• where experts go to learn about FDA
  • Recent “Fraud on the FDA” Court Decision Should Cause CROs to Take Note

    In the preemption world, “fraud on the FDA” cases are fairly common.  As one court recently used the term, fraud on the FDA means a drug or a medical device company is liable to someone who was injured by their product if that product was approved by FDA based on false information the company submitted and the company has admitted to the Agency that it engaged in fraud.  But drug (and device) companies often do not gather all the data they submit to FDA.  Instead, they frequently have help from Contract Research Organizations (“CROs”), which perform a variety of functions, including overseeing clinical trials.  So what happens when a CRO does something questionable during a clinical trial?

    Enter the Wawrzyneks.

    Eileen Wawrzynek had spinal surgery in 1999.  During the surgery her doctors used a device – ADCON-L – that had received conditional FDA approval to help prevent scarring.  The surgery did not go well.  Mrs. Wawrzynek had three subsequent surgeries and the Wawrzyneks sued the doctors and the hospital alleging malpractice.  They lost.  Then they sued the medical device manufacturer, Gliatech, and settled.  Then they sued Statprobe Inc., a CRO, in the U.S. District Court for the Eastern District of Pennsylvania.

    Very strict procedures needed to be followed during the ADCON-L clinical trials.  In order to ensure the results were not influenced by whether the investigator knew the device had been used (it is rather difficult to create placebo devices) the results consisted of an MRI scan taken of the area where the surgery occurred.  This MRI was then read by a blinded researcher who rated the resulting scar on a scale of 0 (no scar) to 4 (maximal scarring).  This result was to be recorded in pen on a specific sheet.  To be successful, the manufacturer needed to show that ADCON-L prevented scarring and that there was less than a 5% chance that the results shown were due simply to chance (i.e., a p-value less than 0.05).  The preliminary results looked good.  Then things changed.  As new results were analyzed, the p-value skyrocketed to greater than 0.5, meaning no one could really determine whether ADCON-L did anything useful at all.  In fact, scarring between the two groups was about equal, as was the number of people receiving the highest score of 4.  Because only one person was reading all of the MRIs, it made sense to investigate whether he was consistent in his scoring.

    The device manufacturer sent two doctors to supervise the researcher.  The researcher still did not know who had received the device, but these two new doctors did.  The researcher re-read each of the prior MRIs, and instead of recording his results in pen, as he had previously done, he called out the number to one of the new (and unblinded) doctors, who recorded it in pencil.  The researcher then signed the results and the CRO re-entered the numbers into the trial database without noting that they had been re-read or were in pencil.

    Through the re-read process, numbers changed.  Fewer ADCON-L patients received 4s, and more non-ADCON-L patients did.  These changes were enough to reduce the p-value from 0.66, nowhere near good enough for approval, to 0.01, well below the required 0.05 level.  Not only was the new data now statistically significant, it was good enough for FDA to conditionally approve the device.

    The court indicated that this was a pretty straightforward case of fraud on the FDA for the manufacturer, as the manufacturer had already admitted the fraud.  What makes this case interesting is that this admission was enough for the court to hold the CRO liable as well (at least potentially, as the court’s decision in Wawrzynek v. Statprobe was just an order denying summary judgment in favor of the CRO).  As the court stated:

    [T]he Court sees no legal theory or compelling policy reason to allow [the CRO] to use [the manufacturer] and its wrongdoing as a shield. Because the FDA found that fraud and wrongdoing occurred during the ADCON-L approval process, the door to [a fraud on the FDA claim] was opened wide enough to allow both [the manufacturer and the CRO] to pass through.

    So, what’s a good CRO to do?  In this case, the year before the re-read occurred the CRO had already recognized it was being asked to do some questionable statistical practices by the manufacturer.  Wawrzynek provides strong incentive for a CRO to protect itself the next time a similar situation arises, either removing itself from the study or simply refusing to go along with similar manufacturer practices.

    Pharmacy Associations Challenge Final CMS AMP Rule; Legislative Fixes Pending in Congress

    The Deficit Reduction Act of 2005 changed the basis for the federal government’s calculation of how much it reimburses states for their Medicaid generic prescription drug purchases.  Instead of using the “average wholesale price,” or AWP, which is a benchmark price, the federal reimbursement is now based on the “average manufacturer price,” or AMP (which is based on actual sales data, and which is usually quite a bit lower than AWP).

    In July 2007, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule with a comment period (“AMP Rule”) clarifying how manufacturers must calculate AMP.  (Hyman, Phelps & McNamara, P.C.’s summary and analysis of the AMP Rule is available here.)  The regulations became effective on October 1, 2007, but comments may be submitted to CMS until January 2008, after which time CMS will consider revising the regulations. 

    Earlier this month, two pharmacy associations — the National Association of Chain Drug Stores (“NACDS”) and the National Community Pharmacists Association (“NCPA”) — filed a complaint for injunctive and declaratory relief in the U.S. District Court for the District of Columbia challenging the AMP Rule.  The NACDS and NCPA allege that:

    The AMP Rule unlawfully changes the methodology by which pharmacies are reimbursed for dispensing prescription drugs to Medicaid patients.  The AMP Rule is contrary to the plain language of the Social Security Act, contrary to Congress’ clear intent when it enacted the statute, contrary to [the] prior application of that statute [by CMS], contrary to dozens of other federal agency and State statutes and regulations, contrary to long-standing industry practices, and contrary to common sense.

    Furthermore, the associations question CMS’s motivation behind promulgating the AMP Rule:

    [CMS] failed to implement the plain meaning of the Social Security Act because they were motivated to cut billions of dollars from payments to retail pharmacies that serve disadvantaged Americans through the Medicaid program.  All of the [CMS] statutory violations result from the [Centers’] efforts to cut Medicaid reimbursement to retail pharmacies below levels permitted by the statute.

    The associations request that the court: “(1) declare the AMP Rule illegal; (2) preliminarily and permanently enjoin [CMS] from implementing the AMP Rule; (3) declare illegal the posting on the [CMS] website of AMP data calculated pursuant to the AMP Rule; (4)  preliminarily and permanently enjoin [CMS] from posting on the [Centers’] website AMP data collected pursuant to the AMP Rule; and (5) such other relief as the Court deems appropriate.” 

    According to a joint NACDS/NCPA letter addressed to “Senators and Representatives on the Senate Finance Committee and House Energy and Commerce Committee and Co-Sponsors of Medicaid Pharmacy Payment Legislation:”

    [T]his lawsuit was necessary at this time given the impending crisis on January 2008, but legislative action this year remains necessary to sufficiently remedy this problem. Only new legislation can eliminate the severe damage to community pharmacies and their patients caused by this new reimbursement method. Action by Congress is the only long-term solution. [(emphasis in original)]

    The aforementioned “Medicaid Pharmacy Payment Legislation” is reference to S. 1951, H.R. 3700, and H.R. 3140, which are purported legislative fixes for NACDS/NCPA objections to the AMP Rule.  Clearly, the associations hope that following this two-pronged “belt and suspenders” approach will lead to a favorable resolution of their concerns over pharmacy reimbursement in Medicaid.

    Categories: Reimbursement

    First Circuit Decision Signals Hurdles for Whistleblowers in Off-Label Promotion Cases

    We have seen a rash of cases brought by the government and private “whistleblowers” alleging that companies have violated the Federal False Claims Act (“FCA”) by promoting the sales of drugs and devices for “off-label” uses (i.e., uses that have not been approved by FDA).  On November 15, 2007, the U.S. Court of Appeals for the First Circuit issued an opinion in United States v. Pfizer, Inc. that signals the hurdles that whistleblowers have to overcome to be successful in these cases.

    Significantly, the court noted that “FCA liability does not attach to violations of federal law or regulations, such as marketing of drugs in violation of the [Federal Food, Drug, and Cosmetic Act], that are independent of any false claim.”  The court concluded that even though the Relator had apparently alleged a fraudulent scheme (“Rost’s complaint amply describes illegal practices”), his complaint had to be dismissed.  He failed to properly allege “that false claims were submitted for government payment in a way that satisfies the requirements of the Federal Rules of Civil Procedure that fraud be alleged with particularity.”  The court’s opinion notes that “[i]n most, if not all, instances, patients taking Genotropin for anti-aging, cosmetic appearance, and athletic performance enhancement, paid for the Genotropin out-of-pocket without reimbursement from any public of private third-party payors.”  However, the court also noted that it was not irrational to infer from the Complaint that at least some false claims were submitted to the government.  Despite affirming the district’s court’s determination that the plaintiff’s complaint did not meet Federal Rule of Civil Procedure 9(b)’s heightened fraud specificity requirements, the First Circuit remanded the case to the district court to consider whether the plaintiff should be permitted to amend his complaint.

    As the court noted, Pfizer resolved its issues relating to the promotion of GENOTROPIN (somatropin recombinant) with the federal government in April 2007 by paying $34.7 million. (Copies of the Department of Justice (“DOJ”) press releases are available here and here).  In a series of agreements that had the earmarks of careful lawyering on both sides, one Pfizer subsidiary pled guilty to violation of the federal health care program antikickback law and paid a criminal fine, another Pfizer subsidiary entered into a deferred prosecution agreement relating to off-label promotion and paid a $15 million monetary penalty, and Pfizer, Inc. entered into a non-prosecution agreement.  These agreements came nearly four years after Pfizer voluntarily disclosed these issues to the government and a year and one-half after DOJ declined to intervene in the Relator’s case.

    Following the 9th, 10th, and 11th Circuits, the First Circuit also ruled that a voluntary disclosure to FDA, DOJ, and the Department of Health and Human Services Office of Inspector General does not constitute “public disclosure” under the FCA (31  U.S.C. § 3730(e)(4)(A)).  The First Circuit’s decision follows the majority of circuits that have ruled on this issue.  This ruling thus limits the protection from FCA whistleblower suits that companies can get from voluntary disclosures to the government. 

    By J.P. Ellison

    Categories: Enforcement

    FDA Takes Several Steps to Strengthen the Advisory Committee Process, Including Adopting Simultaneous Voting

    Late last week, FDA announced several steps intended to strengthen the advisory committee process.  The announced improvements are part of a broader FDA effort to address recommendations made by the Institute of Medicine in its September 2006 report, titled "The Future of Drug Safety: Promoting and Protecting the Health of the Public," and to meet requirements added by the recently-enacted FDA Amendments Act ("FDAAA"). 

    In October, FDA issued a draft guidance document concerning advisory committee member conflicts of interest.  The draft guidance implements FDAAA Title VII, which, among other things, continues the requirement that all individuals under consideration for appointment to serve on an FDA advisory committee disclose to the Agency all financial interests that would be affected by the committee’s actions.  (In March 2007, FDA issued a draft guidance document that discusses the procedures for determining conflicts of interest and advisory committee member eligibility.)  According to FDA, the October 2007 draft guidance “makes the [advisory committee] process more transparent and consistent by having all advisory committee members publicly disclose interests for which a waiver is granted.”

    In yet another draft guidance document issued last week, FDA provides guidance on advisory committee voting procedures.  In particular, the guidance recommends that votes during advisory committee meetings occur simultaneously instead of sequentially to avoid potential bias.  FDA’s draft guidance states: 

    There has been much discussion inside and outside FDA regarding sequential versus simultaneous voting. Some have expressed concern that sequential voting, in which members cast public votes in turn, has the potential to compromise the integrity of the result.

    For example, scholars and social scientists have studied the risk of “momentum” in sequential voting, exploring whether some sequential voters may be influenced, perhaps even subconsciously, by the votes that precede theirs, especially if those votes are nearly identical or signal a clear trend.  This potential risk may be aggravated in the advisory committee setting, where votes are often conducted in full view of a passionate public and participatory audience.  In the case of sequential voting, there is also a potential risk that comments made by a committee member or a designated federal officer (DFO) during the vote could inappropriately affect the deliberations of those who have not yet voted. Another potential risk is that comments could alter the meaning (or interpretation) of the question at issue in such a way as to cast doubt on whether all the members voted on the identical question.

    As such, FDA makes several recommendations “to help maximize the integrity, consistency, and utility of advisory committee voting results,” including that the Advisory Committee Chair, DFO, or other senior agency official “solicit and answer questions about its meaning before the vote begins,” and use a simultaneous voting procedure such as “a simultaneous show of hands, a simultaneous show of ‘yes’ or ‘no’ cards, or a balloting method in which members simultaneously cast written votes.”

    FDA also announced improvements to the Agency’s advisory committee webpage, re-announced the Agency’s selection of members for the newly-established Risk Communication Advisory Committee, and released a report conducted under a contract with the Eastern Research Group (“ERG”) that assessed the relationship between expertise and financial conflicts of interest of FDA advisory committee members.   The ERG report concludes that:

    standing advisory committee members with higher overall measures of expertise were more likely than other standing advisory committee members to have been granted waivers for financial conflicts of interest[, and] that potential alternative experts can be initially identified, but that some of these individuals may not otherwise be appropriate or available to serve as advisory committee members.  In particular, many alternative experts would also require waivers.  Overall we judge the ability to create alternative conflict-free advisory panels to be speculative.  If possible, it would represent an uncertain and potentially substantial additional burden on the cost and the timeliness of advisory committee operations.  Further, FDA might not always be able to match the specialized expertise of some existing advisory committees.

    Senate Will Take up Another Dextromethorphan Bill; CSA Scheduling Mandated

    In early October, we reported on legislation introduced in the U.S. House intended to restrict the distribution and possession of raw dextromethorphan, an antitussive drug found in many over-the-counter cold/cough drug products.  Dextromethorphan is not a federally-controlled substance, however, the Drug Enforcement Administration (“DEA”) recently noted that it is reviewing the drug for possible control under the Controlled Substances Act (“CSA”). 

    In late October 2007, Senators Joseph Biden (D-DE) and Charles Grassley (R-IA) introduced the Dextromethorphan Abuse Reduction Act of 2007 (S. 2274).  (Sen. Grassley’s press release is available here.)  The bill, while recognizing that cough medications containing dextromethorphan are safe and effective when used properly, notes that dextromethorphan’s inexpensive cost, legal status and accessibility have contributed to its increased abuse, especially by teenagers.  The bill notes that dextromethorphan abuse increased 10-fold between 1999 and 2004, with a 15-fold increase among children between 9 and 17 years old.

    S. 2274, if enacted, would place unfinished dextromethorphan in Schedule V under the CSA.  Schedule V substances have a low potential for abuse and have a currently accepted medical use in treatment in the U.S.  Unfinished dextromethorphan is any form of the drug not in tablet, capsule, solution, liquid or other form intended for retail sale that usually contains inactive ingredients.  Placement of unfinished dextromethorphan in Schedule V would subject entities that handle this drug to DEA registration, recordkeeping, reporting, and security requirements.

    The legislation would also make it illegal to knowingly sell products containing dextromethorphan to individuals under 18 years old, and would impose civil penalties for persons who do so.  Specifically, the bill creates civil penalties of not more than $1,000 for a first violation, up to $2,000 for a second violation, and $5,000 for a third violation.  Retailers who fail to check a government-issued identification for an individual under 18 years old are deemed to have knowledge that the person was underage; however, the bill provides an affirmative defense for retailers who check identification and reasonably (though incorrectly) believe it to prove that the purchaser is over 18.

    Finally, S. 2274 mandates the Attorney General (as delegated to DEA) to promulgate regulations governing sales of dextromethorphan over the Internet and the imposition of civil penalties, and recommends that manufacturers of dextromethorphan products place language about the dangers of dextromethorphan on packaging and that retailers use safeguards to protect against the theft dextromethorphan products.

    Both the National Association of Chain Drug Stores and the Consumer Healthcare Products Association (“CHPA”) issued press releases commending the introduction S. 2274 and promised to work with Congress as the bill moves forward.  CHPA notes in its press release that the organization “is spearheading several major campaigns to raise awareness of dextromethorphan abuse, including the comprehensive web site http://www.stopmedicine abuse.org.”  

    By Larry K. Houck

    Cobalt Pursues “Belt & Suspenders” Approach with Generic Acarbose; Files Declaratory Judgment Action to Preclude ‘769 Patent Orange Book Delisting

    Last week we reported that on October 24, 2007, Cobalt Pharmaceuticals Inc. (“Cobalt”) submitted to FDA an emergency petition for stay of action in which Cobalt publicly disclosed the company’s status as a first applicant eligible for 180-day exclusivity for generic acarbose tablets — marketed by Bayer Pharmaceuticals under the tradename PRECOSE.  Cobalt’s petition requests that FDA stay the approval of all subsequent acarbose tablets ANDAs until Cobalt’s 180-day exclusivity period expires.  In September 2007, FDA established a public docket soliciting comment on certain 180-day exclusivity forfeiture and Orange Book patent “delisting” issues.  FDA’s September 26, 2007 letter establishing the docket states:

    There is one patent listed for Acarbose Tablets, U.S. Patent No. 4,904,769 (the ‘769 patent), which expires on September 6, 2009. . .   [A]t least one ANDA for Acarbose Tablets containing a paragraph IV certification was received by the agency on March 22, 2005. By virtue of this filing, at least one applicant became eligible for 180-day generic drug exclusivity.

    As of [September 26, 2007], which is more than 30 months from March 22, 2005, no first applicant’s ANDA has been approved. Also, on April 16, 2007, Bayer requested that the ‘769 patent be “delisted” as to Precose, i.e., they withdrew the patent information. On September 26, 2007, FDA indicated in [the Orange Book] . . . that the request to delist this patent had been submitted on April 16, 2007.

    As a result of this scenario, in which Bayer did not sue Cobalt for patent infringement, FDA requested comment on whether the first applicant for generic acarbose forfeited 180-day exclusivity eligibility because of a failure to obtain tentative ANDA approval within 30 months after the date on which the application was filed (i.e., FDC Act § 505(j)(5)(D)(i)(IV)), or by operation of the “failure to market” or patent delisting forfeiture provisions at FDC Act §§ 505(j)(5)(D)(i)(I) and 505(j)(5)(D)(i)(I)(bb)(CC), respectively. 

    FDA Law Blog recently learned that in addition to petitioning FDA to stay the approval of all subsequent acarbose tablets ANDAs until Cobalt’s 180-day exclusivity period expires, Cobalt also filed a complaint against Bayer in the U.S. District Court for the Northern District of Illinois (Eastern Division) seeking a declaratory judgment of non-infringement and invalidity of the ‘769 patent, and to preclude the delisting of the ‘769 patent from the Orange Book “until after the natural expiration of Cobalt’s 180-day exclusivity.”  As a basis for the company’s declaratory judgment action, Cobalt asserts that “[t]he listing of the ‘769 patent in the Orange Book also objectively creates the necessary case or controversy and subject matter jurisdiction for an ANDA-filer to file and maintain a declaratory judgment action if it is not sued by Bayer within the requisite 45-day period.” 

    The standard for obtaining a declaratory judgment in Hatch-Waxman cases has been the topic of intense debate.  In December 2003, the Medicare Modernization Act (“MMA”) (§ 1101) amended the FDC Act to affirmatively permit a generic applicant with an application containing a Paragraph IV certification to bring an action for declaratory judgment of patent invalidity or noninfringement (referred to in the law as a “civil action to obtain patent certainty”), provided: (1) the NDA holder or patent owner has allowed the 45-day period in which to file a suit for patent infringement to expire without bringing an action for patent infringement or invalidity; and (2) if the generic applicant’s notice to the NDA holder or patent owner relates to patent noninfringement, the notice includes an offer of confidential access to the generic applicant’s application for purposes of determining whether the NDA holder or patent owner should bring an action for patent infringement.  The MMA also amended the patent statute to provide that “courts of the United States shall, to the extent consistent with the Constitution, have subject matter jurisdiction in any action brought  . . . under [28 U.S.C. § 2201] for a declaratory judgment” of invalidity or noninfringement.

    In the Conference Report (page 836) accompanying the MMA, Congress stated its expectations with respect to the declaratory judgment provisions:

    [C]ourts will find jurisdiction, where appropriate, to prevent an improper effort to delay infringement litigation between generic drug manufacturers and pioneer drug companies.  The conferees expect courts to apply the “reasonable apprehension” test in a manner that provides generic drug manufacturers appropriate access to declaratory judgment relief to the extent required by Article III. . . .  [T]he conferees do not intend for the courts to modify their application of the requirements under Article III that a declaratory judgment plaintiff must, to the extent required by the Constitution, demonstrate a “reasonable apprehension” of suit to establish jurisdiction. . . . The conferees expect the courts to examine as part of their analysis the particular policies served by the Hatch-Waxman Act.  In determining whether a reasonable apprehension of suit exists where an ANDA has been filed with a paragraph IV certification and the patentee has not brought an infringement suit within the 45 days, the conferees expect courts to examine these specific factors as part of the totality of the circumstances. . . .  In any given case, the conferees expect a court may or may not find a reasonable apprehension of suit where these two specific factors are present.

    Pursuant to the recent Supreme Court decision in MedImmune v. Genentech, in which the Court held that a patent licensee is not required to terminate or be in breach of its license agreement before seeking a declaratory judgment that the subject patent is invalid, unenforceable, or not infringed, the Federal Circuit held in Teva Pharms. USA v. Novartis Pharms., which concerned a declaratory judgment action involving generic famciclovir (FAMVIR), that:

    A justiciable declaratory judgment controversy arises for an ANDA filer when a patentee lists patents in the Orange Book, the ANDA applicant files its ANDA certifying the listed patents under paragraph IV, and the patentee brings an action against the submitted ANDA on one or more of the patents.  The combination of these three circumstances is dispositive in establishing an actual declaratory judgment controversy as to all the paragraph IV certified patents, whether the patentee has sued on all or only some of the paragraph IV certified patents.

    After analyzing the Teva decision, Orange Book Blogger Aaron Barkoff noted that the Federal Circuit’s opinion suggests that “unless an innovator grants a covenant not to sue, the mere listing of a patent in the Orange Book coupled with a paragraph IV certification may be sufficient to establish declaratory judgment jurisdiction.  In other words, generic drug companies may be able to pursue declaratory judgment actions even if the innovator declines to file suit on any of its Orange Book-listed patents.”  Indeed, this is precisely the argument that Cobalt makes in its declaratory judgment action against Bayer.

    Whether the court will agree with Cobalt’s basis for its complaint for declaratory judgment is as of yet unclear.  In a recent docket entry in the case, the court states that “[a]fter careful review of this recently filed complaint, the Court has serious concerns about the appropriateness of venue and jurisdiction in this district.  The parties should address this issue in the joint status report which will be due on or before 11/29/2007.”  We will continue to update you on this and other issues concerning generic acarbose as we learn additional information.

    Categories: Hatch-Waxman

    HHS Issues Import Safety Report; FDA Simultaneously Announces Food Safety Protection Plan

    Earlier this year, President Bush signed Executive Order 13439 establishing the Interagency Working Group on Import Safety (“Working Group”).  The Working Group, chaired by Department of Health and Human Services Secretary Mike Leavitt, was charged with conducting a comprehensive review of current import safety practices and determining where improvements can be made.  In September 2007, the Working Group issued its initial findings in a Strategic Framework document, and committed to issuing a detailed action plan by mid-November 2007.

    On November 6, 2007, the Working Group issued its Action Plan for Import Safety (“Import Action Plan”).  HHS simultaneously announced an FDA Food Protection Plan (“Food Plan”).  Although the Food Plan is presented as part of the broader Import Action Plan, FDA’s Food Plan covers food safety of both domestic and imported food. 

    Based on a 3-pronged strategy of prevention, intervention, and response, the Import Action Plan is a roadmap to keep hazardous products from entering the U.S. (Additional information about the Import Action Plan is available here.) The “roadmap to import safety” discussed in the Import Action Plan identifies 14 broad recommendations and 50 specific action steps to enhance product safety at every step of the import lifecycle.  For each action step, the Import Action Plan specifies which agencies are affected, and whether the action steps are short-term (i.e., completed within the next 12 months) or long-term.  The Import Action Plan is not limited to food products but covers all consumer goods including toys, drugs, and medical devices.  Recommendations from the Import Action Plan that are also incorporated in the FDA’s Food Protection Plan include certification of imported products, mandatory product recalls, and expedited consumer notification of product recalls. 

    FDA’s Food Plan is based on the same strategy as the broader Import Action Plan; that is, a strategy of prevention, intervention, and response.  FDA recognizes that a new approach to food safety is needed.  According to the Food Plan, the safety of the U.S. food supply remains second to none, but increasing variety in food products, changing consumption patterns, changing food production technologies, changing consumer demographics, and new foodborne pathogens challenge a food safety system based solely on inspection.  The change in volume, variety, and complexity of FDA-regulated products, and the stagnant or diminishing resources have resulted in a need for FDA to move away from the random inspection “snapshot approach” currently used by the Agency.  The Food Plan proposes a proactive approach that focuses on risks throughout the food product lifecycle, reallocates resources to high risk food products, and implements modern technologies and detection methods.  The Food Plan also “address[es] both unintentional and deliberate contamination” of all foods except meat, poultry, and processed egg products, which are within the U.D. Department of Agriculture’s jurisdiction.   

    The Food Plan identifies some issues that can be addressed within the current statutory framework by strengthening FDA actions.  Many of these actions involve: (1) increased communication and cooperation with federal, state, local, and international partners, consumers groups and industry representatives; and (2) a shift of focus or reallocation of Agency resources.  The Food Plan includes only two regulatory actions.  Specifically, the Food Plan recommends that FDA finalize the Agency’s September 2004 proposed rule on prevention of Salmonella in shell eggs, and finalize the February 2003 proposal concerning prior notice of imported foods.  The Food Plan also identifies numerous legislative changes necessary to provide FDA with the authority to “transform the safety of the nation’s food supply.”   

    Each of the three major components of FDA’s Food Plan (i.e., prevention, intervention, and response) is discussed below.

    Prevention – From “Farm to Fork”

    Prevention is the core element of the Food Plan.  Recognizing that random inspections are ineffective, FDA proposes to identify risks and target resources to achieve the greatest risk reduction.  In its risk analysis, FDA will focus on risks over a product’s lifecycle, from “farm to fork.”  Such an approach requires cooperation with producers, manufactures, distributors, retailers, and importers, among other interested parties.  FDA identifies the need for additional authority to: (1) “allow FDA to require preventative controls against intentional adulteration;” (2) “strengthen FDA’s ability to require manufacturers to implement . . . Hazard Analysis and Critical Control Point (HACCP) [plans] for high-risk foods;” and (3) “require that food facilities . . . renew their FDA registration every two years.”

    Intervention – Verifying Preventative Measures

    The intervention element in the Food Plan focuses on verification of implementation of preventative measures.  Rather than random inspection, FDA proposes a risk-based inspection and surveillance program for imported as well as domestic food products.  To allow such an approach, FDA needs additional legislative authority.  To ease FDA’s burden of inspecting the ever-growing number of food facilities, FDA requests authority to “accredit independent third parties.”  FDA would be not be bound by such voluntary inspections, but the Agency could use information collected during such voluntary inspections to address food safety issues. 

    Currently, foreign establishments importing food into the U.S. are required to provide prior notice of each shipment into the U.S.  FDA requests additional authority to require electronic import certificates when such shipments concern high-risk products.  Foreign regulatory authorities or third-party inspectors would inspect the product and certify its safety.  Products certified as meeting U.S. safety standards could receive expedited entry.  FDA also requests authority to stop import of food from foreign facilities that “unduly delayed, limited or denied” the Agency’s access to inspect the facility. 

    Finally, struggling with ever-shrinking resources, FDA also proposes that Congress grant the Agency the authority to charge a reinspection fee for facilities that require follow-up inspections because they failed the initial inspection, and to charge a user fee for issuance of export certificates.  (Congress is currently considering legislation to create import user fees – see 8/15/2007 FDA Law Blog post.)

    Response – Speed and Effectiveness are Key

    Because no system is failure proof, a food safety plan would be incomplete without provisions addressing responses to contamination.  As such, the Food Plan identifies “a need to respond faster and communicate more effectively with consumers and parties.”  Not surprisingly, FDA asks Congress for legislative authority to issue mandatory recalls.  In addition, citing the recent melamine pet food contamination, FDA requests Congress to increase the Agency’s authority to access company records.  Such increased authority would include access to records concerning food products “related to” an adulterated food in addition to those records concerning the adulterated food product.

    Overall, FDA’s Food Plan does not contain many new suggestions.  Although the proposed changes will undoubtedly require additional resources, the Food Plan does not include an estimate of the costs associated with the proposed measures.   Later this week, FDA will hold a blogger teleconference on the Food Plan.  We plan to participate in that teleconference and will update you on issues discussed during the call.

    By Riëtte van Laack

    Categories: Foods |  Import/Export

    Seventh Circuit Questions Equity of CSA Civil Monetary Penalty Involving Pseudoephedrine Sales

    The U.S. Court of Appeals for the Seventh Circuit, in its recent opinion in United States v. Global Distributors, Inc., remanded for reconsideration to the U.S. District Court for the Northern District of Illinois (Eastern Division) the imposition of the maximum allowable monetary penalties under the Controlled Substances Act (“CSA”).  In this case, the federal government brought a civil action against Global Distributors, Inc. (“Global”) for allegedly failing to demand proof of identity from four customers in connection with eight large sales of a cold medicine containing pseudoephedrine. 

    Pseudoephedrine is commonly used as a decongestant in drug products, but can be “cooked up” to produce the illegal psychostimulant and sympathomimetic drug methamphetamine (popularly known as “meth” or “ice”). The Combat Methamphetamine Epidemic Act of 2005 banned over-the-counter sales of cold medicines containing pseudoephedrine and limited the sale of such drug products to “behind the counter” status.

    The pseudoephedrine contained in some of the drug products sold by Global was allegedly converted into methamphetamine worth almost $500,000.  According to an investigation conducted by the Drug Enforcement Administration (“DEA”), much of the cold medicine was diverted for illicit uses by a clerk employed by one of the four customers involved in these transactions.  The U.S. District Court for the Northern District of Illinois (Eastern Division) granted summary judgment in the government’s favor and assessed jointly against Global and John Asoofi, Global’s owner and sole shareholder, the maximum $25,000 fine per each of the eight violations. 

    The Seventh Circuit affirmed the district court’s holdings that Global and Mr. Asoofi violated the CSA and its implementing regulations by failing to: 

    (1) verify the identities or registration statuses of their customers at the time the eight orders were placed;

    (2) verify the existence and apparent validity of business entities ordering a listed chemical;

    (3) verify the agency status claimed of the representative when it is entering a transaction with a new representative of a firm;

    (4) obtain one of the customer’s signature and two forms of identification for cash sales; and

    (5) establish, for customers who are not an individual or cash customer, the identity of the authorized purchasing agent and have on file that person’s signature, electronic password, or other identification. 

    The Court of Appeals agreed with the district court that the defendants presented either no evidence, or insufficient evidence for purposes of defeating summary judgment, that they complied with these regulatory requirements. 

    The Seventh Circuit, however, found that the trial court abused its discretion in imposing the maximum allowable monetary penalties under the CSA.  Both courts considered the following four factors in assessing a civil penalty: (1) the defendants’ level of culpability; (2) the public harm that the violations caused; (3) the amount of profits defendants made from the violations; and (4) the defendants’ ability to pay a penalty.  The Seventh Circuit agreed with the lower court’s analysis of the first, second, and fourth factors.  As to the third factor, however, the appellate court was struck by the disparity between the $200,000 fine and Global’s profit ($11,000 according to the government; $2,000 according to defendants). 

    The Seventh Circuit reasoned that “civil penalties ought to bear some relation to the conduct being punished” and observed that although the product Global sold resulted in methamphetamine worth $500,000, none of the methamphetamine actually reached the public.  Given these circumstances, the Court opined that “it is more appropriate in this case to focus on the defendants’ profits, rather than the public harm caused by their actions, which was minimal in non-monetary terms.  This would suggest that a lower fine would be adequate.”  Accordingly, the Seventh Circuit remanded the case for reconsideration of the amount of penalties assessed against the defendants.

    By Brian J. Wesoloski

    ADDITIONAL INFORMATION:

    • An MP3 file of the February 2007 oral argument before the Seventh Circuit is available here.

    • FDA information on the legal requirements for the sale and purchase of drug products containing pseudoephedrine is available here.

    Reps. Waxman and Allen and Sen. Kennedy Will Introduce Bill to Modernize the OTC Drug System

    Yesterday, Representatives Henry Waxman (D-CA) and Tom Allen (D-ME) and Senator Ted Kennedy (D-MA) announced plans to introduce the Non-Prescription Drug Modernization Act of 2007 (“NDMA”).  The bill comes in the wake of recent concern over the use of Over-the-Counter (“OTC”) cough/cold drugs in children under 6 years old and FDA’s ability to quickly take action to address those concerns by amending OTC drug monographs. 

    In October 2007, FDA’s Nonprescription Drugs and Pediatric Advisory Committees recommended, during a joint committee meeting, a ban on the use of OTC cough/cold drugs in children under 6 years old.  The joint committee was scheduled and occurred after a citizen petition submitted to the Agency in March 2007 raised concerns about the safety and efficacy of OTC cough/cold products in this pediatric population.  Subsequently, FDA announced the Agency’s plans to hold a public workshop in December 2007 with the National Institutes of Health and the Consumer Healthcare Product Association (“CHPA”) to “gain an understanding of current use of OTC drug products by adolescents.”  In addition, Rep. Waxman, following the advisory committees’ mid-October recommendation, sent a letter to CHPA urging the organization to “take prompt action to ensure that the advisory committee’s recommendations are promptly carried out by your member companies.”  On November 1, 2007, Sen. Chris Dodd (D-CT) also sent a letter to FDA Commissioner Andrew von Eschenbach asking the Agency to “take swift and comprehensive action” on the advisory committees’ recommendation by immediately removing OTC cold/cold drugs indicated for children under 6 years old, or at least mandate that new product labels state “do not use” for children under that age.

    The NDMA, a summary of which is available here, would amend the Federal Food, Drug, and Cosmetic Act (“FDC Act”) by adding section 568 (“Amending or Repealing Monographs”) to provide FDA with explicit expedited rulemaking authority to amend or repeal OTC drug monographs under two circumstances:

    (1) When FDA finds (on its own initiative) that an OTC drug monograph must be amended or repealed because a drug under the monograph may pose a significant risk; or

    (2) When FDA finds, after an advisory committee meeting, that a drug under the OTC monograph lacks evidence of effectiveness.

    No specific appeal procedure is provided in the bill.

    The NDMA would expand FDA’s authority to regulate OTC drug advertising.  Currently, the Federal Trade Commission regulates OTC drug advertisements, while FDA regulates prescription drug advertisements.  The bill would also amend the FDC Act to provide civil monetary penalties for violative Direct-to-Consumer (“DTC”) OTC drug advertisements.  The recently-enacted FDA Amendments Act added civil monetary penalties for violative DTC prescription drug advertisements.  Finally, the NDMA would require FDA to identify (by establishing a public docket) and report to Congress (not later than 2 years after the NDMA is enacted) on any OTC drug monographs requiring further review to determine whether they should be amended or repealed.

    Categories: Drug Development

    The Controversy over Acarbose 180-Day Exclusivity Heats Up

    In September, we reported that FDA established a public docket (#2007N-0417) soliciting comment on certain 180-day exclusivity forfeiture and Orange Book patent “delisting” issues concerning the diabetes drug acarbose (marketed by Bayer Pharmaceuticals under the tradename PRECOSE).  Specifically, FDA’s September 26, 2007 letter states:

    As of the date of this letter, which is more than 30 months from March 22, 2005, no first applicant’s ANDA has been approved. Also, on April 16, 2007, Bayer requested that the ‘769 patent be “delisted” as to Precose, i.e., they withdrew the patent information.  On September 26, 2007, FDA indicated in [the Orange Book] that the request to delist this patent had been submitted on April 16, 2007.

    To determine whether any ANDA referencing Precose is eligible for final approval, the agency must consider how the 180-day generic drug exclusivity forfeiture provisions at section 505(j)(5)(D) of the [FDC Act] apply to this set of facts.  As part of the process for making such a determination, we are seeking your views regarding the applicability of sections 505(j)(5)(D)(i)(IV) — failure to obtain tentative approval within 30 months — and 505(j)(5)(D)(i)(I)(aa)(BB) — failure to market by 30 months. We also are interested in your views regarding the applicability of section 505(j)(5)(D)(i)(I)(bb)(CC) — relating to the delisting of a patent.

    At that time, the identity of any first ANDA applicant eligible for 180-day exclusivity was not publicly known.  Since then, however, Cobalt Pharmaceuticals Inc. (“Cobalt”) has publicly disclosed its status as a first applicant. 

    This became apparent when Cobalt submitted a 4-page emergency petition for stay of action in late October requesting that FDA stay the approval of all subsequent acarbose tablets ANDAs until Cobalt’s 180-day exclusivity period expires.  Cobalt argues that such a stay is necessary to prevent substantial and irreparable harm to the company.  “Here, Cobalt accepted the quid pro quo that Congress created with the exclusivity incentive and filed the first ANDA with a paragraph IV certification challenging the ‘769 patent.  As a reward, Congress intended that Cobalt reap the benefits of 180-day generic market exclusivity.  Sound public policy requires FDA to safeguard that exclusivity and to preclude others from circumventing it based on unlawful interpretations of the forfeiture provisions.” 

    Upsher-Smith Laboratories (“USL”) and Teva Parenteral Medicines (“Teva”) submitted comments to docket #2007N-0417. (The deadline for submitting comments to the docket has been extended from October 10, 2007 until November 12, 2007.)  USL takes the position that because the ‘769 patent has been disclaimed, it should be removed from the Orange Book, and no first applicant should be awarded 180-day exclusivity — thereby making FDA’s solicitation unnecessary. 

    Teva takes the position that the first applicant appears to have forfeited 180-day exclusivity eligibility because of a failure to obtain tentative ANDA approval within 30 months after the date on which the application was filed (i.e., FDC Act § 505(j)(5)(D)(i)(IV)).  Teva also comments on the “failure to market” and patent delisting forfeiture provisions at FDC Act §§ 505(j)(5)(D)(i)(I) and 505(j)(5)(D)(i)(I)(bb)(CC), respectively, on which FDA also requested comment. 

    With respect to the “failure to market” provision, Teva states “we do not believe that, under the apparent facts of this case, the first applicant for generic Acarbose tablets has forfeited its exclusivity under [FDC Act § 505(j)(5)(D)(i)(I)].”  This position is consistent with Teva’s September 28, 2007 letter to FDA regarding 180-day exclusivity for generic granisetron (Docket #2007N-0389; 10/12/2007 FDA Law Blog post), in which the company takes the position that a first applicant’s failure to commence commercial marketing within 30 months of submitting its exclusivity-qualifying paragraph IV certification is not (on its own) sufficient to trigger 180-day exclusivity forfeiture.

    With respect to the patent delisting forfeiture provision, Teva cites the District of Columbia Circuit’s 2006 decision in Ranbaxy Labs. Ltd. v Leavitt, and states:

    [W]e do not believe that the reference to the withdrawal of patent information in [FDC Act § 505(j)(5)(D)(i)(I)(bb)(CC)] abrogates the D.C. Circuit’s holding that FDA may not “delist a patent upon the request of the NDA holder [where] the effect of delisting is to deprive the applicant of a period of marketing exclusivity.”  Instead, the reference to delisting in [this forfeiture provision] merely reflects the fact that delisting may result from a court order entered pursuant to [FDC Act § 505(j)(5)(C)(ii)(I)], which for the first time authorized ANDA applicants who are sued by the NDA holder to “assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted [to the Orange Book].”

    We will continue to update you on this and other 180-day exclusivity issues for which FDA has recently requested public comment.

    Categories: Hatch-Waxman

    Rep. DeLauro Requests that FDA Cease Activities to Create the Reagan-Udall Foundation

    Title VI of the recently-enacted FDA Amendments Act (“FDAAA”) amended the FDC Act to establish a non-profit corporation whose purpose is to advance FDA’s Critical Path Initiative to “modernize medical, veterinary, food, food ingredient, and cosmetic product development, accelerate innovation, and enhance product safety.”  (The Critical Path Initiative is FDA’s effort to modernize the scientific process through which a potential drug, biologic, or medical device is transformed from discovery into a medical product.)  This corporation, known as the Reagan-Udall Foundation for FDA, is intended to allow FDA to collaborate with other researchers to foster newer methods of testing that are needed to assess newer technologies. 

    On October 3, 2007, FDA issued a Federal Register notice seeking nominations for the Reagan-Udall Foundation.  The Foundation’s Board of Directors will initially include four ex-officio members — the FDA Commissioner, and the Directors of the National Institutes of Health, Centers for Disease Control and Prevention, and the Agency for Healthcare Research and Policy — who appoint the remaining 14 members from industry, academia, patient/consumer groups, and health care providers. 

    On November 1, 2007, Representative Rosa DeLauro (D-CT) issued a press release with a copy of a letter sent to FDA Commissioner Andrew von Eschenbach requesting that FDA cease all activities related to the creation of the Reagan-Udall Foundation.  According to Rep. DeLauro’s letter:

    Although the mission of the foundation is intended to support research that encourages an expedited FDA approval process, I believe the Reagan-Udall Foundation has the potential of endorsing the approval of drugs and devices based on lower standards for safety and efficacy, and without appropriately designed clinical trials.  For example, rather than having new drugs be tested to ensure their efficacy in reducing symptoms or curing diseases, the Foundation could play a significant role in recommending the use of biomarkers and other measures that may not be true measures of efficacy. . . .  The result could be patients spending billions of dollars on drugs that are not as effective as other products on the market.  Therefore, I am very concerned that undue influence by industry could harm the work of the FDA.

    Rep. DeLauro’s letter to Dr. von Eschenbach was presumably related to a recent press report in which Francesca Grifo, Director of the Union of Concerned Scientists, stated with respect to the Reagan-Udall Foundation that “Given FDA’s track record in the past, I’m not confident in their ability to create something that is free of influence from industry.”

    Peter Pitts, the co-founder of the Center for Medicine in the Public Interest (“CMPI”) and former FDA Associate Commissioner for External Relations (and who has referred to the Reagan-Udall Foundation as the “bi-partisan crown jewel” of the FDAAA), immediately authored an article published in the Journal of Life Sciences stating that “FDA should not be chastised, but applauded for working with industry to tackle the big problems of drug development.” 

    CMPI runs the blog DrugWonks.com.  In his latest post on this issue, Mr. Pitts pillories Rep. DeLauro for her press release and letter.  Mr. Pitts’ colleague, Robert Goldberg, also recently posted on this issue stating that Rep. DeLauro and the media have been misled on what biomarkers do and can offer people in terms of safer drugs.

    FDA has not (to our knowledge) indicated whether the Agency plans to cease activities to create the Reagan-Udall Foundation.  We will update you as we learn more information.

    The Lighter Side of Food & Drug Law – “I WAS CONVICTED OF VIOLATING THE FDCA”

    In our second installment of the “Lighter Side” (our first post is available here) we pass along to you an article from The Birmingham News, which reported on a comical case of a “shaming penalty” the CEO of a medical device company agreed to as part of a plea agreement for marketing an unapproved device.  As you will read, if civil penalties are not reason enough to avoid violating the Federal Food, Drug, and Cosmetic Act, then perhaps the possibility of an alternative sanction like that agreed to by James Lee is reason enough.

    Categories: Miscellaneous

    HHS Secretary Michael Leavitt Wades Into Blogdom

    Earlier this year, after the success of the Department of Health and Human Services’ Pandemic Flu Leadership Blog (and no doubt also due to the success of FDA Law Blog), Secretary Michael Leavitt decided to test the waters of blogdom with his own blog, aptly named Secretary Mike Leavitt’s Blog.  The blog was launched on August 13, 2007 with this post, and a commitment by Secretary Leavitt to personally write the posts, rather than relying on staff.  Since then, Secretary Leavitt has posted about once a week.  His posts cover a broad range of topics (from personalized health care to import safety) that FDA Law Blog readers might find of interest.  You can sign up for Secretary Leavitt’s blog here.

    Categories: FDA News

    HHS OIG Announces FY 2008 Work Plan; 9 New FDA Studies Identified, Including Clinical Trial Oversight and Off-Label Promotion

    The Department of Health and Human Services’ (“DHHS”) Office of Inspector General (“OIG”) recently announced its Fiscal Year 2008 Work Plan.  The OIG Work Plan, issued annually, sets forth various projects to be addressed during the coming fiscal year by the Office of Counsel to the Inspector General, the Office of Audit Services, the Office of Evaluation and Inspections, and the Office of Investigations.  The various factors OIG takes into account to identify the areas most worthy of attention in the fiscal year include:

    • Requirements for OIG reviews, as set forth in laws, regulations, or other directives;
    • Requests made or concerns raised by Congress and DHHS management;
    • Significant management and performance challenges facing DHHS; 
    • Work performed by DHHS and other organizations; and
    • Actions to implement OIG recommendations from previous reviews.

    The 2008 Work Plan includes 12 planned studies involving FDA policy – 9 of which are new, and 3 of which are a continuation from the Fiscal Year 2007 Work Plan.  The summary below is taken from OIG’s description of the planned and continued studies.  The 2007 Work Plan led to the publication of various reports, including the September 2007 OIG report on FDA’s clinical trial oversight.

    New Studies

    Implementation of Pandemic Influenza Preparedness Strategic Plan – OIG will review FDA’s implementation of its Pandemic Influenza Preparedness Strategic Plan.  The plan focuses on accelerating development, production, and regulatory reviews of vaccines, antivirals, and diagnostic devices for an effective national response.  OIG will determine whether FDA is meeting the timeframes it has established for deliverables in the plan.

    Food and Drug Administration’s Implementation of Select Agent Regulations – OIG will review FDA’s implementation of select agent Federal regulations at its laboratories.  This effort continues our previous work at university, State, and private laboratories, which generated recommendations aimed at strengthening control of select agents. Pursuant to 42 CFR Part 73, OIG will assess compliance with select agent Federal regulations regarding security plans, accountability for select agents, and access to select agents.

    Oversight of Off-Label Drug Promotion – OIG will assess FDA’s oversight and review of allowable off-label drug promotion and enforcement. Pursuant to provisions of the Food, Drug, and Cosmetic Act at 21 U.S.C. §§ 331 and 355, among others, FDA has the authority to regulate the labeling and promotion of drugs and to restrict off-label marketing.

    Submission of Electronic Drug Labels – OIG will review FDA’s oversight of drug manufacturers’ compliance with the requirement to electronically submit to FDA complete and accurate drug labels for currently marketed prescription drugs.  In December 2003, FDA published final regulations (21 CFR §§ 314.50(l), 314.94(d), 601.14(b), and 314.81(b), respectively) requiring drug manufacturers to ectronically submit to FDA specific labeling content for new drug applications, abbreviated new drug applications, certain biologics license applications, and annual reports.  In November 2005, drug manufacturers were required to begin electronic submission of prescribing and product information for prescription drug labels in a structured product-labeling format.  The format is intended to give health care providers accurate, up-to-date drug information using standardized medical terminology in a readable, accessible format. OIG will examine the accuracy and completeness of electronic labels submitted to FDA and identify any factors that contribute to inaccurate or missing information.

    Adverse Event Reporting for Medical Devices – OIG will review FDA’s adverse-event-reporting system for medical devices. Medical device manufacturers are required under 21 CFR Part 803 to report deaths, serious injuries, and device malfunctions to FDA within 30 calendar days or within 5 working days if the event requires remedial action to prevent substantial harm to the public.  Device reporting is a key part of FDA’s oversight of new medical devices, providing an early warning of problems with devices after they reach the market.  OIG will evaluate the extent to which FDA ensures compliance with adverse-event-reporting requirements and the way in which FDA uses medical device adverse event reports to identify and address safety concerns.

    Oversight of Research Misconduct by Clinical Investigators – OIG will review FDA’s oversight and discipline of clinical investigators found to have engaged in research misconduct. Regulations at 21 CFR Part 312 provide FDA with authority to oversee and discipline clinical investigators for research misconduct. OIG will review FDA’s progress in implementing recommendations made by OIG during a 2000 review. OIG recommended at the time that FDA develop internal guidance on the thresholds that violations must meet to justify disqualifying a clinical investigator from receiving investigational products for use in clinical trials.

    Financial Disclosure Requirements for Clinical Investigators – OIG will review the disclosure to FDA of financial interests of clinical investigators, as required by 21 CFR § 54, associated with drug, device, and biologic applications.  Financial conflicts of interest create a potential for bias that may negatively impact the integrity of the data as well as human subject protection.  OIG will determine the nature of financial interests disclosed by clinical investigators, the extent to which applicants monitor their clinical investigators for financial interests, and the extent to which FDA oversees the process.

    Oversight of Food Safety Operations – OIG will review FDA’s oversight and operations related to three broad areas: imported foods, imported pet food and feed products, and recall procedures for human food and pet food. In the area of imported foods, OIG will determine the extent of FDA’s enforcement authorities; whether and how it determines that foreign countries’ food safety standards and inspections meet U.S. food safety requirements (or that their food products exported to the United States are in compliance with requirements), whether and how it determines that foreign measures are equivalent to U.S. food safety measures, and how frequently FDA evaluates companies that export food products to the United States. In area of the area of imported pet food and feed products, OIG will determine the extent of FDA’s enforcement authorities, including whether it requires imported pet food and feed to be produced under the same safety standards as those under which pet food and feed are produced in the United States. OIG will also determine whether FDA samples imported pet food and feed for chemicals and microbial pathogens. If FDA is not sampling food and feed products, OIG will determine why. In the area of human food and pet food recall procedures, OIG will determine the extent of FDA’s enforcement authorities, identify FDA procedures to implement those authorities, determine whether and how FDA is carrying out the activities called for in its procedures, and determine whether FDA conducted tests for melamine in human food immediately after melamine was found in pet food.  These various reviews are being conducted in response to a congressional request.

    Food Facility Inspections – OIG will review FDA’s food facility inspection process and its methods for determining which facilities will be inspected. FDA monitors the safety of domestic food primarily through inspections of farms, warehouses, manufacturers, packers, and other types of food establishments. Section 702(a) of the Food, Drug, and Cosmetic Act authorizes FDA to conduct inspections to enforce the provisions of that statute and other applicable laws. Under this authority, FDA carries out surveillance inspections to gauge overall industry compliance with manufacturing practices and compliance inspections based on known or suspected problems with specific manufacturers. FDA’s district officers, with guidance from FDA headquarters, determine the number, type, and specific firms to be inspected. OIG will identify trends in the types of FDA facility inspections and their effectiveness in protecting the food supply.

    Continued Studies

    Generic Drug Approval Process – OIG will review FDA’s timeframes for reviewing original generic drug applications and identify factors that affect the timely review of these applications. FDA is required by 21 CFR § 314.100 to approve or disapprove applications for generic drugs within 180 days of submission. As of 2006, the agency had a backlog of approximately 1,000 generic drug applications, one-third of which had exceeded the 180-day statutory time limit. OIG will assess average application review times and identify factors contributing to the backlog.

    Management of Information Technology Projects – OIG will review the adequacy of management and contracting practices of the Office of Information Technology (OIT) within FDA’s Center for Drug Evaluation and Research.  Requirements found in the Federal Acquisition Regulation (FAR), specifically parts 5-16 and 39, govern FDA’s contracting practices. OIG will review a sample of FDA information technology contracts, including those for the Adverse Event Reporting System II, and determine the adequacy and effectiveness of OIT’s acquisition management processes.  Our review will also focus on contractor selection and oversight.

    Traceability in the United States Food Supply Chain – OIG will review FDA’s ability to trace food products back through the U.S. food supply chain.  The food traceability model, known as “one-up, one back,” is incorporated in regulations that FDA has issued to implement section 306 of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act) and is intended to help FDA respond to a deliberate attack on the Nation’s food supply or other public health emergency involving food. The Bioterrorism Act and FDA’s regulation at 21 CFR Part 1, Subpart J, require persons that manufacture, process, pack, hold, transport, distribute, receive, or import food under FDA’s jurisdiction to maintain records that identify the immediate previous sources and immediate subsequent recipients of food that they receive or release. Compliance with this requirement will enable FDA to trace back through the supply chain any food FDA believes may pose a serious health threat and to trace forward through the food chain to alert facilities of potentially contaminated food. OIG will assess selected food facilities’ implementation of Federal requirements to maintain records that FDA may access if it has a reasonable belief that the food may present a threat of serious adverse health consequences or death to humans or animals.

    Sen. Sanders Introduces Bill to End Market Exclusivity and Create a New “Medical Innovation Prize Fund”

    Earlier this month, Senator Bernie Sanders (I-VT) announced the introduction of the “Medical Innovation Prize Act of 2007” (S. 2210).  If enacted, the bill would replace the current patent and non-patent market exclusivity system for drugs that has been in place since the enactment of the Hatch-Waxman Act in 1984 with a new “prize system” (for both drugs and biologics) that is intended to “provide incentives to encourage entities to invest in research and development of new medicines . . . and to enhance access to such medicines by allowing any person in compliance with [FDA] requirements to manufacture, distribute, or sell an approved medicine.”  According to the bill’s findings:

    Exclusive rights to market products are one way to reward successful product research and development, but not the only way. Prize funds are another way and have been used successfully to stimulate inventions and solutions to difficult problems.

    Awards to companies through a prize fund mechanism that reward successful product research and development can de-couple the reward for product research development from the price of the product. . . .

    The substitution of prize fund awards to companies for successful product research and development in place of marketing exclusivity for new medicines will lead to more competition, greater utilization of generic products, lower prices, and savings to Federal, State and local governments, private employers and individual consumers of more than $200,000,000,000 per year.

    Specifically, the bill provides that notwithstanding the U.S. patents laws (i.e., U.S.C. Title 35), the Hatch-Waxman Act, the Medicare Modernization Act, the Orphan Drug Act, the Best Pharmaceuticals For Children Act, and “any other provision of law providing any patent right or exclusive marketing period for any drug, biological product, or manufacturing process for a drug or biological product . . . , no person shall have the right to exclusively manufacture, distribute, sell, or use a drug, a biological product, or a manufacturing process for a drug or biological product in interstate commerce, including the exclusive right to rely on health registration data or the 30-month stay-of-effectiveness period for Orange Book patents. . . .”  Instead, a person could receive a “prize payment” “in lieu of any remuneration the person would have otherwise received for the exclusive marketing, distribution, sale, or use of a drug, biological product, or manufacturing process,” and “in addition to any other remuneration that such person receives by reason of the nonexclusive marketing, distribution, sale, or use of the drug, biological product, or manufacturing process.”  This provision would apply only with respect to “the marketing, distribution, sale, or use of a drug, a biological product, or a manufacturing process for a drug or biological product that occurs on or after October 1, 2007.”

    The “prize payment” would come from a fund (the “Fund for Medical Innovation Prizes”) established in the U.S. Treasury Department.  Each fiscal year, an amount equal to 0.6% of the U.S. gross domestic product for the preceding fiscal year would be appropriated to the fund.  To be eligible to receive a prize payment a person must be either: (1) “the first person to receive market clearance with respect to the drug or biological product;” or (2) “the holder of the patent with respect to [ a manufacturing process].”  Prize payments would be made by the fund’s 13-member Board of Trustees based on several criteria specified in the bill.  Among other things, “[t]he Board may award prize payments for a drug, a biological product, or a manufacturing process for not more than 10 fiscal years, regardless of the term of any related patents,” and “[f]or any fiscal year, the Board may not award a prize payment for any single drug, biological product, or manufacturing process in an amount that exceeds 5 percent of the total amount appropriated to the Fund for that year.”

    S. 2210 has been referred to the Senate Health, Education, Labor, and Pensions Committee where it will either be considered, or more likely languish and die.

    Although S. 2210 is (to our knowledge) the first attempt to legislatively abolish patent and non-patent market exclusivities in lieu of a prize system, the idea is not new.  Earlier this year, Democratic Presidential Candidate John Edwards proposed such a system as part of his health care plan.  In addition, the World Health Organization mentioned prizes as a complementary mechanism to stimulate research and development in a July 2007 draft Global Strategy and Plan of Action.

    ADDITIONAL READING:

    Categories: Hatch-Waxman