Supreme Court Ruling on SEC Statute of Limitations May Affect Other Agencies’ Pursuit of Disgorgement

Supreme Court Ruling on SEC Statute of Limitations May Affect Other Agencies’ Pursuit of Disgorgement

By Jennifer M. Thomas & Gugan Kaur –
On June 5th, 2017, the U.S. Supreme Court issued its opinion in Kokesh v. Securities and Exchange Commission. The Court unanimously reversed the Tenth Circuit’s decision below, and ruled that a five-year statute of limitations for the enforcement of “any civil fine, penalty, or forfeiture” (28 U.S.C. § 2462) applied to the SEC’s claims against Kokesh seeking disgorgement.
Importantly, in reaching its decision in Kokesh the Court found that SEC disgorgement (which requires a defendant to pay back any gains attributable to the wrongful conduct) operates as a penalty under 28 U.S.C. § 2462. The Court also stated that it had not reached the question of “whether courts possess authority to order disgorgement in SEC enforcement proceedings or on whether courts have properly applied disgorgement principles in this context.” (Slip. Op. at 5 n. 3). The Court’s classification of disgorgement as a penalty, and its dicta on the question of whether disgorgement is appropriate under the Securities Exchange Act, has the potential to affect other agencies’ pursuit of disgorgement in enforcement actions.
Like the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) at issue in Kokesh, neither the Food, Drug, and Cosmetic Act (“FDC Act”) nor the Federal Trade Commission Act (“FTC Act”) explicitly authorize disgorgement. Rather, the government has asserted disgorgement authority inherent in FDC Act Sec. 302(a), which awards district courts jurisdiction to restrain most violations of the FDC Act (21 U.S.C. § 332(a)), and Section 13(b) of the FTC Act, which authorizes the FTC to seek preliminary and permanent injunctions to remedy “. . . any provision of law enforced by the Federal Trade Commission….” (15 U.S.C. § 53(b)).
Courts have upheld FDA’s and the FTC’s efforts to seek restitution or disgorgement as a remedy. See, e.g., United States v. Universal Mgmt. Servs., 191 F.3d 750, 763-63 (6th Cir. 1999) (reasoning that both disgorgement and restitution are appropriate under the FDC Act); FTC v. Cardinal Health, No. 15-cv-3031(S.D.N.Y Apr. 20, 2015); FTC v. Gem Merchandising Corp., 87 F.3d 466, 470 (11th Cir. 1996). Disgorgement has become an important enforcement tool for FDA, in particular, although we previously questioned whether remedies such as restitution and disgorgement are appropriate under the FDC Act. See Jeffrey N. Gibbs, John R. Fleder, Can FDA Seek Restitution or Disgorgement?, 58 Food and Drug L. J. 129-47 (2003).
After Kokesh, the government may have more to consider when determining whether to seek disgorgement under the FDC Act or FTC Act. The fact that the Supreme Court declined to address whether disgorgement principles are “properly applied” under the Securities and Exchange Act will likely be cited by defendants in arguing that disgorgement is inappropriate under the other Acts that do not specifically provide for that remedy. Also in light of this new precedent, the Department of Justice may have to reanalyze the question of whether a penalty of disgorgement raises double jeopardy concerns if the government seeks to later bring a criminal prosecution relating to the same conduct. See Application of the Double Jeopardy Clause to Disgorgement Orders Under the Federal Trade Commission Act (Apr. 9, 1998).  On this point, defendants will undoubtedly rely on the Court’s reasoning in Kokesh to argue that disgorgement is so punitive in nature as to qualify as a criminal penalty that should bar later criminal proceedings. Finally, Kokesh has the ancillary consequence of calling into (further) question whether disgorgement payments are tax deductible, an issue that we have previously addressed here. See Internal Revenue Code Sec. 162(f) (fines or penalties are nondeductible); see also IRS OCC Memorandum (Jan. 29, 2016), (disgorgement payments are nondeductible if they are primarily punitive). This is something that both the government and defendants will need to consider with respect to any settlement of an enforcement action that involves disgorgement.

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FDA Sued Over its Delay of the Menu Labeling Compliance Date and Reconsideration of the Regulations

FDA Sued Over its Delay of the Menu Labeling Compliance Date and Reconsideration of the Regulations

By Riëtte van Laack & Etan Yeshua –
As we previously reported, FDA recently extended the compliance date for its restaurant menu labeling regulations to May 8, 2018. Just one day before the previous (May 5, 2017) compliance date, FDA published an interim final rule (IFR) that delayed compliance for one year and solicited comments on how the Agency can “further reduce the regulatory burden or increase flexibility.”
On June 7, two consumer advocacy organizations sued FDA to have the IFR vacated and a more immediate compliance date instated. The Center for Science in the Public Interest and the National Consumer League (the plaintiffs) claim that FDA’s delay of the menu labeling rule was illegal because it did not “rationally explain[] why it was changing its interpretation of” the federal requirements, and because it did not provide an opportunity for public notice and comment before the delay took effect.
First, the plaintiffs allege that FDA’s decision to delay the compliance date violated the Administrative Procedure Act (APA) by “departing from its prior interpretation of the [Affordable Care Act] and its prior conclusions about the importance of nutrition labeling without providing a rational explanation.” (The Affordable Care Act was the statutory basis for the menu labeling requirements.) They point to FDA’s own Regulatory Impact Analysis for the IFR – where the Agency assesses the costs and benefits of delaying the compliance date – to support the claim that FDA did not provide a rational explanation for the delay: the Agency’s analysis concludes that the costs of the delay in terms of reduction in benefits to the consumer ($5 million to $19 million) outweigh the benefits to industry ($2 million to $8 million). The plaintiffs also quote a spokesperson for the National Restaurant Association as opposing the delay.
Second, the plaintiffs allege that FDA was not permitted to issue the IFR without providing an opportunity for public comment. Under the APA, an agency may forego notice and comment rulemaking and issue an IFR with an immediate effective date only when it has “good cause,” i.e., when it determines that it would be “impracticable, unnecessary, or contrary to the public interest” to follow the notice and comment procedures. The plaintiffs assert that FDA did not have the required good cause: they cite FDA’s preamble to the final menu labeling regulations, which states that the rule “provides flexibility where appropriate” by “accommodat[ing] different types of menus and menu boards and the various ways that standard menu items may be listed on menus and menu boards.”
The plaintiffs request that the court declare the IFR “arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law, and to have been published without observance of legally required procedure, in violation of the APA.” They further request that the court issue an order vacating the IFR and set a compliance date for the final menu labeling rule that is within 15 days of the court’s order.

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FDA Announces Intent to Extend Compliance Date for Nutrition Labeling

FDA Announces Intent to Extend Compliance Date for Nutrition Labeling

By Riëtte van Laack –
On June 13th, FDA’s Office of Nutrition and Food Labeling “announced” that it intends to extend the compliance date for the new Nutrition Facts requirements.  As we previously reported, FDA received several citizen petitions requesting an extension of the compliance date. In addition, some in the industry had sought to delay the compliance date to coincide with the regulations (yet to be developed) for GMO (Genetically Modified Organism) labeling. Although the announcement may not have been a surprise, the way it was delivered was highly unusual. There was no press release or Federal Register announcement. Instead the “announcement” was included on the webpage on Changes to the Nutrition Facts Label.
FDA states that, based on feedback from industry and consumer groups regarding the compliance date, the Agency “determined that additional time would provide manufacturers covered by the rule with necessary guidance from FDA, and would help them be able to complete and print updated nutrition facts panels for their products before they are expected to be in compliance.”  FDA’s announcement is limited as it only states FDA’s intent to extend the compliance date. How long the compliance date will be extended and whether FDA also will reconsider certain aspects of the regulation (e.g., the dietary fiber definition) are unknown. FDA will provide details on the extension through a Federal Register Notice at a later time.
We will blog more as further information becomes available.

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U.S. Supreme Court Rules in Amgen v. Sandoz; Gives a Potential Boost to the Biosimilars Industry

U.S. Supreme Court Rules in Amgen v. Sandoz; Gives a Potential Boost to the Biosimilars Industry

By Sara W. Koblitz –
In a relatively infrequent unanimous decision, the U.S. Supreme Court this morning (June 12th) interpreted the Biologics Price Competition and Innovation Act (“BPCIA”) such that the biosimilar patent dance is not mandatory. As regular readers of the FDA Law Blog know, Amgen sued Sandoz for failure to engage in the patent dance and inadequate notice of commercial marketing for Sandoz’s ZARXIO (filgrastim-sndz), a biosimilar version of Amgen’s NEUPOGEN (filgrastim). Amgen sought injunctions to enforce the BPCIA patent dance requirements and for patent infringement while Sandoz counterclaimed for declaratory judgments that the patent was invalid and Sandoz had not violated the BPCIA.
The Supreme Court decided that Sandoz did not violate the BPCIA by failing to engage in the patent dance, as consequences for failure to do so are expressly stated in the BPCIA – meaning that failure to participate was expressly contemplated by the BPCIA. The Court explained that failing to disclose its application and manufacturing information as required under 42 U.S.C. § 262(l)(2)(A) does not constitute an act of artificial infringement, but is actionable under 42 U.S.C. § 262(l)(9)(C), which permits the sponsor to bring an immediate declaratory judgment action for artificial infringement. Therefore, failure to participate in the patent dance cedes control of patent litigation to the sponsor rather than the applicant. This, rather than injunctive relief, serves as enforcement of the disclosure requirements. The Court then remanded to the Federal Circuit to determine whether an injunction is available under California state law to enforce 42 U.S.C. § 262(l)(2)(A) based on whether noncompliance with § 262(l)(2)(A) is unlawful under California’s unfair competition statute.
The Court then examined the plain language of the 180-day notice requirement and determined that no policy argument exists that could outweigh the clear textual argument: 180-day notice of marketing is permitted before licensure.

The applicant must give “notice” at least 180 days “before the date of the first commercial marketing.” “[C]ommercial marketing,” in turn, must be “of the biological product licensed under subsection (k).” §262(l)(8)(A). Because this latter phrase modifies “commercial marketing” rather than “notice,” “commercial marketing” is the point in time by which the biosimilar must be “licensed.” The statute’s use of the word “licensed” merely reflects the fact that, on the “date of the first commercial marketing,” the product must be “licensed.” See §262(a)(1)(A). Accordingly, the applicant may provide notice either before or after receiving FDA approval.

Implicitly, the Court held that reference product manufacturers are not entitled to an additional 6 months of practical exclusivity after a biosimilar is approved. Theoretically, this should help biosimilars come to market faster.
In a Concurring Opinion, Justice Breyer, citing the Court’s previous decision in National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U. S. 967 (2005), raised the possibility that notwithstanding the Court’s interpretation of the BPCIA, FDA might come to a different interpretation of the statute: “if [FDA], after greater experience administering this statute, determines that a different interpretation would better serve the statute’s objectives, it may well have authority to depart from, or to modify, today’s interpretation.”  It seems unlikely that FDA will depart from the Court’s decision.  

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Colgate Asks Court to Stay Action until FDA Defines “Natural”

Colgate Asks Court to Stay Action until FDA Defines “Natural”

By Riëtte van Laack – 
As readers of this blog know, natural claims have been and continue to be a frequent basic for consumer class actions. Initially, lawsuits appeared to focus on natural claims for foods (and dietary supplements). However, natural claims for personal care products also have become a popular target in consumer class actions. Even the Federal Trade Commission has addressed natural claims for personal care products (see here).
Currently, there is no single authoritative legal definition of what “natural” means in the context of food or personal care products. For foods, FDA has a policy that “natural” means “nothing artificial or synthetic,” but it remains unclear how some issues such as genetically modified ingredients and presence of certain residues, such as pesticides, fit within that policy. The continuing uncertainty has encouraged litigants to seek answers from the courts. 
In November 2015, in response to several petitions requesting clarification of the definition or prohibiting the term natural altogether, FDA announced that it would consider the use of “natural” and requested comments as to how to best define the term. The comment period closed in May 2016, after FDA received more than 7600 comments.
FDA’s action has provided defendants of consumer class actions with an additional reason that lawsuits should be stayed based on the primary jurisdiction doctrine. Pursuant to this doctrine, courts may in their discretion stay or dismiss a plaintiff’s claims, to permit the relevant administrative agency to reach a decision on the issue in question. The primary jurisdiction doctrine is intended to preserve the proper working relationship between administrative agencies and the judicial system. See U.S. v. W. Pac. R.R. Co., 352 U.S. 59, 63-64 (1956). In a number of natural cases, defendants have successfully argued for a stay and several lawsuits have been put on hold until FDA weighs in on the “natural” issue. See, e.g., Kane. v. Chobani, LLC, 645 Fed. Appx. 593, 594 (9th Cir. 2016).  
Just recently, Colgate Palmolive Co. (Colgate) relied in part on this latest FDA action in asking the Southern District of New York to also stay lawsuits concerning natural claims for its personal care products. Colgate and its subsidiary Tom’s of Maine, Inc. (Tom’s) market and sell personal care products. Last year, after FDA already had initiated its proceedings concerning natural claims, they were sued for the marketing of a number of the personal care products with allegedly false and misleading “natural claims.” Defendants argue that these cases should be stayed based on primary jurisdiction.
Defendants provide four reasons for deferral to FDA:

The determination of what constitutes “natural” is better left to the expertise of FDA;
Labeling standards are within FDA’s jurisdiction and authority;
The risk of inconsistent rulings regarding the meaning of “natural;” (Colgate got sued in New York and California);
FDA is already reviewing the meaning of natural and natural claims.

Defendants acknowledge that FDA’s action focuses on natural claims for foods, not on personal care products. However, they point out that “there is no indication that . . . FDA’s pending guidance would not also apply to personal care and cosmetic products.”
This would not be the first time that a court would stay “natural” litigation related to personal care products. In 2015, in Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 761 (9th Cir. 2015), the 9th Circuit determined that a stay was appropriate based on the primary jurisdiction doctrine. When that decision was issued, FDA had not yet initiated proceedings regarding “natural” claims. Now that FDA has in fact taken action suggesting that guidance is forthcoming, the argument for a stay is stronger; “FDA has already completed its notice and comment period, a necessary step that will inform . . . FDA’s guidance, and [FDA] seems determined to address the natural labeling issue.” This may alter the primary jurisdiction calculus, and spells a greater likelihood of success for Colgate’s motion and those of other defendants in similar litigation.

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Should Free Speech Protections Include an Exception for Exclusivity-Protected Information?

Should Free Speech Protections Include an Exception for Exclusivity-Protected Information?

By Kurt R. Karst –     
As we previously noted, the intersection of exclusivity and off-label promotion issues is not common, but quite an interesting issue nevertheless. The intersection of these issues was raised earlier this year when Egalet Corporation (“Egalet”) issued a press release saying that the company had received correspondence from FDA stating that the Agency “‘does not object’ to Egalet’s stated plans for distribution of materials [concerning the company’s ARYMO ER (morphine sulfate) Extended-release Tablets] that are ‘based on the intranasal abuse-deterrence data in its original NDA submission’ if the communications are directed only to healthcare professionals, include appropriate disclosures and are otherwise truthful and non-misleading.”  You see, although Egalet conducted intranasal route of abuse clinical studies with ARYMO ER (approved under NDA 208603), FDA determined that 3-year exclusivity granted to Inspirion Delivery Technologies, LLC’s (“Inspirion’s”) MORPHABOND (morphine sulfate) Extended-release Tablets (NDA 206544) – for which Daiichi Sankyo, Inc. (“Daiichi”) holds U.S. marketing rights – prevented the Agency from approving ARYMO ER with labeling describing abuse-deterrence via the intranasal route of abuse.
FDA’s comments to Egalet have apparently bled over into comments submitted to the Agency by AbbVie Inc. (“AbbVie”) and Daiichi concerning a January 2017 draft guidance, titled “Medical Product Communications That Are Consistent With the FDA-Required Labeling — Questions and Answers” (Docket No. FDA-2016-D-2285).
According to AbbVie’s comments, “beyond-the-label communications” are justifiably restricted in one particular narrow circumstance:

A flexible approach to beyond-the-label communications . . . will serve the public interest by enabling more informed coverage and treatment decisions. Providing these additional avenues for manufacturer communications also furthers First Amendment values by respecting the rights of manufacturers to engage in truthful and nonmisleading speech about their products. . . .  In one narrow situation, however, we believe a different conclusion is warranted: that a specific legitimate government interest justifies appropriate limits on certain beyond-the-label communications.  This narrow situation involves the federal statutory scheme in place to incentivize biopharmaceutical industry research and development efforts through grants of non-patent regulatory exclusivity to innovative sponsors, in particular circumstances. . . .
In very narrow circumstances, however, beyond-the-label communications could undermine these sorts of regulatory exclusivity granted to a given company. This could happen if an innovator’s product were approved for an unprotected use but also for a supplemental use protected by orphan exclusivity or, in the case of a new drug, three-year exclusivity.  In these situations, FDA might approve another company’s product for the unprotected uses but allow that company to carve out from its labeling the protected uses. That other company might then choose to promote its drug for the protected use (subject to infringement claims under any applicable patents), which could lead to sales for the protected use—directly undermining the exclusivity.  Appropriate regulation of beyond-the-label communications in these circumstances would directly advance the government’s legitimate interest in preserving incentives for innovation made possible by exclusivity.  Indeed, courts that have upheld FDA’s authority to approve products with labeling carve-outs have assumed that only the innovator could promote for the protected use.  Moreover, no less restrictive alternatives (such as a disclaimer) would be effective in preserving the incentive.  The constitutional analysis in these narrow circumstances thus leads to a different result. In this specific situation, then, we believe FDA could justify a speech restriction.

Although AbbVie does not identify a particular product, the company’s focus on orphan drug exclusivity may be a veiled reference to AbbVie’s HUMIRA (adalimumab). In September 2016, FDA approved Amgen, Inc.’s (“Amgen’s”) AMJEVITA (adalimumab-atto) (BLA 761024), the first biosimilar version of HUMIRA (see our previous post here).  Amgen’s AMJEVITA was approved with labeling omitting information on uses that are protected by periods of orphan drug exclusivity applicable to HUMIRA. 
Comments submitted to FDA on the draft guidance by Daiichi are specific to the off-label use/exclusivity controversy:

Data exclusivity thus derives all of its value from the scope of the labeling for the drug. If the Draft Guidance were interpreted to permit a competitor to communicate data about a condition of use of a product with the same active moiety for which another company has data exclusivity, then the value of the data exclusivity to the original innovator would be severely undermined, if not destroyed.
In these circumstances, [Daiichi] believes that the First Amendment analysis is different than in the typical communication with a healthcare professional. . . . Where exclusivity rights are not at stake, the Central Hudson analysis weighs in favor of protecting truthful and non-misleading communications to sophisticated health care professionals about medicines and puts the burden on the government to show that it has important interests that the speech regulation directly advances in a narrowly tailored manner. . . .  Where intellectual property rights, such as exclusivity rights, are at stake, the prohibition on truthful and non-misleading communications directly advances the government’s interest in protecting those rights and preserving incentives for innovation. . . .  Allowing a competitor to communicate the infringing data, by itself, causes immediate competitive injury and undermines the carefully framed statutory exclusivity framework.  No amount of disclosure can cure that infringement.  Thus, the only alternative in this narrow circumstance is to restrict the speech. . . . 
FDA should thus make clear that the guidance provided does not apply to any communications that would infringe on the intellectual property rights of another company, including data exclusivity rights. In those circumstances, the only rule that would be consistent with statutory mandates is to restrict the communication, even if the communication is truthful and non-misleading.

Neither the Pharmaceutical Research & Manufacturers of America (“PhRMA”), nor the Biotechnology Innovation Organization (“BIO”), has yet entered the fray in any appreciable way.  BIO’s comments to FDA on the draft guidance only briefly mention exclusivity:

BIO does not believe that FDA’s modernizing its current framework to appropriately broaden communications will detract from the sound incentives for pursuing label expansions. This is due to the value of having information on the FDA-approved labeling, the simplicity of ‘on label’ detailing, and incentives such as regulatory exclusivity and eligibility for reimbursement.

Whether FDA will address off-label promotion vis-à-vis exclusivity in another version of the guidance is unclear; however, the Agency may be hesitant to do so in detail given the controversial nature of the topic and the possibility of litigation over the matter.

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User Fee Reauthorization Moves One Step Closer to Reality with House Committee Passage

User Fee Reauthorization Moves One Step Closer to Reality with House Committee Passage

By Kurt R. Karst –
On June 8, 2017, after a long mark-up session, the House Energy and Commerce Committee unanimously (54-0) passed H.R. 2430, the FDA Reauthorization Act of 2017 (“FDARA”). The Senate version of the bill, S. 934, passed out of the Health, Education, Labor, and Pensions Committee last month (see our previous post here).  Both bills would, in enacted, reauthorize an alphabet soup of user fee programs that fund much of FDA’s operations, including PDUFA, GDUFA, BsUFA, and MDUFA.
During the House Energy and Commerce Committee mark-up session, several amendments were added to the bill that passed out of the House Energy and Commerce Subcommittee on Health in May. Those amendments include:

An amendment from Reps. Ryan Costello (R-PN) and Scott Peters (D-CA) on medical device servicing;
An amendment from Reps. Ryan Costello (R-PN) and Scott Peters (D-CA) concerning FDA’s review process for medical imaging devices with contrast agents;
An amendment from Rep. Mimi Walters (R-CA) concerning a process for medical device manufacturers to request that FDA reclassify accessories based on their intended use;
An amendment from Rep. Jan Schakowsky (D-IL) establishing a voluntary pilot project to gather timely and reliable information on medical device safety and effectiveness; and
A sense-of-Congress amendment by Rep. Schakowsky (D-IL) urging the Department of Health and Human Services to work with Congress to take administrative actions and enact legislation to lower the costs of prescription drugs by increasing generic and biosimilar competition and preventing anticompetitive behavior.

Chairman Greg Walden (R-OR) also offered a package of technical corrections that passed.  Among other things, the package of technical corrections amends provisions included in the Health Subcommittee version of H.R. 2430 concerning Competitive Generic Therapies and a new 180-day exclusivity regime (see our previous post here).  
Several other amendments failed to garner the votes necessary for inclusion in the user fee reauthorization bill. Those proposed amendments include the Pharmaceutical Information Exchange Act, which seeks to “improve patient access to emerging medication therapies by clarifying the scope of permitted health care economic and scientific information communications between biopharmaceutical manufacturers and population health decision makers,” a revised version of Rep. Morgan Griffith’s (R-VA) Medical Product Communications Act concerning off-label use, and an amendment from Rep. Peter Welch (D-VT) concerning drug importation.  Rep. Welch also offered the Fair Access for Safe and Timely Generics Act concerning Risk Evaluation and Mitigation Strategies, but withdrew the amendment after debate.
H.R. 2430 will now move to the House Floor where further changes may be made to the bill. Differences between the House and Senate versions of FDARA will need to be ironed out before the bill can be sent to the President for his signature.  

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Adieu, “Orange Book FR Safety or Effectiveness Determinations List”; Hello, “Orange Book Patent Listing Dispute List”

Adieu, “Orange Book FR Safety or Effectiveness Determinations List”; Hello, “Orange Book Patent Listing Dispute List”

By Kurt R. Karst –       
The Orange Book has undergone – and continues to undergo – a lot of change as a result of FDA’s October 2016 promulgation of final regulations (effective as of December 5, 2016) to implement parts of the December 8, 2003 Medicare Modernization Act (“MMA”).  We pointed out some of those changes in our annual review of the Orange Book (see our previous post here), as well as in a subsequent post on changes made to the Orange Book reflecting new FDA guidance, titled “Referencing Approved Drug Products in ANDA Submissions.”  Most recently, we delved into the new “Reference Listed Drugs by ANDA Reference Standard List” (see our previous post here), which is intended to “assist applicants submitting an ANDA to seek approval of a generic drug in identifying an RLD when an ANDA [Reference Standard] has been selected.”  Last week, we became aware of some additional changes to the Orange Book . . . and one in particular that we had been waiting for. 
First, FDA has discontinued publishing the “FR Notice Determination of Safety or Effectiveness List.” (The “FR” in the title is short for “Federal Register.”)  FDA had published the list for many years (most recently in December 2016), and it was a helpful resource to determine what withdrawn drug products were the subject of an FDA determination (since 1995) that withdrawal was not for reasons of safety or efficacy.  (Although the Orange Book continues to include the standard ““**Federal Register determination that product was not discontinued or withdrawn for safety or efficacy  reasons**” next to a particular discontinued drug product, the “FR Notice Determination of Safety or Effectiveness List” included additional details about each discontinued drug product.)  Now, the website that housed that list simply states “This list is no longer published,” and refers readers to the new “Reference Listed Drugs by ANDA Reference Standard List” (see here).
Second, and of greater interest to Orange Book followers, is the new “Orange Book Patent Listing Dispute List.” The list implements FDA’s new method-of-use patent/patent use code patent challenge regulations and fulfills FDA’s new requirement to “promptly post information on its Web site regarding whether a patent listing dispute has been submitted for a published description of a patented method of use for a drug product and whether the NDA holder has timely responded to the patent listing dispute.”  The new patent challenge procedures are laid out at 21 C.F.R. § 314.53(f)(1) and state:  

(f) Correction of patent information errors—(1) Requests by persons other than the NDA holder. If any person disputes the accuracy or relevance of patent information submitted to the Agency under this section and published by FDA in the list, or believes that an NDA holder has failed to submit required patent information, that person must first notify the Agency in a written or electronic communication titled “314.53(f) Patent Listing Dispute.” The patent listing dispute communication must include a statement of dispute that describes the specific grounds for disagreement regarding the accuracy or relevance of patent information for FDA to send to the applicable NDA holder. For a dispute regarding the accuracy or relevance of patent information regarding an approved method of using the drug product, this statement of dispute must be only a narrative description (no more than 250 words) of the person’s interpretation of the scope of the patent. This statement of dispute must only contain information for which the person consents to disclosure because FDA will send the text of the statement to the applicable NDA holder without review or redaction. The patent listing dispute communication should be directed to the Office of Generic Drugs, OGD Document Room, Attention: Orange Book Staff, 7620 Standish Pl., Rockville, MD 20855, or to the Orange Book Staff at the email address listed on the Agency’s Web site at http://www.fda.gov.
(i) Communication with the NDA holder—(A) Drug substance or drug product claim. For requests submitted under this paragraph (f)(1) that are directed to the accuracy or relevance of submitted patent information regarding a drug substance or drug product claim, the Agency will send the statement of dispute to the applicable NDA holder. The NDA holder must confirm the correctness of the patent information and include the signed verification required by paragraph (c)(2)(ii)(R) of this section or withdraw or amend the patent information in accordance with paragraph (f)(2) of this section within 30 days of the date on which the Agency sends the statement of dispute. Unless the NDA holder withdraws or amends its patent information in response to the patent listing dispute, the Agency will not change the patent information in the Orange Book.
(B) Method-of-use claim. For requests submitted under this paragraph (f)(1) that are directed to the accuracy or relevance of submitted patent information regarding an approved method of using the drug product, FDA will send the statement of dispute to the NDA holder. The NDA holder must confirm the correctness of its description of the approved method of use claimed by the patent that has been included as the “Use Code” in the Orange Book, or withdraw or amend the patent information in accordance with paragraph (f)(2) of this section, provide a narrative description (no more than 250 words) of the NDA holder’s interpretation of the scope of the patent that explains why the existing or amended “Use Code” describes only the specific approved method of use claimed by the patent for which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug product, and include the signed verification required by paragraph (c)(2)(ii)(R) of this section within 30 days of the date on which the Agency sends the statement of dispute. The narrative description must only contain information for which the NDA holder consents to disclosure because FDA will send the text of the statement to the person who submitted the patent listing dispute without review or redaction.
(1) If the NDA holder confirms the correctness of the patent information, provides the narrative description required by paragraph (f)(1)(i)(B) of this section, and includes the signed verification required by paragraph (c)(2)(ii)(R) of this section within 30 days of the date on which the Agency sends the statement of dispute, the Agency will not change the patent information in the Orange Book.
(2) If the NDA holder responds to the patent listing dispute with amended patent information in accordance with paragraph (f)(2) of this section, provides the narrative description required by paragraph (f)(1)(i)(B) of this section, and includes the signed verification required by paragraph (c)(2)(ii)(R) of this section within 30 days of the date on which the Agency sends the statement of dispute, FDA will update the Orange Book to reflect the amended patent information.
(ii) Patent certification or statement during and after patent listing dispute. A 505(b)(2) application or ANDA must contain an appropriate certification or statement for each listed patent, including the disputed patent, during and after the patent listing dispute.
(iii) Information on patent listing disputes. FDA will promptly post information on its Web site regarding whether a patent listing dispute has been submitted for a published description of a patented method of use for a drug product and whether the NDA holder has timely responded to the patent listing dispute.

The inaugural “Orange Book Patent Listing Dispute List” includes only a single patent listing dispute (concerning PRADAXA (dabigatran etexilate mesylate) and U.S. Patent No. 9,034,822); however, we expect the list to grow.

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Amgen SENSIPAR Pediatric Exclusivity Dispute is Put on Ice While FDA Dispute Resolution Process Proceeds

Amgen SENSIPAR Pediatric Exclusivity Dispute is Put on Ice While FDA Dispute Resolution Process Proceeds

By Kurt R. Karst –      
Amgen Inc.’s (“Amgen”) nearly two-week-old lawsuit filed against FDA in the U.S. District Court for the District of Columbia challenging the Agency’s denial of a period of 6-month pediatric exclusivity under the Best Pharmaceuticals for Children Act (“BPCA”) (FDC Act § 505A) applicable to SENSIPAR (cinacalcet) Tablets (NDA 021688) is on hold while Amgen seeks resolution of its claim that the company met the requirement for granting exclusivity by using FDA’s Formal Dispute Resolution process.
As we previously reported, Amgen alleges in the company’s Complaint and Motion for Temporary Restraining Order and/or Preliminary Injunction that FDA violated the Administrative Procedure Act when the Agency, among other things, “acted contrary to the plain terms of its governing statute by faulting Amgen for its failure to fulfill ‘one criterion’ of several study requests, when the statute requires merely that the studies ‘fairly respond’ to the Agency’s [Written Request for pediatric studies].”  Amgen’s lawsuit set off a flurry of activity from each party to the litigation, including a Motion to Dismiss from FDA and supplemental briefs (here and here).  A Motion Hearing was held last Friday where Judge Randolph D. Moss took the matter under advisement.
But on Monday, June 5, 2017, the case was put on hold with a Stipulation and Order signed by Judge Moss. According to the Order, “FDA will accept resubmission of Amgen’s May 25, 2017 request for dispute resolution on June 5, so long as that request is substantially similar to Amgen’s May 25, 2017 request,” and the Agency must respond with a decision by June 26, 2017. “[S]hould reconsideration uphold the May 22, 2017, decision [denying pediatric exclusivity], Amgen shall respond to the reconsideration decision by July 3, 2017; and FDA shall issue a decision on dispute resolution by August 2, 2017,” says the Order.  If FDA, after reconsideration, deems that the studies met the terms of the Written Request for pediatric studies, then “FDA will update the Orange Book to reflect pediatric exclusivity on the first business day following the acceptance.”  If FDA once again denies Amgen pediatric exclusivity, then we’ll probably see the parties back in court. 
Regardless of whether FDA decides to grant pediatric exclusivity, or if the exclusivity is ordered granted by a court, the Order states that “any future decision requiring FDA to accept Amgen’s study reports for Sensipar (cinacalcet) under 21 U.S.C. § 355a(d)(3) . . . shall be deemed to relate back, nunc pro tunc, to May 22, 2017, the date of FDA’s initial determination.”  As we previously explained, a “relate back” decision is important here, because pediatric exclusivity extends all other types of Orange Book-listed patent and non-patent marketing exclusivity an application holder may have under the FDC Act, provided that at the time pediatric exclusivity is granted there is not less than nine months of term remaining.  Here, U.S. Patent No. 6,011,068 listed in the Orange Book for SENSIPAR expires on March 8, 2018.  Nine months prior to that date is June 8, 2017. 

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First Generic Drug Price Gouging Prohibition to Become Law in Maryland

First Generic Drug Price Gouging Prohibition to Become Law in Maryland

By David C. Gibbons & Alan M. Kirschenbaum –
Maryland will become the first state in the United States to enact a law prohibiting “price gouging” by generic pharmaceutical manufacturers. H.B. 631, 437th Gen. Assemb., Reg. Sess. (Md. 2017) (hereinafter, “the Bill”). The Bill was passed by the Maryland General Assembly on April 20, 2017 and, on May 26, Maryland Governor Larry Hogan sent a letter to the Speaker of the House stating that he would allow the bill to become law without his signature.
There are two essential provisions of the Bill. First, it prohibits a generic drug manufacturer or wholesale distributor from engaging in price gouging in the sale of an “essential off-patent or generic drug.” An essential off-patent or generic drug, for purposes of the Bill, is a prescription drug (1) with no unexpired marketing exclusivity under the Federal Food, Drug, and Cosmetic Act; (2) that either appears on the World Health Organization’s model list of essential medicines or is designated as essential for treating a life-threatening or certain chronic health conditions by the Maryland Secretary of Health and Mental Hygiene; (3) is actively marketed in the United States by three or fewer manufacturers; and (4) is available for sale in Maryland. Prohibited price gouging, according to the Bill, is an “unconscionable increase” in the price of such prescriptions drugs. This term is defined as a price increase that is “excessive and not justified” by the manufacturing cost or costs associated with expanding access to the drug for the purpose of promoting public health, and which results in patients having “no meaningful choice” whether or not to purchase the drug because of its importance to their individual health and insufficient market competition. The Bill exempts wholesale distributors from the price gouging prohibition when the price increase is “directly attributable” to additional costs imposed on the distributor by the manufacturer.
Second, the Bill authorizes the Maryland Medical Assistance Program (“MMAP”) to notify the Maryland Attorney General (“AG”) of a price increase when the Wholesale Acquisition Cost (“WAC”) of a prescription drug increases by at least 50% from the WAC within the preceding one-year period or when the price paid by MMAP would increase by at least 50% from the WAC within the preceding one-year period and the WAC for either a 30-day supply or a full course of treatment exceeds $80.
At the request of the AG, the manufacturer of a drug so identified must provide a statement justifying the price increase within 45 days of such request. The AG may also require a manufacturer or distributor to provide records or documents relevant to a determination of whether the price increase violates the Bill’s prohibition on price gouging. The AG may seek a court order compelling a justification statement or document disclosure.
In addition, the Bill allows the AG to seek other remedies, including:

Restraining or enjoining violations of the Bill;
Obtaining monetary relief to consumers, based on violative price increases;
Requiring the manufacturer or distributor to sell the drug to Maryland State health plans or programs at the price at which it was available in the year prior to the violative price increase; and
Imposing a civil penalty of up to $10,000 per violation.

The Bill has not been without controversy. Governor Hogan indicated, in his letter to the Speaker of the House, that “legal and constitutional concerns” with the Bill have been raised by his Chief Counsel. This places the Governor at odds with the AG, who championed the Bill, but largely echoes concerns raised by generic drug manufacturers through the Association for Accessible Medicines, the generic manufacturers’ trade association. The Governor stated that one issue concerns the fact that the Bill only addresses generic products, and not patented drugs and medical device drug delivery systems, which, according to the Governor, comprise a significant share of the market and “are often times the most expensive and essential pharmaceuticals.” He also stated that the Bill may suffer from defects under the U.S. Constitution. First, the Governor stated that the Bill potentially implicates the Constitution’s dormant commerce clause by regulating interstate commerce—that is, drug prices negotiated “outside of Maryland.” Second, the Bill may violate the Fourteenth Amendment due process clause due to the vagueness of the terms “unconscionable increase” and “excessive.”
The Bill will become effective on October 1, 2017. We will continue to monitor enforcement of this law and similar developments in other states.
 

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