Meet the newest category of drug applications: the PANDA.  A PANDA, or the Pre-Hatch-Waxman Abbreviated New Drug Application, refers to abbreviated drug applications submitted and approved under sections 505(b) and 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA) prior to the enactment of the Hatch-Waxman Amendments in 1984, as FDA announced in the Federal Register last week.  Drugs approved as PANDAs are, for all intents and purposes, follow-on drugs approved based on FDA’s previous findings of safety and efficacy for a given drug, but, because they were not submitted under section 505(j) of the FDCA, they are not technically “Abbreviated New Drug Applications (ANDAs).”  Nonetheless, FDA has been calling them ANDAs and listing them in the Orange Book as ANDAs for years, but recent changes to the Orange Book have spurred some confusion.  Thus, FDA divided them into their own category and is now seeking Comments on whether the 505(b) or the 505(j) regulatory scheme should apply.

While generic drugs as we know them are a creation of the 1984 Hatch-Waxman Amendments, the Federal Register Notice explains that FDA first introduced the concept of an ANDA in 1968 to facilitate approval of Drug Efficacy Study Implementation (DESI) drugs.  By 1970, products evaluated as DESI drugs ultimately determined to be effective for one or more indications could be eligible for approval as ANDAs if they were similar or related to DESI drugs even if the drug products had not been marketed under a 505(b) New Drug Application (NDA).  However, because they are not necessarily the same as any previously approved drugs, the title “ANDA” is a bit of a misnomer.  Yet some of these ANDAs, which FDA is now calling PANDAs, still are marketed today, and, despite the misnomer, are listed in the Orange Book as ANDAs.

Because PANDAs are listed in the Orange Book as ANDAs but are not duplicates of any FDA-approved 505(b) drugs, there has been confusion about whether they can serve as Reference Listed Drugs (RLDs) for new ANDAs or 505(b)(2) NDAs.  As ANDAs, the PANDAs are not listed RLDs in the Orange Book; they are only Reference Standards (RS) and therefore cannot be relied on for FDA’s findings of safety and effectiveness.  While this was not an issue when FDA did not distinguish RLDs from its associated RS in the Orange Book (and therefore these PANDAs were listed as RLDs), it became confusing when FDA revised the Orange Book in 2017 to separately identify a RLD and a RS.  To address this confusion, FDA has decided to designate PANDA products as RLDs in an effort to provide “clarity both to prospective 505(j) ANDA applicants seeking to make generic versions of these products, and to applicants of 505(b)(2) applications that there is a finding of safety and effectiveness for these products that may be relied upon for approval.”  This approach, FDA explains, is consistent with its efforts to “advance competition and increase patient access to more affordable medicines.”

FDA already has started adding RLD designations for PANDAs to the Orange Book and will continue to do so “as expeditiously as resources permit.”  In the interim, ANDA applicants may also submit Controlled Correspondence to FDA seeking to designate a PANDA as a RLD.  FDA also provided a list of PANDA products currently identified as an ANDA in the Orange Book for reference.  FDA emphasizes, however, that this effort expressly excludes antibiotic drug products originally submitted under FDCA § 507.

The Federal Register Notice also solicits input from PANDA holders or other interested stakeholders related to FDA’s post-approval regulation of PANDAs.  Because PANDAs were submitted to FDA under section 505(b) and approved under 505(c)—which typically apply to NDAs—but are nonetheless treated as ANDAs, FDA recognizes ongoing confusion as to which regulatory scheme might apply for purposes of postmarketing reporting requirements, labeling updates, patent listing, exclusivity eligibility, and drug-safety related requirements or procedures; indeed, PANDA holders have typically elected which regulatory scheme to follow.  FDA therefore seeks industry comment on whether “there are regulatory or policy reasons for treating PANDAs differently from other 505(b) Application.”  Specifically, FDA asks for Comments on regulatory or policy rationales for treating PANDAs differently from other 505(b) applications in certain respects, in particular with respect to:

• Labeling requirements and updates, including safety-related information;
• Patent listing requirements;
• Eligibility for exclusivity; and
• Certain safety-related requirements, such as the postmarket studies and clinical trials, safety-labeling change requirements, and REMS requirements.

Further, FDA requests Comment on:

• Factors FDA should consider in determining a reasonable amount of time for PANDA holders to make changes to their practices, if applicable;
• Any additional steps FDA should take to highlight for PANDA holders that their ANDA is a PANDA;
• Any additional steps, beyond the Orange Book, that FDA should take to aid other interested persons in identifying PANDAs;
• Any necessary modifications to the PANDA list for accuracy; and
• Any other issues FDA should consider in assessing the regulatory framework for PANDAs under the FDCA.

FDA will accept Comments on its PANDA proposal—submitted to the docket in black and white (see what I did there?)—until December 13, 2021.

A determination of “intended use” is fundamental to FDA’s regulation of drugs and medical devices.  It is a primary basis for determining if an article is regulated by FDA at all, and if so, what regulatory requirements apply.  It is embodied in parallel drug and device regulatory definitions of intended use (21 C.F.R. §§ 201.128 (drugs), 801.4 (devices)).

FDA has now issued a final rule governing how intended use of a distributed product is to be determined.  Thus ends a saga that began with a proposal in 2015 to amend the “intended use” regulation.  The proposal was to remove the “knowledge provision,” which had always seemed to problematically suggest that a manufacturer could be held responsible for off‑label use if the manufacturer knew about it.

This provision stated (as of April 2021):

But if a manufacturer knows, or has knowledge of facts that would give him notice that a device introduced into interstate commerce by him is to be used for conditions, purposes, or uses other than the ones for which he offers it, he is required to provide adequate labeling for such a device which accords with such other uses to which the article is to be put.

The proposal to delete this provision made sense, because the off‑label uses under consideration are entirely lawful.  It is contrary to the statutory scheme to require a manufacturer to obtain cleared or approved labeling for an off-label label use simply based on knowledge that physicians were choosing to use the device off‑label.  It is especially problematic to criminalize these otherwise lawful sales until such clearance or approval can be obtained.

In 2017, however, FDA shockingly finalized this proposed rule without deleting the knowledge provision.  Indeed, FDA arguably strengthened it.  This set off a firestorm, eventually leading to a new proposed rule in 2020, which was much closer to the one in 2015.  We were generally in favor of it, although not without some criticisms.

FDA has now finalized the rule roughly as proposed last year.  On the whole, the amended intended use regulation is a modest improvement over the one in place for many decades.  (It could have been made much better; our more comprehensive proposal is here.)

The entire modified rule (device version) can be found here.  It states:

The words intended uses or words of similar import in §§  801.5, 801.119, 801.122, and 1100.5 of this chapter refer to the objective intent of the persons legally responsible for the labeling of an article (or their representatives). The intent may be shown by such persons’ expressions, the design or composition of the article, or by the circumstances surrounding the distribution of the article. This objective intent may, for example, be shown by labeling claims, advertising matter, or oral or written statements by such persons or their representatives. Objective intent may be shown, for example, by circumstances in which the article is, with the knowledge of such persons or their representatives, offered or used for a purpose for which it is neither labeled nor advertised; provided, however, that a firm would not be regarded as intending an unapproved new use for a device approved, cleared, granted marketing authorization, or exempted from premarket notification based solely on that firm’s knowledge that such device was being prescribed or used by health care providers for such use. The intended uses of an article may change after it has been introduced into interstate commerce by its manufacturer. If, for example, a packer, distributor, or seller intends an article for different uses than those intended by the person from whom he or she received the article, such packer, distributor, or seller is required to supply adequate labeling in accordance with the new intended uses.  (Italics supplied.)

We have three quick comments on the revised regulation:

First, the removal of the problematic knowledge provision is a significant victory for regulatory clarity and brings the regulation more in line with the statutory scheme.  This was the core of the 2015 proposal and it is amazing that it took six years to get back to that proposal.  Still, it is a welcome outcome.

Second, the new italicized proviso introduced in this rulemaking is important.  It further prevents FDA from inferring off-label intent based merely on knowledge that an otherwise lawfully marketed device is being used off-label.  We had suggested striking the word “solely” to clarify further that a manufacturer’s knowledge of off-label use should never enter into a FDA’s determination of intended use.  Nonetheless, although FDA did retain “solely,” it seems unlikely that mere knowledge of lawful off-label use could be used to bring a case against a manufacturer without significant unlawful promotion being involved as well.

Finally, as discussed here, this revised provision gives FDA the right to consider “design and composition” in determining intended use.  To the extent that FDA infers an unapproved new intended use based upon the design and composition of a device as it has been cleared or approved, then it may conflict with Section 513(i)(1)(E) of the FDCA.

That provision requires FDA limit the determination of intended use in premarket review to the proposed labeling.  If FDA believes based upon a device’s design (which includes composition) that an off-label use is possible and could cause harm, it may do no more than require certain cautionary labeling statements.  The agency may not require that the manufacturer obtain clearance or approval of the off‑label use implied by the design or composition.

It would contradict this statutory scheme for FDA to clear or approve a device with a particular design or composition and then turn around and seek to hold the manufacturer liable for an off-label intended use based upon the same design or composition.  That would be an inappropriate end run around Section 513(i)(1)(E).

About two weeks ago, FDA made an exciting announcement (and it remains exciting even if we’re late posting about it): FDA approved the first interchangeable biosimilar.  On July 30, 2021, FDA approved Semglee (insulin glargine-yfgn), an insulin product that relies on Lantus (insulin glargine) as its reference product.  In its Press Release, FDA explains that Mylan, the Semglee sponsor, submitted evidence that showed that “there are no clinically meaningful differences” between Semglee and Lantus “in terms of safety, purity, and potency (safety and effectiveness)” and that Semglee “can be expected to produce the same clinical result as Lantus” in any given patient.  As a result of this decision, Semglee can now be substituted for Lantus prescriptions without the intervention of a health care provider in accordance with state substitution regulations.  While Semglee was previously approved as a 505(b)(2) NDA referencing Lantus in June 2020, it was not rated as therapeutically equivalent (and therefore substitutable) to Lantus, and it immediately transitioned to a BLA upon approval as a result of the BPCIA (more on that below).  Thus, though Semglee is not new to the market, it is for the first time substitutable for Lantus without intervention of a health care provider.

Though Congress enacted the pathway for approval of interchangeable biosimilars in 2010 in an effort to incentivize competition to address the high prices of biologics, no sponsor had yet to crack the code to interchangeable approval until now.  In the past eleven years, we have seen a plethora of biosimilar approvals—which, like their name implies, are “similar” but not quite the “same” as and therefore substitutable for approved biologics—but substitutable biologics remained a pipe dream due to the difficulty of replicating a large molecule.  Biosimilars do provide a more affordable way for sponsors to get products onto the market—by referencing the clinical studies performed by the reference product sponsor—which, in theory, allows for the introduction of lower cost versions of expensive biologics.  But because these biosimilars cannot be substituted for their reference products—requiring health care professional brand awareness for both the brand name and the biosimilar—biosimilars have not quite made the dent in the market that Congress had hoped.  The expectation is that interchangeable biologics would make all the difference.

Yet, even with the first interchangeable biosimilar approval, it’s not quite clear when patients will see those savings.  Though no exclusivity is listed in the Purple Book yet, Semglee should be eligible for 12 months of exclusivity, which would block FDA licensure of any subsequent interchangeable biosimilars starting from its first commercial launch.  Even though Semglee has been approved and marketed as a biologic for a little over a year already and therefore first commercial marketing already has occurred, it’s interchangeable biosimilar is approved under a new BLA.  Interchangeable exclusivity, assuming it’s awarded, likely will be triggered at launch of the product under the new BLA, which, according to the NDC Code database, has not yet occurred.

Regardless of exclusivity, with no interchangeable competition as of yet, Mylan can price Semglee only slightly less than Lantus and still take market share, only marginally reducing costs to consumers.  As FDA states in its Press Release, “Biosimilars marketed in the U.S. typically have launched with initial list prices 15% to 35% lower than comparative list prices of the reference products,” but this 15 to 35% is not a huge relief for patients given the high cost of biologics.  For that reason, FDA merely states that biosimilars have the “potential to reduce health care costs.”  It’s not clear how much interchangeable approval will affect these health care cost reductions or how much competition is needed for prices to come down.  So, it remains to be seen if and when interchangeable Semglee will have any meaningful effect on insulin prices in the near future.

And it’s no surprise that the first interchangeable biosimilar is insulin.  FDA has long encouraged generic competition for insulin but developing a generic under an ANDA was very difficult “due to the complexities of these products”.  As part of the BPCIA, Congress amended the definition of “biologic” so that it included proteins, and protein products previously approved as drugs transitioned to biologics in March 2020, and, also under the BPCIA, became eligible for use as a reference product for biosimilar approval.  This transition eased the way for the development of insulin follow-on products because they no longer needed to be identical to their reference products for generic approval.  In 2019, Commissioner Gottlieb even noted: “The transition is particularly important for insulin” and that “FDA is dedicated to facilitating access to insulin.”  FDA further held a public hearing specific to insulin interchangeable biosimilar, and, in November 2019, issued a guidance on clinical immunogenicity specifically for insulin products.  To say that access to lower cost insulin products has been a priority for the Agency may be an understatement.

In tandem with its approval of Semglee, FDA issued a Consumer Update, as well as Fact Sheets and Stakeholder Toolkits, explaining the “treatment choices” arising from biosimilar and interchangeable approvals.  In contrast to claims made by certain reference product sponsors (which Pfizer took issue with back in 2018), FDA states in the Update that “Biosimilars are as safe and effective as the original biologic” and that consumers “can expect the same safety and effectiveness from the biosimilar over the course of treatment as you would from the original product.”  An interchangeable “meets additional requirements” for substitution, and “health care providers and patients can be confident in the safety and effectiveness of a biosimilar or an interchangeable biosimilar product, just as they would be for the FDA-approved original product.”  Even before this approval and Update, health insurers heard this message loud and clear and have taken to paying patients to switch to biosimilar versions of medications to encourage widespread use in an effort to address costs.

FDA, in its Consumer Updates, states that it “expects to approve more interchangeable products in the future.”  Now that FDA has hit this milestone and mapped a blueprint for its interchangeable expectations, hopefully we won’t have to wait too much longer for the flurry of interchangeable approvals needed to add some meaningful competition in the biologics market and presumably address biologic prices.

The Department of Health and Human Services (HHS) is proposing to rescind a Trump era rule that would have established a “most favored nation” (MFN) model to base Medicare Part B drug payment on international prices.  The Trump Administration rule had a troubled history.  The idea of basing Medicare drug reimbursement on prices in foreign countries was first proposed during the Obama Administration in 2016.  That proposal was withdrawn by the Trump HHS, but the notion of international reference pricing was subsequently incorporated in an October 2018 HHS Advance Notice of Proposed Rulemaking (ANPR) (see our post here).  HHS took no further action on the ANPR, but two years later, in the waning days of the Trump Administration, HHS issued a final rule with comment period establishing a MFN model for Part B rate setting methodology, circumventing the usual proposed regulation stage.  The MFN rule, which we summarized here, called for Part B payment for at least 50 high-expenditure drugs selected by HHS to be based on the lowest payment rate in 22 specified foreign countries, with a fixed add-on payment for drug administration.  Predictably, PhRMA, BIO, and numerous provider organizations took advantage of the procedural irregularity to challenge the rule on APA grounds in three separate lawsuits, and succeeded in obtaining injunctions blocking the rule from taking effect on January 1, 2021 (as we reported here and here).

Finally, CMS released a proposed rule on August 6 seeking to rescind the interim final rule.  According to CMS, the agency considered the nationwide preliminary injunction and multiple court challenges based on the rule’s procedural deficiencies, and stakeholder concerns about its start date and its far-reaching impact.  According to the proposal, CMS will review the issues identified by commenters and continue to explore opportunities to address high drug costs based on stakeholder comments to the interim final rule.  The proposed rule to rescind will be published in the August 10 Federal Register and comments will be due on October 9.

It is possible that CMS will issue a new proposed rule to impose international reference pricing in the future, but it is far more likely that the initiative will move to Congress.  Use of international reference pricing as a target for Medicare to negotiate prices with drug manufacturers appears in H.R. 3, the “Elijah E. Cummings Lower Drug Costs Now Act,” introduced by Representative Pallone on April 22.  This bill is the slightly revised and re-introduced version of the comprehensive drug pricing bill that passed the House during the last Congress, and represents the House Democrats’ drug pricing proposal.  On the Senate side, a drug pricing bill being developed by Ron Wyden, Chairman of the Senate Finance Committee, has been reported by the trade press to include the use of either international or domestic prices as reference benchmarks for setting payment rates under Medicare, and perhaps  even commercial insurance markets.

As always, we are following drug payment and price reduction initiatives in the Administration and Congress with great interest, and will be reporting on important developments as they occur.

On the heels of Genus Medical Technologies’ successful lawsuit against FDA—Genus was represented by Hyman, Phelps & McNamara PC—in both the District Court of D.C. and the Court of Appeals for the D.C. Circuit, FDA published a Federal Register Notice today (August 9) soliciting comments on its proposed approach to implementing the Court’s interpretation of the Federal Food, Drug, and Cosmetic Act (FDCA) distinction between drugs and devices.  As you may remember, Genus sued FDA back in 2019, alleging that FDA’s classification of, and putative regulation of, its barium sulfate products as drug products violated the FDCA because barium sulfate meets the statutory definition of medical device and therefore must be regulated as a device.  The FDCA definition hinges on the mechanism by which a product meets its primary intended purposes.  FDA claimed that Congress afforded FDA the discretion to regulate devices as drugs based an overlap in the statutory definitions of “drug” and “device” and chose to do so in the case of contrast agents in response to a 1997 court decision and related Citizen Petition.  Both courts disagreed with FDA’s broad assertion of discretion, as neither the statutory construction nor the legislative history supported such discretion.  Ultimately, FDA decided not to request a hearing en banc nor to seek review of the decision in the Supreme Court.

In light of this decision, FDA has acquiesced to regulating barium sulfate as a device, and is now exploring the application of this decision beyond the Genus products at issue in the litigation.   To that end, FDA’s Federal Register Notice explained that “FDA intends to regulate products that meet both the device and drug definition as devices, except where the statute indicates that Congress intended a different classification . . . .”  Further, FDA will comb through its previous classifications to “bring previously classified products into line with the Genus decision.”  Products—not just barium sulfate products or contrast agents—that satisfy the device definition will hereafter be regulated as devices regardless of previous classification.

FDA stated that it will now use as the determining factor, in accordance with the definitions in the FDCA, “whether the product achieves its primary intended purposes through chemical action within or on the body or is dependent upon being metabolized for the achievement of its primary intended purposes.”  While FDA previously stated in guidance that these factors typically determine how to regulate medical products, the Federal Register Notice admits that “FDA has not always examined these factors”—the exact problem that led to the Genus litigation in the first place—due to its presumed discretion.  Now, however, the courts have made clear that FDA must regulate devices as devices unless other provisions of the FDCA say otherwise.  Thus, FDA will evaluate the primary intended purposes and mechanism of action for all products, and then comb the statute for any language suggesting otherwise.  Previously, FDA applied that analysis only to those products that FDA decided merited such an analysis.

The Federal Register Notice specifically addresses medical imaging products, like those at issue in the Genus case.  While FDA previously regulated all imaging agents as drugs regardless of how they achieve their primary intended purposes, FDA will now “reexamine whether individual imaging agents meet the device definition.”  Existing approved imaging agents will transition from drug status to device status where applicable, and the Agency will aim to transition products in a way that does not disrupt supply.  FDA will publish a Federal Register Notice with a tentative list of approved products that will transition from drug to device and will provide an opportunity for industry to comment on the specific product’s classification.  Recognizing that the transition will require sponsors to shift from compliance with the drug regulatory scheme to the device scheme, FDA requests that stakeholders provide comments on the timeline for implicated products to come into compliance with device regulations, such as updating labeling, establishing procedures that comply with FDA’s Quality System Regulations, and preparing for device inspections.  FDA also seeks industry suggestions to facilitate the transition without disrupting supply.

FDA explains that the transition will take some time and consequently products previously regulated as drugs will still be subject to drug approval user fees (PDUFA and GDUFA user fees) until they transition: The Federal Register Notice explains that FDA “does not anticipate that the identification and transitioning of products from drug status to device status pursuant to the Genus decision will be completed before October 1, 2021.”  Thus, FDA suggests that sponsors of implicated products pay the drug user fees to avoid placement on the arrears list and any associated penalties.  Sponsors can then request a refund.  This could get complicated though, as FDA explains that the transition may affect program fee tier assessments for ANDA holders or facility fees.  And it is unclear how the excess user fees collected for devices would factor into the estimates to set the next year’s user fee rates.

FDA encourages all sponsors of implicated products to submit comments on this notice.  Until FDA takes action, there is nothing else for sponsors to do but to sit tight, but FDA includes no anticipated timeline for taking action.  However, for all “time-sensitive” inquiries, questions can be directed to a Genus-transition-specific email address at Drug_Device_Transition_Inquiry@fda.hhs.gov.  FDA also requests comments on “statutory provisions other than the drug and device definitions that may indicate Congressional intention regarding the appropriate regulatory pathway (i.e., drug or device) for certain types of products.”

Interestingly, throughout Genus’s dealings with FDA, the Agency insisted that very few products had been subject to its “discretion” to regulate devices as drugs, but the Federal Register Notice implies that the transition will affect more than a handful of stakeholders.  It’s unclear at this time how many products have been erroneously classified due to FDA’s purported discretion, and its request for comments on other statutory provisions that may direct the appropriate regulatory pathway suggests that application of this discretion may not have been limited to devices.  In that case, it’s not entirely clear how far FDA believed its discretion extended, and on what basis that discretion was predicated.  It definitely seems possible that FDA’s exercise of discretion went farther than the Agency represented.  We look forward to seeing the tentative list of products that need to transition, and reading industry comments.

Comments are due on October 8, 2021.

We are old enough to remember the “poke” function on Facebook, and too old to remember what purpose it served.  We are similarly at a loss to understand the purpose of Facebook’s new policy requiring that pharmaceutical manufacturers, telehealth companies, and online pharmacies apply for permission to advertise on Facebook.  This new policy goes into effect on August 25, 2021.

The new policy restricts advertising prescription drugs to the three types of entities mentioned above.  Prior to advertising prescription drugs, these entities must apply for permission to do so.  The application form is fairly basic and seems designed to ensure that the advertiser is a legitimate business. Telehealth companies and online pharmacies must submit certification from LegitScript, an organization that provides certification for online health entities, primarily in the addiction treatment space.  Pharmaceutical companies do not need to do this.

Advertisers are limited to promoting prescription drugs in the US, Canada, and New Zealand, and only to people over the age of 18.

So far, so good.  This is pretty basic, although other than ensuring that the entities are real and not scammers or selling illicit drugs, we’re not sure what purpose this serves.  For example, while pharmaceutical companies do submit paid advertisements, much of their Facebook and social media activity is on their own pages, whether corporate, product, or disease state (or, in many cases, all three).  This policy doesn’t seem to restrict those activities.  While those pages require activity by the user to view them, as opposed to ads which are proactively put in the Facebook user’s feed, it still seems to be inconsistent.  And what about influencer marketing?  It is unlikely that this policy impacts sponcon – an increasingly popular means to deliver messaging to a particular demographic.

Nor does the policy apply to prescription medical devices which we’ve also seen advertised endlessly on Facebook.  (Hey, as we opened with, we’re “of a certain age”.  And Facebook is good at targeting our demographic.  They don’t advertise video games and acne products to us.)

Facebook has stated that it can take up to four to six business days to validate information provided and to approve the application.  Since the policy goes into effect on August 25th, advertisers should postpone those summer vacations and “poke” Facebook.  (Seriously, can someone explain the poke function?)

On Monday August 2, 2021, the Senate took up for review H.R. 3684, the Infrastructure Investment and Jobs Act, following House passage of its version last month. Although the bipartisan bill largely deals with the nation’s transportation infrastructure, Section 90006 delays the so-called “rebate rule,” a Trump-era rule finalized by the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services in December 2020 to prevent Medicare Part D and Medicaid Managed Care plans from receiving rebates from manufacturers unless the rebates are passed through to pharmacies to reduce patient out-of-pocket expenses.

We previously explained the rebate rule and its likely impact on patients and payors here. The rebate rule significantly narrows the anti-kickback statute (AKS) safe harbor for discounts, so that it excludes manufacturer rebates to Medicare Part D plans (or their pharmacy benefits managers (PBMs)). See 42 C.F.R. § 1001.952(h). At the same time, the rule establishes a new safe harbor protecting rebates paid by manufacturers to Part D plans, Medicaid Managed Care plans, or their respective PBMs if the rebates are passed through to the dispensing pharmacy.  OIG argued that confidential manufacturer rebates to Medicare Part D plan sponsors and PBMs generally do not reduce patient out-of-pocket costs but act as kickbacks to these “middlemen.” CMS estimated that the rule would result in savings in individual out-of-pocket costs but such savings would be more than offset by increased premiums. The rule was estimated to cost the federal government around $196 billion over ten years.

The new safe harbor was originally effective on January 29, 2021 and the new discount safe harbor exclusion on January 1, 2022, but these effective dates were delayed until January 1, 2023 pursuant to court orders in a lawsuit brought by the PBM industry association.  Section 90006 of the proposed infrastructure bill would further delay implementation of the rebate rule until January 1, 2026, providing the government with an estimated savings of $49 billion. See bipartisan bill summary at 5. If the infrastructure bill passes the Senate, the rebate rule delay would still have to survive reconciliation with the House version of the infrastructure bill, which did not contain the delay provision.

Last week the Drug Enforcement Administration (“DEA”) issued a direct final rule clarifying requirements about who may record the supplier’s DEA registration number on a single-sheet DEA Form 222 (“single-sheet form”).  Clarification Regarding the Supplier’s DEA Registration Number on the Single-Sheet DEA Form 222, 86 Fed. Reg. 38230 (July 20, 2021).  DEA issued a final rule in September 2019 implementing a new single-sheet form to replace triplicate carbon copy DEA Form 222s (“triplicate forms”).  New Single-Sheet Format for U.S. Official Order Form for Schedule I and II Controlled Substances (DEA Form 222), 84 Fed. Reg. 51368 (Sept. 30, 2019).

DEA requires registrants use DEA-222s to transfer schedule I and II controlled substances.  (Registrants may also use DEA’s electronic Controlled Substance Ordering System (“CSOS”)).  Both the single-sheet and triplicate forms require information about the supplier, including their name, address and DEA registration number.  21 C.F.R § 1305.12(c).  DEA explained, consistent with the triplicate form, that the final rule requires the supplier when filling the order to record their DEA registration number on the DEA-222.  DEA notes that the field on the triplicate form for the supplier’s registration number is in the section marked “To Be Filled in By Supplier” while the field on the single-sheet form for the supplier’s registration is in the section titled “To Be Filled In By the Purchaser.”  Needless to say, the inconsistency has caused some confusion for DEA registrants.

The final rule clarifies that either the purchaser or, if not entered by the purchaser, the supplier, may record the supplier’s DEA number on a single-sheet form.  Allowing the purchaser to omit a supplier’s DEA registration number for the supplier to add later provides flexibility for when a supplier may have to fill an order from a different registered location than the one contemplated by a purchaser.

As a reminder, registrants may only use their triplicate forms until they exhaust their supply, after which they must use single-sheet forms.  But in any case, registrants must cease using triplicate forms as of October 30, 2021, after which time they must use single-sheet forms.  21 C.F.R. § 1305.20.

As a direct final rule, the rule becomes effective October 18, 2021, unless DEA receives significant adverse comment.  DEA will withdraw the rule by September 20, 2021, if it receives significant adverse comment.  Electronic comments must be submitted, and written comments postmarked, on or before August 19, 2021.

Maine and Nevada previously enacted laws requiring drug manufacturers to report information about the pricing of their products. (See our coverage here and here). As summarized below, each state has recently updated their reporting requirements.  Both states’ new requirements will become effective in October 2021 and should be considered as manufacturers prepare for state drug price transparency reporting in 2022.

Maine

LD 686 provides the Maine Health Data Organization with new authority to publish a list of the prescription drugs for which the manufacturer has: (A) increased the wholesale acquisition cost (WAC) of a brand-name drug by more than 20% per pricing unit; (B) increased the WAC of a generic drug that costs at least $10 per pricing unit more than 20% per pricing unit; or (C) introduced a new drug with a WAC that exceeds the threshold for a specialty drug under the Medicare Part D Program (currently $670). This list will be posted on a publicly accessible website no later than January 30, 2022 and updated annually thereafter.

LD 686 also revises the process for disclosures by manufacturers, wholesale drug distributors and pharmacy benefits managers (PBMs). Previously, manufacturers, wholesale drug distributors and PBMs were required to provide “pricing component data” within 60 days of a request from the state. Now, the state will post a list of drug product families for which it intends to request pricing component data from manufacturers, wholesale drug distributors, and PBMs on a publicly available website on or before February 15th each year. No sooner than 30 days after the posting of the list, the state shall provide notice via email to manufacturers, wholesale drug distributors, and PBMs of its request for pricing component data. These entities will then have 60 days to provide the pricing component data to the state. “Drug product family” is defined as “a group of one or more prescription drugs that share a unique generic drug description and drug form.” In determining which drug product families are included on the list, the state intends to consider prescription drugs included on the public notice list described above, as well as the 25 costliest drugs, the 25 most frequently prescribed drugs, and the 25 drugs with the highest year-over-year cost increases.

The definition of “manufacturer” has also been updated to specify that a manufacturer is an entity that manufactures or repackages, and sets the WAC for, prescription drugs.

Finally, LD 686 updates the confidentiality provisions that apply to information disclosed to the state by manufacturers, wholesale drug distributors and PBMs. While information could previously be shared in the aggregate if it did not allow for the identification of an individual drug, the state may now share information in the aggregate “as long as it is not released in a manner that allows the determination of individual prescription drug pricing contract terms covering a manufacturer, wholesale drug distributor or [PBM].” In addition, the state may share information that is publicly available.

Nevada

Nevada’s reporting requirements have previously been primarily focused on drugs deemed to be essential for treating asthma and diabetes and included on an annual list published by the state (the “Essential Drug List”). SB 380 removes asthma from the Essential Drug List, and provides the state with authority to compile an additional new list of drugs for which manufacturers will need to report information. The latter list, which will be published at the same time as the Essential Diabetes Drug list, will consist of prescription drugs with a WAC exceeding $40 for a course of therapy that have been subject to an increase in WAC of 10% or greater during the immediately preceding calendar year or 20% or greater during the immediately preceding two calendar years (the “WAC Increase List”). A “course of therapy” is defined as the recommended daily dosage as set forth on the FDA-approved label for 30 days, or, if the normal course of treatment is less than 30 days, the recommended daily dosage set forth on the FDA-approved label for the duration of the recommended course of treatment. Manufacturers of drugs that appear on either or both of the current Essential Drug List or WAC Increase List must submit reports to the state by April 1 of each year. The elements of the manufacturer’s reports remain substantially the same, however SB 380 adds new reporting elements if the manufacturer acquired the intellectual property for the drug within the immediately preceding five years.

SB 380 also updates the reporting requirements for PBMs and adds a new reporting requirement for wholesalers that sell prescription drugs included on either or both of the lists compiled by the state. By April 1 of each year, wholesalers that sell these products must report information regarding WAC and rebates with manufacturers, pharmacies, PBMs, and other entities. Wholesalers that do not comply with the reporting requirements are subject to the same penalties that can be assessed against manufacturers and PBMs – i.e., up to $5,000 per day of violation.

On July 1, 2021, the Federal Trade Commission (FTC) announced the availability of the pre-publication of the final rule on “Made in USA” (MUSA) claims in the Federal Register. The final rule was published on July 14, 2021.  We previously reported on events that resulted in this rule.

FTC received more than 700 comments in response to the notice of proposed rulemaking from individuals, industry groups, consumer organizations, and members of Congress. FTC concluded that none of the comments provided a compelling basis to change the substantive requirements of the proposed rule.

The rule does not set a new standard for MUSA claims.  Instead, it authorizes FTC to seek not only an injunction but also civil penalties of up to $43,280 per violation of the final rule.

The new rule applies not only to product labeling, but to any “mail order catalog” or “mail order promotional material” that includes a seal, mark, tag, or stamp that labels a product as having been made in the United States.  Mail order catalogs and promotional material are defined as “any materials, used in the direct sale or direct offering for sale of any product or service, that are disseminated in print or by electronic means, and that solicit the purchase of such product or service by mail, telephone, electronic mail, or some other method without examining the actual product purchased.”

As we previously reported, two Commissioners did not support the proposed rule and questioned FTC’s application of the rule to materials that did not appear to constitute labels, such as mail order catalogs.  In the preamble to the final rule, FTC concludes that the final rule does not cover MUSA claims in all advertising.  Instead, it covers labels appearing in all contexts, whether, for example, they appear on product packaging or online.  FTC does not clarify the definition of labels and we anticipate that the meaning of that term will become a topic of discussion when FTC asserts that a Company is liable under the new rule for a claim appearing in a context that arguably does not constitute a “label.”

Some notes about the final rule:

• It applies only to unqualified MUSA label claims.  For false or misleading qualified MUSA claims, FTC authority remains limited to injunctive relief.
• It includes a list of equivalents to “Made in USA” in 16 C.F.R. § 323.1 (listing “made,” “manufactured,” “built,” “produced,” “created,” or “crafted” in the United States or in America).  However, this list is not exhaustive.
• The final rule does not supersede, alter, or affect the application of any other federal statute or regulation relating to country-of-origin labeling requirements, including but not limited to regulations issued under the Federal Meat Inspection Act, the Poultry Products Inspection Act.; or the Egg Products Inspection Act.  As readers of our blog know, “Product of USA” and other country of origin labeling issues on meat and poultry products have been an issue of discussion in recent years.  Last year, in response to a Petition regarding such claims, USDA committed to  rulemaking to address the voluntary use of “Product of USA” claims on meat and poultry.  On July 1, 2021, USDA announced its plan to initiate a top-to-bottom review of “Product of USA” claims.  (Incidentally, earlier in June, the National Cattlemen’s Beef Association submitted a Petition to USDA requesting notice and comment rulemaking regarding “Product of USA” claims on beef products).
• The effective date of the rule is Aug. 13, 2021.

In case you missed it, FDA took to email and social media earlier this week (the equivalent of shouting it from the rooftops) to announce that it has notified Amgen Inc. of Neulasta (pegfilgrastim) misbranding due to false or misleading promotion.  This is OPDP’s second Untitled Letter and fourth letter overall this year.

Notably, this Untitled Letter is solely based on false or misleading benefit claims – FDA did not take ANY issue with Amgen’s presentation of safety.  This is only the second letter of this type in over five years; in the first instance, FDA took issue with a demonstrably false claim.  FDA’s 2018 CFL Guidance seemed to signal to industry that FDA would be more flexible on Rx drug benefit claims.  Generally, FDA has stayed true to that approach – with a focus on promotion that has some element of risk minimization.  Given this background, what happened here?

What happened is likely FDA’s concerns that the Neulasta promotion misleadingly sought to sow doubt about the efficacy of biosimilars.  While not a specifically stated priority for OPDP, FDA has prioritized biosimilar development to encourage innovation and competition among biologics.  As part of its initiatives on this front, FDA issued a Draft Guidance in February 2020 on Promotional Labeling and Advertising Considerations for Prescription Biological Reference and Biosimilar Products (Biologics Promotional Guidance).

The Neulasta promotion identified in the Untitled Letter is an animated banner that compares the rates of febrile neutropenia (FN) between “pegfilgrastim” pre-filled syringes (PFS) and Neulasta Onpro.  The banner presents claims that PFS resulted in a 31% increase in the rate of FN compared to Onpro.  This claim is based on a real world, retrospective study of 11,000 patients, comparing Neulasta PFS and Neulasta Onpro.  While the study evaluated Neulasta products in both arms, the banner refers to the PFS arm as “pegfilgrastim PFS,” NOT Neulasta PFS.  OPDP called out the use of this terminology in its letter:

The above misleading claims and presentations are particularly concerning from a public health perspective because they could undermine confidence not just in Neulasta delivered via PFS but also in FDA-licensed biosimilar pegfilgrastim products, which are only delivered via PFS. The above claims prominently present “Pegfilgrastim PFS” (emphasis added) as the comparator arm vs. “Neulasta Onpro” and “Onpro.” The use of the proper name (i.e., nonproprietary name) of Amgen’s PFS product, on the one hand, and the proprietary name of its OBI product, on the other, could result in healthcare providers failing to understand that Amgen’s Neulasta was used in both arms of the study. Healthcare providers could conclude that a biosimilar pegfilgrastim product delivered via PFS is not as effective as Amgen’s OBI product (i.e., Neulasta Onpro). As noted above, the study cited is inadequately designed and precludes the drawing of conclusions regarding the comparative risk of FN in patients taking Amgen’s pegfilgrastim products depending on delivery method. It likewise does not support conclusions about any other FDA-licensed pegfilgrastim products.

The Untitled Letter’s discussion about the name used aligns with FDA’s position, as articulated in its Biologics Promotional Guidance, on clearly identifying biological products in promotion:

Firms should carefully evaluate the information presented in promotional materials for reference products or biosimilar products to ensure that in each instance where the promotional materials address a product or products, the materials correctly and specifically identify the product or products to which the information applies (e.g., the reference product, the biosimilar product, or both the reference product and the biosimilar). . . Clearly and correctly identifying the relevant biological product or products in promotional materials can help prevent presentations that are inaccurate because they attribute data or information to the wrong product. It can also help the audience identify which product or products are the subject of a particular promotional presentation.

Biologics Promotional Guidance at 4.

Notwithstanding the name used, OPDP pointed out the following inadequacies with the study that render the claims misleading.  The study

• was not designed to ensure that patients with FN were appropriately identified;
• had no control to ensure the study populations were adequately balanced; and
• selection bias was possible given the small absolute difference in rates between the arms.

FDA also stated that the disclosure of study limitations in the last two frames of the animation did not mitigate the misleading claims and presentations in the banner.

Interestingly, while FDA focused on an animated banner, it also called out its receipt of complaints through the FDA Bad Ad Program “regarding promotional communications with similar claims and presentations as the one discussed in this letter.”  The statement seems to suggest that this may be a course of conduct by Amgen with regard to Neulasta promotion.  Twenty years ago, FDA’s Warning Letter to AstraZeneca sent a strong message to industry that FDA would not tolerate brand messaging that suggested generic drugs were somehow less safe or effective than reference products.  We are interested to see whether OPDP will continue this approach through the strategic use of enforcement letters to protect biosimilars.

While some of us are just starting to recover from graduations, ends of fiscal years, or just looking forward to a summer vacation and listening to the Rolling Stones, time is decidedly not on your side if you have not yet determined if your food or dietary supplements need to be labeled under the National Bioengineered Food Disclosure Standard (BE standard).

With the approach of the January 1, 2022 mandatory compliance deadline for the BE standard, manufacturers and importers of food and dietary supplements should work to develop strategies for compliance and evaluating each product’s bioengineered (BE) status if they have not already done so. For those still in the process of doing so, or those who want a refresher on the requirements, we just authored an article for the Regulatory Affairs Professionals Society outlining the requirements under the BE standard. Prior posts on the BE Standard and its implementing regulations can be found here, here, and here.

The mandatory disclosure requirement of the BE standard applies to human food, including dietary supplements, that is subject to the labeling requirements under the Federal Food, Drug, and Cosmetic Act, as well as some products under the jurisdiction of the USDA’s Food Safety and Inspection Service. There are several express exemptions to the disclosure requirement in the regulations, including an exemption for very small manufacturers, a threshold for inadvertent or technically unavoidable presence of BE substances of up to 5% for each ingredient, and food and supplements certified under AMS’s National Organic Program. The BE standard and its implementing regulations require food containing any amount of a bioengineered substance that is not inadvertent or unintentional to bear a disclosure.

While our article was written for the dietary supplement industry, the requirements are the same for foods.

On Friday, President Biden issued a wide ranging Executive Order seeking to address overconcentration, monopolization, and unfair competition in the U.S. economy.  Using an aptly named “whole-of-government” approach, the Order calls on the Department of Justice, the Federal Trade Commission, the Agriculture Department, the Treasury Department, the Department of Commerce, the Department of Health and Human Services (DHHS), and other agencies to implement wide-ranging policies to combat the “excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony – especially as these issues arise in labor markets agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets) . . . .”

Among the Order’s mandates for DHHS are several relating to prescription drugs.  The Secretary of Health and Human Services is directed to submit to the White House, by August 23, a plan to “combat excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce pries paid by the Federal Government for such drugs, and to address the recurrent problem of price gouging.”  DHHS is also called upon to implement existing laws and initiatives supporting the development, approval, and Medicare and Medicaid payment for generics and biosimilars.

But the Order’s most specific mandate relating to prescription drugs pertains to the importation of drugs from Canada.  The Order calls on FDA “to reduce the cost of covered products to the American consumer without imposing additional risk to public health and safety, [by working] with States and Indian Tribes that propose to develop section 804 Importation Programs . . . .”  Section 804 was added to the Federal Food, Drug, and Cosmetic Act in 2003 to authorize the importation of prescription drugs from Canada under certain conditions, but until 2020, no administration had made the statutorily required certification that an importation program will pose no additional risk to the public’s health and safety and will result in a significant reduction in the cost of covered products to the American consumer.  On September 20, 2020, HHS under the Trump Administration made the required certification for the first time, and concurrently issued a final rule to permit states, and, in certain circumstances, pharmacies or wholesale distributors, to seek authorization from FDA to import certain drugs from Canada.  (See our blog post on the rule.)  However, the rule places the burden of demonstrating consumer savings on the sponsors of importation plans.  Two states have submitted importation plans to FDA for approval, but the rule and the certification were promptly challenged in federal court by the Pharmaceutical Research and Manufacturers of America (PhRMA) and other interest groups.

Prior to this Executive Order, the Biden Administration seemed to be ambivalent about drug importation.  The Justice Department recently filed a motion to dismiss the PhRMA lawsuit for lack of subject matter jurisdiction, or alternatively, for failure to state a claim, which would indicate that the Administration wanted to retain at least the option to implement drug importation through the 2020 regulation.  On the other hand, the Justice Department’s brief went into detail about how difficult it will be to pass the statutory hurdle and obtain FDA approval to import drugs from Canada, and also pointed out that Canada’s Minister of Health has issued an order restricting Canadian sellers from distributing drugs outside of Canada.

The Executive Order places the Biden Administration firmly behind drug importation.  Although the Order is careful to repeat Section 804’s requirement that importation may not impose additional risk to public health and safety, it calls on FDA to work with states and Indian Tribes to find a way to make importation work.

Despite the measures described above, the Order’s provisions relating to drug pricing are, on the whole, relatively modest.  In contrast to Donald Trump, President Biden apparently does not intend to address drug pricing primarily through this or other Executive Orders, or even through regulations.  Instead, the Order announces the President’s intention “to support aggressive legislative reforms that would lower prescription drug prices, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and through other related reforms.”  This statement (and a similar statement in the President’s FY 2021 budget) reflects Biden’s strategy of leaving the bulk of the work on drug price reduction to Congress.

The Drug Enforcement Administration (“DEA”) recently issued its final rule authorizing the use of mobile narcotic treatment programs (“MNTPs”) to allow registered Narcotic Treatment Programs (“NTPs”) employing mobile units to dispense medication for maintenance or detoxification treatment remotely.  Registration Requirements for Narcotic Treatment Programs with Mobile Components, 86 Fed. Reg. 33,861 (June 28, 2021).  DEA had issued a notice of proposed rulemaking in February 2020 (see our post here).  We note that the Centers for Disease Control and Prevention reported in December that over 81,000 drug overdose deaths occurred in the year ending May 2020, the highest number ever recorded during a twelve-month period.  Overdose Deaths Accelerating During Covid-19 (Dec. 17, 2020).  Kudos to the Drug Enforcement Administration (“DEA”) for recognizing the increased demand for treatment by patients with opioid use disorder in underserved and remote areas and, most important, for taking steps to improve access.

DEA authorizing NTPs to operate MNTPs as a coincident activity waives the requirement that NTPs obtain a separate registration for each mobile unit.  DEA previously authorized MNTPs to dispense remotely on an ad hoc basis, and placed a moratorium on new authorizations in 2007.  The agency opined that the final rule allows the use of MNTPs “to be expanded more extensively, more consistently, and with greater protections against theft and diversion than was possible before.”

While increasing access to treatment, the final rule imposes a number of requirements that minimize risk of controlled substance diversion, including that the MNTP’s must “come back” to the registered location each day.

An MNTP, as defined, is an “NTP operating from a motor vehicle…that serves as a mobile component (conveyance)…operating under the registration of the NTP, and engages in maintenance and/or detoxification treatment with narcotic drugs in schedules II–V, at a location or locations remote from, but within the same State as, its registered location.”  MNTPs are motor vehicles propelled under their own motive power lawfully on public streets and roads; more than three wheels must be in contact with the ground.  The final rule expressly excludes trailers from qualifying as MNTPs.

NTPs must notify the local DEA office in writing of their intent to operate an MNTP and must receive explicit written approval from DEA before operating an MNTP.  NTPs must also provide local and state licensing and registration information to DEA investigators during inspections and prior to transporting controlled substances.

MNTPs can operate at any remote location or multiple locations, including correctional facilities, as long as it is consistent with applicable federal, state, tribal, and local laws and regulations, and the local DEA office does not direct otherwise.

Only the registered NTP can supply narcotic drugs to their MNTPs.  MNTPs may only dispense approved medication for treatment.  They cannot conduct any other controlled substance activities such as sharing, transferring or reverse distributing while away from their registered location.  MNTPs cannot act as controlled substance collectors, function as hospitals, long-term care facilities, or emergency medical service vehicles.  They cannot transport patients.

Also, an MNTP can only operate in the state where the registered NTP is located and registered.  DEA registrations are based on state licenses so DEA registrations cannot authorize controlled substance activities outside that state.

For good reason, because MNTPs will transport and dispense methadone and other controlled substances, the mobile units are subject to enhanced security requirements.  Authorized personnel must retain control over controlled substances during transfer between the registered location and the MNTP, transporting to and from remote dispensing sites, and at the dispensing sites.  Narcotic drugs must be stored in an installed safe.  MNTPs must also be protected by an alarm system that transmits signals directly to a central monitoring station or police agency.

The controlled substance storage area cannot be accessible from outside the vehicle.  Patients must wait in an area physically separate from the storage and dispensing area.  Patients must wait outside if the MNTP does not have seating or a reception area separate from the storage and dispensing area.

NTPs must also establish procedures in the event an MNTP becomes disabled.  The procedures must require that the controlled substances be accounted for, removed from inoperable MNTPs, and secured at the registered location.

As noted above, while there are no mileage limits on the range that MNTPs can travel and dispense, the requirement that MNTPs return to the registered location upon completion of dispensing at the conclusion of each day dictates distance.  Controlled substances must be removed and secured at the registered location after daily operations.  DEA has concluded that requiring MNTPs to return to their registered location and securing the controlled substances reduces the risk that controlled substances will be diverted.

However, NTPs can apply to DEA for a waiver to the requirement that MNTPs return to the registered location at the end of each day.  NTPs must submit with their waiver request a proposed alternate return period for the MNTP, enhanced security measures and other factors the agency should consider for waiving the requirement.  DEA will evaluate each request on a case-by-case basis to determine whether the NTP has “demonstrated exceptional circumstances that warrant the exception.”  DEA will also consider whether the MNTP’s security, recordkeeping and other relevant effective controls will be maintained if it grants the waiver.  DEA promised to evaluate the final rule within in a year to determine whether to allow all MNTPs to be excepted from having to return at the end of the day without requiring NTPs to apply for a waiver.

MNTPs may park at their registered location or in any secure, fenced area after its controlled substances have been removed at the end of a day.  The NTPs must notify the local DEA office where the MNTP will park.

MNTPs are subject to the same recordkeeping requirements as NTPs, including maintaining a dispensing log at the registered site.  As an alternative to maintaining a paper dispensing log, the final rule allows MNTPs and NTPs to use an automated/computerized data processing system for storage and retrieval of the dispensing records, if:

1. The automated system maintains all required information;
2. The automated system is capable of producing a hard copy printout of the dispensing records;
3. The MNTP or NTP prints a hard copy of each day’s dispensing log initialed by each person who dispensed medication;
4. DEA approves the automated system;
5. The MNTP/NTP maintain an off-site back-up of all computer-generated program information; and
6. The MNTP/NTP can produce accurate summary reports for any time-frame DEA personnel select during an investigation; summary reports in hard copy must be in a maintained systematically organized file at the registered site of the NTP.

NTPs must retain required MNTP records for two years unless the state requires records be retained for a longer period.

The final rule takes effect on July 28, 2021, and not a moment too soon.