Federal Court Punts Regarding Remedy Related to CMS’ Invalidated Rule Concerning Medicare Hospital Outpatient Payment Rates for 340B Drugs

Federal Court Punts Regarding Remedy Related to CMS’ Invalidated Rule Concerning Medicare Hospital Outpatient Payment Rates for 340B Drugs

By David C. Gibbons & Alan M. Kirschenbaum

On May 6, 2019, the United States District Court for the District of Columbia issued a Memorandum and Opinion concerning the remedy available to Plaintiffs following the same court’s earlier decision (see our previous post regarding the court’s earlier decision here) invalidating a final rule issued by the Centers for Medicare and Medicaid Services (CMS) that would have altered the methodology for Medicare hospital outpatient payment rates for 340B drugs. In accordance with D.C. Circuit precedent, the court remanded the matter to CMS to remedy the unlawful change to the 340B drug payment methodology under the final rule. See Am. Hosp. Ass’n v. Azar, No. 18-2084, 2, 22 (D.D.C. May 6, 2019).

As background, under the Social Security Act, CMS must set reimbursement rates for certain separately payable hospital outpatient drugs, including 340B drugs, under the Medicare Part B hospital outpatient prospective payment system (OPPS). Since 2005, CMS has set those rates based on average sales price (ASP) plus 6%. However, in 2017, CMS proposed to revise the reimbursement formula for 340B drugs effective January 1, 2018. Concluding that hospital Covered Entities profited too much from reimbursement for 340B discounted drugs, CMS reduced the payment amount for hospital outpatient separately payable 340B drugs to ASP minus 22.5%. The American Hospital Association (AHA) and various other hospital associations and non-profit hospitals submitted comments opposing this change to the calculation methodology, arguing that CMS was not authorized to make the change. Despite these comments, CMS asserted that it had the statutory authority to set the rate based on the average price for the drug “as calculated and adjusted by the Secretary” and finalized the rule.  The AHA, along with other hospital associations and non-profit hospitals, filed a lawsuit against CMS seeking to enjoin the final rule from further effect and to remedy the use of the unlawful payment methodology in determining 340B drug payments.

In its December 2018 ruling, the court granted Plaintiffs’ motion for a permanent injunction, holding that CMS had “fundamentally altered the statutory scheme,” thereby exceeding its authority to “adjust[]” the reimbursement rate. However, the court did not rule on the appropriate remedy for CMS applying the 2018 revised payment methodology rule. Among other relief, Plaintiffs sought a retroactive increase in payment rates for 340B drugs to ASP plus 6% for 2018. However, because of a statutory requirement that all OPPS payment rates be budget neutral, increasing hospital reimbursement rates for 340B drugs retroactively for 2018 would also require retroactive offsets in payments for other items and services paid under the Medicare program. Therefore, the court decided to postpone a decision on an appropriate remedy, ordering the parties to provide supplemental briefing on this issue.  In the meantime, CMS issued a rule to continue the ASP minus 22.5% payment rate reduction through 2019. 83 Fed. Reg. 58818, 58822 (Nov. 21, 2018). Plaintiffs supplemented their Complaint to petition the court to vacate both the 2018 and 2019 rules, order CMS to reimburse Plaintiffs for the difference in payments between the 2017 (i.e., ASP + 6%) and 2018/2019 (i.e., ASP – 22.5%) rates, and order CMS to use the ASP + 6% methodology for claims not yet paid. CMS, however, sought to have the 2018 and 2019 OPPS rules remanded to CMS without vacating them or imposing specific duties on CMS.

The court, in the May 2019 ruling, concluded that “[r]emand, rather than injunction is the better course of action here.” The court cited to numerous precedential cases in the D.C. Circuit where, upon setting aside unlawful agency action, the agencies were given the initial task to fashion an appropriate remedy. In fact, the D.C. Circuit has held that a district court order to an agency to take specific action in such circumstances is reversible error. The court also noted that Plaintiffs have the option to seek judicial review of an agency’s remedy if they are not satisfied with it.

In deciding whether to remand or vacate the 2018 and 2019 OPPS rules, the court applied the Allied-Signal standard in which the court must weigh the seriousness of the agency’s deficiencies against the disruptive consequences of vacating the agency’s action. Id. at 16 (citing Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm’n, 988 F.2d 146, 150-51 (D.C. Cir. 1993). On the one hand, the court found that CMS’s “deficiencies here were substantial” and that CMS “patently violated the Medicare Act’s text.” But, on the other hand, vacating the 2018 and 2019 OPPS rules would be “highly disruptive,” given the budget neutrality requirement. Vacating the 2018 and 2019 OPPS rules would likely require CMS to retroactively recoup payments made to providers for non-drug items and services whose rates were increased because of the reduction in reimbursement rates for drugs; CMS estimated that to recoup such payments would take a year and result in administrative costs between $25 and $30 million. Furthermore, retroactive recoupment would also negatively affect Medicare beneficiaries because of the impact on amounts they paid under their cost-sharing obligations during that period. In addition, the court noted that the Plaintiffs themselves conceded that there were multiple ways CMS could remediate the underpayments for drugs under the violative 2018 and 2019 OPPS rules. Finally, the court determined that “no amount of reasoning on remand will allow [CMS] to re-implement the 340B rates in the same manner” as the unlawful 2018 and 2019 OPPS rules. For these reasons, the Court granted, in part, the Plaintiffs’ motion for permanent injunction and ordered the parties to submit, by August 5, 2019, a status report on the progress to remedy the unlawful payment methodology implemented by CMS in 2018 and 2019.

We will continue to track developments in this case.

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Anything You Can Do I Can Do (Better?): Demonstrating Biosimilar Interchangeability

Anything You Can Do I Can Do (Better?): Demonstrating Biosimilar Interchangeability

By Sara W. Koblitz

FDA recently finalized its guidance document intended to assist protein biosimilar manufacturers in demonstrating interchangeability, Considerations in Demonstrating Interchangeability With a Reference Product.  Interchangeability, as of now, is nothing more than a pipe dream; no biosimilar has been declared interchangeable and therefore fully substitutable for its reference product.  But FDA is hoping that this guidance will help address that.  This guidance finalizes FDA’s expectations and updates the draft version of the guidance to provide more clarity.  Of note, this guidance document is directed specifically toward proposed therapeutic protein products, which are those products scheduled to transition from drug products to biologic products on March 20, 2020 under the “deemed to be a license”  provision of the Biologics Price Competition and Innovation Act.

The draft version of this guidance was published in January 2017 and triggered over 50 separate (mostly substantive) comments from a variety of stakeholders arguing the merits of each recommendation made in the guidance.  Some, for instance, suggested that interchangeability should be established individually for all conditions of use while others contend that extrapolation across intended uses is sufficient; similarly, some argued that immunogenicity in product switches must be robustly assessed while others contend that immunogenicity is a “hypothetical concern”.  Comments also provided line-by-line analyses of the text, often requesting clarity, as well as concerns about the specific testing parameters set forth in the guidance.

In the almost 2.5 years since the publication of the draft, FDA has made some changes but not many significant ones.  Indeed, even though the 2019 version clocks in at 7 pages less than the draft, the final version is largely the same as the draft.  Though much of the language has been revised, the two versions differ mainly in detail and clarity.  For example, while the concepts remain, terminology like “fingerprint-like” demonstrations of biosimilarity and “residual uncertainty” has been scrapped.  More substantively, the final guidance omits discussion of the specific analyses FDA expects for product presentation, design, and administrative characteristics.  For that reason, the Appendices also differ between the draft and the final, with the draft’s appendix detailing considerations in Comparative Use Human Factors Studies replaced by an example of switching study design in the final.

The meat of the guidance document remains largely unchanged.  As in the draft, the final provides an overview of the important scientific considerations in demonstrating interchangeability with a reference product.  A product is interchangeable if it is biosimilar to the reference product and can be expected to produce the same clinical result as the reference produce in any given patient.  To demonstrate interchangeability, the risks involved in switching from the reference to the biosimilar may not be any greater than the risk of solely using the reference product when a biological product is intended to be administered more than once to an individual.  To meet this standard, the guidance discusses the:

  • Data and information needed to support a demonstration of interchangeability;
  • Considerations for the design and analysis of a switching study or studies to support a demonstration of interchangeability;
  • Considerations regarding the comparator product in a switching study or studies; and
  • Abbreviated considerations for developing presentations, container closure systems, and delivery device constituent parts for proposed interchangeable products.

FDA also provides a list of factors that may be required for demonstrating interchangeability but emphasizes that the data necessary may vary based on the nature of the proposed interchangeable product, as not all factors may be necessary.  The product’s degree of structural and functional complexity may influence the data required.  Clinical experience with the reference product may also affect the data and information needed to support a demonstration of interchangeability.  In such cases, FDA will require a scientific rationale for extrapolation of data and other information to support interchangeability.

FDA applies a presumption that switching studies are required for demonstrations of interchangeability.  Again, when a sponsor believes that switching studies are not necessary, the sponsor must provide a justification for not needing such data to demonstrate interchangeability.  Switching studies should be designed based on clinical practice and risk-based treatment scenarios, and FDA therefore has outlined a flexible approach regarding study design.  Primary endpoints should assess the impact of switching on PK and PD (if available), as well as descriptively assess immunogenicity and safety.  Assessments of efficacy endpoints can be used as supportive information, as may postmarking data of a product previously licensed as biosimilar (rather than interchangeable).  The guidance provides significant detail on suggested study design and analysis.  The final guidance also reiterates the need for “bridging” studies should the study use a comparator that is a non-U.S. version of the reference product.

Though the initial publication of this guidance was welcomed by industry, its impact remains unclear.  In the years since the publication of the draft, FDA still has not determined that a single drug is interchangeable to its reference product.  There is no telling when FDA will license its first interchangeable product, and it is clear that reference product sponsors will not make acceptance of biosimilars – interchangeable or not – an easy feat.  But if this now-final guidance has its intended effect, reference product sponsors will not be able to cast doubt on the sameness of biosimilars anymore.  Interchangeability should make the notion that “anything a biosimilar can do, the reference product can do better” a thing of the past, but this is all conjecture until a sponsor can actually demonstrate interchangeability.

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FDA Finalizes Guidance on Non-Clinical Bench Performance Testing Information in Premarket Submissions

FDA Finalizes Guidance on Non-Clinical Bench Performance Testing Information in Premarket Submissions

By Adrienne R. Lenz, Senior Medical Device Regulation Expert

On April 26, 2019, CDRH released the final guidance, Recommended Content and Format of Non-Clinical Bench Performance Testing Information in Premarket Submissions (“Final Guidance”).  We previously blogged on the draft version (“Draft Guidance”) here.  Overall, the Final Guidance is much the same as the Draft Guidance, though FDA has added more detailed descriptions of the recommended information.

Like the Draft Guidance, the Final Guidance provides recommendations for Test Report Summaries and Complete Test Reports to be submitted in premarket submissions, including “premarket approval (PMA) applications, humanitarian device exemption (HDE) applications, premarket notification (510(k)) submissions, investigational device exemption (IDE) applications, and De Novo requests.” Final Guidance at 3.  Test report summaries should include the following elements:  tests performed; objective(s) of the test(s); a brief description of the test methods, including sample size, device(s), and any consensus standard(s) utilized; pre-defined pass/fail criteria (when applicable); results summary; discussion/conclusions; location of complete test report and summary table (optional).  Complete test reports should include:  test performed; objective of the test; description of test methods (test sample information, test sample size/selection, test methods); pass/fail criteria; data analysis plan; test results (data, data analysis, protocol deviations); and discussions/conclusions.

There are a few notable differences, first of which is the title.  The Draft Guidance included “Complete Test Reports” in the title whereas the Final Guidance’s title covers “Information” more broadly than just complete test reports.  That being said, the overall guidance does not broaden in scope and the name change appears a more appropriate description as the guidance covers both complete test reports and summary information included within a premarket submission.

The Final Guidance also adds clarity to several points, including:

  • The recommendations are applicable for non-clinical testing performed by either a device manufacturer or a third-party testing facility.
  • Bench tests using ex vivo, in vitro, and in situ animal or human tissue are within the scope of a non-clinical bench performance test. A new footnote is also added where FDA states their support of reducing, refining, and replacing animal testing when feasible and alternate methods are “suitable, adequate, validated, and feasible.” at 3.
  • For testing excluded from the scope of the guidance, reprocessing validation, human factors validation, software verification and validation, and computational modeling studies are added in addition to biocompatibility evaluation and sterilization validation.
  • Test report summaries should be provided either within an executive summary section of the premarket submission or provided as a separate document within the premarket submission. An example summary table has been added including columns for test performed, device description/sample size, test method/applicable standards, acceptance criteria, unexpected results/significant deviations, and results.  Complete test reports, when submitted, should be provided as separate attachments.
  • A complete test report means the “entirety of the testing documentation submitted for a study” which may be included in a single document or within multiple documents in the premarket submission. at 8.
  • There are situations where pre-defined pass/fail criteria may not be applicable, such as tests conducted for characterization purposes. In these situations, a description of the acceptance criteria used to allow for interpretation of the data should still be provided.
  • A data analysis plan used to analyze results, including all planned quantitative and/or qualitative assessments, is recommended in the test report.
  • When recommended information comes from an FDA guidance document or FDA-recognized consensus standard, the full information can be replaced with the full reference to the cited document. If there are options or choices within the referenced document, the options selected or choices made should be included.

The Final Guidance no longer recommends including information in test reports justifying why the test methods or results support substantial equivalence.  As we noted in the prior blog, the test report is not the place for this information as the connection between an engineering test and a planned 510(k) submission may not be known by an engineer performing testing and writing a test report.  This information is certainly important within a 510(k) and the Final Guidance now more broadly states “[y]our premarket submission should also discuss how the non-clinical bench performance test results support the overall submission” and that the “information can be provided in the test report summary or another location in your premarket submission.” Id. at 5.

The Quality System Regulation (QSR), in 21 C.F.R. § 820.30 Design Controls, includes requirements for design verification and validation, yet these requirements are not mentioned anywhere within the guidance.  While the Final Guidance may appear on its surface to provide a comprehensive list of information to include within “complete test reports,” it fails to identify some information required for verification and validation results by the QSR (e.g., the date, and the individual(s) performing the tests).  Also, as we noted in the prior blog, the Final Guidance still recommends that test reports state whether the test sample is a final, finished device though this may not be known at the time many test reports are written during product development.  With the recently announced CDRH reorganization and creation of a new Super Office, Office of Product Evaluation and Quality (OPEQ), we hope to see better alignment in the future between what is expected in a premarket submission and what is already required of device manufacturers in the QSR.

The Final Guidance may be helpful to companies in writing or revising their design controls procedures as it does provide useful descriptions of information to include within test reports.  However, it is important to ensure the procedures cover QSR requirements as well as the recommendations of the guidance to ensure the resulting test reports are considered complete for both a premarket submission and in an FDA inspection.

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Brave New Real World: FDA Draft Guidance Takes First Steps to Move RWE from Dystopia

Brave New Real World: FDA Draft Guidance Takes First Steps to Move RWE from Dystopia

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

On May 8, 2019, the FDA published a new draft guidance for industry titled “Submitting Documents Using Real-World Data and Real-World Evidence to FDA for Drugs and Biologics.”

This draft guidance was produced as a joint effort from CDER and CBER and is intended to provide guidance about how to use Real World Data (RWD) and Real World Evidence (RWE) in regulatory submissions to the agency.

The use of RWD and RWE is an area of great interest yet has little regulatory precedent. The Agency was mandated by section 3022 of the 21st Century Cures Act to, among other things, provide guidance to industry on how RWE might be used to support drug development and new drug and biologic approvals (see previous coverage of the 21st Century Cures Act and this provision here). Section 3022 required the Agency to track submissions to INDs, NDAs, and BLAs that use RWE to support regulatory decisions related to safety and efficacy.

The draft guidance clearly defines the terms RWD and RWE which is helpful. One of the most significant parts of the draft guidance is that it clearly states that RWE may be used in single arm studies that use RWE as an external control. This is a paradigm shift for the Agency and opens doors to many potential, as of yet unexplored and untested, approaches to drug development.  On the topic of external controls, FDA similarly discussed the use of natural history data as historical controls in a recent draft guidance, which the Agency does not view as RWE (see coverage here).  Beyond use as an external control, the draft guidance also notes that RWE may be captured through (1) conduct of randomized clinical trials, (2) observational studies to support an efficacy supplement, and (3) studies to fulfill postmarketing requirements to further evaluate safety and effectiveness.

The draft guidance does not provide much detail on how RWE might be used and barely mentions any caveats.  Therefore, this draft guidance should be viewed in combination with FDA’s December 2018 “Framework for FDA’s Real-World Evidence Program” (available here), where the Agency began to articulate how it will assess fitness of RWD for use in regulatory decisions.  Existing precedent has been limited to using data on historical response rates drawn from chart reviews and expanded access, primarily in cancer and rare diseases; however, FDA seems to instead be promoting the generation of RWE through randomized trial designs that take place in “pragmatic clinical trial” settings that more resemble real-world care and use. This seems to be the most promising “type” of RWE to support evidence of safety or effectiveness for a new product approval, which the draft guidance notes is a potential use for this evidence.

It is well known that there is an enormous amount of RWD in existence but there are also many challenges to figuring out how to use that data. There are issues related to getting informed consent from the people who are the source of the data, issues of statistical analysis and the introduction of bias, issues of data quality, lack of comparability between the RWE control arm and the study population, and generally the potential for making flawed conclusions.  In the words of FDA’s past Principal Deputy Commissioner:

Thus, although we are optimistic about long-term prospects for the evolution of mature, robust methodologic approaches to the incorporation of real-world evidence into therapeutic development and evaluation given the intensive efforts now under way, caution is still needed, and expectations of “quick wins” resulting from the use of such evidence should be tempered accordingly.

Sherman, et al. Real-World Evidence – What Is It and What Can It Tell Us? 375 NEJM 23, at 2295 (December 8, 2016)

Much of this will have to be figured out by trial and error and lots of conversation. This area of development holds a lot of promise but will require a lot of scientific thought and evaluation to find a path forward.

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Two More States Seek to Establish Prescription Drug Importation Programs

Two More States Seek to Establish Prescription Drug Importation Programs

By Serra J. Schlanger & Alan M. Kirschenbaum

Colorado and Florida have joined Vermont in the list of states seeking to combat high prescription drug prices by establishing programs to import drugs from Canada.  On April 29, 2019, the Florida legislature passed CS/HB 19, which directs the state’s Agency for Health Care Administration to establish the Canadian Prescription Drug Importation Program.  On May 6, 2019, the Colorado legislature passed SB19-005 to create the “Colorado Wholesale Importation of Prescription Drugs Act.”  Neither bill has been signed into law yet, but the Governors’ signatures are expected.

Similar to the Vermont law passed last year (see our summary here), the Colorado and Florida bills require the states to develop Canadian drug importation programs that comply with federal drug importation laws (21 U.S.C. § 384), including limitations on eligible drugs.  Each state’s program must meet the federal requirements that the imported drugs will not pose additional risk to public health and will generate cost savings for consumers.  By July 1, 2020, Florida’s Agency for Health Care Administration must submit a request to the U.S. Secretary of Health and Human Services (HHS) for approval of the state’s program.  The Colorado Department of Health Care Policy and Financing must submit its request for program approval to the Secretary of HHS by September 1, 2020.

Florida’s bill also allows for the development of an “International Prescription Drug Importation Program,” which will permit the state to import drugs from “foreign nations with which the United States has current mutual recognition agreements, cooperation agreements, memoranda of understanding, or other federal mechanisms recognizing their adherence to current good manufacturing practices for pharmaceutical products.”  FDA currently has a “Mutual Recognition Agreement” in place with the European Union and Cooperation Arrangements for drug products in place with Australia, Canada, Japan, Russia and Sweden.

Under the Florida bill, drugs imported under the Canadian Prescription Drug Importation Program will be limited to use for Medicaid and certain institutions owned, operated, or supported by the state or county governments.  However, Florida’s International Prescription Drug Importation Program will not be restricted to state and county purchasers, nor will the Colorado program have such limitations on use.

Federal law requires that drug importation programs generate substantial cost savings for American consumers.  Donald Trump recently said that his administration will allow states to import drugs if they can be purchased at a lesser price.  However, it is unclear whether a lesser purchase price will equate to substantial cost savings for American consumers.  Despite public opinion that drugs can be purchased at significantly lower costs from Canada and other countries, proving that importation results in cost savings may be a difficult hurdle for states to overcome.  As we previously reported (see here), Vermont’s Agency of Human Services, in designing that state’s “Canadian Rx Drug Import Supply Program,” issued a report suggesting that it may cost more to implement and operate a drug importation program than the amount of savings the state would recognize from such a program.  Vermont’s formal request for approval of the state’s drug importation program is due to the Secretary of HHS by July 1, 2019.

Although state drug importation programs seem to have gathered some steam, it still remains to be seen whether these programs can be designed to meet the federal requirements and whether the Secretary of HHS will approve such programs.  We will continue to monitor and report on federal and state developments and actions related to regulating drug pricing.

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CMS Finalizes Regulations Requiring WAC Disclosure in TV Ads for Rx Drugs

CMS Finalizes Regulations Requiring WAC Disclosure in TV Ads for Rx Drugs

By David C. Gibbons & Alan M. Kirschenbaum

The Centers for Medicare & Medicaid Services (CMS) has finalized its proposed rule requiring pharmaceutical manufacturers to disclose the Wholesale Acquisition Cost (WAC) in Direct-to-Consumer (DTC) television advertisements for certain prescription drugs and biological products (the Final Rule). The Final Rule will appear in the Federal Register on May 10, 2019 and will become effective on July 9, 2019.  It is largely unchanged from the proposed rule, which we previously blogged on here.

The Final Rule requires that any advertisement on TV (including broadcast, cable, streaming, or satellite) for a prescription drug or biological product for which reimbursement is available under Medicare or Medicaid must include the following statement:

“The list price for a [30-day supply of] [typical course of treatment with] [name of prescription drug or biological product] is [insert price]. If you have health insurance that covers drugs, your cost may be different.”

The “list price” to be inserted is the WAC, which is defined as the manufacturer’s published list price for the most recent month available, not including discounts or rebates. The list price should reflect the WAC for a typical 30-day regimen or typical course of treatment, as appropriate, and as determined on the first day of the quarter during which the advertisement is being aired on television or otherwise broadcast. For a drug with multiple indications, the list price to be used is the one for the course of treatment associated with the indication advertised. The statement must appear at the end of the advertisement in legible text with a style, font, and duration that allows it to be read easily. The preamble to both the Proposed Rule and the Final Rule (though not the regulation itself) states that manufacturers would also be permitted to include truthful and non-misleading information about a competing product’s current WAC, so long as the provision of such information is consistent with current law.

The Final Rule applies to prescription drugs for which payment is available, directly or indirectly, under Medicare or Medicaid, with the exception of products with a WAC of less than $35 per month for a 30-day supply or typical course of treatment. The only penalty for a failure to provide the statement would be inclusion of the manufacturer on a publicly available “shame” list on CMS’s web site. However, CMS states in the preamble to the Final Rule that it believes the primary enforcement mechanism will be the threat of private actions under the Lanham Act for false or misleading advertising, asserting optimistically that the threat of meritless lawsuits is “acceptably low.”

According to CMS, the Final Rule seeks to address the rising prices of prescription medicines and the impact that such costs have on the Medicaid and Medicare programs. It also seeks to address over-utilization of prescription drugs caused by patients requesting “costly drugs and biological products seen on television.” Finally, CMS asserts, in the Final Rule, that DTC advertising lacking information about a drug’s price is potentially misleading. CMS states that if patients better understand the costs associated with prescription drugs or biological products, they will make “good health care choices,” which will in turn promote efficiency in the Medicaid and Medicare programs. CMS rejected arguments that the WAC itself is misleading because it does not reflect actual out-of-pocket costs paid by consumers.  CMS cited a 2019 study published in the Journal of the American Medical Association as support for the proposition that consumers are better able to estimate their out-of-pocket costs knowing the WAC than without knowing it.

We will continue to report on drug pricing regulations and legislation at the federal and state level.

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New Jersey Attorney General Loosens Rules on the Acceptance by Prescribers of Remuneration from Drug Manufacturers

New Jersey Attorney General Loosens Rules on the Acceptance by Prescribers of Remuneration from Drug Manufacturers

By Alan M. Kirschenbaum

Responding to objections from New Jersey healthcare practitioners, hospitality and restaurant businesses, and the pharmaceutical industry, the New Jersey Attorney General published an amendment to the state’s rules restricting the acceptance of remuneration by prescribers from pharmaceutical manufacturers.  The final amendment, which appeared in the May 6 New Jersey Register and immediately became effective, relaxes some of the restrictions in the original rule (see our post on that rule here.)  Following are the significant changes from the original rule:

  • Meals at Education Events: The original regulation permitted prescribers to accept “modest meals” provided through the event organizer at an education event, and a “modest meal” was defined as one with a fair market value of $15 or less.  The $15 limit has been removed.  In addition, the amendment clarifies that an education event includes an event that focuses on disease states and treatment approaches, and also includes an event that that meets the rule’s definition of “education event” even if FDA classifies that event as promotional.
  • Promotional Programs: The prior rule on accepting modest meals provided by drug manufacturers during promotional activities remains in place and is still capped at $15 for lunch, but the cap on dinners has been increased from $15 to $30 (adjusted for inflation after 2018).  Also, the previous limit of four such meals per year has been removed.
  • Bona Fide Service Fees: The Attorney General rejected recommendations that the existing cap on bona fide service fees accepted from all pharmaceutical manufacturers during any year be increased from the current $10,000.  Fees for research and for speaking at education events continue to be exempt from this cap, and the preamble clarifies that research includes both pre-market and post-market research.
  • No application to devices: The regulation continues to apply only to gifts and payments from pharmaceutical manufacturers, but a helpful clarification has been added that the rules do not apply to prescribers’ interactions with pharmaceutical manufacturers that also manufacture medical devices if the interactions are directly solely to medical devices.

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And if They Don’t Dance, Well They’re No Friends of Mine – And They’ll Probably Get Sued

And if They Don’t Dance, Well They’re No Friends of Mine – And They’ll Probably Get Sued

By Sara W. Koblitz

As FDA continues to approve biosimilar drug products, and as sponsors participate – or rather choose not to participate – in the Biologics Price Competition and Innovation Act (“BPCIA”) version of the patent dance, more questions arise about the remedies reference product sponsors have when certain steps are not followed.  As we have detailed extensively (here, here, here, and really any post tagged under the “biosimilars” category of the FDA Law Blog), new questions about the BPCIA patent dance continue to pop-up and make for interesting new lawsuits.  Such is the case with FDA’s April 25, 2019 approval of Samsun Bioepis’s Eticovo, a biosimilar to Amgen’s Enbrel, which has resulted in another lawsuit, this time asking the Court to enjoin marketing of Eticovo until it provides the 180-day notice required under the BPCIA.

In a Complaint filed on April 30, 2019, Amgen alleges that Samsung Bioepis infringed the multiple unexpired patents covering Enbrel.  Originally licensed in 1998, Enbrel is now approved for multiple indications: rheumatoid arthritis, polyarticular juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, and plaque psoriasis.  Samsung Bioepis’s Eticovo is approved for the same indications and route of administration, and it shares the same dosage form and strength as an approved version of Enbrel.  The suit alleges that Samsung Bioepis infringed five patents covering Enbrel and asks for a declaratory judgment that Samsung Bioepis has infringed and/or would infringe one or more claims of each of the patents at issue, as well as injunctive relief preventing Samsung Bioepis from commercial marketing consistent with the 180-day notice period under the BPCIA.

Samsung Bioepis declined to participate in the patent dance, as it is entitled to do under the Supreme Court’s 2017 decision in Amgen v. Sandoz, so Amgen brought this declaratory judgment action to enforce its patent rights under section 351(l)(9)(C) of the Public Health Service Act (42 U.S.C. § 262(l)(9)(C)).  But because Samsung Bioepis did not participate in the exchange of patent information, Amgen posits that it is “reasonable to infer that Bioepis might not provide notice to [Amgen subsidiary] Immunex in accordance with § 262(l)(8)(A).”  Indeed, Amgen alleges that “Bioepis is prepared imminently to begin to use, offer, for sale, and sell in the United States, and import into the United States, its etanercept biosimilar product.”  As such, Amgen seeks a temporary restraining order and injunction to prohibit Samsung Bioepis from commercial launch of Eticovo until 180 days after it provides notice of intent to market to Amgen’s subsidiary and Enbrel BLA holder (and co-Plaintiff) Immunex.

While the Supreme Court has determined that the patent dance and provision of the 351(k) biosimilar application is not mandatory, the Court further determined in Amgen v. Sandoz that the notice provision is.  But the Act doesn’t contemplate failure to provide this notice, and it is not clear what remedies are available at this juncture.  It’s not clear that a Court would grant injunctive relief here when there is no assurances that Samsung Bioepis is actually intending to launch in the near future (and without notice).

Patent remedies based on the submission of Samsung Bioepis’s aBLA are most likely available.  Certainly, in this situation, an aBLA sponsor would be launching at risk and potentially be liable for treble damages but like with premature at-risk launch of generic small molecule drugs, the bell can’t be unrung once the product floods the market.  That biosimilars are not automatically substitutable for their RLDs makes such an act less of a threat to Amgen’s market share.  But chances are high that an influx of Eticovo would still undercut Amgen’s Enbrel market, at least to some extent.  If there is no further recourse for Amgen other than the treble damages award arising from patent infringement, it raises questions of whether an at risk launch of a biosimilar will result in significantly smaller damages awards for reference product sponsors.  Is it possible that the treble damages award could be less than attorneys’ fees (we note that Amgen here is seeking attorneys’ fees)?  And if so, is treble damages enough to deter at risk launch when each biosimilar needs to find a way to get individual attention?  In other words, could the publicity of an at risk launch be worth the treble damages in news coverage and publicity?  Probably not but given all of the moving parts in the BPCIA and the uncharted market, it seems fair to say that “business decisions,” as opposed to legal decisions, may end up the driving force as this market develops.

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You Don’t Change Horses in Mid-Stream: Product-Specific Guidances

You Don’t Change Horses in Mid-Stream: Product-Specific Guidances

By Sara W. Koblitz

As you may have noticed, FDA recently unveiled a new website.  As part of this redesign, FDA “enhanced” the Product-Specific Guidances (“PSG”) for Generic Drug Development web page.  The “enhanced” version of the website includes new database and search function features, export features, and paginated search results.  The new search functions will allow users to perform text searches of PSGs by active ingredient, by Reference Listed Drug application number, or Reference Standard application number and will allow further filtration of search results.  Of course, the guidances are still available to browse alphabetically rather than search (and there are 1685 of them for your reading pleasure).

As exciting as the new website is, FDA really buried the lead when it announced the new website.  In response to common complaints from industry, FDA has adopting a new resource for PSGs, a dynamic web page entitled “Upcoming Product-Specific Guidances for Complex Generic Drug Product Development.”  This web page contains a list of PSGs for complex generic products that are currently under development or for a which a revision is planned in the next year.  The list reflects FDA’s efforts to be transparent regarding plans for development and revision of PSGs so that sponsors can be aware of what is in the pipeline and discuss with FDA the appropriate testing as necessary.

Generic manufacturers have found that FDA’s bioequivalence recommendations for a given product may have changed during development of a generic.  Sometimes, these recommendations change after a product has been submitted but before FDA has completed its review, requiring sponsors to perform additional studies after submission.  In fact, this situation has occurred enough that Congress carved out an exception from the 180-day exclusivity tentative approval forfeiture provisions for it.  As Brian McCormick, Vice President & Chief Regulatory Counsel Teva Pharmaceuticals USA, Inc. explained during the Incentivizing Generic Competition Panel at FDLI’s Annual Conference last week, such changes to bioequivalence requirements “midstream” can throw off the years of planning that goes into large ANDA development programs and may have ripple effects in the development of other ANDA products in the pipeline.  To paraphrase Wag the Dog (and Abraham Lincoln): You don’t change horses in midstream.

While obviously no one advocates for the approval of a generic product with a less than robust demonstration of bioequivalence, transparency in the publication and the revision of these guidances would go a long way to alleviate some industry complaints.  To that end, FDA’s list of planned PSG revisions announces the PSGs in development, as well as those under revision in the next year, so that sponsors can plan accordingly.  According to Dr. Robert Lionberger, Director of FDA’s Office of Research and Standards, the intent of this list is to provide the notice and transparency that industry seeks to alleviate surprises that may arise after an application is submitted.  FDA is aware of the issue and is therefore attempting to be more open with sponsors about changes in the pipeline.

The PSG list information includes the active ingredient(s), route of administration and dosage form, and RLD application number.  Additionally, the PSGs undergoing revision are also assigned a “planned revision category.”  The revision categories are “Major Revisions,” “Minor Revisions,” and “Editorial Revisions.”  “Major Revisions” are defined as the revision of PSGs to include additional bioequivalence studies or evidence recommended to support FDA approval.  “Minor Revisions” are any revisions not considered major, including the removal of certain studies, providing alternative and less burdensome approaches to currently recommended studies, to add information on newly approved strengths of the RLD, or to make other recommendations that would not result in the requirement of a new bioequivalence study.  “Editorial Revisions” are non-substantive changes, updates of external references, corrections of grammatical issues, and changes to formatting.

This new system isn’t perfect.  Some companies rely on these PSGs years in advance of submitting an ANDA, so notice of new bioequivalence requirements only a year in advance might not be a panacea.  Further, the list only covers “complex” generics, and if there are any changes to PSGs for more basic generics, sponsors may not have the same transparency.  But there is little doubt that the Agency’s efforts to remediate at least some of the generic industry’s complaints in this area provides at least a bit of relief to sponsors.  We’ll have to see how well FDA keeps this list updated and how helpful this list actually is given how early some companies start development of new generics.  But if nothing else, FDA’s continued work to make the generic development process easier and more accessible demonstrates that the agency’s commitment to generic competition has not waned in the post-Commissioner Gottlieb era.

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Hi-Tech Sues to Save DMHA

Hi-Tech Sues to Save DMHA

By Ricardo Carvajal & JP Ellison

Hi-Tech Pharmaceuticals, Inc. (Hi-Tech) and its President and Chief Operating Officer filed suit in the U.S. District Court for the District of Columbia to enjoin FDA from continuing to seek removal of DMHA products from commerce through the issuance of warning letters and “pressure… to remove and destroy DMHA containing products.”  Plaintiffs allege that FDA has failed to meet its burden of proof in showing adulteration, as required by section 402(f)(1) of the FFDCA, and that the agency is circumventing its statutory obligation to engage in rulemaking to “formally ban” DMHA.

Plaintiffs argue that DMHA “is a natural constituent of walnut trees” with “an extensive history of use in dietary supplements,” and that “there is a significant body of scientific evidence supporting the safety of DMHA for human consumption.”  Although Plaintiffs do not explicitly state whether the DMHA in their products is naturally derived or synthetically produced, they assert that “[d]ietary ingredients include both naturally occurring and synthetically produced versions of the same ingredient,” and that “FDA has recognized the equivalence of natural vs. synthetically produced dietary ingredients in the context of several vitamins and other ingredients.”

Plaintiffs allege that FDA’s actions violate the Administrative Procedure Act in that they are contrary to law, exceed the agency’s statutory authority, and are arbitrary and capricious.  Plaintiffs further allege that FDA’s actions violate the Fifth Amendment by depriving Plaintiffs of due process.

As noted in the complaint, Hi-Tech is already engaged in litigation with the government over the regulatory status of DMAA.  That case is currently under review by the 11th Circuit Court of Appeals.  We’ll be keeping an eye on both cases as the litigation unfolds.

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