By Ricardo Carvajal –

A district court dismissed a complaint alleging consumer fraud in food labeling that highlights the presence of fiber.  Plaintiff alleged that defendants violated state consumer fraud laws by failing to disclose that their products contain alleged “non-natural” fibers that “have not been shown by current scientific evidence to possess all of the health benefits of natural fibers.”  The court dismissed the case on the ground that the consumer’s state law claim is preempted by the Federal Food, Drug, and Cosmetic Act ("the Act").  The Act preempts any state requirement for nutrition labeling, nutrient content claims, or health claims that is not identical to the requirements of the Act.  With respect to fiber, the Act and its implementing regulations require food labels to bear nutrition information on the amount of dietary fiber present in a food, specify how dietary fiber must be disclosed, authorize nutrient content claims for fiber, and specify how health claims for fiber can be made.  In light of these requirements, the court concluded that the Act preempts plaintiff's demand under state law that certain fiber ingredients be labeled as “non-natural” and that the labeling disclose the purported differences in health benefits of “non-natural” fibers.

It’s that time of year again when the Blawggeratti (legal bloggers) are all atwitter about the American Bar Association’s (“ABA’s”) Blawg 100 – the top 100 legal blogs in the blogosphere.  With your help we made the top 100 list last year, and we are hoping for a repeat in 2010 – with your help once again!   The ABA announced that it is now accepting nominations for 2010.  We ask that FDA Law Blog readers visit the ABA’s “Blawg 100 Amici” website and nominate FDA Law Blog!  Thank you!  (It will only take a couple of minutes. Remember, when you complete the nomination form, our URL is www.fdalawblog.net.)

By Kurt R. Karst –   

How much is the potential for four month being lopped off your NDA review period (i.e., the difference between FDA’s standard and priority review goals under PDUFA)?  FDA set the baseline earlier this week when the Agency issued a Federal Register notice setting the Priority Review Voucher (“PRV”) User Fee for Fiscal Year 2011 at (drumroll please) . . . $4,582,000.  And that is in addition to the Fiscal Year 2011 application fee of $1,542,000 that must accompany the submission of an NDA.  We won’t bother you with all of the numbers that went into the calculation, but they are detailed in FDA’s notice if you are interested. 

PRVs were established by § 1102 of the 2007 FDA Amendments Act, which created  FDC Act § 524.  Under the statute, applicants for certain new drugs and biologics for “tropical diseases” that have received priority review may receive a PRV entitling the holder to a 6-month priority FDA review of another application that would otherwise be reviewed under FDA’s standard 10-month review clock.  To our knowledge, FDA has granted only a single PRV – in connection with the April 2009 approval of NDA No. 22-268 for COARTEM (artemether; lumefantrine) for the treatment of acute, uncomplicated malaria infections in adults and children weighing at least five kilograms. 

PRVs are transferable – indeed, FDC Act § 524 allows for a single actual transfer of a PRV from the original recipient to another sponsor, and FDA has clarified in draft guidance that “contractual arrangements such as the use of an option or transfer of the right to designate the voucher’s recipient could comply with the terms of the statute” – so there has been speculation that a market could be created for them.  In fact, one non-profit organization has created a website to track the PRV program and to help build a market for the vouchers.  As we previously commented, ultimately, the value of a PRV must be based on two considerations: (1) the prospect of saved approval time; and (2) the anticipated sales of a new drug.  And it is difficult  to predict either with any certainty.  A redemption fee of $4,582,000, however, could hurt PRV marketability in light of these uncertainties. 

Moreover, a redemption fee of $4,582,000 could hurt the prospects for the passage of the Creating Hope Act of 2010 (S. 3697).  As we previously reported, S. 3697 was introduced earlier this year and would, among other things, amend the PRV program to extend it to applications for a “rare pediatric disease” – that is, a disease “recognized in the medical community as affecting a pediatric population” and that is “a rare disease or condition, within the meaning of section 526” (i.e., the Orphan Drug Act).  With such a high redemption fee, the marketability of a PRV (i.e., sale for profit) is questionable, and support for the bill could wane.  Of course, Congress could amend the PRV statute to require a different redemption fee calculation or set a flat fee, either for a rare pediatric PRV or for a tropical PRV, or both. 

By Kurt R. Karst –   

Earlier this week, Senator Patrick Leahy (D-VT) introduced the Food Safety Accountability Act of 2010 (S. 3767).  The bill, which follows Sen. Leahy’s Food Safety Enforcement Act of 2010 (S. 3669) introduced earlier this year and the recent egg recall, is intended to strengthen criminal penalties for food safety violators. 

S. 3767 would amend Title 18 of the U.S. Code (Chapter 47 – Fraud and False Statements) to add a new section – § 1041 Misbranded and adulterated food – making it unlawful for any person to knowingly: “(1) introduce or deliver for introduction into interstate commerce any food that is adulterated or misbranded; or (2) adulterate or misbrand any food in interstate commerce.”  A violation of proposed § 1041 would carry with it a fine and/or imprisonment for not more than 10 years.  S. 3669 would have amended the FDC Act to impose criminal penalties for persons who knowingly contaminate the food supply.

According to a press release, Sen. Leahy, who chairs the Senate Judiciary Committee, has scheduled a Committee business meeting for Thursday, September 16th that will include a discussion of the bill.  Continuing concern about the safety of the food supply could increase pressure on Congress to pass food safety legislation that might include at least some version of the Food Safety Accountability Act.

By Kurt R. Karst –   

It was not a question of whether ViroPharma Incorporated (“ViroPharma”) would sue FDA in connection with the approval of ANDAs for generic versions of the company’s antibiotic drug of last resort, VANCOCIN (vancomycin HCl) Capsules, but when.  In addition to a pending FOIA lawsuit (see our previous post here), ViroPharma has made voluminous submissions to FDA challenging the Agency’s draft bioequivalence recommendation for generic VANCOCIN, which provides that bioequivalence may be established based on comparative dissolution (i.e., in vitro information).  Last Friday we got the answer to the outstanding “when” question when ViroPharma sued FDA in the U.S. District Court for the District of Columbia. 

ViroPharma’s Complaint alleges that FDA violated the Administrative Procedure Act (“APA”) when the Agency failed to engage in notice-and-comment rulemaking “before effectively amending its [ANDA] regulations to permit a waiver of the in vivo bioequivalence requirement based on 21 C.F.R. § 320.24 even when none of the waiver criteria of 21 C.F .R. § 320.22 are satisfied.”  ViroPharma requests declaratory relief from the court, including “that the plain reading of FDA’s regulations requires an ANDA applicant seeking a waiver of the in vivo bioequivalence testing requirement to first meet one of the criteria set forth in 21 C.F.R. § 320.22,” and that a previous statement from FDA in a May 2008 response to a November 2007 citizen petition concerning generic PRECOSE (acarbose) – that 21 C.F.R. § 320.24 provides an independent basis for waiving the in vivo testing requirement even when none of the criteria of 21 C.F.R. § 320.22 is satisfied – constitutes an amendment to FDA’s ANDA bioequivalence regulations.

Under the FDC Act, as amended by the 2003 Medicare Modernization Act, for a drug, like vancomycin HCl, “that is not intended to be absorbed into the bloodstream, [FDA] may establish alternative, scientifically valid methods to show bioequivalence if the alternative methods are expected to detect a significant difference between the drug and the listed drug in safety and therapeutic effect” (FDC Act § 505(j)(8)(C)).  Although ANDAs often include the results of both in vivo and in vitro studies demonstrating bioequivalence to a reference listed drug, FDA’s ANDA regulations at 21 C.F.R. § 320.21 and § 320.22 provide that bioequivalence can be demonstrated through in vitro testing and that in vivo testing can be waived.  FDA’s regulations at 21 C.F.R. § 320.24 describe the types of in vivo and in vitro methods to establish bioequivalence. 

According to ViroPharma, “21 C.F.R. § 320.24 does not authorize the waiver of the in vivo bioequivalence requirement, which is the function of §§ 320.21 and 320.22.  Rather, § 320.24 lists the various methods for establishing either in vivo or in vitro bioequivalence, depending on which of those two types of testing is otherwise required by the regulations.”  And none of the circumstances identified in 21 C.F.R. § 320.22 apply to vancomycin HCl capsules, says ViroPharma:

[V]ancomycin capsules are not an injectable, topical or oral solution, or inhalation drug product (§ 320.22(b)); vancomycin is not a DESI drug (§ 320.22(c)); vancomycin capsule ANDAs do not seek approval of a different strength of a drug product that has already been approved (§ 320.22(d)(2); in vitro bioequivalence methods for vancomycin have not, to ViroPharma's knowledge, been shown to be correlated with in vivo data (§ 320.22(d)(3)); vancomycin capsule ANDAs do not seek approval for a reformulation of an already-approved product (§ 320.22(d)(4)); nor is there a need to approve vancomycin capsule ANDAs to ensure the continued marketing of a medically important drug product because Vancocin is readily available in the market (§ 320.22(e)).

When FDA issued its May 2008 PRECOSE citizen petition response, the Agency, according to ViroPharma, “claimed that under § 320.24 of its regulations, FDA has the discretion to accept in vitro studies for a nonsystemically absorbed drug product such as acarbose when such studies are determined to be a scientifically valid method of determining bioequivalence” (internal quotation omitted).   Thus, the Complaint argues that “[t]hrough this response, FDA effectively amended its regulations, which on their face plainly require that one of the waiver criteria of § 320.22 be satisfied before FDA can waive the in vivo requirement.  Instead, FDA interpreted the list of bioequivalence methods provided in 21 C.F.R. § 320.24 as a separate and sufficient regulatory basis for waiving in vivo bioequivalence requirements independent of 21 C.F.R. § 320.22.”

ViroPharma also points to FDA’s June 2010 Final Product Specific Bioequivalence Guidance as further evidence of this effective amendment of FDA’s ANDA bioequivalence regulations.  That final guidance states that “[f]or a drug that is not intended to be absorbed into the bloodstream, FDA may establish alternative methods to show bioequivalence that may be expected to detect a significant difference between the drug and the listed drug in safety and therapeutic effect (21 U.S.C. 355(j)(8)(C); 21 CFR 320.24)” [(emphasis in original)].  Thus, ViroPharma states:

In citing 21 C.F.R. § 320.24 in the Final Product Specific Bioequivalence Guidance as the sole regulatory basis for its decision to waive in vivo testing, FDA plainly ignored both the plain text of its own regulations and ViroPharma’s submissions explaining that one of the criteria of § 320.22 must first be satisfied in order for FDA to waive the in vivo bioequivalence testing requirement of § 320.21, and affirmed the rationale it enunciated in its Acarbose Bioequivalence Decision.

FDA’s alleged amendment to its ANDA bioequivalence regulations “increase[s] the likelihood of approvals for generic vancomycin ANDAs” – for which there are reportedly 11 ANDAs pending. 

By Nisha P Shah –

In a letter to the Electronic Cigarette Association, FDA stated its intention to regulate electronic cigarettes (also referred to as e-cigarettes or e-cigs) as drug products.  Specifically, FDA maintained that e-cigarettes “meet the definitions of both a drug and device under the [Federal Food, Drug, and Cosmetic] Act and the definition of a combination product … with a drug primary mode of action.”  Therefore, to market these products, FDA states that companies will have to comply with the drug approval process, which includes submission of an investigational new drug ("IND") application and completion of the new drug approval process.

FDA also issued Warning Letters to five distributors of electronic cigarettes for certain violations of Federal Food, Drug, and Cosmetic Act, including making unsubstantiated drug claims and poor manufacturing practices.  In the letters, FDA claims that e-cigarettes are devices intended to deliver a drug, nicotine, and points to the fact that the corresponding marketing materials and websites are unlawfully promoting e-cigarettes as smoking-cessation aids.  Because the products are being marketed as smoking cessation aids, FDA warns that the products must receive premarket approval.

Earlier this year, the District Court for the District of Columbia ruled that FDA cannot regulate e-cigarettes as combination drug/device products absent a showing that the products are intended to assist in treating nicotine addiction or to “affect the structure or function of the body in a way distinguishable from ‘customarily marketed’ tobacco products” (see our prior post here).  That case is under appeal.

By Kurt R. Karst –   

Earlier today (September 9th), in a notice filed with the U.S. District Court for the Eastern District of Virginia (Alexandria Division), the government informed the court that “the Solicitor General has, at this time, elected against appeal” of Judge Claude M. Hilton’s August 3rd decision in which he granted The Medicines Company’s (“MDCO’s”) Motion for Summary Judgment and ordered the U.S. Patent and Trademark Office (“PTO”) to consider timely filed MDCO’s Patent Term Extension (“PTE”) application for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering MDCO’s ANGIOMAX (bivalirudin) under a next business day interpretation of the PTE statute (35 U.S.C. § 156).

But MDCO is not popping any champagne corks yet.  As we previously reported, on August 19, APP Pharmaceuticals, LLC (“APP”) filed a Motion to Intervene in the case.  A hearing on APP’s motion is schedule for September 10th at10:00 AM before Judge Hilton, who could very well rule from the bench.

The government decided not to take an official position on APP’s motion, and instead provided a “brief explanation of some of  the thorny legal issues raised through APP’s motion, including the analytical framework and pertinent decisional authority that play a role – at least in part – in this Court’s adjudication of the motion.”  Not surprisingly, MDCO vigorously opposes APP’s intervention, and stated in its opposition brief (before it was clear that the government would not intervene) that:

APP seeks to intervene because it believes the government may choose not to appeal this Court’s decision. But it is hornbook law that a party may not intervene to pursue an appeal in the absence of the principal party on its side unless it can establish both prudential and Article III standing.  And APP’s motion fails even to mention these requirements, much less to show that they are satisfied here.  In fact, APP has neither prudential nor constitutional standing.

APP, which has already put the court on notice that “[i]n the event that the Court denies or conditionally grants APP’s pending Motion for Leave to Intervene, . . . APP shall appeal to the United States Court of Appeals for the Federal Circuit from that Order and related rulings as well,” argues in its rebuttal brief that:

Both the Plaintiff and the Government fundamentally misunderstand, or misrepresent, the grounds for APP’s motion to intervene.  APP is not seeking to challenge the PTO’s action on Plaintiff’s application for extension of the ’404 patent’s term.  APP is not seeking to insert itself into the patent term extension process.  APP does not claim to be harmed by, and does not wish to appeal, the underlying agency decision.  Instead, APP seeks to appeal the decision of this Court changing the timeliness requirements for patent term extension applications retroactively, a decision that harms APP, in substantial ways. . . .

We’ll keep you posted as things progress in this case and will issue an update to this post if Judge Hilton decides on APP’s motion tomorrow.

UPDATE:

• On September 10th, Judge Hilton denied APP’s motion to intervene.  APPs’ appeal has already been docketed in the Federal Circuit – Case No. 10-1534. 

By Ricardo Carvajal –

In late August, FDA issued warning letters to Unilever and Dr. Pepper Snapple Group objecting to the use of unauthorized nutrient content claims for antioxidants in the labeling of certain products containing green tea.  Similar warning letters addressing other types of products with antioxidant claims have been issued in the past year, but none previously to large manufacturers. 

Of special interest, FDA concludes that green tea and green tea flavonoids “are not nutrients with recognized antioxidant activity,” and that “flavonoids” cannot properly be the subject of a nutrient content claim.  In addition, FDA restates its position that it is inappropriate to fortify snack foods such as carbonated beverages – an issue the agency addressed last year in a warning letter to Coca-Cola for its Diet Coke Plus – see our previous post here.  

FDA is increasing scrutiny of nutrient content claims, which are generally preferred by both manufacturers and consumers for their short, punchy nature.  These latest warning letters serve as additional reminders that such claims must be formulated with care.

Correction: In our earlier posting on FDA's clamp-down on antioxidant claims, we missed a gaffe on FDA's website and erroneously stated that one of the warning letters was issued to Cadbury Adams. In fact, the letter was issued to the Dr. Pepper Snapple Group. The posting has been corrected.

By Kurt R. Karst –   

Earlier this week, the U.S. Court of Appeals for the Second circuit denied without comment a Petition for Rehearing and Rehearing En Banc filed on behalf of certain plaintiffs-appellants in In Re Ciprofloxacin Hydrochloride Antitrust Litig,, an antitrust challenge to certain patent settlement agreements (what opponents call “pay-for-delay” agreements) involving manufacturers of Ciprofloxacin HCl (CIPRO).  As we previously reported, an April 2010 decision by a 3-judge panel of the U.S. Court of Appeals for the Second Circuit in the case affirmed (3-0) a 2005 decision by the U.S. District Court for the Eastern District of New York granting summary judgment for defendants (i.e., Ciprofloxacin HCl manufacturers) (In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d 514 (E.D.N.Y. 2005)); however, the panel decision invited further review of the case by the full Court. 

According to the April 29, 2010 panel decision, the Court affirmed the district court decision because the Court’s 2005 decision in Joblove v. Barr Labs., Inc., (, compelled it to do so: “Since Tamoxifen rejected antitrust challenges to reverse payments as a matter of law, we are bound to review the Cipro court’s rulings under the standard adopted in Tamoxifen.”  The Court states in its decison, however, that “because of the ‘exceptional importance’ of the antitrust implications of reverse exclusionary payment settlements of patent infringement suits,” plaintiffs-appellants should petition for rehearing en banc.  The Federal Trade Commission (“FTC”), a vocal opponent to patent settlement agreements, quickly issued a press release after the decision came down exclaiming that the Court’s invitation for the plaintiffs-appellants to seek further review “is further evidence that courts are rethinking their approach to pay-for-delay settlements.” 

Although the panel invited the submission of the petition for rehearing en banc submitted in May 2010, the full Court denied the request . . . but not without dissent.  Circuit Judge Rosemary S. Pooler filed a 5-page dissent critical of the Tamoxifen decision and patent settlement agreements in general.  According to Judge Pooler, patent settlement agreements “serve no obvious redeeming social purpose” and the Tamoxifen decision “unambiguously deserves reexamination.”  In addition, Judge Pooler commented that:

The Tamoxifen majority recognized the “troubling dynamic” of permitting exclusion payments that “inevitably protect patent monopolies that are, perhaps, undeserved.” Subsequent experience has shown that the majority was right to be “troubled.” Although the “enormous importance” of the issues that this case raises is beyond dispute, Fed. R. App. P. 35(a)(2), a majority of this Court has voted against en banc rehearing. . . .  It will be up to the Supreme Court or Congress to resolve the conflict among the Courts of Appeals.

But as Rutgers School of Law-Camden Professor Michael A. Carrier commented, although “[a] petition for certiorari likely will be filed with the Supreme Court . . . that strategy has not been successful in previous cases.”  Patent settlement agreements is a hot topic in the halls of Congress.  As we previously reported, in July, the U.S. Senate Committee on Appropriations, over the objection of several Senators, approved the inclusion of the “Preserve Access to Affordable Generics Act” in the report (Senate Report No. 111-238; pages 144-148 & 150-151) accompanying the Fiscal Year 2011 Financial Services and General Government Appropriations Bill (S. 3677).  The legislation would not ban patent settlement agreements (as proposed in previous legislation), but would make them presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”

The FTC, which did not comment on the Second Circuit’s rehearing denial, has been pushing for passage of the “Preserve Access to Affordable Generics Act,” and will presumably use the Second Circuit’s rehearing denial as fodder to keep the pressure on Congress to pass the bill when Congress reconvenes next week. 

By Ricardo Carvajal –

Section 10(b) of the Exchange Act and Securities and Exchange Commission (“SEC”) Rule 10b-5 prohibits “any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”  To adequately allege a violation, a plaintiff must allege (among other things) that a defendant has engaged in a material representation or omission of fact, and that the defendant has done so with an intent to deceive, manipulate, or defraud – otherwise known as “scienter.”

Last fall, the 9th Circuit overturned a district court’s dismissal of a class action lawsuit alleging that Matrixx Initiatives, Inc. (“Matrixx”) violated securities laws when it failed to disclose information about possible adverse health effects of Zicam, its zinc-based cold remedy.  The district court had dismissed the complaint on the ground that plaintiffs alleged insufficient evidence to support their claim of a securities fraud violation.  In specific, the district court held that adverse event reports (“AERs”) about Zicam were not material because they were not statistically significant, and also that plaintiffs’ allegations of scienter were inadequate.  The appellate court reversed, concluding that the district court erred when it applied a statistical significance standard to determine the materiality of the AERs.  The appellate court also concluded that the inference of scienter was sufficiently strong to survive dismissal.

Matrixx appealed the 9th Circuit decision, and the Supreme Court granted certiorari in June on the question of “[w]hether a plaintiff can state a claim under § 10(b) of the Securities Exchange Act and SEC Rule 10b-5 based on a pharmaceutical company's nondisclosure of adverse event reports even though the reports are not alleged to be statistically significant.”  Since then, the drug, medical device, and dietary supplement industries have lined up in solid opposition to the 9th Circuit decision, as evidenced by briefs recently filed in the case by PhRMA, AdvaMed, BayBio, the Consumer Healthcare Products Association, the Council for Responsible Nutrition, and the Natural Products Association, among others (see the U.S. Supreme Court docket here and SCOTUSBlog for copies of the briefs). 

Generally, the briefs argue that the district court properly applied the statistical significance standard, and that upholding the 9th Circuit decision would have strong detrimental effects on companies, investors, and consumers.  More specifically, the briefs argue that AERs are not evidence of a causal relationship between a product and an adverse event, and that data submitted in AERs requires analysis to determine its significance.  Yet, if the 9th Circuit decision stands, companies would have little choice but to disclose all adverse event reports.  The resulting flood of information could confuse and mislead both investors and consumers.

Although most of the briefs focus on the statistical significance standard, the Washington Legal Foundation (“WLF”) filed a brief that focuses solely on the issue of scienter.  WLF argues that the facts alleged in the case do not adequately support the inference of scienter drawn by the appellate court.  Rather, those facts support the inference that Matrixx considered the AERs for Zicam to not be material – a position that Matrixx advances in its own brief.

Given the potential impact on a wide range of FDA-regulated companies, this is a case that should be watched closely.

By Michelle Butler & Alan Kirschenbaum –  

It took CMS 17 years to issue a regulation implementing the Medicaid Rebate Program, and much of that regulation is turning out to be short-lived.  On Friday, September 3, CMS published a proposal to withdraw provisions of its 2007 regulation governing the determination of average manufacturer price ("AMP") and the setting of federal upper limits ("FULs") for multiple source drugs.  Both of these regulations have been superseded by the Patient Protection and Affordable Care Act ("PPACA"), which, as described in our summary of that law, made significant changes to the definition of AMP and also redefined the methodology for calculating FULs. 

As a result of the PPACA changes, CMS is proposing to withdraw 42 C.F.R. § 447.504, “Determination of AMP,” in its entirety.  In the preamble, CMS advises companies to calculate AMP based on the definitions set forth in the statute (effective October 1, 2010) rather than definitions in the withdrawn AMP regulation and other CMS guidance.  CMS states that it expects to develop regulations that will implement the changes made by PPACA relating to the determination of AMP and the setting of FULs.  However, no timeline is provided, and regulations certainly will not be forthcoming by the time the first monthly AMP report (for October) is due under the new PPACA methodology on November 30.  For that report, manufacturers will have to rely on the statutory definition, whatever subregulatory guidance CMS may issue before then, and reasonable assumptions regarding issues that are not addressed in the statute or any guidance.  CMS also proposes to withdraw in its entirety 42 C.F.R. § 447.514, “Upper limits for multiple source drugs,” which is inconsistent with the new FUL methodology set forth in PPACA. 

It is important to note that certain AMP-related provisions of the 2007 regulation would not be withdrawn under CMS’ proposal, including the requirements that AMP be reported monthly and quarterly, that 12-month averaging be used for lagged price concessions, and that bundled discounts be allocated in calculating AMP.  Also remaining intact would be provisions relating to best price, authorized generics, certification of reports, recordkeeping, restatements of AMP and best price, nominal price sales, and reporting of prompt pay discounts.

Comments may be submitted to CMS until 5 pm on October 4, 2010.

By Kurt R. Karst –   

The dispute between Cody Laboratories, Inc. and Lannett Co., Inc. (collectively “Cody/Lannett”) and FDA over marketed unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products did not end with the July 26, 2010 decision from the U.S. District Court for the District of Wyoming, in which the court denied Cody/Lannett’s Motion for Temporary Restraining Order and Preliminary Injunction requesting that the court enjoin FDA from taking any enforcement action with respect to their marketed unapproved Morphine Sulfate drug products.  Since then, Cody/Lannett filed, FDA opposed, and the court granted, a Motion for Clarification, Amendment, or Reconsideration of Order  raising certain jurisdictional issues.  FDA promptly filed a Motion to Dismiss – and a Proposed Order – arguing for dismissal for lack of jurisdiction or failure to state a claim (or both).

As we previously reported (here and here), the Cody/Lannett lawsuit stems from FDA’s March 2009 Warning Letters to Cody and Lannett (among other companies) to stop manufacturing certain unapproved narcotic drugs, including morphine sulfate oral solutions.  At that time, FDA concluded that marketed unapproved morphine sulfate products are “new drugs [under the FDCA] and not grandfathered and that manufacturing and marketing of these products without an approved application constituted a violation of the Act.”  In subsequent communications with Cody/Lannett, FDA stated that the Agency would exercise enforcement discretion with regard to the shipment and distribution of Cody’s/Lannett’s unapproved Morphine Sulfate Solution Immediate-Release 20mg/mL drug products until July 24, 2010, which is 180 days after FDA approved an NDA for the drug product.  Meanwhile, Lannett submitted its own NDA to FDA for Morphine Sulfate Solution Immediate-Release 20mg/mL in late February 2010.  That NDA is still under review and FDA has not taken any further enforcement action against Cody/Lannett. 

Cody/Lannett’s latest motion does not seek to re-litigate any issue the court decided on in ruling on the TRO/PI Motion.  “Rather, Cody/Lannett seek a clarification as to whether the Court did in fact intend to dismiss the Complaint itself, sua sponte.”  According to Cody/Lannett:

If the Court did in fact intend by its Order to dismiss the case sua sponte, it is not clear to Cody/Lannett from the Order whether the basis (or bases, if alternative grounds exist) for such dismissal was jurisdictional, justiciability, failure to state a claim, or some other grounds.  If the Court in fact intended to dismiss the case, this clarification would be necessary in order for Cody/Lannett to evaluate its options moving forwarding, including whether to file an amended Complaint or to appeal a final judgment. . . .

In addition, Cody/Lannett wish to clarify whether the Court intended by its Order to rule on some of the ultimate issues in the case without discovery or briefing.  This is particularly significant with respect to certain of the Court’s statements in the Order regarding whether Cody/Lannett’s product is a “new drug” for purposes of the Food, Drug, and Cosmetic Act of 1938.  As the grandfathering provisions of the law have been rarely litigated, Cody/Lannett would certainly seek the opportunity to be heard on the substance of its contention that its drug is not a “new drug,” a question about which there was only limited discussion during the July 23, 2010 hearing on the Motion for TRO/PI.

Citing our FDA Law Blog post of July 26, 2010, in which we commented that FDA will likely use the court’s decision (which the Agency submitted to the court as a proposed order) as “Exhibit A” if any company expresses its intent to challenge FDA in court over the Agency’s Unapproved Drugs Initiative enforcement plans, Cody/Lannett also note that:

The Court’s clarification is important not only for this case so that Cody/Lannett may proceed appropriately, but for the Food and Drug industry as well, as the Court’s Order has already been publicized and, to the extent it addresses the merits of the underlying issues (rather than the temporary and preliminary injunctive relief standard), will likely be viewed as breaking new legal ground.  As such, if the Order is not clarified and amended, Cody/Lannett expect that the Order will be frequently cited as some of the only legal authority in this area of law, and it may be regularly relied upon by the FDA as providing legal support for highly controversial positions taken by the agency.

Echoing some of the same arguments FDA previously put forth in this case, the Agency’s  Motion to Dismiss (and Proposed Order) argues that the case should be dismissed for lack of jurisdiction.

The Court lacks jurisdiction for several reasons.  Principal among these is that plaintiffs seek to enjoin a hypothetical enforcement action.  At this point, FDA personnel have done no more than issue warning letters to plaintiffs, and FDA staff has had discussions with plaintiffs about the issues raised in those letters.  Such warning letters and informal discussions do not constitute final agency action that is ripe for judicial review. . . .  If parties could challenge these actions, it would severely hinder FDA in performing its statutory duty to protect the public health and would flood the courts with premature requests for advisory opinions.  Moreover, the Supreme Court long ago established that courts lack jurisdiction to enjoin FDA’s enforcement proceedings under FDCA, the very relief plaintiffs seek here.  See Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594 (1950).

This Court has no jurisdiction to review unripe, nonfinal agency action or to enjoin a hypothetical enforcement proceeding. The case can be dismissed any of these reasons, or because plaintiffs failed to avail themselves of an administrative procedure available to them that must, under FDA regulations, be used before a complaint may be filed in court.

And even if jurisdiction exists, FDA argues that the case should be dismissed for failure to state a claim:

[P]laintiffs have failed to state a claim on which relief can be granted.  Plaintiffs contend that their drug is not a “new drug” within the meaning of the FDCA because it has “grandfather” status under the Act.  In order for a drug to be “grandfathered,” however, the labeling and composition of the drug in question must be the same as it was before 1938.  Plaintiffs concede that they only began marketing their drug five years ago, and they do not provide any pre-1938 labeling for their product or even make any allegations about the pre-1938 labeling for their product.  Nor do they assert that the composition of their product is the same as it was prior to 1938. . . .  Based on their allegations, it is impossible for plaintiffs’ product to be “grandfathered.”  In fact, if plaintiffs’ argument were accepted, then anyone could market a drug that contains an active ingredient that was on the market prior to 1938, claim that it is “grandfathered,” and thus avoid FDA approval.  This is an absurd – and potentially dangerous – argument.  Nor was FDA required to compile a “record” of this nonfinal agency action. [(citation omitted)]

Cody/Lannett’s response to FDA’s Motion to Dismiss is due by September 14th.  A hearing is scheduled for October 8th in Cheyenne, Wyoming.

By Kurt R. Karst –      

A recent report issued by Morgan Stanley, titled Pharmaceuticals – Potential Selective Upside for Industry post Prandin Ruling, predicts “increasing probability for the innovative pharmaceutical industry to successfully delay US generic approval of select innovative drugs” following a pair of rulings (here and here) in Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. handed down earlier this year by the U.S. Court of Appeals for the Federal Circuit concerning Patent Use Codes (“PUCs”) and the drug product PRANDIN (repaglinide) Tablets. 

As we previously reported (here and here), in those decisions the Federal Circuit ruled that a generic applicant “does not have a statutory basis to assert a counterclaim requesting” a court to enter an order to change an Orange Book-listed PUC because a PUC, among other things, is not “patent information.”  PUCs, as the Morgan Stanley report shows (using the table we put together for a previous post), have doubled in recent years, while at the same time “the number of approved patents has remained largely unchanged.”    According to Morgan Stanley: 

We anticipate that several companies will extract significant [earnings per share] and [net present value] upside from utilization of PUC (Patent Use Code) narrative strategies.  In the absence of listed Orange Book patents, it is challenging to identify discrete opportunities.  However, we believe those companies facing near term generic competition have the strongest motivation to consider this strategy in order to capture residual intellectual property value.

The report tempers its positive outlook, however, noting that:

While this is an important positive development for the industry . . . only select drugs will benefit from any upside a PUC based legal strategy brings. The innovative drug must have robust “use” patents listed in the FDA Orange Book.  In addition, one must believe that Congress will not amend the current FDA law to limit the use or abuse of this strategy.  Regardless, we anticipate increasing listing of “use” patents in the Orange Book as the innovative industry seeks to maximize any commercial gains.

Interestingly, the Morgan Stanley report fingers AstraZeneca’s (“AZN’s”) CRESTOR (rosuvastatin calcium) Tablets as one drug product for which a PUC strategy may be beneficial.  Assuming there is a “section viii” statement to carve out out certain information covered by two Orange Book-listed patents – U.S. Patent Nos. 7,030,152 and 6,858,618 – “AZN will likely respond with (i) filing a Citizens Petition (ii) Argue that its PUC code prevents a carve out approval.”  Morgan Stanley anticipates “a 90% probability that the FDA is unable to carve out an indication for the ANDA,” and that “assuming Congress does not enact a change in FDA regulatory law, we estimate a 64% probability that AZN can delay US generic introduction until 3Q 2018.”  U.S. Patent No. 7,030,152 is listed in the Orange Book with a “U-1032” PUC, which is defined as “USE OF ROSUVASTATIN CALCIUM FOR THE PRIMARY PREVENTION OF CARDIOVASCULAR DISEASE IN INDIVIDUALS WITHOUT CLINICALLY EVIDENT CORONARY HEART DISEASE BUT WITH INCREASED RISK FACTORS,” and U.S. Patent No. 6,858,618 is listed with a “U-618” PUC, which is defined as “USE OF ROSUVASTATIN CALCIUM TO REDUCE ELEVATED TOTAL-C, LDL-C, APOB, NONHDL-C OR TG LEVELS; TO INCREASE HDL-C IN ADULT PATIENTS WITH PRIMARY HYPERLIPIDEMIA OR MIXED DYSLIPIDEMIA; AND TO SLOW THE PROGRESSION OF ATHEROSCLEROSIS.”

So it is possible there could be another PUC battle on the horizon – or perhaps in the halls of Congress.  We will certainly keep you posted. 

By Kurt R. Karst –      

The long-running dispute over a Patent Term Extension (“PTE”) for U.S. Patent No. 5,196,404 (“the ‘404 patent”) covering The Medicines Company’s (“MDCO’s”) ANGIOMAX (bivalirudin) may be far from over.  On September 1st, APP Pharmaceuticals, LLC, which previously submitted an amicus brief in the case (as did Teva Pharmaceuticals – here), filed a Notice of Appeal to the U.S. Court of Appeals for the Federal Circuit.  The notice follows APP’s Motion to Intervene in the case. 

As we previously reported, on  August 3, 2010, Judge Claude Hilton of the U.S. District Court for the Eastern District of Virginia (Alexandria Division) granted MDCO’s Motion for Summary Judgment and remanded the case to the U.S. Patent and Trademark Office (“PTO”) to consider MDCO’s PTE application for the ‘404 patent “timely filed and to adopt an interpretation of § 156(d)(l) that includes a next business day construction for filing of a [PTE]  application.”  As FDA Law Blog readers will recall, FDA approved ANGIOMAX at 5:18 PM on Friday, December 15, 2000, and MDCO submitted its PTE application to the PTO on February 14, 2001 – 62 days after NDA approval (including the December 15, 2000 date of approval).  Under 35 U.S.C. § 156(d)(1), the submission of a PTE application must occur “within the sixty-day period beginning on the date the product received permission under the provision of law under which the applicable regulatory review period occurred for commercial marketing or use.”  MDCO had argued that the PTO should employ a “rule of construction” under which the Office would consider the 60-day PTE application submission period to commence on the first business day after the day the FDA transmits notice of NDA approval of the drug product if that transmittal occurs after normal business hours.  In the case of the PTE application for the ‘404 patent covering ANGIOMAX, that would mean the 60-day period would have begun on December 18, 2000 and the PTE application would have been timely filed.  Judge Hilton agreed with MDCO, ruling that “the proper interpretation of § 156(d)(1) is a business day construction of the phrase ‘beginning on the date.’  Of the parties’ competing interpretations the business day construction is consistent with the statute’s text, structure, and purpose.” 

Since Judge Hilton issued his decision almost a month ago, folks have wondered whether the PTO/FDA will appeal the decision to the Federal Circuit.  APP, which has an ANDA pending at FDA but has not yet been granted tentative approval, does not want to wait any longer and is attempting to take matters into its own hands.  According to APP’s Motion to Intervene:

On August 11, 2010 . . . , counsel for APP received a letter from counsel for Defendants indicating that Defendants have not decided whether they will appeal the Court’s August 3, 2010, Order and judgment for Plaintiff in this action.  APP no longer can reasonably expect that APP’s interests will be adequately represented (or represented at all) by Defendants.

APP’s anticipatory Notice of Appeal is intended “to become effective upon the granting of APP’s pending Motion for Leave to Intervene . . . .”  And what if Judge Hilton denies APP’s motion?  According to APP, “[i]n the event that the Court denies or conditionally grants APP’s pending Motion for Leave to Intervene, notice is hereby given that APP shall appeal to the United States Court of Appeals for the Federal Circuit from that Order and related rulings as well.”

Although MDCO has not made any submissions to the court since Judge Hilton issued his opinion, the company continues to lobby for its position.  According to FDA’s public calendar, MDCO representatives recently met with officials from FDA’s Office of Chief Counsel to discuss “The Medicines Company v. David Kappos, et al.”  Former Solicitor General of the United States Seth P. Waxman is among those MDCO representatives who attended the meeting – perhaps signaling MDCO’s intentions to go all the way to the U.S. Supreme Court if necessary.

By William T. Koustas –

Franck’s Lab, Inc. (“Defendant”), an Ocala, Florida veterinary compounding pharmacy, resumed compounding after a federal judge in the United States District Court for the Middle District of Florida denied the Government’s (“Plaintiff”) request for a preliminary injunction on August 19, 2010 that would have prohibited such activity.  The Defendant had previously admitted that it mistakenly compounded a vitamin supplement that was injected into 21 polo horses during the U.S. Open Polo Championships in April 2009, causing their deaths. 

In its Motion for Preliminary Injunction, the Plaintiff argued that regulations regarding the compounding of veterinary drugs permits such activity only “if such drugs are compounded from ‘approved animal or human drugs’ and state that ‘[n]othing in this part shall be construed as permitting compounding from bulk drugs.’”  U.S.A. v. Franck’s Lab, Inc., et al., United States District Court for the Middle District of Florida, Ocala Division, Memorandum in Support of Plaintiff’s Motion for Preliminary Injunction, July 2, 2010 (“Motion”) at 14; 21 C.F.R. § 530.13.  The Plaintiff noted that FDA issued a compliance policy guidance in 2003 regarding compounding in which it purportedly clarified its interpretation of the Animal Medicinal Drug Use Clarification Act.  Motion at 15.  In this guidance, FDA stated its view that compounding veterinary medicines is only acceptable as long as the compounding entity is not attempting to “intentionally circumvent the drug approval process,” and “compounding from bulk drug substances [as the Defendant did] or unapproved drugs renders the compounded drugs unsafe as a matter of law, and thus adulterated in violation of 21 U.S.C. § 351(a)(5).”  Id.  Therefore, the Plaintiff argues, the veterinary drugs the Defendant compounds from bulk drugs are new animal drugs as defined in 21 U.S.C. § 321(v) and require proper regulatory approval before they may be sold in interstate commerce.  Motion at 17.  The Plaintiff noted that the Defendant voluntarily agreed to temporarily stop compounding animal drugs as this litigation proceeded, but the Plaintiff sought this preliminary injunction anyway as such a suspension could be withdrawn at any time with 48 hours notice.  Motion at 2.

However, in its Response to Plaintiff’s Motion for Preliminary Injunction, the Defendant essentially argued that FDA does not have the authority to ban the compounding of veterinary drugs from bulk ingredients.  U.S.A. v. Franck’s Lab, Inc., et al., United States District Court for the Middle District of Florida, Ocala Division, Response to Plaintiff’s Motion for Preliminary Injunction, August 6, 2010 (“Response”) at 1.  The Defendant asserts that the “use of bulk ingredients to compound commercially unavailable preparations is a core part of the traditional pharmacy practice,” which is traditionally regulated by the states.  Response at 2.  Though the Defendant agrees that FDA has the authority to regulate the manufacturing of veterinary drugs “if it occurs in the guise of compounding,” such authority “does not permit FDA to override state law and impose a blanket ban on traditional pharmacy compounding practices.”  Response at 5-6.  The Defendant further notes that the legislative history of the Federal Food, Drug, and  Cosmetic Act (“FDCA”) seems to demonstrate that Congress intentionally left the regulation of compounding to the states as part of the practice of pharmacy while regulating the manufacturing of drugs because it was not generally regulated by the states.  Response at 7.  Additionally, the Defendant claims that even if the FDCA would allow FDA to regulate the compounding of veterinary drugs, it would need to do so by the promulgation of regulations through notice and comment rulemaking procedures rather than by the use of non-binding guidance documents.  Response at 11.

While the judge denied the Plaintiffs Motion for Preliminary Injunction, he also denied the Defendant’s Motion to Dismiss.  In issuing the denials, the judge did not write an opinion explaining his decision.  The Court is still considering the Plaintiff’s request to permanently enjoin the Defendant from compounding veterinary drugs from bulk drugs.