Author: Matthew Nelson

Infrastructure Bill Set to Delay Trump-era Rebate Rule to Raise Cash

Infrastructure Bill Set to Delay Trump-era Rebate Rule to Raise Cash

By Faraz Siddiqui

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

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

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

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DEA Tweaks DEA-222 Supplier Information Requirement

DEA Tweaks DEA-222 Supplier Information Requirement

By Kurt R. Karst

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

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

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

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

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

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ACI’s 37th Annual FDA Boot Camp (Virtual Conference)

ACI’s 37th Annual FDA Boot Camp (Virtual Conference)
The American Conference Institute’s (“ACI’s”) popular “FDA Boot Camp” – now in its 37th iteration – is scheduled to take place from September 29-30, 2021 (Eastern Standard Time). The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.  And like a lot of conferences over the past 18 months, the ACI conference format has changed from a live, in-person event to an interactive, virtual conference.

ACI’s FDA Boot Camp will provide you not only with the essential background in FDA regulatory law to help you in your practice, but also key sessions that show you how this regulatory knowledge can be applied to situations you encounter in real life. A distinguished cast of presenters will share their knowledge and provide critical insights on a host of topics, including (conference agenda here):

  • The organization, jurisdiction, functions, and operations of FDA
  • The essentials of the approval process for drugs and biologics, including: INDs, NDAs, BLAs, OTC Approval, the PMA process and the Expedited Approval Process
  • Clinical trials for drugs and biologics
  • Unique Considerations in the approval of combination products, companion diagnostics, and stem cell therapies
  • The role of the Hatch-Waxman Amendments in the patenting of drugs and biologics
  • Labeling in the drug and biologics approval process
  • cGMPs, adverse events monitoring, risk management and recalls

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst will present at a session titled “Hatch-Waxman and BPCIA Fundamentals: Understanding Follow-On Products and the Rules for Generic Entry.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-806-806GX02.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference.

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Maine and Nevada Update Drug Price Transparency Laws

Maine and Nevada Update Drug Price Transparency Laws

By Serra J. Schlanger

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


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

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

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

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


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

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

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FTC codifies its Enforcement policy for “Made in the USA” Claims; False “Made in the USA” Claims May Now Result in a Monetary Penalty

FTC codifies its Enforcement policy for “Made in the USA” Claims; False “Made in the USA” Claims May Now Result in a Monetary Penalty

By Riëtte van Laack

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

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

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

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

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

Some notes about the final rule:

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

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What’s in a name? FDA Calls out Amgen for Misdirection

What’s in a name? FDA Calls out Amgen for Misdirection

By Dara Katcher Levy

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

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

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

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

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

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

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

Biologics Promotional Guidance at 4.

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

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

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

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

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Time is (Not) on Your Side: January 1, 2022 Bioengineered Food Disclosure Deadline is Fast Approaching

Time is (Not) on Your Side: January 1, 2022 Bioengineered Food Disclosure Deadline is Fast Approaching

By Karin F.R. Moore & Ricardo Carvajal

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

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

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

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

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Biden “Promoting Competition” Executive Order Falls In Behind Drug Importation

Biden “Promoting Competition” Executive Order Falls In Behind Drug Importation

By Alan M. Kirschenbaum

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

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

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

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

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

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

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DEA To Mobile Narcotic Treatment Programs: “Hit the Road, Jack, But You Better Come Back”

DEA To Mobile Narcotic Treatment Programs: “Hit the Road, Jack, But You Better Come Back”

By Larry K. Houck

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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A VALID Argument: Proposed Legislation Would Reshape Regulation of Diagnostics

A VALID Argument: Proposed Legislation Would Reshape Regulation of Diagnostics

By Jeffrey N. Gibbs & Gail H. Javitt

For many years, one of the most controversial topics in device regulation has been the dual-track oversight of in vitro diagnostics (IVDs) and laboratory developed tests (LDTs).  Distributed IVD products are regulated by FDA, while laboratories that perform LDTs are regulated by the Centers for Medicare & Medicaid Services (CMS).  At various points and in various ways, FDA has sought – mostly unsuccessfully – to regulate LDTs (see here).  Most recently, the Department of Health and Human Services (HHS) under the previous administration said FDA could not regulate LDTs in the absence of notice-and-comment rulemaking (see our prior post here).  Given how hard rulemaking is, that decision – if left standing by HHS – could significantly deter FDA from regulating most LDTs.

Enter Congress, and the introduction on June 24 of newest incarnation of the Verifying Accurate, Leading-edge IVCT Development (VALID) Act.  If enacted, the VALID Act would completely reshape the regulation of all diagnostic products in the United States.  Running 245 pages, the Act would create a new framework that would encompass both distributed IVD products and LDTs.  This approach stands in sharp contrast to the Verified Innovative Testing in American Laboratories Act of 2021 (VITAL Act), introduced on May 18, 2021.  In 7 short pages, this bill would give CMS exclusive jurisdiction over LDTs.  The VITAL Act would largely preserve the dual-track regulatory approach; the VALID Act would upend it.

Both approaches have their proponents and detractors.  Critics of the current system assert, for example, that it makes no sense for a diagnostic test for Condition X to be subject to FDA’s comprehensive regulatory framework if distributed and another test for the same condition to be subject to a different, and (some would argue) lower level of regulation as an LDT.  They argue that, from the patient’s perspective, the requirements for, and quality of, a test should not vary depending on whether it relies on a distributed IVD or is developed in a laboratory.  Proponents of the current dual-track approach assert that laboratories that develop and perform LDTs are in fact highly regulated – just not by FDA – and that LDTs have an excellent track record and are essential to the current health care system.

The COVID-19 pandemic has only highlighted and deepened the split.  LDT advocates assert that FDA’s blocking of LDTs at the start of the pandemic hindered the country’s response to the pandemic by delaying test availability.  FDA, however, claims that nearly two-thirds of COVID LDT EUAs submitted to the agency for review had design or validation issues.  Critics also note FDA’s struggle to cope with the large influx of EUA submissions for COVID tests (both IVDs and LDTs), and question FDA’s capacity to regulate a large influx of LDTs.  According to Concert Genetics there are currently an estimated 160,000 genetic tests – which is only one type of LDT.  The number of LDTs is certain to grow in the upcoming years.

Thus, both sides view the COVID pandemic as confirming their pre-pandemic positions; the need for greater FDA oversight of LDTs to ensure test quality, on the one hand, versus the detrimental impact of FDA regulation to the timely availability of LDTs, especially in response to new public health threats, on the other.

VALID comes down squarely on the side of the need for greater FDA regulation.  The bill creates a new category, called In Vitro Clinical Tests (IVCTs), which encompasses both distributed IVD products and laboratory tests.  Once the legislation is fully in effect, the distinction between LDTs and distributed products would largely vanish.

While completely revamping diagnostic regulation, VALID was not crafted in a vacuum.  Some elements, such as technology certifications, are new.  Many other concepts in the legislation are familiar, such as premarket review by FDA, breakthrough designations, pre-submissions, and risk classifications (albeit only in two categories).  Thus, many provisions will feel familiar, even if not identical.

And yet, the devil will lie in the details.  For instance, under VALID, IVCTs that are “low risk” and IVCTs that are “high risk” will be subject to very different requirements.  The former will enter the market without FDA review, while the latter will need FDA approval.  Thus, drawing the line is critically important.  A low risk IVCT is one that:

(A) would cause minimal or no harm, or minimal or no disability, or immediately reversible harm, or would lead to only a remote risk of adverse patient impact or adverse public health impact, taking into account the degree to which the technology for the intended use of an in vitro clinical test or category of tests is well characterized and the criteria for performance of the test or category of tests are well-established for the intended use, the clinical circumstances under which the in vitro clinical test or category of tests is used, and the availability of other tests (such as confirmatory or adjunctive tests); or (B) would cause a serious adverse health consequence, harm that is reversible, a delay in necessary treatment that is not life-supporting or life-sustaining, or would lead to a serious risk of adverse patient experience or adverse public health impact, but applied mitigating measures have the capacity to ensure the test meets the standard described in subparagraph (A).

These criteria are by and large different from the ones found in the language of the Federal Food, Drug, and Cosmetic Act for determining device classification.  The concepts here are ones that are often used by FDA, but the aggregation of concepts – risk + well-characterized + well-established performance criteria + clinical circumstances + confirmatory tests – represent a new statutory equation.  And because of the imprecision of many of the terms and how they are weighed, it will give FDA very wide latitude in classifying IVCTs.

This is just one example.  As one dissects VALID, there are numerous other instances where it is predictable that confusion and debate will ensue as to exactly what the law means.  FDA will have a gargantuan task in creating the guidance documents trying to provide greater clarity as to how the law would be implemented.  And, notwithstanding the drafters’ goal of developing new criteria for IVCTs, FDA may largely apply these concepts along the lines of its existing device framework.  Or, perhaps not.  How the law will be implemented is a large unknown.

FDA has, of course, dealt with similar challenges of assessing multiple factors in reviewing a submission.  For example, the agency has issued multiple guidance documents relating to device review which direct a multi-factorial analysis.  Those documents, though, represent FDA’s perspectives informed by years of evaluating devices under a fairly static framework.  At a minimum, these new statutory terms and concepts will lead to a protracted transitional period of great uncertainty.  Under section 5 of VALID, most provisions would not take effect for four years.  Given the scope and complexity of the law, FDA and stakeholders would need all of that time – and probably more – to prepare for implementation of the legislation.  Even then, it will take time to see how these terms are actually implemented in practice.

Ultimately, the most important provisions of any LDT legislation, if enacted, may not be what the legislative drafters expected.  That happened with the 1976 Medical Device Amendments.  The sponsor of the legislation wrote a detailed, lengthy section creating a pathway to market called “Product Development Protocols,” which was clunky, complex, and cumbersome, and quickly became irrelevant. Conversely, an obscure provision, added to create parity with pre-Amendment products – section 510(k) – became one of the most important provisions of all.

Whether VALID will be enacted is unknown.  Prior legislation to address IVCTs has died.  Perhaps this bill will have a different fate.  Gamblers can place their bets on the likelihood of passage.

One sure bet, though, is that despite the herculean efforts to craft this legislation, if VALID is enacted, an even more powerful law will kick in: the law of unintended consequences.  In transforming the field of diagnostic regulation in the United States, VALID will have impacts that will not be foreseen or contemplated.

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