In the words of the inimitable Yogi Berra: “When you come to a fork in the road, take it.”

Last month the U.S. Department of Justice (“DOJ”) and the Drug Enforcement Administration (“DEA”) proposed significant reductions of Schedule II opioid pain medication quantities to be manufactured next year. DOJ, Press Release, Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019 (Aug. 16, 2018).  See The Third Cut Is the Deepest: DEA’s Continued Slashing Of Annual Quotas Lacks A Clear Rationale (Aug. 21, 2018). In contrast with significantly reducing the aggregate production quotas (“APQs”) of certain opioids, DEA proposed a significant increase of the 2019 marijuana APQ and proposed that tetrahydrocannabinols (“THC”) APQ remain at the 2018 level. Proposed Aggregate Production Quotas for Schedule I and II Controlled Substances and Assessment of Annual Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2019, 83 Fed. Reg. 42,164, 42,167 (Aug. 20, 2018).

DEA establishes APQs for schedule I and II substances, and certain List I chemicals, that limit the aggregate quantity of a drug that can be manufactured each year. The proposed marijuana APQ for 2019 (2,450,000 grams or 5,400 pounds) represents a five and a half-fold increase over the initial 2018 marijuana APQ (443,680 grams or 978 pounds), and more than doubles the adjusted 2018 marijuana APQ (1,140,216 grams or 2,500 pounds).

The proposed marijuana APQ leads us to ask who is going to use all of this quota? Is the University of Mississippi, the current sole DEA-registered marijuana cultivator, gearing up to cultivate the increased marijuana quantities for 2019?  Or, is Attorney General Jeff Sessions finally going to give DEA the green light to review and process the twenty-six applications it began receiving in 2016, and issue registrations to legitimate entities to cultivate marijuana for research?  Given recent events and for the reasons outlined below, the latter appears more likely if not necessary.

For over 50 years, DEA has granted only one manufacturer registration for marijuana, thus restricting all marijuana production for research to the University of Mississippi under contract with the National Institute on Drug Abuse (“NIDA”). DEA limited marijuana cultivation to a single grower based on its belief that manufacturing by a single registrant decreased the likelihood of diversion.  Of course until recently, the University of Mississippi was able to meet the limited demand for research-grade marijuana.

Then, in August 2016, DEA stated that along with the National Institutes on Health and FDA it “fully supports expanding research into the potential medical utility of marijuana and its chemical constituents.” Applications to Become Registered Under the Controlled Substances Act To Manufacture Marijuana To Supply Researchers in the United States, 81 Fed. Reg. 53,846 (Aug. 12, 2016).  DEA acknowledged recent increased interest in research with cannabinoids including cannabidiol (“CBD”), and based upon discussions with NIDA and FDA, “concluded that the best way to satisfy the current researcher demand for a variety of strains of marijuana and cannabinoid extracts is to increase the number of federally-authorized marijuana growers.” Id.

DEA observed that the single cultivator system was geared towards federally-funded and academic research, not commercial product development, and announced that its new approach with multiple cultivators would foster not only federally-funded and academic research, but also private commercial drug product development. Id.

To that end, DEA announced that it would accept and consider additional applications for registration to grow and cultivate marijuana for research. DEA has received twenty-six applications for registration to manufacturer marijuana since August 2016.  Letter to Jeff Sessions, Attorney General, DOJ (July 25, 2018); Letter to Jeff Sessions, Attorney General, DOJ (Aug. 31, 2018).  DEA has requested routine background information from some of the applicants, but appears to have done little else with the applications.

So why the inaction? It appears that both the House and Senate believe the Attorney General is the hold-up.  Federal lawmakers have prodded the Attorney General on a number of occasions to allow DEA to act on the applications.  A July 25, 2018 letter from a bipartisan group of eight Senators quoted Sessions as stating during testimony in April 2018 that: “We are moving forward and we will add, fairly soon . . . additional suppliers of marijuana under the Controlled [Substances Act],” and had testified in a prior hearing that: “It would be healthy to have some more competition in the [marijuana] supply.”  Letter to Jeff Sessions, Attorney General, DOJ (July 25, 2018).

More recently, an August 31, 2018 letter from fourteen congressional members, also posed the following questions to Attorney General Sessions:

1. What is the current status of the twenty-six marijuana manufacturer applications?
2. What steps have DEA and DOJ taken to review the pending applications?
3. When does Mr. Sessions estimate that DEA will have completed its review of the applications and issue registrations?

Id., and Letter to Jeff Sessions, Attorney General, DOJ (Aug. 31, 2018).

Finally, last week the House Judiciary Committee approved by voice vote the Medical Cannabis Research Act of 2018 (H.R. 5634), which was introduced in the House on April 26, 2018. The bipartisan bill would require the Attorney General through DEA to issue registrations to at least two additional applicants to manufacture marijuana for legitimate research purposes within a year, and to register at least three applicants in subsequent years.  Medical Cannabis Research Act of 2018, H.R. 5634, 115th Cong. (2018).  Registered manufacturers would be limited to transferring or selling marijuana to DEA-registered schedule I researchers for “use in preclinical research or in a clinical investigation pursuant to an investigational new drug exemption” the Food, Drug and Cosmetic Act. Id. § 2(a)(2).

DEA has analyzed relevant data and has set its 2019 APQ that “reflects the total amount of controlled substances necessary to meet the country’s medical, scientific, research, industrial, and export needs for the year and for the establishment and maintenance of reserve stocks.” DOJ, Press Release, Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019 (Aug. 16, 2018).  We agree with DEA’s August 2016 statement that the best way to satisfy increased researcher demand for marijuana and its extracts is to increase the number of registered cultivators.  We wonder whether the University of Mississippi can meet the increased demand for marijuana over the next year.  Clearly Members of Congress do not think so.  Clearly if DOJ and DEA are serious about approving expanded research into the medical use of marijuana they need to approve additional registrations from qualified applicants who can demonstrate compliance with DEA requirements.

Having increased the marijuana APQ necessary to meet the country’s legitimate research needs for 2019, the Attorney General, DOJ and DEA are at a fork in the road. They need to take it.

This is the second post in a series of posts dedicated to delving into and discussing various issues that arise with both 5-year New Chemical Entity (“NCE”) exclusivity and 3-year new clinical investigation exclusivity based on a small stack of Letter Decisions we obtained that were issued by the Exclusivity Board in the Center for Drug Evaluation and Research – the “CDER Exclusivity Board.” While our first post dealt with 5-year NCE exclusivity, this post (and the remainder of our posts in this series) will deal with 3-year new clinical investigation exclusivity.

First up is a relatively short, but nevertheless informative decision on the scope of two periods of 3-year exclusivity FDA granted in connection with the April 23, 2015 approval of Supplemental NDAs (“sNDAs”) for VALCYTE (valganciclovir HCl): one sNDA for VALCYTE Tablets (NDA 021304/S-011) and another for VALCYTE Oral Solution (NDA 022257/S-005). Both sNDAs were approved to “expand the Indications and Usage to include heart transplant patients from 1 month to 4 months of age and to extend the duration of dosing regimen from 100 days to 200 days post-transplantation for the prevention of CMV disease in pediatric kidney transplant patients 4 months to 16 years of age.”  The periods of 3-year exclusivity expired on April 23, 2018, and were coded in the Orange Book as “D-148” (“EXTENDED THE DURATION OF THE DOSING REGIMEN FROM 100 DAYS TO 200 DAYS POSTTRANSPLANTATION FOR THE PREVENTION OF CMV DISEASE IN PEDIATRIC KIDNEY TRANSPLANT”) and “NPP” (“NEW PATIENT POPULATION”).

Enter Exela Pharma Sciences, LLC’s (“Exela’s”) 505(b)(2) NDA 209347 for Ganciclovir Injection, 2mg/ml (500mg/250mL). FDA approved NDA 209347 on February 17, 2017 for the treatment of Cytomegalovirus (“CMV”) retinitis in immunocompromised adult patients, including patients with acquired immunodeficiency syndrome and for the prevention of CMV disease in adult transplant recipients at risk for CMV disease.

Knowing that approval date (and indication) kind of gives away FDA’s determination as to whether or not the scope of the later-expiring D-148 and NPP periods of 3-year exclusivity applicable to VALCYTE blocked the approval of NDA 209347. But that bottom line determination isn’t what we found particularly interesting about FDA’s February 16, 2017 CDER Exclusivity Board Letter Decision.

As the L-valyl ester of ganciclovir, valganciclovir HCl (VALCYTE) is actually a prodrug for ganciclovir. After oral administration, valganciclovir is rapidly converted to ganciclovir by intestinal and hepatic esterases.  Exela NDA 209347 is for the ganciclovir active metabolite, and not for the valganciclovir prodrug.  So, an issue for the CDER Exclusivity Board to consider was whether 3-year exclusivity granted pursuant to FDC Act § 505(c)(3)(E)(iv) for a prodrug could block approval of a 505(b)(2) NDA for the active metabolite, a different active ingredient.  Here’s how the CDER Exclusivity Board set up the issue under the statute:

The bar clause of section 505(c)(3)(E)(iv) [] describes 3-year exclusivity as blocking approval of a 505(b)(2) application for “a change approved in the supplement.” Although this language is not identical to the phrase “conditions of approval of such drug in the approved subsection (b) application” used in section 505(c)(3)(E)(iii), in determining the scope of exclusivity and which applications are barred, there are likewise two aspects of the inquiry.  One aspect of the inquiry focuses on the drug at issue.  Under FDA’s interpretation of section 505(c)(3)(E)(iv) of the FD&C Act, for a single-entity drug to be potentially barred by 3-year exclusivity for another single-entity drug, the drug must contain the same active moiety as the drug with 3-year exclusivity.  If the 505(b)(2) application for a single-entity drug seeks approval for the same drug (active moiety) to which exclusivity has attached, then the second aspect of the scope inquiry applies.  This aspect of the scope inquiry focuses on the exclusivity-protected change approved in the supplement. FDA examines the conditions of approval supported by the new clinical investigations (other than bioavailability studies) that were essential to approval of the supplement.  If the 505(b)(2) application for a single-entity drug is for the same drug for the same exclusivity-protected change approved in the supplement, it will be blocked.  However, 3-year exclusivity does not block a 505(b)(2) application for the same drug that does not seek approval for the exclusivity-protected change approved in the supplement.

Under the first aspect described above, FDA determined that VALCYTE and Exela’s drug product contain the same active moiety:

Although Valcyte and Exela’s Ganciclovir have different active ingredients—valganciclovir HCl and ganciclovir, respectively—the products have the same active moiety, ganciclovir. Because the two products at issue contain the same active moiety, Exela’s Ganciclovir could potentially be barred by Valcyte’s unexpired 3-year exclusivity.

Under the second aspect described above, FDA determined that despite containing the same active moiety, the scope of 3-year exclusivity applicable to VALCYTE did not touch on Exela’s product:

The Board must therefore consider whether the 505(b)(2) applicant is seeking approval for the exclusivity-protected changes approved in the supplements for Valcyte. The Board concludes that Exela is not seeking approval for the exclusivity-protected changes approved in the supplements.  Valcyte’s 3-year exclusivity relates to the new pediatric uses approved in the supplements.  Exela is seeking approval of Ganciclovir for only adult indications: the treatment of CMV retinitis in immunocompromised adult patients, including patients with AIDS, and prevention of CMV disease in adult transplant recipients at risk for CMV disease.  Exela is not seeking approval of Ganciclovir for any pediatric uses, and therefore, the conditions of approval for Ganciclovir are clearly outside the scope of Valcyte’s 3-year exclusivity.

The Letter Decision is helpful reminder that the scope of 3-year exclusivity extends to the active moiety for the approved conditions of use for which clinical investigations were conducted or sponsored by the NDA applicant and that were considered by FDA to be essential to the approval of the application (or supplement).

But wait . . . there’s more!

While clearly 3-year exclusivity does not block approval of a 505(b)(2) NDA for a drug product containing the same active moiety for a condition of use outside of the scope of that exclusivity, it does block approval of an ANDA for that drug for the same use. That is, unless such exclusivity-protected information is omitted from generic drug labeling, And provided FDA determines that the omission of such exclusivity-protected information does not make the proposed generic drug less safe or effective for the remaining conditions of use.

That brings us to the complex carve-out of the D-148 and NPP periods of 3-year exclusivity applicable to VALCYTE that FDA had to consider when approving ANDAs for generic versions of the drug product. According to “Model Labeling” drafted by FDA, the Agency recommended that ANDA applicants use in their proposed labeling the following dosage and administration table (focus on the pediatric dosage):

That table differs quite a bit from the same table in post-2015 labeling for VALCYTE:

And the table in the Model Labeling also differs a bit compared to the pre-2015 labeling for VALCYTE:

That being said, there seem to be some early shades in the Model Labeling of a so-called ANDA labeling “carve-in”/”carve-up.” That might make VALCYTE the precursor to the first true instance of an ANDA labeling “carve-in”/”carve-up”: FDA’s ruling on the approval of generic VELCADE (bortezomib) for Injection, 3.5 mg/vial (NDA 021602) (see our previous post here).

In a memo issued by the Attorney General to all civil litigators throughout the country, AG Sessions set forth the DOJ position that it would seek to limit courts from applying “overbroad injunctive relief” in cases involving “nationwide injunctions.”  A “nationwide injunction” is one in which the federal government is barred from enforcing a law or policy as to any person or organization regardless of whether the person is a party to the litigation challenging the law or policy.  In the FDA context, a plaintiff can bring an Administrative Procedure Act (APA) challenge to a particular FDA regulation, and the court, in deciding in favor of the plaintiff, may vacate the challenged rule so that it does not apply to any person.  (See, for example, the Washington Legal Foundation challenge to FDA’s enforcement policy against off-label communications and seeking to enjoin FDA from taking further enforcement action.)

DOJ’s position set forth in the memo is that a court cannot act outside the bounds of its authority by granting relief beyond the particular case or controversy. Although the memo asserts that this position has been longstanding under “Administrations of both parties,” the DOJ memo instructs its litigators to make the following arguments, as appropriate, to defend against the issuance of a potential nationwide injunction:

1. Nationwide injunctions are inconsistent with constitutional limitations on judicial power – The memo focuses on the equitable power of Article III courts and modern standing doctrine;
2. Nationwide injunctions have no basis in equitable practice – The memo calls this type of relief an “ahistorical anomaly.”
3. Nationwide injunctions impede the consideration of a disputed legal issue by different courts – The memo seems to welcome the “organic development and discussion” by lower courts of a contested legal issue, without reference to the policy of conserving judicial resources.
4. Nationwide injunctions undermine legal rules intended to ensure the orderly resolution of disputed legal issues – The memo argues that the class action system is sufficient to provide relief to large numbers of similarly situated people and that the federal government is entitled to relitigate matters in multiple circuits, citing the principle of nonmutual offensive collateral estoppel as not applying to the federal government.
5. Nationwide injunctions interfere with judgments that properly belong to other branches of government – The memo claims that Congress must first establish by statute when a single court has authority to review agency actions with nationwide applicability, and that the Executive Branch (and in the particular the discretion of the Executive) decides whether to abide by an adverse ruling outside the geographical region in which the ruling is binding.
6. The availability of nationwide injunctions undermines public confidence in the judiciary – The memo points to forum shopping as an institutional danger to the judiciary.

The memo devotes an entire section presenting arguments to be made in APA challenges. The APA states that a reviewing court can “hold unlawful and set aside agency action, findings and conclusions” that are arbitrary and capricious, contrary to constitutional rights, in excess of statutory jurisdiction, without observance of procedure, unsupported by substantial evidence, or unwarranted by the facts.  5 U.S.C. 706.  The DOJ memo argues that this statutory language does not expand the limitation on a court to grant relief only to the parties before it.  Specifically, DOJ lawyers are instructed to make the following arguments in APA cases:

1. The relevant “agency action” is the application of the regulation to the plaintiff, not the regulation itself, so the court should not go beyond the boundaries of the case to invalidate the regulation.
2. Even if the regulation is the subject of the challenge, the APA does not require that the rule, if found invalid, be set aside on its face or as applied to the challenger.
3. The APA provides for declaratory and injunctive relief in the absence of a special statutory review provision, and this type of relief is traditionally limited to the parties involved in the litigation.

This APA section reads like an excerpt to be dropped directly into a legal brief, and it will be interesting whether courts ultimately will agree with these legal arguments when presented by DOJ lawyers.

A few months ago we reported on FDA’s recent enforcement efforts targeting electronic nicotine delivery systems (ENDS), such as e-cigarettes, and warned that the Agency is watching retailers and manufacturers closely (see here and here).

In a September 12, 2018 announcement, FDA summarized its enforcement efforts to reduce underage access to e-cigarettes over the last few months. Calling it “the largest coordinated enforcement effort in the FDA’s history,” the Agency reported that between June and September 2018, more than 1,300 Warning Letters and civil money penalty complaints were issued to e-cigarette retailers and manufacturers for illegally selling e-cigarette products to minors.  The violations were discovered during an “undercover blitz of brick-and-mortar and online stores” conducted by FDA.

In a direct challenge to industry, FDA Commissioner Gottlieb said that there were “clear signs that youth use of electronic cigarettes has reached an epidemic proportion, and we must adjust certain aspects of our comprehensive strategy to stem this clear and present danger.” Dr. Gottlieb stated that, although FDA had exercised discretion for e-cigarette products as part of the attempt to develop a pathway to transition adult smokers off combustible cigarettes, in light of the increased use by minors, the Agency is now seriously reconsidering the extension of compliance dates for the submission of product applications, particularly for flavored e-cigarettes.  “I believe certain flavors are one of the principal drivers of the youth appeal of these products,” said Dr. Gottlieb (in March 2018, FDA issued an advance notice of proposed rulemaking to seek public comment on the role that flavors in tobacco products play in attracting youth).

FDA issued letters to the five manufacturers comprising 97% of the e-cigarette market, asking them “to put forward plans to immediately and substantially reverse these trends, or face a potential decision by the FDA to reconsider extending the compliance dates for submission of premarket applications.” The letters stated that the sale of e-cigarette products to minors “is unacceptable, both legally and as a matter of public health.”  FDA requested that each manufacturer respond within 15 days including “a proposed timeline for meeting with FDA.”  Within 60 days FDA requested “a detailed plan, including specific timeframes, to address and mitigate widespread use by minors.”  FDA provided several plan elements for the manufacturers to consider, which included discontinuing sales to retailers that are subject to an FDA civil monetary penalty, reporting to FDA the name and address of retailers that have sold products to minors, eliminating online sales, and removing flavored products from the market until those products can be reviewed by FDA as part of a PMTA.  The letters stated that the actions proposed by the manufacturers would need to “demonstrate that FDA should continue to defer enforcement of the premarket review provisions” of the Tobacco Control Act (TCA).  FDA continued:

The youth tobacco use prevention imperative could affect the marketing of products that may have potential public health benefit for a different population, namely, cigarette smokers who may be seeking alternative forms of nicotine delivery. We recognize the challenge here. But steps must be taken to protect the nation’s young people.

Failure to respond to this letter may result in FDA taking action to enforce the premarket authorities in the TCA . . . .

FDA will review the information provided by your firm. If the agency determines that it should enforce the premarket authorization requirements in the TCA with respect to [your] products, we intend to communicate our expectations to you.

In other words, if FDA decides the actions are insufficient, it could require manufacturers to remove some or all of their products until they receive premarket authorization.

In addition, FDA committed to ramping up enforcement with a campaign to “monitor, penalize, and prevent e-cigarette sales in convenience stores and other retail sites” and “evaluating manufacturers’ own internet storefronts and distribution practices.” FDA intends to pursue appropriate enforcement actions if violations are found, including both civil and criminal remedies.  Furthermore, FDA will be “[i]nvestigating whether manufacturers of certain e-cigarette products may be marketing new products that were not on the market as of August 8, 2016 . . . .”  If these products are found to not have been on the market as of this date, they would fall outside of FDA’s compliance policy.

While the Commissioner did reinforce the Agency’s position that e-cigarette products may present an alternative for adult smokers to combustible cigarettes, the message to retailers and manufacturers is clear: reduce youth access and use or we will do it for you.

After submitting five Citizen Petitions to FDA since 2016 (see Docket Nos. FDA-2018-P-2851; FDA-2017-P-4352; FDA-2017-P-3064; FDA-2017-P-1359; FDA-2016-P-0645) alleging that evidence does not support approval of opioids, Pharmaceutical Manufacturing Research Services (“PMRS”) is trying a new tactic to challenge FDA’s regulatory scheme for abuse-deterrent opioids: court.  PMRS is a contract manufacturer who appears to have been petitioning FDA to stop the approval of pending and future opioids indicated for chronic use.  Garnering little support from FDA, PMRS appears to have submitted its own 505(b)(2) NDA for an opioid with abuse-deterrent labeling: NDA 209155 for Oxycodone HCl Immediate-release Oral Capsules, 5 mg, 15 mg, and 30 mg.  But is it, as Admiral Ackbar uttered in Return of the Jedi, a trap?  (“It’s A Trap!”)

In February 2018, FDA published in the Federal Register a proposal to refuse to approve NDA 209155, and a Notice of Opportunity for a Hearing (Docket No. FDA-2018-N-0188).  FDA apparently refused to approve NDA 209155 based on a litany of deficiencies, including chemistry, manufacturing, and controls, GMP issues, failure to comply with patent certification requirements, impurity problems, and others.  FDA also noted that the product could not be approved with abuse-deterrent labeling because the application did not demonstrate the necessary abuse-deterrent properties.  PMRS responded with a timely Request for a Hearing, which FDA denied.  (As a side note – it is certainly not unusual for FDA to deny such a hearing, as FDA denies these hearings fairly often.)  PMRS responded to the denial with allegations of genuine and substantial issues of fact requiring a hearing, but FDA has not yet responded.

Rather than wait for another denial, PMRS decided to sue FDA.  In the Complaint, filed in the U.S. District Court for the Eastern District of Pennsylvania, PMRS alleges that FDA’s failure to have a hearing within the statutory period violates the Administrative Procedure Act and the Mandamus Act.  “Requiring PMRS to wait any longer for the hearing on its NDA to commence would be unjust, wasteful, and significantly harmful to the public health, because absent PMRS is being precluded from bringing its product to market with correct labeling, while other, mislabeled and dangerous opioids are permitted to proceed to market,” alleges PMRS in the Complaint.

But it seems from the Complaint that PMRS may be using this litigation as a bully pulpit to protest FDA’s framework for evaluating purported abuse-deterrent opioids.  Indeed, the 22-page Complaint dedicates 15 pages to discussion of the opioid epidemic, FDA’s reliance on Abuse-Deterrent Opioid guidance, “chronic use” labeling with abuse-deterrent claims, and the scientific evidence supporting the effectiveness of long-term opioid therapy for chronic pain. The Complaint also alleges that FDA improperly approved several opioids based on previous findings of effectiveness for referenced listed drugs, including Roxybond, Roxicodone, and Percodan.

Reviewing the Request for a Hearing raises the question of whether the entire NDA was submitted simply to contest FDA’s approach to abuse-deterrent and chronic use opioid approval. The Request for a Hearing challenges FDA’s regulatory approach rather than any specific deficiency in its application.  Given that PMRS does not appear to hold any approved drug applications, it is possible that this NDA was submitted to make a point – and to provide PMRS with standing to sue FDA for its review practices with respect to opioids.  If so, it is a creative – albeit expensive – strategy.  It’s difficult to say how far a court will let this go given that the FDC Act only requires FDA to give the applicant notice of an opportunity of hearing, but we don’t expect PMRS to give up quietly. Once final action is taken with respect to this hearing request, this NDA may serve as the basis for a lawsuit challenging FDA’s entire regulatory scheme for abuse-deterrent and chronic use opioids.

One of the main components of FDA’s 2016 final rule to update the Nutrition Facts is the mandatory requirement for a declaration and a daily value (DV) for “added sugar” for both sugars added to processed foods as well as foods “packaged as such,” including a bag of table sugar, jar of honey or container of maple syrup.  With respect to the single ingredient foods that are/contain sugars when “packaged as such,” FDA has acknowledged concerns by producers that this new labeling information may inadvertently lead consumers to think their single ingredient foods may actually contain added table sugar or corn syrup if “added sugars” are listed on the label. As we previously reported, FDA published a draft guidance in February 2018 in an effort to address this concern. In the draft guidance, FDA announced that it would allow the use of a symbol in the Nutrition Facts box on pure maple syrup and pure honey linking the added sugars daily value (DV) to a statement that would advise consumers about the meaning of the “added sugars” declaration.  Not surprisingly, FDA received a large number of comments on the draft guidance, many of which contended that FDA’s proposed approach would not prevent consumers from erroneously concluding that containers of pure maple syrup and pure honey contain sugar as an additional ingredient (and therefore are economically adulterated).

In June, just one day after closing of the docket for the draft guidance, FDA issued a statement that it would work with stakeholders to “swiftly formulate a revised approach that makes key information available to consumers in a workable way.”

Just recently, Commissioner Gottlieb issued what seems to be an interim response. On Sept. 6, 2018, the Commissioner announced that FDA is drafting the “final guidance, which [FDA] anticipate[s] issuing by early next year.” According to the Commissioner, this final guidance will provide an alternative under which, presumably, no declaration of added sugars will be required.  However, the Commissioner adds that FDA is “not considering changes to the required percent daily value for these products.”  No further details were provided.  How this will work remains to be seen.  For now, the manufacturers of single ingredient foods such as sugar, maple syrup and honey can be expected to hold off on revising their labels and wait for the final guidance to be issued in early 2019.

On September 6, 2018, FDA launched the Quality in 510(k) Review Program Pilot (“Quik”). With the name “Quik,” it has a lot to live up to.  The goal of the program is to simplify the 510(k) process by providing an alternate method of preparing a 510(k) using FDA’s eSubmitter software to format the submission. The new process is being piloted for a select list of device types. Eligible devices must also be reviewed by CDRH, not be classified as combination products and constructed with the eSubmitter template “non-In Vitro Diagnostic Device – 510(k).” The agency considers the eligible devices selected to be moderate risk and well-understood.

According to the user manual, the eSubmitter tool is “is intended to automate the current paper submission process, allowing for quicker completion once users are accustomed to the software, as well as speed up the filing process with FDA.” It can be set up locally or on a network, to allow multiple users to access a submission in process. Most of the documentation currently submitted in a 510(k) will be uploaded as attachments. However, some of the information will need to be entered into fields within the software. There may be challenges if content requires review from individuals outside of the network or if it is installed as a single user application.  From a practical perspective one can envision needing to maintain parallel working documents to exchange and review content prior to entering it into the application. This may actually add time to the 510(k) construction process. Once all information is entered, the eSubmitter packages the 510(k) in a file that is physically delivered to CDRH’s Document Control Center. A paper copy will no longer be required.

Submissions eligible for the program will be reviewed according to a faster timeline than a standard Traditional 510(k) submission. First, the Refuse to Accept review that typically occurs in the first 15 days of 510(k) review will not be conducted. (However, FDA will review the submission to confirm eligibility and will convert the submission to the standard procedure and timeline if the 510(k) is found to be ineligible.)  During the review, the submission will not be placed on hold.  All FDA requests for additional information will be made interactively with an expectation that the sponsor responds quickly.  The final decision is intended to be made within 60 days.

While requests for clarification of the device design or its testing can typically be made quickly, many 510(k) requests for additional information ask for additional testing when FDA feels that methods and/or data provided in the submission were insufficient. Sponsors may find it challenging to respond to such deficiencies quickly to allow a total review timeline of 60 days.  It will be interesting to see if the pilot program results in more sponsors needing to submit a second 510(k) if the first cannot be cleared within the timeframe.  In a current Traditional 510(k) review, FDA requests additional information around day 60 of their review and takes the remaining 30 days to review the additional information when submitted.  If sponsors find that multiple 510(k)s are required, the timelines will be increased as instead of a 30 day review after they complete the additional work, it will now be a new 60 day review. Also, a second user fee will be necessary.

For straightforward submissions that require only clarification or other updates that can be made quickly to address FDA requests, this program is likely to reduce overall review time. However, given many additional information requests take longer to respond to properly, the ability of a “Quik” 510(k) to reduce review times more broadly is unknown. We will follow this pilot program and provide updates on its outcomes as they become available.

On Sept. 10, 2018, the Food Safety Inspection Service (FSIS) of the USDA and FDA announced a joint public hearing scheduled for Oct. 23-24, 2018.

The federal register announcement, explains that this will follow a meeting by FDA’s Science Advisory Board on October 22, 2018. The advisory board will address questions prepared by FDA and USDA.  The intent is “to support a process for identifying potential hazards, assessing risks, and establishing control measures appropriate to each risk for cell cultured food products.”  As the questions are still being developed, further details will be provided at a later date.

The two-day public hearing is scheduled to address safety issues and jurisdictional issues on day 1 and labeling on day 2. Stakeholders will have an opportunity to provide oral comments during the public meeting as well as written comments to the docket. Comments previously submitted in response to the July 12, 2018 FDA public hearing need not be resubmitted.  FSIS and FDA jointly will review these and new comments.  In addition, according to the notice, time has been allotted for audience questions after most presentations delivered during the meeting.

Given the high level of interest early registration is recommended.

As we celebrate the 35th Anniversary of the Orphan Drug Act (see our 30th anniversary post here), periodic consideration of opportunities to reform and refine the approach to rare disease medical product regulation is warranted – similar to the review that occurred 10 years ago, which resulted in the establishment of the CDER Rare Diseases Program and first FDA public hearing on orphan drugs in June 2010.

In that spirit, Hyman, Phelps & McNamara, P.C.’s Frank Sasinowski (who serves as Vice Chair of the EveryLife Foundation Board of Directors) and James Valentine co-authored a proposal for building an FDA Rare Disease Center of Excellence (COE). The proposal will serve as a discussion document for the upcoming EveryLife Foundation 10th Annual Scientific Workshop. The proposal comes on the heals of the 21st Century Cures Act which provides FDA authority to establish COEs, as well as recent successes with the first COE in oncology.

The onus for this proposal, as well as the Scientific Workshop, is that because of the Orphan Drug Act, which provides incentives to make developing drugs for small numbers of patients financially viable, there has been increased investment in the research and development of medical products (drugs, biologics, and medical devices) to prevent and treat rare diseases, also known as orphan conditions. However, this influx has created unique regulatory challenges for FDA in providing regulatory oversight and in conducting review of marketing applications given that the development of products for these conditions present many unique challenges. There is no separate, lower or lesser legal or regulatory standard for approval of orphan products, so researchers and product developers and FDA alike must confront these issues throughout all phases of development and employ creative approaches to product development and review must be employed.

Given the unique challenges and, therefore, the unique expertise needed to advance the development and review of products for rare diseases, a Rare Disease COE would provide the necessary infrastructure to allow centers and offices across FDA to consistently and efficiently review novel products for these conditions. The proposed Rare Disease COE would involve a combination of three overarching organizational changes at FDA:

1. Establishment of a COE organizational unit within the Office of Medical Products and Tobacco with cross-Center responsibilities
2. Establishment of a Deputy Director for Rare Diseases within each review office/division across CDER, CBER, and CDRH
3. Establishment of a Rare Disease Advisory Committee

For more information on the details on the structure, function, and regulatory responsibilities of this Rare Disease COE, you can view the proposal here.

The EveryLife Foundation’s Scientific Workshop, which takes place this Thursday, September 13^th from 8:30 am until 4:00 pm has a robust agenda that brings together regulators, patient advocates, academia, industry, and other stakeholders to discuss both progress and continued challenges in the development and review of medical products for rare diseases. The day will culminate with a presentation by Mr. Sasinowski on this proposal for a Rare Disease COE, which will be followed by a panel discussion consisting of:

• Rich Moscicki, MD, Executive Vice President, PhRMA
• Paul Melmeyer, Director of Federal Policy, NORD
• Lucas Kempf, MD, Associate Director Rare Diseases Program, FDA
• Celia Witten, MD, PhD, Deputy Director, FDA CBER
• Alan Beggs, PhD, Director, The Manton Center for Orphan Disease Research

The workshop agenda can be found here, and you can register for the webcast is available here.

We hope this proposal and the workshop will initiate a dialogue about such possibilities to jumpstart brainstorming that may result in increased visibility for rare disease therapies and other related developments (e.g., a practical way to enhance and augment the prominence of surrogates and Accelerated Approval).

Back in June 2017, we introduced folks to a system we dubbed “ANDA Arbitrage.”  It’s an effort undertaken by a company called ANDA Repository, LLC to help companies potentially decrease annual user fee liability under the second iteration of the Generic Drug User Fee Amendments (“GDUFA II”).  Since then, we’ve hear the words “genius” and “entrepreneurial” used to describe the service.

As we quickly approach the October 1, 2018 deadline when the state of ANDAs solidifies and fee payments are due, we thought it would be a good time to remind some ANDA owners who have a small number of approved ANDAs, or who are just over the application count threshold for paying a higher ANDA Holder Program Fee, that there’s another option out there to consider.

GDUFA II significantly changed the user fee system and structure that had been in place under GDUFA I. Among other fees under GDUFA II, there’s the ANDA Holder Program Fee.  That fee is set up as follows: a firm and its affiliates pays one program fee each fiscal year commensurate with the number of approved ANDAs (both active and discontinued ANDAs) that the firm and its affiliates collectively own (see here).

The program fee to be paid each year depends on the number of ANDAs owned. Firms do not pay a per-ANDA fee.  Instead, the program fee is split into three tiers that represent different positions held by the firms and their affiliates within the market (i.e., small, medium, and large).  Specifically, FDC Act § 744B(b)(2)(E) states that:

if a person has affiliates, a single program fee shall be assessed with respect to that person, including its affiliates, and may be paid by that person or any one of its affiliates. The Secretary shall determine the fees as follows:

(I) If a person (including its affiliates) owns at least one but not more than 5 approved [ANDAs] on the due date for the fee under this subsection, the person (including its affiliates) shall be assessed a small business generic drug applicant program fee equal to one-tenth of the large size operation generic drug applicant program fee.

(II) If a person (including its affiliates) owns at least 6 but not more than 19 approved [ANDAs] on the due date for the fee under this subsection, the person (including its affiliates) shall be assessed a medium size operation generic drug applicant program fee equal to two-fifths of the large size operation generic drug applicant program fee.

(III) If a person (including its affiliates) owns 20 or more approved [ANDAs] on the due date for the fee under this subsection, the person (including its affiliates) shall be assessed a large size operation generic drug applicant program fee.

The statute (at FDC Act 744B(g)(5)) also includes certain penalties for failure to pay the ANDA Holder Program Fee:

(A) IN GENERAL.—A person who fails to pay a [ANDA Holder Program Fee] by the date that is 20 calendar days after the due date . . . shall be subject to the following:

(i) The Secretary shall place the person on a publicly available arrears list.

(ii) Any [ANDA] submitted by the generic drug applicant or an affiliate of such applicant shall not be received, within the meaning of section 505(j)(5)(A).

(iii) All drugs marketed pursuant to any [ANDA] held by such applicant or an affiliate of such applicant shall be deemed misbranded under section 502(aa).

(B) APPLICATION OF PENALTIES.—The penalties under subparagraph (A) shall apply until the fee required under subsection (a)(5) is paid.

For Fiscal Year 2019, the ANDA Holder Program Fee tier rates increased pretty significantly compared to Fiscal Year 2018:

That’s where ANDA Repository, LLC comes into the picture. . . .

Imagine a parking lot. The owner of a car that is not being used on a daily basis needs a parking space for that car.  In exchange for that parking space (and an annual fee) the car’s owner transfers title of the automobile to the parking lot owner.  The old owner of the car can, with appropriate notice, take back ownership when he decides that he wants to use the automobile again.  Provided the parking lot owner has enough cars, this can be a beneficial venture for all of the parties involved.

In the imagery above, the automobile owner is an ANDA sponsor (typically with a discontinued ANDA), and the parking lot owner and attendant is ANDA Repository, LLC. As a “large size” operation, ANDA Repository, LLC pays a flat ANDA Holder Program Fee regardless of how may ANDAs are owned.  In exchange for its services, ANDA Repository, LLC charges an ANDA sponsor an annual fee, which we understand is significantly less than the ANDA Holder Program Fee such ANDA sponsor would otherwise pay as a small or medium size operation.

If you’re interested in the program, you should reach out to ANDA Repository, LLC soon. The mechanism to communicate to FDA a transfer in ANDA ownership prior to October 1, 2018 should be relatively painless: (1) Transfer of Ownership Letters (Seller) and Acknowledgment of Transfer of Ownership letters (Buyer) to the Office of Generic Drugs; and (2) Email and call CDER Collections notifying them of the change in ownership.

A district court in Massachusetts scolded FDA for failing to meet a two-year deadline for issuing a final rule mandating color graphic warnings on cigarettes. This decision is important for the public health interests associated with the graphic warnings, but interesting for the loss dealt FDA under the Administrative Procedure Act (“APA”).

As background, the Family Smoking Prevention and Tobacco Control Act of 2009 required FDA to promulgate a final rule mandating color graphic warnings on cigarette packs and in cigarette advertising by June 22, 2011, i.e., two years after Congress enacted the statute. FDA issued a final rule within the two year time period requiring the use of nine text warnings accompanied by graphic images.  A group of tobacco product manufacturers and sellers promptly challenged the rule, alleging that it violated their constitutional right to free speech.  The district court agreed with industry, and the D.C. Circuit upheld the lower court’s decision and vacated the final rule in 2012.

A coalition of physician groups and cancer associations filed the instant suit to force FDA to follow the mandate of the Tobacco Control Act and issue new graphic warnings requirements. They alleged that FDA violated the APA because it “unlawfully withheld” agency action, or in the alternative, “unreasonably delayed” the final rule.  FDA explained to the court that following the 2012 D.C. Circuit decision, the agency formed a working group to research the text of warning statements.  In 2015, FDA contracted with a communications and marketing firm to develop new graphic warning image concepts that were tested in discussion groups.  FDA revised the warnings and then contracted a social science research firm to conduct focus group testing on the revised warnings.  FDA further modified the warnings in response to these results.  FDA explained to the court that additional research was being planned, including another round of focus group review, and two quantitative studies.  The research would then be used to support a formal rulemaking, which FDA estimated would conclude in November 2021.

The Honorable Indira Talwani agreed with the plaintiffs that FDA violated the APA because it both “unlawfully withheld” agency action, and “unreasonably delayed” the final rule.

“Unlawfully Withheld” Standard.  Plaintiff argued that the court should compel agency action here because Congress established a firm, enforceable deadline in the statute.  The district court agreed, highlighting the distinction that exists under the APA when the statute “impose[s] a date-certain deadline on agency action,” and not just a general admonition to act “within a reasonable time.”  The court found that FDA’s duty to promulgate a rule under the Tobacco Control Act is “nondiscretionary”: “Not later than 24 months after June 22, 2009, the Secretary shall issue regulations that require color graphics depicting the negative health consequences of smoking to accompany the label statements . . . .”  Even though FDA pointed to its original compliance with the two year deadline before vacatur, the court held that the vacatur “simply return[s] matters to where they stood before,” thus resetting the two-year clock.  The court stated that “it cannot be the case that the FDA has freed itself from Congressional mandates and may now take the opportunity to promulgate this rule at whatever pace it chooses.”

“Unreasonably Delayed” Standard.  The court also walked through the six TRAC factors, named after the D.C. Circuit Court case establishing the test for “unreasonable delay.”

1. the time agencies take to make decisions must be governed by a rule of reason;
2. where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason;
3. delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake;
4. the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority;
5. the court should also take into account the nature and extent of the interests prejudiced by delay; and
6. the court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is unreasonably delayed.

The court used reprimanding language in its opinion to describe the two year “detour” after the appellate decision vacating the final rule and the “gaps of time where little to no work was completed,” and noted that FDA’s current timeline proposes a period of “four times the initial amount of time set by Congress.” The court also noted that “FDA has not articulated a single higher priority” to justify the “competing priorities” required under the fourth TRAC factor, but requests that the court defer to FDA’s priority choices without regard to those dictated by Congress.  Thus, the court found there was “unreasonable delay” and ordered FDA to provide within three weeks (by September 26, 2018) an expedited schedule for issuing a final rule (including completion of studies, and notice-and comment rulemaking).  The court also offered time for plaintiffs to review and respond to FDA’s proposed schedule, and stated that it intends to direct further action following review of the schedule.

Given the deference typically afforded agencies in their statements of what is a reasonable timeline, this case is a notable win for challenges to agency (in)action. It will be interesting how much FDA’s new schedule shaves off its initial proposed deadline of November 2021, and whether FDA will use this “expedited” schedule as a basis for pushing other competing priorities on the backburner.

FDA’s Commissioner Scott Gottlieb, M.D., announced last Friday, September 7, 2018, FDA’s publication of its revised draft Memorandum of Understanding (“MOU”) between states and FDA addressing interstate shipment of compounded medications. This is the third draft MOU published by FDA that involves interstate shipment of compounded medications; recall FDA’s first attempt was way back in 1999 (which received over 6,000 comments) (see our previous post here). FDA’s third attempt is quite different than its first two attempts both in terms of its definition of what is an “inordinate amount” of compounded products shipped interstate, and how States and FDA are supposed to regulate those compounders that may ship inordinate amounts of compounded medications interstate.

Section 503A of the Federal Food, Drug, and Cosmetic Act (“FDCA”) requires FDA and states to enter into a MOU (developed in consultation with the National Association Boards of Pharmacy (“NABP”)) that addresses the distribution of inordinate amounts of compounded drug products interstate, and provides for appropriate investigation by a State agency of complaints relating to compounded drug products distributed interstate. See FDCA Section 503A. If the State does not enter into the MOU, then that State’s compounders are significantly limited to a ceiling of distributing or dispensing only 5% of their compounded medications interstate. FDA will not enforce this so-called 5% rule unless and until the MOU is finalized and made available to the States for their consideration and signature. FDA is proposing a 180-day period at this point to allow States to consider and sign the final MOU, but that period is subject to comment and may change upon publication of the final MOU.

New Definition of ”Inordinate Amounts”: The “50 Percent Threshold”

The purpose of the draft MOU remains generally the same: It sets forth how and when States must investigate and report to FDA compounding complaints, adverse events and compounders that ship interstate “inordinate amounts” of compounded medications. Unlike prior versions, the new draft MOU appears to be more of a practical, risk-based information collection and reporting guideline, and sets an “inordinate amount” threshold for further investigation, and not a “limit.”

For example, with respect to an “inordinate amount” determination, States do not simply “report” pharmacies and compounding physicians to FDA once they reach a certain limit on compounded medications shipped interstate (which was proposed to be 20% in 1999 and 30% in 2015). Instead the MOU would require states to do the following:

• Identify on an annual basis, using surveys, reviews of records, or other available mechanisms, compounding pharmacists that distribute inordinate amounts of compounded drugs interstate by collecting information regarding the following:
  • Total number of prescription orders for compounded drug products distributed or dispense intrastate, and
  • Total number of prescription orders for compounded drug products distributed interstate.
• If the state becomes aware of a physician who is distributing compounded drug products interstate, coordinate with the State’s appropriate regulator of physician compounding using similar state collection of:.
  • Total number of prescription orders for compounded drug products distributed or dispense intrastate, and
  • Total number of prescription orders for compounded drug products distributed interstate.
• For pharmacies or physicians that have been identified as distributing inordinate amounts of compounded drug products interstate, collect information regarding the following:
  • Total number of prescription orders for sterile compounded drugs distributed interstate
  • Number of States in which the compounded pharmacy or physician is licensed or into which the compounding pharmacy /physician distributes
  • Whether the state inspected for or found during the most recent inspection that the pharmacy /physician distributed compounded products without a prescription.
• Notify FDA if the State identifies any pharmacy or physician within its jurisdiction that has distributed inordinate amounts interstate; and
• Provide FDA certain information identified in the MOU that the State collected concerning those physicians and pharmacies it believes are distributing inordinate amounts interstate.

And here is the proposed definition of “inordinate amount”:  The revised MOU draft states that a pharmacy or physician is considered to have distributed an inordinate amount interstate if the number of prescription orders for compounded drug products in any calendar month is greater than 50 percent of the number of prescription orders for compounded drug products dispensed or distributed both interstate and intrastate.

The calculation includes only compounded drug products, unlike the 2015 draft where it included both compounded and finished drug products.

Concerning use of the term “distribution,” FDA states it revised this definition from the prior draft based on industry comments and that “distribution” now means:

[A] compounder has sent a compounded drug product out of the facility in which the drug is compounded. This may include but not be limited to delivery or shipment to a physician’s office, hospital or other healthcare setting for administration, and dispensing the drug product by sending it to a patient for a patient’s own use.

Based on comments received, FDA also has proposed to exclude from the definition of “distribution” the act of “dispensing that occurs at the facility in which the drug was compounded.” This act of “dispensing but not distribution” will not be a prescription that is included in the pharmacy’s “50 percent threshold” determination. Thus, FDA seems to differentiate dispensing and distribution, at least to some degree, according to whether the transaction is via mail or occurs in person. We shall see whether FDA’s explanation is now satisfactory or whether this issue will continue to provide controversial fodder and frustration for those in the industry that believe a plain reading of FDA’s regulations and the statute plainly demonstrates that “dispense” and “distribution” are different concepts than FDA’s proposed “new” definitions here.

The general takeaway for this blogger on the MOU saga, however, is that FDA’s new draft leaves more leeway to States to collect information necessary to make inordinate amount determinations, investigate its pharmacies, and report certain pharmacies that compound inordinate amounts to FDA. Unlike the former draft, FDA states it does not intend to take action against a compounder that breaches a 50 percent threshold, but instead it proposes that States collect information identified above, and provide it to FDA to help “inform FDA’s inspectional priorities.” The proposed draft would require States to maintain records of complaints, investigations, and responses to the same for at least three years after completion of the investigation. FDA notes that the revised draft does not include “specific directions to the States on how to conduct their investigations of complaints. Rather, as recommended by comments to FDA previously, the details of such investigations are left to the States’ discretion.”

FDA is also distinguishing between compounders of non-sterile and sterile compounds in light of the fact that it is collecting information of the types of compounds to likely assist with its risk-based enforcement approach (recognizing the significantly different risk profiles for these products). FDA’s continued quest to know whether compounders of “inordinate amounts” are obtaining valid individually identified patient prescriptions demonstrates FDA will be watching this issue.   States must consider whether compounders that may exceed the 50 percent threshold are also falling short of the individually identified prescription requirement in 503A. Comments are due in 90 days.

States must notify FDA within three business days (versus the former proposed 72 hours) after receiving any complaints related to a compounded product distributed interstate involving a serious adverse product quality issue or adverse drug experience, and provide FDA with specific information about the complaint. FDA states it has staff on call 24 hours a day to receive information in emergency situations.

On August 17, FDA announced that the Animal Drug and Animal Generic Drug User Fee Amendments of 2018 had been signed into law. As the name of the law suggests, it reauthorizes the Animal Drug User Fee Act (ADUFA) and the Animal Generic Drug User Fee Act (AGDUFA) programs administered by FDA. Not so obvious is that the amendment also impacts FDA’s review of animal feed ingredients. Specifically, section 360 concerns the review and approval process for animal food ingredients.  Among other things, the amendment removes Section 1002(a) of the Food and Drug Administration Amendments Act of 2007 (FDAAA). This section required FDA to establish ingredient standards and definitions with respect to pet food. Lacking a clear definition of pet food, FDA interpreted the provision broadly as to require ingredient standards and definitions for animal food ingredients.

As discussed in a prior posting, FDA announced a strategy for the required ingredient review only in 2015. Briefly, FDA had planned to align ingredient listings in the Official Publication (OP) of the Association of American Feed Control Officials (AAFCO) with the agency’s regulatory process and requirements.” Based on a comprehensive review of the OP, the Agency would establish as its own standards and definitions any AAFCO definitions for ingredients that are approved by the agency as food additives or that are Generally Recognized as Safe (GRAS). For the remaining AAFCO ingredient definitions, FDA would review available data and determine whether they supported an animal food additive approval or GRAS conclusion. There remained uncertainty about how FDA would manage the strain on resources; estimates suggested FDA might have to address about 500 ingredients. Now three years later, section 1002(a) has been removed. Section 306 also addresses several aspects of the animal food additive approval process. FDA must develop pre-submission guidance for companies. A draft guidance must be published in the next 18 months, and FDA is directed to finalize, withdraw or reissue this guidance no later than one year after closing of the comment period for the draft guidance. The law also amends FDC Act § 409 to clarify that FDA must review applicable foreign reports of investigations and data on animal food ingredients when submitted by petitioners as part of an animal food additive petition. It remains to be seen if these actions will speed up the food additive approval process (currently it takes 3-5 years to obtain approval).

On August 30, 2018, the United States District Court for the Eastern District of California granted the State of California’s Motion to Dismiss a Complaint filed on December 8, 2017 by the Pharmaceutical Research and Manufacturers of America (PhRMA) seeking declaratory and injunctive relief against implementation and enforcement of California Senate Bill 17 (SB 17). We previously blogged on SB 17 here and PhRMA’s lawsuit here. PhRMA’s original Complaint can be accessed here. SB 17, which went into effect on January 1, 2018, imposes notification and reporting requirements on pharmaceutical manufacturers for certain price increases on their products sold to state purchasers, insurers, and PBMs in California. Further information on the implementation of SB 17 can be found on the California Office of Statewide Health Planning and Development (OSHPD) website here.

Briefly, PhRMA’s lawsuit challenged SB 17 on three distinct constitutional grounds. First, PhRMA alleged that SB 17 violates the Commerce Clause by regulating interstate commerce. Compl. at 3. Second, PhRMA alleged that SB 17 violates the First Amendment by compelling manufacturers to speak and in a manner that expresses viewpoints that are neither speaker- nor content-neutral. Id. at 4, 26. Third, PhRMA argued that SB 17 is unconstitutionally vague, in violation of the Fourteenth Amendment Due Process Clause. Id. at 5, 18, 31.

The district court dismissed PhRMA’s Complaint on procedural grounds without reaching the merits of the constitutional arguments. California argued that the court lacked subject matter jurisdiction under Federal Rules of Civil Procedure (FRCP) Rule 12(b)(1), asserting that Gov. Brown must be dismissed as a party because he was immune from suit pursuant to the Eleventh Amendment. California asserted that states are generally immune from civil suits, but that such suits may be brought against a state’s officers acting in their official capacities seeking to enjoin the enforcement of a state law when a state officer has a “direct connection” with the enforcement of the particular law. Defs.’ Memorandum of Points and Authorities in Support of Motion to Dismiss at 9, PhRMA v. Brown, No. 2:17-cv-02573 (E.D. Cal. Jan. 26, 2018) [hereinafter Memorandum]; see also Ex Parte Young, 209 U.S. 123, 157 (1908). In the present matter, California argued that Gov. Brown did not have a direct connection with the enforcement of SB 17, but rather only had “general oversight” over the state’s executive branch. Memorandum at 9.

The district court agreed with California and dismissed Gov. Brown as a party. PhRMA’s Complaint argued that Gov. Brown has a direct connection with the enforcement of SB 17 because he signed SB 17 into law and bears responsibility for its enforcement. Memorandum and Order at 6, PhRMA v. Brown, No. 2:17-cv-02573 (E.D. Cal. Aug. 30, 2018) [hereinafter Order]. However, the court disagreed, concluding that this amounted to no more than general oversight. Id. at 7.

California also argued that PhRMA lacked standing to bring the lawsuit against the Defendants and, therefore, failed to state a claim upon which relief can be granted pursuant to FRCP Rule 12(b)(6). In order to meet the jurisdictional requirements of Article III of the U.S. Constitution, a plaintiff must demonstrate that it has standing to bring the lawsuit. An association, like PhRMA, has standing to bring a lawsuit on behalf of its members “when its members would otherwise have standing to sue in their own right, the interests at stake are germane to the association’s purpose, and neither the claim asserted nor the relief requested requires the participation of individual members [in the lawsuit].” Memorandum at 10 (quoting Friends of Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 181 (2000)). Here, California asserted that PhRMA merely alleged the operation of SB 17 would injure its members if the reporting requirement was triggered by a price increase or that its members may refrain from increasing product prices to avoid the reporting requirement. Order at 9. California also stated that PhRMA’s factual allegations of harm to its members were not actual but predicated on how OSHPD applies certain provisions of SB 17. Id.

Again, the court agreed with California and dismissed the lawsuit for lack of standing. Id. at 10. The court held that PhRMA’s assertions regarding the potential harm that may be incurred by its members were speculative, citing “a long-settled principle that standing cannot be inferred argumentatively from averments in the pleadings,” but must be based on allegations of facts essential to demonstrate jurisdiction. Id.

PhRMA’s Complaint was dismissed without prejudice and the court granted leave to PhRMA to amend its Complaint within 30 days to plead additional facts to address these procedural defects. We will continue to track developments in this litigation.

We recently came into possession of a small stack of Letter Decisions issued by the Exclusivity Board in the Center for Drug Evaluation and Research – the “CDER Exclusivity Board” – and decided that a series of posts on each decision would be an entertaining way to delve into and discuss various issues that arise with both 5-year New Chemical Entity (“NCE”) exclusivity and 3-year new clinical investigation exclusivity.

By way of background, the CDER Exclusivity Board was established to “oversee certain exclusivity determinations, including whether and what type of exclusivity should be granted and the appropriate scope of exclusivity grants,” and to ensure consistency and accuracy among exclusivity determinations.  The Board has been in existence for quite some time.  While it’s been almost 6 years since FDA publicly announced, in Fall 2012, the establishment of the Board (see our previous post here), the Board had already issued decisions before then (for example, with respect to the availability of 3-year exclusivity for an NDA supplement for VANCOCIN (vancomycin HCl) Capsules (NDA No. 050606) – see here).

During the past 6-plus years, the CDER Exclusivity Board has issued scores of Letter Decisions (and there are more to come – see, e.g., page 26 here, as well as a recent Citizen Petition [FDA-2018-P-3284]).  Not all of the Board’s Letter Decisions are publicly available, and those that are public are not always easy to find as they can be buried in NDA Approval Packages.  But we’ve been able to rustle up some of them.

First up is the CDER Exclusivity Board’s October 2016 Letter Decision on eligibility for 5-year NCE exclusivity for E-Z-HD (barium sulfate) Powder for Oral Suspension, 98% (w/w). FDA approved E-Z-HD under NDA 208036 – a “literature-based” 505(b)(2) application – on January 11, 2016 for use in double contrast radiographic examinations of the esophagus, stomach and duodenum to visualize the gastrointestinal tract in patients 12 years and older.

NDA 208036 was (and continues to be) identified in FDA’s drug approval database as a “Type 7 – Drug Already Marketed without Approved NDA” application. FDA’s MAPP 5018.2, titled “NDA Classification Codes,” describes a “Type 7” NDA as follows:

A Type 7 NDA is for a drug product that contains an active moiety that has not been previously approved in an application, but has been marketed in the United States. This classification applies only to the first NDA approved for a drug product containing this (these) active moiety(ies).

Type 7 NDAs include, but are not limited to:

(1) The first post-1962 application for an active moiety marketed prior to 1938.

(2) The first application for an active moiety first marketed between 1938 and 1962 that is identical, related or similar (IRS) to a drug covered by a Drug Efficacy Study Implementation (DESI) notice.

(3) The first application for an IRS drug product first marketed after 1962.

(4) The first application for an active moiety that was first marketed without an NDA after 1962.

Whether the Type 7 (mis)classification or something else triggered a review by the CDER Exclusivity Board is unclear; however, the Board’s Letter Decision provides a nice reference tool for a point we’ve made in the past: An analysis of NCE exclusivity eligibility requires more than just consulting Drugs@FDA and the Orange Book, because those databases are incomplete. It requires, at the very least, a look-back at all NDAs approved by FDA under FDC Act § 505 since the FDC Act was signed into law by President Roosevelt on June 25, 1938, including those many, many NDAs whose approvals were withdrawn in the early 1970s under FDA’s NDA “clean-up initiative” (35 Fed. Reg. 11,929 (July 24, 1970)).

And that’s exactly what the CDER Exclusivity Board did in determining that E-Z-HD is not eligible for 5-year NCE exclusivity. According to FDA:

At least one drug product, Metabarin, containing barium sulfate as its active ingredient has been previously marketed under an NDA in the United States. On December 2, 1948, C.S.C. Pharmaceuticals, a division of Commercial Solvents Corporation, submitted an application (NDA 6624) for Metabarin under section 505(b) of the FD&C Act.  The application became effective on December 9, 1948.  As described in NDA 6624, Metabarin, an oral suspension, is a barium contrast medium used in the roentgenographic (X-ray) visualization of the esophagus, stomach, and intestinal tract.  The NDA indicates that Metabarin contains 99.656% barium sulfate (USP) along with a suspending agent, intended to provide a high degree of dispersibility, and two flavoring agents. . . .

The FD&C Act and FDA’s regulations preclude eligibility for 5-year NCE exclusivity when the drug contains an active moiety that has been previously approved in an application under section 505(b) of the FD&C Act. E-Z-HD contains barium sulfate, the sulfate salt of barium, as its active ingredient.  The active moiety in E-Z-HD is barium.21 Likewise, barium sulfate is the active ingredient and barium is the active moiety in Metabarin.  As noted above, the NDA for Metabarin became effective in 1948 and was deemed approved through the 1962 Amendments to the FD&C Act.  FDA’s regulations make clear that a drug product that is the subject of an application that was “deemed approved” under the 1962 Amendments is considered to be approved in an application under section 505(b) of the FD&C Act for purposes of determining whether certain products qualify for 5-year NCE exclusivity under section 505(c)(3)(E)(ii) and 505(j)(5)(F)(ii) of the FD&C Act.  Therefore, because the active moiety in E-Z-HD has been previously approved in an application under section 505(b) of the FD&C Act, i.e., the Metabarin NDA, E-Z-HD does not contain a new chemical entity and is not eligible for 5-year NCE exclusivity.

FDA is able to review drug approvals going back to 1938 because the Agency has a tool at its disposal that most folks do not have: the so-called “Ever-Approved List.” The Ever-Approved List a list of drug products purported to have been approved by FDA since 1938 under a marketing application submitted pursuant to FDC Act § 505.  Fortunately, we have a copy of the Ever-Approved List, which we understand the Agency will now supply through a FOIA request (though you might what to specify whether or not you would like the nearly 5,400-page PDF list or the Excel database. . . or perhaps both).  The list certainly comes in handy when speculating about the prospects of 5-year NCE exclusivity (see our previous post here).