Attorney East Hampton

By Karin F.R. Moore & Riëtte van Laack —

At a time when some influencers are making good money – and sometimes millions of dollars – for endorsing and promoting everything from fake eyelashes on Instagram to the latest video game on YouTube, the Federal Trade Commission (FTC) announced on February 12, 2020 that it is seeking public comment on whether to make changes to its Endorsement Guides as part of the agency’s retrospective review of all current rules and guides.

The Guides were first issued in 1980 and designed to assist businesses and others in conforming their endorsement and testimonial advertising practices to the requirements of Section 5 of the FTC Act.  The Guides were updated in 2009 to more directly address social media (see our posting on that here).  Since 2009, the FTC has issued various guidance documents directed to businesses and influencers – see, for example, our previous post discussing the 2015 updates to their Q&A here.

In a Federal Register notice, the FTC asks for comments on a range of questions, including:

• whether the Guides should be changed to account for changes in technology or the economy;
• whether some of the FTC’s guidance documents should be incorporated into the Guides;
• whether children are capable of understanding disclosures of material connections;
• whether incentives like free or discounted products bias consumer reviews, and whether or how those incentives should be disclosed;
• whether composite ratings that include reviews based on incentives are misleading, even when reviewers disclose incentives in the underlying reviews;
• whether the Guides should address the use of affiliate links by endorsers; and
• what, if any, disclosures advertisers or operators of review sites need to make about the collection and processing of publication of reviews to prevent them from being deceptive or unfair.

Commissioner Rohit Chopra issued a separate statement, advocating for developing formal rules which codify elements of the currently voluntary endorsement guides so that violators can be liable for civil penalties and damages under 15 U.S.C. §§ 45(m)(1)(A) & 57.  He also suggests instituting requirements for technology platforms (e.g., Instagram, YouTube, and TikTok) that directly or indirectly profit from influencer marketing.

Comments will be due within 60 days of publication of the Federal Register notice. Because of the impact of the 2009 updates, any new changes to the Endorsement Guides can be expected to have far-reaching effects.  We will be monitoring comments.

By Karin F.R. Moore —

On February 13, the FDA released the final installment of guidance to support compliance with the Intentional Adulteration (IA) Rule under the FDA Food Safety Modernization Act (FSMA). The FSMA final rule on intentional adulteration, entitled “Mitigation Strategies to Protect Food against Intentional Adulteration” (IA rule), 21 C.F.R. Part 121, was published in May 2016. The rule is designed to address hazards that may be intentionally introduced to foods, including by acts of terrorism, with the intent to cause wide-spread harm to public health. This latest draft guidance adds to the draft guidance previously published in March 2019. The latest chapters cover the following topics:

• Chapter 5: Food Defense Corrective Actions
• Chapter 6: Food Defense Verification
• Chapter 7: Reanalysis, and
• Chapter 9: Recordkeeping

It also includes appendices on FDA’s mitigation strategies database and how businesses can determine their status as a small or very small business under the rule.

The initial draft guidance included chapters on:

• the components of the food defense plan;
• how to conduct vulnerability assessments using the key activity type method;
• how to identify and implement mitigation strategies; and
• food defense monitoring requirements.

As a reminder, compliance requirements for large facilities under the IA Rule began in July 2019, but the FDA delayed enforcement of the Rule until March 2020. The IA Rule generally applies to food facilities that are required to register with the FDA, absent an exception. Both domestic and foreign companies who sell product in the U.S are affected.

By Sara W. Koblitz —

Animals, shmanimals.  Or so says FDA.  Well, FDA didn’t actually say that, but that’s the effect of the District Court of D.C.’s recent ruling in Vanda Pharmaceuticals v. FDA.  In a case we have been following for the last year or so, the District Court deferred entirely to FDA’s decision to place a clinical hold on Vanda’s human studies until studies in dogs were completed.  Vanda argued that FDA’s decision to place its trial on clinical hold lacked an articulated scientific basis and treated a guidance as binding.  In its initial Complaint, Vanda also argued that the mandated testing needlessly wastes dogs’ lives.  As such, Vanda alleged that FDA’s imposition of a clinical hold was arbitrary and capricious in violation of the Administrative Procedure Act (“APA”).  FDA asked to remand the issue to the Agency, the Court granted the request and stayed the litigation, but the Agency went back and made the same decision – this time providing significantly more explanation.  In response, Vanda revived its litigation.

In its second round of briefing, Vanda alleged procedural violations of the APA, as well as substantive violations of the Food, Drug, and Cosmetic Act with respect to FDA’s interpretation of the studies.  Vanda argued that FDA’s remand response is “impermissible post hoc rationalization” including new reasons for the imposition of the hold.  The Court rejected these arguments, noting that the justifications provided in the Remand Response were merely “amplified articulation” rather than post hoc rationalization.  Vanda also argued that the “proper decisionmakers” (the Medical Policy and Program Review Council or “MPPRC”) had not been responsible for the remand response and that the remand response amounted to the review division (Office of Drug Evaluation III) impermissibly “overruling” the MPRCC’s previous findings.  The Court quickly dismissed this argument noting that it had no support in statute or regulation, and, in any event, the remand response was issued by FDA.

Additionally, Vanda argued that FDA “skewed the administrative record on remand” by selectively opening the record and adding new studies supporting its position while ignoring studies Vanda and the Humane Society of the U.S. pointed out.  (Of note, the Humane Society tried to file an amicus brief in this case, but the Court rejected it, saying that all of the arguments it made had already been made by Vanda or were not adequately in front of the Agency prior to its decision.)  Explaining that FDA was required only to examine the record before it at the time the decision was made, the Court held that FDA was not required to consider any additional evidence in support of Vanda’s position.  The Court explained that “no provision in the APA requires FDA to give Vanda an ‘opportunity to offer contrary evidence’ on remand” and a “fundamental fairness” requirement would impose additional procedures on FDA without statutory basis.  Further, the Court noted that Vanda could have introduced its evidence into the administrative record through a “written request” containing “sufficient information” to support the removal of a clinical hold but chose not to do so.  As such, the Court rejected all of Vanda’s procedural arguments.  Finally, the Court noted that Vanda had not availed itself of the administrative pathway of dispute resolution once the clinical hold was imposed.

The Court divided Vanda’s substantive claims into two main arguments: FDA improperly used guidance as a binding legislative rule, and FDA relied on flawed scientific judgment.  Specifically,  Vanda objected to FDA’s reliance on the non-binding policy document, Guidance for Industry, M3(R2) Nonclinical Safety Studies for the Conduct of Human Clinical Trials and Marketing Authorization for Pharmaceuticals (Jan. 2010).  This guidance, referred to as the “ICH Guidance” because it was created by the International Conference for Harmonization, addresses the use of nonclinical safety studies to support the conduct of human clinical trials and marketing authorization for pharmaceuticals.  FDA has adopted this policy and relied on it as justification for requiring Vanda to conduct additional animal studies.  The Court concluded that the “the Remand Response makes clear that the ICH Guidance is a policy statement exempt from the notice-and-comment process, and that FDA did not rely upon it as a binding rule in imposing the clinical hold.”  As a general statement of policy (rather than a legislative rule), the Court explained that the guidance was not subject to notice and comment requirements.  Contrary to Vanda’s allegations, the true legal authority for the hold was FDA’s clinical hold regulations – not the guidance, which had no actual legal effect.

Finally, as is the norm, the Court largely deferred to FDA’s scientific expertise in this case.  Absent clear error or malfeasance, it’s almost impossible to overcome deference to scientific expertise – particularly in the area of necessary clinical studies.  Vanda argued that FDA ignored or misinterpreted cited studies; failed to explain why toxicity in nonrodent studies would be predictive of human toxicities; and that the Remand Response was a litigation-driven interpretation of a study.  In response, the Court asserted that Vanda failed to show that FDA’s interpretation of its study was unreasonable.  Additionally, because the legal framework mandates animal studies, the Court explained, the legal framework presumes some connection between animal and human toxicity.  The Court added: “If Vanda has a quarrel with animal studies and their predictive power for humans in general, its fire would be more appropriately aimed at the controlling statute and regulations, not at FDA’s actions in this case.”  Finally, the Court stated that Vanda’s litigation-driven “argument is dead in the water: the administrative record makes clear that FDA had noticed and was concerned about the adverse toxicity findings in the 3-month nonrodent studies well before the lawsuit was filed in February 2019.”

The results of the case are not surprising.  Back in February 2019, we predicted both a remand and deference to the Agency, concluding that “Vanda would then be left in the same place it is now but after several years of litigation” and still required to complete a dog study.  Based on our experience, this outcome was essentially guaranteed.  Almost a year later, we are back to the same question: what was in this for Vanda?

Nonetheless, as avowed animal lovers, our interest in this case was no less due to the implications for animal studies as it was on the implications for FDA jurisprudence.  Unfortunately, the Court was silent on this aspect of the case.  Instead, the Court left the question of the necessity of animal studies to FDA, which has committed to reduce, refine, and replace.  This commitment, emphasized as recently as 2018, is intended to “potentially replace much of the need to use dogs in future trials with new informatics tools.”  FDA wants to “do one single study involving a small number of dogs—where the dogs will only be subject to minimally invasive blood sampling, and adopted as pets at the completion of the short trial—to eliminate the need for the use of dogs in certain types of future studies, some where they might have been euthanized.”  Perhaps this statement, combined with the inconsistent demand of further dog testing, is really what prompted Vanda to file this lawsuit.  We may never know.  But, given FDA’s zealous defense in this lawsuit, with allegedly questionable scientific rational, there may be some activists questioning FDA’s actual commitment to reduce, refine, and replace.

By Riëtte van Laack —

On January 24, 2020, the Food Safety Inspection Service (FSIS) announced that it had received a Petition by Marler Clark LLP, on behalf of several individuals (victims of food poisoning from Salmonella containing meat or poultry products) and three consumer advocacy organizations (Food & Water Watch, Consumer Federation of America, and Consumer Reports), requesting that FSIS declare 31 salmonella serotypes adulterants; Petitioners identified the 31 serotypes because they have been implicated in one or more outbreaks associated with poultry or meat or product recalls.

Petitioners request that FSIS act through interpretive rulemaking.  According to Petitioners, an interpretative rule is the appropriate action.  Pointing to an FSIS action in 1994 when the Agency declared E. coli O157:H7 in ground beef an adulterant, they discuss that the Federal Meat Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA) do not require that FSIS engage in substantive rulemaking requiring notice and comment procedures.  In fact, under the Administrative Procedures Act, 5 U.S.C. § 553(b)(3)(A), FSIS may issue “interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice.”

Whether Salmonella is an adulterant has been a topic of discussion for decades.  Most recently in 2011, when the Center for Science in the Public Interest petitioned FSIS to classify four strains of antibiotic resistant (ABR) Salmonella as adulterants.  In 2014, FSIS denied CSPI’s petition because, according to the Agency, there was insufficient information to support the requested action; among other things, FSIS concluded that the CSPI petition provided insufficient information about differences between ABR and non-ABR Salmonella.

The current Petition specifically identifies the 31 Salmonella serotypes as are adulterants because:

1. they are not naturally present in the final products but a result of contamination during processing after slaughter, and
2. the serotypes’ associations with outbreaks due to consumption of meat and poultry demonstrates that the serotypes ordinarily render meat and poultry products injurious to human health.

Thus, the Petitioners claim, the 31 Salmonella serotypes are “added substances,” and they must only meet the “may be injurious,” rather than the ordinary injurious criterion to be deemed adulterants.  That said, even if FSIS were to disagree that the Salmonella in meat and poultry is an added substance, Petitioners assert and discuss evidence that the identified serotypes are “ordinarily injurious.”  Thus, they claim, the serotypes are adulterants under the FMIA, 21 U.S.C. § 601(m)(1), and the PPIA, 21 U.S.C. § 453(g)(1).

Petitioners discuss at some length the argument that cooking will inactivate the pathogens; FSIS and others have asserted that Salmonella in meat and poultry can be inactivated by cooking.  To counter this argument, Petitioners present evidence that some Salmonella serotypes are more heat resistant than previously believed.  Moreover, it is not just undercooking; the bigger threat comes from cross-contamination and studies show that consumers are uninformed about the proper way to handle (Salmonella-containing) meat and poultry.  The continued reliance on inexpert consumers to prevent foodborne outbreaks due to Salmonella contamination of meat and poultry has been shown ineffective; Petitioners believe FSIS should become proactive and place the responsibility on the industry to avoid the introduction of Salmonella into meat and poultry.

As mentioned above, Petitioners claim that FSIS does not need to engage in substantive rulemaking as a predicate to interpret the FMIA and PPIA and deem a substance an adulterant.  Although FSIS could continue to make such determinations on a case-by-case basis, Petitioners believe that an interpretive rule declaring the Salmonella serotypes adulterants would encourage the meat and poultry industry to engage in more effective oversight measures and create and implement effective preventative measures.  Petitioners point to the effect of the 1994 interpreted rule on E. coli O157:H7 incidence in meat and poultry as evidence of the effectiveness of the requested action.

FSIS opened a docket on regulations.gov.  Comments are due Mar. 23, 2020.

By Jeffrey K. Shapiro —

The FDA is taking very seriously the threat of the coronavirus from China (2019‑nCoV).  Makers of medical devices, drugs and biologics should consider whether their products can contribute to countering this threat.

In late January, FDA announced its strategy to advance development of medical countermeasures to prepare for the coronavirus threat.  FDA made clear in its January strategy statement that private industry has a role:

As with any emerging public health threat, the FDA will collaborate with interagency partners, product developers, international partners and global regulators to expedite the development and availability of medical products needed to diagnose, treat, mitigate and prevent such outbreaks.  (Italics added.)

As a first step, on February 4, the Secretary of Health and Human Services (HHS) issued a public health emergency determination for the coronavirus.  This determination effectively authorizes FDA to issue emergency use authorizations (EUAs) for unapproved devices, drugs, and biologics (or unapproved uses of otherwise approved products) that may be effective medical countermeasures to combat a pandemic.  FDA also has additional authorities, e.g., to waive expiration dating and Good Manufacturing Practice (GMP) requirements.

On the same date as the determination, FDA issued its first EUA, authorizing use emergency use of the Centers for Disease Control and Prevention’s (CDC) 2019-nCoV Real-Time RT-PCR Diagnostic Panel.  Prior to the EUA, this test was limited to use at CDC laboratories; FDA’s authorization allows the use of the test at any CDC-qualified lab across the country.

Products made by private industry are also eligible for EUAs.  FDA has issued a detailed guidance on how to work with the agency to obtain one.  In a nutshell, to issue an EUA, FDA must find:

• The threat (e.g., coronavirus) is capable of causing a serious or life-threatening disease or condition. (That requirement is clearly met.)
• The potential product is intended to to diagnose, treat, or prevent the coronavirus. It must be shown that it “may be effective” in achieving this intended use.
• The known and potential benefits of the product outweigh the known and potential risks, looking at the totality of the scientific evidence. Such evidence may include (but is not limited to): results of domestic and foreign clinical trials, in vivo efficacy data from animal models, and in vitro data.
• There must be no adequate, approved, and available alternative to the candidate product for diagnosing, preventing, or treating the disease or condition. A potential alternative product may be considered “unavailable” if there are insufficient supplies of the approved alternative to fully meet the emergency need.  A potential alternative product may be considered “inadequate” if, for example, there are contraindicating data for special circumstances or populations (e.g., children, immunocompromised individuals, or individuals with a drug allergy), if a dosage form of an approved product is inappropriate for use in a special population (e.g., a tablet for individuals who cannot swallow pills), or if the agent is or may be resistant to approved and available alternative products.

The bottom line – if a firm has a device, drug or biologic not yet FDA‑cleared or approved, but that could help fight the corona virus ‑ now is the time to look at FDA’s guidance and see whether an EUA might be appropriate.

By Michelle L. Butler —

On February 10, the Court of Appeals for the Federal Circuit ruled that the Department of Veterans Affairs (“VA”) erred in interpreting the Trade Agreements Act of 1979 (“TAA”) and the Federal Acquisition Regulation (“FAR”) to exclude from procurement pharmaceutical products that are manufactured in the United States using an active pharmaceutical ingredient (“API”) made in a foreign country.  Acetris Health, LLC v. United States, No. 2018-2399 (Fed. Cir. Feb. 10, 2020).  Acetris had brought this action in the Court of Federal Claims as a result of the VA’s determination that certain of Acetris’ products were not TAA and FAR-compliant because the products contained APIs from India that were made into tablets in the United States.  The Court of Federal Claims ruled in Acetris’ favor.  (See our blog post on the lower court decision here.)

As an initial matter, the Federal Circuit rejected the government’s arguments that the case was not justiciable on grounds that the case was moot, that there was no constitutional or statutory standing, and that previously filed and pending suits in the Court of International Trade divested the lower court of jurisdiction.  Decision at 10-18.  On the merits, the Federal Circuit concluded that the VA’s interpretation of the TAA and the FAR was erroneous.  The Federal Circuit analyzed the TAA and the FAR separately.

The TAA prohibits the procurement of products that are products of a foreign country or instrumentality that is not designated by statute.  According to the Federal Circuit, in this case, the relevant question “is whether Acetris’ products, which are made into tablets in the United States using API made in India (a non-designated country), are ‘products of’ India for which procurement is prohibited by the TAA” under the TAA’s rule-of-origin test.  Id. at 18.  This test states that

An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.

Id. at 19 (emphasis in original; citations omitted).  The Federal Circuit found that Acetris’ products (the government conceded that the tablets are the products) are not products of India as they do not meet either prong of this test; they are neither wholly the manufacture of India nor substantially transformed in India.  Id.  The Federal Circuit concluded that because “the TAA only excludes products from government procurement if they are “products of” a foreign country like India, the TAA does not bar the VA from procuring Acetris’ products.”  Id.

Regarding the FAR, the Federal Circuit explained that the Trade Agreements contract clause is different from the TAA as it provides in relevant part that

“[t]he Contractor shall deliver under this contract only U.S.-made . . . end products.”  FAR § 52.2255.  The FAR does not adopt the TAA’s country-of-origin test for determining what are “products of a foreign country or instrumentality.”  19 U.S.C. § 2518(4)(B).  Instead, the FAR defines “U.S.-made end product” as “an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States.”  FAR § 25.003.

Id. at 19-20.  The Federal Circuit determined that Acetris’ products are U.S.-made end products under the plain meaning of the FAR.  In coming to this conclusion, the Federal Circuit rejected an argument by the government that the products are not manufactured in the U.S. because they are not substantially transformed in the U.S.  The Federal Circuit determined that the “or” in the FAR clause “reflects an intent not to require ‘substantial transformation’ for analysis under the FAR; ‘manufacture’ does not require substantial transformation.”  Id. at 22.  The Federal Circuit did not need to and did not decide whether Acetris’ products are substantially transformed in the U.S.

While upholding the lower court’s decision, the Federal Circuit disagreed with some of its reasoning and found the judgment “imprecise and confusing.”  Id. at 23.  The Federal Circuit directed the lower court on remand to

declare that: (1) under the TAA, a pharmaceutical product using API made in India does not, because of that fact, thereby become the “product of” India; and (2) under the FAR, the term “U.S.-made end product” may include products manufactured in the United States using API made in another country.

Id.

Because the Federal Circuit did not address whether putting a product into tablets (or other finished dosage form) is considered to be substantial transformation, the decision does not address two alternative scenarios: (1) whether a product with API from a designated country (e.g., France) that is put into finished dosage form in a non-designated country (e.g., India) can be offered to the government and (2) whether a product with API from a non-designated country (e.g., India) that is put into finished dosage form in a designated country other than the U.S. (e.g., France) can be offered to the government.

The government has 90 days after entry of the judgment to appeal this decision to the Supreme Court.

By Karin F.R. Moore —

Yesterday’s announcement by the U.S. Federal Trade Commission (“FTC”) that it was issuing so-called “6(b) Orders” to heavyweights in the tech industry at first glance, might not seem relevant to most readers of the blog, but it is.   As the announcement reminds us, “Section 6(b) of the FTC Act . . .  authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose.”  We’ve previously posted about the FTC’s use of 6(b) authority to compel information from companies on their practice in marketing food to children.  Moreover, because of the “vital importance of quality healthcare services at competitive prices to every American consumer” the statement of FTC Commissioners Wilson and Chopra in connection with the announcement regarding big tech specifically asks the Commission to “next” use its 6(b) authority to focus on the healthcare sector, specifically calling out pharmaceutical companies, hospitals, and dialysis chains.    These FTC Act 6(b) orders, seek significant amounts of documents and data from those who receive them.  For example, the FTC’s Order to Alcoholic Beverage Manufacturers sought detailed information “on the effectiveness of voluntary industry guidelines for reducing advertising and marketing to underage audiences.”  Recipients of 6(b) orders need to understand their rights and responsibilities.  The FTC’s own website explains the basics:

As with subpoenas and CIDs, the recipient of a 6(b) order may file a petition to limit or quash, and the Commission may seek a court order requiring compliance. If a party fails to comply with a 6(b) order after receiving a notice of default from the Commission, the Commission may commence suit in federal court under Section 10 of the FTC Act, 15 U.S.C. Sec. 50. After expiration of a thirty-day grace period, a defaulting party is liable for a penalty for each day of noncompliance. Id.; Commission Rule 1.98(f), 16 C.F.R. Sec. 1.98(f).

As a refresher, the FTC consists of five Commissioners, no more than three of which can be members of the same political party.  Commissioner Wilson is one of three Republicans and Commissioner Chopra, one of the two Democrats currently on the Commission.  Given the seeming bipartisan interest in the healthcare sector, it seems reasonable to expect a 6(b) order later this year.  In any event, we’ll continue to monitor this and other FTC developments.

Hyman, Phelps & McNamara, P.C. (“HP&M”) is pleased to announce that Karin Moore has become its newest Director.  Drawing on her years of experience as a former general counsel to leading trade associations, Karin is an industry expert and thought leader in the areas of food and beverage, personal care products, household products and beverage alcohol who can anticipate issues, aid in client innovation and transformation, and mitigate the multitude of risks to those clients.

As a Director at HP&M, Karin will provide strategic regulatory and policy advice on ingredients and finished products, and compliance with labeling and advertising requirements. She will help clients interpret the implementation of new requirements, such as those arising from the Bioengineered Food Disclosure Standard, the Food Safety Modernization Act, Prop 65 and other state ingredient labeling mandates. She will also work at the intersection of FDA regulated products and antitrust, drawing on her expertise in both areas.

Prior to joining HP&M, Ms. Moore was General Counsel of the Grocery Manufacturers Association (now Consumer Brands Association), and Co-General Counsel of the Wine & Spirits Wholesalers of America.  Before that, she practiced antitrust law as Counsel at O’Melveny & Myers LLP where she focused on antitrust litigation, civil and criminal investigations, and federal and state class action defense. She previously held a variety of positions with the U.S. Federal Trade Commission’s (FTC) Bureau of Competition, including Counsel to the Director and staff attorney. She earned her J.D., from George Mason University School of Law and her B.A. from Hobart and William Smith Colleges.

“During my time at Grocery Manufacturers Association, I worked with so many wonderful people and companies in the CPG industry, and I am excited to continue to support them at HP&M. The depth and breadth of technical expertise and industry knowledge that HP&M offers will allow me to continue to work with an industry I love, and to further broaden my own expertise,” said Ms. Moore.

Hyman, Phelps & McNamara, P.C. (“HP&M”) is pleased to announce that Richard Lewis has become its newest Senior Regulatory Device & Biologics Expert.   Coming to us after more than 4 years at FDA, Richard worked in the Center for Biologics Evaluation and Research (CBER) and the Center for Devices and Radiological Health (CDRH) in both pre-market and compliance roles.

As a one of HP&M’s regulatory experts, Richard is using the training and experience gained at FDA as a pre-market reviewer to provide regulatory advice for medical devices, diagnostics, biological products, and human cellular and tissue-based products (HCT/Ps). In the post-market compliance space, Richard uses his GMP and inspection training and experience to assist clients in the handling of complaints, MDRs, Recalls, cGMP Compliance, Inspections, and Warning Letters.

Prior to joining FDA, Richard was a chemistry researcher in academia for eight years.  He received his Ph.D. in Inorganic Chemistry at UC Santa Barbara and continued his training during a post-doctoral appointment at Yale University.

By Kurt R. Karst —

As more biosimilars are approved (we’re up to 26 now!), FDA has been rolling out guidance documents under the Biosimilars Action Plan (“BAP”).  The most recent guidance has been long awaited.  While the Hatch-Waxman Act explicitly provides that an applicant can seek approval for only some of the uses for which the reference product is approved – ultimately resulting in a labeling “carve out” – the Biologics Price Competition and Innovation Act contains no such language.   However, back in 2018, then-Commissioner Gottlieb slipped into the BAP roll-out a reference to a guidance intended to “provide additional clarity to biosimilar applicants who seek approval for fewer than all conditions of use for which the reference product is licensed because, for example, one of the licensed conditions of use of the reference product is protected by a patent,” signaling to industry that FDA intended to permit carve-outs in biosimilar labeling.

At last, that guidance has arrived.  The new guidance, Biosimilars and Interchangeable Biosimilars: Licensure for Fewer Than All Conditions of Use for Which the Reference Product Has Been Licensed, makes it explicitly clear that carve-outs are permissible for biosimilars.  Like with NDAs, the guidance explains the situations in which a carve-out (or approval of fewer than all conditions of use for which the reference product is licensed) may occur when a condition of use is protected by exclusivity, such as Orphan drug Exclusivity, or by patent.  In such a case, FDA can license the biosimilar for any indications or conditions of use that are not protected by the relevant exclusivities or patents.

As with NDAs, aBLA sponsors seeking to carve-out an indication must submit draft labeling including all information from the reference product labeling to support the relevant (uncarved-out)  conditions of use.  As part of the aBLA review, FDA will consider whether the information carved out is essential scientific information needed for safe use of the product; if it is, FDA will not permit the carve-out.

Given the stark differences between the patent dance for NDAs and BLAs, the process for carving out conditions of use in these submissions is different.  Notably, the guidance explains that “FDA does not expect an applicant to submit a justification for the applicant’s decision not to seek licensure of a biosimilar for all of the reference product’s licensed conditions of use.”  This differs from a carve-out in an NDA, in which a section viii statement or exclusivity statement is necessary to justify the carve-out.  The lack of such a requirement for aBLAs is logical, as there is no requirement to certify to any reference product patents or discuss exclusivities in a given aBLA submission.  However, FDA will accept “information that is intended to inform FDA’s review of the draft labeling,” such a justification of why certain clinical trial information can be carved-out without raising safety or efficacy issues.

When ready to add such a carved-out condition of use into the labeling, the aBLA holder must submit a supplement to the aBLA containing all data and information needed to support licensure of the biosimilar with that condition of use.  FDA expects that it will review and act on aBLA supplements seeking licensure for additional conditions of use within 6 months.  Though the Biosimilar User Fee Act Goals Letter gives the agency 10 months to do so, FDA thinks that it can surpass this goal, assuming the supplement does not raise novel review issues.

While carve-outs for exclusivity purposes will prevent FDA from approving a supplement adding in a carved-out condition of use until the expiration of exclusivity, the same bar does not extend to carve-outs based on patents (or other reasons).  Indeed, FDA may license a product for conditions of use protected by patent as long as FDA determines that the requirements for licensure have met.  For that reason, FDA warns applicants in this guidance that it may review and act on a supplement early, and that an applicant should request that FDA refrain from acting on a supplement before a specified date that falls within the applicable goal date.  If the applicant requests a date beyond the applicable goal date, FDA will not honor the request.

FDA’s assertion about goal dates is important for purposes of infringement litigation.  Because the PHS Act provides that the submission of a BLA is an artificial act of infringement, the submission of the supplement to add a patented condition of use constitutes an act of infringement.  While the reference product sponsor would know about the supplement if the aBLA sponsor chooses to partake in the patent dance, the aBLA patent dance is optional; as such, a reference product sponsor may not know of the existence of an application or supplement to add a condition until FDA announces its approval.  If FDA announces a supplement approval adding a condition of use and that condition of use is still protected by patent (because FDA approved the supplement early or the applicant submitted the supplement early), the reference product sponsor will become aware and can immediately sue for infringement – even if there’s only a few days left on that patent.  Therefore, the exact date of approval of a supplement adding a carved-out condition of use could have a critical effect on infringement litigation.

The guidance also states, in a footnote, that FDA expects all applications for interchangeable products to include data to support that the product can produce the same clinical result as the reference product “in all of the reference product’s licensed conditions of use” (emphasis added).  While the interchangeable can still carve-out a condition of use, the expectation is that all data demonstrating that the product is interchangeable for that condition of use is submitted with the initial interchangeable application rather than in a supplement.  This too raises questions of infringement.  Again, because the PHS Act provides that the submission of a BLA is an artificial act of infringement, if there’s a patent protecting a condition of use and an interchangeable application is submitted with the intent to carve-out that condition of use, the act of submission is enough to allege patent infringement.  Therefore, FDA’s requirement that interchangeable applications include all data for all conditions of use, even those intended to be carved out, inherently requires interchangeable applicants to infringe patents for conditions of use that will be carved out.  In a way, it actually encourages applicants not to seek approval as an interchangeable product until all patents have run out.  In other words, because FDA’s requirement leaves interchangeable sponsors vulnerable to patent infringement allegations – even if the interchangeable is carving-out a condition of use – one might expect that aBLA sponsors would be hesitant to seek interchangeable status until all conditions of use can be included in the label.

As with all draft guidance documents, this document represents FDA’s current thinking on the matter.  There is always a chance that FDA hadn’t considered the ramifications of its requirements for interchangeable products carving out a patent.  Like always, FDA will accept comments on this guidance document.  Comments are due by April 7, 2020.