Attorney East Hampton

By Serra J. Schlanger —

On December 9, 2019, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a civil action in the United States District Court for the District of Oregon seeking declaratory and injunctive relief against the Acting Director of the Oregon Department of Consumer and Business Services (OR DCBS) to prevent enforcement of two Oregon laws aimed at containing drug prices: H.B. 4005, which was enacted on March 12, 2018, and H.B. 2658, which was enacted on June 20, 2019.

As discussed in our prior post (see here), H.B. 4005 requires drug manufacturers to submit an annual report containing extensive pricing and cost information for each prescription drug that has a price (defined as the wholesale acquisition cost, or WAC) of $100 of more for a one-month supply or for a course of treatment lasting less than one month, and that had a net increase of 10% or more in the price over the course of the previous calendar year.  H.B. 4005 also requires drug manufacturers to report pricing and cost information for new prescription drugs within 30 days after introducing a drug for sale in the United States at a price that exceeds the threshold for specialty drugs set in the Medicare Part D program ($670 in 2020).  Information provided to OR DCBS by manufacturers will be posted on the OR DCBS website.  H.B. 4005 states that trade secrets may not be posted on the website if “the public interest does not require disclosure of the information.”  OR DCBS regulations set forth exacting requirements for demonstrating that a designated trade secret is entitled to protection from disclosure, and, in our experience, the agency has not hesitated to question, and request additional information in support of, a manufacturer’s trade secret designation.

Oregon’s more recent law, H.B. 2658, imposes an additional requirement for drug manufacturers to report price increases to OR DCBS at least 60 days before an increase in (1) the price of a brand-name drug that will result in a cumulative increase of 10% or more, or an increase of $10,000 or more, in the price of the brand-name drug within a 12-month period; or (2) the price of a generic drug that will result in a cumulative increase of 25% or more and an increase of $300 or more in the price of the generic drug within a 12-month period.  The report must include the date and dollar amount of the increase, and a statement of whether the increase is necessitated by a change or improvement in the drug, and, if so, a description of the change or improvement.  There is an exception for a generic drug that is manufactured by four or more companies and is either (1) marketed and distributed pursuant to an abbreviated new drug application; (2) an authorized generic drug; or (3) entered the market before 1962 and was not originally marketed under a new drug application.

Similar to the complaints PhRMA filed challenging similar laws in California and Nevada (see our coverage here, here, and here), PhRMA’s latest complaint alleges that HB 4005 and HB 2568 violate federal law on four separate grounds.  First, PhRMA asserts that both laws violate the dormant Commerce Clause by restricting drug prices nationwide.  (Readers may recall that the dormant Commerce Clause was used to strike down Maryland’s price gouging law in 2018.)  Second, PhRMA asserts that both laws violate the First Amendment by compelling speech.  Third, PhRMA asserts that both laws are preempted by federal law governing trade secrets, including the Defend Trade Secrets Act (codified at 18 U.S.C. § 1836(b)).  Fourth, PhRMA asserts that Oregon’s “threatened abrogation of trade secret protection also effects an unconstitutional taking of property without any compensation” in violation of the Fifth Amendment’s Takings Clause.

PhRMA’s lawsuit seeks a declaration that H.B. 4005 and H.B. 2658 violate federal law as well as an injunction prohibiting OR DCBS from implementing or enforcing either law.  However, drug manufacturers have already had to submit information to OR DCBS under H.B. 4005; the reporting requirement for new drugs went into effect on March 15, 2019 and drug manufacturers with price increases were required to submit reports by July 1, 2019.  H.B. 2658 is set to take effect on January 1, 2020.  The District Court judge recently granted Oregon’s motion to extend the time for the state’s response; Oregon’s response to PhRMA’s complaint is now due by February 14, 2020.  We will continue to monitor this case and other state efforts to constrain drug prices.

By Serra J. Schlanger —

On December 18, 2019, the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) issued a Notice of Proposed Rulemaking (NPRM) and a Draft Guidance for the importation of certain prescription drugs.  The NPRM and Draft Guidance provide further details for the two pathways initially described in the Safe Importation Action Plan that was announced in July 2019 (see our coverage here).  The NPRM describes “Pathway 1” which will allow for the importation of certain prescription drugs from Canada.  The Draft Guidance sets forth “Pathway 2” which will allow manufacturers to import FDA-approved prescription drugs that were originally manufactured and intended to be marketed for sale in a foreign country.

I.  Overview of the NPRM

Section 804 of the Federal Food, Drug, and Cosmetic Act (FDC Act), 21 U.S.C. § 384, allows HHS to promulgate regulations that allow for the importation of certain FDA-approved prescription drugs from Canada.  However, Congress conditioned the implementation of § 804 on a certification by the Secretary of HHS that implementation (1) will pose no additional risk to public health and safety and (2) will result in a significant reduction in the cost of drugs to the American consumer.  Since the current version of § 804 became effective in 2003, no HHS Secretary has made such a certification. The NPRM states that the HHS Secretary intends to make this certification when the final rule is issued. The certification will be conditioned on each authorized Section 804 Importation Programs (SIP) meeting the requirements of § 804 and the final rule.  The NPRM explains that the rule is not severable; if any provision in the rule becomes invalid, the entire rule will become invalid and the Secretary’s certification will be null and void.

The NPRM sets forth a potential pathway to implement FDC Act § 804(b)–(h), for a State, tribal, or territorial government entity (SIP Sponsor) to import certain prescription drugs from Canada through time limited SIPs.  The NPRM proposes to approve SIPs for two years, with the possibility of extensions for additional two year periods. HHS proposes that every SIP be sponsored by a State, tribal, or territorial government entity, with possible co-sponsorship by a pharmacist, wholesaler, or another State or non-federal government entity.  The NPRM says that FDA is specifically seeking comments about whether the definition of a SIP Sponsor should be expanded to allow for a pharmacy, wholesaler, or pharmacist to sponsor a SIP without a State, tribal or territorial government co-sponsor.

A SIP Sponsor will need to submit a SIP proposal to FDA for review and authorization.  In the proposal, the SIP Sponsor must identify a foreign seller (licensed by Health Canada as a wholesaler and registered with FDA as a foreign seller) that will purchase eligible prescription drugs directly from the manufacturer, and an importer (a licensed wholesaler or pharmacist) in the United States that will buy the drugs directly from the foreign seller.  In order to be eligible for importation, the drug must be approved by Health Canada’s Health Products and Food Branch and, other than the labeling, also meet the conditions in an FDA-approved new drug application (NDA) or abbreviated new drug application (ANDA). Controlled substances, biological products, infused drugs (including peritoneal dialysis solutions), intravenously injected drugs, drugs inhaled during surgery, intrathecally or intraocularly injected drugs, and drugs subject to Risk Evaluation and Management Strategies (REMS) are excluded from potential importation.

The SIP proposal must show that importation will pose no additional risk to the public’s health and safety and will result in a significant reduction in cost to the American consumer for the prescription drug that the SIP Sponsor seeks to import.  The cost savings explanation will be reviewed by another, still-to-be identified, component of HHS. FDA may elect not to authorize a SIP proposal if, for example, there are potential safety concerns, there is relatively low likelihood that the program would result in significant cost savings, or FDA needs to limit the number of authorized programs to effectively monitor the program.

The NPRM sets forth the requirements for importing eligible prescription drugs if FDA approves a SIP proposal.  The importer must submit a Pre-Import Request to FDA at least 30 days prior to the scheduled date of entry; the request must include a testing plan describing how the imported drugs will be tested for authenticity, degradation, and compliance with established specifications and standards.  This testing may be performed by the manufacturer or the importer, but must be completed at a qualifying laboratory in the United States. Shipments of imported drugs will be limited to certain ports of entry authorized by FDA. The drugs can either be admitted to a foreign trade zone for entry into the United States once the product is in compliance with the FDC Act, or the importer can file an entry for consumption and request to recondition to bring the drugs into compliance with the FDC Act.  Before the drug can be sold in the United States, the FDA must review and find the testing results acceptable, and the product must meet FDC Act labeling requirements. The NPRM proposes that a drug imported under a SIP will need a new National Drug Code (NDC) and will need to be listed. The NPRM also proposes that the labeling on or within the imported drug’s package include the statement: “This drug was imported from Canada under the [Name of State or Other Governmental Entity and of Its Co-Sponsors, If Any] Section 804 Importation Program to reduce its cost to the American consumer.”

The NPRM includes a number of other requirements for drugs imported under a SIP.  Most products imported under a SIP must comply with the Drug Supply Chain Security Act (DSCSA), however, the NPRM exempts certain transactions from the DSCSA requirements.  The importer will be responsible for receiving and reporting adverse events, medication errors, field alerts, and other reports to the drug manufacturer and FDA. Among other things, the SIP Sponsor will need to comply with post-importation requirements, including providing FDA with data and information about the SIP, including the SIP’s cost savings to American consumers.  

II.  Overview of the Draft Guidance

The Draft Guidance sets forth a potential pathway manufacturers may use to import FDA-approved prescription drugs that were originally manufactured and intended to be marketed for sale in a foreign country, referred to as “multi-market approved products” or “MMA products”.  The Draft Guidance explains FDA’s recommended procedures for manufacturers to obtain an additional NDC for MMA products; for submitting documentation to demonstrate that the MMA products are FDA-approved drugs that meet the specifications of the products’ NDA or biologics license application (BLA); and the recommended labeling changes for the MMA products.  Drugs offered under an ANDA are not eligible for importation under the Draft Guidance.

Under FDC Act § 801(d)(1)(B), 21 U.S.C. § 381(d)(1)(B), a prescription drug manufactured outside of the United States may only be imported into the United States for commercial use if the manufacturer has authorized and labeled the drug to be marketed in the United States.  As such, manufacturers that wish to take advantage of this pathway will need to authorize the importation these products. The MMA products must be accompanied by the FDA-approved labeling. To avoid confusion between product packages, and so pharmacists can distinguish the MMA product, the Draft Guidance suggests that manufacturers add a statement to differentiate the MMA product on the product container and outside package.

The Draft Guidance explains that a manufacturer must obtain marketing approval from FDA through the submission of an NDA or BLA supplement.  The supplement should include information to demonstrate that the MMA product is the FDA-approved product and is manufactured in accordance with the FDA-approved NDA or BLA.  Among other things, the information in the supplement should demonstrate that the MMA product meets all of the chemistry, manufacturing, and controls specifications in the NDA or BLA.  Manufacturers are also encouraged to submit an attestation stating that the MMA product conforms to the information described in the approved application regarding the quality of drug substances, drug products, intermediates, raw materials, reagents, components, in-process materials, container closure systems, and other materials used in the production of the product.  The supplement should also include executed batch records for the product to be imported.

Manufacturers that import MMA products must comply with the DSCSA requirements for product identification, tracing, and verification.  To help identify these products, FDA proposes to add a new “multi-market approved products” marketing category to the registration and listing system.  The Draft Guidance also suggests that manufacturers submit import entries to help FDA verify that the manufacturer has authorized and labeled the MMA product to be marketed in the United States.

In the Federal Register Notice of Availability for the Draft Guidance, FDA specifically asks for comments on a number of questions, including whether generic drug manufacturers would be interested in a similar importation pathway.  FDA is also interested in understanding how this proposal will impact the development and market entry of generic drug and biosimilar products.  

* * *

The issuance of the NPRM and Draft Guidance indicate that the federal government has taken steps to allow for the importation of drug products.  However, the potential utility and impact of the two proposed pathways it is still uncertain. Although the NPRM states that the Secretary of HHS will make the certification required under FDC Act § 804 when the final rule is issued, it is still unclear whether any SIPs will be able to satisfy the requirement that the importation of prescription drugs results in a “significant reduction in the cost of covered products to the American consumer.”  It is also unclear whether any manufacturers will seek to use Pathway 2.

Comments on the Draft Guidance will be accepted until February 21, 2020.  Comments on the NPRM will be accepted until March 9, 2020. We will continue to monitor and report on federal and state efforts to address drug pricing issues.

By Ricardo Carvajal —

In ongoing litigation over the FDA’s approval of AquAdvantage bioengineered salmon, the District Court for the Northern District of California issued an order upholding FDA’s authority to regulate as a new animal drug genetic material that is used to modify an animal (for background on the case, see our prior posting here). Although the Court discussed a number of factors supporting its decision, the Court seemed to have little difficulty concluding that FDA’s authority derives directly from the plain language of the Federal Food, Drug, and Cosmetic Act (FDCA):

The text of the FDCA settles this dispute: AquaBounty’s rDNA construct is a drug under the plain language of the statute. The definition in section 321(g)(1)(C) can be broken down into two elements: (1) an article (other than food) (2) that is intended to affect the structure and function of an animal. The discrete and identifiable rDNA construct is an “article,” which “is just ‘a particular thing.’” The article of genetic material is not “food,” which is defined “as articles used for food or drink for man or other animals,” or “used for components of any such article.” And that article is intended to affect the structure and function of the Atlantic salmon by stimulating faster growth. Therefore, the rDNA construct in this case is a “drug” and (with an added layer of precision) a “new animal drug”—that is, “any drug intended for use for animals other than man.”

(Citations omitted.) The Court also sided with the government in turning aside plaintiffs’ challenge to FDA’s Guidance for Industry 187 (Guidance 187), which sets out the Agency’s view of how the statutory provisions and regulations that govern new animal drug approval apply to animal bioengineering. The Court concluded that Guidance 187 is “best characterized not as a legislative rule (as the plaintiffs insist) but instead as an interpretive rule addressing the drug definition and a policy statement with respect to the new-animal-drug application process.” The court held that neither the interpretive rule nor policy statement aspects of Guidance 187 constitute final agency action subject to judicial review, in that they don’t mark the consummation of the agency’s decisionmaking process and also determine legal rights or obligations.

The Court opted to delay resolution of plaintiffs’ claim that the FDCA precludes approval of a drug that is not safe for the environment.  The Court acknowledged that “some aspects of the statutory scheme suggest that the FDA’s substantive decision should turn solely on the safety of the genetically engineered animals and the humans who come into contact with those animals,” and that “the statute could be read to suggest that safety is linked to health rather than some broader conception of harm.”  However, the Court noted that “the term ‘safe’ is certainly capacious enough to reach environmental risks, and Congress carved out space for ‘other relevant factors.’ Thus, the FDA might be permitted to treat the environment as a relevant factor so long as there is ‘a rational connection between the facts found and the choice made.’  And perhaps in compelling circumstances, environmental harm would be among the ‘other relevant factors’ the FDA would be required to consider when evaluating a drug’s safety.”  Noting that the parties had not adequately briefed the questions raised by the Court, the Court delayed resolution of this issue until the next stage of the case.  Also deferred for a later date are plaintiffs’ claims challenging specific aspects of FDA’s approval of AquAdvantage (as opposed to plaintiffs’ broader attack on FDA’s authority over bioengineered animals).

On December 13, 2019, Nature Reviews Drug Discovery published an article that reviews the landscape of the development of drugs for rare diseases, both the progress and challenges.  The article was authored by HP&M Attorney James E. Valentine along with co-authors from the BioPontis Alliance for Rare Diseases and representatives from NIH, FDA, and EMA, among others.

The article discusses the technological basis and rare disease applicability of today’s main therapeutic modalities, including small molecules, monoclonal antibodies, protein replacement therapies, oligonucleotides and gene and cell therapies, as well as drug repurposing. The article also discusses selected overarching topics in the development of therapies for rare diseases, such as approval statistics, engagement of patients in the process, regulatory pathways and digital tools (topics commonly covered on this blog, e.g. on gene therapies clinical trials here).  This article serves as an important resource for anyone interested in the research and development of therapies for rare diseases, inspiring interest in funding and nurturing a culture that will lead to innovations that will alleviate the suffering of the very large number of patients affected by rare diseases in the U.S. and globally.

HP&M has a long legacy of thought leadership in rare disease product development, particularly in the application of the FDA regulatory framework to the review and approval of these products.  For example, HP&M’s Frank J. Sasinowski authored the 2012 seminal report on FDA’s flexibility in orphan drug approvals, and he and James co-authored the 2015 update (see coverage here).

Frank, James, and colleagues are currently drafting a second update, so our blog readers should stay tuned!

By Rachael E. Hunt —

For those following the war between the Food and Drug Administration (“FDA”) and industry over the regulation of vaping products, last week’s opinion by the United States Court of Appeals for the District of Columbia Circuit upholding FDA’s so-called Deeming Rule is yet another battle won by FDA.  The unanimous three-judge panel held that FDA’s application of its regulations governing tobacco products to e-cigarettes is reasonable because such products are “indisputably highly addictive and pose health risks, especially to youth, that are not well understood.”

By way of background, the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”), originally signed into law in 2009, gave FDA the immediate authority to regulate cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco.  At the time, however, any other “tobacco product” could be regulated by FDA only if the agency issued regulations “deeming” such other products to be subject to the Tobacco Control Act.  On May 10, 2016, FDA issued a final rule deeming electronic cigarettes (“e-cigarettes”), cigars, pipe tobacco, nicotine gels, waterpipe (or hookah) tobacco, and dissolvable tobacco products, among other products (collectively referred to for purposes of this blog post as “e-cigarettes”), to be within FDA’s regulatory authority under the Tobacco Control Act.  See FDA Final Rule “Deeming Tobacco Products to Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products,” No. FDA-2014-N-0189, 81 Fed. Reg. 28,973 (May 10, 2016).  This subjected e-cigarettes to regulation by FDA through premarket review requirements, heightened standards for products claiming to be safer than other tobacco products (“modified risk products”), review of smoking cessation products as either drugs or medical devices, and a ban on the distribution of free samples.

As we previously blogged here, on the same day FDA issued this final deeming rule, Nicopure Labs, Inc. (“Nicopure”) filed a complaint in the D.C. District Court seeking to set aside the purportedly unlawful rule as contrary to the Administrative Procedure Act and a violation of the First Amendment.  After reviewing the parties’ cross-motions for summary judgment, the District Court sustained the Tobacco Control Act and FDA’s Deeming Rule.  See Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360 (D.D.C. 2017).  Nicopure appealed this decision.

Last week, on December 10, 2019, the U.S. Court of Appeals for the District of Columbia affirmed the District Court’s judgement sustaining the Tobacco Control Act and its application to e-cigarettes.  Nicopure limited its appeal to three issues:

1. FDA violated the Tobacco Control Act and the Administrative Procedure Act by not providing a less rigorous premarket authorization pathway for e-cigarettes.
2. FDA’s premarket review standards for modified risk products violate the First Amendment.
3. FDA’s ban on the distribution of free samples of tobacco products, including e-cigarettes, violates the First Amendment by suppressing constitutionally protected expressive conduct.

In upholding the district court’s decision, the Court of Appeals found it “entirely rational and nonarbitrary to apply to e-cigarettes the [Tobacco Control] Act’s baseline requirement that, before any new tobacco product may be marketed, its manufacturer show the FDA that selling it is consistent with public health.”  With respect to Nicopure’s First Amendment challenges, the Court of Appeals concluded that the First Amendment affords manufacturers no protection against FDA preventing the sale of e-cigarettes as safer than existing tobacco products absent a showing that they are, in fact, safer.  As for FDA’s ban on free samples, the Court of Appeals held that free samples are not expressive conduct and “the government’s interest in preventing their distribution is unrelated to the suppression of expression.”

As of the date of this blog, it is unclear whether Nicopure will appeal this decision and seek review by the Supreme Court.  However, even if this battle has ended unsuccessfully for industry, there are many more battles being waged across the country and the war is not yet over.  As we previously reported, vape shops in several states have challenged the constitutionality of the Deeming Rule under the Appointments Clause.  There is also a case filed by Big Time Vapes Inc. and United States Vaping Association this year in the United States District Court for the Southern District of Mississippi.

We will continue to keep our readers apprised of the results of these lawsuits as they unfold.

By Deborah L. Livornese —

Subcommittees of the House Committee on Energy and Commerce heard testimony last week from the Government Accountability Office’s Mary Denigan-Macauley and from Janet Woodcock, Director of FDA’s Center of Drug Evaluation and Research, about the state of FDA’s foreign drug establishment inspection program.

FDA generally conducts three types of drug manufacturing establishment inspections:  preapproval inspections; surveillance inspections; and, for-cause inspections.  Both domestic and foreign establishments are subject to the same types of inspections and same manufacturing requirements.

By way of background, Dr. Denigan-Macauley noted that the GAO has had long-standing concerns about FDA’s ability to oversee the increasingly global drug supply chain.  In written testimony, she said that in 2018 more than 60 percent of establishments manufacturing drugs for the U.S. market were located overseas, and as of March 2019, 40 percent of foreign establishments were located in India or China.   In 2008, FDA inspected only about 8 percent of the foreign establishments eligible for inspection.  In 2010 and 2016, GAO observed increases in foreign inspections, but reported that some foreign establishments had not ever been inspected.

Dr. Denigan-Macaulay described GAO’s preliminary observations from its ongoing work in three areas:  the number of foreign inspections; inspection staffing levels; and, challenges unique to foreign inspections.

Based on its preliminary analysis of FDA data, GAO reports that the number of FDA inspections of foreign drug manufacturing establishments increased, and that in fiscal year 2015, the number of foreign inspections surpassed the number of domestic inspections.  After 2016, however, the number began to decline, and from 2016-2018, both foreign and domestic inspections decreased – by approximately 10 and 13 percent respectively.

Dr. Woodcock noted in her testimony that prior to 2012, FDA was required to inspect domestic establishments every two years, but there was no similar requirement for foreign inspections.  Passage of the Food and Drug Administration Safety and Innovation Act (FDASIA) in 2012 removed the requirement for the Agency to inspect domestic sites every two years and allowed FDA to use the risk-based approach it had developed to prioritize inspections of facilities according to risk.  Dr. Woodcock also noted that the Generic Drug User Fee Act of 2012 and its reauthorization in 2017 (GDUFA) provided additional resources for inspections of foreign facilities.

Dr. Woodcock’s testimony on this subject provided additional details about the numbers.  Specifically, she stated that CDER’s records showed that as of July 2016, 965 foreign manufacturing facilities had never been inspected by FDA.  By the end of FY2019, 495 or 51% of these had been inspected, 359 or 37% had been removed from CDER’s list for a variety of reasons and were no longer part of FDA’s inspection obligation (e.g., they had gone out of business or were not serving the U.S. market).  An additional 52 or 6% had refused inspection, 37 or 4% were “inaccessible” because FDA inspectors could not travel to the location (e.g., because of travel warnings), and 22 or 2% had no drug shipments.

Dr. Woodcock noted that although FDA’s inspections of foreign establishments, particularly those that had not been inspected as frequently as domestic facilities, had uncovered deficiencies, as of August 2019, 90 percent or more of the final outcomes of inspections were acceptable with either no action indicated (NAI) or voluntary action indicated (VAI) in all countries or regions except India.  GAO’s written testimony noted that some investigators who conduct foreign inspections expressed concern that reviewers reclassify an inspector’s original classification recommendations of official action indicated OAI to VAI.  GAO intends to look into this issue further as part of its ongoing work.  Finally, Dr. Woodcock’s testimony states that concurrence rates on foreign drug inspections designated OAI went from 50% in 1998 to 73% in 2019.

GAO’s concerns about understaffing and high vacancy rates of foreign inspectors and translators were also described by Dr. Denigan-Macaulay.  FDA relies on inspectors from three groups to perform foreign inspections:  investigators based in the U.S. who perform domestic and occasional foreign inspections; investigators based in the U.S. who are dedicated to foreign inspections; and, investigators based in countries where FDA has foreign offices.

High vacancy rates in foreign offices are reported by both GAO and FDA.  The number of qualified foreign office-based inspectors in FY2019 was 12.   An additional 12 individuals are based in the U.S. and conduct exclusively foreign inspections.  Among the challenges faced in recruiting for these positions are the fact that such investigators must already possess experience in conducting foreign inspections because the foreign offices do not have the ability to train new investigators.  Consequently, recruitment is limited to FDA’s existing inspectors in the U.S.  Dr. Woodcock also noted that it takes 1.5 to 2 years of training to bring a new hire to a fully proficient skill level.  She also stated that beyond the usual challenges of achieving optimum staffing levels, the number of individuals who can be permanently attached to a foreign office is limited by some host countries.  The GAO also stated that an FDA official had told them that it can take between one and over two years for a new investigator to receive the security training and complete the background check needed before they can begin a foreign-based assignment.  These requirements are reported as being handled by the embassy and agencies other than FDA.

The language barrier and lack of FDA translators was identified as a potentially significant issue.  GAO stated that FDA often relies on translators provided by the company being inspected or an external translator or consultant hired by the company.  GAO stated that this practice adds time to inspections and raises questions about the information FDA receives.  This, too, can be seen as an inequality between domestic and foreign inspections.

The third issue raised in the testimony was the amount of notice usually provided by FDA to foreign establishments prior to inspection.  Specifically, the GAO written testimony states that although FDA is not required to provide advance notice of inspections, it generally provides 12 weeks’ notice.  Some unannounced or short-notice inspections are performed by inspectors in China and India.  GAO stated that the amount of notice provided foreign establishments raises questions about the equivalence of domestic and foreign inspections because the long lead time provides the facilities with the ability to address issues before the inspectors arrive.  Among the reasons for the long lead time is that FDA reportedly wants to ensure that the establishment being inspected will be operational while they are there.

OTC monograph drugs and active pharmaceutical ingredients (APIs) used in compounding were called out in Dr. Woodcock’s testimony for being able to ship to the U.S. without their manufacturing facilities being inspected.  She did not suggest how to bring these facilities under FDA’s inspection purview, but perhaps the groundwork is being laid.

By Kurt R. Karst —

Earlier this week, House Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ), Ranking Member Greg Walden (R-OR) and Senate Health Committee Chairman Lamar Alexander (R-TN) announced that they reached agreement on a bipartisan, bicameral drug pricing bill, called The Lower Health Care Costs Act of 2019.  According to a 16-page overview we obtained, the bill includes several FDA-related provisions – from Orange Book and Purple Book modernization, to orphan drugs, to biosimilars . . . to this description of Section 407 of the bill:

Sec. 407. Change conditions of first-to-file generic applicants’ 180-day exclusivity to spur access and competition.

• Prevents first-to-file generic drug applicants from blocking, beyond a 180-day exclusivity period, the entrance of subsequent generic drugs to the market.
• Triggers the start of first-to-file generic drug applicants’ 180-day exclusivity when no first-to­-file applicant has received final approval within 30 months of submission of its application, and a subsequent applicant has been tentatively approved.

If this short description looks familiar to you, that’s probably because it is!  It’s a description of H.R. 938, the “Bringing Low-cost Options and Competition while Keeping Incentives for New Generics Act of 2019” or the “BLOCKING Act of 2019” (House Report here).

The BLOCKING Act, which was introduced in the U.S. House of Representatives on January 31, 2019 by Representatives Kurt Schrader (D-OR) and Earl L. “Buddy” Carter (R-GA), stems from a proposal in the Trump Administration’s proposed Fiscal Year 2019 Budget.  The bill has drawn this blogger’s ire in blog posts (here and here) and in Congressional testimony as antithetical to a primary goal of the Hatch-Waxman Amendments: getting high quality, low-cost generic drugs into the hands of consumers – fast.

As we’ve noted before (here and here), the BLOCKING Act would significantly alter – and not in a good way – the FDC Act’s 180-day exclusivity provisions and the 180-day exclusivity incentive itself.  The BLOCKING Act would punish ANDA applicants eligible for 180-day who are diligently pursuing final application approval and would further dilute and cheapen the 180-day exclusivity incentive Congress created in the 1984 Hatch-Waxman Amendments.  In particular, the BLOCKING Act could trigger a loss of 180-day exclusivity – even when the generic drug applicant is diligently seeking final approval – based on a failure of FDA to grant final approval to a first applicant within 30 months of application submission for any reason.

The version of the BLOCKING Act included in Section 407 of the The Lower Health Care Costs Act of 2019 is reportedly identical to the version of the bill introduced as H.R. 938.  This means that all of the efforts and resources expended over the past year to protect the cornerstone of the generic drug provisions of the Hatch-Waxman Amendments by modifying the BLOCKING Act have thus far fallen on deaf ears.  Indeed, over the past year we’ve seen multiple proposed modifications to blunt the potentially catastrophic effects of the bill, such as a provision that would require a subsequent ANDA applicant blocked by a first applicant’s eligibility for 180-day exclusivity to certify that the company will promptly market its drug product after ANDA approval.  Such a proposal certainly seems to make sense.  If the intent of the BLOCKING Act is to promote generic drug competition – that is, actual lauch of generic drug products and not just ANDA approval numbers – then a guarantee that launch will occur before obliterating a first applicant’s 180-day exclusivity eligibility seems to be good public policy.

Just as concerning is the possibility that the BLOCKING Act may lead to higher drug prices.  According to a press release from the Association for Accessible Medicines, Matrix Global Advisors (“MGA”) will soon release an analysis of the BLOCKING Act that “finds that the BLOCKING Act, by creating the risk that first filers could lose their 180 days of exclusivity through no fault of their own, would reduce generic firms’ incentives to pursue patent challenges, thereby delaying generic entry and savings.”  In addition, “MGA concludes that if even one generic launches later as a result of these changed incentives, it would, on average, cost the U.S. health care system $1.7 billion.”  Here’s a summary of the MGA analysis we were able to obtain detailing the unintended costs of the BLOCKING Act:

It’s crunch time folks!  And while much of the attention of the country and Congress is focused on other matters these days, we should not forget the need to protect the integrity of the Hatch-Waxman Amendments.  After all, the Congressional Budget Office’s cost estimate of the BLOCKING Act makes it an attractive pay-for candidate to add to drug pricing legislation, or even a last minute add-on to a continuing resolution to fund the government past December 20, 2019.

By Sara W. Koblitz & Douglas B. Farquhar —

The distinction between a drug and a device is a critical one: drugs and devices are subject to different regulatory schemes, with the drug pathway being significantly more onerous and expensive.  User fees alone for a generic drug total $300,000 for the first year compared to only around $7,600 for devices – user fees for drugs approved under the 505(b) pathway are even more expensive, totaling more than $2.5 million in 2019.  Drugs are also subject to a much more rigorous pre-market review process, as well as different post-market compliance requirements.  Given these differences, the jurisdictional designation of a product is of great importance.

On Friday, the U.S. District Court for the District of Columbia rejected FDA’s attempt to regulate one of our client’s medical products as a drug, because the product met the definition of a device.

While the Federal Food, Drug, and Cosmetic Act sets forth a definition of “drug” and a definition of “device,” FDA has taken the position that it has discretion to regulate any product meeting the definition of “device” as a drug.  FDA’s position was based on the “overlap” in the definition of drug and device.  The Act, in relevant part, defines “drug” to include:

articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals

21 U.S.C. § 321(g)(1).  It defines “device” to have the same intended purpose, but provides a key statutory distinction: a device does not achieve “its primary intended purposes through chemical action within or on the body of man” and “is not dependent upon being metabolized for the achievement of its primary intended purpose.”  But because the drug and device definitions both include articles “intended for use in the diagnosis” of disease, FDA has taken the position that all articles meeting the definition of a device also meet the definition of a drug.  Under this interpretation, it is only by the grace of the agency that any particular medical device is not regulated as a drug.  For more on this topic, see Jeff Shapiro’s blogpost from 2018 on this issue.

While FDA claimed to have taken the position since 1997 that all contrast agents will be classified as drugs, and regulated as such, only recently has anyone challenged it.  Our client Genus Medical Technologies (“Genus”) of St. Louis, Missouri manufactures barium sulfate, an orally administered contrast agent used in radiographic procedures.  Represented by Hyman, Phelps & McNamara P.C., Genus filed a Complaint in the U.S. District Court for the District of Columbia in March 2019 challenging FDA’s classification of barium sulfate as a drug.  While admitting that barium sulfate met the statutory definition of device, FDA nonetheless issued Genus a Warning Letter for marketing an unapproved drug.  Genus submitted a Request for Designation making the point that, because the product did not achieve its primary intended purposes through chemical action on or in the body or through metabolization, the product must be regulated as a device under the statute, even though a competitor’s barium sulfate products are regulated as drugs.  FDA rejected this approach and stated – without actually classifying barium sulfate – that barium sulfate would be regulated as a drug.  So, after years of trying to reason and/or negotiate with FDA, Genus filed suit alleging violations of the Administrative Procedure Act.

Last week, the Court granted Genus’s Motion for Summary Judgment.  Judge Boasberg held that FDA’s theory of unfettered discretion to regulate devices as drugs contradicts the plain language of the FDCA.  Relying on the canons of statutory interpretation, the Court held that FDA’s interpretation that the diagnostic product is a drug — even if it plainly falls under the device definition — would render superfluous the device definition in the statute.  Judge Boasberg explained that the drug-device distinction would be meaningless under FDA’s interpretation:

If a product that meets both definitions is nonetheless treated as a drug, then the device-drug distinction would be rendered meaningless. Put otherwise, the FDA could classify any diagnostic device as a drug because no limiting principle would trammel its authority. That would turn the statutory scheme on its head.

Memorandum Order at 13.  Employing Step 1 of the framework established by the landmark Supreme Court decision on application of statutory terms by administrative agencies (Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984)), Judge Boasberg determined that “[i]n the end, the plain text dictates the result here. Congress readily could have afforded the agency discretion to determine which of these pathways a product must take. . . But it did not do so here.”  Id. at 14.

Judge Boasberg rejected FDA’s argument that the intended use definition overlap implicitly grants the Agency discretion to decide whether to regulate a device as a device or a drug.  FDA based its argument on the evolution of the drug and device definitions, which once explicitly excluded devices from the definition of drug but was later redrafted to remove that express exclusion.  FDA argued that this revision awarded the Agency the discretion it sought, but Genus pointed out that this revision was made only to enable combination drug/device products to be regulated as drugs where appropriate.  The Court, once again, agreed with Genus, stating “Congress’s intent was not — as the FDA would have the Court believe — to delegate unfettered discretion to the FDA to regulate all devices as drugs.”  Memorandum Order at 16.  The Court also rejected FDA’s reliance on case law (predominantly Bracco Diagnostics, Inc. v. Shalala, 963 F. Supp. 20 (D.D.C. 1997)) that implicitly granted FDA the discretion it sought, as those cases arose in different contexts and under different permutations of the drug and device definitions.   In the end, the Court held that such discretion is not implicitly in the statute nor is the statute ambiguous enough to support such an interpretation.

This is a big win for industry in limiting FDA’s discretion.  The decision supports the proposition that, despite some level of deference by federal courts to agencies, the plain meaning of the FDCA places strict limits on FDA’s administrative decisions, and courts will reject FDA’s administrative decisions when they run counter to clear statutory meaning (likewise, a decision from the Fourth Circuit Court of Appeals almost exactly five years ago held FDA had failed to properly apply clear statutory provisions (a blogpost on that decision is linked here).  More immediately though, the decision effectively mandates that FDA regulate as a device any product that “does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.”

By Sara W. Koblitz —

As we move in to 2020, FDA is fastidiously preparing for the event 10 years in the making: the transition.  For those of you unfamiliar with the “transition,” it refers to the “deemed to be a license” provision of the Biologics Price Competition and Innovation Act.  The 2010 statute amended the statutory definition of a “biological product” to include “a protein (except any chemically synthesized polypeptide),” and this definition is officially in effect as of March 2020.  As a result, almost 100 approved NDAs will automatically transition into BLAs on March 23, 2020.  On the same date, FDA will no longer accept applications under section 505 of the FDCA for protein products, and any pending drug applications (other than supplements) will receive a Complete Response.

The most notable product undergoing the “transition” is insulin.  Given the high costs of insulin that limit product accessibility, FDA is anxious to get more insulin products on the market.  As a drug, insulin sponsors have had difficulty scientifically demonstrating the requisite “sameness” needed for generic approval.  For that reason, as well as technical advances in delivery, most insulin products were approved under 505(b)(1) or 505(b)(2) NDAs (a look at the Orange Book shows that FDA has never approved an ANDA for generic insulin).  But as a biologic, putative “generic” insulin manufacturers no longer have to demonstrate “sameness” – only that their insulin products are “highly similar” to the reference product.  While their products are not “generic” – and not interchangeable until sameness can be demonstrated – the 351(k) biosimilar pathway makes it a little easier for new insulin products to come to market provided that analytical studies demonstrate that there are no clinically meaningful differences between biosimilar and reference product safety, purity, and potency.

To “enable a more robust route for developing lower cost copies of insulin,” a commitment the Agency undertook under the watch of Commissioner Gottlieb and appears to be continuing under Acting Commissioner Giroir, FDA issued a draft guidance last week designed to “facilitate the development of, and improve patient access to, life-saving insulin [biosimilar and interchangeable] products.”  The guidance is intended to inform developers on the data an information necessary to support a demonstration of biosimilarity or interchangeability for an insulin product.  Part of the Biosimilars Action Plan, the guidance is focused specifically on “Clinical Immunogenicity Considerations for Biosimilar and Interchangeable Insulin Products.”

The guidance explains that FDA has typically recommended the submission of clinical immunogenicity studies for the approval of insulin drug products under the 505(b) pathway and that FDA has previously stated that the same is expected in any 351(k) insulin applications.  However, FDA has now “updated its thinking” with respect to clinical immunogenicity studies: the Agency now believes that if a comparative analytical assessment supports demonstration of “highly similar” for a proposed biosimilar or interchangeable insulin product, there should be little uncertainty regarding immunogenicity, and comparative clinical immunogenicity studies may not be required.  While this isn’t the case for all biosimilar or interchangeable insulin products and FDA will analyze on a case-by-case basis for individual applications, the presumption is no longer that such studies are required.   FDA attributes this shift to “the evolution in the understanding and extensive characterization of protein products” arising from technological improvements, particularly with respect to small, well-understood, well-characterized, and structurally uncomplicated proteins like insulin.

FDA also uses this guidance to explain its expectations for data to support a demonstration of biosimilarity or interchangeability in a 351(k) for insulin.  In addition to “a robust and comprehensive comparative analytical assessment demonstrating that the proposed insulin product is ‘highly similar’ to its proposed reference product with very low residual uncertainty regarding immunogenicity” and an immunogenicity assessment justifying why a comparative clinical study to assess immunogenicity is not necessary, FDA expects to see adequate chemistry, manufacturing and controls information, a comparative clinical pharmacology study between the proposed insulin product and the reference product, and a comprehensive and robust comparative analytical assessment to show that the insulin product is “highly similar” to the reference product.

While, in theory, a sponsor could submit a 351(k) aBLAs for insulin before March 2020, this can only happen if an insulin reference product is approved under a BLA.  Since the “transition” of the approved insulin NDAs does not officially happen until March 2020, there is no reference product on which a biosimilar insulin application can currently rely.  (Though FDA could start approving insulin products under BLAs in 2010, the Purple Book does not show any approved insulin BLAs.)  Upon that transition though, when insulin becomes a valid biosimilar reference product, there will likely be many insulins vying for approval.  This guidance suggests that FDA will exercise some flexibility in its requirements for biosimilar insulin, helping the agency bring additional insulin products to market more quickly in an effort to address the dire need for these products.

Hyman, Phelps & McNamara, P.C. (HPM) is pleased to announce that Deborah L. Livornese and Serra J. Schlanger have become its newest directors.

Deborah’s practice covers a broad range of FDA regulatory issues.  She assists pharmaceutical drug companies of all sizes on drug development and regulatory  strategies related to obtaining FDA approval, as well as on post-marketing regulatory requirements, including drug promotion and advertising. Ms. Livornese also assists clients in connection with commercial transactions and public offerings by conducting FDA regulatory due diligence on behalf of regulated companies and potential investors and purchasers.

Deborah spent seven years in the Office of Regulatory Policy in FDA’s Center for Drug Evaluation and Research prior to joining HPM in 2018. As a Senior Regulatory Counsel at FDA, she was involved in a wide variety of policy issues in the areas of drug approvals and withdrawals, the regulation of unapproved and over-the-counter drugs, opioid drugs, and user fee programs.

Prior to joining FDA, Deborah was Of Counsel with an FDA boutique law firm in Washington DC where she advised drug companies on promotional activities for compliance with FDA, FTC and HHS requirements, and assisted clients in responding to investigational findings, warning letters, and inquiries from the FDA and other agencies.  Her full bio can be found here.

Serra joined HPM in July 2016.  Prior to joining the firm, Serra was an associate in the health care and life sciences practice of a national law firm.  Before beginning her legal career, Serra worked in clinical administration at Memorial Sloan-Kettering Cancer Center, gaining practical experience that she continues to draw upon when counseling clients.

Serra’s broad practice covers the intersection of health care and FDA law.  She works with clients across all of HPM’s practices areas.  Serra assists clients with a wide range of regulatory matters including developing regulatory strategy, drafting compliance policies and procedures, reviewing advertising and promotional materials, and evaluating and updating data privacy and patient health information policies and practices (HIPAA).  Serra has specific expertise with regard to federal and state health care fraud and abuse laws and defends clients in connection with government investigations and other enforcement inquiries.  She advises clients on the many legal and regulatory issues associated with telemedicine, laboratory developed tests (LDTs), and CLIA certification.  She also helps clients with contract matters and regulatory due diligence.  Serra was shortlisted for the 2019 LMG Life Sciences “US Rising Star – Regulatory” award.  Her full bio can be found here.