FSIS Proposes to Simplify Labeling Compliance by Removing the Requirement for Dual Declaration of Net Content

FSIS Proposes to Simplify Labeling Compliance by Removing the Requirement for Dual Declaration of Net Content

By Riëtte van Laack

On April 16, the Food Safety & Inspection Service (FSIS) of USDA announced the publication of a proposed rule amending the labeling regulations for net content statements on meat and poultry.  FSIS proposes to remove the requirement for dual declaration of net weight and net content on packages that contain at least one pound or one pint, but less than four pounds or one gallon.

FSIS is proposing this action after receiving a petition submitted by a small meat processor in response to USDA’s request for ideas to better serve its customers.  As described in the preamble to the proposed rule, the requirement for dual declaration has created confusion for industry.  Under the proposed rule, establishments that produce meat and poultry products in packages containing at least 1 lb. or one pint and less than 4 lb. or 1 gal. will be allowed to express the weight or contents in one unit of measurement on the product label instead of using both measures — e.g., “Net Wt. 24 oz.” or “Net Wt. 1.5 lb.” rather than “Net Wt. 24 oz. (1.5 lb.).  Establishments would be allowed to use their current labels until they run out or may elect to use them indefinitely.

FDA regulations for net content statement include a similar requirement.  It will be interesting to see if someone petitions FDA to also amend its regulation.

Comments to the proposal must be submitted by June 17, 2019.

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FDA Issues Another “Final” Rule on Antiseptics; Defers Action on Three Active Ingredients for Use in Consumer Antiseptic Rubs

FDA Issues Another “Final” Rule on Antiseptics; Defers Action on Three Active Ingredients for Use in Consumer Antiseptic Rubs

By Riëtte van Laack

Last week FDA issued a final regulation regarding consumer antiseptic rubs.  In 2016, FDA had proposed that 28 active ingredients, including triclosan, are not eligible for evaluation under the FDA’s OTC Drug Review for use in consumer antiseptic rubs.   FDA requested but did not receive more data on those ingredients.  Three other active ingredients, ethyl alcohol, benzalkonium chloride, and isopropyl alcohol remain under consideration.  In the proposed rule (described here), FDA indicated that it needed more information to ensure that the ingredients are safe and effective; according to FDA, developing science and increased frequency of use have resulted in concerns about absorption and systemic exposure to the ingredients included in topical drug products, such as the consumer antiseptic rubs.  Thus, FDA has requested additional data, including so called MUsT information.  In the final rule, FDA reaffirms the need for these data on the three active ingredients that remain under consideration.  Similar data are needed for the health care antiseptics.  To the extent that there is overlap of studies needed for certain ingredients, the industry need not repeat the studies.  For example, data generated from a MUsT study sufficient to support a healthcare antiseptic indication will also be sufficient to support a consumer antiseptic indication, because the maximal usage across consumer settings is lower than the maximal usage in a healthcare setting.

The rule declaring the 28 ingredients ineligible for use in consumer antiseptic rubs is effective April 12, 2020.  Since only a small percentage of the consumer antiseptic rubs currently marketed in the United States contain any of the 28 active ingredients that have been determined ineligible, the impact of this final rule will be relatively minor.

In its press release, FDA mentions that this final rule completes its series of rulemakings  for OTC antiseptics to determine whether they are safe and effective.  Presumably the Agency referred to the series of rulemakings required under the consent decree with NRDC.  However, as readers of this blog know, FDA is not yet done.  The Agency deferred decisions on certain active ingredients for consumer antiseptic washes (benzalkonium chloride, benzethonium chloride, and chloroxylenol), health care antiseptics (benzalkonium chloride, benzethonium chloride, chloroxylenol, ethyl alcohol, isopropyl alcohol and povidone iodine), and, now, the consumer antiseptic rubs (ethyl alcohol, benzalkonium chloride and isopropyl alcohol).  FDA has not set a specific deadline for final action on these ingredients but instead will address their status “either after completion and analysis of ongoing studies to address the safety and effectiveness data gaps . . . or at a later date, if these studies are not completed.”  The deferral letters for each ingredient set forth initial deadlines for submission of a plan to address the outstanding data gaps.  Moreover, because FDA has not concluded that an active ingredient is GRAS/GRAE for any of the categories of the antiseptic drug products, the Agency has not yet addressed labeling and finished product efficacy testing.  Thus, once the safety studies have been done, assuming FDA finds at least one ingredient in a category GRAS/GRAE, further rulemaking will be needed.  In addition, rulemaking for the first aid antiseptics is not yet complete and in December 2018, FDA took only the first step on the path to a monograph for antiseptics for food handlers.  The timing of the remaining rulemaking is not subject to the consent decree.

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DOJ Should Listen to Its Own Arguments

DOJ Should Listen to Its Own Arguments

By Anne K. Walsh

As it previewed back in December, the government formally filed its motion to dismiss the high-profile False Claims Act case against Gilead Sciences, Inc.  This case has had a long history, beginning in 2010 when the Relators filed their original complaint.  After investigation, in 2013, the government declined to intervene in the action but did not at that time move to dismiss the case.  (This decision pre-dated the 2018 Granston memo, which directed  the Department of Justice (“DOJ”) to affirmatively seek dismissal in certain circumstances.)

The government likely rues its decision not to seek dismissal back in 2013, given that DOJ has been engaged in multiple rounds of briefing to dismiss the case in the ensuing six years.  Although the stated reason for aggressively seeking dismissal is “to avoid the additional expenditure of government resources on a case that it fully investigated and decided not to pursue,” the unstated concern appears to be to avoid an adverse ruling about the standard for “materiality” applied to False Claims Act cases.  The “materiality” issue has begged for more clarity since the 2016 ruling in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), which requires a plaintiff to allege that a misrepresentation by the defendant was “material to the government’s payment decision.”

The factors the government considers in deciding to dismiss a matter, as outlined in the recent motion to dismiss brief, are instructive to the factors the government should be using in deciding whether to decline to intervene in the first place.  For example, in Gilead, the government claims:

In addition to preserving scarce resources, dismissal is also appropriate to prevent Relators from undermining the considered decisions of FDA and CMS about how to address the conduct at issue here.  .  .  .  In this case, FDA exercised continuing regulatory oversight of Gilead’s manufacturing processes, including multiple on-site inspections of Gilead’s facilities both before and after Relators filed their complaint.  FDA took the actions that it deemed appropriate.  Relators’ case now asks a jury to find that different action was nevertheless required.

Substituting “DOJ” for “Relators” in the above excerpt arguably should lead to the same result: that DOJ should not substitute its judgment when the affected agencies, FDA and CMS, have considered and taken actions they deemed appropriate.  Taking it one step further, these same factors support a finding that the company’s conduct was not material to the government’s payment decision, which in and of itself supports dismissal.  And these factors could extend outside the FCA world to require dismissal in all instances in which DOJ attempts to base a follow-on action using the same facts known to and addressed by the agency.

It will be interesting to see how the government distinguishes this case from others in which it has “already spent resources extensively investigating Relators’ claims, reviewing the merits of the case as presented by Relators, and monitoring the case after declination.”  If this is the standard, almost every FCA matter the government declines and that the Relator continues to advance should result in an affirmative motion to dismiss no later than the close of discovery.

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Advertising Laboratory Tests: Change on the Way in Maryland

Advertising Laboratory Tests: Change on the Way in Maryland

By Serra J. Schlanger

The 2019 Maryland Legislative Session closed on April 8th with an exciting development related to laboratory testing.  As we previously reported (see here), Maryland law currently prohibits directly or indirectly advertising or soliciting for medical laboratories.  Two bills were introduced earlier this year to address this state-specific constraint.  On the last day of the Legislative Session, the Maryland General Assembly unanimously passed SB495, which creates certain exceptions to the advertising prohibition.

SB495 allows advertising or soliciting business for two categories of laboratory tests:

  • Tests used for screening, diagnosing, managing, or treating a physical or mental condition or disease; and
  • Ancestry testing and DNA testing used for detecting and reporting genetic evidence of parental lineage and genetic ethnicity.

The exception only applies to laboratory tests that are ordered by a physician and performed by a CLIA-certified laboratory.  In addition, the company advertising the tests must be a HIPAA covered entity or a business associate of a HIPAA covered entity.  The advertisements may not make claims about the reliability and validity of the test that are inconsistent with CLIA and must disclose that the tests may or may not be covered by health insurance.

SB495 does not allow all laboratory tests to be advertised in Maryland.  In addition to the restrictions outlined above, SB495 specifically states that germline genetic or genomic tests used for the analysis, diagnosis, or prediction of human diseases may not directly or indirectly advertise or solicit business.

SB495 will allow the State to take legal action to restrict the marketing of a laboratory test if the test poses a threat to public health or is not in compliance with the exception requirements.

It is expected that Governor Hogan will sign SB495 next month and that the changes will go into effect on October 1, 2019.

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Is the Government All Fired Up About Charging Individuals?

Is the Government All Fired Up About Charging Individuals?

By Riëtte van Laack & JP Ellison & Anne K. Walsh

We have long posted about the government’s threats to hold individuals liable for actions taken on behalf of their companies, for example here, but these actions remain rare and typically are reserved for egregious, repeated, and intentional criminality.  A recent indictment against two former executives, however, may signal the government is making good on its threat even when the conduct (at first glance) involves mundane recordkeeping or reporting obligations.

The U.S. Consumer Product Safety Commission (CPSC) has long had the authority to bring criminal charges for knowing or willful violations of the Consumer Product Safety Act (CPSA).  Indeed, the government has used this power to charge parties for things like repeated importation of banned consumer products into the United States.  But the CPSC has never used its criminal authority to charge individuals for failing to report information to CPSC about potentially defective products.  Until recently.

On March 28, the government filed an indictment against Simon Chu, the Chief Administrative Officer, and Charley Loh, the Chief Executive Officer, of “unindicted co-conspirator” companies that sold dehumidifiers to US consumers.   According to the indictment, as early as September 2012, Chu, Loh, and their companies received multiple reports that their Chinese dehumidifiers were defective, dangerous, and could catch fire.  The defendants then conducted testing that confirmed that these dehumidifiers could pose safety issues.

Section 15(b) of the CPSA requires manufacturers, importers, and distributors (and their individual directors, officers, and agents) to report “immediately” to the CPSC information that reasonably supports the conclusion that a consumer product contains a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury or death.  The defendants allegedly knew of the reporting obligations under the CPSC, but not only failed to report the incidents to the CPSC as required, but made affirmative representations to the CPSC that the humidifiers were not defective and hazardous.  In addition, Chu and Loh continued to sell these products for at least six months, and provided retailers with false certifications that the products met safety standards.

Even though the government touts this case as the “First-Ever Criminal Prosecution for Failure to Report” under the CPSA, the allegations describe much broader criminality of lies and cover-ups.  Indeed, although the manufacturer companies are unnamed in the indictment, it appears they are the same companies that agreed to settle with the CPSC a few years ago for the same conduct.  The $15.4 million paid by Gree Electric Appliances Inc., of Zhuhai, China; Hong Kong Gree Electric Appliances Sales Co. Ltd., of Hong Kong; and Gree USA Sales Ltd., of City of Industry, Calif., was the highest civil penalty ever imposed under the CPSA.   As part of the settlement, these companies agreed to “implement and maintain a compliance program designed to ensure compliance with the CPSA and regulations enforced by the Commission with respect to any consumer product manufactured, imported, distributed, or sold by Gree,” which included a variety of compliance provisions related to reporting.

So perhaps this case is not as ground-breaking as advertised given the full story.  Nevertheless, it serves as a useful reminder to company executives that the risk of criminal exposure is real.

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Tips On Choosing The Right Criminal Lawyer

Tips On Choosing The Right Criminal Lawyer

If you are on the lookout for a good criminal lawyer then you should not hesitate to spend a few minutes going through this article. Though your city could have dozens of criminal lawyers, making the right choice is not easy, to say the least. Unless you have a fair idea about the various things to look forward to from these professionals, more often than not you could end up making the wrong choice. Hence we are happy to share some useful and pertinent information about the various important tips that one should bear in mind when it comes to hiring these professionals. We are sure it will be enlightening and informative and help you to make the right choice.

Choose The Right One For You

 The best criminal lawyer in Sugar Land may not be the best for you. Hence, you must not go by name and fame alone. You must ensure that the lawyers who you choose are the best as far as your specific needs and requirements are concerned. You must be sure that he or she is easily reachable and contactable and is rooted to the ground. There is no point in hiring a high flying criminal lawyer with a good track record. They may not be able to offer the required services to make a difference in your case.

 Experience Is Important

 You must pay importance to experience and expertise when hiring a criminal lawyer. While qualification, certification, and other such attributes are very important, this alone may not help win cases for you as a client. Experience brings with it many attributes and therefore you must always look for a combination of both of these attributes when hiring these professionals. If there are clients who are stuck in a case of violent crime, then you have to do your research and hire the right talent accordingly. In such cases, a lawyer specializing in white collar crimes may not be of much use.

 Have A Look At The Team

 You have to also look into the team that is handling the entire case without which you are likely to deal with. It is quite obvious that you will not be dealing with the lawyer on a daily basis and you have to look at the team with whom you will be dealing on a daily basis. The team must be intelligent, experienced and responsive and must take the information provided by you to the lawyers who are dealing with your case. This is very important and could make the difference between failure or success as far as the case is concerned.

Take References

You also should understand the importance of taking references because that will help you to get a clear idea about the quality of the services provided by the lawyers. You will be able to get a clear idea about the type of services they offer, their track record, their success ratio in winning cases on behalf of their clients and other such useful and pertinent information.

Therefore at the end of the day, there are quite a few things that you must take into account and only then hire a Richmond criminal lawyer either as an accused or as a defendant.

Contact US:

Lawrence Law Firm

Address:695 Industrial Blvd #100
Sugar Land, TX
Phone: (281) 238-5819

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Medical Cannabis Research Act Stirs DEA Marijuana Registration Pot

Medical Cannabis Research Act Stirs DEA Marijuana Registration Pot

By John A. Gilbert & Larry K. Houck

We sometimes use the term “act of Congress” when referring to something that is difficult or requires large effort to achieve.  But, as nothing else has worked, a real act of Congress may be required to compel the Drug Enforcement Administration (“DEA”) to issue marijuana manufacturer registrations for research.  To that end, Representative Matt Gaetz (R.-FL) introduced H.R. 601, the Medical Cannabis Research Act of 2019.

In August 2016 DEA expressed its full support to expand research “into the potential medical utility of marijuana and its chemical constituents” (see our previous post here).   Acknowledging increased interest in research with cannabinoids including cannabidiol (“CBD”), and based upon discussions with the National Institutes of Drug Abuse and the Food and Drug Administration (“FDA”), DEA “concluded that the best way to satisfy the current researcher demand for a variety of strains of marijuana and cannabinoid extracts is to increase the number of federally-authorized marijuana growers.” Id.   DEA announced that it would consider additional applications for registration to grow and cultivate marijuana for research.

DEA has received twenty-six applications for registration to manufacturer marijuana in the two and a half years since the agency began accepting them.  To date, the DEA has not published a Federal Register final rule granting any such registrations.  It is worth noting that DEA has continued to grant importer registrations for marijuana.  See, e.g., Importer of Controlled Substances Application: Sanyal Biotechnology LLC, 83 Fed. Reg. 12,407 (Mar. 21, 2018); Importer of Controlled Substances Registration, 83 Fed. Reg. 27,632 (June 13, 2018).

During this same period, FDA approved Epidiolex, an oral CBD solution for the treatment of certain seizures.  Subsequently, DEA scheduled Epidiolex and other FDA-approved drugs containing CBD derived from cannabis with no more than 0.1 percent tetrahydrocannabinols (“THC”) in Schedule V of the Controlled Substances Act (“CSA”) (see our previous post here).  It appears that neither FDA nor DEA believed there was any abuse potential of CBD with less than .01 percent THC, however, DEA scheduled this CBD formulation to comport with the import and export provisions of the Single Convention on Narcotic Drugs, 1961.  CBD is still controlled under the relevant international drug control treaties.

Then in December, Congress enacted the Farm Bill, removing “hemp” from the CSA definition of “marijuana” and excluding THC contained in “hemp” from scheduling under the CSA.  7 U.S.C. § 1639o; 21 U.S.C. § 802(16).  “Hemp” is defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

It is also worth noting that in December, DEA doubled the adjusted 2019 aggregate production quotas for marijuana from 2018 to 1,140,216 grams or 2,500 pounds.  At that time DEA noted that it “continues to review applications” for bulk manufacturer registrations “necessary to produce an adequate and uninterrupted supply” of marijuana.

Congressional efforts to prod then-Attorney General Sessions and DEA to issue the registrations were unsuccessful.  Letters from federal lawmakers dated July 25, 2018 and August 31, 2018 had no effect.

Finally, in January, Representative Gaetz introduced the bipartisan Medical Cannabis Research Act of 2019, a revision of a bill with the same goals introduced in the last Congress and which would amend 21 U.S.C. § 823.  The current bill, which would require the Attorney General to continue assessing the required adequate, uninterrupted cannabis supply for legitimate research annually.  Medical Cannabis Research Act of 2019, H.R. 601, 115th Cong. (2019).  Unlike the 2018 bill, the current bill would require the Attorney General through DEA to issue registrations to at least three applicants to manufacture cannabis for legitimate research purposes within a year, and to register at least four applicants in subsequent years.  (The 2018 bill would have required at least two and three applicants, respectively, in initial and subsequent years).  Registered manufacturers would be limited to supplying cannabis to DEA-registered Schedule I researchers for “use in preclinical research or in a clinical investigation pursuant to an investigational new drug exemption” under section 505(i) of the Food, Drug and Cosmetic Act.  In addition, registered manufacturers must:

  1. “[H]ave established and begun operating a process to store and handle” Schedule I substances to include required security;
  2. Be able to provide at least ten unique plant cultivars and “scale up” production to produce cannabis to supply forecasted demand;
  3. Be able to test for and isolate at least twelve cannabinoids for “producing specific products for specific studies by compounding pharmacists or others, labeling, and chemical consistency;”
  4. Be licensed by the state where they conduct operations; and
  5. Provide a written explanation of how its manufacture of cannabis “would augment the nation’s supply of cannabis for legitimate research purposes.”

The 2018 bill required that manufacturer personnel have no convictions for a felony or drug-related misdemeanor but the current bill prohibits personnel from having a conviction only “for a violent felony.”

The Medical Cannabis Research Act of 2019 if enacted as written will not change the legal status of marijuana nor affect CSA provisions regulating cannabis manufacturers for other than research purposes, including commercial drug product development by the private sector.

Requiring DEA to grant a certain number of registrations is problematic in that it appears contrary to the CSA wherein DEA is only required to grant a registration if the applicant is qualified.  While we would assume that a number of the current applicants should be able to meet the CSA requirements, this is not a given.  In lieu of requiring DEA to issue a certain number of marijuana manufacturer registrations each year, the bill would require DEA to grant or deny the registrations, or request additional information, within one year of receiving an application.

Congressman Gaetz stated: “[c]urrently, all federally-approved studies of medical cannabis get their product from one source, and it is extremely subpar . . .  [it] is weak and often moldy . . . federally grown cannabis is scarce; there is not enough product.”

It is time that DEA and DOJ make good on their announcement to issue additional registrations for marijuana manufacturers.  Manufacturer compliance with CSA recordkeeping and security requirements minimize risk of diversion.  It is unfortunate that it may require an act of Congress to facilitate legitimate medical research with cannabis, but American patients and the public are worthy.

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Judge Says Lack of State and Federal Plans Means That the Farm Bill’s Interstate Commerce Protections for Hemp Don’t Apply

Judge Says Lack of State and Federal Plans Means That the Farm Bill’s Interstate Commerce Protections for Hemp Don’t Apply

By JP Ellison & Ricardo Carvajal

We previously posted about what the Agricultural Improvement Act of 2018 (commonly referred to as the Farm Bill) did, and did not, do with respect to “hemp” and CBD products derived from hemp.  In that post, we noted that the Farm Bill did not preempt state laws that were more stringent. Our prior post did not discuss the Farm Bill’s interstate commerce provisions, which recently have become the focus of litigation.

Under section 10114, “Interstate Commerce,” there are two provisions–

  • Subsection (a) states as a “RULE OF CONSTRUCTION” that “[n]othing in this title or an amendment made by this title prohibits the interstate commerce of hemp (as defined in section 297A of the Agricultural Marketing Act of1946 (as added by section 10113)) or hemp products.”
  • Subsection (b), titled “TRANSPORTATION OF HEMP AND HEMP PRODUCTS” provides that “[n]o State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products produced in accordance with subtitle G of the Agricultural Marketing Act of 1946 (as added by section 10113) through the State or the territory of the Indian Tribe, as applicable.”

The meaning of “in accordance with” played a major role in a recent decision denying a request for emergency relief in connection with what seems to have been “hemp,” under the Farm Bill.  Briefly, in Big Sky Scientific LLC v. Idaho State Police, the Idaho state police seized nearly 13,000 pounds of what appears to be hemp.  They did so because hemp is a controlled substance under Idaho law.  The hemp (or according to Idaho “contraband”) was produced in Oregon and was in route to Colorado.  Idaho took the position that the Farm Bill’s section 10114(b) protection against a state prohibiting transport of hemp did not apply because subtitle G contains provisions setting forth how the Secretary of USDA can “approve” or disapprove” a state or tribal “plan,” or establish his own “plan.”  Idaho argued that until such a plan is approved or established, no hemp can be produced “in accordance with subtitle G.”  At the emergency motion stage, the court agreed finding:

[T]he cargo that was seized on January 24, 2019 was not hemp that has been “produced in accordance with subtitle G.” It could not have been produced in accordance with subtitle G because Oregon does not have a federally approved plan and the Secretary of the United States Department of Agriculture has yet to establish its own plan as Subtitle G requires be done. This is undisputed. It matters not whether the cargo might meet the requirements of subtitle G if such a plan (or something similar) had existed when the crop was grown and harvested, or whether the implementation of the production plan by the Department of Agriculture was delayed somehow because of the recent shutdown of certain operations of the federal government. There simply is no such plan in place and therefore the cargo, whether described as hemp or marijuana, could not have been produced in accordance with subtitle G and therefore could not be subject to the protection of interstate commerce as provided by the 2018 Farm Bill.

The Court made clear that this was not a final determination on the merits and the litigation is proceeding.   We’ll continue to monitor this litigation and other developments.  In the meantime, anyone distributing hemp or CBD products derived from it would do well to check their distribution routes against the varying state laws.

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FDA Doubles Down on Warnings to Stem Cell Clinics

FDA Doubles Down on Warnings to Stem Cell Clinics

By Mark I. Schwartz

In a press release issued on April 3rd, FDA reiterated its warning to stem cell clinics (and implicitly to other HCT/P facilities that are benefiting from enforcement discretion), asserting that the agency has stepped up oversight over such facilities, and will be ramping up even more after the 36 months of enforcement discretion end in November 2020:

Over the past year, we have sent 45 manufacturers and health care providers regulatory correspondence, including warning letters, and we have two court cases pending. We’re committed to taking appropriate steps to address those that jeopardize the health of the people we are sworn to protect.

Today, we’re continuing these efforts. The agency issued a warning letter to Cord for Life, Inc., located in Altamonte Springs, Florida, for manufacturing unapproved umbilical cord blood products in violation of current good manufacturing practice (CGMP) requirements, including failing to validate processes to prevent bacterial contamination, raising potential significant safety concerns that put patients at risk. In addition, we issued 20 letters today to separate manufacturers and health care providers across the country who may be offering unapproved stem cell products, reiterating the FDA’s compliance and enforcement policy.

We’ve previously spoken about this issue here and here.

In addition, the agency expressed frustration that some in the stem cell industry continue to assert that autologous stem cell procedures (i.e., procedures that take cells or tissue from a person’s body and re-administer them to the same person, usually after some manipulation, and for a different intended use) are not subject to FDA regulation.

There’s a false premise being asserted by some in the field that a product derived from a person’s own body and then manipulated and reinserted for another use different from the one it played in its original location is not subject to FDA regulation just because it originated from the person it was given back to. But stem cell products can create unique and serious risks depending on how they’re manipulated once they’re taken from the body and how they are used once they’re reinserted in the body.

Interestingly, while the agency had issued a similar press release in December 2018 emphasizing that they were “discouraged” by the overall lack of manufacturers wanting to interact with the agency during the 36 months of enforcement discretion, in the current press release FDA states that the industry has made “modest progress” in coming into compliance, though much more work needs to be done.

Finally, as enforcement discretion comes to an end, in addition to the stick of possible regulatory and enforcement action, the agency also held out the carrot of possible relief for firms that undertake well-designed investigational studies with the intent of collecting information to more clearly identify the safety and benefits of their products.

As we come up on the end of this period during which the FDA intends to exercise enforcement discretion, we may take additional steps to delineate an efficient development path for promising products that pose lower risk to patients and that are being developed by sponsors who’ve engaged the regulatory process in a responsible manner by filing INDs.  These would be cases where the sponsors have undertaken or are in the process of undertaking well-designed investigational studies with the intent of collecting information to more clearly identify the safety and benefits of their products… In addition, during the next year, the agency will explore whether there are additional ways that it can assist legitimate developers of stem cell products to come into compliance with its regulations. [Emphasis added]

What might these additional steps to delineate an efficient development path be?

In what ways might the agency assist legitimate developers to come into compliance?

We have some thoughts.  Stay tuned…

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Medicaid “Right Rebate” Provisions Clear Congress

Medicaid “Right Rebate” Provisions Clear Congress

By Alan M. Kirschenbaum

The Senate on Tuesday passed H.R. 1839, a bill of Medicaid amendments that included new penalties for mis-categorizing a drug under the Medicaid Drug Rebate Program (MDRP).  The bill already cleared the House on March 25, and is now headed to Donald Trump for signature.  The bill grew out of an investigation conducted by Senate Judiciary Committee Chairman Chuck Grassley into Mylan’s Epi-Pen.  In August 2017 Mylan settled qui tam allegations brought under the Federal False Claims Act by Sanofi-Aventis that Mylan had reduced its rebates under the MDRP by mis-classifying Epi-Pen as a non-innovator drug.  Mylan did not admit the allegations and there was no determination of liability.  Although the Mylan case made headlines, in part because of the Congressional investigation, other drug manufacturers have settled similar allegations in the past.

Under the MDRP, a manufacturer pays greater per-unit rebates for innovator drugs (i.e., those approved under NDAs) than for non-innovator drugs (i.e., those approved under ANDAs and certain unapproved drugs).  The drug category ─ innovator or non-innovator ─ is reported to CMS by the manufacturer.  The Medicaid Rebate statute already contains civil penalties for providing false drug information, and Federal False Claims Act penalties may also apply as discussed above, but Section 6 of H.R. 1839 imposes several additional penalties on manufacturers who misclassify their drugs.  First, a manufacturer that knowingly misclassifies a drug must pay a penalty of twice the difference between the rebates that the manufacturer paid and the amount it would have paid had the drug category been correctly reported.  Second, if CMS determines that a manufacturer misclassified a drug – whether or not the manufacturer knew or should have known that the drug was misclassified – CMS must notify the manufacturer about the error and require a timely category correction, and the manufacturer must pay the underpaid rebates.  If a manufacturer is so notified but fails to timely correct the misclassification, CMS may either correct the misclassification on its own initiative, suspend the drug from the MDRP and exclude it from Medicaid coverage, impose a civil penalty of 23.1% of the drug’s average manufacturer price multiplied by the number of units dispensed during the period of the misclassification, or any combination of the above.  Finally, an exclusion penalty may be imposed on a manufacturer who knowingly misclassifies a drug, fails to correct a misclassification, or provides false information.  These provisions become effective upon enactment.

The bill also contains a long overdue “clarifying definition.”  Since enactment in 1990, the Medicaid rebate statute’s definitions of single source and innovator multiple source drugs – i.e., the drugs subject to higher rebates – refer to drugs approved under an “original new drug application,” a term that is not defined.  Over the years, many manufacturers, and even CMS in a regulation proposed in 1995 (never finalized), have construed that term to exclude NDAs that rely on literature studies or data previously submitted in other applications – for example section 505(b)(2) applications or applications submitted under FDA’s pre-1984 “paper NDA” policy – since those NDAs arguably are not “original”.  In a 2016 final rule, CMS read the term “original” out of the statute and construed “original NDA” to simply mean “NDA”, unless CMS grants a narrow exception.  Congress has now codified that approach by deleting the confusing term “original”, and adding that a drug approved under an NDA is an innovator unless CMS determines that a “narrow exception” applies.  Thus, Congress has finally eliminated a word that has been a source of confusion, controversy, misclassifications and disputed classifications, and an enormous sum of penalties during the 29 years since enactment.

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