In Support of the New HHS Policy Barring FDA from Premarket Review of LDTs

In Support of the New HHS Policy Barring FDA from Premarket Review of LDTs

By Jeffrey K. Shapiro

On August 19, the Department of Health and Human Services (HHS) announced that FDA shall no longer conduct premarket review of laboratory developed tests (LDTs) under the Federal Food, Drug, and Cosmetic Act and implementing regulations (FDCA).  The crux of the statement is this:  “the department has determined that the Food and Drug Administration . . . will not require premarket review of laboratory developed tests . . . absent notice‑and‑comment rulemaking, as opposed to through guidance documents, compliance manuals, website statements, or other informal issuances.”  Others at our firm have summarized the policy here.

To put the new HHS policy in context, the Centers for Medicare and Medicaid Services (CMS) regulates clinical laboratories under the Clinical Laboratory Improvement Amendments of 1988 and implementing regulations (CLIA).  CLIA requires laboratories to hire scientifically qualified personnel and to follow rigorous testing, analytical validation and record-keeping procedures.  These laboratories must obtain various CLIA certificates from CMS, depending on the complexity of the testing the laboratory performs.  According to CMS, CLIA applies to approximately 260,000 laboratory entities.  Under CLIA, these laboratories are regulated in the development and performance of in‑house developed assays, i.e., LDTs, as well as when they employ test kits manufactured outside the laboratory..

FDA claims concurrent authority to regulate LDTs as medical devices under the FDCA.  The dirty little secret is that, during the past 40 years, FDA has only singled out a handful of LDTs for active regulation.  (This post explains why this selective enforcement is unlawful.)  The rest are left alone based upon “enforcement discretion.”  In this respect, therefore, the HHS policy change is not as dramatic as it might appear.  For almost all clinical laboratories, it will be largely business as usual.

At the same time, the new HHS policy actually may have two potentially beneficial effects.  First, clinical laboratories will no longer have the sword of Damocles dangling over their LDTs, i.e., the threat that FDA may select their assays for regulation.  This type of legal uncertainty can have a chilling effect on innovation.  If the new policy remains firm, look for even greater technological progress in this space.

Second, the new policy will allow FDA to better direct its resources against Corona Virus Disease 2019 (COVID‑19).  Even though few LDTs are regulated by FDA, the agency chose to regulate LDTs for the diagnosis of COVID‑19.  This post describes how FDA’s choice to do so led to critical delays in clinical testing in the early days of the pandemic when speed was paramount.  See also this Yale Law Journal article.

Equally unfortunate, an inordinate share of FDA’s scarce resources have been directed toward these LDTs.  Just count the number of EUAs that FDA has issued for COVID‑19 LDTs in these past few months.  The laboratories offering these LDTs are already regulated under CLIA and well‑versed in validating assays.  FDA should have focused instead on manufacturers of test kits sold to laboratories and healthcare facilities.  These manufacturers are explicitly subject to FDA regulation.  The clinical laboratories are not.  Every EAU issued to a laboratory has diverted time and energy that FDA could have spent more productively.

Now, thanks to the new HHS policy, FDA can better deploy its resources.  An example might be rapid asymptomatic screening that would allow safer congregation in places of work, worship, and schooling.  For obvious reasons, these rapid tests will generally not be offered by clinical laboratories.  If it turns out that this type of testing is a priority, FDA can now devote more resources to moving these tests through EUA review as quickly as possible.

The new HHS policy requires FDA to follow notice and comment rulemaking before resuming premarket review of LDTs.  But, given the dubiousness of FDA’s legal authority over LDTs, and the complexity of harmonizing FDCA and CLIA requirements, an explicit act of Congress should be a prerequisite.  Indeed, FDA expressly stated two years ago that it would no longer seek to expand regulation of LDTs beyond the status quo but would await congressional action.  In a healthy republic, it is the legislature, not the regulatory agencies, that define the boundaries and nature of regulatory action.  FDA and CMS have each been entrusted with important regulatory schemes.  It is Congress, not FDA, that should define how these schemes should interact, if at all, with respect to clinical laboratory testing.

An important issue not addressed in the HHS announcement is how to define LDTs that are no longer subject to FDA’s premarket review.  FDA’s LDT web page defines an LDT as follows:  “A laboratory developed test (LDT) is a type of in vitro diagnostic test that is designed, manufactured and used within a single laboratory. . . .  The FDA does not consider diagnostic devices to be LDTs if they are designed or manufactured completely, or partly, outside of the laboratory that offers and uses them.”

Should HHS allow FDA to apply this definition under the new policy?  A concern here is that FDA may attempt to evade or weaken the new HHS policy by continuing to apply the portion of the definition positing that a test is not an LDT if any part of it is “designed” outside a clinical laboratory.  This requirement — that an LDT must have developed by a laboratory with autarkical self‑sufficiency — was invented by FDA.  It is ipse dixit with no statutory or regulatory basis.  It allows FDA unfettered latitude to decide how much “foreign aid” in the development of a test will lead to FDA’s premarket review.

The new HHS policy now bars FDA from regulating LDTs based upon “guidance documents, compliance manuals, website statements, or other informal issuances.”  (The list does not mention enforcement correspondence such as untitled letters and warning letters, which FDA has deployed in the LDT space on occasion.  Nonetheless, these letters lack the force of law and therefore fall under the rubric of “other informal issuances.”)  In fact, FDA has only ever deployed informal issuances when regulating LDTs; there has never been a rulemaking.  Because FDA’s definition of an LDT was promulgated only in these informal issuances, the agency should be barred from applying it.

Instead, HHS should simply preclude FDA from premarket review of any test offered by a clinical laboratory as the latter is defined by CLIA.  This facility‑based approach would at least be grounded in an existing statute.  Under CLIA, a clinical laboratory is defined as:

a facility for the biological, microbiological, serological, chemical, immuno‑hematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings.

If a test is offered by this type of facility, it is subject to CLIA requirements.  In such cases, HHS should preclude FDA from layering premarket review on top of the CLIA requirements.

FDA might counter that the design activities, if performed outside the laboratory, mean that the laboratory has not actually developed the assay.  Hence, the assay is not be a “laboratory developed test.”  Rather, it is an in vitro diagnostic subject to FDA’s premarket review.  The reply to FDA is that this analytical framework would lose the forest for the trees.  The core legal dispute is that FDA claims that all tests performed in a clinical laboratory are subject to the FDCA.  The agency bases this claim on the definition of an in vitro diagnostic, which on its face encompasses tests performed in a clinical laboratory.  The contrary position is that CLIA is a more specific statute that was enacted after the FDCA to comprehensively regulate clinical laboratory testing.  Therefore, CLIA preempts the FDCA with regard to tests offered by clinical laboratories.

The point of the new HHS policy is not to resolve the dispute but to instruct FDA to stand down for now.  Yet, if FDA continues to apply its longstanding definition of LDTs, it will not be required to stand down completely.  Rather, it will continue to pick and choose among LDTs offered by clinical laboratories, regulating some of them as “not true LDTs” as determined by FDA based upon subjective criteria not grounded in law.

A facility‑based approach would more fully carry out the new HHS policy of precluding FDA from premarket review of LDTs.  At the same time, it would clearly permit FDA to continue regulating traditional test kits manufactured outside clinical laboratories (and typically shipped to laboratories for use).  It is uncontroversial that these kits are medical devices under section 201(h) of the FDCA and properly regulated by FDA.  If HHS were to apply this suggested approach, every test would be regulated either under CLIA or the FDCA.  With no test going entirely unregulated, Congress would have breathing room to sort out the proper harmonization of the FDCA and CLIA.

Finally, another concern is that the new HHS policy says that FDA will abstain only from “premarket review.”  In the past, when FDA has chosen to regulate an LDT, it has said that all requirements of the FDCA apply.  (For example, see this warning letter from 2019.)  That would ordinarily include a panoply of post‑market requirements, such as the Quality System Regulation (QSR), Medical Device Reporting (MDR) and labeling requirements.  May FDA impose these even if premarket review is out of bounds?

It would be illogical (and potentially ultra vires of the FDCA) for HHS to allow FDA to do so.  The new HHS policy is premised on FDA’s lack of authority to conduct premarket review of LDTs.  (Hence, the requirement for notice and comment rulemaking to support such review.)  That same concern applies to postmarket regulation.  The FDCA is a finely balanced statutory scheme in which premarket review and postmarket requirements are two sides of the same coin.  They work together to meet the FDCA’s mandate that all medical devices have “reasonable assurance of safety and effectiveness” (FDCA § 513(a)).  If FDA lacks authority to conduct premarket review, it also lacks authority to impose postmarket requirements.

To sum up:  the new HHS policy is an excellent step to more rationally apply FDA’s resources during the pandemic.  In the bigger picture, it should take no less than an act of Congress to determine the proper scope of the FDCA and CLIA as applied to clinical laboratories.  Congress may decide that CLIA preempts the FDCA inside clinical laboratories.  Or, Congress may decide that developments in testing technology and business models warrants an overlay of FDA regulation.  If so, the new statute should supply the boundaries of such regulation and harmonize CLIA with the FDCA.

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Shifting Patient Engagement in the Era of COVID-19: HPM Facilitates the First Four Virtual Externally-Led PFDD Meetings, Moderating the Fifth Today

Shifting Patient Engagement in the Era of COVID-19: HPM Facilitates the First Four Virtual Externally-Led PFDD Meetings, Moderating the Fifth Today

By Larry J. Bauer, Senior Regulatory Drug Expert & James E. Valentine

We all have had to adapt to a world with COVID-19 concerns.  One of the challenges has been how to continue having Externally-Led Patient-Focused Drug Development (PFDD) meetings in these times of social distancing, travel restrictions, mask requirements, and other efforts to “flatten the curve”.

On June 9, 2020, the first ever virtual Externally-Led Patient-Focused Drug Development (EL-PFDD) meeting took place for the Hepatitis B community.  This virtual format, rather than the usual face to face meetings, was planned to avoid social contact and possible health consequences for attendees due to the COVID-19 pandemic.  HPM’s James Valentine and Larry Bauer helped the Hepatitis B Foundation in the planning and leading of this meeting.  On the day of the meeting, James was the meeting moderator, working from a local studio, and Larry gave a virtual meeting summary.

Since the success of that meeting, there have been three additional meetings for people living with Hypertrophic Cardiomyopathy (HCM); Facioscapulohumeral Muscular Dystrophy (FSHD); and, most recently, Pompe disease.  Today the National Kidney Foundation in partnership with NephCure hosts the fifth virtual meeting of its kind.  HPM helped in the planning and moderation of all these meetings.

Leveraging HPM’s Longstanding Experience with PFDD

PFDD meetings were a 2012 initiative originally conceived and sponsored by FDA to try to more systematically capture patients’ voices regarding their disease symptoms, the impacts of those symptoms on daily life, their current treatments, and their wishes for future treatments.  The goal of the meetings was to hear from patients and their caregivers to better incorporate their wishes and ideas throughout the drug development life cycle.  Information from these meetings is a valuable tool aiding FDA review staff when reviewing new drugs and treatments.  Part of each review is an evaluation of the potential benefits and risks from a new treatment.  Having direct patient input helps ensure that patients’ needs and wants are being considered.

James and Larry were both working at FDA at the time of the creation of this program. James served as a patient liaison, helping create and launch the PFDD program, and Larry served on several FDA panels at these meetings on behalf of the Rare Diseases Program.

Several years of success with these meetings followed; then, after conducting 24 such internal meetings, FDA decided to share the responsibility for PFDD meetings with patient organizations.  They encouraged interested groups to plan and conduct “externally-led” PFDD meetings with support from FDA.  These meetings typically follow a similar format to the original FDA meetings and result in a publicly available Voice of the Patient document that summarizes the meeting.

The first externally-led meeting took place in November of 2015 and was for people with Amyloidosis.  Since then, there have been meetings for a variety of conditions, both common and rare, including Spinal Muscle Atrophy, Friedreich’s Ataxia, Barth Syndrome, Cystic Fibrosis, and others.  HPM has been very active in planning many of these meetings, aided in 27 out of 37 meetings (73%), and moderated all but one of those meetings (see a complete listing in table at end of post).  In addition to James and Larry, other HPM colleagues bring their regulatory expertise to aid in organizing these meetings (e.g., Frank Sasinowski helped organize the EL-PFDD meetings on epidermolysis bullosa and pachyonychia congenita).  This extensive experience with PFDD meetings, both FDA- and externally-led, was leveraged to reimagine the virtual PFDD format when confronted with the COVID-19 pandemic.

Adapting the PFDD meeting format to a virtual environment

When we first considered shifting EL-PFDD meetings to a virtual format, there were many questions and doubts.  Would the meeting have the same impact? Would FDA attend virtually? How would we manage all the technical aspects of having a virtual meeting? How would we deal with any kind of technical failures on the day of the meeting? Would the virtual meetings be as interesting as in-person meetings? A virtual meeting format was not entirely new to the HPM team.  On October 29, 2018, the Cystic Fibrosis (CF) community held an EL-PFDD meeting for their community with help in planning and moderating from James Valentine.  Due to the nature of CF and the potential for cross-infection between patients, it was decided that the patients would call into the meeting.  A tele-townhall style approach allowed the moderator and meeting attendees to engage with remote patients from an in-person style meeting.  This experimental hybrid meeting format was very successful and critical for this community.

As the COVID-19 pandemic took ever greater hold on the country, it became clear that future EL-PFDD meetings would have to shift to virtual if the meetings were going to continue.  The Hepatitis B Foundation was the brave patient advocacy organization that decided to test the waters and planned a meeting for June 2020.  The Foundation enlisted the help of HPM as well as the media firm Dudley Digital Works to plan and produce the meeting.  When considering having a meeting, the Hepatitis B Foundation had these thoughts:

We have only a limited understanding of the broad impact of chronic hepatitis B on affected individuals,” states Dr. Chari Cohen, DrPH, MPH, Senior Vice President of the Hepatitis B Foundation.  “Many aspects of the disease, including the experiences of living with and being treated for chronic hepatitis B infection, have not been formally captured in clinical trials or public health studies.

The new virtual format gradually evolved.  It was decided that the patient panelists would pre-record their 5-minute statements to avoid any possibility of technical failure on the day of the meeting.  It also gave them the opportunity to practice their statements to ensure the best video quality.  For the first meeting, moderator James Valentine, was live in the Dudley Digital studio behind a desk to create the feeling of a news feature program.  For the subsequent meetings, James has had a co-host who was a representative from the patient advocacy community to provide additional commentary and moderate written comments.

Communication with attendees was key.  This was primarily done through an enhanced landing page for attendees to register in advance and get information about how to access the meeting on the day of the event.  This helped capture information about who was watching and participating in the meeting.  Live polling of participants was very similar to in-person meetings with patients and caregivers being asked polling questions by the moderator and then responding from their cell phones or other web-enabled device to give feedback in real time.

One of the biggest differences between in-person and virtual meetings was in how meeting attendees could participate in the live discussion part of the meeting.  During in-person meetings, the moderator asks questions and walks around the room with a microphone and people raise their hands to contribute to the meeting.

In a virtual meeting, there were now three possible ways of getting attendee feedback.  The first was through a panel of five pre-chosen people with the specific disease or condition that were all participating simultaneously in a Zoom call.  We called these people ‘discussion starters,’ since the moderator could ask them specific questions related to the discussion topic while waiting for callers to enter the queue.  The second way to participate was through emailed, written comments.  Participants could respond to the moderator’s questions by sending in an email with their thoughts and responses.  The third way of participating was through calling into a call center that took calls in real time.  James could call on people by name and ask them to respond to the discussion question.  These meetings really feel like a documentary style news show with a variety of inputs including photographs and videos to be shown during patient testimony.  Many FDA staff have attended these meeting virtually, and each meeting has had an FDA representative give opening remarks.  The FDA’s Patient-Focused Drug Development Program staff in CDER were very helpful in guiding the planning of these meetings.

This new virtual format has gone extremely well and put most of our doubts to rest.  Not unlike the in-person meetings, there have been few technical glitches, but the meetings have generally gone smoothly.  Some of the lessons learned have been to start planning early, make sure there are a lot of visuals to hold viewers’ attention, have the planning team communicate regularly, and to have two live meeting hosts instead of just one to balance the increased number of live inputs.

Parting Thoughts

COVID-19, unfortunately does not have any signs of going away soon.  It looks like virtual EL-PFDD meetings are the way for at least the near future and may remain a valuable option for patient communities that may have difficulty traveling or have other health risks.

We look forward to today’s meeting and continuing to develop the virtual format to make it even better. In fact, several organizations are already planning meetings for the coming months.

Table: 37 Externally-led PFDD meetings held to date (unofficial count)

Disease Patient Organization Date
Amyloidosis* Amyloidosis Research Consortium November 15, 2015

(prior to FDA guidelines)

Myotonic Dystrophy* Myotonic Dystrophy Foundation September 15, 2016
Acute Porphyrias American Porphyria Foundation March 1, 2017
Osteoarthritis Arthritis Foundation March 8, 2017
Spinal Muscular Atrophy* Cure SMA April 18, 2017
Friedreich’s Ataxia* FA Research Alliance June 2, 2017
Tuberous Sclerosis (& LAM)* Tuberous Sclerosis Alliance June 21, 2017
C3G, a rare kidney disease* National Kidney Foundation August 4, 2017
Lupus* LADA, LFA, & LRF September 25, 2017
Hyperhidrosis International Hyperhidrosis Society November 13, 2017
Duchenne Muscular Dystrophy Parent Project Muscular Dystrophy March 5, 2018
Hypereosinophilic Syndromes Am. Partnership for Eosinophilic Disorders March 23, 2018
Pachyonychia Congenita* PC Project April 6, 2018
Epidermolysis Bullosa* debra of America April 6, 2018
Sleep Apnea American Sleep Apnea Association June 8, 2018
Barth Syndrome* Barth Syndrome Foundation July 18, 2018
Juvenile Idiopathic Arthritis Arthritis Foundation; CARRA August 2, 2018
Alport Syndrome* National Kidney Foundation August 3, 2018
Chemotherapy-induced hearing loss in pediatric cancers* Children’s Cause for Cancer Advocacy September 13, 2018
CMT & inherited neuropathies* Hereditary Neuropathy Foundation September 28, 2018
Chronic hypophosphatemias* XLH Network October 5, 2018
Cystic Fibrosis* Cystic Fibrosis Research, Inc. October 29, 2018
Major Depressive Disorder Depression and Bipolar Support Alliance November 16, 2018
Niemann-Pick Type C Ara Parseghian Medical Research Fund March 18, 2019
Mitochondrial Diseases* United Mitochondrial Disease Foundation March 29, 2019
IgA Nephropathy* National Kidney Foundation August 19, 2019
Myeloproliferative Neoplasms (MPN)* MPN Research Foundation September 16, 2019
Pyruvate Kinase Deficiency (PKD)* NORD September 20, 2019
Atopic Dermatitis* National Eczema Association

Asthma & Allergy Foundation of America

September 23, 2019
CDKL5 Deficiency Disorder (CDD)* LouLou Foundation November 1, 2019
Lennox-Gastaut Syndrome LGS Foundation November 1, 2019
Pancreatitis* National Pancreas Foundation March 3, 2020
Chronic Hepatitis B* Hepatitis B Foundation June 9, 2020
Adult Hypertrophic Cardiomyopathy* Hypertrophic Cardiomyopathy Association June 26, 2020
Facioscapulohumeral Muscular Dystrophy* FSHD Society June 29, 2020
Pompe Disease* Muscular Dystrophy Association July 13, 2020
Focal segmental glomerulosclerosis (FSGS)* National Kidney Foundation August 28, 2020

*Meetings HPM helped plan.  Aided with VOP report only.

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2 Become 1: MAPP on Consolidation of ANDAs

2 Become 1: MAPP on Consolidation of ANDAs

By Sara W. Koblitz

Every so often, FDA revisits a policy set forth in FDA’s Manual of Policy and Procedures (“MAPP”) to reflect the Agency’s current practices.  Though MAPPs really only govern the actions of the Agency, their content is important to understanding how FDA will approach certain requests.  For example, FDA’s MAPP 5240.3, “Priority of Original ANDAs, Amendments, and Supplements,” sets forth the Office of Generic Drugs’ approach to Priority Review, which allows sponsors to understand when its ANDA or supplement may qualify for such Priority Review.  Last week, FDA revised MAPP 5241.2 , Consolidation of ANDAs by the Office of Generic Drugs (“OGD”), which, along with insights into FDA’s considerations when a sponsor requests to consolidate ANDAs, provides an important reminder that sponsors should be aware of and considering consolidation ANDAs when possible.

MAPP 5241.2 explains that, historically, ANDA applicants would submit separate, original ANDAs for each strength of a generic drug for which the sponsor sought approval, resulting in multiple ANDA numbers for different strengths of the same drug product.  For a variety of reasons, including streamlining the postmarketing or transfer of ownership requirements, a sponsor might want to consolidate its ANDAs for different strength of the same product into one “parent” ANDA.  The parent ANDA is typically the ANDA for the strength used in bioequivalence testing and serves as the basis for bioequivalence waivers for the other strengths.  In such an instance, the sponsor submits a consolidation request, including information on the formulations of all ANDAs applicable to the requests, all listed drugs referenced, and all bioequivalence studies and bioequivalence waivers received, as well as a copy of the consolidation request as correspondence to each ANDA identified in the request.  Once a consolidation request is approved, the sponsor only needs to submit a Prior Approval Supplement or a Changes Being Effected supplement to implement the consolidation.  MAPP 5241.2 does little to impact this process other than removing a requirement to identify all inactive ingredients in the product formulations.

While consolidation of ANDAs may not seem significant on its face, it is an important tool in managing user fee assessments.  Under the Generic Drug User Fee Act, sponsors must pay annual program fees based on the number of separate ANDAs held as of the fee due date, October 1 of each fiscal year.  A small business program fee is assessed for each entity, including its affiliates, that holds between 1 and 5 ANDAs; an entity that owns between 6 and 19 ANDAs is assessed a medium size operation generic drug applicant program fee; and an entity that owns 20 or more ANDAs is assessed a large size operation generic drug applicant program fee.  The small business program fee is equal to one-tenth of the large size operation generic drug applicant fee while a medium size is equal to two-fifths of the large size.  Consolidating ANDAs can help reduce the number of ANDAs that are considered in the calculation of the GDUFA program fee.

As FDA explains on its GDUFA website, ANDA consolidation requests approved by October 1 can affect the program fee tier assessed:  a jump from the “medium size” program down to the “small size” – a reduction in ANDAs from 6 to 5 – could save a sponsor $500,000, and a jump from “large size” down to “medium” – 20 to 19 – can save a company over $900,000.  But the catch is that the consolidation request must be approved by October 1.  As FDA explains “if a company has 6 approved ANDAs and requests a consolidation of 2 ANDAs into 1, but the Office of Generic Drugs does not grant the consolidation request until after October 1, 2020, then the company’s tier would remain medium tier for FY 2021. (total remains 6 ANDAs).”  That’s $500,000 that a sponsor need not pay if it were just to consolidate its ANDAs in a timely fashion.  As such, MAPP 5241. 2 serves as a timely reminder as we approach the fall that companies considering consolidating ANDAs in an effort to address program fee assessments should get those requests in now!

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FDA, Testing, and COVID-19: A “Mid-Mortem”

FDA, Testing, and COVID-19: A “Mid-Mortem”

By Gail H. Javitt & Jeffrey N. Gibbs & Richard A. Lewis & McKenzie E. Cato

From the start of the COVID-19 pandemic, access to accurate and reliable testing to identify patients exposed to SARS-CoV-2 or infected with COVID-19 was identified as a critical element of an effective public health response.  Testing is needed to diagnose individuals with active symptoms, enable early identification (through contact tracing) and quarantine of individuals who may have been exposed, and determine whether an individual has developed antibodies to the disease.  And as we head into the Fall, testing is becoming integral to schools and universities seeking to safely resume in-person instruction, and to the health and safety of employees as they return to work.

The Food and Drug Administration (FDA) is the government agency that has played the most pivotal role in determining what tests have been available in the United States.  Unfortunately, the issue of testing has too often been politicized, which has impeded a nuanced, rational assessment of FDA’s regulatory efforts and the extent to which FDA has succeeded in, on the one hand, facilitating widespread and timely access to accurate and reliable tests, while on the other, preventing poor quality tests from being disseminated.

Although “post-mortems” are typically performed at the end of a project, the COVID-19 pandemic appears to be poised to continue for the foreseeable future.  This makes it all the more important to evaluate FDA’s response to date and to recommend any “mid-course corrections” that could improve the agency’s response during the pendency of this pandemic . . . let alone any future ones that may arise.  The list below is anything but exhaustive, but we believe it includes the key areas for improvement.

As FDA regulatory practitioners who have worked with multiple companies trying to introduce COVID-19 tests, we have witnessed first-hand both the challenges faced by companies seeking to bring new tests to the market and the pernicious impact of “bad actors.”  With the end of summer approaching and states experimenting with “back to work” and “back to school” programs, this is an opportune time to reflect on the past five months and identify key lessons for regulators, policy makers, and the regulated industry, which we hope can inform the process going forward.

Primum non nocere – First, do no harm

The lack of adequate testing at the outset of the pandemic can be directly linked to FDA’s controversial laboratory-developed test (LDT) policy, which several FDA Law Blog contributors have addressed on numerous occasions.  See J. Gibbs, M. Cato & S. Schlanger, New FDA Policy Significantly Limits Serological Testing, FDA Law Blog (Apr. 13, 2020); J. Valentine, D. Clissold, & J. Shapiro, FDA Works Around the Clock, Provides More Detailed Guidance on the Conduct of Clinical Trials Amidst the COVID-19 Pandemic, FDA Law Blog (Apr. 1, 2020).  In short, FDA asserts jurisdiction to regulate clinical laboratory tests, but in most cases exercises “enforcement discretion,” allowing clinical laboratories to innovate and respond quickly to emerging clinical needs.  However, FDA did not elect to exercise general enforcement discretion for COVID-19 LDTs, meaning that clinical laboratories other than CDC were not permitted to offer testing for SARS-CoV-2 without prior authorization from FDA, either through an Emergency Use Authorization (EUA) or pursuant to an applicable FDA COVID-19 enforcement policy.  As was widely reported, CDC’s test – notwithstanding FDA authorization – had significant performance issues, but FDA’s prohibition on offering LDTs without FDA authorization meant there were no alternatives available for several crucial weeks at the beginning of the outbreak in the U.S.  Laboratories were ready, willing, and able to offer LDTs, but were blocked by FDA’s policy.  Michael Shear et al., The Lost Month: How a Failure to Test Blinded the U.S. to Covid-19, N.Y. Times, Mar. 28, 2020.

FDA’s jurisdiction to regulate LDTs under the medical device provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act) has long been the subject of debate but has not yet been subject to legal challenge.  In a recent Yale Law Journal Forum essay, Barbara Evans and Ellen Wright Clayton present an additional jurisdictional argument based on Section 564 of the FD&C Act, which addresses FDA’s EUA authority specifically, and which FDA cited in guidance as the source for its authority to require clinical laboratories to obtain EUAs.  Barbara Evans & Ellen Wright Clayton, Deadly Delay: The FDA’s Role in America’s COVID-Testing Debacle, 130 Yale Law J Forum 78 (2020).  As Evans and Clayton note, Section 564 allows FDA to grant EUAs only for medical “products,” defined as drugs, devices, and biological products, but “grants no new powers for the FDA to regulate clinical laboratory services.”  Id. at 80.  Indeed, they note that the only mention of clinical laboratories under Section 564 occurs in the context of FDA’s authority to categorize the complexity of a “laboratory examination or procedure associated with such device.” Id.; FD&C Act § 564(m)(1).  By drawing a distinction between “laboratory examinations or procedures” that are not subject to Section 564 and “products,” which are subject to Section 564, the statutory language makes FDA’s assertion of jurisdiction to require EUAs for clinical laboratory tests highly suspect.

In any event, FDA’s decision to prevent LDTs for SARS-CoV-2 testing was not dictated by decisions by the prior administration.  FDA did not have to prevent labs from running samples for SARS-CoV-2 using their LDTs.  FDA chose to take that approach.

In short, FDA’s decision not to exercise enforcement discretion for use of LDTs for SARS-CoV-2 significantly delayed the availability of accurate and reliable tests.  The adverse consequences of FDA regulation of LDTs in the time of a pandemic was foreseeable.  This is not a case of hindsight is 20/20 – the need for LDTs during disease outbreaks had been foreseen in comments to FDA criticizing past FDA efforts to limit LDTs.  See, e.g., American Clinical Laboratory Association, Citizen Petition, Docket No. FDA-2013-P-0667-0001 (Jun. 17, 2013) at 15-16 (noting that LDTs allow for real-time response to emergent infectious diseases that is critical to the welfare of patients and the public health and that requiring FDA marketing authorization under such circumstances could have “potentially catastrophic consequences”).

Remarkably, on August 19, 2020, the Department of Health and Human Services (HHS) issued a statement announcing that FDA could not regulate any LDTs – including those for SARS-CoV-2 – without first going through rulemaking (see our blog post here).  The HHS notice specifically stated that this position meant that laboratories did not need EUAs to offer LDTs.  As a consequence of this announcement, FDA’s policy requiring laboratories to obtain EUAs for LDTs for SARS-CoV-2 has been overridden.  This move, of course, cannot cure the damage caused by testing delays at the beginning of the pandemic.  But moving forward, laboratories will have significantly more flexibility to quickly offer appropriately validated LDTs for SARS-CoV-2 without FDA authorization as a rate-limiting step.

Measure twice, cut once – The law of unintended consequences

FDA’s requirements for serology (antibody) tests have changed multiple times in the space of a few short months.  We understand that FDA has needed to make changes to the regulatory requirements for serology tests as it learns more about the quality of the tests on the market and the data supporting their use, but making changes also imposes costs and confusion.  The lack of regulatory predictability has complicated matters for reviewers and companies.

Initially, FDA announced that manufacturers of serology tests could begin marketing their tests without an EUA, so long as they had appropriate analytical and clinical test validation data on file and submitted a “notification” to FDA of their intent to distribute.  FDA, Guidance for Clinical Laboratories, Commercial Manufacturers, and FDA Staff, Policy for Diagnostic Tests for Coronavirus Disease-2019 during the Public Health Emergency, at 1 (Mar. 2020).  Companies rushed to validate their tests according to FDA’s recommendations and put distribution networks in place.

FDA then abruptly shifted its notification policy in May, announcing that all serology test manufacturers would first need to prepare and submit an EUA, but could continue distribution pending FDA review.  FDA, Guidance for Clinical Laboratories, Commercial Manufacturers, and FDA Staff, Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency (Revised) (May 2020).  FDA distributed a “template” EUA request disclosing the data required to be included in the submission.  Again, industry raced to meet the new requirements, since the penalty for not submitting an EUA by the stated deadline was to be placed on the list of companies not permitted to distribute in the U.S.  FDA was giving companies as little as 24 hours to respond to agency interactive review questions.

FDA explained the change in policy was due in part to the improper promotional claims that companies made, as well as changes in understanding of the benefits and risks.  The document did not mention another factor that undoubtedly played a role: FDA was roundly criticized in the press and by Members of Congress for allowing serology test kits onto the market that it had not reviewed, some with low or inconsistent performance.  (While LDTs typically are not reviewed by FDA before being introduced, serology tests for new analytes ordinarily do require FDA review before commercial distribution.)  See Laurie McGinley, Dozens of coronavirus antibody tests on the market were never vetted by the FDA, leading to accuracy concerns, Washington Post, Apr. 19, 2020; Zachary Brennan & David Lim, FDA pushed through scores of inaccurate antibody tests without agency review, Politico, Apr. 27, 2020; Thomas Burton, FDA Sets Standards for Coronavirus Antibody Tests in Crackdown on Fraud, Wall Street J, May 4, 2020.

While some reviewers, particularly in in the March-May timeframe, responded rapidly and substantively to serology EUA submissions, the collaborative nature of the interactions deteriorated, and response time and quality of reviews varied widely between submissions.  Some EUAs were issued fairly quickly, while others languished for weeks or months.  Eventually, FDA seemed to be overwhelmed by the influx of EUA submissions and would frequently reference its large “backlog” in submissions when companies requested status updates on FDA’s review of their EUA request.

FDA also at some point made an internal decision to “deprioritize” serology tests, but this decision was never publicly announced or acknowledged.  FDA’s stated public rationale was that since, under the revised May policy, companies were permitted to begin distribution of their serology tests while the EUA submission was under review, FDA action on the EUA really was not that important, and FDA’s resources could be better utilized.  This perspective, though, ignored the real-world impact of lack of an EUA: in many cases, the product is not commercially viable without an EUA authorization because some customers (e.g., state governments and hospital systems) preferred to purchase tests that had completed the FDA review process.

By design or inadvertently, FDA created two distinct marketplaces: some tests were being sold pursuant to FDA’s revised policy, which allowed distribution during the pendency of FDA’s review, while others had an EUA.  Another disadvantage to distribution of a test without an EUA is that there is a question of whether a test sold while an EUA request is under review, and not yet authorized, enjoys the strong liability protection available under the PREP Act, which is unquestionably available for tests that have an EUA.  See HHS, Advisory Opinion on the Public Readiness and Emergency Preparedness Act and the March 10, 2020 Declaration Under the Act, April 17, 2020 as modified on May 19, 2020.

Transparency and Communication are Key

The failure to acknowledge changes in review priorities is only one of many instances in which FDA has not clearly communicated with regulated industry.  The examples below are by no means exhaustive:

  • “Point-of-Care” serology tests: As noted above, FDA’s initial policy for COVID-19 tests allowed serology tests to be marketed pursuant to a notification only without prior FDA authorization. FDA’s written policy stated that such tests were intended for use by clinical laboratories and health care providers “at the point of care.”  On its face, this appeared to allow the tests to be sold to and used in point-of-care settings, such as doctors’ offices and drive-through testing facilities.  It made sense for this policy to apply to point-of-care health care settings, as these are the settings most suited to the use of these simple, rapid serological tests.  This interpretation would also have been consistent with broader access to tests.  However, in order for these tests to be used by non-laboratorians outside of a CLIA-certified clinical laboratory, FDA must classify them as “CLIA waived.”  Many readers of FDA’s policy reasonably inferred that FDA must mean these tests were CLIA waived, because that was the only way providers “at the point of care” could actually use them.  Nevertheless, FDA later issued an “FAQ” on its website stating that, in fact, the tests were not waived, and that manufacturers would need to conduct additional studies demonstrating that their tests could safely be used at the point of care and receive an EUA in order to market them to anyone other than a CLIA “high complexity” laboratory.  See Gibbs, M. Cato & S. Schlanger, New FDA Policy Significantly Limits Serological Testing, FDA Law Blog (Apr. 13, 2020).  Following this clarification, companies were forced to quickly cease distribution for point-of-care use and revise labeling and marketing materials to note the tests’ high-complexity status.  Companies that did not notice the clarification on FDA’s website continued distribution for point-of-care use.  There were several points in the process where FDA could have avoided the significant confusion over this issue. Procedurally, FDA’s delay allowed confusion to continue.  Substantively, FDA’s decision meant that tests could not be run at many sites where they would have been most useful.  FDA’s decision also directly clashed with a policy from the Centers for Medicare & Medicaid Services issued almost at the same time that permitted testing at pharmacies, which was not at the time possible because FDA has not yet authorized any serological tests for point-of-care use.
  • NCI testing pathway: On April 28, 2020, FDA issued an umbrella EUA, which was described as a “voluntary” program under which manufacturers could, at no cost, submit their tests to the National Cancer Institute for validation testing rather than conducting independent clinical validation testing and submitting an individual EUA. If the validation testing conducted by NCI showed that the test met minimum performance standards outlined by FDA, the test was authorized under the umbrella EUA.  This process was described by FDA as designed to cut down on FDA’s review burden, because FDA would not have to perform in-depth reviews of individual EUA submissions.  The NCI test data (whether favorable or unfavorable) would be made publicly available.

While in concept this plan had merit – creating a central, standardized U.S. testing site in which FDA had confidence and for which manufacturers did not have to incur expense – the execution of the program was anything but smooth.  Companies that volunteered to have their tests evaluated by NCI were given priority in the form of continued communication with FDA.  NCI quickly (and foreseeably) became inundated with testing requests, and manufacturers experienced long delays for their results.

At the same time, many companies chose not to pursue the “voluntary” NCI pathway (e.g., in favor of using a commercial testing laboratory).  There were some limitations to the umbrella EUA; for example, it only allowed for authorization for use in moderate- or high-complexity CLIA laboratories.  If companies wanted to pursue a point-of-care authorization, an individual EUA was required.  However, even though companies submitted robust clinical validation studies with their individual EUA, some were told by reviewers that they would need to submit test kits to NCI for testing to “confirm” their clinical validation results in order to obtain an EUA, while others found their EUAs inexplicably stalled while reviewers inquired repeatedly whether their tests had been submitted to NCI.  The de facto requirement to obtain NCI testing was never publicly announced or acknowledged, and companies were confused by requests to submit test kits to NCI for testing when they had not elected the umbrella pathway.

Gating the review of serology tests through the NCI, which apparently stemmed from a lack of trust in data submitted by device manufacturers, has caused another host of problems for companies.  It was the expectation of FDA that the data generated by NCI would be consistent with the other data provided in the submission.  However, NCI data do not necessarily reflect performance in the field.  NCI uses a curated panel of specimens that, because of small sample size and limited range of titers, is not necessarily consistent with what might be observed in the real-world when evaluating “all-comers” as part of a clinical study.  The test report provided by NCI acknowledges these limitations, stating that the “[s]ensitivity and specificity estimates in this report may not be indicative of the real-world performance of the [Company] [Device Name].”  The report explains that the NCI results are “based on serum and plasma samples only and may not be indicative of performance with other sample types, such as whole blood, including finger stick blood.”  Additionally, the report states that the “number of samples in the panel is a minimally viable sample size that still provides reasonable estimates and confidence intervals for test performance, and the samples used may not be representative of the antibody profile observed in patient populations.”  Notwithstanding these acknowledged limitations by NCI, FDA has in practice treated NCI results as determinative and has rejected EUAs based on NCI data that failed to meet FDA’s threshold for sensitivity, even if the NCI test results conflicted with other data submitted by the manufacturer, often using much larger sample sizes compared to NCI testing.

  • Revocation of NCI umbrella EUA: Three months after announcing the “umbrella” pathway, on July 21, 2020, FDA announced without warning that the umbrella EUA was being revoked. (FDA explained that nobody had actually used this pathway it had created.  This was only partially true; many tests were in the pipeline awaiting authorization under the umbrella policy, but FDA not yet authorized any tests.)  FDA couched the decision as solely “administrative” in nature, but the implications of its actions seemed potentially far reaching, leaving applicants who had pursued the NCI testing pathway uncertain over the fate of their submissions and concerned about whether they needed to undertake costly independent clinical validation.  It took several days and multiple emails to regulators to clarify that pending submissions would not be adversely affected by the change.  This confusion could have been avoided had FDA more clearly communicated what the change meant.
  • Lack of industry input: FDA has three main resources for manufacturers looking to validate serology tests: “Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency (Revised) Immediately in Effect Guidance for Clinical Laboratories, Commercial Manufacturers, and Food and Drug Administration Staff” (May 11, 2020); FAQs on Testing for SARS-CoV-2; and the Serology Template for Commercial Manufacturers. None of these resources mention FDA’s data expectations regarding shelf-life claims for EUAs. As it turns out, FDA will not accept the standard practice of providing accelerated aging studies that validate the full claimed shelf-life with real-time testing to be conducted post authorization.  Companies need real-time data in their EUAs, or they may find that they are left with a short-term shelf-life claim that presents commercial challenges or renders the product commercially non-viable.

This specific example highlights another problem: the lack of industry input.  Under ordinary circumstances, FDA would be issuing draft guidances and receiving feedback from stakeholders.  The lack of a mechanism to receive comments has meant that FDA has been deprived of a critical outside perspective.  FDA may know what it is trying to communicate in its policies and FAQs, but sometimes it is not clear to the outside world.  For example, one of FDA’s early guidance documents referred to “at home” testing.  The ambiguous phrasing led companies reasonably to conclude that FDA’s policy applied to tests conducted at the home, not samples obtained from the home.  FDA then criticized companies for providing products where samples were collected at home, even though FDA’s phrasing was unclear.

  • Delays in providing guidelines on data expectations: While there have been occasions where FDA has been quick to provide feedback and clarifications to industry, such as through its list of FAQs and weekly “virtual town halls,” there have been occasions where FDA has been slow to provide public guidance on expectations for data supporting EUAs.  For example, for a period of about two months, FDA promised an EUA template for home testing “very soon” or by the “end of the week.”  Some companies delayed submission of EUAs for home tests, fearing that FDA would release a template with new requirements shortly after submission of an EUA application.  Similarly, following FDA’s clarification that an EUA was required to distribute a serology test for point-of-care use, companies requested information from FDA on the expectations for usability and flex studies.  FDA did not add these data expectations to the serology test EUA template until weeks later, but in the meantime, provided the usability and flex study expectations to companies individually upon request, leaving companies who did not know to request these guidelines at a disadvantage.  Given the unprecedented volume of work, we understand that developing these guidance documents and FAQs will take time.  It is important, however, for FDA to provide realistic estimates as to when these documents will be released.

Dirty Harry had it right – An agency’s “got to know its limitations”

During the early months of the pandemic, interactions between reviewers and test developers were, on the whole, collaborative and communicative.  Sadly, as the pandemic has dragged on to new heights, this situation has changed. Many companies have had their questions go unanswered by FDA for months. We at HPM have never had so many companies so frustrated by the lack of agency feedback.  Multiple companies have reported sitting in a queue for months, with no visible progress and no meaningful communications with FDA.  That same frustration clearly comes through in some of the calls to the weekly virtual town hall meeting on diagnostics.

The reduction in collaborative discourse can be attributed in large measure to a sharp spike in submission volume for CDRH.  We are well aware that the agency has never faced such an onslaught of submissions.  We are sympathetic to the challenges FDA faces, not just with diagnostics but also with other pandemic-related products (e.g., vaccines, drugs, personal protective equipment, hand sanitizer).

Even so, this lack of interaction has had a crippling impact on companies pursuing EUAs.  The regulatory landscape is still changing rapidly, and these changes are not always followed with appropriate communications by the Agency. And as applications languish, FDA’s standards can change, dooming companies whose submissions met the standards that had been in place at the time of submission. When emails are sent to FDA requesting updates on the status of a review one is very likely to hear nothing, or to receive this boilerplate response: “We appreciate your patience during this time.  Unfortunately, we are not able to provide estimates of review timelines.”  While the U.S. suffers from a shortage of tests, companies that raced to develop and validate tests are left in regulatory limbo.

Again, this outcome was completely foreseeable.  FDA has received thousands of EUA requests since March – the equivalent of several years of work compressed into mere months.  Doing the math, it is physically impossible for FDA, with current staffing levels, to review these submissions in anywhere close to a timely manner.  Although FDA has not (and will not, we expect) publicly admit its capacity constraints, the reality is that some submissions will not get reviewed, and some products will not receive authorization because there are simply not enough people to do the work.

However, FDA’s failure to acknowledge limitations in its capacity has significant adverse commercial consequences for test developers and public health consequences.  It also has created distrust and disillusionment.  For a number of companies, this has been their first experience with FDA – and it has not been a favorable one.

Companies whose products have been rejected or criticized by FDA are also frustrated by their FDA interactions.  There is a recurring pattern reported by companies caught in these situations: that FDA has made up its mind and will not listen to any other perspective, and that when FDA communicates publicly its conclusions, the agency fails to provide the necessary context.  Once again, the result is a recurring perception that FDA has acted unfairly.

Those Who Fail to Learn History Are Doomed to Repeat It

This will almost certainly not be the last major outbreak of an infectious disease.  As Evans and Clayton note, “[w]hile nothing will buy back time already lost, the COVID-19 outbreak casts a useful light on flaws in recent laboratory-testing policy. . . . Lessons from the current pandemic might still help us in the next one.”  It is critical that a thorough, non-partisan, scientifically-based and objective review of FDA’s handling of COVID-19 testing be conducted to evaluate what went right and what needs to be improved.  FDA and all stakeholders need to learn from these experiences so that we are all more prepared.

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Lawsuit Challenges USDA’s BE Labeling Rule

Lawsuit Challenges USDA’s BE Labeling Rule

By Riëtte van Laack

On July 27, 2020, the Natural Grocers, Citizens for GMO Labeling, Label GMOs, Rural Vermont, Good Earth Natural Foods, Puget Consumers Co-op, and the Center for Food Safety (“Plaintiffs”) filed a complaint against USDA challenging the final “BE labeling rule,” i.e., the final rule implementing the National Bioengineered Food Disclosure Standard (NBFDS).  According to Plaintiffs, the final BE labeling rule fails to provide meaningful labeling of, what Plaintiffs call, genetically engineered (GE) foods.   They allege that USDA “fell far short of fulfilling the promise of meaningful labeling of GE foods [and] in many ways, the [rule results] . . . in the direct or de facto concealment of these foods and avoidance of their labeling.”

As readers of our blog know, Plaintiffs have been fighting for mandatory disclosure of the presence or use of genetically engineered ingredients in food for many years.  Congress passed the NBFDS in 2016 after several states had passed and several other states were poised to pass laws mandating certain statements on foods that were manufactured from or with the use of genetic engineering.  The Agricultural Marketing Service (AMS) of the USDA was tasked with the implementation of the law.   The final rule, setting a compliance date of Jan. 1, 2022, was issued in 2018.  (see our blog post here)

Plaintiffs take issue with various aspects of the final regulation.

  1. The option of using a QR code only (i.e., without requiring additional on-package labeling) as method of disclosure. Plaintiffs allege that a study commissioned by AMS showed that it is not realistic to have customers scan barcodes for dozens of products in the store and the QR code would discriminate against people with lower smartphone ownership, with no or low ability to afford data, and people living in areas without general access to internet with the required bandwidth, i.e., the poor, elderly, rural and minorities.  According to Plaintiffs, AMS ignored the  study results and decided to allow the QR code as a method of disclosure anyway.
  2. The terminology used in the disclosure language . Congress used the new term “bioengineered” in the NBFDS.  However, Plaintiffs allege that NBFDS instructed USDA to also include “any similar term” in its new standard.  Nevertheless, the final rule prohibits the terms “genetically engineered” and “GMO,” on the label.  Plaintiffs allege that AMS’s decision was arbitrary and capricious and in contradiction to the plain language of the law.  According to Plaintiffs the use of “bioengineered” rather than “genetically engineered,”  or “GMO” will confuse and mislead consumers because for many decades, consumers, federal agencies, scientists and the marketplace have used the terms “genetically engineered” and “GMO.”
  3. The application of mandatory disclosure to foods that contain detectable modified genetic material only. Not surprisingly, Plaintiffs assert that the final rule is too limited because the mandatory disclosure applies only to foods that contain detectable modified genetic material and excludes highly refined products which do not contain any detectable modified genetic material.  As we reported previously, AMS considered the language of the definition of BE in the NBFDS and concluded that the term BE foods covers only those foods that contain detectable modified genetic material.
  4. The prohibition against the voluntary use of the terms “GMO” or “genetically engineered” on BE foods. The only voluntary labeling allowed is “derived from bioengineering” and only in certain circumstances.  Plaintiffs argue that this limitation is unconstitutional because “[m]anufacturers and retailers have a fundamental 1st Amendment Right to provide truthful commercial information to consumers, and consumers have a right to receive it.”  Therefore,  prohibiting manufacturers and retailers from labeling foods as produced through genetic engineering or as genetically engineered “violate[s] the statute’s text and purposes as well as the 1st Amendment’s guarantees.”

Plaintiffs ask that the Court set aside or vacate all or portions of the final rule based on AMS/USDA’s violations of the NBFDS and Administrative Procedure Act, and set aside any portions of the rule and the NBFDS that violate the 1st Amendment.

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Prescription Drug Wholesalers: Don’t Overlook Non-Resident State License Requirements

Prescription Drug Wholesalers: Don’t Overlook Non-Resident State License Requirements

By Larry K. Houck

Owners and management of the Kilgoban Drug Company, a fictional prescription drug wholesaler in the fictional U.S. state of Moosissippi, are preparing to begin operations.  They have applied for and obtained all of the licenses required to operate their business, including a wholesaler license issued by the Moosissippi state board of pharmacy.  Owners and management believe that they are ready to begin purchasing drugs from manufacturers and selling them to pharmacies, hospitals, clinics and medical practices within Moosissippi and across the country.  But their belief would be incorrect if they have overlooked obtaining every license required by all of the states where their products may “end up.”  In fact, many wholesalers are unaware that they may need to obtain licenses even in those states where they are not physically located, or where they do not necessarily intend to send their products.

All states, and the District of Columbia, require wholesalers to obtain a license to ship or sell prescription drugs into or within their borders, and prohibit wholesalers from conducting those activities until they have obtained the required licenses.  The most niggling though consequential challenge confronting drug wholesalers is determining whether they hold all of the required state licenses to conduct their business activities.  To make that determination, wholesalers must identify, then obtain every license required by all jurisdictions where they conduct business.  While many states share similarities as to which activities require licensing, unfortunately they are far from uniform.  States are consistently inconsistent as to what triggers licensing requirements.

Failure to obtain and maintain required licenses can result in substantial civil financial penalties and administrative sanctions, including denial, suspension or revocation of a license and the prohibition of conducting activities within the state.

Initially, most states required and continue to require, drug wholesalers physically located within their borders to obtain in-state or “resident licenses.”  Later, most states also began requiring wholesalers to obtain “non-resident licenses” if they physically ship or move products into their state from another state.  Those are easy triggers for wholesalers to determine if they need non-resident licenses.  But states have gone even further, and drug wholesalers not located within their borders who do not physically ship products into the state may still have to obtain a non-resident license if they trigger one of the myriad licensing triggers.

Whether a wholesaler must obtain a non-resident license in certain states and not others depends upon how each state defines “wholesale” and “wholesaler” in combination with a number of different facts within the distribution scenario.  So, even if a wholesaler does not ship drugs directly into other states, owners and management must ask themselves whether their company…

•           Name appears on the products’ label?
•           Invoices customers in the state?
•           Employs sales representatives in the state?
•           Owns or holds title to products sold into the state?
•           Owns or holds the New Drug Application or the Abbreviated New Drug Application?
•           Conducts marketing activities or has customer accounts in the state?
•           Directs movement of products into the state?
•           Provides samples to entities in the state?

If the answer to any if these questions is “yes,” the wholesaler will have to obtain non-resident licenses in certain states.  The difficulty is determining exactly which states.  Deciphering unclear state statutes, regulations and licensing authorities’ (usually boards of pharmacy, but also possibly the state’s Department of Health or Occupational/Professions Division) websites to determine whether a license is required, can be a frustrating exercise.  Speaking or communicating directly with licensing authority personnel can cut through the foggy morass, but personnel within the same agency sometimes interpret definitions and requirements differently from their colleagues.

Once wholesalers have identified which state licenses they need, submitting applications and all required licensing components prior to beginning operations or after a change of ownership is a resource- and time-consuming endeavor.  Some applications are short and easy to complete, while others require detailed information about the company, ownership, officers (including fingerprints), products, operations and even customers.  As part of their application, a number of states require criminal background checks, including fingerprinting, of directors and employees, officers and owners.  States then may take up to ten weeks or longer to process applications, complete background checks and issue licenses.

We note that it is not only prescription drug wholesalers who must navigate through this difficult terrain.  Prescription and non-prescription drug manufacturers, non-prescription drug wholesalers, prescription and non-prescription medical device manufacturers and distributors, virtual manufacturers, third-party logistics providers and outsourcing facilities are subject to some of the same licensing requirements.

In addition, if controlled substances are among the prescription drugs that wholesalers distribute,  a number of states require joint or separate controlled substance registrations issued by the same agency or by a state controlled substance authority.  Wholesalers will also have to obtain a DEA distributor registration.

Diamonds may be forever, but state licenses are not.  Once obtained, state licenses must be renewed periodically, usually annually.  Ownership changes, mergers, acquisitions and corporate restructurings can require licensees to submit applications to obtain new licenses or, at the very least, to notify state regulatory authorities of the changes.  Changes of the corporate name, corporate officers and even federal tax identification number can trigger states requiring a wholesaler to obtain a new license.  A number of states allow operations to continue under the old license until a new license is issued, but some states require a new license be issued before operations can continue.  Notwithstanding any of the issues raised above, industry is awaiting FDA’s promulgation of regulations for wholesalers pursuant to Title II of the Drug Quality and Security Act (the Drug Supply Chain Security Act (“DSCSA”)) (FDCA Section 583), which will dictate on a uniform basis licensing standards for wholesale distributors distributing finished pharmaceutical human drug products throughout the United States.  Congress charged FDA with promulgating those regulations within two years after the DSCSA’s promulgation back in November 2013, yet to date those regulations have not been published or otherwise released.

The owners and management of Kilgoban, must obtain licenses in Moosissippi, the state where the facility is located.  However, they cannot overlook whether they need to also obtain non-resident licenses in other states before beginning operations or obtain new licenses if undergoing corporate changes.

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HHS Reverses Its Position and No Longer Requires EUAs for COVID-19 LDTs

HHS Reverses Its Position and No Longer Requires EUAs for COVID-19 LDTs

By Gail H. Javitt & Jeffrey N. Gibbs

In a jaw-dropping move, HHS  announced today that, effective immediately, FDA will no longer require premarket review of laboratory developed tests (LDTs)—including LDTs to detect the virus that causes COVID-19—absent notice and comment rulemaking.  HHS is rescinding all guidance documents and informal statements of policy concerning LDTs.  HHS said that it made this decision “as part of the HHS’s ongoing department-wide review of regulatory flexibilities enacted since the start of COVID-19” and consistent with Executive Orders 13771 (Executive Order on Reducing Regulation and Controlling Regulatory Costs) and 13924 (Executive Order on Regulatory Relief to Support Economic Recovery).  HHS offered no further explanation for this abrupt about-face.   Nor did HHS explain why this new approach was not extended to other FDA policies that have increased regulation and regulatory costs for companies seeking to offer COVID-19 tests (see our previous post here).

As a consequence of HHS’ decision, clinical laboratories will no longer be required to submit a request for emergency use authorization (EUA) before offering LDT-based testing for COVID-19.  The announcement does not alter clinical laboratory obligations under the Clinical Laboratory Improvement Amendments (CLIA).

According to the announcement, clinical laboratories may still voluntarily seek an EUA from FDA for COVID-19 tests, and laboratories that offer such LDTs without premarket authorization will not be eligible for PREP Act coverage.  As discussed in a previous post, the PREP Act provides immunity from liability for losses related to medical countermeasures used to combat a declared public health emergency.  The liability immunity applies to entities involved in the development, manufacture, testing, distribution, administration, and use of such medical countermeasures.  Clinical laboratories that have already obtained an EUA (or other marketing authorization) for an LDT are not affected by this announcement.

As readers of the blog know, we have long been critical of FDA’s limitations on LDTs (see, e.g., prior posts herehereherehere, and here).  HHS’s announcement has far-reaching implications for all clinical laboratories offering LDTs, which we will explore in future blog posts.

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Mum’s the Word on Hearing Aids

Mum’s the Word on Hearing Aids

By Sara W. Koblitz

Earlier this week, FDA was supposed to issue proposed rules—years in the making—implementing over-the-counter (OTC) hearing aid rules, as required by the Food and Drug Administration Reauthorization Act (FDARA) (read HPM’s summary here).  Under FDARA, FDA is required to issue proposed rules three years from the Act’s approval on August 18, 2017 and issue final rules 180 days after the close of the proposed regulation comment period.  August 18, 2020 has now come and gone with no sign of the proposed rule.  In fact, it hasn’t even been added to OMB’s dashboard, suggesting that it hasn’t been sent to OMB for review (though, we note the possibility that the rule could skip OMB review).

Given the current state of the world, and FDA’s significant role in addressing COVID-19, it’s not entirely surprising that FDA missed the statutorily mandated release date, but it does have us guessing as to the reasons for the hold-up. Given that many of the technical aspects of the rule were likely addressed in last year’s Bose de novo review, our best guess is that the broad preemption provisions are giving FDA trouble.  For those of you unfamiliar, the statute provides:

No State or local government shall establish or continue in effect any law, regulation, order, or other requirement specifically related to hearing products that would restrict or interfere with the servicing, marketing, sale, dispensing, use, customer support, or distribution of over-the-counter hearing aids . . . through in-person transactions, by mail, or online, that is different from, in addition to, or otherwise not identical to, the regulations promulgated under this subsection, including any State or local requirement for the supervision, prescription, or other order, involvement, or intervention of a licensed person for consumers to access over-the-counter hearing aids.

FDA therefore has to figure out how to go about preempting the hodge-podge of state consumer protections that currently govern hearing aids, applied through the licensing scheme.  That’s no easy feat.

As Bridget Dobyan, Director of Public Policy and Advocacy at the Hearing Industries Association, and I detail in a recent article in Hearing Review, preemption raises significant concerns about the future of several consumer protections that flow through the hearing aid professional license.  Specifically, we flag for FDA the following major areas that preemption could impact:

  • licensing;
  • receipt requirements;
  • return periods;
  • promotion and advertising; and
  • assistive technology device warranties.

Figuring out a scheme to preempt restrictive state rules while maintaining important consumer protections will be incredibly tricky, and we look forward to seeing how FDA decides to address it.  For now, we continue to anxiously await the release of FDA’s proposed OTC hearing aid rules, as we have for the last three years.

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Ogden Nash’s Rule of Thumb Ignored: Group of 8 Face Criminal Indictment for Falsifying Clinical Trial Records

Ogden Nash’s Rule of Thumb Ignored: Group of 8 Face Criminal Indictment for Falsifying Clinical Trial Records

By Robert A. Dormer

“Here’s a rule of thumb; too clever is dumb.” Unfortunately, eight people didn’t follow Ogden Nash’s rule of thumb and are now facing a 19-count criminal indictment for falsifying records of clinical trials of investigational drugs and lying about it to FDA.

The 60-page indictment was returned by a grand jury in the Northern  District of Ohio, Eastern Division, and charges the defendants with criminal conspiracy, mail fraud, wire fraud and violations of the Federal  Food, Drug, and Cosmetic Act. In plain English the defendants are alleged to have falsified records of subjects in clinical trials and billed pharmaceutical companies for work that was never done. The indictment does not name the seven drug companies that were the victims of defendants’ conduct.  Instead, they are identified only as Sponsors 1 through 7.

Several of the defendants are related to each other by blood or marriage. For example, Amie Demming was President of Company 1 (the indictment does not provide the company’s name nor was any company indicted.). Also indicted were Demming’s mother, Debra Adamson who was Vice President of Clinical Operations, Demming’s brother William Adamson, William’s wife Ashley Adamson, and Walter O’Malley who was described as the “romantic partner”  of  Demming but was not an employee of Company 1. The three other defendants were employees of Company 1 including John Panuto who is a medical doctor and was the Principal Investigator for Company 1.

Reading the examples of document falsification leads one to wonder how these defendants ever thought for a moment they could get away with this conduct. Of course, the defendants are presumed innocent and the government has to prove its case beyond a reasonable doubt but here are a couple of examples alleged in the indictment:

  • A woman by the name of “Nicole A. Bockman” was enrolled in a study conducted for Sponsor 1. However, there was no such study subject. According to the indictment, “Bockman” was Ashley Adamson’s maiden name and Nicole is her middle name. In addition, “Bockman” was enrolled in the study using Ashley Adamson’s correct date of birth and social security number. Debra Adamson signed the informed consent form attesting that she had obtained the informed consent to participate in the study from “Nicole Bockman.”
  • “Hank W. Bobart” was another subject enrolled in the same study. According to study records he had the same date of birth and social security number as William Adamson. The real William Adamson signed the informed consent form attesting that he had obtained informed consent from “Hank Bobart.”
  • The indictment alleges that Sponsor 1 paid Company 1 approximately $760,000 to conduct this study.

There are many more allegations of a similar nature involving the six other Sponsors. The indictment also alleges that the defendants knowingly made false statements to FDA. This is certainly not the first time companies have submitted false information to FDA but thankfully those are rare events. It also appears that in this case no drugs were approved and sold to consumers based on the studies “conducted” at Company 1.

As noted above one of the defendants is named Walter O’Malley. That name brings up memories of a long-deceased man of the same name who was the owner of the Brooklyn Dodgers baseball team which he moved to Los Angeles in 1956. For this treachery O’Malley was despised in Brooklyn . There was a joke at the time about what a person should do if he found himself in a room with O’Malley, Hitler and Stalin and he had a gun with only two bullets. The correct answer was to shoot O’Malley twice to make sure he was dead.

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FSIS Petition: Don’t Rush Rulemaking for Labeling of Cell-based Meat and Poultry Products; Respect the First Amendment

FSIS Petition: Don’t Rush Rulemaking for Labeling of Cell-based Meat and Poultry Products; Respect the First Amendment

By Riëtte van Laack

On July 23, FSIS acknowledged that it had received a Petition from the Harvard Law School’s Animal Law and Policy Clinic (Harvard or Petitioner) regarding the naming of cell-based or cultured meat and poultry products. Petitioner requests that the Food Safety Inspection Service (FSIS) of the USDA establish a labeling approach for cell-based meat and poultry that “does not overly restrict speech and that respects the First Amendment.”

As readers of this blog know, the issue of naming of what has been referred to as cell-based, cultured, or clean meat has been a topic of contention in recent years.  In February 2018, the United States Cattlemen’s Association (USCA) asked that FSIS establish formal definitions for “meat” and “beef” that would exclude what USCA called “lab grown” meat.  The USCA petition generated much discussion and based  on comments by many, including other meat and poultry associations, it became clear that there was no general agreement on the necessity to prohibit the use of the terms such as beef, meat, chicken, etc. for cell-based animal products.  FSIS has not yet responded to the USCA petition.

Meanwhile, in the absence of federal action, several states developed laws that bar cell-based meat companies from using common food terms traditionally used for products from slaughtered animals such as “beef” and “chicken.”

Cell-based products are still in development and detailed information about the composition and nature of the future cultured meat products is not (publicly) available.  (In a recent scientific conference, Dr. G. Forgacs, chief scientific officer of Fork & Goode, indicated that the cultured product is a “structureless biomass.”)

Nevertheless, based on statements by FSIS officials cited by Petitioner it appears that FSIS is in the process of drafting labeling regulations for cell-based products.  More recent statements in a joint FDA/USDA webinar confirm that FDA and FSIS are developing joint principles for the labeling of these products and FSIS mentioned that it plans to develop regulations for the labeling.  However, it did not identify a timeline.

The Petition by Harvard requests that FSIS use a flexible labeling approach that does not require new standards of identity or disclosures unless necessary to protect consumers from “an increased food safety risk or material compositional difference.” The Petition warns that a restrictive federal labeling policy can be expected to face legal challenges because of violation of the First Amendment commercial speech protections.  Petitioner asserts that, at this time, there is insufficient information about the cell-based products and, therefore, FSIS cannot determine what restrictions (if any) on the use of existing standards of identity and common or usual names now used on conventionally produced products would be needed to protect the consumer.

Petitioner also calls on FSIS to consult with FDA to ensure “regulatory consistency for cell-based meat and seafood products” and to offer “certainty to producers and states.”  The recently posted joint webinar indicates that FSIS and FDA are in fact cooperating on the development of procedures regarding the safety and labeling of cell-based products.

FSIS considers the Petition a rulemaking petition and referred it to the Office of Policy and Program Development.

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