An Extra Dollop of Ketchup is Not a Crime! Confusion Over Calories on Menus Continues

An Extra Dollop of Ketchup is Not a Crime! Confusion Over Calories on Menus Continues

By Wes Siegner –
Small business owners and managers of chain restaurants subject to FDA’s menu labeling rule remain confused as to the criminality of adding an extra dollop of ketchup to a hamburger. One thing is now clear — the only way to stop FDA’s years of wasteful dithering on menu labeling is for Congress to intervene.
Last week, FDA issued another in a string of guidance documents, and again failed to explain or simplify the hopelessly complex regulations aimed at requiring the disclosure of calories on menus in chain restaurants. The tortuous and bizarre history of FDA’s efforts to interpret several pages of statutory text intended to set a flexible national standard for calorie disclosure, which the restaurant industry favors, has just become more tortuous and bizarre with FDA’s latest effort to explain a needlessly inflexible regulation. We have posted regularly on FDA’s menu labeling rule and guidance documents (see, e.g., here and here).
The most entertaining (or depressing, depending on your point of view) aspect of FDA’s latest draft guidance is the agency’s attempt to calm those who justifiably fear federal prosecution for inadvertently exposing consumers to a few extra calories. When FDA issued its final menu labeling regulation in 2014, FDA required that small business owners and/or managers certify that the calorie information they submit to FDA is “true and accurate.” Because the Federal Food, Drug, and Cosmetic Act is a strict liability criminal statute, the submission of a certification that is not “true and accurate,” even if the small business owner or manager believed it to be so, is a prosecutable criminal offense potentially subjecting the individual to fines and prison. This is a highly questionable penalty for the inadvertent failure to certify to an accurate calorie count on a slice of pizza or a piece of apple pie.
The absurdity of the situation has led members of Congress and others to object, and now FDA has attempted to convince us of its good intentions in the latest menu labeling draft guidance. FDA explains that
our goal is to ensure compliance among covered establishments in a cooperative manner, and we do not intend to penalize or recommend the use of criminal penalties for minor violations. For example, we would consider examples such as the following to be minor violations:

Inadvertently missing a calorie declaration for a standard menu item on a buffet when other items are labeled;
Minor discrepancies in the type size/color contrast of calorie declarations, provided that they are readable;
Minimal variations or inadvertent error that would only minimally impact the calorie declaration or other nutrition information, such as adding extra slices of pepperoni on a pizza or adding an extra dollop of ketchup on a hamburger when not typically added; or
Not rounding your calorie declaration correctly in accordance with the menu labeling rule.

Guidance Q&A 6.2.
These examples beg the following questions: What if I miss two calorie declarations on a buffet, or miss one and the other items are incorrectly labeled? What if there are type size discrepancies and the numbers are not readable by customers with bad eyesight? What if I add two dollops of ketchup? What if I routinely add one extra dollop so that dollop is deemed by FDA to be “typically added”? Will these violations be criminally prosecuted? OK, ridiculous, right? Well, no, not if you are the target. That FDA felt the need to explain that one dollop ketchup “violations” would not be pursued as crimes as long as they are not routine violations only further illustrates the serious deficiencies and overreach of FDA’s regulation.
And, as the Wall Street Journal pointed out on Monday (here), there is much more that is wrong with FDA’s menu labeling effort. The most profound is FDA’s misinterpretation of a statute that was intended to provide a flexible framework, given the thousands of different types of businesses that the law covers, by which to informatively disclose calories to consumers. FDA has turned this flexibility on its head by over broadly interpreting the term “menu” to include coupons and other marketing materials, even though the calorie information is accessible to consumers in other formats, and by preventing the substitution of more efficient computer and internet-based technological solutions to replace expensive printed material. The latest guidance ostensibly was meant to resolve these key issues, but it fell far short of that goal. In fact, the latest FDA effort causes even more confusion and unpredictability by creating a new “enticement” test that appears to turn additional marketing materials into “menus.” And FDA purports to provide flexibility by allowing restaurants to declare calories via in-store tablets and electronic kiosks; but this is nothing new and is hardly flexible – if a restaurant that declares calories via tablet or kiosk also has a traditional menu board, the menu board must also declare calories.
The most significant problems with FDA’s current regulation have not been and cannot be fixed by guidance, as “non-binding” guidance cannot change requirements that are set through regulation. Unless Congress finally turns its attention to the Common Sense Nutrition Disclosure Act, a bill that would lead FDA down the right path, small businesses will not only be forced to waste many more millions of dollars on useless compliance measures, they will be left wondering whether even their well-intended efforts might be subject to arbitrary federal prosecution.

{ Comments are closed }

What to Do When You Receive a DEA Order to Show Cause

What to Do When You Receive a DEA Order to Show Cause

By Andrew J. Hull –
You may be a doctor, dentist, veterinarian, pharmacy, wholesale distributor, or manufacturer, and you just received an Order to Show Cause from the Drug Enforcement Administration (DEA). An Order to Show Cause can have a significant impact on your ability to handle controlled substances and, ultimately, to practice medicine or continue business operations. An Order to Show Cause must be taken seriously and requires a prompt response. This post summarizes DEA’s Order to Show Cause process, as well as highlights some important deadlines that you must meet to preserve your rights.
What Is an Order to Show Cause?
An Order to Show Cause is DEA’s official initiation of an administrative proceeding to revoke or suspend an existing DEA registration or deny an application for a DEA registration. By law, DEA must provide you with notice and an opportunity for a hearing before it can take away your registration (or deny your application), so DEA will issue an Order to Show Cause, which explains the legal grounds for revoking or denying a registration and informs you of your right to challenge DEA’s decision.
What Are Your Options When You Receive an Order to Show Cause?
You have several options. The first is to request a hearing before one of DEA’s administrative law judges (ALJs). To preserve your right to a hearing, you must file a request for a hearing with DEA’s Office of Administrative Law Judges within thirty (30) days of service of the Order to Show Cause. A second option is to waive your right to a hearing and simultaneously file a written position statement, again within thirty (30) days of service of the Order to Show Cause. A third option is to ignore the Order to Show Cause, in which case DEA will request a final order based only on DEA’s evidence. Which option is best for you is a decision that is best made after consulting with experienced counsel.
What Happens If You Request a Hearing?
A timely request for a hearing places your case on the docket of one of the ALJs. The ALJ will issue an order for prehearing statements and schedule a prehearing conference, which is typically conducted telephonically. At the prehearing conference, the ALJ will set a date and location for the hearing.
The hearing closely resembles a trial, but the ALJ (rather than a jury) is the trier of fact. Both the government (represented by DEA counsel) and you will have an opportunity to present your case through witness testimony and written evidence. Hearings can range from half a day to several weeks, depending on the complexity of the case. After the hearing, both parties may submit post-hearing briefs, and the ALJ will issue a recommended decision. The parties may file exceptions to the decision if they believe the ALJ made a factual or legal error in the decision. The recommended decision is submitted to the DEA Administrator who reviews the decision, rules on the exceptions, and issues a final order regarding your registration, either adopting or rejecting the ALJ’s recommended decision.
Not all cases end up going to hearing, however, as DEA is often willing to reach a settlement resolution.
What Happens If You Waive Your Right to a Hearing?
If you choose to forgo a hearing, the government will forward your case with its evidence (along with any timely submitted position statement) to the Administrator. The Administrator will then issue a final order based on the review of the evidence and written statements provided.
What Is an Immediate Suspension Order?
An Immediate Suspension Order is the exception to the rule that DEA will not revoke or suspend an existing DEA registration prior to a hearing. An Immediate Suspension Order allows DEA to suspend your registration upon a determination that there is an “imminent danger to the public health and safety.” An Immediate Suspension Order is served along with an Order to Show Cause, allowing you to challenge DEA’s determination that your registration should be revoked, but it takes away your ability to handle controlled substances while your case is pending. As a result, an Immediate Suspension Order can significantly (and immediately) affect your ability to practice medicine or operate your business.
What Is a Corrective Action Plan?
A recent amendment to the law (called the Ensuring Patient Access and Effective Drug Enforcement Act of 2016) now allows recipients of an Order to Show Cause (except those also receiving an Immediate Suspension Order) to submit a Corrective Action Plan. A Corrective Action Plan provides an opportunity for the registrant to demonstrate remedial actions contemplated or taken, and requests DEA to discontinue the Order to Show Cause proceedings. What should be discussed or admitted in a Corrective Action Plan, as well when it should be submitted (the law is unclear), is a decision that likely should be made after seeking advice from an experienced attorney.
Are You Allowed to Have an Attorney Represent You?
You are permitted to proceed on your own (i.e., pro se) or to have an attorney represent you. Because of the complex nature of these proceedings and the stakes involved, representation by a law firm experienced in handling DEA hearings may be a necessity.
What Resources Are Available?
DEA’s Office of Administrative Law Judges website provides some helpful resources, including templates of various filings. We also regularly blog on DEA administrative cases and procedures (see here), and our HPM attorneys have authored articles (see here and here) and spoken (see here) on the hearing process.

{ Comments are closed }

FDA Finalizes Guidance on When to Submit a 510(k) for a Change to an Existing Device

FDA Finalizes Guidance on When to Submit a 510(k) for a Change to an Existing Device

By Rachael E. Hunt & Allyson B. Mullen –
On October 25, 2017, FDA issued a final guidance: Deciding When to Submit a 510(k) for a Change to an Existing Device. This guidance is a final version of the draft issued in 2016 (see our post on the 2016 draft here). Despite receiving a significant number of comments, the final guidance is largely unchanged from the 2016 draft.  Industry should also be comforted to know that the final guidance is also, at its core, very similar to the 1997 guidance – a welcome relief as compared to the 2011 draft guidance.
The most significant change from the draft to final guidance has to do with the analysis for labeling changes. As we discussed in our blog post on the draft guidance, the draft merely acknowledged that changes to the indications for use were some of the most difficult to assess.  The draft guidance did little to elaborate on how a 510(k) holder should assess whether a new 510(k) is required for a changed to a device’s indications for use.  The final guidance seeks to provide additional clarity, and in fact, adds five additional questions to Flowchart A, Labeling Changes (Questions A1.1 – A1.5). 
These additional questions suggest that if an indication change goes from single use to multiple use or from prescription use to OTC use a new 510(k) is always required. The questions also highlight that there may be additional flexibility in other types of indication changes.  For example, if a change does not “describe a new disease, condition, or patient population” nor does a “risk-based assessment identify any new risks or significantly modified existing risks,” a change to the indications for use may be documented without a new 510(k). 
We should also highlight a new example FDA includes in Appendix A of the final guidance. This example highlights an indication for use change using a cleared device on a similar, closely related anatomical area.  FDA proceeds through the new flowchart and concludes that a new 510(k) is required because, although “there are no new or increased safety risks associated with the use of the device . . . the new indication for use is associated with a risk of significantly reduced effectiveness” due to the difference in anatomical area.  We read this example as saying that any indication change where new effectiveness data is required to support an indications for use change, a new 510(k) will be required, because the change “could” affect safety or effectiveness.  In sum, manufacturers should ensure that they carefully consider the examples in Appendix A as well as the text associated with the flowcharts when assessing whether a new 510(k) is required.  The examples and text should especially be discussed when a decision not to file a 510(k) is documented.
A notable carry-over from the draft guidance is FDA’s requirement that decisions not to file a new 510(k) be thoroughly documented. The final guidance makes clear that simple yes/no responses or flowcharts are insufficient.  The final guidance includes sample “regulatory change assessments” with narrative explanations and responses to each inquiry in the decision-making flow chart.
A few other noteworthy changes between the final and the draft guidance include:  

The Guidance document emphasizes that it is “not intended to implement significant policy changes to FDA’s current thinking on when submission of a new 510(k) is required,” but rather the intent of the guidance is to “enhance predictability, consistency and transparency of the “when to submit’ decision-making process.” Accordingly, unlike with some other significant guidance documents, FDA has not provided for a future effective date for the final guidance meaning that it went into effect immediately on October 25th.
The final guidance adds an introductory statement regarding the least burdensome provision, which is unsurprising in light of the provisions in the 21st Century Cures Act re-emphasizing “least burdensome.”
FDA clarifies that this guidance applies to remanufacturers and relabelers who hold their own 510(k).
In conjunction with this guidance, FDA also issued a guidance regarding when to submit changes for a software device. The final guidance clarifies that when there are multiple changes, including changes covered by this guidance as well as software changes, the changes should be analyzed under both guidances and if either guidance results in a new 510(k) being required, one should be submitted.

In sum, the final guidance provides some additional clarity beyond the 2016 draft guidance and is conceptually very similar to the 1997 guidance. This final guidance, much like the 2016 draft, provides additional detail and explanation as compared to the 1997 guidance intended to aid manufacturers in making the often difficult decision as to whether a new 510(k) is required for a change to a device.  However, as discussed above, with the extensive examples provided in this final guidance (more than 40 individual examples are provided in Appendix A) some of the manufacturer judgment allowed for by the flowcharts may be lost and manufacturers should be cautioned to consider carefully the examples provided in the Appendices when making their decisions.

{ Comments are closed }

FDA Denies Millennium Petition on Generic VELCADE and . . . Yada, Yada, Yada . . . Permits ANDA Labeling “Carve-in”/“Carve-up”

FDA Denies Millennium Petition on Generic VELCADE and . . . Yada, Yada, Yada . . . Permits ANDA Labeling “Carve-in”/“Carve-up”

By Kurt R. Karst –      
Last week, FDA did something unprecedented (although not unexpected, at least by this blogger)! And based on the absence of any reporting in the trade press or online chatter, nobody seems to have taken note of FDA’s decision.  In a November 6, 2017 response to a June 9, 2017 Citizen Petition (Docket No. FDA-2017-P-3672) submitted by Millennium Pharmaceuticals, Inc. (“Millennium”) concerning the company’s drug product VELCADE (bortezomib) for Injection, 3.5 mg/vial (NDA 021602), FDA – apparently for the first time ever – ruled that the Agency will allow a generic drug manufacturer to “carve-up” brand-name labeling and “carve-in” to generic drug labeling a condition of use that no longer appears in brand-name labeling.
We won’t go page-by-page through Millennium’s 31-page Citizen Petition and various requests, or FDA’s 21-page Petition Decision. Instead, like Seinfeld’s Elaine Benes, we’re going to “yada, yada, yada” over most of the content of those documents and just get to the endgame. But first, a little background. . . .
In March 2017, we put up a post, titled “Orphan Drugs: The Current Firestorm, a Real Evergreening Issue, and a Possible Solution” We described the “Real Evergreening Issue” alluded to in the title of the post as follows:

[T]here may be a real evergreening issue that’s probably been overlooked by most folks. In some cases, a single orphan drug designation can result in multiple periods of orphan drug exclusivity. . . .
In most instances, multiple and staggered periods of orphan drug exclusivity stemming from the same designation do not stymie generic competition. For example, if FDA grants an orphan drug designation for Drug X for Disease Y and the sponsor first obtains approval of the drug for use in adults with Disease Y and then later for the same drug for use in children with Disease Y, FDA would grant two separate periods of orphan drug exclusivity – one for each approval.  An ANDA applicant may obtain approval of the drug for the adult population indication once the initial period of orphan drug exclusivity expires, and then later for the pediatric population indication once that second period of orphan drug exclusivity expires.
But not all cases are as easy as the one above. You see, indications, like Pokémon, can evolve into something new.  There appear to be a growing number of cases where FDA has granted multiple periods of orphan drug exclusivity based on the same original orphan drug designation, and where the drug’s indication evolves into something new, shedding and subsuming the previous indication statement.  This could occur, for example, as different disease stages or different lines of therapy are approved.  (Some possible examples of this might be in the cases of Ibrutinib, Cinacalcet, Bortezomib, and Bevacizumab.)  As the old labeling is shed, the new labeling may not allow for an ANDA (or biosimilar) applicant to easily (if at all) omit information protected by a new 7-year period of orphan drug exclusivity.
But is the solution to what may be a real evergreening problem opening up the Orphan Drug Act? This blogger thinks that there could be a better solution. . . . [One] possible remedy is for [the Office of Generic Drugs] to take a broader view of permissible labeling changes. That is, considering so-called labeling “carve-ins” that clarify the omission of other labeling information (and effectively return an indication to its previous state).  It’s a topic FDA raised a few years back (see our previous post here), but that the Agency ultimately decided not to address.

Curiously, Millennium’s Citizen Petition was submitted to FDA just a few weeks later and raised, among other things, the precise issue we described in our March blog post. Specifically, Millennium requested that FDA:

Refrain from approving any ANDA or 505(b)(2) bortezomib product for any mantle cell lymphoma indication with labeling that omits information regarding the safe and effective conditions of use for treatment in previously untreated patients or labeling that adds new language to modify Velcade’s current mantle cell lymphoma indication.
Seek public comment if FDA is considering allowing an ANDA applicant to revise Velcade’s current mantle cell lymphoma indication by adding new language, consistent with FDA’s prior action in a similar situation.

. . . and yada, yada, yada . . . FDA says in the Agency’s November Petition Decision that the Agency will, in fact, permit ANDA applicants to “carve-in” and “carve-up” brand-name labeling. Here are the important parts to note from FDA’s Petition Response (pages 12-15):

Velcade was approved as a second-line treatment for mantle cell lymphoma in 2006.  The indication was changed in 2014 to include previously untreated patients (i.e., first-line treatment), resulting in a revised indication “for the treatment of mantle cell lymphoma.”  The Petition states that the “approval of the revised mantle cell lymphoma indication resulted in multiple exclusivity periods, including orphan drug exclusivity.”  The Petition notes the following:
VELCADE was awarded orphan exclusivity in 2006 for “Treatment of patients with mantle cell lymphoma who have received at least 1 prior therapy.”  With regard to the current orphan exclusivity, FDA’s orphan database describes the “approved labeled indication” as “Treatment of patients with mantle cell lymphoma who have not received at least 1 prior therapy.”  That set of patients was incorporated into the labeling through the revised indication statement, which states that “VELCADE is indicated for the treatment of patients with mantle cell lymphoma.”
The Petition states that FDA may not approve “any bortezomib product for the treatment of patients who have not received at least 1 prior therapy” until the expiration of the orphan drug exclusivity period on April 8, 2022 and further states “[b]ecause VELCADE has only one broad mantle cell lymphoma indication, . . . FDA may not approve any ANDA or 505(b)(2) ‘for the treatment of mantle cell lymphoma.’”
The Petition argues that FDA should not allow ANDA applicants to carve out the protected first-line indication and to seek approval for the non-protected aspects of the treatment of mantle cell lymphoma indication.  The Petition states that “FDA’s carve-out authority and precedent make clear that the agency will permit only omissions and minor attendant changes” to approved labeling.  According to the Petition, “[i]t is not possible to omit words from the current mantle cell lymphoma indication and/or to make de mininus changes to arrive at an indication that does not disclose the exclusivity-protected use for first-line mantle cell lymphoma.”  The Petition states that an ANDA applicant “would have to add language to create a new indication for second-line treatment that is not part of VELCADE’s current labeling.”  In other words, because Velcade’s current labeling contains a broad indication “for the treatment of mantle cell lymphoma,” the Petition contends that applicants may not carve out the protected first-line indication without impermissibly changing the language of the indication or referencing a discontinued version of Velcade’s labeling.  The Petition asserts, however, that FDA lacks the authority to approve of such a change. . . .
FDA disagrees with the Petition’s assertion that FDA may not approve ANDAs or 505(b)(2) applications for bortezomib drug products that rely on Velcade and that propose to carve out Velcade’s protected first-line information regarding mantle cell lymphoma (i.e., the indication for “treatment of patients with mantle cell lymphoma who have not received at least one prior therapy”).  Prior to the approval of supplement 040 to NDA 021602, the labeling for Velcade included the following second-line treatment indication:  “VELCADE is indicated for the treatment of patients with mantle cell lymphoma who have received at least 1 prior therapy.”  The second-line treatment indication for mantle cell lymphoma currently is not protected by exclusivity.  Upon approval of supplement 040, the Indications and Usage section was revised to include a new patient population for mantle cell lymphoma, patients who have not received at least one prior therapy.  Thus, the revised indication included both patients who have received at least one prior therapy (the second-line treatment indication that is unprotected by exclusivity) and patients who have not received at least one prior therapy (the first-line treatment that is protected by exclusivity).  The current approved indication provides that “VELCADE is indicated for the treatment of patients with mantle cell lymphoma.”  It would be appropriate, in FDA’s view, to omit the exclusivity-protected information and retain the non-protected indication for the “treatment of patients with mantle cell lymphoma who have received at least 1 prior therapy.” . . .
In this situation, FDA may omit the first-line mantle cell lymphoma indication.  However, because of the way the indication is currently worded, the only way to omit the protected indication is to add words.  FDA could have approached the labeling for Velcade differently.  As described above, when the indication for “treatment of patients with mantle cell lymphoma who have not received at least one prior therapy” was granted exclusivity under the Orphan Drug Act, the indications for both first- and second-line treatment of mantle cell lymphoma were written as “treatment of patients with mantle cell lymphoma,” which FDA believes to be clear and concise.  We note that the mantle cell lymphoma indications could have been written as “treatment of patients with mantle cell lymphoma who have received at least one prior therapy and treatment of patients with mantle cell lymphoma who have not received at least one prior therapy.”  If the indications had been written as such, then omission of the words describing the protected indication would result in “treatment of patients with mantle cell lymphoma who have received at least one prior therapy” and would presumably be allowable under the Petition’s “only omissions” standard.  We do not believe it would be appropriate for the scope of exclusivity for Velcade to be broadened due to the writing of labeling in a clear and concise manner.  Further, we think this is consistent with our past practice.  FDA does not believe there is a need to solicit public comment on this change in labeling. 

Based on some recent patent infringement litigation, it does not appear that FDA will be approving generic VELCADE any time soon.  As such, we are unlikely to see Millennium sue FDA with respect to the Petition Decision discussed above.  But the “carve-in”/“carve-up” issue is likely to come up again soon (perhaps in the coming months) in the context of another drug we identified in our previous post on the topic.  We’ll leave it to our readers to ponder what drug that might be.  

{ Comments are closed }

FDA’s Digital Health Software Precertification (Precert) Program

FDA’s Digital Health Software Precertification (Precert) Program

Digital health technologies are moving forward toward rapid adoption in the United States.  Yet, software developers are often apprehensive about the often long and detailed process of FDA’s premarket review.  FDA’s new Digital Health Software Precertification (Precert) Program (“Precert Program”), announced in August 2017 (see our previous post here), seeks to pilot a “fast-track” process for developers of software-as-a-medical device that the FDA trusts to produce consistently high quality, safe and secure products, removing the necessity to undergo the full-blown design and validation review for each new software product.
In an article published in Digital Health Legal, titled “FDA’s Digital Health Software Precertification (Precert) Program,” Hyman, Phelps & McNamara, P.C.’s Jeffrey K. Shapiro, provides background to and discussion of FDA’s review processes and its new Precert Program, and considers the impact the Precert Program may have on the digital health market.

{ Comments are closed }

Just in time for Halloween, California Retailers Charged with Illegal Sale of Cosmetic Contact Lenses

Just in time for Halloween, California Retailers Charged with Illegal Sale of Cosmetic Contact Lenses

By Douglas B. Farquhar –
Back in the day, there were some freaky-looking cosmetic contact lenses that could make people look like they had the eyes of a wolf, a fish, or an insomniac vampire (excuse the redundancy, please). The costume accessories were especially popular with the frightener, if not the frightened. But, this Halloween, it was the FDA that was striking fear into the hearts of its targets. Four days before Halloween, the U.S. Attorney’s Office for the Central District of California filed misdemeanor criminal charges (here and here) against two retailers, TS Group, Inc. with a “retail location” in Rowland Heights, California, and I-Takashima, Inc., with a “retail location” in Irvine, California. Both were charged with violating the Federal Food, Drug, and Cosmetic Act by holding for sale and then selling cosmetic contact lenses without a prescription, thereby causing the cosmetic contacts, classified as medical devices, to be misbranded (because they do not have adequate directions for use when not sold pursuant to a prescription).
This brought back to mind the issues surrounding cosmetic contacts years ago. Back in the early part of this millennium, arguments were made that cosmetic contact lenses did not fit within the definition of a medical device, because they were not intended to affect the structure or function of the body and were not intended to diagnose, mitigate, cure, prevent, or treat disease. But FDA still sought to regulate them, because, FDA argued, they could cause serious problems to the human eye (infections, scratched corneas, etc.), and, if regular contacts to assist vision were regulated as medical devices, why shouldn’t cosmetic contact lenses? In 2005, Congress voted overwhelmingly to end the debate and to categorize all contact lenses – including cosmetic lenses – as medical devices (Section 520(n) of the FDCA, codified at 21 U.S.C. Section 369j(n)), thereby requiring prescriptions and instituting strict manufacturing standards.
There have since been periodic government reminders and, we believe, other criminal actions. As reported in a blog post so old that the spider webs had to be swept away, we noted that FDA and the Federal Trade Commission issued a guidance document on the subject.
In that guidance, internet purveyors of cosmetic lenses were warned that selling the cosmetic contact lenses without a prescription was illegal. Apparently, not everyone got the message.
No listing on the docket sheet as to how the companies will respond to the charges.

{ Comments are closed }

Nevada Scares Diabetes Drug Industry With Halloween List of “Essential Diabetes Drugs”

Nevada Scares Diabetes Drug Industry With Halloween List of “Essential Diabetes Drugs”

By Alan M. Kirschenbaum –
In June, we reported on Nevada S.B 539, a new law that, among other things, requires manufacturers of “essential diabetes drugs” to report certain sensitive financial information concerning these drugs. On October 31, the Nevada Department of Health and Human Services took the first step to implement this requirement by issuing its list of “essential diabetes drugs.” The list contains over 35 insulin products and other drugs, both brand and generic, determined by DHHS to be those most often prescribed for diabetes. Beginning July 1, 2018, dozens of manufacturers and repackagers of these drugs will have to annually report the cost of production, marketing and advertising costs, profit, patient financial assistance costs, patient coupon costs, PBM rebates paid, and a history of WAC increases over the preceding five years with an explanation for each increase. A second list, containing the subset of drugs on the first list that have undergone an increase in wholesale acquisition cost (WAC) greater than inflation over a one-year or two-year look-back period (measured using a statutory methodology), has yet to be issued. Manufacturers of drugs on the latter list will have to submit a more detailed explanation for their WAC increases. Furthermore, because the new statute amends Nevada’s Uniform Trade Secrets Act so that information submitted in these reports is excluded from the definition of a trade secret, nothing prohibits DHHS from disclosing or publicizing confidential information included in these reports.
As we have also reported, PhRMA and BIO have challenged the Nevada statute in a lawsuit alleging constitutional infirmities stemming from its infringement on patent and trade secret protections. Their separate motions for a Temporary Restraining Order and a Preliminary Injunction have been denied, but the case is proceeding, and we are following it closely.

{ Comments are closed }

NOP Issues Interim Instruction Regarding Organic Imports

NOP Issues Interim Instruction Regarding Organic Imports

By Riëtte van Laack –
As we previously reported, the integrity of imported organic products has been questioned. International supply chains are becoming increasingly “complex” and frequently involve a number of businesses which may be certified under different programs.
Foreign organic operations are subject to the same requirements as domestic organic operations, and only organic products verified to be in compliance with these regulations or arrangements can be imported for sale into the United States. Foreign operations may export their organic products into the United States under one of three scenarios: 1) They are certified organic by USDA-accredited certifiers under USDA organic regulations; 2) They are organic certified under a foreign standard that NOP has determined to be equivalent to the USDA organic standard; or 3) They are certified organic by foreign certifiers accredited by a foreign government to USDA standards. Organic certifiers must assess whether the imported products comply with U.S. law. As has become clear, review of an organic certificate is not sufficient. What else is needed?
On October 25, 2017, the USDA AMS National Organic Program (NOP) announced the availability of a new interim instruction regarding import of organic products. According to the Federal Register notice, the instruction is intended to clarify and strengthen compliance with existing regulations applicable to imports.  Although NOP does not specifically say so, the interim instruction appears to be an effort by NOP to address at least some of the criticisms and weaknesses identified by OIG and other parties.
The interim instruction for certifiers describes what information and documentation organic certifiers should consider when evaluating the organic integrity of imported products. The instruction also alerts certifiers to procedures that federal and state agencies may require (e.g. fumigation and radiation) which may be inconsistent with organic standards.  
NOP invites interested parties to submit comments. It is particularly interested in the parts of the instruction that “recommend best practices . . . to ensure compliance with the USDA regulations.” Comments must be submitted by December 26, 2017.

{ Comments are closed }

FTC Releases FY 2015 Staff Report on Drug Patent Settlement Agreements; Competitive DRUGS Act of 2017 Introduced in House

FTC Releases FY 2015 Staff Report on Drug Patent Settlement Agreements; Competitive DRUGS Act of 2017 Introduced in House

By Kurt R. Karst –  
Last week, the Federal Trade Commission (“FTC”) announced the issuance of the Bureau of Competition’s annual summary of agreements filed with the Commission during the last fiscal year (Fiscal Year 2015) – Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  The FTC’s FY 2015 Staff Report is the second full fiscal year report issued since the U.S. Supreme Court’s June 17, 2013 decision in FTC v. Actavis, Inc., 133 S. Ct. 2233 (2013), which addressed the standards that courts should apply in drug patent settlement cases (also known as “pay-for-delay” or “reverse payment” cases) (see our previous post on the Actavis decision). 
According to the FTC Staff Report, FY 2015 saw pharmaceutical companies file “170 agreements constituting final resolution of patent disputes between brand and generic pharmaceutical manufacturers,” but only 14 final settlements (involving 11 different brand-name products) “potentially involve pay for delay because they contain both explicit compensation from a brand manufacturer to a generic manufacturer and a restriction on the generic manufacturer’s ability to market its product in competition with the branded product.” That’s a drop from the 21 agreements reported in FY 2014, and a significant decrease from the record 40 agreements reported in FY 2012. In addition, only 39 of the 170 agreements reportedly involved ANDA sponsors eligible for 180-day exclusivity, of which 7 are identified by the FTC as “potential pay-for-delay settlements.”  The number of potential pay-for-delay settlements is the lowest since FY 2005 when there were two such agreements.
The downward trends in potential pay-for-delay settlements and settlements involving ANDA first-filers become quite apparent when we at the FDA Law Blog add percentages to the numbers supplied by the FTC and (as we have done in the past) illustrate the numbers in a table. 

 
 

Final Settlements

Potential Pay-for-Delay

Potential Pay-for-Delay Involving First Filers

FY2004

14

0 (0%)

0 (0%)

FY2005

11

3 (27%)

2 (18%)

FY2006

28

14 (50%)

9 (32%)

FY2007

33

14 (42%)

11 (33%)

FY2008

66

16 (24%)

13 (20%)

FY2009

68

19 (28%)

15 (22%)

FY2010

113

31 (27%)

26 (23%)       

FY2011

156

28 (18%)

18 (12%)

FY2012

140

40 (29%)

23 (16%)       

FY2013

145

29 (20%)

13 (9%)         

FY2014

160

21 (13%)

11 (7%)         

FY2014

170

14 (8%)

7 (4%)

TOTALS

1,104

229 (21%)

148 (13%)

Last year, the FTC noted in a blog post that the Commission was hesitant to say that the declining number of concerning agreements showed a “lasting trend.” This year, the FTC did not comment much on the report other than noting that “[w]hile the number of reverse-payment settlements has declined in FY 2014 and FY 2015, Bureau of Competition staff continues to review each patent settlement it receives to identify potentially anticompetitive agreements.” 
The declining number of potential pay-for-delay settlements and settlements involving ANDA first-filers begs the question: Is legislation still necessary to address patent settlement agreements? For the better part of a decade, we’ve seen bill after bill introduced in Congress, such as the “Preserve Access to Affordable Generics Act” (see our previous post here), to address a perceived problem in the pharmaceutical industry.  Well, despite the FTC’s last two reports (FYs 2014 and 2015), there’s still a perception among some Members of Congress that legislation is needed. . . .
On October 25, 2017, Rep. Lloyd Doggett (D-TX), along with several other co-sponsors, introduced H.R. 4117, the “Competitive DRUGS Act of 2017” (a.k.a., the “Competitive Deals Resulting in Unleashed Generics and Savings Act of 2017”). The Competitive DRUGS Act of 2017 borrows heavily from previous iterations of the Preserve Access to Affordable Generics Act.  For example, the new bill would amend the FTC Act to add a new section – Section 27 – to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 27] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product” if “an ANDA filer receives anything of value,” including an exclusive or even a non-exclusive license – apparently a new addition to the bill – and if “the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the ANDA product for any period of time.” Such agreements, if challenged, would be presumptively anticompetitive and unlawful unless it can be demonstrated “by clear and convincing evidence” that “the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement,” or, if the value received “is compensation solely for other goods or services that the ANDA filer has promised to provide.”
A new aspect of H.R. 4117 that we don’t recall seeing before is Section 2 of the bill, titled “Clawback of research and development tax benefits for manufacturers engaging in pay-for-delay.” That section states, generally, that:

If the [FTC] determines under section 27 of the [FTC Act] that the taxpayer violated section 5 of such Act in connection with the sale of a drug product (as defined in such section), then the tax under [Section 41 of the Internal Revenue Code of 1986] for the taxable year which includes the date of such determination shall be increased by the sum of the product for each of the 2 relevant years of—
(A) the aggregate decrease in the credits allowed under section 38 for such relevant year which would have resulted solely from reducing to zero any credit determined under this section, multiplied by
(B) the sales ratio for such drug product for such relevant year.

Like past legislative attempts to address patent settlement agreements, the prospects that the Competitive DRUGS Act of 2017 will be enacted into law seem dim.

{ Comments are closed }

Sixth Circuit Affirms Dismissal of Off-Label Promotion FCA Case for Lack of Rule 9(b) Specificity

Sixth Circuit Affirms Dismissal of Off-Label Promotion FCA Case for Lack of Rule 9(b) Specificity

By Andrew J. Hull –
The Sixth Circuit recently dealt another blow to relators seeking damages under the False Claims Act (FCA) based on allegations of off-label promotion. In a 2-1 decision, the court, in United States ex rel. Ibanez v. Bristol-Myers Squibb Co., affirmed the district court’s dismissal of relators’ (the government declined to intervene) second amended complaint and denial of relators’ motion to file a third amended complaint because, inter alia, relators could not plead a false claim with the specificity required under Federal Rule of Evidence 9(b).
The court affirmed the dismissal of FCA conspiracy counts, explaining that, while alleged conduct involving off-label promotion to increase the number of drug prescriptions “may be condemnable” (if true), such an alleged plan “does not amount to a conspiracy to violate the FCA.” The court held:

Even if it was foreseeable that somewhere down the line off-label prescriptions of [the drug] would be submitted to the government for payment, that foreseeable consequence does not subsume the aim of the agreement. In other words, to adequately allege an FCA conspiracy, it is not enough for relators to show there was an agreement that made it likely there would be a violation of the FCA; they must show an agreement was made in order to violate the FCA.  

Slip Op. at 10.
The court’s discussion regarding the heightened pleading standard under Rule 9(b) is also of particular note to drug and device manufacturers facing FCA complaints alleging off-label promotion. The court noted that pleading with specificity in such cases is “awkward” and requires a specific representative example demonstrating the following three elements:

The physician to whom manufacturer improperly promoted the product must have prescribed the medication for an off-label use;
The patient must have filled that prescription; and
The filling pharmacy must have submitted a claim to the government for reimbursement of that prescription.

Id. at 6-7. 
The court also rejected several examples attached to the proposed third amended complaint, which relators claimed satisfied the heightened pleading standard: 

An exhibit identifying reimbursement for prescriptions paid by state Medicaid for pediatric patients before the drug had a pediatric indication (the court noted that nothing connected the prescribing physicians to defendants’ alleged improper promotion).
Exhibits showing that a patient obtained prescriptions for an off-label use from a pharmacy (the court explained that there was no corresponding allegation that the prescriptions were presented to the government for payment, and no link to defendants’ alleged improper promotion).

The dissent rejected the notion that relators had not pled with sufficient specificity in their third amended complaint. Instead, the lone-dissenting judge noted that other circuits have found specificity when the relator alleges “particular details of a scheme to submit false claims” along with “reliable indicia that lead to a strong inference that claims were actually submitted.” Id. at 21. The judge wrote: “I cannot agree with the . . . majority opinion because the relators have pled facts sufficient to satisfy Rule 9(b) by identifying specific claims and supplementing those identifications with personal knowledge and statistical evidence.” Id. at 23.The Rule 9(b) pleading standards vary by circuit, particularly as to whether inferences supported by “reliable indicia” can constitute sufficiently plead allegations as they apply to CMS-related claims involving alleged violations of the FDC Act and FDA’s regulations (see our previous post here). The lack of a consistent standard among the circuits invites forum shopping by relators’ counsel and would benefit from Supreme Court review.
 
 

{ Comments are closed }