By David B. Clissold & Carrie S. Martin –

Last Friday, FDA issued two new draft guidance documents regarding clinical trial designs: Guidance for Industry: Adaptive Design Clinical Trials for Drugs and Biologics (February 2010) and Guidance for Industry: Non-Inferiority Clinical Trials (March 2010).

These draft guidance documents are products of FDA’s Critical Path Initiative (“CPI”), FDA’s effort to modernize the scientific process through which a potential drug or device goes from “proof of concept” to a marketed medical product.  The CPI is an effort to optimize the scientific tests and tools used to determine whether a product is safe and effective.  One of the goals of the CPI is to streamline clinical trials, and the Adaptive Design and Non-Inferiority guidances are solid examples of FDA’s progress towards that objective.

Adaptive Design Guidance

The Adaptive Design draft guidance provides sponsors with information on those features of  adaptive designs that are valid, and discusses elements that may be problematic.  FDA defines an adaptive design clinical trial as one that “includes a prospectively planned opportunity for modification of one or more specified aspects of the study design and hypotheses based on analysis of data (usually interim data) from subjects in the study.”  By allowing these modifications, a study may more efficiently provide information, increase the likelihood of successfully meeting a study objective, or improve the understanding of the drug’s treatment effect.  The guidance notes that such prospectively planned modifications can be submitted with the study protocol or in a statistical analysis plan (“SAP”).

Among the possible study design modifications, the guidance discusses study eligibility criteria, randomization procedure, total sample size, primary endpoints and secondary endpoints, and the methods used to analyze those endpoints.  The Agency explains that the adaptive design concept is best used in adequate and well-controlled studies and that study revisions should be based on blinded data.  A chief concern with adaptive design studies is the possibility of bias and false-positives.  To address these concerns, FDA recommends – among other things – that sponsors submit a written standard operating procedure (“SOP”), which defines who will conduct the interim analysis and implement the adaptation plan.  The Agency recommends using an independent entity for this purpose, such as a Data Monitoring Committee ("DMC"), to control access to unblinded data.

Because adaptive study designs may require more advanced planning by sponsors, the guidance document encourages sponsors to interact with the Agency during the planning stages of the clinical trials.  The timing and frequency of such meetings will vary based on the complexity of the study designs.

Non-Inferiority Clinical Trials Guidance 

The Non-Inferiority draft guidance explores FDA’s thinking on the use of non-inferiority study designs to provide evidence of a drug’s effectiveness.  This includes FDA’s thoughts on how best to choose an appropriate non-inferiority margin and how to analyze the results.  FDA explains that a non-inferiority trial seeks to demonstrate that “any difference between [ ] two treatments is small enough to allow a conclusion that the new drug has at least some effect or, in many cases, an effect that is not too much smaller than the active control.”  This is in contrast to the more common superiority trials, such as a placebo-controlled trial, which seek to prove a new drug is more effective than the control.  Non-inferiority trials are most often used when it would be unethical to use a placebo control. 

In addition to providing recommendations regarding study design and interpretation, the guidance provides answers to nine “commonly asked questions” regarding the estimation of margins, appropriate active control drugs, endpoints, and reliance on a single non-inferiority study to support effectiveness.  The guidance also discusses five examples derived from publicly available information that describe how to choose a non-inferiority margin, how to analyze the results, and other considerations relevant to the design and interpretation of non-inferiority studies.

Comments on both guidance documents are due June 1, 2010, and can be submitted to the Division of Dockets Management (HFA-305), FDA, 5630 Fishers Lane, rm. 1060, Rockville, MD 20852 or electronically at http://www.regulations.gov.

The Washington Legal Foundation has published a Legal Opinion Letter authored by Hyman, Phelps & McNamara, P.C., attorneys Jeffrey N. Wasserstein and Nisha P. Shah.  The article, with the catchy title "Court Empowers Qui Tam Defendants To Sue Third Parties For Indemnification," expands on our earlier discussion of the topic. 

By Kurt R. Karst –      

FDA’s Office of Generic Drugs (“OGD”) has a backlog of Abbreviated New Drug Applications (“ANDAs”) that is nearing 2,000, according to OGD Director Gary Buehler, who presented the data at the recent Generic Pharmaceutical Association (“GPhA”) Annual Meeting.  OGD’s median ANDA approval time was also up about 5 months – to 26.70 months – in Fiscal Year (“FY”) 2009 compared to the FY 2008 figure of 21.65 months.  Both the ANDA backlog and median approval times have progressively increased over the past several years, while the numbers of ANDA receipts and approval actions have remained relatively steady, as illustrated in the tables below from Mr. Buehler’s GPhA presentation.

So why such a ANDA backlog and rising median approval times?  The answer lies in OGD’s resources, according to FDA Commissioner Dr. Margaret Hamburg.  In Her speech at the GPhA Annual Meeting, Dr. Hamburg commented that “no one benefits from a pending-application queue that will soon hit the 2,000 mark.  This is simply unacceptable. . . .  But the unprecedented spike in generics applications has simply outstripped our capacity to properly review, which must remain our foremost focus.  The solution lies in resources.” (emphasis in original)

And “resources” means both funding from Congress and the generic drug industry, according to Dr. Hamburg:

We have already begun to use the $10 million that Congress allotted to our agency to hire 50 additional scientists to address the generics-application backlog. But without action from your industry, too—without your support for a fair system of user fees—we simply cannot achieve for the public what we otherwise could. . . .  We very much want to work with you to see generic drug user fees enacted this year. Adequate and reasonable fees will be key to both more rapid review and to better surveillance.

The President’s FY 2011 budget request for the Department of Health and Human Services includes $51,545,000 in appropriations to OGD (a $10 million increase over last year) and proposes “user fees to support activities related to generic human drug reviews” (as well as new user fees for re-inspections of FDA-regulated facilities).  Contingent upon the enactment of authorizing legislation, generic drug user fees would be expected to bring in an amount not to exceed $38,015,000.

According to FDA’s FY 2011 Congressional Justification, generic drug user fees would more than halve the current median approval time:

FDA will hire additional staff to support the review of [ANDAs] for generic drugs and inspections of generic drug manufacturing facilities.  In the case of user fees, by the end of the first five years of the Generic Drug User Fee Program, the additional user fees will result in a complete review and response for an estimated 80 percent of applications within 12 months of receipt, other than applications excluded because of exclusivity or challenges.

Previous budget requests have proposed the establishment of generic drug user fees (along with draft performance goals); however, legislation has never gotten off the ground and negotiations between FDA and GPhA were stalled, apparently over what FDA’s performance results should be. 

Dr. Hamburg expressed her hope that interested parties “can return to the negotiating table soon.”  GPhA appears to be open to reengaging FDA in user fee negotiations, according to a GPhA press release.

By Kurt R. Karst –      

In yet another setback to the Federal Trade Commission’s (“FTC’s”) battle against settlement agreements between brand name and generic drug companies – so-called “reverse payments” or what the government now calls “pay-for-delay” agreements – the U.S. District Court for the Northern District of Georgia (Atlanta Division) largely dismissed multidistrict litigation brought by the Commission, direct purchasers, and indirect purchasers challenging certain agreements in which Solvay Pharmaceuticals, Inc. allegedly paid generic drug companies to delay generic competition to Solvay’s drug product ANDROGEL (testosterone gel) 1%.  Specifically, the FTC’s complaint (originally filed in the U.S. District Court for the Central District of California) alleged that in 2006, Solvay and generic companies violated various federal antitrust laws when they agreed to dismiss patent infringement litigation on U.S. Patent No. 6,503,894 (“the ‘894 patent”) in exchange for a profit-sharing arrangement and provided the generic competitors would not launch their generic versions of ANDROGEL until 2015.

The court, citing previous circuit court decisions concerning settlement agreement  antitrust challenges – e.g., Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1303 (11th Cir. 2003); Schering-Plough Corp. v. Fed. Trade Comm’n, 402 F.3d 1056 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir. 2006); and In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008)) – ruled that the settlements are not an unreasonable restraint of trade:

The Plaintiffs do not allege that the settlements between the Defendants exceed the scope of the ‘894 patent.  First, the settlements only exclude generic AndroGel from the market.  The ‘894 patent claims the gel formulation used in AndroGel and that gel formulation is necessary to the manufacture and sale of generic AndroGel.  The settlements do not exclude any product other than generic AndroGel.  Second, the settlements only exclude generic AndroGel from the market until August 31, 2015.  This provides for five years less exclusion than the ‘894 patent, which does not expire until August 2020.  Third, the settlements only prevent Watson, Par, and Paddock from selling generic AndroGel. . . .  Because the Plaintiffs do not allege that the settlements exceed the scope of the ‘894 patent, it does not matter if the Defendants settled their patent disputes with reverse payments. The Plaintiffs’ reverse payment settlement claims must be dismissed. [(internal quotation and citation omitted)]

The decision comes just a month after the FTC issued its report, titled “Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions,” in which the Commission analyzed the effects of settlement agreements in the drug industry over the past 6 years and pleaded for the inclusion of a provision in Health Reform legislation that would address such settlements.  (See our previous post here) 

Earlier this week, the Obama Administration released a Health Reform proposal that includes, among other things, provisions addressing settlement agreements.  (see our previous post on the proposal here)   According to summary:

The President’s proposal adopts a provision from the bipartisan legislation that gives the FTC enforcement authority to address this problem. Specifically, it makes anti-competitive and unlawful any agreement in which a generic drug manufacturer receives anything of value from a brand-name drug manufacturer that contains a provision in which the generic drug manufacturer agrees to limit or forego research, development, marketing, manufacturing or sales of the generic drug. This presumption can only be overcome if the parties to such an agreement demonstrate by clear and convincing evidence that the pro-competitive benefits of the agreement outweigh the anti-competitive effects of the agreement. The proposal also requires the Chief Executive Officer of the branded pharmaceutical company to certify to the accuracy and completeness of any agreements required to be filed with the FTC.

The Obama Administration’s description of its settlement agreement proposal – which FTC Chairman Jon Leibowitz praised – appears to be similar to S. 369, the Preserve Access to Affordable Generics Act, which was passed out of the Senate Judiciary Committee last year.  That bill would amend the FTC Act to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 28] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product.”  Such agreements, if challenged, would be 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.”  In contrast, the bill passed by the House (§ 2573) would amend the FDC Act to add section 505(w) – “Protecting Consumer Access to Generic Drugs” – to, among other things, make it unlawful for any person from being a party to any agreement resolving or settling a patent infringement claim in which an ANDA applicant receives anything of value, and the ANDA applicant agrees not to research, develop, manufacture, market or sell the generic drug that is the subject of a patent infringement claim.  Both bills were scored by the Congressional Budget Office (here and here). 

According to a recently filed report on S. 369, there is some disagreement as to how best to address settlement agreements.  Senators Orrin Hatch (R-UT), Jon Kyl (R-AZ), John Cornyn (R-TX), and Tom Coburn (R-OK) filed their “minority views” criticizing the legal-presumption rule in the bill:

Although this bill has been substantially improved since it was first introduced, we cannot support it in its current form. The original bill would have created a per se violation of the antitrust laws where the parties to a drug patent infringement suit settle the suit in a way that gives something of value to the generic company other than the right to go to market earlier. The reported bill replaces an express per se ban with a presumption that such agreements are anticompetitive and invalid. Because of the way that the bill enforces that presumption, however, we believe that the bill would amount to a de facto per se ban on covered settlements—and would entail all of the evils attendant to a per se ban.

To be clear, we would support creating a legal presumption against drug patent settlements—in effect, requiring the parties to such settlements to show why the terms of the settlement are reasonable and will not harm consumers. Such a test would require the parties to explain what consideration is being transferred between them under the agreement, to estimate the value of that consideration, and to give a neutral and legitimate reason for the exchange. We think that such a test would ferret out settlements that are anticompetitive and designed simply to delay generic market entry, while still allowing the parties to enter into settlements that are reasonable.

For a legal-presumption rule to work, however, the parties must be afforded a forum in which they can quickly and fairly test whether they have overcome the presumption and whether the agreement is valid. Unfortunately, under the reported bill, settlements would be made presumptively unlawful, but the bill does not create a process for quickly resolving whether the agreement is unlawful. The issue would not be resolved until the FTC brings an action to challenge the settlement, which could be years after the settlement was entered into. Moreover, the current bill requires the brand and generic companies to rebut the presumption that the agreement is unlawful by clear and convincing evidence. This is a heavy burden that is not appropriate for commercial litigation and that tilts the scales in a lawsuit sharply in the government’s favor. . . .

By effectively preventing the parties from settling, it is likely that this bill will discourage generic drug companies from bringing challenges to brand companies’ patents in the first place—and as a result, the bill will ultimately reduce competition and raise prices for drugs that are currently subject to invalid or low-quality patents.

Notwithstanding the current legislative initiatives to address settlement agreements – and the loss in the ANDROGEL case – the FTC will presumably continue to fight against such arrangements.  Indeed, settlement agreement antitrust challenges are currently beling litigated in a Pennsylvania district court in Fed. Trade Comm’n v. Cephalon, and before the U.S. Court of appeals for the Second Circuit in Arkansas Carpenters Health and Welfare Fund v. Bayer AG.

By Alan Kirschenbaum —

In an effort to salvage health care reform, the Obama Administration will hold a bipartisan health care reform meeting this Thursday, February 25.  Invited are the Congressional leadership of both parties and the Chairmen and ranking membership of committees involved in health care reform.  Today the White House released a health care reform outline described as a “proposal to work off of at the meeting.”  The outline can be found here and additional detail is posted on the White House web site.  The drug and device-related points of the outline draw on many of the provisions that appear in the House and Senate bills, which we’ve described in previous posts.  (You’ll find our report on the House bill here and the Senate bill here.)  Among the familiar provisions appearing in the President’s outline are the following:

•  Medicare Part D Donut Hole:  Like the House bill, the proposal would phase out the Part D coverage gap over the next ten years.  In 2010, a $250 rebate would be provided to Part D beneficiaries who enter the donut hole.  Though the outline provides no detail, this rebate would presumably be funded by pharmaceutical manufacturers.

•  Medicaid rebates:  Like both the House and Senate bills, the proposal would increase the minimum Medicaid rebate for innovator drugs to 23.1 percent of AMP, impose an additional rebate for new formulations of an innovator drug, and require new rebates on drugs dispensed to Medicaid managed care enrollees.  The proposal does not mention an increase in the minimum rebate for generics, which was included in the Senate bill.

•  Industry fees and excise taxes:  The annual fee on the drug industry, which is $23 billion over 10 years in the Senate bill, is increased to $33 billion but delayed until 2011.  Instead of a fee on the device industry as contained in the Senate bill, the President has opted for the House bill’s excise tax on device sales beginning in 2013.  The outline doesn’t indicate whether the excise tax is 2.5 percent of the wholesale price, as under the House bill.

•  Physician payment sunshine:  Like both the House and Senate bills, the President’s proposal includes physician payment reporting requirements.
 
•  Ending pay-for-delay arrangements:  The President’s proposal adopts House provisions prohibiting brand name drug manufacturers from paying generic manufacturers to forego manufacturing or marketing of generic drugs.

•  Biosimilar approval:  The President’s proposal adopts from both bills a new approval pathway for biosimilars.
 
•  340B program expansion:  A cryptic reference to extending drug discounts to “hospitals and communities that serve low-income patients” indicates that the President’s proposal includes the 340B drug discount program expansion provisions included in both the House and Senate bills, though the extent of the expansion (which differs between the two bills) is uncertain. 

It is far from certain whether Thursday’s meeting will break the partisan logjam on health care reform.  However, if it does, the drug and device provisions outlined in the President’s proposal are likely to be included in any surviving bill.

By David B. Clissold and Nisha P. Shah

On February 19, 2010, FDA issued a proposed rule that would require sponsors to report any person that has or may have engaged in the falsification of data in studies that involve human or animal subjects.  FDA believes the proposed rule is “intended to help ensure the validity of data that the agency receives in support of applications and petitions for FDA product approvals and authorization of certain labeling claims and to protect research subjects.”

Key definitions under the proposed rule are: 
•  “Sponsor” would broadly include sponsors of studies conducted on humans and animals; petitioners submitting food additive, color additive, nutrient content claim, and health claim petitions; and manufacturers or distributors submitting new dietary ingredient notifications.
•  “Falsification of data” would be defined as “creating, altering, recording, or omitting data in such a way that the data do not represent what actually occurred.” The proposed rule would not be intended to address “unintentional errors in recording or reporting information”, such as typographical errors or transposed numbers or characters.
•  “Data” would include, though not limited to, “individual facts, tests, specimens, samples, results, statistics, items of information, or statements made by individuals.”

The rule would require a sponsor to report information indicating that a “person has, or may have, engaged in the falsification of data in the course of reporting study results, or in the course of proposing, designing, performing, recording, supervising, or reviewing studies that involve human subjects or animal subjects conducted by or on behalf of a sponsor.”  A sponsor would not be required to determine definitively that data have been falsified, nor the intent of the person who has, or may have, falsified data.  Rather, a sponsor would be required to report information of which it is aware suggesting that a person has, or may have, engaged in the falsification of data. The reporting obligation would exist regardless of the amount of evidence, if any, the sponsor has with regard to the intent of the person who has, or may have, falsified data.  The agency emphasized that the sponsors should not wait to determine conclusively whether falsification actually occurred, or seek to determine the circumstances that led to the falsification before reporting the information with FDA. Therefore, a sponsor must report any confirmed or possible falsification of data.

The sponsor would be required to report the information to the appropriate FDA center “promptly”, but no later than 45 calendar days after the sponsor becomes aware of the information.  The reporting requirement would be ongoing and cover the periods before and after study completion.  Information in the report to FDA must include the following: 
•  The name of the person who has, or may have, falsified data, 
•  The last know address(es) and phone number(s) of that person, 
•  The specific identify of the potentially affected study, including, when applicable, application information such as the application number, investigational protocol number, study title, study site(s), and study dates, and 
•  Information suggesting that falsification occurred and describing the falsification. 

FDA commented that the agency is considering also whether additional information should be included in the report, such as the National Clinical Trial (“NCT”) number assigned to a study when the study is registered with ClinicalTrials.gov. 

FDA intends to use the reported information to determine whether further agency investigation is warranted in conjunction with other information available to the agency.  According to FDA, these investigations might form the basis of administrative or enforcement actions, such as excluding clinical trials from consideration by FDA, placing a clinical trial on hold, or initiating disqualification of investigators or criminal proceedings.  Failure to report possible falsification of data might constitute a violation of section 301(e) of the Food, Drug, and Cosmetic Act (21 U.S.C. § 331(e)) (concerning failure to make a required report) or 18 U.S.C. § 1001 (concerning the submission of a false statement to the federal government).

This proposed rule is a dramatic shift in regulatory obligations with serious implications for study sponsors and investigators alike.  Currently, if the sponsor of a clinical study under an IND determines that an investigator “is not complying” with the protocol or with FDA regulations (conduct that would include data falsification), they must discontinue the investigator’s participation in the trial and notify FDA.  Note that a mere “suspicion” of non-compliance is not enough to trigger this obligation.  In contrast, the proposed rule requires sponsors to report “possible” falsification.  FDA claims they are not interested in “errors” but as any experienced clinical trial auditor will tell you, there is a lot of gray area between an “error” and “falsification.”  As FDA noted, “falsification is more difficult for FDA to detect than errors . . . because persons who engage in the falsification process are more likely to attempt to conceal their actions.”  That is undoubtedly true, but such people are no more likely to reveal those actions to a sponsor’s representative than they are to an FDA investigator.  Moreover, data falsification is not always obvious right away, even to an auditor or monitor.  FDA generally gets to review these allegations on their own timeline with the benefit of 20:20 hindsight, yet the sponsor is expected to report suspicious activity, or apparently even unusual activity that is not resolved within 45 days, under penalty of civil penalty.  Not addressed in the proposed rule is whether FDA will expect the sponsor to continue to develop evidence for the Agency after it has reported suspected falsification.
 
Comments on the proposed rule must be submitted by May 20, 2010.

By William T. Koustas —

 The FDA has announced that it will require all drugs known as Erythropoiesis-Stimulating Agents (“ESAs”) to have a Risk Evaluation and Mitigation Strategy (“REMS”).  At the present time, this class of drugs is limited to three Amgen products: Procrit, Epogen (both epoetin alfa) and Aranesp (darbepoetin alfa).  FDA required Amgen to create a “risk management program,” or REMS, in April of 2008 for ESAs based on new safety information received from studies that showed ESAs caused tumors to grow faster, leading to premature death in some cancer patients.

 The REMS consists of a medication guide, communication plan, and elements to assure safe use (“ETASU”).  The medication guide is to be provided at retail/hospital outpatient pharmacies as well as in physician offices, clinics, hospital inpatient and in-clinic services and upon request.  The communication plan will consist of letters to Nephrology and Oncology related professional societies, “Dear Healthcare Provider” letters to hospital Directors of Pharmacy/Administrators and to those healthcare providers who directly purchase/prescribe ESAs and ensure access to communication materials online. 

 The most onerous part of this REMS is the required ETASU that includes certification for healthcare providers who both prescribe and dispense ESAs as well as the hospitals themselves.  Amgen has established Assisting Providers and cancer Patients with Risk Information for the Safe use of ESAs (“APPRISE”) which provides each eligible healthcare provider and/or hospital with an APPRISE enrollment number and ensures that they re-enroll in the APPRISE program every three years.  Failure to do so will result in that provider/hospital no longer having access to ESAs.  Further, the ETASU require that Amgen ensure that certified hospitals and healthcare providers only dispense ESAs after they have discussed the risks with the patient and the patient has signed an “Acknowledgment Form.” 

 We have previously discussed on this blog how FDA may expand its use of class-wide REMS as it continues to become more comfortable with its new powers under FDAAA, and this appears to further confirm that FDA is moving in that direction. 
  

By Ricardo Carvajal and A. Wes Siegner –

According to a press release issued by FTC, the agency “has sent letters to 11 companies that promote various Omega-3 fatty acid supplements, telling them they should review their product packaging and labeling to make sure they do not violate federal law by making baseless claims about how the supplements benefit children’s brain and vision function and development.”  The companies have been given two weeks to respond.  As an example of the level of substantiation that FTC would find acceptable, the letters point to “well-conducted, clinical cause-and-effect studies demonstrating that the use of the combination of Omega-3 fatty acids provided in Product X, in the same dosage as provided by one serving of that product, improves or promotes brain function, cognitive function, attention span, intelligence, memory, learning ability, and visual acuity in normal children ages 2 years and older.”

This latest action is consistent with remarks delivered by an FTC staff attorney at the Food and Drug Law Institute’s recent conference on hot topics in food and dietary supplement law.  In her remarks, the staff attorney indicated that FTC intends to closely scrutinize claims relating to omega-3 fatty acids, probiotics, fiber products, antioxidants, and products marketed for use by children.  The products targeted in FTC’s latest action span two of these categories, suggesting that they may have been at especially high risk.  Notably, FTC’s press release encourages the filing of consumer complaints against companies that “may be deceptively advertising dietary supplements for children.”

By Douglas B. Farquhar –

A recent of a New Jersey federal court is bound to encourage some manufacturers of an FDA-approved version of a long-marketed drug to sue competitors that continue to market unapproved versions of the same drug.
 
Mutual Pharmaceutical Company, Inc. and two other companies brought a lawsuit after receiving FDA approval of their applications to market colchicine in July 2009.  Colchicine has been used for centuries to treat gout.  Mutual sought a preliminary injunction to block competitors marketing unapproved versions of the drug.  The motion for preliminary injunction was denied by the California federal court, where the case was filed, as discussed in our .  The California court then transferred the case to the court in New Jersey. 

In a decision issued February 8th, Judge Garrett E. Brown, Jr., of the U.S. District Court for the District of New Jersey, held that, although Mutual cannot sue competitors for marketing the drug in violation of the Federal Food, Drug, and Cosmetic Act (inasmuch as the FDC Act does not permit a private right of action), the Court could not determine, at this preliminary stage of the case, whether the unapproved marketers of the drug had engaged in marketing activities that effectively misrepresented the unapproved status of their drugs in violation of the federal Lanham Act.

The decision is unpublished (meaning that it will not be published in the Federal Reporter, where district court judges can decide to place decisions on matters they think should have precedential impact).  However, inasmuch as the judge issued a decision allowing the case to continue, it will likely boost the optimism of similarly situated marketers of approved drugs that lawsuits will at least harass competitors which have not yet received FDA approvals.

The Court's decision is at odds with numerous court rulings in Lanham Act cases which have ruled that plaintiffs have improperly used the Lanham Act as a vehicle to enforce the FDC Act.  For instance, in Schering-Plough Healthcare Products, Inc., v. Schwarz Pharma, Inc., 586 F.3d 500 (7th Cir., 2009), the Seventh Circuit affirmed the dismissal of a Lanham Act case, ruling that the lawsuit sought to usurp FDA's primary jurisdiction concerning the legality of labels that FDA had earlier approved.   Hyman, Phelps & McNamara, P.C. represented Schwarz Pharma, Inc. and Kremers Urban, LLC in that case.  Our firm is writing an article in the next edition of FDLI Update magazine about the interplay between the Lanham Act and the FDC Act.

By Ricardo Carvajal –

In an effort to grant FDA additional authority over dietary supplements, Senators John McCain and Byron Dorgan have introduced the Dietary Supplement Safety Act of 2010.  The bill would require dietary supplement facilities to provide FDA with information on supplements and their ingredients on an ongoing basis, would substantially alter the requirements applicable to new dietary ingredients ("NDI’s"), would give FDA mandatory recall authority, and would expand adverse event reporting requirements, among other changes. 
 
Particularly noteworthy are the changes in the requirements applicable to NDI’s that would take effect if the bill were to become law.  Currently, FDCA § 413(c) defines an NDI as “a dietary ingredient that was not marketed in the United States before October 15, 1994 and does not include any dietary ingredient which was marketed in the United States before October 15, 1994.”  If a dietary ingredient meets the definition of an NDI, then a manufacturer or distributor must submit a 75-day premarket notification to FDA that provides the basis on which the manufacturer or distributor has concluded that a dietary supplement containing the NDI will reasonably be expected to be safe, with one exception.  A premarket notification need not be submitted if “the dietary supplement contains only dietary ingredients which have been present in the food supply as an article used for food in a form in which the food has not been chemically altered.”

In conjunction with the passage of the Dietary Supplement Health and Education Act of 1994, dietary supplement trade associations developed “grandfather” lists of dietary ingredients that were marketed in the U.S. before October 15, 1994, and therefore were not subject to regulation as NDI’s.  Although FDA does not regard these lists as dispositive of a dietary ingredient’s status as a grandfathered dietary ingredient, manufacturers and distributors continue to rely on the lists.  The proposed legislation would amend the existing definition of an NDI to eliminate the references to October 15, 1994, and instead authorize FDA to establish a list of “accepted dietary ingredients.”  Dietary ingredients not on that list would be regulated as NDI’s.  Further, all such ingredients would have to be the subject of a 75-day premarket notification to FDA because the proposed legislation would abolish the exception to the premarket notification requirement described above. 

In proposing the legislation, Sen. McCain referenced a previous GAO report that made numerous recommendations with regard to FDA’s regulation of dietary supplements, including a recommendation that FDA issue guidance to clarify when a dietary ingredient is a new dietary ingredient (that guidance has yet to issue).  Notably, GAO just sent out letters to a number of supplement manufacturers seeking information on specific dietary ingredients, including substantiation of any company determinations that submission of an NDI notification is not required.  Just as the previous GAO report is being cited in support of calls for reform, the results of the current GAO inquiry could well be seized upon by advocates of reform if that inquiry reveals any apparent shortcomings in FDA’s oversight of NDI’s.

By Alan M. Kirschenbaum –      

Late last year, we reported on a decision of the D.C. District Court upholding the Department of Defense’s ("DOD’s") authority to apply Federal Ceiling Price ("FCP") limitations to all prescriptions filled on or after January 28, 2008 under the TRICARE Retail Pharmacy Program.  While that decision represented a victory for DoD, the court also criticized DoD’s interpretation that the authorizing statute requires the discount pricing to be implemented through a refund system to the exclusion of other approaches, and the court remanded the implementing regulation back to DoD without vacatur to consider other approaches to implementing FCP pricing.

Although not required under the court order, DoD published a notice in the Federal Register yesterday soliciting additional public comments on its final rule establishing the current refund program (which we summarized when it was promulgated in March 2009), as well as comments on other possible approaches to implementing FCP pricing.  DoD will consider alternatives that are consistent with the Congressional intent and with best business practices, and that are practical to administer.  Comments are due by March 11, 2010.  In the interim, because DoD’s final rule was remanded without vacatur, the current refund program and Pricing Agreements will remain in effect.  It will take unusually persuasive comments to overcome the inertia of a refund program that has now been in effect since May 2009.

By Kurt R. Karst –      

Two recent rulings out of the U.S. District Court for the Eastern District of Pennsylvania stemming from allegations about antitrust violations from the submission of citizen petitions have once again raised the issue of so-called “sham” citizen petitions and, insofar as there are allegations of violation of Section 2 of the Sherman Act, Noerr-Pennington immunity.  In each case – In Re: Flonase Antitrust Litigation and Roxane Laboratories v. Smithkline Beecham – the plaintiffs allege that GlaxoSmithKline, Inc. (“GSK”) submitted a series of “sham” citizen petitions several years ago that delayed and restrained competition for generic versions of GSK’s FLONASE (fluticasone propionate) in violation of competition laws.  And in each case the court denied (here and here) motions from GSK to dismiss the actions.  The underlying competition issues have yet to be decided.  Based on the recent track record of challenging “sham” citizen petitions, however, the plaintiffs in each case have a difficult road ahead. 

Under the Noerr-Pennington doctrine, private entities are immune from antitrust liability in petitioning the government to influence the passage or enforcement of laws, even if the laws they advocate for would have anticompetitive effects.  See Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965).  Immunity extends to citizen petitions submitted to FDA.  The Noerr-Pennington doctrine is grounded in the First Amendment protection of political speech, and “upon a recognition that the antitrust laws, ‘tailored as they are for the business world, are not at all appropriate for application in the political arena.’” City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 380 (1991) (quoting Noerr, 365 U.S. 127, 141 (1961)).

Noerr-Pennington immunity is not absolute, however.  When petitioning activity “ostensibly directed toward influencing governmental action[] is a . . . sham to cover what is . . . nothing more than an attempt to interfere directly with the business relationships of a competitor[, then] the application of the Sherman Act would be justified.”  Noerr, 365 U.S. at 144.  The sham exception requires that a petition be “(i) ‘objectively baseless,’ and (ii) ‘an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process – as opposed to the outcome of that process – as an anticompetitive weapon.’”  Primetime 24 Joint Venture v. Nat’l Broad. Co., 219 F.3d 92, 100-01 (quoting Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993)).

In 2009, the U.S. District Court for the Southern District of New York declined to find that a March 2005 citizen petition submitted on behalf of Sanofi-aventis concerning generic versions of ARAVA (leflunomide) was “objectively baseless” and denied the plaintiff’s – Louisiana Wholesale Drug Co., Inc. (“LWD’s”) – Motion for Judgment as a Matter of Law.  The ruling followed a jury verdict concluding that the petition was not “objectively baseless.”  

LWD argued that the ARAVA petition is a prime example of a sham citizen petition.  In the petition, Sanofi-aventis requested that:

(1) if an ANDA applicant is not seeking approval of a 100-mg leflunomide tablet that is bioequivalent to Arava 100-mg tablets, [FDA] require the applicant to perform in viva bioequivalence testing to confirm that five of its 20-mg tablets are bioequivalent to one Arava 100-mg tablet, and (2) the Agency withhold final approval of any leflunomide ANDA that either (a) does not seek approval of a 100-mg leflunomide tablet that is bioequivalent tom Arava 100-mg tablets or (b) does not establish in vivo bioequivalence between five 20-mg lleflunomide tablets and one Arava 100-mg tablet.

FDA uncharacteristically (at least at that time) denied the petition less than six months after it was submitted to the Agency and simulteneously approved ANDAs for generic ARAVA.  FDA ruled that it “will require the labeling for generic leflunomide products to include the labeling approved for the RLD, Arava, conceming the use of a 100-mg loading dose,” and that Sanofi’s concern about certain generic labeling omissions or changes “is unfounded.”

In ruling for Sanofi, the court commented that “[i]n short, there was ample evidence introduced at trial that tended to show that the issue raised by the Citizen Petition was sufficiently novel and unsettled to permit an objectively reasonable drug company to ‘perceive[] some likelihood’ that the FDA would grant the relief requested.”  A pretty high sham citizen petition standard to meet indeed!

Hyman, Phelps & McNamara's Jeffrey N. Wasserstein (co-chief blogger at fdalawblog.net and self-described social media guru) will be speaking on the regulation of social media at the American Conference Institute’s 8th Expert Regulatory Guide to Advertising, eMarketing and Promotions for the Pharmaceutical Industry, taking place in the City of Brotherly Love, (that's Philadelphia, PA) from April 14-April 15, 2010.   Registration materials for the conference can be found here.  Loyal readers of the blog may obtain a $200 discount by using discount code 876L10.S.

By Kurt R. Karst –      

FDA’s ability to force a prescription-to-over-the-counter switch (“Rx-to-OTC switch”) has been hotly contested over the past decade.  The crux of the debate concerning forced Rx-to-OTC switches is whether FDA, absent a New Drug Application (“NDA”) sponsor’s consent, has the authority to force an Rx-to-OTC switch; and if so, on what legal basis.  (Although FDA attempted a forced switch once – almost 30 years ago – when the Agency proposed to switch metaproterenol sulfate metered-dose inhaler drugs from Rx to OTC status under the OTC Drug Review, FDA did not carry through with the switch after extensive adverse comment.)  A little-known FDA response to a citizen petition, however, appears to have settled what FDA believes is its legal basis to effect a forced switch.  But first, some background . . . .

The 1951 Durham-Humphrey Amendments to the FDC Act gave FDA the authority to require that drugs be limited to Rx status when they cannot be used safely for OTC use.  Thus, the underlying presumption (then and now) is that Rx restrictions are the exception, and that if a drug can be used safely and effectively OTC it should be.  The Durham-Humphrey Amendments also amended the FDC Act (§ 503(b)(3)) to state that FDA “may by regulation remove drugs subject to [FDC Act § 505 [(i.e., new drugs)] from the requirements of [FDC Act § 503(b)(1)] when such requirements are not necessary for the protection of the public health.”  FDA’s regulation implementing § 503(b)(3) is codified at 21 C.F.R. § 310.200(b), and states that FDA may approve an Rx-to-OTC switch when Rx dispensing is:

not necessary for the protection of the public health by reason of the drug’s toxicity or other potentiality for harmful effect, or the method of its use, or the collateral measures necessary to its use, and . . . [t]he drug is safe and effective for use in self-medication as directed in proposed labeling. 

There are two different mechanisms under the FDC Act for FDA to make an Rx-to-OTC switch: (1) FDC Act § 503(b)(3) explicitly provides FDA with the authority to issue a regulation changing the status of an Rx drug to an OTC drug; and (2) the FDC Act grants FDA the authority to approve and reject NDAs. 

FDA’s regulation at 21 C.F.R. § 310.200(b), which implements FDC Act § 503(b)(3), identifies processes for initiating consideration of an Rx-to-OTC switch.  Specifically, a proposal to exempt a drug from Rx-only requirements may be initiated by the FDA Commissioner or by “any interested person” in the form of a sponsor submitting an NDA or by a third party petitioning FDA.  Regardless of who initiates a request for an Rx-to-OTC switch, however, the evidence must demonstrate that the statutory Rx-only dispensing requirements are no longer necessary to protect the public health, and that the drug is safe and effective for use in self-medication as directed in proposed labeling. 

Those opposed to forced switches have argued that FDA can only authorize a switch over the NDA sponsor’s objections following a formal, trial-like administrative process known as an adjudication, and that FDA lacks the authority to force an Rx-to-OTC switch through rulemaking.  (The distinction between rulemaking and adjudication is based on the nature of the decision facing an agency.  Actions pursuant to generalized facts do not require an individual hearing and can be taken according to procedures applicable to rulemaking – either formal rulemaking, informal notice-and-comment rulemaking, or the rarely used negotiated rulemaking.  Actions pursuant to individualized facts require some level of hearing and are classified as an adjudication.)  Moreover, forced switch opponents have argued, among other things, that even if rulemaking is appropriate, FDA cannot use informal notice-and-comment rulemaking, but instead must use formal, hearing-based rulemaking.  

Forced switch proponents have argued, among other things, that the FDC Act expressly authorizes FDA to force a switch following rulemaking – not adjudication – and that FDA is free to undertake any type of rulemaking the Agency deems appropriate, such as informal notice-and-comment rulemaking. 

Over the past decade, FDA has been asked on at least three separate occasions to make a forced switch.  First, in July 1998, WellPoint (Blue Cross of California) submitted a citizen petition to FDA (Docket No. FDA-1998-P-0254) requesting that the Agency convert from Rx to OTC status several antihistamine drugs.  (The WellPoint petition was the subject of a joint meeting of the Nonprescription Drugs Advisory Committee & the Pulmonary – Allergy Drugs Advisory Committee in May 2001.)  Second, in March 2007, FDA was petitioned (Docket No. FDA-2007-P-0056) to force a switch of fexofenadine HCl and cetirizine HCl.  FDA has not substantively responded to either petition.   

Finally, in February 2001, the Center for Reproductive Rights petitioned FDA (Docket No. FDA-2001-P-0123) to force a switch of PLAN B (levonorgestrel) Tablets.  FDA denied the petition in June 2006 “because it did not contain sufficient data to satisfy the statutory and regulatory requirements for an Rx-only to OTC switch for Plan B.”  Moreover,  given the then-pending NDA supplement for OTC PLAN B, FDA refused to allow the petition to “circumvent the [NDA supplement] process to which the sponsor of the drug is entitled.”  Importantly, however, FDA noted in its response that:

Although your petition does not explicitly state that you are requesting FDA initiate notice-and-comment rulemaking, the Act . . . authorizes only two mechanisms for FDA to make an Rx to OTC switch: [informal] notice-and-comment rulemaking and approval of a drug application . . . . You are not yourselves applicants for drug approval, and you are not permitted to submit a supplement to another company’s application.  21 CFR 314.71(a).  Accordingly, your petition can only be construed as a request that we initiate notice-and-comment rulemaking proceedings pursuant to which a rule would be promulgated allowing Plan B and other emergency contraceptives to be made available OTC. [(emphasis added)]

In other words, FDA in its petition decision appears to have determined that informal notice-and-comment rulemaking is the appropriate route to effect a forced switch over an NDA sponsor’s objections, and that administrative adjudication is not necessary. 

By Michelle L. Butler –

This week, the parties in the Winston Laboratories case filed a Stipulation of Dismissal with Prejudice Pursuant to Fed. R. Civ. P. 41(a).  This case involved FDA’s interpretation of the term “affiliate” in its decision to deny Winston a small business waiver of the PDUFA fee for a new drug application.  Given the Court’s prior decision denying the Government’s Motion to Dismiss, it is likely that the parties settled the case on terms favorable to Winston.  We do not yet know how FDA will deal with similar small business waiver determinations going forward, but we will provide updates as information becomes available.