By Jamie K. Wolszon –

The U.S. Government Accountability Office (“GAO”) released a report earlier this week finding that FDA’s postmarket drug safety decision-making and oversight, while improved since a prior investigation a few years ago, continues to have gaps.  The GAO recommended that FDA establish a timeline for transferring responsibility for the review of protocols and findings of observational epidemological studies and the review of protocols and studies that assess medication error risks from FDA’s drug center’s Office of New Drugs (“OND”) to its Office of Surveillance and Epidemiology (“OSE”).

Senate Finance Committee Ranking Member Charles Grassley (R-IA) requested the report “Drug Safety: FDA Has Begun Efforts to Enhance Postmarket Safety, but Additional Actions are Needed.”  The report, dated November 2009, follows up on a 2006 GAO report that found deficiencies in agency postmarket drug safety decision-making and supervision. 

The 2006 GAO report, titled “Drug Safety: Improvement Needed in FDA’s Decision-making and Oversight Process,” found that the agency had not clearly defined the role of OSE and that communications problems between OSE and OND were undermining the decision-making process. 

OND mainly reviews premarket drug applications submitted by drug sponsors, but also has postmarket authority.  OND traditionally has had final responsibility to decide whether to take regulatory action.  OSE traditionally has acted as a consultant and not had independent decision-making responsibility.

The 2006 report also found limitations in the data FDA uses to identify postmarket drug safety issues and the systems the agency uses to track drug safety issues once identified.  The 2006 report recommended that FDA: revise and implement the agency’s draft policy intended to clarify the role of staff, including OSE, in major postmarket drug safety decisions; clarify OSE’s role in FDA scientific advisory committee meetings with postmarket drug safety issues; increase the independence of the drug center’s dispute resolution process; and systematically track OSE’s recommendations and subsequent safety actions.

Since 2006 when GAO issued its last report, Congress passed the FDA Amendments Act of 2007 (“FDAAA”).  FDAAA provided the agency with significant new drug postmarketing authority, and heightened the agency’s drug safety responsibilities and workload.  The new GAO report examines the steps FDA is taking to address the issues identified in the 2006 GAO report, and evaluates FDA efforts to meet the agency’s increased drug safety workload.

The new GAO report notes that the agency launched a Safety First Initiative in January 2008.  That initiative is intended to provide clearly defined roles and responsibilities for the post-market decision making process.  The initiative incorporates the principle the agency calls Equal Voice, intended to ensure the equal participation of all relevant parties. 

OSE and OND signed a Memorandum of Understanding in June 2008 that states the agency’s intent for the two offices to equally contribute.  That MOU has expired and subsequently been extended.  OND, according to GAO, generally retains the authority to decide the regulatory action.  FDA, the report adds, has stated that this authority generally remains with OND as the OND staff has the broadest expertise in evaluating and managing clinical risks and benefits of drugs. 

However, as part of the MOU, the agency envisioned transferring three roles from OND to OSE: 1. proprietary name review; 2. review of protocols and findings of observational epidemological studies; 3. review of protocols and studies that assess medication error risks.  FDA transferred proprietary name review in April 2009, but has yet to establish timelines for the remaining planned transfers. 

GAO now recommends that the FDA commissioner “develop a comprehensive plan for transferring the additional regulatory authorities from OND to OSE that includes time frames for the transfer and steps to ensure resources are properly aligned to allow OSE to assume these responsibilities.”

While FDA supports the idea of such a comprehensive plan, it resists committing to timelines.  “The details of such a plan, including timelines, remain dependent upon available appropriated and PDUFA funding as well as the Agency’s ability to recruit and retain the necessary staff to assume additional responsibilities,” the agency stated in a letter to GAO.  GAO responded: “we believe that the development of a comprehensive plan and time line is an important step towards ensuring the necessary funding levels and staffing needs are identified and secured.”

By Kurt R. Karst –      

A recent decision from the Patent and Trademark Office (“PTO”) in which the Office granted an interim Patent Term Extension (“PTE”) for U.S. Patent No. 5,407,914 but denied interim extensions for U.S. Patent Nos. 5,260,273 and 5,789,381 covering the drug product SURFAXIN appears to be the first time in which the PTO has had to address the issue of the availability of multiple interim PTEs.  The PTO has previously ruled that multiple PTEs are available, under certain circumstances, once a drug product has been approved (see our previous posts here and here).

There are two types of interim patent extensions under the PTE statute (35 U.S.C. § 156): (1) interim patent extensions granted during the “review phase” of the statutory “regulatory review period” (35 U.S.C. § 156(d)(5)); and (2) interim patent extensions granted during the PTO’s review of an application for a PTE (35 U.S.C. § 156(e)(2)). 

The PTO may grant an interim patent extension while an NDA is undergoing FDA review if the patent owner (or his agent) “reasonably expects” that the applicable statutory “regulatory review period” will extend beyond the expiration of a patent that claims the drug product under review at FDA.  The patent owner (or his agent) must submit to the PTO an application “during the period beginning 6 months, and ending 15 days, before such [patent] term is due to expire.”  If the PTO determines that, except for receipt of FDA’s permission to market or use a product commercially, the patent would be eligible for a statutory extension of the patent term under 35 U.S.C. § 156, then the PTO publishes a notice in the Federal Register announcing the interim patent extension for the particular product, and issues to the applicant a certificate of interim patent extension for a period of not more than one year.  The applicant may apply for additional interim patent extensions for the patent; however, the PTO generally limits subsequent applications for a particular patent to four one-year interim patent extensions (thus, a total of five years). 

The PTO may also extend (either on its own initiative or upon the application of a patent owner) the term of a patent for up to one year if the time necessary to process and review an application for patent term extension might result in a patent expiring while the application is under review at the PTO. 

The cumulative patent time granted under either type of interim patent extension cannot exceed the PTE that a company might obtain under regular patent extension provisions.  That is, interim patent extensions cannot exceed what the PTO might ultimately determine is the correct PTE for which a particular patent claiming a drug product is eligible.  The PTO reviews each application requesting an interim patent extension to ensure that a patent will not be extended for more time than that for which it is eligible under the law.

The PTO’s recent decision on the avilability of multiple interim patent extension for patents covering SURFAXIN was made pursuant to requests under 35 U.S.C. § 156(d)(5), as the drug product is still under FDA review.  In analyzing the PTE statute, the PTO stated that:

The explicit language of section 156, in many instances, states that it is the term of "a patent" which shall be extended.  Additionally, the statute provides for "an extension of the term of a patent."  See § 156(d)(1).  This is not the first time that the USPTO has been required to interpret the language "a patent."  It is a long-standing interpretation of the USPTO that "a patent" means one patent.  In the context of double patenting, the USPTO's Manual of Patent Examining Procedure (MPEP) clearly explains a "'same invention' type double patenting rejection [is] based on 35 U.S.C. 101 which states in the singular that an inventor 'may obtain a patent.'" See MPEP 804 (emphasis added). . . .

Based on the language of the statute, as a whole, and the plain meaning of "a patent," the statute only contemplated that a single patent is entitled to have the term extended for the same (single) regulatory review period.  Similarly, the explicit language of section 156(d)(5)(C) makes clear that interim extension is applicable only for "a patent," stating, "[t]he owner of record of a patent, or its agent, for which an interim extension has been granted under subparagraph (b), may apply for not more than 4 subsequent interim extensions under this paragraph . . . ."  The plain language of obtaining "an extension" for "a patent" delineates that the patent term extension statute contemplates that only one patent may be granted an interim extension.  Furthermore, the language of § 156 distinguishes "interim extension" from "extension" by referring throughout subsection 156(d)(5) that the extension is "an interim extension."  See e.g., § 1 56(d)(5)(F) indicating that the rights derived are "during the period of interim extension." (emphasis added).

As addition justification for the PTO’s decision that only a single interim PTE is available for the same (single) regulatory review period, the Office notes that to rule otherwise would mean that “the additional patents would be listed in the Orange Book, necessitating additional patent certifications, and potentially leading to additional litigation.”  Instead, a policy of granting only a single interim PTE means that an ANDA applicant “would be required to provide patent certifications for only the patent which would ultimately be eligible for a certificate of extension,” thereby avoiding “unnecessary litigation.” 

With respect to cases in which a company might ultimately be eligible for multiple PTEs once a drug product is approved, the PTO’s interim PTE decision leaves the door open for multiple interim patent extensions.  Specifically, the PTO’s statement that “only a single interim PTE is available for the same (single) regulatory review period,” means that when separate NDAs, each with its own “regulatory review period,” might be approved on the same first day, more than a single patent might qualify for an interim patent extension.

By Ricardo Carvajal –

When FDA sent letters to manufacturers of caffeinated alcoholic beverages asking them to furnish evidence supporting a conclusion that the use of caffeine in an alcoholic beverage is generally recognized as safe (GRAS) or prior sanctioned, the agency allowed 30 days for a response.  The 30-day deadline expires on December 13, and anyone with an interest in the future of FDA’s voluntary GRAS notification program should pay close attention to what comes next. 

The FDCA excepts from regulation as a food additive the use of a substance that is GRAS.  This means that a manufacturer can determine GRAS status and proceed to market without seeking FDA’s approval and without notifying the agency.  FDA operates a voluntary GRAS notification program pursuant to a proposed rule that was published in 1997.  FDA’s administration of that program, and the adequacy of its oversight of GRAS substances more generally, is the subject of an ongoing Government Accountability Office (GAO) review.  The GAO is expected to issue its report in January.  Depending on its content, that report could well rekindle debate over whether the GRAS exception affords manufacturers too much flexibility in introducing new uses of substances into the food supply.  Given the possibility that major food safety legislation could be debated and enacted in 2010, it is not unthinkable that any perceived weaknesses in FDA’s oversight of GRAS substances could quickly rise on the Congressional agenda.

This brings us back to caffeine in alcoholic beverages.  Should the manufacturers' evidence of GRAS status prove insufficient, a robust regulatory response by FDA could help preserve the status quo by confirming that FDA has both the will and requisite authority needed to prevent abuse of the GRAS exception.  A lax response by the agency could let loose the hounds of reform.  We’ll keep an eye on this one.

By John R. Fleder –

On December 4, 2009, the United States Court of Appeals for the Eleventh Circuit in Atlanta issued a 24-page Opinion in James Hopper v. Solvay Pharmaceuticals, Inc., No. 08-15810.  The Court affirmed the District Court’s dismissal of a False Claims Act (FCA), (31 U.S.C. 3729 et. seq.) lawsuit that two former sales representatives (Relators) of Solvay Pharmaceuticals, Inc. filed in 2004, in the United States District Court for the Middle District of Florida.  The Court of Appeals ruled that the Relators’ complaint was legally deficient under Rule 9(b) of the Federal Rules of Civil Procedure because the alleged fraud was not pleaded with the necessary specificity. The Relators had alleged that the defendants had violated the FCA by engaging in an allegedly unlawful off-label marketing scheme that had caused the federal government to pay “false” claims through federal programs for the drug Marinol.

This is an important ruling in the context of FCA litigation generally, but more specifically with regard to off-label use cases.  There has been a plethora of FCA litigation over the past decade involving allegations that companies have violated the FCA by causing the submission of false claims based on off-label marketing campaigns.  This litigation has resulted in huge monetary payments by a number of companies in lawsuits brought by the Department of Justice.  However, in addition to the Justice Department’s right to commence litigation under FCA, individuals who are often referred to as Relators or whistleblowers can initiate an FCA action.  This case is that type of case, because the Justice Department declined to intervene in, and take over, the case after the Relators filed it.

The Eleventh Circuit’s ruling is the first decision by a United States Court of Appeals that a FCA action should be dismissed when, as here, the Relators are unable to present any evidence that the defendant company actually caused false claims to be submitted based on an alleged off-label marketing campaign.  Many off-label FCA actions have been initiated by company sales representatives who claim first-hand knowledge about an alleged off-label sales program.  However, many company sales representatives do not have first-hand knowledge about the reimbursement practices of the company, because those functions are handled by others in the company.  Thus, where as here, the Relators have no knowledge that their former employer actually caused false claims to be submitted to the federal government, their alleged knowledge of an off-label marketing campaign, without more, is legally insufficient to initiate an FCA action.

In this case, the District Court dismissed the case because the Relators had not identified any specific false claims that the defendants caused to be submitted to the federal government.  The Relators appealed to the Eleventh Circuit arguing that they were not required to allege specific false claims because they had alleged an off-label marketing campaign, and showed that there was a marked increase in prescriptions for Marinol and an increase in federal government payments for the drug during the period that the defendants allegedly engaged in an off-label marketing campaign.  As a result, the Relators claimed that they had adequately pleaded an FCA case because they pleaded “factual allegations which reliably indicated” that false claims were submitted to the government.  Opinion at 7.

The Court of Appeals correctly concluded that the Relators’ Complaint did not identify even a single alleged false claim or that the Defendants intended that the government rely on any alleged false statements or records in deciding whether to pay claims that were submitted with regard to the drug.  The Defendants argued (and the District Court earlier agreed) that there could not be a viable FCA action in the absence of the Relators identifying specific (alleged) false claims.

The Court relied on three earlier rulings by that same court which had dismissed FCA cases that did not involve off-label marketing allegations.  The Court found that regardless of the specificity of the Relators’ allegations concerning off-label activities, more is required.  Here, the Court found that Relators did “not allege the existence of a single actual false claim.  In fact, we are unable to discern from the complaint a specific person or entity that is alleged to have presented a claim of any kind, let alone a false or fraudulent claim.”  Opinion at 12.  Nor did Relators “identify a single physician who wrote a prescription with such knowledge [that the federal government would reimburse], does not identify a single pharmacist who filled such a prescription, and does not identify a single healthcare program that submitted a claim for reimbursement to the federal government.”  Opinion at 13.  Instead, to bring an FCA case, a Relator’s complaint “requires that actual presentment of a claim be plead with particularity,” Opinion at 14, or that the defendants intended that their alleged false statements influenced the government’s decision to pay a false claim and that the Relator presented proof that the government actually paid a false claim.  Opinion at 16, 17.

It is too soon to know whether this decision will end this litigation.  The Relators could ask the Court of Appeals to revisit this ruling.  Alternatively, the Relators could ask the United States Supreme Court to hear the case.

The defendants are represented in this case by Jack E. Fernandez and Marcos E. Hasbun of the law firm of Zuckerman Spaeder LLP, as well as Hyman, Phelps & McNamara P.C. (John R. Fleder and Douglas B. Farquhar).  The Defendants’ appellate brief in the case can be found here.  Also, Richard Samp of the Washington Legal Foundation submitted a brief, urging affirmance of the District Court’s dismissal of the case.

By Alan Kirschenbaum −

We previously reported on a March 2009 Department of Defense (DoD) regulation establishing a prescription drug “refund” program to implement section 703 of the National Defense Authorization Act of 2008 (NDAA 08).  That section provides that prescriptions filled on or after January 28, 2008 (the enactment date) and paid for under the TRICARE retail pharmacy program are subject to Federal Ceiling Prices (FCPs) under 38 U.S.C. § 8126.  As reported in our previous post, the DoD’s regulation implemented a program of voluntary agreements under which drug manufacturers agree to provide refunds for prescriptions filled prospectively and also retroactive to January 28, 2008, and, in return, their drugs may be considered for inclusion in the TRICARE uniform formulary.  However, even if a manufacturer does not sign an agreement, it must still pay the refunds prospectively and retroactively under the regulation.

Shortly after the regulation was issued, the Coalition for Common Sense in Procurement, an industry coalition, filed a lawsuit in the U.S. District Court for the District of Columbia challenging the regulation on a number of grounds.  Among other things, the Coalition argued that the statute does not require manufacturers to pay mandatory refunds, but instead calls for DoD to obtain FCP pricing through voluntary procurement agreements.  The Coalition also argued that DoD could implement a refund program only prospectively from the effective date of the regulation (May 26, 2009), and could not seek refunds retroactive to January 28, 2008.

Applying the deferential review standard of Chevron U.S.A., Inc. v. Natural Resources Def. Council, 367 U.S. 837 (1984), the District Court concluded, based on the plain language of the statute, that FCPs apply to all TRICARE retail pharmacy program prescriptions filled on or after January 28, 2008.  The court rejected the Coalition’s arguments against retroactive application of the regulation, explaining that drug manufacturers were on notice that their transactions would be subject to FCPs when the NDAA-08 was enacted. 

However, the court also decided that DoD had erroneously interpreted the statute to mandate that FCP pricing be implemented through manufacturer refunds, when, in fact, the statute did not speak to the question of how DoD should implement the FCP requirement.  Accordingly, the court remanded the rule to DoD (without vacating it), for DoD to decide whether to maintain the current rebate/refund approach or implement some other mechanism for obtaining FCPs.  In view of the fact that DoD has been trying since 2004 to establish a rebate/refund program to obtain FCP pricing for retail drugs, and the current refund program is already up and running, we do not expect the agency to change its approach.

By William T. Koustas –

We previously reported that the United States District Court for the District of Columbia ruled in favor of the American Bar Association and prevented the Federal Trade Commission ("FTC") from enforcing its Red Flags Rule (“the Rule”) on attorneys.  On December 1, 2009, Judge Walton issued a written Opinion, explaining why the FTC’s application of the Red Flags Rule to attorneys violates the Administrative Procedure Act, 5 U.S.C. § 706(2)(C), because the Rule is in excess of the Government's statutory jurisdiction and authority.  American Bar Ass'n. v. FTC, No. 09-1636 at 1 (D.D.C. Dec. 1, 2009).  Although the ruling is in a case that relates specifically to the Rule's coverage of lawyers, there is language in the Opinion that may be highly beneficial to other businesses.

The Judge ruled that the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”),  on which the Rule is based, does not bring attorneys within the purview of the FACT Act and thus subject them to regulation by the Rule.  The Court also found that the lack of clarity in the FACT Act regarding its applicability to attorneys cannot be interpreted as authority for the FTC to regulate a profession that is traditionally regulated by the states.  Decision at 14.  As the Court explained, the FACT Act seems to contemplate the regulation of financial businesses.  It also concluded that another statute, the Equal Credit Opportunity Act (“ECO Act”),  which defines some of the terms used in the FACT Act such as "creditor" and "credit",  is targeted at credit applicants, but not lawyers. 

The Court also determined that the FTC’s “application of the Red Flags Rule to attorneys who invoice their clients is not reasonable,” and thus not entitled to "deference" by the Court.  Decision at 31.  The FTC argued that the definition of creditor under the ECO Act, as incorporated into the FACT Act, covers attorneys because they bill their clients for services rendered at the end of the month, rather than collect compensation for those services at the time the services are performed.  The Court, however, declined to permit such a broad interpretation of the term creditor and noted that “[t]o invoice [a] client at the end of each month is not delaying payment or giving a client a right to postpone payment.  As a practical matter in the legal context, legal services are not the type of services that can in many instances be billed and payment received simultaneously with the occurrence of the services . . . .”  Decision at 32-33. 

Although couched in terms of the typical arrangement between lawyers and their clients, this aspect of the Court's holding would appear to have much broader applicability to many other businesses.  It is quite common that companies sell goods or services to a customer and then send that customer a bill, expecting to be paid within a fairly short period of time.  The FTC has taken the position that this type of payment arrangement means that the company selling the goods and services has extended "credit" and has become a "creditor" subject to the Rule.  That position has been soundly rejected by the Court in the context of lawyers.  There does not appear to be any logical reason why a court would render a different analysis for businesses other than lawyers that simply send their suppliers a bill, expecting that payment will be made soon.

The Court found other reasons to rule that attorneys are not covered by the Rule.  For instance, the FTC never indicated that its definition of a creditor for the purposes of the Red Flags Rule would include attorneys during the rulemaking process.  Rather, that interpretation was only disclosed a year and a half after the Red Flags Rule was issued.  Therefore, the Court ruled that the FTC’s interpretation of the Red Flags Rule as applied to attorneys was “both plainly erroneous and inconsistent with the purpose underlying the enactment of the FACT Act.”  Decision at 40.

Procedurally, the Court's Decision resulted in the Court granting the ABA's Motion for Partial Summary Judgment.  It is quite noteworthy that the FTC has not issued any public statements regarding whether it intends to reissue the Rule, appeal the Court's ruling, seek further review from Judge Walton, or take some other action.

By Ricardo Carvajal –

FDA has issued a draft guidance that proposes a “preliminary” timetable for the agency’s review of applications for approval of modified risk tobacco products (MRTP’s).  FDCA section 911(a) prohibits the introduction of an MRTP into interstate commerce unless FDA has issued an approval order under section 911(g).  However, the statute does not specify a time limit for FDA’s review and decision on MRTP applications.  Instead, the statute allows FDA two years to issue a regulation or guidance that establishes a “reasonable timeframe” for its review.  The lack of a time limit for review was a key issue cited in a recent case challenging the constitutionality of the MRTP provisions (see our prior post).  Although plaintiffs in that case failed to secure a preliminary injunction, the court noted that the lack of a reasonable time limit for review of MRTP applications rendered the statute potentially vulnerable to a First Amendment challenge (“The Court thinks it likely that this two-year delay is unconstitutional given that certain portions of the MRTP provision have been in effect since June 22, 2009”).

FDA’s draft guidance appears to address that vulnerability by establishing a “reasonable preliminary timetable” of 360 days.  In doing so, FDA dismissed the 180-day time period for review of drug and device applications as too short, given the statutory requirements that FDA seek public comment on MRTP applications and also refer them to the Tobacco Products Scientific Advisory Committee.  FDA also tentatively dismissed the 540-day time period for review of health claims as unnecessarily long, given that notice-and-comment rulemaking is not required for a decision on an MRTP application.  The draft guidance signals that the agency expects to issue more detailed guidance or regulations once it has acquired a base of experience with processing MRTP applications.  In the interim, the guidance suggests that the first MRTP applicants may be in for a rough ride:

The Agency has not yet received an MRTP application. It therefore does not have experience in reviewing such applications, and has no information based on prior experience regarding the length of time required for review of such applications. Moreover, the MRTP application review process and approval criteria are new, and the Agency is likely to encounter a number of questions of first impression involving science, law, policy, and procedure. Resolving questions of first impression may mean that the initial applications will require more time than later submitted ones.

Comments on the draft guidance are due by February 25, 2010.

By Carrie S. Martin –      

On November 19, the Washington Legal Foundation (“WLF”), along with three other organizations, filed an amicus curiae brief in support of Allergan, Inc.’s First Amendment challenge to FDA’s ban on “truthful, accurate and nonmisleading speech” proactively disseminated to health care professionals (“HCPs”) about off-label uses of FDA-approved prescription drugs.  

On October 1, Allergan filed a Complaint and a Motion for Preliminary Injunction in the United States District Court for the District of Columbia to prevent the FDA and the federal government from enforcing regulations and policies that would prohibit Allergan from proactively sharing information with HCPs on an off-label use of BOTOX (botulinumtoxin type A) for injection to treat spasticity in certain patients.  Allergan stressed that it was “not seek[ing] to engage in direct-to-consumer communications about the off-label use of Botox,” but instead wanted to inform HCPs about safety data regarding the use by distributing safety information to physicians who treat spasticity through “medical and scientific representatives,” distributing printed and electronic information to physicians, and making formal presentations at scientific meetings and conventions, among other things.  As Allergan points out, this speech currently runs afoul of FDA regulations and government policies and renders a company vulnerable to criminal prosecution and civil penalties.
 
Such policies and regulations regarding off-label communications, according to Allergan, violate the First Amendment and are patently inconsistent with the Federal Food, Drug, and Cosmetic Act (“FDC Act”).  In addition, the regulations and policies “impair[] public health and safety” by prohibiting the company from disseminating information about risks of serious adverse events to physicians already using Botox for this off-label use. 

Allergan attributes the overly restrictive regulatory landscape to the expansion of several related and intertwined regulations and policies.  Among them is the “radical[] expan[sion]” of the regulatory definition of “labeling” to include any material that contains company-generated and distributed information about a drug, whether or not it physically “accompan[ies]” it, 21 C.F.R. § 202.1(l)(2), which in turns makes it unlawful for a pharmaceutical company to distribute material about an off-label use under the FDC Act, because such information renders the drug a “new drug.”  In addition, because the federal government considers all speech about an off-label use “false or misleading,” such speech misbrands a drug under section 502(a) of the FDC Act. 

WLF’s brief supplements Allergan’s complaint by expounding on two topics: (1) the importance of off-label uses to the practice of medicine and how overregulation of off-label speech is contrary to public health; and (2) the “three foundational First Amendment principles” necessary to resolve Allergan’s claims.  With regard to the first topic, the brief stresses that manufacturers are in the best position to provide important off-label information because they – simply put – have the best access to and understanding of that information and the resources to disseminate it.  In addition, the amici curiae argue that this information is critical to HCPs, because, among other reasons, off-label uses of prescription drugs often constitute the standard of care. 

With regard to the “foundational First Amendment principles,” the brief notes that the First Amendment is always implicated when the government limits truthful, accurate and non-misleading speech, including when such speech is from a manufacturer regarding off-label uses of approved drug products.  Furthermore, the speech at issue here—truthful, nonmisleading speech from a prescription drug manufacturer to HCPs about the safety and efficacy of an off-label use of a prescription drug – is not commercial, but rather scientific speech that receives “strict scrutiny” in a First Amendment analysis.  According to the brief, the fact that the manufacturer may benefit financially from that speech does not automatically make it commercial speech.  And even if the speech was commercial, which receives intermediate scrutiny, the WLF brief argues that the government’s restrictive policies and regulations would still be found unconstitutional, because the “First Amendment forbids the government from paternalistically limiting the flow of information to the marketplace concerning lawful transactions in lawful products.”  

A hearing on Allergan’s Motion for Preliminary Injunction has been set for March 2010.  Regardless of the outcome, it is likely that this fight – given its history and its potential impact on manufacturers and the federal government – will not end until it reaches the steps of the United States Supreme Court.

Thanks to our faithful readers, we made the list for the Third Annual ABA Journal Blawg 100.  One of our readers, an FDA official, said that “there is no one within the agency that does what this blog provides.”  We are humbled by this honor and hope to continue to provide useful information and analysis on food and drug law for years to come. 

By Jeffrey N. Wasserstein –

We missed this interesting decision in the run-up to Thanksgiving.  Now that we’ve recovered from our tryptophan-induced sleepiness, we found this case to be of particular interest.  We previously blogged on the Cell Therapeutics Inc. (“CTI”) case.  To sum up that case, the complaint had alleged that CTI promoted TRISENOX (arsenic trioxide) for off-label uses, which caused doctors to prescribe TRISENOX and submit claims to Medicare for uses not approved or medically accepted.  The Complaint in Intervention also alleged that CTI implemented a plan to convince physicians and Medicare carriers that various off-label uses of TRISENOX were medically accepted and eligible for Medicare reimbursement.  CTI settled with the government for $10.5 million.

CTI then sued the Lash Group, a reimbursement consulting firm, for indemnification and other independent claims, arising out of the reimbursement advice that the Lash Group provided to CTI.  The district court had held that CTI’s qui tam settlement barred a suit for indemnification and other causes of action, since the Lash Group was effectively a co-participant in the scheme to defraud the government.  (The government intervened in the qui tam suit against CTI, but not the Lash Group, which settled with the relator in 2008.) 

On appeal, the Ninth Circuit held that a qui tam settlement was not a bar, since it was a settlement, not a “de facto finding of liability.”  The Court stated that generally, a settlement agreement under the False Claims Act would not necessarily bar non-False Claims Act claims against a third party, and sent the case back down to the district court for further proceedings.  Since pharmaceutical and medical device companies rarely plan reimbursement strategies without outside consultants, this case is important to companies and consultants alike.

By Kurt R. Karst –    

Returning from the Thanksgiving Holiday, we found our inbox chock-full of recent preemption decisions of note involving generic drugs. 

First off is a decision from the U.S. Court of Appeals for the Eighth Circuit in Mensing v. Wyeth.  That case involves generic REGLAN (metoclopramide), allegations that use of the drug caused tardive dyskinesia, and an appeal from an October 2008 decision from the U.S. District Court for the District of Minnesota in which the court dismissed, among other things, certain tort claims (failure to warn and misrepresentation) against generic manufacturers of metoclopramide on the basis of federal preemption.  In reversing the district court’s decision on this point, the Eighth Circuit, following a rationale harkening back to the recent decision from the U.S. District Court for the District of New Hampshire in Bartlett v. Mutual Pharma. Co. (see our previous post here), ruled that the plaintiff stated a viable claim against generic metoclopramide manufacturers.  Some of the more notable passages from the decision include:

• The Hatch-Waxman Amendments are part of this 70 year history and they do not explicitly preempt suits against generic manufacturers. Congress could have crafted a preemption provision for generic drugs in its 1984 amendments, having done so for medical devices less than 10 years earlier. It chose not to do that. . . . After [Wyeth v. Levine], we must view with a questioning mind the generic defendants' argument that Congress silently intended to grant the manufacturers of most prescription drugs blanket immunity from state tort liability when they market inadequately labeled products.

• The parties agree that generic labels must be substantively identical to the name brand label even after they enter the market. . . .  Because of this requirement, the generic manufacturers argue they are prohibited from implementing a unilateral label change without prior FDA approval through the [Changes Being Effected (“CBE”)] process.  Yet, 21 C.F.R. § 314.97compels generic manufacturers to “comply with the requirements of §[] 314.70[.]”  Section 314.70 includes the CBE process and the prior approval supplement process.  In this case we need not decide whether generic manufacturers may unilaterally enhance a label warning through the CBE procedure because the generic defendants could have at least proposed a label change that the FDA could receive and impose uniformly on all metoclopramide manufacturers if approved.  [(italics in original)]

• In addition to proposing a label change, the generic manufacturers could have suggested that the FDA send out a warning letter to health care professionals.  When the FDA first adopted its labeling regulations, well before the Hatch-Waxman Amendments, it stated that the requirements “do not prohibit a manufacturer . . . from warning health care professionals whenever possibly harmful adverse effects associated with the use of the drug are discovered.”  44 Fed. Reg. 37434, 37447 (June 26, 1979); see also CDER, Manual of Policies and Procedures (MAPP) 6020.10, NDAs: “Dear Health Care Professional” Letters (July 2, 2003) (guidance document to name brand manufacturers stating that the letters may be ordered by the FDA or sent by manufacturers without FDA involvement).

The second decision of interest is from the U.S. District Court for the Northern District of California (San Jose Division) in Gaeta v. Perrigo.  In that case, the court denied Gaeta’s Motion for Reconsideration of a pre-Levine Order granting Perrigo’s Motion for Summary Judgment.  The pre-Levine Order found that Gaeta’s state law causes of action were preempted to the extent that they allowed for liability based on a lack of adequate warning on Perrigo’s over-the-counter ibuprofen drug product.  Gaeta argued that “although the specific facts of Levine involved a brand-name drug, the Court’s holding was broad enough to also encompass the interaction between FDA regulations and state tort law with regard to generic drugs.”  The court disagreed, however, ruling that “Levine does not govern whether the Court may grant summary judgment on Plaintiff’s state tort claims,” because “Levine did not address a dispositive issue in this case, namely, whether a generic drug manufacturer may use the CBE process to make warning-label changes without prior FDA approval.”

The applicability of the Supreme Court’s decision in Levine to generic drug manufacturers was also noted – more specifically, sidestepped – in a third recent ruling.  In Morris v. Wyeth, which again involves metoclopramide, the U.S. District Court for the Western District of Louisiana (Monroe Division) granted a Motion for Summary Judgment in favor of the brand-name drug manufacturers because the plaintiff in the case did not consume REGLAN, but rather a generic version.  The court stated that “Levine held only that the FDA’s approval of a branded drug’s labeling does not preempt a plaintiff’s state law failure-to-warn tort claim against the manufacturer of the branded drug.  Levine certainly does not stand for the proposition that the brand-name manufacturer of a drug may be held liable under the law of Louisiana for the warning provided by a generic manufacturer.”  The court goes on to comment in a footnote, however, about the applicability of Levine to generic drug manufacturers:

Levine did not address generic drugs and if or how its analysis might apply to claims against generic drug makers.  The Court is aware that generic drug manufacturers continue to argue that failure to warn claims against them are preempted because they are bound by FDA regulation to conform their labels to that of the brand-name drug. . . .  However, . . . that issue is not before the Court in this motion. . . .  The Court recognizes the inequity that may result if a plaintiff who was harmed by a generic drug is preempted from obtaining damages from the generic manufacturer on the basis of its failure to warn, but also has no cause of action against the name-brand manufacturer who prepared the warning used by the generic manufacturer.  Nevertheless, these are two separate legal issues, and the Court cannot render a finding of liability . . . based on the possibility that the generic manufacturers . . . may or may not have a preemption defense to Plaintiffs' failure-to-warn claim.    

Although legislation has been proposed that would preempt tort suits against generic drug makers, it does not appear to have made it into the current version of the House and Senate health care reform bills.

By J.P. Ellison –      

Earlier this month a federal district court in Georgia granted summary judgment in a Lanham Act suit that raised a number of FDA issues.  The plaintiff in the suit manufactured two prescription acne products under the trade name Benziq.  Defendant manufactured two products under the name Benprox that competed with plaintiff’s products. 

The plaintiff alleged that defendant violated the Lanham Act, a federal cause of action that provides a remedy to plaintiffs harmed by false or misleading commercial advertising or promotion by a competitor.  In this case, the plaintiff alleged that the defendant’s false and misleading statements took two forms:  (1) submissions to third party pricing services; and (2) product labeling. The court granted the defendant’s motion for summary judgment on both grounds.

Before considering those claims, the court addressed a threshold issue that often arises in Lanham Act suits that implicate FDA issues, namely whether a Lanham Act suit is precluded because the substance of the allegations are the province of the FDA.  In this case, after examining a number of the prior cases, the court concluded that it could address the claims raised.

On the plaintiff’s first theory, that the defendant’s submissions to third party pricing services were false and misleading, the court ruled that the plaintiff’s had not presented any evidence of falsity.  On the plaintiff’s second theory, that the product labeling was false and misleading, the court ruled that plaintiff’s arguments either required interpretation of an issue on which FDA had not provided guidance, or in the alternative that plaintiff’s had failed to present evidence to support that theory.

In sum, the Court’s opinion is fairly fact specific, but nevertheless provides an overview of the issues that arise in Lanham Act cases that implicate FDA issues.

By Riëtte van Laack –

In two little noticed speeches delivered at the Council for Responsible Nutrition’s ("CRN’s") Annual Symposium on October 22, 2009, FTC’s Director David Vladeck and FDA’s Principal Deputy Commissioner Joshua Sharfstein set out their agencies’ priorities for regulation of dietary supplements.  For FTC, a continuing priority is advertising substantiation.  Mr. Vladeck, in his speech, stressed that it is not just the ultimate advertiser that will be held liable for substantiation.  In addition, those who are the source for the advertising claims, including ingredient suppliers and contract manufacturers, are responsible for claims that they make to their (trade) customers. 

Vladeck also mentioned the new guidelines on the use of endorsements that we addressed in a previous post.  FTC intends to aggressively enforce the guidelines.  Any advertiser will be held to the same standard of substantiation of competent and reliable scientific evidence, including advertisers who use endorsements or testimonials. 

Vladeck acknowledged that the recent court decision in the Lane Labs case has raised questions about what constitutes competent and reliable evidence.  Therefore, in future injunctive orders, FTC intends to provide more precise language to describe what type of evidence is required.  What is clear from FTC’s perspective is that evidence from one or two studies contradicting or inconsistent with the weight of the evidence is not sufficient to substantiate a claim – even when those studies are performed according to standard, reliable, scientific protocols.

FTC and FDA intend to increase their level of cooperation.  This increased cooperation is particularly evident in the area of enforcement activities directed toward dietary supplements that pose a serious health concern because they carry claims for serious diseases such as cancer or the H1N1 flu. As an example, see the recent joint warning letter issued to DrWeil.com and Weil Lifestyle LLC, 

FTC and FDA also intend to pursue dietary supplements that present undisclosed health risks because the products have been spiked with pharmaceutical substances.  Both FTC and FDA are struggling with the best approach to this problem.  In his remarks at the CRN Symposium, Dr. Sharfstein pointed out that FDA is pursuing criminal investigations in this area.  He further mentioned the dietary supplement GMP regulation, and adverse event reporting requirements as potential tools to address the problem.  In addition, Dr. Sharfstein suggested that stricter enforcement of the requirement to notify FDA of intent to market a new dietary ingredient might be an avenue to address the problem.  Such a notification provides FDA with an opportunity to review the safety of a new dietary ingredient and its use. 

In his remarks, Dr. Sharfstein suggested that a notification is required for any new dietary ingredient.  However, under section 413(a)(1), submission of a notification is not required if “[t]he 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.”  Dr. Sharfstein also suggested that guidance on what constitutes a new dietary ingredient subject to notification may be forthcoming, and that the agency intends to clarify its standards for such notifications.  (We note that the agency has been working on guidance in this are for years, and held a public hearing on this subject in November of 2004.) 

All of these agency activities notwithstanding, Dr. Sharfstein reminded his audience that every company in the dietary supplement industry is ultimately responsible for the safety of its products. 

By Alan M. Kirschenbaum –

Yesterday, the Senate voted 60 to 40 to send its 2,074-page health care reform bill, the “Patient Protection and Affordable Care Act,” to the floor for debate.  The bill represents a merger of two bills reported by the Senate Finance Committee and the Senate Committee on Health, Education, Labor, and Pensions, respectively.  Like its House counterpart, the Senate bill contains major changes to the Medicaid Rebate Program, Medicaid drug reimbursement, Medicare Part D, the 340B Drug Discount Program, and the Federal Food, Drug, and Cosmetic Act, as well as new physician payment reporting requirements for drug and device companies.  As we previously did for H.R. 3296, the health care reform bill that passed the House on November 7, we have prepared an outline summarizing the most significant drug- and device- related provisions of the Senate bill.  The outline can be found here.  The Democratic leadership of the Senate expects to debate the bill and vote on it by the end of December.

By Kurt R. Karst –

In June, we reported on a citizen petition Galderma Laboratories L.P. (“Galderma”) submitted to FDA requesting that the Agency interpret the QI Program Supplemental Funding Act of 2008 (“QI Act”) to impose a 30-month stay of approval on an ANDA referencing the old antibiotic drug product ORACEA (doxycycline) if that ANDA contains a Paragraph IV certification to a patent that was listed in the Orange Book in accordance with § 4(b)(1) of the QI Act.  The QI Act amended the FDC Act to add § 505(v) to create Hatch-Waxman benefits for “old” antibiotics.  FDA previously denied several petitions (see our previous post here) that argued a 30-month stay should apply.

Galderma states that its citizen petition is “entirely distinguishable” from the previous QI Act 30-month stay citizen petitions submitted to FDA: “Unlike prior petitioners, Galderma does not contend that Congress, via the QI Act, directed FDA to apply the applicable statutory provisions of the original Hatch-Waxman Amendments as enacted in 1984, rather than as subsequently amended by Congress.”  Furthermore, Galderma states that the company “agrees with FDA’s Denial Letter that ‘it is reasonable, both as a matter of statutory construction and sound public policy, to interpret section 505(v)(4) [of the QI Act] to require the application of the current law to old antibiotics . . . there is a strong argument that Congress intended this result.’” 

Indeed, according to Galderma, “this is precisely Galderma’s position – that Congress clearly intended to treat ‘old antibiotics’ consistent with ‘new antibiotics’ pursuant to current law, and that a single 30-month stay should apply to both classes of products.”  Galderma summarizes its argument as follows:

[N]o previous petitioner argued, as this petitioner does, that the intent of Congress, embodied in the terms of the transition provisions of the QI Act, was to grant the opportunity to obtain both a single 30-month stay of ANDA approval and 180-day generic exclusivity to the holders of NDAs and ANDAs covered by the Q1 Act.  Although FDA addressed certain issues related to this petition in its recent Denial Letter, FDA has not directly addressed the issues raised herein as applicable to ORACEA.

Earlier this month, FDA denied Galderma’s petition.  FDA’s response indicates that the Agency did not, in fact, consider Galderma’s arguments to be “entirely distinguishable” from those raised in the previous QI Act 30-month stay petitions:

There is no evidence that Congress intended to link the QI Act’s 60-day transitional requirement for patent submissions to the availability of a 30-month stay. . . .  After consideration of the Petitioner’s arguments, comments thereto, statutory language, and legislative history associated with the development of antibiotic regulation, the Agency has concluded that the transition provisions of the QI Act do not impose a 30-month stay of approval on an ANDA as to which the NDA holder or patent owner has initiated patent litigation as a result of the ANDA applicant’s notice of paragraph IV certification, when the ANDA was pending with FDA at the time the patent claiming the old antibiotic drug was submitted to the Agency for listing. 

Now that FDA has responded to 5 citizen petitions concerning QI Act 30-month stay issues, the issue has presumably been put to rest.  Other QI Act implementation issues remain, however, including those raised in a January 2009 letter from the American Intellectual Property Law Association to FDA.