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  • HP&M’s Serra Schlanger to Present on State Drug Price Reporting Laws

    Hyman, Phelps & McNamara, P.C. is pleased to announce that Serra Schlanger will present at this year’s Drug Pricing Transparency Congress, a virtual conference, on November 16–17, 2020.  This conference gathers stakeholders to examine the evolving landscape of state drug price reporting and transparency efforts.  Serra will speak about the state laws that require price disclosures to be made directly to health care providers, as well as join a panel of experts to discuss recent developments and practical tips for compliance with the various state requirements.

    As a sponsor of the event, we can offer our readers a special discount off the registration.  The discount code is DPC200.  We look forward to seeing you at this virtual conference.

    FDA Launches Digital Health Center of Excellence

    On September 22, FDA announced the creation of a Digital Health Center of Excellence (DHCoE), which has grown out of their existing Digital Health Program.  The objectives of the DHCoE include connecting and building partnerships, sharing knowledge and innovating regulatory approaches related to digital health.  The landing page provides helpful links to other content on the FDA website related to digital health.

    It appears that the DHCoE provides new organization for the work that the Agency has already been doing in the digital health space. DHCoE services are organized into those that empower stakeholders, connect stakeholders, share knowledge and innovate regulatory approaches.  For each service, there are numerous examples of ongoing activities that the digital health team has been providing.

    With its kick-off, the DHCoE focus will be to raise awareness and engage stakeholders.  Starting this winter and into next year, they plan to focus on building partnerships, including creation of a digital health community of practice and assembling FDA and CDRH advisory groups.  Overall, the DHCoE appears to set the stage for developing and implementing improvements to digital health policy and processes.

    For those interested in learning more and asking questions related to the DHCoE, FDA is offering two listening sessions in October and November.  They will also be involved in the upcoming Patient Engagement Advisory Committee Meeting on Artificial Intelligence and Machine Learning in October.

    Categories: Medical Devices

    Final Decision on Economic Analysis Report of Organic Livestock and Poultry Practices Rule and Summary of Comments on the Economic Analysis Report; The Lawsuit Continues

    Quite some time ago, we blogged on the organic livestock and poultry practice (OLPP) rule.  The rule established minimum indoor and outdoor space requirements for chickens based on the type of production and stage of life, as well as added new provisions for livestock handling and transport for slaughter.   After years of work, a final rule was published the day after President Trump’s inauguration, with an effective date two months later.  However, USDA delayed the effective date several times, and ultimately withdrew the rule because the agency concluded that it did not have the authority to issue the rule and it also determined that the costs outweighed the benefits.   The Organic Trade Association (OTA) sued USDA claiming that USDA’s basis for withdrawal was unfounded.

    Fast forward to Oct. 31, 2019, when the OTA filed a motion for summary judgment.  In its motion for summary judgment, OTA argued, among other things, that the regulatory impact analysis (RIA) of the withdrawal rule contained serious flaws.  USDA had acknowledged that the RIA of the OLPP contained errors.  When it issued the withdrawal rule, it issued a revised (or withdrawal) RIA which corrected several main errors of the OLPP RIA and concluded that benefits of the OLPP had been overstated.

    Rather than responding to the motion for summary judgment, USDA requested that the Court stay the proceedings and remand the case to USDA to allow USDA to correct the RIAs.  Upon review of OTA’s expert’s analysis, USDA had determined that the withdrawal RIA still contained errors and it requested remand to make sure that the impact of those errors would be addressed; it wanted to correct and clarify the record in a manner that would permit judicial review.

    Recognizing the value of a complete and correct record, the Court granted the motion (over the opposition of OTA) and set a deadline of 180 days, or September 8, 2020, for USDA to publish a final rule fully explaining its updated cost/benefit analysis.

    On April 23, 2020, USDA published the Economic Analysis Report (Report) reviewing and evaluating the OLPP RIA and the withdrawal RIA.  The Report identified several additional errors in the OLPP RIA which had been carried forward to the revised RIA.  USDA requested comments on the Report.

    On September 17, 2020, USDA published its final decision, announcing that it had found nothing in the comments to the Report that  would cause it to reject or modify the findings of the Report, and affirming the findings of the Report which discredit both the OLPP RIA and the withdrawal RIA.

    Based on the Report and comments to the Report USDA concluded that “the [flawed OLPP] RIA does not support promulgation of the OLPP Rule.”  It further concluded that “[i]mplementing the OLPP rule based on such a flawed economic analysis is not in the public interest.”  Because the parts of the final withdrawal rule that do not rely on the flawed revised RIA remain intact, USDA also concluded that no further action is needed for that RIA.  Now that the administrative record has been “corrected,” the lawsuit can proceed.

    A Couple of Firsts in Food Enforcement

    Last week brought a reminder that the government can bring to bear a range of legal theories – some old, some new – in pursuing alleged violations of food safety requirements.

    The U.S. Department of Justice (DOJ) announced a sentence levying $17.25 million in criminal penalties against Blue Bell Creameries, whose ice cream products were implicated in an outbreak of foodborne illness. The sentencing follows a plea agreement entered last May, in which Blue Bell pleaded guilty to misdemeanor counts of distributing adulterated products and agreed to pay the criminal penalties, and also agreed to pay $2.1 million to resolve alleged violations of the False Claims Act. According to DOJ, “the $17.25 million fine and forfeiture amount is the largest-ever criminal penalty following a conviction in a food safety case.”

    We won’t recount the long history of the Blue Bell saga here, but the company allegedly declined to initiate a recall or issue a formal notification to consumers after being informed that product samples had tested positive for Listeria monocytogenes. Subsequently, the strain detected in the products was linked to a strain that sickened consumers, and FDA inspectors found sanitation issues at the company’s manufacturing facilities.  Although the government charged the company’s former president, Paul Kruse, with seven felony counts, the court dismissed those charges in July 2020 because the government failed to use proper charging procedures.  With this corporate settlement, it is unknown whether the government will pursue any further charges against individuals.

    Separately, DOJ announced the issuance of an injunction against Fortune Food Product, a producer of sprouts and tofu products whose manufacturing operation was alleged by FDA to be in violation of certain requirements of the produce safety regulation and the current good manufacturing practice regulation for food.  FDA’s press release notes that this is “the first consent decree of permanent injunction against a firm or grower for violating public safety standards under the Produce Safety Rule enacted under the Food Safety Modernization Act of 2011.”  The company will be unable to resume production until it has complied with the terms of the injunction, effectively closing the company’s doors until it demonstrates to FDA’s satisfaction that it can produce compliant products.

    FDA Pre-Cert Program Update – Good Progress but Full Launch Not Yet in Sight

    FDA’s Software Pre-Certification (Pre-Cert) Program is intended to create a new streamlined regulatory process for software as a medical device (SaMD) (see our earlier blog posts on the program here, here, here, here, and here).  On September 14, 2020, FDA updated the Digital Health Software Precertification (Pre-Cert) Program website with a new summary document, Developing the Software Precertification Program:  Summary of Learnings and Ongoing Activities (Summary) and updated Frequently Asked Questions.  The Summary highlights FDA’s key learnings from the initial testing and the next steps planned for the program.  In short, the Agency appears to be addressing important questions in their development and testing of the Pre-Cert program.  However, three years into the process it is not clear when the program might be ready to move into its next phases of beta testing and eventual launch.

    As a refresher, the Pre-Cert program has four key components following a Total Product Lifecycle (TPLC) approach:

    • Demonstrate a culture of quality and organizational excellence through an Excellence Appraisal (pre-certification),
    • Determine the SaMD’s required review through a Review Determination Pre-Submission (Pre-Sub) meeting,
    • Conduct a Streamlined Review, and
    • Verify a SaMD’s continued safety, effectiveness, and performance and the organization’s commitment to culture of quality through post-market Real-World Performance.

    The Pre-Cert program was initially formed in 2017.  The Agency conducted research in 2018 and in 2019 entered what it refers to as the “build and iterate phase”  with publication of the Working Model 1.0 and 2019 Test Plan.  FDA has said that upon completion of the build and iterate phase, the program will move to beta testing with scaled-up testing of the program and finally transition from Pilot to Program.  No proposed dates have been given yet for these next phases.

    During the last year, FDA has continued to work with the nine pre-cert pilot companies and has also worked with new companies that volunteered to participate in the 2019 Test Plan.  While the test plan sought to include software developers that develop both low- and high-risk SaMDs as well as those that intend to develop a SaMD but are not considered a traditional medical device manufacturer in the test phase, it is not clear in the current Summary the type and number of companies that have been included beyond the nine pilot companies.

    Mock Excellence Appraisals were conducted with an interactive approach and a draft framework for a library of activities, processes, and Key Performance Indicators (KPIs) used by high performing organization has been developed.  FDA also tested and continues to test the Streamlined Review process.  Comparisons are made between premarket submissions that have undergone traditional review with the outcomes of a Streamlined Review package. The Streamlined Review package includes extracted elements from the Excellence Appraisal, Review Determination Pre-Sub, and the traditional premarket submission.  FDA’s summary notes that “FDA found that there was variability regarding the specific information needed from the masked software review elements to achieve a comparable outcome to current review practices,” concluding that further work is needed.  Summary at 4.  The Summary additionally notes challenges with defining SaMD products consistently and collection of ongoing Real-World Performance data.

    Next steps for the Pre-Cert Program include refinements across the program to “drive repeatability of the processes, improve the quality and quantity of information, provide clarity to internal and external stakeholders, and reduce the time burden on both internal and external stakeholders.” Id. at 6.  Per the Summary, the following are notable plans as the Pre-Cert programs continues to unfold:

    • Explore improvements to Excellence Appraisals to reduce variability and develop consistency across different SaMD developers,
    • Evaluate the usefulness and relevance of the software submission content in determination of SaMD market authorization and use that information to evaluate how information collected in Excellence Appraisals, Review Determinations, and Real-World Performance monitoring can be used for Streamlined Review,
    • Explore the use of technology, such as automated remote access to digital data, for collection of Real-World performance data,
    • Simulate scenarios to test interdependencies between the four components of the Pre-Cert program,
    • Determine criteria for maintaining Excellence Appraisal status, and/or the need for re-appraisals, and
    • Consider obtaining legislative authority to fully implement the Pre-Cert program as a new pathway for SaMD.

    With this update, the Agency is acknowledging several challenges that this program presents.  In moving Agency oversight from a periodic, product-focused review to a continuous review of both product and company, new burdens are introduced, and, for the program to be successful, it is imperative that the overall burden to industry is not increased over the current premarket review of design documentation and test results.  The Agency’s planned approaches to further refine and test the program appear sound and, if successful, should result in a useful program.  However, this update shows that there is still much work to do and that the promise of a streamlined regulatory process for SaMD that will allow developers to more quickly release new and modified products is not yet a reality.

    Categories: Medical Devices

    New York Opioid Stewardship Act: Take 2 from the Second Circuit

    On Monday, September 14, the United States Court of Appeals for the Second Circuit reversed the December 2018 opinion from the United States District Court for the Southern District of New York that invalidated the New York Opioid Stewardship Act (OSA).  In Association for Accessible Medicines v. James, the Second Circuit reinstates the New York OSA previously been invalidated by the District Court, with the exception of one key provision.

    The New York State Legislature enacted the OSA in September 2018 to raise $600 million over six years to address the ongoing costs to the state of New York in addressing the opioid crisis.  As detailed below, the annual $100 million “opioid stewardship payment” is assessed collectively on all registered opioid manufacturers and distributors that sell or distribute opioids in the state, each of which is responsible for paying a portion of the $100 million based on its market share of opioid sales in New York.  As originally enacted, the OSA included a “pass-through prohibition” that barred registrant from passing the costs of their opioid stewardship payments on to purchasers, including the ultimate consumer.  Registrants that violated the pass-through prohibition were subject to a monetary penalty of up to $1 million per violation.

    Various aspects of the OSA, including the pass-through prohibition, were challenged in three lawsuits brought by industry trade associations and an opioid manufacturer.  The plaintiffs argued that the pass-through prohibition violated the dormant Commerce Clause, which prohibits state laws from discriminating against interstate commerce, or favoring in-state commerce over out-of-state commerce.   New York moved to dismiss each case on jurisdictional grounds under the Tax Injunction Act (TIA), arguing that the opioid stewardship payment is a tax and is not subject to District Court review.  Under the TIA, “the district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.”  28 U.S.C. § 1341.  In a consolidated Opinion and Order issued December 19, 2018, the District Court held that neither the opioid stewardship payment, nor the pass-through prohibition is a “tax” under the TIA, and that the latter violated the dormant Commerce Clause.  Because the opioid stewardship payment requirement could not survive without the pass-through prohibition, the District Court held that the OSA was invalid in its entirety.

    After the District Court’s decision, the New York State Legislature enacted a new payment mandate, the opioid excise tax, that did not include a pass-through prohibition and the pass-through provision was not included in the State’s appeal.  On appeal, the Second Circuit determined that the opioid stewardship payment required under the OSA is a tax within the meaning of the TIA and is thus not within the subject matter jurisdiction of the District Court.  The Second Circuit reversed the District Court’s judgment invalidating the OSA, with the exception of the pass-through prohibition not included in the appeal.

    Under the current version of the OSA, each manufacturer and distributor registered in New York is required to submit an annual report detailing all opioids sold or distributed in the state.  The report must include gross revenue of all opioid sales, the number of containers and the strength and metric quantity of controlled substance in each container, and the total number of morphine milligram equivalents (MME) sold or distributed.  Annual  reports must be submitted on April 1 of each year based on the actual opioid sales and distributions of the prior calendar year.  The reports are used to determine the “ratable share” of the opioid stewardship payment owed by each manufacturer and distributor.  A registrant’s ratable share is calculated by dividing the total MMEs sold by the registrant in New York by the total amount of MMEs sold by all registrants.  For example, if a Registrant A sold a total of 100,000 MMEs in New York in one year and all registrants sold a total of 10,000,000 MMEs, Registrant A’s ratable share of the opioid stewardship payment is 1% or $1 million.

    New York is required to notify registrants of their ratable share by October 15, based on opioids sold or distributed for the prior calendar year.  Given that the District Court had previously struck down the OSA as unconstitutional, it is our understanding that registrants would not have submitted an annual report on April 1, 2020 for 2019 opioid sales.  However, registrants likely should anticipate submitting an annual report by April 1, 2021 covering 2020 opioid sales in New York State.  The state will then notify registrants of their ratable share for 2020 sales by October 15, 2021.  Registrants will be required to pay their ratable share of 2020 opioid sales quarterly beginning January 1, 2022.  Failure to comply with the OSA may result in a civil penalty up to $1,000 per day.  Additionally, if the registrant fails to pay its ratable share, the state may also assess a penalty of 10-300% of the registrant’s ratable share.

    Note that the OSA stewardship payment is wholly separate from the aforementioned excise tax on the sale of opioids, which is part of the state’s tax law and not the controlled substance law.  On April 12, 2019, after the District Court struck down the OSA as unconstitutional, Governor Cuomo signed a budget bill that included the opioid excise tax.  The excise tax, which went into effect July 1, 2019, is imposed on the first sale of an opioid unit in New York State by a registrant.  Generally, the “first sale” is the transfer of title from a registrant to a purchaser for consideration.  “First sale” does not include the dispensing of an opioid prescription to the end user, or the transfer of title of an opioid unit from a manufacturer in New York to a purchaser outside New York when the opioid will be used or consumed outside the state.  It is presumed that every sale of an opioid by a registrant within or into New York is the first sale unless it is established otherwise.  The New York Department of Health publishes a list of drugs that are subject to the opioid excise tax, as well as an MME calculation guidance.  The excise tax is also assessed based on the MME, but there are separate tax rates depending on the product’s wholesale acquisition cost (WAC):

    • $0.0025/MME for opioids with a WAC of less than $0.50 per unit
    • $0.015/MME for opioids with a WAC of $0.50 or more per unit

    All first sales must be reported on a quarterly opioid excise tax return and paid no later than the 20th day of the month following the quarter in which the opioid was sold.  Registrants must file a return even if they had no sales during the quarter.  The first required filing was due January 21, 2020 and covered an extended period beginning July 1, 2019, and ending December 31, 2019.  The filing for the current July 1 – September 30 period is due October 20, 2020.

    As it currently stands, it is our understanding that both the OSA (minus the pass-through provision) and the opioid excise tax remain in effect.  It is unclear whether New York will reconsider the opioid excise tax in light of the reinstatement of the OSA.   Hopefully further clarification from the state will be forthcoming.

    Californovation? California is Set to Become a Drug Manufacturer

    Californovation (sung to the tune of the Red Hot Chili Peppers’ Californication, obviously): the new portmanteau seems appropriate for California, who just keeps coming up with new ideas to address the many hurdles consumers face with respect to access to affordable medicines.  Last year, we wrote about California’s adoption of the controversial AB 824, designed to address anticompetitive agreements that may keep generic drugs from entering the market (thereby inflating drug prices for consumers), in an effort to control drug prices at the state level.  Now, California has passed another bill to address drug pricing – this time introducing additional competition at lower prices by supplementing the drug supply chain with state-sponsored drugs.

    The California legislature passed SB 852 in early September, and it may be the first legislation of its kind in the  U.S.  The bill essentially allows California to become a drug manufacturer.   It doesn’t quite nationalize drug manufacturing (or whatever the state version of nationalizing would be), but it requires the state of California to partner with industry to “produce or distribute generic prescription drugs and at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings” in an effort to “increase patient access to affordable drugs.”  Specifically, California would engage in drug production only “to produce a generic prescription drug at a price that results in savings, targets failures in the market for generic drugs, and improves patient access to affordable medications.”

    SB 852 directs the California Health and Human Services Agency (“CHHSA”) to enter into partnerships “resulting in the production or distribution of generic prescription drugs” to be made available to both public and private purchasers.  Under the statutory definition, a “partnership” includes contracts or purchasing agreements for the procurement of generic prescription drug with a payer, state governmental agency, group purchasing organization, nonprofit organization or entity.  The statute doesn’t specify exactly how these partnerships will work, but it is clear that these partnerships must be for the “manufacturing or distribution of generic prescription drugs.”  Because any drug resulting from the CHHSA-led partnership must be produced or distributed by a drug company registered with FDA, at least one drug manufacturer will likely be a part of the partnership even if not explicitly called for under the “partnership” definition.

    The statute requires CHHSA to identify and prioritize the production of generic drugs that would have the greatest impact on lowering drug costs to patients or purchasers, increasing competition and addressing shortages, improving public health.  CHHSA must prioritize drugs for chronic or high-cost conditions, including an insulin.  For each top drug identified, CHHSA must determine whether a viable pathway exists for a partnership based on the relevant legal, market, policy, and regulatory factors.   Once the drugs have been identified, CHHSA then sets a price based on user fees, ANDA acquisition costs amortized over five years, mandatory rebates, contracting and production costs, research and development costs, and other initial start-up costs amortized over five years.  Once developed, the drugs will be made available to all purchasers at a transparent price and without rebates (unless federally required).  The statute requires CHHSA to report to the Legislature on the feasibility of directly manufacturing prescription drugs, as well as the drugs selected and activities undertaken.

    This is a really interesting approach to the drug affordability problem that FDA has been trying to address (even if it may be outside the Agency’s statutory mandate) for years.  But the mandated drug production and/or distribution partnership raises many questions, particularly if the partnership is executed from production.  The legislation requires CHHSA to select drugs based on priority and the need for competition, but often those high priority, expensive drugs are still subject to patents and exclusivity periods.  As a result, development costs could include potential Paragraph IV challenges, or, in the case of insulin and other biologics, the BPCIA patent dance.  Could those be included in the pricing calculations?  Or will this exercise instead be limited to the Off-Patent Off-Exclusivity list?

    Novel approaches often result in a myriad of legal challenges.  So while California continues to innovate and think outside the box in an effort to address drug pricing, surely someone in the industry is thinking of ways to challenge SB 852.  Governor Newsom has until September 30 to sign the bill. He proposed a similar plan in January 2020, so it’s unlikely that this will be a tough sell for him.

    Trump Embraces International Reference Pricing in Executive Order

    As we reported in a previous post, Donald Trump several weeks ago threatened drug manufacturers with the prospect of an Executive Order mandating international reference price limitations, unless the manufacturers put forward proposals to significantly reduce drug prices by August 24.  On Sunday, September 13, not having elicited the desired reaction from manufacturers, Trump issued the threatened Executive Order on Lowering Drug Prices by Putting America First.  The Order first directs the Secretary of the Department of Health and Human Services (HHS) to “immediately implement his rulemaking plan” to test a payment model under Medicare Part B, under which Medicare would pay no more than a “most favored nation price” for certain high-cost prescription drugs.   That price would be the lowest price for a drug that the manufacturer sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product, adjusted for volume differences and differences in national gross domestic product.  There is no further explanation of how these adjustments should be made.  In directing the HHS Secretary to “implement his rulemaking plan,” the Order presumably was referring to an Advance Notice of Proposed Rulemaking (ANPR) issued by HHS in November 2018 which proposed to implement an international reference pricing payment model under the auspices of the CMS Center for Medicare and Medicaid Innovation (CMMI).  See 42 U.S.C. § 1315a(b).  (Click here for our post on the ANPR.)  HHS has not taken any action on that ANPR to date.

    In addition, the Order extends the international reference pricing concept to Medicare Part D, which was not contemplated in HHS’s earlier ANPR.  Therefore, the Order directs HHS to “develop and implement a rulemaking plan,” again under the auspices of CMMI as authorized in 42 U.S.C. 1315a(b), to limit Medicare payment to the most favored nation price for Part D drugs where insufficient competition exits and seniors are faced with prices above those in comparable OECD countries.  The CMMI model would test whether limiting prices to the most favored nation price would mitigate poor clinical outcomes and increased expenditures on drugs.

    Ironically, both the Part B and Part D mandates of the Order rest on the authority of 42 U.S.C. 1315a(b) – which was enacted in 2010 as part of the Affordable Care Act.  In a case pending before the Supreme Court, the Trump Administration is seeking to invalidate the Affordable Care Act in its entirety on constitutional grounds.  See Brief for the Federal Respondents, State of California, et al. v. State of Texas, et al., Nos. 19-840 and 19-1019.  Oral argument is scheduled for November 10.  If the Administration prevails in that case, one of the more minor consequences will be the invalidation of this Executive Order.  In addition, a change of administration in January may result in the revocation of this Executive Order (among many others) and/or withdrawal of the mandated HHS proposed regulations, as often happens after a change in administration.  If final regulations are ever issued, there is a strong possibility of a legal challenge from the drug manufacturer industry, which is strenuously opposed to international reference pricing.

    Despite these uncertainties, the significance of this Executive Order should not be minimized.  International reference pricing was proposed by the Obama Administration in 2016 (see our post here), was reintroduced by this Administration in the HHS ANPR in 2018, and was incorporated into H.R. 3, the drug pricing bill passed by the House on December 12, 2019.  Although international reference pricing was not included in S. 4199, the Republican-sponsored Senate drug pricing bill introduced by Senator Grassley on July 2, it is now definitively being championed by Trump.  Regardless of the fate of this Executive Order or the result of the upcoming election, this bipartisan concept will not go away soon.

    How to Stay In Touch With Your Customers During the Coronavirus Pandemic

    On Tuesday, September 15, at 8:00 am, Hyman,Phelps & McNamara, P.C. Director Gail Javitt will moderate a one hour webinar sponsored by the Maryland Israel Development Center (MIDC), titled “How to Stay In Touch With Your Customers During the Coronavirus Pandemic.”  The webinar will feature a panel of experts who will share their strategies for navigating the “new normal” to continue to communicate meaningfully with customers and prospects and meet customer needs.

    Panelists:

    • Steve Mensh, Senior Vice President, Textron Electronic Systems and Geospatial Solutions, a global aerospace and defense company, keeps his finger on the pulse of customers’ needs, sets the strategic path to provide solutions and executes all new product and business development programs.
    • Tim West, Vice President of Sales, Advance Business Systems, a managed IT services and document management company, leads new business development programs and services that keep the firm at the top of its industry.
    • David Warshawski, Founder and CEO of Warshawski, a full-service marketing, branding and communications firm, has worked with leading global companies to position them in front of their customers including Adidas, Black & Decker, Boeing, Credit Suisse, GlaxoSmithKline, Microsoft and the International Olympic Committee.

    See here for registration information.

    Categories: COVID19 |  Miscellaneous

    FDA Law Alert – September 2020

    During these unprecedented times, Hyman, Phelps & McNamara, P.C. is pleased to bring you the next installment of our quarterly newsletter highlighting key postings from our nationally acclaimed FDA Law Blog.  Please subscribe to the FDA Law Blog to receive contemporaneous posts on regulatory and enforcement activities affecting the broad cross-section of FDA-regulated industry.  As the largest dedicated FDA law firm, we are happy to help you or your clients navigate the nuances of the laws and regulations affecting them.

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    DEA

    • Larry Houck deciphers the Drug Enforcement Administration’s (DEA) stated justification of its recent increase of registration and renewal fees affecting facilities handling controlled substances.  Houck analyzes the underlying fee calculation methodology as well as the conditions under which DEA will refund registration fees.

    Medical Devices

    • Gail JavittJeffrey GibbsRichard Lewis, and McKenzie Cato provide a “mid-mortem” analysis of FDA’s response to COVID-19 and propose potential areas of improvement.  The authors review FDA’s policy concerning laboratory developed tests, a lack of regulatory predictability for serological tests, unclear communication from the Agency regarding changing review priorities, and an over-extension of FDA’s capabilities leading to industry frustration over a lack of feedback.
    • Jeffrey Shapiro answers the difficult question of whether a company can lawfully advertise a device that has a pending Emergency Use Authorization (EUA).  Shapiro undertakes a close reading of the pertinent FDA policy, Compliance Policy Guide (CPG) 300.600, that has stood for over 40 years and, in the absence of FDA clarification, opines on whether such promotion is allowed.

    Food Labeling

    • Riëtte van Laack describes FDA’s temporary guidance providing flexibility to food manufacturers facing COVID-19-related supply chain issues, and permits manufacturers to substitute hard-to-get ingredients in food labeling.  This is FDA’s fifth announcement of flexibility regarding food labeling regulations.

    Drug Development

    • Deborah Livornese discusses FDA’s guidance as it applies to “compassionate use” determinations by investigational review boards (IRBs) and clinical investigators when reviewing individual patient access requests.  FDA issued this guidance in response to a substantial uptick in the number of requests for COVID-19 investigational drugs.
    • In this post, Mark Schwartz describes FDA’s proposed review standards for COVID-19 vaccines under the public-private partnership Operation Warp Speed.  Operation Warp Speed heralds questions and concerns such as undue political pressure as well as risks from a potentially abbreviated review cycle and novel technological platforms.
    • Larry Bauer and James Valentine detail their experiences with adapting externally led patient-focused drug development (EL-PFDD) meetings to adjust to the unprecedented disruptions presented by COVID-19.  In the face of social distancing, mask requirements, and other efforts to “flatten the curve,” HPM and several patient communities have successfully come together to represent and capture the voice of patients, as well as caregivers, regarding disease symptoms, the impacts of those symptoms on daily life, current treatments, and hopes for future treatments.  As of August 28, 2020, there have been five virtual EL-PFDD meetings.

    Healthcare

    • Alan KirschenbaumMichelle Butler, and Faraz Siddiqui discuss a proposed rule published by the Centers for Medicare & Medicaid Services (CMS) that seeks to implement statutory amendments to the Medicaid Rebate Program statute while also including CMS’s own policy proposals concerning value-based purchasing arrangements and patient copay assistance.
    • In this post, Faraz Siddiqui and Alan Kirschenbaum describe litigation vacating a drug price transparency rule published by the CMS.  This rule would have required pharmaceutical manufacturers to disclose the Wholesale Acquisition Cost (WAC) in direct-to-consumer advertisements for certain prescription drugs and biological products.

    Litigation

    • Anne Walsh and John Fleder highlight a recent Supreme Court decision, Liu v. Securities and Exchange Commission, that may lead to future challenges to FDA’s and the Federal Trade Commission’s (FTC) presumed ability to secure disgorgement and restitution awards.  Indeed, since publication of the post, the Supreme Court granted the petition for a writ of certiorari in FTC v. Credit Bureau Center, so look for our next update on this litigation.
    • Karin Moore describes a D.C. Circuit Court decision striking down FDA’s regulations requiring extensive health warnings on packaging and in advertising for cigars and pipe tobacco.  The court found that FDA had violated both the Tobacco Control Act (TCA) and the Administrative Procedure Act (APA) by failing to study the effectiveness of such health warnings.

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    Hyman, Phelps & McNamara, P.C. has its finger on the pulse of FDA law.  Our technical expertise and industry knowledge are exceptional in scope and depth.  Our professional team holds extensive experience with the myriad of issues faced by companies.  Please contact us with any questions you may have related to the issues described here or any other FDA-related issue affecting your industry.

    Regulation and Utilization of Digital Health in Clinical Trials

    Hyman, Phelps & McNamara, P.C. Director Jeff Shapiro will be moderating “Digital Health Session 1: Bonus Session – Regulation and Utilization of Digital Health in Clinical Trials” as part of the Food and Drug Law Institute’s Digital Health Conference on September 10.  Jeff’s panel will focus on the use of digital health tools in pharmaceutical clinical trials.  One of the speakers is FDA’s Dr. Leonard Sacks, MD, Office of Medical Policy, Center for Drug Evaluation and Research.

    Overall, this one-day all-virtual event will focus on developments in digital health regulation pre‑and post-COVID-19, including significant enforcement discretion policies and exemptions FDA has implemented over the past six months.

    Sign up for the Digital Health Conference with the discount code save15 for 15% off registration:  https://bit.ly/3iMcKa8.

    Categories: Medical Devices

    CDRH Issues Draft Guidance Regarding Patient Reported Outcomes

    In recent years, FDA has sought to increase the patient perspective in its regulatory decision making.  One way this is accomplished is through use of patient‑reported outcome (PRO) measures in clinical studies.  PROs can assess concepts that are unobservable to clinicians and are only know to the patient (e.g., pain intensity, anxiety, and how bothersome a condition is to a patient).  This concept can be particularly important for medical products that treat disease states primarily defined by patient perception/complaint.  PROs can be used in a wide range of manners in clinical studies including for example to assess inclusion/exclusion, and/or as primary endpoints, secondary endpoints, and/or exploratory endpoints.

    CDRH has, recently, sought to provide additional information regarding use and acceptance of PROs in regulatory decision making, including through publication of PRO case studies and a PRO Compendium outlining instances in which PROs were used in clinical studies in fiscal years 2014 through 2017 (both available here on CDRH’s PRO page).   Even with this recent focus on PROs in clinical studies, in our experience, it can still be challenging for sponsors to know whether PRO data may be accepted as a measure of safety and effectiveness.

    On August 31, CDRH published a new draft guidance, Principles for Selecting, Developing, Modifying, and Adapting Patient-Reported Outcome Instruments for Use in Medical Device Evaluation, aimed at giving sponsors some additional insight on this topic.  Importantly, the guidance notes that “information from well-defined and reliable PRO instruments can provide valuable evidence for benefit-risk assessments and can be used in medical device labeling to communicate the effect of a treatment on patient[s] . . . when the use is consistent with the PRO instrument’s documented and supported measurement properties.”

    The draft guidance describes overarching principles to consider when assessing whether a PRO meets these criteria, including recommendations about ensuring the PRO is fit-for-purpose and best practices for ensuring that “relevant, reliable, and sufficiently robust PRO instruments” are used in device clinical studies.  In order to demonstrate that a PRO is fit-for-purpose, the draft guidance lays out three factors:

    • Is the concept being measured by the PRO instrument meaningful to patients and would a change in the concept of interest be meaningful to patients?
    • What role (e.g., primary, key secondary, or exploratory) will the PRO instrument serve in the clinical study protocol and statistical analysis plan?
    • Does the evidence support its use in measuring the concept of interest as specified in the clinical study protocol and statistical analysis plan?

    These are important points, and while they may seem obvious, it is not always clear whether a PRO instrument will fulfill them to the Center’s satisfaction.  The draft guidance does not give any indication as to the level of evidence required for a PRO to be fit-for-purpose.  Indeed, in our experience, even when a disease-specific, validated PRO is used as a primary endpoint for its intended purpose, it can be met with resistance during premarket review, particularly when the PRO has not previously been used as a primary effectiveness measure.

    The draft guidance notes several times that sponsors should consider discussing novel (in that it has not previously been relied upon in premarket decision making) and modified PROs with the Center in a pre-submission prior to inclusion in a clinical study.  In such a pre-submission, sponsors should ensure they address each of the above‑described elements in as much detail as possible to convince the Center that the proposed PRO is fit-for-purpose.

    The draft guidance also provides practical considerations for PRO development including ensuring that PRO instruments are written in plain language easily understood by patients, and providing PRO instruments in multiple languages, where appropriate, to capture health outcomes from patients with limited English proficiency. If a PRO instrument is newly developed or modified from an existing instrument, it must be appropriately validated.  The draft guidance notes that while a PRO may be validated as part of a sponsor’s clinical study, the results of the PRO from such study cannot then be presented in the sponsor’s labeling.  An additional study of the device using the PRO would be necessary.  This approach is consistent with the Center’s view that separate development and validation data sets are necessary to ensure reliability of device and the tools used to assess their safety and effectiveness.

    Bottom line: the draft guidance provides helpful insight into understanding the Center’s thinking regarding use of PRO in medical device clinical studies.  In our view, it would be helpful to elaborate on how much evidence is necessary to establish that a PRO is fit-for-purpose and how the level of evidence changes depending on whether a PRO is being used as a primary endpoint as compared to a secondary or exploratory endpoint.  Even without this detail, however, the information in this draft guidance should help sponsors as they craft justifications for use of PRO measures in device clinical studies.

    Categories: Medical Devices

    Join Our Team: Hyman, Phelps & McNamara, P.C. Seeks Device and Drug Development Attorneys

    Device Attorney

    HP&M seeks to add an associate to its thriving device practice.  We assist medical device manufacturers with product development, FDA approval and clearance, and post-market compliance.  Qualified candidates should have familiarity with premarket strategies, including:

    • Investigation Device Exemption requirements
    • Premarket Notifications (510(k) clearances)
    • Premarket Approval Applications (PMAs)
    • De Novo Petitions
    • Pre-submissions
    • Product classification and reclassification

    The boutique, collaborative nature of this team allows attorneys to work closely with clients and in-house regulatory experts to bring exciting new technologies to market.  Strong verbal and writing skills are required.  The ideal candidate will have experience working at FDA or with a medical device company, and prior big law firm experience is helpful.

    Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.  Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

    Drug Development Attorney

    We are seeking an attorney to work with our drug development team. The attorney must possess at least two years of relevant experience in the drug development arena, either by working at FDA or by assisting companies develop product development strategy or navigate the regulatory process.  Strong verbal and writing skills are required.  Compensation is competitive and commensurate with experience.  HP&M is an equal opportunity employer.

    Please send your curriculum vitae, transcript, and a writing sample to Anne K. Walsh (awalsh@hpm.com).  Candidates must be members of the DC Bar or eligible to waive in.

    Categories: Jobs

    PTE Countdown (Or Not?!?): 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 (Read to a Funky Soundtrack and Vocals by The Pointer Sisters)

    For those of us of “a certain age,” the original “Sesame Street” recalls fond memories: Mr. Hooper, Mr. Snuffleupagus (when only Big Bird could see Snuffy), and those catchy songs like “C Is For Cookie” and, of course, “Pinball Countdown” – those animated segments with a funky soundtrack with vocals by The Pointer Sisters that teaches children to count to 12 by following the journey of a pinball through a fanciful pinball machine.

    “Pinball Countdown” is quite the earworm, and it rang in this blogger’s mind as I counted the number of Patent Term Extension (“PTE”) requests submitted – and still pending – based on the 2018 NDA approvals for Array Biopharma Inc.’s (“Array’s”) MEKTOVI (binimetinib) Tablets (NDA 210498) and BRAFTOVI (encorafenib) Capsules (NDA 210496).  Array filed six PTE applications in four U.S. Patent Nos. 7,777,050; 8,178,693; 8,193,229; and 8,513,293 based on the approval of MEKTOVI (two PTE applications were filed in each of the ‘050 and ‘229 patents), and six PTE applications in four U.S. Patent Nos. 8,501,758; 9,314,464; 9,593,099; and 9,593,100 based on the approval of BRAFTOVI) (two applications were filed in each of the ‘758 and ‘464 patents).  You can access those PTE applications at FDA-2019-E-3050; FDA-2019-E-3051; FDA-2019-E-3052; FDA-2019-E-3054; FDA-2019-E-3056; FDA-2019-E-3063; FDA-2019-E-3064; and FDA-2019-E-3073.

    While it is not unusual for a company to submit multiple PTE applications for multiple patents based on the approval of a marketing application and then make an election as to which patent term to extend based on a single Regulatory Review Period (“RRP”), or for a company to request (and be granted) multiple PTEs based on multiple NDA (or BLA) approvals, the PTE applications for MEKTOVI and BRAFTOVI raise an important matter of first impression: It is Array’s contention that both the BRAFTOVI and MEKTOVI approvals involved four non-same RRPs based on different INDs and NDAs, making four patents eligible for PTE for each approval.

    But before we delve into Array’s legal argument, some background on PTEs is in order . . . . because it’s going to be a bumpy ride from here . . .

    Under Title II of the Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984) (“Hatch-Waxman Amendments”) and 35 U.S.C. § 156, certain patents related to products regulated by FDA are eligible for extension if patent life was lost during a period when the product was undergoing regulatory review.  The “regulatory review period” is composed of a “testing phase” and a “review phase.”  For a drug product, the “testing phase” begins on the effective date of an IND, and ends on the date a NDA is submitted to FDA.  The “review phase” is the period from NDA submission to the date of FDA’s approval of an NDA.  A patent term may be extended for a period of time that is the sum of one-half of the time in the “testing phase” (minus any time before patent issuance), plus all the time in the “review phase” (minus any time before patent issuance), including the time an applicant uses to respond to a Complete Response Letter.  The “regulatory review period” must be reduced by any time that the applicant “did not act with due diligence.”  The total (calculated) regulatory review period may not exceed five years, and the extended patent term may not exceed fourteen years after the date of approval of the marketing application.  In some cases, the term of a patent that is scheduled to expire before the PTO can issue a certificate of extension can be extended on an interim basis.  There are two types of interim PTEs: (1) interim patent extensions available during the “review phase” of the statutory “regulatory review period;” and (2) interim patent extensions available during the PTO’s review of an application for PTE.

    The PTE statute states (at 35 U.S.C. § 156(c)(4)) that “in no event shall more than one patent be extended . . . for the same regulatory review period for any product.”  For quite some time now, the PTO has interpreted 35 U.S.C. § 156(c)(4) to permit multiple PTEs under certain circumstances (as well as multiple interim PTEs).  Specifically, for a drug product covered by several patents PTO may extend a different patent for each NDA approved on the same first day (even when multiple NDAs share common “testing phase” and a “review phase” dates).  That is, the PTO considers each NDA “regulatory review period” to be distinct and for which a PTE is available.  We’ve posted on this issue several times over the years – see here, here, and here.

    Array presents a new twist on the multiple PTE argument.  The following is taken from one of the BRAFTOVI PTE applications, but the argument is the same for the MEKTOVI PTE applications:

    For many drug products, clinical testing and FDA approval involve a single IND and NDA. In these situations, only one RRP will exist and only one patent will be eligible for term extension. In other cases, however, due to the complexity of the clinical trials or for FDA’s “administrative convenience,” multiple INDs or NDAs may be required for FDA approval. For drug products reviewed under multiple INDs or NDAs, multiple RRPs will exist and multiple patents will be eligible for term extension.

    For example, if multiple NDAs for the same new drug product are approved simultaneously (to meet the statutory “first permitted commercial marketing” requirement discussed further below), non-same RRPs have been found to exist and multiple patent terms have been extended.  This has occurred where the NDAs reference the same underlying IND and even when the NDA and IND reviews occur over identical time frames.  Each IND/NDA combination was determined as not being the “same” RRP under§ 156(c)(4) and each provided the legal basis for a patent term extension.

    For this to happen, the Patent Office had to interpret “same regulatory review period” in 156(c)(4) as not referring to a same time period but rather, referring to a same substantive regulatory activities and review undertaken by FDA.  In other words, if the regulatory information produced and reviewed by FDA during any RRP is different from the regulatory information of any other RRP, they would be considered not to be the “same” even if the underlying IND and NDA time periods overlap or are identical.

    Under the Patent Office’s interpretation of the statute, non-same RRPs can be found to exist for the same product approval whether they are due to multiple NDAs and/or multiple INDs, as long as the underlying information reviews are different. Indeed, the statutory purpose of an RRP is to compensate a patentee for lost term associated with FDA review.  It should not matter, therefore, whether that term is lost due to multiple NDAs or multiple INDs as the outcome will be the same lost term due to regulatory delays in either event.

    In the case of BRAFTOVI™, four separate INDs were required for the clinical studies and investigations that went into FDA drug product approval.  Accordingly, each IND contributed to a regulatory delay represented by the following non-same RRPs:

    • RRP#l: IND 111003 + NDA 210496
    • RRP#2: IND 117085 + NDA 210496
    • RRP#3: IND 113850 + NDA 210496
    • RRP#4: IND 120738 + NDA 210496

    Based on these non-same RRPs for BRAFTOVI™, four separate patents are eligible for term extension.

    The PTO is already putting up a fight on the legal argument Array has raised.  In a letter to FDA, the PTO comments: “It would appear that contrary to there being four separate ‘non-same’ regulatory review periods which gave rise to the single approval, it is the combination of the information from the four INDs that provided sufficient data to support the approval of the single NDA for BRAFTOVI® (NDA 210496).”  To that end, the PTO requests that FDA confirm “that the product identified in the application, BRAFTOVI® (encorafenib), has been subject to a SINGLE regulatory review period within the meaning of 35 U.S.C. § 156(g) before its first commercial marketing or use as the term ‘regulatory review period’ has been interpreted and implemented by FDA.”

    Array responded to the PTO back in May 2019 in a 14-page letter stating, in part:

    In previous cases where a product approval involved multiple RRPs, FDA determined that two RRPs would not be considered the “same” if the first product approval involved separate NDA review periods, even if the NDAs relied on the same investigational new drug (IND) review period (see e.g., OMNICEF®, ADCETRIS®, MYCAMINE®).  Moreover, two RRPs were not considered to be the “same” even where the combined IND and NDA review periods were identical in time (see e.g. LYRICA®).  However, the only way to square these non-sameness determinations with Section 156(c)(4) is for FDA to construe the term “same” to mean the same information undergoing regulatory review and not the same period of time under which the regulatory review takes place.  Thus, FDA appears to consider multiple RRPs not to be the “same” as long as they involve the review of different regulatory information for product approval, even if some or all of the IND and/or NDA periods overlap.

    Consistent with this FDA precedent, the four RRPs identified in each of the Array PTE applications must also be determined as not being the “same” under Section 156(c)(4), because each involves the review of regulatory information that is different from the information under review in every other RRP. Accordingly, FDA must reject the recommendations in the USPTO’s advisory letter and make the determination that four non­same RRPs exist for each of the BRAFTOVI® and MEKTOVI® approvals.

    The Array PTE requests and dockets have been on our radar for some time.  Moreover, the same legal argument was raised for a second time in the context of PTE applications for VITRAKVI (larotrectinib) Capsules (NDA 210861) and Oral Solution (NDA 211710) (see Docket Nos. FDA-2019-E-5681FDA-2019-E-5682; FDA-2019-E-5663; and FDA-2019-E-5662), and for a third time in the context of PTE applications for patents covering a medical device, TherOx Downstream System, with multiple Investigational Device Exemptions and a single Premarket Approval (see the patent image file wrapper for each of U.S. Patent Nos. 8,246,564; 7,820,102; and 6,582,387).  So why are we blogging on the issue now?

    Well, there’s been a development that could not only throw Array’s arguments into . . . um . . . “disarray” . . . but that could call into question any multiple PTEs granted by the PTO.

    Earlier this week, when the non-Beta version of Regulations.gov was operational (because the new, and not too user-friendly, Beta version currently operates only on Tuesday and Thursday – see our previous post here – and searching is a pain), several new PTE dockets popped up in which Nabriva Therapeutics GMBH (“Nabriva”) requests multiple PTEs for different patents based on FDA’s August 19, 2019 approval of two NDAs for XENLETA: NDA 211672 for XENLETA (lefamulin) Tablets, and NDA 211673 for XENLETA (lefamulin) Injection.  You can access those PTE requests at Docket Nos. FDA-2020-E-1839; FDA-2020-E-1840; FDA-2020-E-1841; FDA-2020-E-1842; and FDA-2020-E-1843.

    OK . . . so a request for multiple PTEs based on different NDA approvals is nothing new.  But what’s shocking is a July 13, 2020 letter from the PTO to FDA contained in each XENLETA PTE docket.

    Styled as a “REQUIREMENT FOR INFORMATION PURSUANT TO 37 C.F.R. §1.750,” the PTO does an about-face on the availability of multiple PTEs:

    The issue is whether 35 U.S.C. § 156 permits a patent owner who owns more than one patent to obtain more than one patent term extension for the same FDA approved product.  Applicant has filed multiple PTE applications directed to the same product (lefamulin). If applicant contends that more than one patent may be extended based on the approval of lefamulin, then applicant is required to provide legal support pursuant to 35 U.S.C. § 156, expressly demonstrating that the statute permits multiple term extensions based on the same product.  Absent a convincing showing, the Office plans to issue only one PTE directed to XENLETA® (lefamulin), provided that the requirements of 35 U.S.C. § 156 are met. . . .

    Although both FDA approvals received the same date, they cannot both be considered as “first” approved under § 156(a)(5)(A) and they cannot both constitute distinct regulatory review periods under§ 156(a)(4).  These interpretations go against the plain statutory language, which states:

    “the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred.”  There cannot be more than one “first permitted commercial marketing or use” of the product or more than “a” (single) regulatory review period of the product, subject to patent term extension.  Id.  Additionally,§ 156(c)(4) states that “in no event shall more than one patent be extended under subsection (e)(l) for the same regulatory review period for any product.”  Hence, subsection (c)(4) limits the right of a patent owner to obtain more than one extension based on time lost for the “same” regulatory review period for “any product.” See, 35 U.S.C. § 156(c)(4) and 37 C.F.R. § 1.785(b).

    The PTO goes on to cite Novartis AG v. Ezra Ventures LLC, 909 F.3d 1367 (Fed. Cir. 2018), Arnold Partnership v. Rogan, 246 F. Supp.2d 460 (E.D. Va. 2003), and even (curiously) Biogen lnt’l v. Banner Life Sciences LLC, 956 F.3d 1351 (Fed. Cir. 2020) as supposed legal support for its position.  PTO then concludes the letter with the following paragraph and footnote acknowledging a change in position:

    Section 156 does not allow for multiple extensions of patents beyond the one patent per one approved product.  The regulatory review period of XENLETA® (lefamulin) can be used as a basis for extension of only one patent.  See 35 U.S.C. § 156(c)(4) and 37 C.F.R. § 1.785(b).  Therefore, the Office plans to limit applicant to extending only one patent for the approved product (lefamulin).1

    1The Office acknowledges that in the past it has permitted more than one extension when multiple forms of administration of the same drug product were applied for and approved by the FDA on the same day.  However, the Office believes that the proper interpretation of the statute, especially in light of recent court decisions discussed in this requirement for information, mandates that only a single patent be extended for any given drug product, regardless of the number of forms of administration approved by the FDA.

    This is quite a bombshell!  We suspect the PTO will find itself in court trying to defend any final determination on multiple PTEs (maybe in the context of multiple PTE requests that were on the verge of being granted, such as for BAXDELA and BRIVIACT, but are now subject to letters like this).  And if the PTO is ultimately successful, then that decision could spawn litigation to invalidate previously-granted PTEs.  What a mess this could be!

    Tick Tock, Goes The Clock . . . October 1st is Fast-Approaching

    No, “Tick Tock, Goes The Clock” is not a reference to Doctor Who poetry, Ke$ha (TiK ToK), or to that “TikTok” destination for mobile videos that’s been in the news recently.  We’re talking about the countdown to October 1, 2020, when the Fiscal Year 2021 (“FY21”) Generic Drug User Fee Amendments of 2017 (“GDUFA II”) fees go into effect.

    FDA announced the FY21 fee rates in August.  That announcement usually triggers companies to consider what they can do to potentially lessen the effect of the annual user fee burden – and, in particular, the annual Program Fee.  That fee is based on the number of ANDAs owned by a company (including affiliates), which results in a company being placed into one of three tiers: a large size operation (20 or more ANDAs; $1,542,993 FY21 fee), a medium size operation (6-19 approved ANDAs; $617,197 FY21 fee), or a small business operation (1-5 approved ANDAs; $154,299 FY21 fee).

    The year-over-year up-and-down fluctuations in user fee rates we’ve seen thus far under GDUFA II continue for FY21 – especially for the annual Program Fee – as shown in the tables below.  Those fluctuations are attributable to several factors, including the changing landscape of generic drug manufacturers: there were 258, 177, 199, and 220 small size operations in FYs 2018, 2019, 2020, and 2021, respectively; 52, 49, 63, and 60  medium size operations in FYs 2018, 2019, 2020, and 2021, respectively; and 62, 57, 63, and 72 large size operations in FYs 2018, 2019, 2020, and 2021, respectively.

    In a post last week concerning ANDA consolidation we pointed out one way for generic drug manufacturers to potentially lessen the effect of the annual Program Fee burden.  A second way, as we’ve noted before, is to consider 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 GDUFA II.  The company’s website explains how the system works (see here).  And it seems that they’ve been pretty successful in implementing that system.  According to our data, as of April 30, 2020, ANDA Repository LLC owned 130 ANDAs.