PhRMA Code Revised in Response to OIG Special Fraud Alert on Speaker Programs

PhRMA Code Revised in Response to OIG Special Fraud Alert on Speaker Programs

By McKenzie E. Cato & Alan M. Kirschenbaum

On August 6, 2021, the Pharmaceutical Research and Manufacturers of America (PhRMA) announced the release of a revised PhRMA Code on Interactions with Health Care Professionals, which takes effect on January 1, 2022.  The PhRMA Code is a voluntary code of conduct focusing on the pharmaceutical industry’s interactions with health care professionals as they relate to the marketing of products.  The PhRMA Code is updated periodically to reflect changes in industry norms or, as is likely the case with the latest revision, in response to political pressure or increased scrutiny from the federal government.

The latest changes to the PhRMA Code are primarily focused on speaker programs, including meals and drinks offered, the venue used, and attendance at such programs.  These revisions appear to be responsive to a November 16, 2020 Special Fraud Alert issued by the Office of Inspector General at the U.S. Department of Health and Human Services (OIG) (see our blog post on this Special Fraud Alert here).

While PhRMA does not reference the OIG Special Fraud Alert in its announcement of the revised code or its summary of revisions to the code, the substantive updates to the code are directly traceable to OIG’s critiques of speaker programs.  OIG provided examples of practices that are common in violative speaker programs that are conducted with the intent to induce health care professionals (HCPs) to prescribe or order products paid for by Federal health care programs:  holding programs at non-conducive venues or events; providing expensive meals; repeat attendance by HCPs at substantially similar trainings; and attendance by the HCP’s friends or families.

PhRMA has updated its guidance regarding speaker programs through the following additions to the Code:

  • The purpose of a speaker program should be to present substantive educational information to address a bona fide educational need, and only those with a bona fide educational need for the information should be invited (i.e., not friends, significant others, or family members of a speaker or invitee). Repeat attendance at a program on the same topic is generally not appropriate, unless there is a bona fide educational need for repeat attendance.
  • The speaker program should occur in a venue that is conducive to the informational communication. If held in a third-party venue, the venue “should not be extravagant or the main attraction of the event” (e.g., the venue should not be a luxury resort, high-end restaurant, or other entertainment, sporting, or recreational venue).  The new Code continues to permit incidental meals that are modest by local standards (still without defining “modest”), but adds a prohibition on providing alcohol.
  • It continues to be appropriate for companies to offer HCP speakers reasonable compensation for their time, travel, lodging, and meal expenses. However, the revised Code clarifies that an HCP should not be selected to serve as a speaker based on past revenue that the speaker has generated or potential future revenue that the speaker could generate by prescribing or ordering a company’s products.

Other, less extensive changes have been made to Code sections on topics other than speaker programs.  The section on informational presentations by company representatives continues to permit modest meals to be provided during such presentations, but a requirement has been added that there must be a reasonable expectation, and reasonable steps taken to confirm, that each attendee has a substantive interaction or discussion with a company representative.  “Grab-and-go” meals and alcohol are not appropriate.

The current Code discourages the use of resort venues for several types of meetings, including consultant meetings, speaker programs, and speaker training meetings.  Wherever a “resort” venue is discouraged in the current Code, the revised Code substitutes “luxury resort.”  In other words, under the revised Code, a resort may be an appropriate venue as long as it is not a “luxury resort.”  This change probably reflects the trend since the Code was last revised for relatively modest hotels to include “resort” in their names.

It is timely to remind our readers that, although the PhRMA Code remains a voluntary industry code, its important function in risk reduction cannot be overstated.  The OIG long ago recommended that drug manufacturers adopt the Code, explaining in the Compliance Program Guidance for Pharmaceutical Manufacturers that, “[a]lthough compliance with the PhRMA Code will not protect a manufacturer as a matter of law under the anti-kickback statute, it will substantially reduce the risk of fraud and abuse and help demonstrate a good faith effort to comply with the applicable federal health care program requirements.”  Moreover, three states — California, Connecticut, and Nevada – have essentially incorporated the Code into state law by requiring pharmaceutical companies to develop and maintain compliance programs that include, or are consistent with, the PhRMA Code.

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It’s Groundhog Day for Food Labeling, Again: The Food Labeling Modernization Act is Back

It’s Groundhog Day for Food Labeling, Again: The Food Labeling Modernization Act is Back

By Karin F.R. Moore

In a repeat of 2013, 2015 and 2018, Rep. Frank Pallone (D-N.J.) has yet again introduced the Food Labeling Modernization Act (FLMA).  As in the past, there are a few new things of note, and a few other things have been removed (e.g., requirements for sesame allergen labeling, which was accomplished earlier this year).

The latest version of the bill again directs FDA to establish a standard symbol system for front-of-package labeling for conventional foods.  A food would be misbranded unless its principal display panel bears “summary nutrition information that reflects the overall nutritional value of the food or specified ingredients” as required in regulations that would be issued by FDA.

As noted in the previous iterations, the 2021 FLMA focuses on nutrients.  As FDA has recognized, modern nutrition science no longer focuses on nutrients, but instead focuses on certain foods and dietary patterns

The FMLA seems to be a compilation of items that have been subject to petitions by various NGOs and others covering a wide range of topics, as well as a few things already in process as part of FDA’s Nutrition Innovation Strategy, including:

  • Amending the Food Drug and Cosmetic Act to address the amount of wheat and grains in grain-based products, and real fruit, vegetable, and yogurt required in products bearing fruit, vegetable and yogurt claims. Interestingly, this provision also applies to the terms “froot” and “frooty.”
  • Revising the term “healthy” and addressing nutrient content claims that “may not be compatible with maintaining healthy dietary practices” and how those claims should be qualified. Defining the term “natural.”
  • The addition of “gluten-containing grain” when referencing food allergens, and the addition of “gluten-containing grain” to FSMA’s Hazard Analysis and Preventive Controls, as well as to food allergen inspections language.
  • A review of Standards of Identity, as well as amendments to existing standards to allow for the use of salt substitutes where appropriate. The bill includes a specific provision related to a minimum level of live and active cultures per gram – an issue that has been addressed already in FDA’s June 2021 final rule to amend the standard of identity for yogurt.
  • A study on the fortification of corn masa flour.
  • Regulation to establish levels of allulose, polydextrose, sugar alcohols or isolated fibers above which require a warning that the food contains levels that cause “deleterious health effects.”
  • A provision setting forth requirements for infant and toddler beverages.
  • A study on text size and color contrast that make food labeling information visually accessible to most consumers.
  • Regulations to establish requirements for the sale of food online, including access to label or labeling information prior to purchase

The bill does not include any provisions to fund the work to conduct the studies and establish the required regulations, and includes a provision requiring the issuance or proposed regulations within one year of passage (shortened from two years in the last iteration), and two years to finalize the regulations (shortened from three years) – and if final regulations are not issued within that timeframe, the proposed regulations become final on that deadline. This is an incredibly short timeframe, and would seemingly make final regulations that do not have the benefit of any incorporation of comments.  As to whether this version will eventually become a law, it is doubtful given that this is the fourth iteration and a partisan bill, but we will alert you if things change.

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The 6-Year Saga Finally Ends: FDA Issues Final Rule Modifying The Intended Use Regulation

The 6-Year Saga Finally Ends: FDA Issues Final Rule Modifying The Intended Use Regulation

By Jeffrey K. Shapiro

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

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

This provision stated (as of April 2021):

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

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

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

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

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

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

We have three quick comments on the revised regulation:

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

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

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

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

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

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The Code is Cracked: Interchangeable Biologics are Here

The Code is Cracked: Interchangeable Biologics are Here

By Sara W. Koblitz

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

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

Yet, even with the first interchangeable biosimilar approval, it’s not quite clear when patients will see those savings.  Though not exclusivity is listed in the Purple Book yet, Semglee should be eligible for 12 months of exclusivity, which would block FDA licensure of any subsequent interchangeable biosimilars starting from its first commercial launch.  Even though Semglee has been approved and marketed as a biologic for a little over a year already and therefore first commercial marketing already has occurred, it’s interchangeable biosimilar is approved under a new BLA.  Interchangeable exclusivity, assuming it’s awarded, likely will be triggered at launch of the product under the new BLA, which, according to the NDC Code database, has not yet occurred.

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

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

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

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

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CMS proposes to Withdraw Trump Era Most Favored Nation (MFN) Drug Pricing Rule

CMS proposes to Withdraw Trump Era Most Favored Nation (MFN) Drug Pricing Rule

By Faraz Siddiqui & Alan M. Kirschenbaum

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

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

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

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

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FDA Announces It Will Now Regulate Devices as Devices

FDA Announces It Will Now Regulate Devices as Devices

By Sara W. Koblitz & Douglas B. Farquhar

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

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

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

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

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

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

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

Comments are due on October 8, 2021.

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Facebook “Pokes” Pharma Companies, Telehealth, and Online Pharmacies

Facebook “Pokes” Pharma Companies, Telehealth, and Online Pharmacies

By Jeffrey N. Wasserstein & Dara Katcher Levy

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

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

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

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

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

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

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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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