By Dara Katcher Levy –

How many lawsuits will it take before FDA starts exercising better judgment on imports?  On October 25, 2010, Amphastar Pharmaceuticals Inc. (“Amphastar”) filed suit against FDA seeking declaratory judgment and injunctive relief with regard to FDA’s detention of two entries of semi-purified heparin.  According to the Complaint, the entries, proposed for import in May 2010 in the Los Angeles District, were intended for use in the manufacture of starting material for the development of active pharmaceutical ingredient – the subject of a pending Abbreviated New Drug Application for generic LOVENOX (enoxaparin).  The material, heparin (which is used in the manufacture of enoxaparin), from an Amphastar-owned facility in China, was intended to qualify the manufacturer as an alternate source of raw material, and was intended for laboratory testing purposes only, not for use in humans or animals.

Both entries of material were tested by FDA in June 2010 and released in July 2010.  FDA rescinded both releases a week later, and two weeks after the recission of the releases, alleged the products were misbranded due to the manufacturer not being a registered facility.  This allegation was apparently incorrect, as the Chinese facility was a registered establishment.  After FDA was notified of this, the Agency then alleged the product lacked adequate directions for use, notwithstanding the fact that the material was not intended for use in humans, was for laboratory testing purposes only, and even if it were a drug for human use, would be subject to the exemption from adequate directions for use for bulk drugs intended for further processing pursuant to 21 C.F.R. § 201.122(c).

The products remain detained despite Amphastar notifying FDA of these issues.  Although the first shipment passed FDA testing, FDA still has not completed testing of the second shipment.  FDA notified Amphastar on October 18, 2010 that testing would not be completed until November 17, 2010 – approximately 5 months after FDA initially sampled the product.

Although FDA has broad discretion over imports, it is expected that FDA’s allegations of violations have some merit, and that they be made in a timely manner.  It appears that FDA is using the misbranding allegations as “place-holders” until FDA completes testing of the second shipment.  For FDA to take five months to test the shipment is extraordinary, and even more so given that the product is not intended for human use.  It will be interesting to see FDA’s response to this Complaint.

By Riëtte van Laack –

Direct Marketing Concepts, Inc. (“DMC”) and other companies and individuals marketed Coral Calcium and Supreme Greens by producing and distributing infomercials claiming that these products were an effective cure against many diseases including heart disease, cancer, lupus, etc.  The district court granted summary judgment against the Defendants, holding that the infomercials were misleading as a matter of law, and ordered the defendants to pay $50 million.

Defendants appealed, challenging the legal and factual bases for the District Court's ruling, including its calculation of "damages."  On October 21, 2010, the United States Court of Appeals for the First Circuit concluded that the Federal Trade Commission ("FTC") had shown that the Defendants had not established that they had adequate substantiation for the claims at issue.  The FTC relied on four expert declarations that asserted that a reasonable basis for the relevant claims would be double-blind, placebo-controlled human studies, but  Defendants did not meet this standard.  The Court ruled that without a reasonable basis for the claims, Defendants' advertising was deceptive as a matter of law.  The Court stated: "To be sure, there may be other scientific evidence that could be sufficient, and we may assume for these purposes that a double-blind study is not necessarily required.  But the government established that some scientific evidence is required for substantiation."

The Court also rejected a "puffery" defense, concluding that the claims at issue went far beyond puffery.  The Court also rejected Defendants' argument that they had presented adequate disclaimers in the ads. 

The Court further affirmed the liability of an owner and corporate officer of two of the companies, because it found that  the record contained ample evidence that the officer had the capacity to make decisions about the advertising ("he could have nipped the offending infomercials in the bud"), and he knew that the claims lacked substantiation.

The Court also affirmed that the gross sales volume of the products at question was deemed the appropriate measure for calculating "damages" to be awarded against the Defendants.

By Kurt R. Karst –      

FDA’s recent decision to grant an April 27, 2010 citizen petition submitted on behalf of Genzyme Corporation (“Genzyme”) concerning the Agency’s ability to approve Cobrek Pharmaceuticals, Inc.’s (“Cobrek’s”) pending ANDA for a generic version of HECTOROL (doxercalciferol) Injection sheds some light on the circumstances in which a second 30-month stay (or “superseding stay” as FDA terms it in this case) could arise as a result of a Paragraph IV certification to an Orange Book-listed patent – regardless of whether the patent was listed prior to or after the December 8, 2003 enactment of the Medicare Modernization Act (“MMA”), which generally limits ANDA applicants to a single 30-month stay of ANDA approval.  Genzyme’s petition requested that FDA not approve Cobrek’s ANDA No. 90-040 until the expiration of a second 30-month stay, or 30 months from November 24, 2009, when Genzyme received a second notice of a Paragraph IV certification from Cobrek regarding U.S. Patent No. 5,602,116 (“the ‘116 patent”), a method-of-use patent covering HECTOROL.  The initial 30-month stay reportedly expired in early July 2010.

FDA approved HECTOROL (2 mcg/mL, 2 mL) in an ampule presentation under NDA No. 21-027 in April 2000 for the treatment for secondary hyperparathyroidism in patients with end stage renal disease.  The ‘116 patent, as well as other patents, were submitted to FDA for Orange Book listing.  In December 2008, FDA approved an NDA supplement for HECTOROL for a new injectable formulation (and packaging configuration) in a vial presentation.  (The old ampule product is no longer being manufactured, and in July 2010, FDA determined in response to a citizen petition – FDA-2009-P-0088 – that the ampule presentation was not withdrawn from the market for safety or effectiveness reasons, thereby clearing the way for ANDA approval, and that the ampule and vial formulations would be considered therapeutic equivalents.)  Pursuant to 21 C.F.R. § 314.53(d)(2)(i), Genzyme resubmitted the ‘116 patent to FDA for Orange Book listing for the new vial product formulation, as well as U.S. Patent No. 7,148,211 (“the ‘211 patent”), a formulation (drug product) patent.

Cobrek submitted ANDA No. 90-040 to FDA on October 13, 2007 containing a Paragraph IV certification to the ‘116 patent (based solely on invalidity), among other patents.  (According to FDA’s Paragraph IV Certification List, the first ANDA containing a Paragraph IV certification to an Orange Book-listed patent for HECTOROL, 2 mcg/mL, 2 mL ampules, was submitted to FDA on October 15, 2007, thus seemingly making Cobrek’s submission subject to the MMA, although the possibility of an “MMA straddle” situation exists.)  Genzyme timely asserted the ‘116 patent in infringement litigation and triggered a 30-month stay of approval on Cobrek’s ANDA.  While ANDA No. 90-040 was under review, and after FDA approved the new HECTOROL vial formulation in December 2008 and the ‘211 patent was timely listed in the Orange Book, Cobrek amended its application to include a Paragraph IV certification to the ‘211 patent.  Genzyme did not sue Cobrek for patent infringement because the company “believed that Cobrek’s ampule formulation for which it was seeking approval at the time would not infringe the ‘211 patent claims.”

All seemed in order until FDA informed Cobrek that the Agency could not approve ANDA No. 90-040 because the ampule formulation was not quantitatively and qualitatively (“Q1/Q2”) the same as the new HECTOROL vial drug product.  Instead, FDA recommended that Cobrek reformulate to a Q1/Q2 formulation.  Cobrek reformulated its drug product and amended its application in 2009, but without new patent certifications.  FDA refused to accept the ANDA amendment without new certifications to both the ‘116 and ‘211 patents, but did give the company the option to request whether the old HECTOROL formulation had been withdrawn for safety or effectiveness reasons (which, as mentioned above, FDA recently ruled on) and continue on without new certifications.  Cobrek decided not to take that path, and instead continued on with its reformulated drug product and in late November 2009 certified to the ‘116 and ‘211 patents.  In January 2010, Genzyme sued for patent infringement with respect to both patents. 

About three months after initiating patent infringement litigation, Genzyme submitted a citizen petition to FDA arguing that the FDC Act “requires a separate 30-month-stay analysis for ‘each certification’ to a patent that claims the drug at issue[, and that in] this case, analysis of a second certification to the ‘116 patent requires a second 30-month stay.”  Genzyme also argued that FDA should grant the company’s request for a second 30-month stay regardless of whether the post-MMA version of the FDC Act applies, and further, that the MMA’s provisions generally prohibiting more than a single 30-month stay are inapplicable in this case because the ‘116 patent was listed in the Orange Book for HECTOROL prior to August 18, 2003 and prior to the submission of ANDA No. 90-040. 

As FDA explains in a draft October 2004 guidance document interpreting the MMA’s provisions:

The relevant provisions of the MMA apply to patents submitted to FDA on or after August 18, 2003.  For ANDAs and 505(b)(2) applications with paragraph IV certifications to a patent submitted to FDA on or after August 18, 2003, the MMA provides that a 30-month stay may be available for litigation related to that patent only if the patent was submitted to FDA before the date that the ANDA or 505(b)(2) application (excluding an amendment or supplement) was submitted.  In other words, the MMA precludes 30-month stays for later listed patents, that is, those patents submitted to FDA on or after the date the ANDA or 505(b)(2) application was submitted. Because of this limitation, in most cases, ANDAs and 505(b)(2) applications will be subject to no more than one 30-month stay.

FDA also notes in the draft guidance, however, that:

Multiple 30-month stays . . . still may be possible in certain cases.  For instance, an ANDA or 505(b)(2) application may contain a paragraph IV certification to a patent at the time of first submission that gives rise to one 30-month stay.  If the same application also contains a paragraph III certification to a different patent that was submitted to FDA (1) on or after August 18, 2003, and (2) before the ANDA or 505(b)(2) application was submitted, and the applicant subsequently converts this certification to a paragraph IV certification, a second 30-month stay could be possible.  This is because the new paragraph IV certification is subject to the MMA and references a patent submitted to FDA before the applicant’s ANDA was submitted.

Cobrek, argued in the company’s comments submitted to FDA in response to the Genzyme petition that the MMA applies in this case “because patent information on the ‘116 patent was submitted a second time with respect to the amendment covering the reformulation of this drug on December 26, 2008, after the August 18,2003 effective date of the MMA with respect to submission of patent information.”  Thus, according to Cobrek, only a single 30-month stay applies in this case.

Although FDA notes in the Agency’s petition response that “[d]etermination of whether or not the MMA applies thus depends on whether one concludes that the operative submission of patent information was [pre- or post-MMA],” such a determination is not, according to FDA, necessary “[b]ecause we conclude that the relief requested in your petition must be granted” regardless of whether or not the MMA applies.  Specifically, FDA ruled that:

Genzyme is entitled to a 30-month stay stemming from Cobrek’s paragraph IV certification made in connection with the reformulated product and Genzyme’s resulting patent infringement. . . .  Once Cobrek made the paragraph IV certification, and Genzyme subsequently sued Cobrek for infringing the ‘116 patent, the statutory requirements for a 30-month stay with respect to this paragraph IV certification were met, as the information concerning the ‘116 patent was submitted to FDA before either the original submission of the ANDA to FDA in October 2007, or the submission of the ANDA amendment in 2009.  We reach this conclusion regardless of whether the MMA applies to the facts at hand.

Although Cobrek argues in the company’s comments to FDA that Cobrek should not have been required to submit a second Paragraph IV certification in connection with the its new formulation amendment (and should be permitted to withdraw that certification), FDA declined to comment on this point, stating that such an argument is not appropriate for a petition comment and that the time for Cobrek to make that argument had passed.  That would have been an interesting to point to argue.  FDA has long been of the opinion that ANDA drug product formulation changes made in an amendment to a pending application (or a supplement to an approved application) require a new certification, but has never (to our knowledge) been challenged on the issue.  FDA stated this policy at least as far back as an October 1986 “dear applicant” letter, and most recently (to our knowledge) in the preamble to the Agency’s 1999 proposed rule that was later withdrawn. 

By Ricardo Carvajal –

The Committee on Examination of Front-of-Package Nutrition Rating Systems and Symbols (part of the Food and Nutrition Board at the Institute of Medicine of the National Academies) recently released a report on the first phase of its study of front-of-package ("FOP") nutrition rating systems and symbols.  In the first phase of its Congressionally mandated study, the Committee analyzed existing FOP systems.  In the second phase due to be completed in 2011, the Committee will focus on consumer understanding and use of FOP systems. 

The Committee’s report analyzes 20 of the many FOP systems currently used in the U.S. and abroad, and places them into three categories: (1) Nutrient-Specific Systems (those that display “the amount per serving of select nutrients from the Nutrition Facts panel or use symbols based on claim criteria”); (2) Summary Indicator Systems (those that “use a single symbol, icon, or score to provide summary information about the nutrient content of a product”); and (3) Food Group Information Systems (those that “use symbols that are awarded to a food product based on the presence of a food group or food ingredient”).  The report analyzes the different systems’ respective strengths and limitations, and provides examples of how different systems can yield different results for the same types of foods – an observation that is certain to be cited in support of any future proposal to create a single standardized system.  The report also declines to identify any options for setting criteria for certain types of systems (i.e., Summary Indicator Systems based on algorithms, and Food Group Information Systems), thereby suggesting that those systems are unlikely to form the basis for any future proposal for a single standardized system.

Of particular concern to industry, the report identifies calories, saturated fat, trans fat, and sodium as the most important nutrients to include in an FOP system, on the ground that these nutrients “are most strongly associated with the diet-related health risks affecting the greatest number of Americans.”  At the same time, the report questions the utility of including nutrients that industry has sought to highlight in some FOP systems, such as vitamins and minerals, in part based on “concerns about encouraging overfortification or the addition of these nutrients to food systems in which the nutrient is unstable or not biologically available.”  The report also questions the utility of including fiber, in part based on concerns that “fortification may also encourage consumers to eat foods that have had fiber added rather than increasing their consumption of naturally-occurring, plant-based foods that are high in dietary fiber, as recommended by the 2010 Dietary Guidelines Advisory Committee.” 

Consumers have shown increasing interest in nutrition and health information generally, and food marketers have responded by crafting FOP systems to help convey that information in a way that differentiates their products in a crowded marketplace.  In light of these trends, the course charted by the Committee could well run through rough seas.

By Jeffrey K. Shapiro –

FDA’s Center for Devices and Radiological Health is conducting a usability study of the establishment registration and device listing database. The objective is to make the database easier to use. They are looking for feedback from those who regularly use the database. During the evaluation, participants will be asked to use the database and provide feedback. Participation can be in person in Washington, D.C. or online. Contact Kristina Schall at kristina.schall@opinionstrategies.com to sign up.

By Susan J. Matthees –

Two consumers, a resident of Florida and a resident of New Jersey, have filed a putative class action against Basic Research LLC, Carter-Reed Company, LLC, Dennis Gay, Daniel Mowrey, and Mitchell Friedlander, alleging that Defendants made false and deceptive claims about Relacore and Relacore Extra, two dietary supplement products sold by Basic Research and Carter-Reed and marketed according to plans allegedly designed by Defendants Mowrey, Friedlander, and Gay.  Plaintiffs allege they are entitled to damages for Defendants’ alleged violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), Florida’s Deceptive and Unfair Trade Practices Act, and New Jersey’s Consumer Fraud Act, and under the theory of unjust enrichment. 

Relacore was advertised on television and the internet with the claims such as “Helps prevent stress-related abdominal fat,” “formulated to help:  reduce stress, reduce mild anxiety, improve mood, fight mid-day fatigue, [and] increase energy.”  Both plaintiffs claim that they purchased Relacore and used the product as directed to reduce abdominal fat, but ultimately stopped using the product because it did not work as labeled and advertised.  One plaintiff also purchased and used as directed Relacore Extra, which made similar claims to reduce stress-related abdominal fat, and found that the product did not work as advertised.  Plaintiffs allege that Defendants “knew or should have known” that the products “do not prevent or reduce stress-related abdominal fat, do not reduce stress and anxiety, and do not elevate mood and emergency” and that there was no scientific validation of the claims made for the products. 

In addition, Plaintiffs allege that Defendants Basic Research, Gay, Mowrey, and Friedlander violated a Federal Trade Commission (“FTC”) Consent Order by marketing Relacore and Relacore Extra.  Defendants agreed to the FTC Consent Order in 2006 for claims made for a different weight loss product.  That Order prohibits them from making any claims about health or weight loss without “competent and reliable scientific evidence” to substantiate the claims. 

The case was filed in the southern district of Florida on October 11.

By Kurt R. Karst –      

Earlier this month, President Obama signed into law S. 1674, the Improving Access to Clinical Trials Act (Pub. L. No. 111-255).  The bill, introduced in the Senate by Senator Ron Wyden (D-OR) in September 2009, amends the Social Security Act (42 U.S.C. 1382b & 42 U.S.C. 1396a) to provide for an exclusion under the Supplemental Security Income (“SSI”) program and Medicaid for certain compensation of individuals who participate in clinical trials for rare diseases or conditions.

According to the bill’s findings, “[w]ith a small number of potential trial participants and the possible loss of [SSI] and Medicaid benefits for many who wish to participate, clinical trial research for rare diseases and conditions becomes exceptionally difficult and may hinder research on new treatments and potential cures for these rare diseases and conditions.”  Senator Wyden’s bill, however:

would give people who are eligible for [SSI] and Medicaid the same access to clinical trials as those who are more financially fortunate. . . .  Currently, SSI and Medicaid eligible individuals who want to participate in a clinical trial have to worry about whether or not they will see a loss or a reduction in their benefits for their participation in a clinical trial if the trial offers any sort of research compensation to participants as part of its approved Internal Review Board study design.  This legislation would make it so benefits that these individuals receive from clinical trials are not counted against those who are seeking SSI or Medicaid benefits or those who are already eligible for these benefits.

Specifically, for SSI income exclusion purposes, the new law excludes “the first $2,000 received during a calendar year by such individual (or such spouse) as compensation for participation in a clinical trial involving research and testing of treatments for a rare disease or condition,” provided the clinical trial has been reviewed and approved by an appropriate institutional review board.  For Medicaid exclusion purposes, the new law provides that “[t]he first $2,000 received by an individual (who has attained 19 years of age) as compensation for participation in a clinical trial meeting the requirements of section 1612(b)(26) shall be disregarded for purposes of determining the income eligibility of such individual for medical assistance under the State plan or any waiver of such plan.”

Because, according to Sen. Wyden, there are “some legitimate concerns that research compensation may create the wrong kind of incentives for low-income people,” the new law requires the Comptroller General of the United States to conduct a study to evaluate the effects of S. 1674 on enrollment of SSI beneficiaries in clinical trials for rare diseases or conditions.  The study, which has to be conducted not later than 36 months after the efffective date of the new law, must include an analysis of:

(1) The percentage of enrollees in clinical trials for rare diseases or conditions who were SSI beneficiaries during the 3-year period prior to the effective date of this Act as compared to such percentage during the 3-year period after the effective date of this Act.

(2) The range and average amount of compensation provided to SSI beneficiaries who participated in clinical trials for rare diseases or conditions.

(3) The overall ability of SSI beneficiaries to participate in clinical trials.

(4) Any additional related matters that the Comptroller General determines appropriate.

Not later than 12 months after completion of the study, the Comptroller General must submit a report to Congress with the study results and “with recommendations for such legislation and administrative action as the Comptroller General determines appropriate.”

The new law takes effect within 180 days of enactment, or sooner if the Commissioner of Social Security promulgates final regulations to implement the new law.  S. 1674 is scheduled to sunset in five years, so that Congress can examine the Comptroller General’s report and determine whether the the program is working and should be reauthorized and/or changed. 

The enactment of the Improving Access to Clinical Trials Act is the latest development in a recent flurry of rare disease/orphan drug legislative activity.  As we previously reported (here and here), Congress is considering legislation to streamline the development and regulation of products for rare and neglected diseases and to increase incentives for the development and approval of such products.  We also note that earlier this month the Institute of Medicine issued a 350-page report to help refocus attention on accelerating rare diseases research and product development (see our previous post here), and that FDA and the Drug Information Association (in collaboration with the National Organization for Rare Disorders and Genetic Alliance) recently announced an Orphan Drug Designation Workshop scheduled for November 4-5, 2010, in Lansdowne, Virginia. 

By Dara Katcher Levy & Diane B. McColl - 

Last week, FDA issued a draft guidance intended to assist sponsors and investigators with decisions as to whether human research studies can be conducted on products without an investigational new drug application ("IND").  The draft guidance explains  when an IND is  or is not required.  The draft guidance also provides FDA’s responses to  common questions regarding application of the IND regulations to several types of research involving various types of products.  The draft guidance does present some confusion, however, on the application of the IND regulations to clinical studies assessing certain products’ effects on the structure or function of the body.   

With regard to studies that may be exempt from the IND requirement, the draft guidance clarifies such issues as the following: 

• what is meant by a “drug product that is lawfully marketed in the U.S.”; 
• criteria for assessing whether the risks associated with the proposed investigation of a marketed drug significantly increase the risk or decreases acceptability of the risk compared to approved use of  the marketed drug; and
• when an investigation might be used to support a new indication, change the drug’s labeling, or support a significant change in advertising such that it would require an IND.

The guidance also discusses the use of radioactive and cold isotopes for research.  FDA clarifies that although there are no regulations that specifically address clinical investigations using cold isotopes of unapproved drugs, the agency will exercise its enforcement discretion and will not object to these studies being conducted without an IND, provided certain conditions (modeled after the criteria for studies of radiolabeled drugs articulated in 21 C.F.R. § 361.1) are met.

Of particular note is FDA’s position on the clinical investigation of certain products that are not being investigated for therapeutic purposes, but do affect the structure or function of the body.  Provocation or challenge studies, in which an endogenous compound is administered to evoke a physiologic response, characterize a disease, or establish the mechanism of action, require an IND even though the endogenous compound is plainly not being used for a therapeutic purpose.  FDA reasons that in such studies there is an intent to affect the structure or function of the body, so the compound would be considered a drug and the studies need an IND, unless they meet the criteria for an exemption.  

FDA indicates that an IND is also required for challenge studies in which a live organism (e.g., virus, bacteria, or fungi that is modified or wild-type) is administered to study pathogenesis of disease or  response to the organism.  Acknowledging that the challenge organism is not intended to have a therapeutic purpose, FDA concludes that there is intent to affect the structure or function of the body so the organism is a biological product and a drug, and an IND is required for the clinical investigation, unless the criteria for exemption are met. 

Curiously absent from the guidance is any discussion of  clinical studies of medical foods, which are intended for the dietary management of disease or certain conditions.  FDA does speak to dietary supplements, advising that an IND is not required if the investigation is intended only to evaluate the  effect of the dietary supplement or its dietary ingredients on the structure or function of the body.  The draft guidance cites calcium as an example – a clinical study evaluating calcium’s effect on bone mass would not be subject to an IND, but a clinical study evaluating calcium’s effect on osteoporosis would require an IND.   

Also of interest is FDA’s process for addressing inquiries concerning the application of the IND requirements.  FDA will categorize inquiries as either “formal” or “informal,” specifically stating that “informal” inquiries and responses are nonbinding and will not be tracked.  Further, “formal” inquiries may not receive “formal” responses. 

Comments on the draft guidance must be submitted by January 12, 2011.  Comments on the information collection burdens proposed must be submitted by December 13, 2010.

By Alan M. Kirschenbaum –

After conducting a regulatory exercise mandated by court order, the Department of Defense (“DoD”) on Friday issued a regulation that is virtually identical to a regulation issued in March 2009 to implement its TRICARE retail drug refund program.  As we previously reported, section 703 of the National Defense Authorization Act of 2008 provides that prescriptions filled on or after January 28, 2008 (the enactment date) and paid for under the TRICARE retail pharmacy program are subject to Federal Ceiling Prices (“FCPs”) under 38 U.S.C. § 8126.  In a November 2009 ruling on an Administrative Procedure Act challenge from a coalition of pharmaceutical manufacturers, the Federal District Court for the District of Columbia remanded the original rule back to DoD to decide whether to maintain the current rebate/refund program in effect since May 26, 2009, or implement some other mechanism for obtaining FCPs.  Not surprisingly, after soliciting public comment on the issue in February 2010, DoD has concluded that the existing refund program is the alternative that is most in harmony with the statute, consistent with best business practice, and practical to administer.

The Department rejected industry comments that refunds should be prospective only and that it would be unfair to apply FCPs retrospectively to all prescriptions filled under the TRICARE retail pharmacy benefit since January 28, 2008.  DoD explained that it has no discretion to change this statutorily mandated effective date, but even if it did, retroactive application is not unfair because the statute itself, as well as a DoD Dear Manufacturer letter issued three days after its enactment, advised drug manufacturers of the law and DoD’s interpretation of its effective date.  DoD also rejected industry comments that refunds may be required only if and when a manufacturer enters into a prospective procurement contract with DoD, concluding that this interpretation is contrary to the statute and the legislative history.

DoD did make one significant change from the previous rule.  32 CFR § 199.21(q)(4) now provides that DoD may impose available remedies for the failure of a manufacturer to honor a requirement of the regulation or of a refund agreement, rather than for a failure to “make” an agreement as before.  This change is based on DoD’s view that the refund agreement is voluntary, because a manufacturer may opt out of the program on a drug-by-drug basis under section 199.21(q)(3)(iii)(C) of the rule.  However, if a drug is opted out, the drug will be excluded from TRICARE coverage through not only the retail pharmacy benefit, but also the mail order service and military treatment facility pharmacies.  More importantly, such an opt out may arguably cause the manufacturer to breach its Master Agreement with the Department of Veterans Affairs (VA), which obligates the manufacturer to offer its products to federal agencies (including DoD) on the Federal Supply Schedule.  DoD recognizes this possibility (though calling the issue “outside DoD’s authority”), but offers only cold comfort:  if a manufacturer thinks an opt-out will put it in breach of its Master Agreement, the manufacturer can always voluntarily decide to terminate its Master Agreement.  Of course, the result of these “voluntary” actions would be that the manufacturer would be prohibited from selling its drugs to the federal government, and could not have any of its outpatient drugs reimbursed by the federal government under Medicaid or Medicare Part B.

By Douglas B. Farquhar – 

At a trade industry conference this week, a cadre of government officials unanimously predicted a dramatic increase in the number of criminal prosecutions of individuals for violations of laws governing FDA-regulated industries.  They also discussed how the types of prosecutions may be shifting away from charges based on off-label promotion of drugs and medical devices to charges based on threats to the safety and efficacy of FDA-regulated products, which include food, tobacco, medical devices, and drugs.

I was a co-chair of the conference, which was sponsored by the Food and Drug Law Institute (“FDLI”) in Washington, D.C., along with Jennifer Bragg of the law firm Skadden, Arps, Slate, Meager & Flom.  The Annual FDLI Enforcement Conference gathers together as speakers the decision-makers on enforcement and compliance from all of the major Centers at FDA (Food, Medical Devices, Advertising and Promotion, Drugs, Veterinary Drugs, and Biologics), the top enforcement officer for the agency (Eric Blumberg, FDA Deputy Chief Counsel for Litigation) and the head of the Office of Consumer Litigation, the litigating arm for FDA at the federal Department of Justice (Eugene Thirolf).

In what was probably the most concentrated collection of enforcement speakers gathered at an industry event, nearly all of the speakers predicted an increase in the number of prosecutions of individuals for violations of the Federal Food, Drug, and Cosmetic Act, the statute that governs manufacture and distribution of FDA-regulated products.  The Conference focused on strict-liability prosecutions under the so-called Park doctrine (also covered in an HPM-sponsored webinar last week), and the officials predicted an increase of prosecutions of responsible corporate officials, even if there is no proof that they participated in, encouraged, or even had knowledge of the violations.  Speakers from the government, industry, and private law firms (that would include yours truly) discussed how it is imperative that top corporate officials implement policies and procedures that effectively prevent violations from occurring, with a special emphasis on ensuring that no unapproved claims are made in promotional materials for drugs and devices, that reports of safety problems are filed with FDA promptly and accurately, that officials do not ignore problems discovered in testing of manufactured products, and that drugs and devices are manufactured in accordance with regulations setting current Good Manufacturing Practice.

The trade press has already reported that the government may especially be looking at prosecuting officials for off-label promotion because they feel that the huge monetary settlements with drug and device companies (reportedly more than $9 billion in the last ten years) are not getting the job done.

In addition:

• Blumberg indicated that he expects that criminal investigations will focus on distribution of unapproved new drugs, failure to report unexpected adverse events caused by medical products, and “flagrant” off-label promotion (that is, advertising, company-sponsored programs, pitches by sales reps, and other promotional material which encourages the use of the products for conditions or treatments other than those approved in the labeling).
• Each of the FDA Center compliance directors reported that they are cooperating much more closely with FDA’s Office of Criminal Investigations.
• Howard Sklamberg, Director of FDA’s Office of Enforcement, noted that Class I recalls (the most serious category of recalls) will generally lead to increased FDA inspections and scrutiny of an FDA-regulated company.
• Thirolf mentioned that he anticipates seeing more criminal investigations and prosecutions focused on safety issues, rather than just off-label promotions.  He confirmed, in response to a particularly astute question (that would be from me) that safety issues include distribution of defective products, failure to report adverse events, and fraudulent reporting of testing data or false documentation of manufacturing processes and procedures.

One of the speakers also said that there were 70 whistleblower cases that were filed last year against device and drug companies that are currently being investigated by the federal government.

For more information about the conference, or to get a copy of a CD audio recording of the proceedings, visit www.fdli.org.

By Ricardo Carvajal –

Last October, we noted that FDA and FTC issued a joint warning letter to an internet marketer of a dietary supplement promoted as helpful in preventing swine flu, seasonal flu, and colds. That letter was one of several that targeted similar products as part of FDA’s Flu Task Force.  Now the two agencies appear to be extending the strategy to target supplements marketed for other diseases.  A recent warning letter challenges the marketing of supplements for the treatment of herpes, epilepsy, diabetes, and venereal diseases. 

Of interest to those who have been following recent developments on the subject of what constitutes adequate substantiation, the letter includes the following carefully worded statement: “[I]t is unlawful under the FTC Act. . . to advertise that a product can prevent, treat, or cure human disease unless you possess competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made” (emphasis added).

By Carmelina G. Allis –

We previously reported on FDA’s August 2010 publication of a report recommending changes to the 510(k) program.  We briefly discussed the proposed changes, and raised concerns with some of the agency’s recommendations because of their potential negative effect on the medical device industry and the 510(k) program.  Lawmakers from the U.S. House of Representatives also have concerns with some of the recommended changes.

On October 12, 2010, House lawmakers sent a letter to FDA’s Commissioner Dr. Hamburg asking to delay the implementation of certain changes that the agency is considering for the 510(k) program.  In particular, the lawmakers have raised concerns with the agency’s recommendations regarding rescission authority, split and multiple predicates, intended use and indications for use, mandatory pre-market inspections and clinical data for a subset of Class II devices, and proprietary information.  Those recommendations are “considered controversial” by lawmakers, raising concerns that their implementation could “prevent companies from using important evidence in product applications,” “delay the introduction of innovative new therapies,” and “potentially upset the delicate balance that exists between providing information to the public and protecting intellectual property.”

Although the Representatives do not oppose the recommendations, they request “more transparency from FDA” on those issues.  The letter asks the agency to provide more details about those recommended changes before they are implemented, such as a detailed work schedule for implementing the recommendations, which changes will be implemented pursuant to guidance documents, rulemaking, or statutory amendments, and an analysis of the economic impact of the recommendations on the domestic medical device industry.

The lawmakers also request that the agency “ensure that proper and appropriate public comment is solicited before moving forward.”  Emphasizing the need for more transparency, the Representatives commended the agency on its efforts for keeping “the public[] and the medical technology community informed and engaged” in this process.

By Kurt R. Karst –      

2011 is shaping up to be an interesting year in the Hatch-Waxman world, and all eyes seem to be focusing on what will happen with Ranbaxy’s purported (sole) 180-day exclusivity for a generic version of the mega-blockbuster drug LIPITOR (atorvastatin calcium) Tablets.  Will Ranbaxy launch in November 2011 (pusuant to a patent settlement agreement) and trigger its pre-Medicare Modernization Act (“MMA”) 180-day exclusivity?  Will the exclusivity remain “parked”?  Or will the company be stripped of its exclusivity or otherwise work out a deal to relinquish it?  A recent BernsteinResearch analyst report tries to address these questions and more. 

As we previously reported, Ranbaxy has had good manufacturing practice problems with FDA that could stall Agency approval of the company’s ANDA for atorvastatin.  In February 2009, FDA announced that the Agency was taking the unusual step of invoking its Application Integrity Policy (“AIP”) against Ranbaxy’s Paonta Sahib, India manufacturing facility.  FDA takes such regulatory action under the Agency’s AIP procedures when FDA believes that a company’s actions raise significant questions about the integrity of data in marketing applications.  Importantly, FDA notes in the AIP letter with respect to pending ANDAs that:

In accordance with FDA policy, the Agency will assess the validity of the data and information in all of Ranbaxy’s affected applications which contain data developed at the Paonta Sahib site. . . .  This means that the Agency does not intend ordinarily to conduct or to continue its normal substantive scientific review (including review of data and labeling) of any such pending application or supplement, or of any new application or supplemental applications filed after the date of this letter, that contain data developed at the Paonta Sahib site, during a validity assessment of that application.

Ranbaxy’s atorvastatin ANDA is widely believed to be out of the Paonta Sahib facility; however, Ranbaxy has never confirmed this.  If it is, as many believe, then the application could be blocked from approval and generic competition (other than an authorized generic) stalled. 

According to BernsteinResearch, there appear to be three possible outcomes in this case:

The highest likelihood is that Ranbaxy will be able to launch generic Lipitor (fully or partially) on time.  This would require some sort of resolution of a very challenging regulatory situation (Ranbaxy violated an honor system). However, (i) Ranbaxy will do all it can to resolve the issue (we see the recent departure of Ranbaxy CEO as related), (ii) a solution is best for the public wallet and (iii) may also be organizationally better for FDA (avoids lawsuits and negative attention). We can see a compromise solution like transferring the application to a new manufacturing site as possible.

A less likely possibility is that Ranbaxy is delayed holding other generics off. This is the most likely result if Ranbaxy can’t launch. . . . 

The least likely scenario is that [the] Ranbaxy ANDA file is disqualified being of insufficient quality (as the result of potential fraud). . . .  If [the] Ranbaxy ANDA is invalidated, the exclusivity is lost . . . .

Although BernsteinResearch favors on an on-time launch scenario in November 2011, the report hedges and notes that “all paths depend on FDA willingness to work with Ranbaxy to approve Lipitor out of its facilities and we are uncertain FDA will do so.”  As an aside, BernsteinResearch notes that Ranbaxy could relinquish its 180-day exclusivity, but that the company “does not have commercial interest to do.”  (A selective waiver is not possible unless 180-day exclusivity is triggered by a relevant court decision or after ANDA approval and commercial marketing.)  Given the headaches atorvastatin 180-day exclusivity could cause FDA – think lawsuits and citizen petitions – one has to believe that the Agency would rather see the whole mess go away with a relinquishment. 

An early view on generic LIPITOR could have come earlier this year in the context of generic FLOMAX (tamsulosin HCl) Capsules; however, 180-day exclusivity was forfeited.  In that case, Ranbaxy was reported to be a first applicant eligible for post-MMA 180-day exclusivity with respect to the only Orange Book-listed patent – U.S. Patent No. 4,703,063, which expired on October 27, 2009, and the pediatric exclusivity for which expired on April 27, 2010.  FDA tentatively approved Ranbaxy’s ANDA No. 77-451 in June 2007 – and it remains the only tentatively approved ANDA for generic FLOMAX (8 other ANDAs have been approved).  It is unclear whether Ranbaxy’s inability to obtain final approval for ANDA No. 77-451 is due to FDA’s AIP and whether information supporting the ANDA file was generated from the company’s Paonta Sahib facility.  This is reportedly the case, but the basis for this report is not known. 

The BernsteinResearch report identifies another “early view” case that could shed some light on “the Lipitor situation” – namely generic ARICEPT (donepezil HCl) Tablets.  As we recently reported, Ranbaxy’s ANDA No. 76-786, which is tentatively approved, could be up for final approval on November 25, 2010 after the expiration of U.S. Patent No. 4,895,841, to which Ranbaxy submitted a Paragraph III certification.  Ranbaxy holds pre-MMA 180-day exclusivity based on Paragraph IV certifications to later-expiring patents.  Like atorvastatin (and tamsulosin), Ranbaxy’s donepezil is believed to be out of the Paonta Sahib facility.  “A solution to the Aricept situation if found, may serve as a model for Lipitor,” according to the BernsteinResearch report.

And what about the “nuclear option” – rejecting Ranbaxy’s ANDA and stripping the company of its 180-day exclusivity?  Then FDA “will almost certainly be sued by Ranbaxy” or Pfizer or an authorized generic distributor, according to the BernsteinResearch report.  But it could be a “damned if you do, damned if you don’t” situation for FDA, because “if FDA does not invalidate the application, it may be sued anyways by other generic filers seeking rejection of the filing.”

By Kurt R. Karst –      

Earlier this year we posted on the effects of the U.S. Court of Appeals for the Federal Circuit’s December 2009 “false marking” decision in Forest Group, Inc. v. Bon Tool Co.  False marking is the act of placing an item in commerce that is intentionally marked with a patent number that has expired or that does not protect the item.  In Forest Group, the Federal Circuit ruled that the $500 maximum penalty for a “false marking” in violation of 35 U.S.C. § 292 attaches to each individual article that is falsely marked, potentially resulting in astronomical monetary damages.  The false marking statute includes a bounty hunter (i.e., qui tam) provision providing that “[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.”  Scores of lawsuits ensued, as identified on the Gray On Claims Blog.

Since our last post, many more complaints have been filed alleging false marking by various parties in the FDA-regulated industry, including Ranbaxy, Roche Diagnostics Corporation, Walgreens, Bristol-Myers Squibb, Eisai, Takeda, Watson, and many, many  others.  Even Pop Rocks® Crackling Candy has not been safe from the vagaries of the false marking bounty hunters! 

Although the Federal Circuit once again addressed 35 U.S.C. § 292 in Pequignot v. Solo Cup Co. in a June 2010 decision in which the Court held that that a rebuttable presumption of intent to deceive under 35 U.S.C. § 292 is created when a manufacturer prints expired patent numbers on its products with knowledge that the patents are expired, that decision does not appear to have put a damper on false-marking claims.  Indeed, qui tam relators likely took heart from the Federal Circuit’s August 2010 decision in Stauffer v. Brooks Brothers, Inc. in which the Court addressed standing under 35 U.S.C. § 292.  In that case, the Court ruled that “even though a relator may suffer no injury himself, a qui tam provision operates as a statutory assignment of the United States’ rights, and the assignee of a claim has standing to assert the injury in fact suffered by the assignor” (internal quotation omitted).

The latest attempt to legislatively quash false marking qui tam lawsuits came from Representative Bob Latta (R-OH), who recently introduced the Patent Lawsuit Reform Act of 2010 (H.R. 6352) to amend 35 U.S.C. § 292.  (Previous attempts to amend the law as part of the Patent Reform Act have thus far failed as the reform bill has been stalled.)  According to Rep. Latta, the bill “would strengthen the vague language [of 35 U.S.C. § 292] to revert back to the pre-Forest Group decision and assess one $500 fine if found guilty of deceiving the public under Section 292 and not allow for the interpretation of being fined for each product on the market.”  Moreover,  H.R. 6352, which has been referred to the House Judiciary Committee would “also require the individual bringing the lawsuit to have suffered a competitive injury as a result of the violation.”  A one-two punch for Forest Group and Stauffer!

By John A. Gilbert & Peter M. Jaensch –

On October 6, 2010, the Drug Enforcement Administration (“DEA”) announced a Statement of Policy concerning the procedure by which a registrant-prescriber may use an agent, including a nurse in a long term care facility (“LTCF”), to communicate controlled substances prescriptions to a pharmacy.

DEA notes on background that “[w]hile the core responsibilities [of] prescribing controlled substances may not be delegated…an individual practitioner may authorize an agent to…communicat[e] such prescriptions to a pharmacy in order to make the prescription process more efficient.”

The Policy provides a discrete summary of “acts that an agent may take in connection with controlled substance prescriptions.” It enumerates that:

1. An agent may “prepare a written prescription for the signature of the practitioner,” provided the practitioner has “in the usual course of professional practice” made the necessary determinations regarding the legitimate medical need, and has specified the “required elements” of the prescription to the agent.

2. An agent may telephone a pharmacy concerning a prescription for a controlled substance in schedules III through V and convey the practitioner’s otherwise valid oral prescription provided the prescriber has specified all required prescription information.

3. Where otherwise permissible to fax a controlled substance prescription to a pharmacy, the agent may do the actual faxing.

The Notice further states that “[d]ue to the legal responsibilities of practitioners and pharmacists under the CSA and the potential harm to the public from inappropriate and unlawful prescribing and dispensing of controlled substances,” DEA advises practitioners and their agents to commit their agency authorization to writing.

Importantly, DEA states that a nurse in a LTCF may act as practitioner’s agent.  The Notice closes with a sample of a written authorization that DEA would consider adequate.   This is an area that industry has been seeking clarification on for a long time.  DEA’s  Notice moves this issue in the right direction.   

Notably, the Notice advises that although “not required by DEA,” the agency authorization original should be kept by the practitioner during the life of the agency, and for the two years following. The DEA further notes that a pharmacist’s corresponding duty applies, and even where the pharmacists has a copy of the agency authorization, depending on circumstances, further inquiry may still be necessary to fulfill that duty in connection with a prescription communicated via agent.

The Federal Register Notice advises parties seeking further information to contact Mark W. Caverly, Chief of the Liaison and Policy Section, Office of Diversion Control, DEA, 8701 Morrissette Drive, Springfield, VA 22152, (202) 307-7297.