accountability is not a new theme, the speech suggested that companies may see a new level of urgency to government investigations. DAG Monaco stated, “In individual prosecutions, speed is of the essence.”  For companies (who routinely control the documents and information relevant to the government’s investigation of individuals), she warned “undue or intentional delay in producing information or documents—particularly those that show individual culpability—will result in the reduction or denial of cooperation credit” for the company.

The next topic that DAG Monaco addressed was corporate recidivism.  The speech explained how DOJ will look at that issue. Of particular interest to readers of this blog, she noted “if a corporation operates in a highly regulated industry, its history should be compared to others similarly situated, to determine if the company is an outlier.”  She also explained that while the evaluation of prior misconduct is a multi-factor analysis, “dated” misconduct is given less weight, defining dated as “[c]riminal resolutions that occurred more than 10 years before the conduct currently under investigation, and civil or regulatory resolutions that took place more than five years before the current conduct.”  Of further interest to those considering acquisition of a company with a troubled past, DAG Monaco explained “We will not treat as recidivists companies with a proven track record of compliance that acquire companies with a history of compliance problems, so long as those problems are promptly and properly addressed post-acquisition.”

The speech’s third topic, voluntary self-disclosure is potentially the most significant. DAG Monaco announced that “every Department component that prosecutes corporate crime will have a program that incentivizes voluntary self-disclosure.” While programs may vary in some respects, “Absent aggravating factors, the Department will not seek a guilty plea when a company has voluntarily self-disclosed, cooperated, and remediated misconduct.”  Whether programs will offer any guidance on what constitutes “aggravating factors”—an exception that could swallow the rule—remains to be seen.

DAG Monaco closed her speech by discussing how DOJ views corporate compensation. She explained “when prosecutors evaluate the strength of a company’s compliance program, they will consider whether its compensation systems reward compliance and impose financial sanctions on employees, executives, or directors whose direct or supervisory actions or omissions contributed to criminal conduct.”  While the speech did not identify any examples of compliance bonuses, it did note compensation clawbacks as one example of a compensation policy to deter misconduct.

We expect further guidance documents on these topics in the coming days and will continue to follow how these changes play out both on paper and in practice.

Earlier this week, President Biden signed Executive Order 14081, titled “Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy.”  The Executive Order was spurred in part by the COVID-19 pandemic, but it points out that biotechnology and biomanufacturing—defined as use of biological systems to develop products, tools, and processes at commercial scale—has other uses outside of human health, including securing supply chains and growing the American economy.   Efforts to further policies outlined in the order are referred to as the National Biotechnology and Biomanufacturing Initiative (NBBI).

The Executive Order includes objectives to bolster and coordinate Federal investment in biotechnology and biomanufacturing, and to improve and expand on domestic biomanufacturing production capacity and processes while also accelerating the translation of basic research results into practice (section 1).  It also includes a Section on improving the clarity and efficiency of the regulatory process for agricultural biotechnology products (section 8).   The Executive Order also mentions the need to develop genetic engineering technologies and techniques and advance the science of scale-up production so that innovative technologies and products can reach markets faster.  We’ve only touched on a few of the objectives identified in this ambitious and all-encompassing order.

To achieve the objectives outlined in section 1, several heads of agencies, including the Health and Human Services (HHS) are to submit reports to the President through the Assistant to the President for National Security Affairs (APNSA), in consultation with the Assistant to the President for Economic Policy (APEP) and the Director of the Office of Science and Technology Policy (OSTP) within 180 days of the order.  Each report is to identify high-priority basic research and technology development, opportunities for public-private collaboration, and actions to enhance biosafety and biosecurity.  These reports will be used to develop an implementation plan and by September 2024, HHS and other heads of agencies will report on measures taken and resources allocated to enhance biotechnology and biomanufacturing per the plan.

HHS published a press-release in response to the Executive Order, stating that it will support development of 1) FDA research programs for advanced manufacturing technologies, 2) Advanced Manufacturing Innovation Hub in the FDA’s Office of Counterterrorism and Emerging Threats, 3) FDA Center for Advancement of Manufacturing Pharmaceuticals and Biopharmaceuticals, etc.  While it is not clear what HHS will discuss in its report, the FDA/CDER Emerging Technology Program and FDA/CBER Advanced Technologies Program are collaborative programs where industry, innovators/developers, and the FDA can discuss advanced technologies, including advanced manufacturing.  However, the Committee on Identify Innovative Technologies to Advance Pharmaceutical Manufacturing, indicated industry is still hesitate to implement innovative technologies due to inconsistent feedback from the FDA during these meetings.  In addition to holding meetings, FDA also solicits applications for extramural funding to support advanced manufacturing and other innovative technologies through the FDA Broad Agency Announcement and the NIH Grants and Funding portal.  While HHS mentions the FDA’s Center for Advancement of Manufacturing Pharmaceuticals and Biopharmaceuticals, there is little information on this center aside what the FDA stated in October 2021 and January 2021.  The HHS’s report may consider incorporating some of the FDA’s efforts (Framework for Regulatory Advanced Manufacturing Evaluation) to identify and implement changes in the regulatory structure to enable new technologies, including advanced manufacturing mentioned very, briefly, here.

On September 9, 2022, FDA published two notices regarding draft guidance related to labeling of drug products: a notice on the publication of a draft guidance on the Statement of Identity and Strength — Content and Format of Labeling for Human Nonprescription Drug Products and a notice on the publication of a draft guidance on the Quantitative Labeling of Sodium, Potassium, and Phosphorus for Human Over-the-Counter and Prescription Drug Products.  For both draft guidances, it is unclear what induced FDA to publish these draft guidances now.

Draft Guidance Regarding the Statement of Identity and Strength for Human Nonprescription Drug Products

FDA indicates that this guidance is intended to help manufacturers ensure consistent content and format of the statement of identity and strength for all nonprescription drug products, which then will allow consumers to compare products.  FDA’s thinking on the format to be used is quite specific.

The guidance applies to all non-prescription drugs available in the United States, including products approved by FDA and monograph drug products.  It details FDA’s interpretation of the regulation 21 C.F.R. § 201.61 regarding the statement of identity.  FDA interprets the regulation for drug products without an established name (generally monograph drug products do not have an established name) as requiring the name of the active ingredient, the pharmacological category, and strength.  (The regulation does not include a specific requirement to identify the strength of the active ingredient).  In addition, unless it is obvious, the route of administration (ROA) should be included.  For products that include more than one active ingredient, FDA recommends that this information for each active ingredient is vertically aligned.

The regulation requires that the statement of identity must be in “a font reasonably related to the most prominent printed matter on the principal display panel” (PDP).  Consistent with FDA comments in a few Warning Letters,  FDA asserts that this means that the statement of identify must be 50% or more of the size of the most prominent printed matter.  FDA does not explain how it arrived at 50% or more.  (Interestingly, in the 2019 proposal for sunscreen labeling, FDA proposed to require a size at least one quarter the size of the most prominent printed matter).

Without further discussion or explanation, FDA asserts that the requirement for the placement of the statement of identity “in direct conjunction” with the brand or proprietary name “implies that the proprietary name and the statement of identity should not be separated by any intervening matter.” (underline added).

If a monograph includes requirements for the statement of identity that are inconsistent with this guidance, FDA does not intend to take action against companies who follow the guidance.

Draft Guidance on the Quantitative Labeling of Sodium, Potassium, and Phosphorus for Human Over-the-Counter and Prescription Drug Products

For OTC drug products, this guidance (simply) restates the legal requirements included in regulations regarding the quantitative information for sodium and potassium in labeling of OTC products intended for oral ingestion. Interestingly, it provides information for manufacturers who want to include (voluntarily) the phosphorus level in the drug product.

The amount of phosphorus would be the calculated equivalent amount of elemental phosphorus from all the phosphorus-containing components. (FDA stresses that it should not be the amount of phosphate).  As is the case for sodium and potassium, the amount of phosphorus should not be declared if it is less than 5 mg per single dose because that amount is not expected to be clinically relevant.  Also, amounts should be rounded to the nearest 5 mg.  FDA recommends including this information in the Drug Facts under the heading Other information, i.e., in the same sections as where sodium and potassium (if present) will be declared.   If the product contains sodium, potassium, and phosphorus in amounts of 5 mg per single dose, phosphorus must be listed after potassium (which is listed after sodium).  However, if a voluntary statement about the absence of sodium, potassium, or phosphorus is included, it should be the last statement in the “Other Information” section.  The guidance includes several examples of the labeling.

Patients with certain conditions, such as heart failure, hypertension, or chronic kidney disease, are advised to restrict their dietary intake of sodium, potassium and/or phosphorus. Thus, inclusion of information on sodium, potassium, and phosphorus content in a drug may help healthcare providers and patients to select drug products with lower amounts of sodium, potassium, or phosphorus.

For both guidances, comments must be submitted by November 8, 2022, to be considered by FDA.

As promised in our posts from earlier this summer (here and here), we are back to report on our assessment of CDRH’s electronic submission process through its Customer Collaboration Portal (CCP).  In short, the process is FANTASTIC!  Say goodbye to your thumb drives and CDs – the CCP electronic submission process couldn’t be easier.  FDA’s CCP allows for a simple drag and drop to upload of a zip file containing your full eCopy directly to the Center.  The site, alternatively, allows for uploading of an eSTAR formatted submission.  The upload process really couldn’t be easier.  The instructions are simple and the site is user friendly and intuitive.

This author has now submitted two 510(k)s using the system.  It has been seamless.  In both cases, the 510(k)s were submitted in the afternoon/early evening.  We immediately received an automated confirmation through the website after each was submitted.  Then, the following business day, we received the confirmation email from the Document Control Center identifying the submission number.

The CCP also tracks your sent submissions as well as your Traditional 510(k)s currently under review.  In our view, this submission functionality is a great technological step forward for CDRH.  We look forward to the application being opened up to allow additional users to submit electronically and for the tracking function to be expanded to other submission types (e.g., pre-submissions, IDEs, Special 510(k)s).

It’s been almost 11 years since FDA first clarified use of multiple predicate devices and introduced the concept of Reference Devices in the draft guidance titled The 510(k) Program:  Evaluating Substantial Equivalence in Premarket Notifications [510(k)], which we blogged about here.  The final guidance with the same title (Guidance), which we blogged about here at the time of release in 2014, provided additional clarity, but we find that, even with years of experience, it is still a challenge in many cases to decide how best to bring a second device into a substantial equivalence discussion.  One frequent issue that arises is whether to designate that second device as a secondary predicate device or so‑called reference device.

A little history may be helpful.  Prior to the Guidance, FDA had sometimes allowed so‑called split predicates in 510(k)s.  A split predicate was one “using one legally marketed device for intended use and a different legally marketed device for technological characteristics to demonstrate substantial equivalence.”  Guidance at 39.  In the Guidance, FDA took the position that “the use of a ‘split predicate’ is inconsistent with the 510(k) regulatory standard.” Id.  Since that time, this practice has essentially been taken off the table for 510(k) submissions.

Even as the Guidance ruled out the use of split predicates, it acknowledged that the practice of relying on multiple predicates in a submission can be valid.  However, the Guidance recommended designating a single device as the “primary predicate device” while citing additional devices as either “secondary predicate devices” or “reference devices.”  The Guidance defined a secondary predicate as one used when “combining features from two or more predicate devices with the same intended use into a single new device, when seeking to market a device with more than one intended use, or when seeking more than one indication for use under the same intended use.” Id. At 11.

Things are a bit clearer with reference devices.  The Guidance defines a reference device as a device that is used to “support scientific methodology or standard reference values.” Id. at 13.  This device explicitly does not need to satisfy each step in the SE flow chart.  Rather, it aids with respect to step 5a related to acceptability of methods for performance testing.

When combining features from two or more devices with the same intended use, the determination of whether to consider the second device a secondary predicate or reference device is not always obvious.  Based on the guidance, the second device would be identified as a secondary predicate device.  However, as the primary predicate is sufficient to reach a determination of substantial equivalence, one may also consider an argument that the second device is merely referenced for support of test methods or standard reference values for specifications related to the features not present in the primary predicate device.

Given FDA concerns over split predicates, it seems that most applicants lean towards use of a reference device, even when identifying the device as a secondary predicate may be more appropriate.  As long as the primary predicate device is appropriate, we have not seen FDA raising concerns during review over whether a second device is a secondary predicate or a reference device.  However, given the drift towards considering any second device a reference device, it is important to review the definitions and descriptions of both secondary predicates and reference devices so that the most appropriate choice can be made in the preparation of 510(k) submissions.

Hyman, Phelps & McNamara, P.C.’s Deborah Livornese will be a panelist for FDAnews’ September 15, 2022 webinar titled “Califf’s Post-PDUFA, Post-COVID FDA Agenda: Key Developments, Insights and Analysis”.  Aspirational only title notwithstanding, you can find more information about the webinar and registration at FDAnews and use code VIP20 for a 20% discount.

Three patient advocate groups have sued the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), challenging HHS’s 2020 Notice of Benefits and Payment Parameters (NBPP) rule.  As it stands, the rule allows insurers and pharmacy benefit managers (PBMs) to broadly use copay accumulator programs, which have long been criticized by patient advocacy groups as padding insurers’ pockets while leaving patients high and dry.

Recognizing the problems that high prescription drug costs pose to patient access to medications, many drug manufacturers have created copay assistance programs to help patients afford the copays and deductibles for their medications.  In a common example of this practice, the drug manufacturer issues a coupon to an insured individual to present at the pharmacy.  The pharmacy bills all or most of the individual’s copayment or coinsurance—which the patient would otherwise pay the pharmacy directly—to the manufacturer.

Insurance companies and PBMs, on the other hand, have largely resisted these programs to shift drug costs away from patients and have instead found ways to shift the cost of drugs back to the patient and away from the insurer.  By prohibiting patients from counting manufacturer-provided assistance as part of the patient’s copay obligation, insurers can collect from both the patient and the manufacturer.  These prohibitions are often referred to as copay accumulator adjustment programs.  Under a copayment accumulator adjustment program, if a patient pays the $300 copay for a one-month supply of medication using a $300 manufacturer copay card or coupon, the insurer accepts the payment but does not count any manufacturer-provided copay assistance against the insured individual’s deductible or out-of-pocket maximum in the insurer’s internal accounting systems.  The insurer receives a windfall by being able to collect payments from the manufacturer and then still collect the full deductible and copayment amounts from the patient.

The patient, on the other hand, is no closer to meeting their deductible than before.  Despite securing funds to satisfy the copay obligation, the insurer’s disregard of that payment leaves full benefits and more affordable drugs for the rest of the year the same distance out of reach.  Patients who exhaust any available copay assistance program benefits will then return to square one, facing the same, limited choice: go into debt to acquire needed medications or forgo sometimes life-saving or life-extending treatment.

During the Trump administration, HHS and CMS issued the 2020 NBPP rule, revising 45 C.F.R. § 156.130(h) to explicitly allow insurers to broadly use copay accumulator programs.  The 2019 rule allowed the use of copay accumulator programs, but only with respect to drugs for which a generic alternative was available.  The complaint alleges that “copay accumulator adjustment policies have grown in the wake of HHS’s changing policy” (internal quotations omitted).

We have blogged before on Trump-era drug pricing and payment regulations, most of which have been struck down by the courts (see here and here), including another accumulator adjustment rule (see here).  The HIV and Hepatitis Policy Institute, the Diabetes Patient Advocacy Coalition, and the Diabetes Leadership Council have similarly filed suit in the U.S. District Court for the District of Columbia, challenging the 2020 NBPP rule as plainly unlawful on the grounds that it conflicts with the plain language of the Affordable Care Act (ACA) and the agencies’ existing regulations, and is arbitrary and capricious.

Among other arguments, the complaint asserts that the NBPP rule violates the ACA’s cost-sharing cap, which mandates that cost-sharing, i.e., the part of an insured patient’s annual healthcare costs for which the patient is responsible, “shall not exceed” the result of a statutory formula.  The ACA defines “cost-sharing” to include “deductibles, coinsurance, copayments, or similar charges” and “any other expenditure required of an insured individual…”  The statute sets an annual cap on the “expenditure[s] required of an insured individual” by their health insurance plan.  The complaint argues that the rule must be set aside as contrary to the ACA because the statutory text “looks not to where the money used for a copay originates,” yet the rule permits insurers to exclude payments from the annual statutory cap on cost-sharing “just because the insured obtains assistance from the drug manufacturer in satisfying that obligation.”

The complaint further argues that the rule contradicts the statute because the ACA defines the maximum amount of funds that an insurer may receive as compensation beyond premiums, yet the rule allows insurers to collect more money than the statute authorizes by collecting the ACA out-of-pocket maximum and any manufacturer-provided copay assistance.

The patient advocate groups are requesting that the court declare unlawful and set aside the rule.  An opinion that is favorable to the patient groups would mark another defeat of Trump-era drug pricing regulations.  As it stands, 14 states and Puerto Rico have passed laws outlawing copay accumulator programs.  It remains to be seen whether copay accumulator programs will be banned throughout the nation.