Attorney East Hampton

By Deborah L. Livornese & JP Ellison & Josephine M. Torrente —

A biotech company facing a complete response letter (CRL) action on its NDA/BLA has no greater goal than to quickly and fully understand the deficiencies that FDA has identified in the application.  Such an understanding is critical to addressing the review division’s findings through additional data or analyses, and is even more essential should the company choose to appeal those findings through Formal Dispute Resolution (FDR).

The purpose of a CRL is to communicate to the applicant that FDA will not approve the application in its present form, and, with limited exception, the CRL describes all of the deficiencies that must be satisfactorily addressed before the application can be approved.  21 C.F.R. § 314.3.  A CRL is, by its nature, a summary document that abbreviates the many months of review and independent analyses performed by a number of FDA disciplines such as medical, statistical, and clinical pharmacology, into a handful of pages.  The actual detailed work performed by the FDA reviewers is embodied in various highly informative review documents that, by contrast, typically span several hundred pages.

The applicant receives the CRL but is not provided the more instructive underlying reviews.
Because of its typical brevity, the CRL is limited to a high-level description of deficiencies and suggested actions for addressing them.  It cannot encompass all of the nuanced information needed to fully appreciate the division’s view or the basis for that view.  FDA regulations offer the opportunity for a subsequent End-of-Review (EOR) meeting, which the Center for Drug Evaluation and Research (CDER) requires an applicant to attend as a prerequisite for appeal under the FDR process.  Despite consuming significant Agency resources that are already stretched thin, these meetings are also often just too short to satisfactorily communicate the details of what may be more than one complex issue.  FDA reviewers simply cannot be expected to articulate hundreds of pages of reviews, including the methods and results of any statistical or pharmacokinetic modeling, in one hour.  In addition, the Q&A format of CDER meetings hampers the exchange, making it dependent on the applicant having sufficient understanding from the CRL to articulate questions that will elicit detailed responses about critical issues.

The lack of clarity can result in deep frustration and misunderstanding as applicants address what they have understood to be the basis of FDA’s concern, only to learn that there are one or more additional bases.  Regulated companies, having spent months attempting to address a deficiency, can feel as though FDA is constantly “moving the goalposts.”  The reviewers for their part can become frustrated with a company that “just doesn’t get it.”  In our experience, these perceptions often don’t reflect reality.  Instead, the FDA reviewers are acting in good faith, but the clarity of the direction they can provide (and therefore the ability of the applicant to understand it) is hampered by the brevity of the CRL and EOR meeting.  While not the FDA reviewers’ intent, the applicant may find itself trapped in a game of regulatory whack-a-mole at a moment when resources are dwindling, and investors are losing faith.

What an applicant really needs, in addition to the CRL, are the FDA reviews themselves which, conveniently, have already been drafted and finalized and which are likely the only documents that can communicate exactly what FDA is seeing in the data.  Failure to gain access to these comprehensive reviews necessarily handicaps an applicant’s appeal.  Access to the reviews could aid some would-be appellants in more fully appreciating the reviewer’s point and choosing not to appeal.  In other cases, such access would aid the appellant in understanding the emphasis being placed on various analyses and pointing out any flaws in those assessments.

Without being overly dramatic about it, failure to provide the reviews to the applicant strikes us as fundamentally unfair in addition to being inefficient.  As a general legal matter, it is a well-accepted principle of administrative law that when an agency relies on scientific and technical data, it must provide adequate information regarding those data to allow critique of them.  Banner Health v. Price, 867 F.3d 1323, 1335 (D.C. Cir. 2017); United States Lines, Inc. v. Federal Maritime Com., 584 F.2d 519, 534 (D.C. Cir. 1978).  For that reason, when the Agency elects to rely on, for instance, a statistical simulation or a correlation it discovered among different adverse events, it must disclose the details of it.  Unlike a citation to a publicly available study, a reference in the CRL or EOR minutes to an FDA-conducted analysis which exists only in FDA’s files provides inadequate notice and is improper and unlawful.  National Classification Comm. v. U.S., 779 F.2d 687, 695 (D.C. Cir. 1985) (“The agency cannot, however, rely on data known only to the agency . . . .”).

The point is perhaps best made by considering CDER written responses to FDR requests (whether granted or denied) which uniformly list those documents that form the basis of the appellate officer’s thinking.  In our experience, those responses contain a near boilerplate sentence that reads something like this: “I have carefully reviewed the materials you submitted in support of your appeal, as well as the reviews, meeting minutes, and decision memoranda prepared by FDA staff along with the CRL” (emphasis ours).  To be clear, this indicates that the deciding official has been presented information about the case from one side in the dispute and that the opposing side has not been granted access to that material.  By its very nature, this suggests that all facts needed to understand whether the review division appropriately denied approval were not housed in the CRL and EOR minutes and were not made available to the applicant.

Our understanding (based to some extent on Agency lore) is that CDER does not share the underlying reviews with the applicant because it believes that disclosing them to the applicant would make the documents disclosable, at least in some respects, to third parties, under the requirements of the Freedom of Information Act (FOIA). We believe such an interpretation is incorrect, and that FOIA case law does not require that outcome. Moreover, we struggle to understand this interpretation by the Agency and to distinguish how it applies to other CDER-generated documents such as, for instance, the summary minutes of the EOR meeting which are uniformly provided to the applicant and not to the broader public.  Both the FDA summary reviews and the minutes seem to fall within 21 C.F.R. § 314.430 and yet their release to the applicant is handled differently.

Without the benefit of access to the complex analyses and thinking that underlie a CRL, an applicant may be denied the ability to efficiently move its program forward, and may spend significant time and money, or make the decision to abandon a program, based on incomplete information – despite the existence of fully developed and internally vetted detailed reviews.  FDA’s public health mission is not promoted by unnecessarily withholding information that could be used to more efficiently move new drugs into an approvable position (or have sponsors make fully informed decisions to halt programs for products that are destined to not be approved).

We believe that a modification in CDER policy to allow the applicant access to the underlying reviews could change the post-CRL process for the better for CDER and for the CRL recipients.  At a minimum, that information would reduce the multiple requests to review divisions to provide further clarification, thereby reducing the drain on resources.

We would welcome a public dialogue regarding such a potential policy change as part of the Agency’s thinking on increased transparency.

By Sara W. Koblitz & Jennifer M. Thomas —

Last week, the President signed into law a bill that gives the FTC greater authority to police agreements between biologic license holders and biosimilar applicants – so-called “pay-for-delay” settlements.  The FTC has been focused on these settlements in the pharmaceutical space for years, but until now lacked the same tools for review of biosimilar settlements.

Earlier this year, U.S. Senators Chuck Grassley and Amy Klobachar urged the FTC to examine “pay-for-delay” settlements in the realm of biosimilars, specifically arguing that the same problem that has “plagued generic pharmaceutical markets for years . . . may be being utilized for settlements regarding biologic medicines.” The Senators’ letter cited AbbVie Inc.’s settlement agreements with Amgen Inc. and Samsung Bioepsis over the blockbuster biologic Humira, which have been the subject of concern for patients groups as well. The persistent dearth of competition in the biologics space following passage of the Biologics Price Competition and Innovation Act in 2009 has been a topic of discussion among policy wonks and regulators, and the FTC has been paying close attention to the biosimilars market.

Now, the Patient Right to Know Drug Prices Act, which we previously blogged about here, has amended the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) such that biologic reference product license holders and biosimilar applicants are subject to the same FTC notification requirements applicable to branded pharmaceutical manufacturers and ANDA applicants under that law. Specifically, the FTC must be notified of any agreement between a branded drug/biologic company and a generic/biosimilar company, or between two generic companies or two biosimilar companies, that relates to (1) “the manufacture, marketing, or sale” of either the branded or generic/biosimilar product, or (2) the period of statutory exclusivity for a first generic or first biosimilar applicant. See MMA §§ 1111-1112.  The FTC’s instructions for notification in the pharmaceutical context can be found here. They will likely apply in the biologic context as well.

Although the market for biosimilars is not yet competitive enough to inspire numerous “pay-for-delay” settlements, alleged anti-competitive tactics are already a concern – as explained in Pfizer’s recent FDA Citizen Petition. Moreover, the powers-that-be appear confident that robust competition in the biosimilars market is forthcoming.  As seen from the adoption of the Biosimilars Action Plan, FDA is actively preparing for a highly competitive biosimilars market.

With 30 years of experiences with alleged anti-competitive efforts in the generic drug market under their belts, regulators are implementing proactive measures like FTC review of potentially anticompetitive settlements to attempt to curb potential abuses in the biosimilar market before they can start. Preventing such abuses has clearly been on Commissioner Gottlieb’s mind, as he remarked when rolling-out the Biosimilars Action Plan that

We’re falling into some of the same doubts and policy constraints that were used to deter competition from generics in the years after the Hatch Waxman Act.

But we’re not going to play regulatory whack-a-mole with companies trying to unfairly delay or derail the entry of biosimilar competitors. We’re not going to wait a decade or more for robust biosimilar competition to emerge.

This type of anticipatory policy-making underscores FDA’s, the FTC’s, and Congress’s commitment to creating a functioning, competitive, and ultimately accessible market for lower cost biologics.

Yet another collaboration between FDA and the FTC also provides some insight into FDA’s priorities. While the two agencies have worked together on promotion and substantiation issues since the 1950s, it is only more recently that FDA has been active in addressing potential anticompetitive issues in the drug industry. Just two weeks ago, FDA published a revised guidance indicating that it would refer citizen petitions with the primary purpose of delaying applications to the FTC. Timely authoritative referrals could mean increased success by the FTC in bringing antitrust actions against abusers of the citizen petition process.  Maybe it’s the backlash from the Daraprim and EpiPen extreme price hikes, but regulators seem to be looping in the FTC more than ever.  Regardless of the impetus, this reliance on FTC so early in the development of the biosimilar market could succeed in accelerating competition in the biologic space.

By Riëtte van Laack —

As many of our readers know, slack fill litigation has increased within the food and beverage industry over the past several years. Approximately 300 slack fill cases were filed between 2016 and 2017, principally in California and New York.

By definition, “slack fill” is the difference between the actual capacity of a container and the volume of product contained inside. A container with slack fill that serves no functional purpose, i.e. “nonfunctional slack fill,” could be subject to lawsuits under the Federal Food, Drug, and Cosmetic Act (FDC Act) and relevant state regulations. The basis for these claims is that nonfunctional slack fill allegedly renders the product packaging misleading to consumers, because it causes them to think that they are getting more of the product than they actually are.

A crucial question in slack fill litigation is whether the slack fill in question is truly “nonfunctional.” Under federal law, empty space in food containers is considered “nonfunctional” unless it falls within one of six exceptions:

• Protection of the contents inside the package
• Result of the machines used to enclose the contents
• Result of unavoidable product settling
• Necessary to perform a specific task (e.g. cake mix packaged in a bowl that is to be used in mixing the cake batter)
• Food packaged in a reusable container where the container is a part of the presentation and also serves a useful purpose independent of the function to hold food
• The inability to increase the contents or reduce the package size (e.g. a certain size package is necessary to carry all the required label statements, discourage shoplifting, or facilitate handling the product).

21 C.F.R. § 100.100. California law includes similar exceptions for food containers.

On September 19, 2018, California Governor Jerry Brown signed an amendment to the slack fill law that provides additional protection to manufacturers facing specious slack-fill allegations. The amendment added the following circumstances in which slack fill will not be considered “nonfunctional”:

• Where the consumer can see the dimensions of the product or immediate product container through the packaging.
• Where a clear and conspicuous depiction of the actual size of the product or immediate product container appears anywhere (except on the bottom) on the outside container
• Where a product fill line or other indication on the container demonstrates the minimum amount of product (i.e., fill line after maximum settling)
• Where “[t]he mode of commerce does not allow the consumer to view or handle the physical container or product.”

This last exception logically recognizes that a consumer cannot be misled by slack fill when the consumer does not see the package size at the time of purchase, and appears to exempt on-line sales from application of California’s law prohibiting nonfunctional slack fill

Similar amendments were made to the statute regarding slack fill for non-food containers. Hopefully, these much needed additional safe harbors will reduce the number of actions filed against manufacturers.

By Kurt R. Karst —

Please clear your mind of any premature thoughts and allusions that are untoward or prurient in nature. The title of this post refers only to an unusually extended time for one ANDA applicant to obtain tentative approval for a generic version of an erectile dysfunction drug, yet escape forfeiture of 180-day exclusivity eligibility.  With that said, here we are again with another FDA 180-day exclusivity forfeiture decision concerning the often-cited failure-to-obtain-timely-tentative-(or final)-approval forfeiture provision at FDC Act § 505(j)(5)(D)(i)(IV).  The latest decision we obtained from FDA is interesting as it concerns so-called “split strengths” with different 30-month dates and different bases for determining that 180-day exclusivity for those split strengths was not forfeited.

By way of background, FDC Act § 505(j)(5)(D)(i)(IV) states that eligibility for 180-day exclusivity is forfeited if:

The first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.

The 2007 FDA Amendments Act clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition, the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .” (FDC Act § 505(q)(1)(G)).

According to FDA’s Paragraph IV Certifications List, the first ANDA for a generic version of Eli Lilly and Company’s (“Lilly’s”) CIALIS (tadalafil) Tablets, 2.5 mg, 5 mg, 10 mg, and 20 mg, containing a Paragraph IV certification was submitted to FDA on November 21, 2007 (5 mg, 10 mg and 20 mg) and October 14, 2008 (2.5 mg). Those ANDA submissions were made by Teva Pharmaceuticals USA, Inc. (“Teva”) under a single ANDA – ANDA 090141 – and qualified the company as a “first applicant” eligible for a period of 180-day exclusivity.  Thirty months after the November 21, 2007 (5 mg, 10 mg and 20 mg) and October 14, 2008 (2.5 mg) submissions was May 21, 2010 and April 14, 2011, respectively, but several more years went by without an FDA approval action on the ANDA.  Finally, FDA tentatively approved ANDA 090141on March 10, 2017, and granted final approval on May 22, 2018 (just one day after the May 21, 2018 expiration of a period of pediatric exclusivity associated with U.S. Patent No. 5,859,006 listed in the Orange Book for CIALIS.)

As to 180-day exclusivity, FDA’s approval letter affirms Teva’s eligibility for exclusivity for all strengths, but (frustratingly) says nothing about the Agency’s basis for granting such exclusivity in light of the failure to obtain timely tentative approval:

With respect to 180-day generic drug exclusivity, we note that Teva was the first ANDA applicant to submit a substantially complete ANDA with a paragraph IV certification for Tadalafil Tablets USP, 2.5 mg, 5 mg, 10 mg, and 20 mg. Therefore, with this approval, Teva is eligible for 180 days of generic drug exclusivity for Tadalafil Tablets USP, 2.5 mg, 5 mg, 10 mg, and 20 mg. This exclusivity, which is provided for under section 505(j)(5)(B)(iv) of the FD&C Act, will begin to run from the date of the commercial marketing identified in section 505(j)(5)(B)(iv). Please submit a correspondence to this ANDA informing the Agency of the date you begin commercial marketing. Please submit correspondence to this ANDA notifying the Agency within 30 days of the date of the first commercial marketing of this drug product or the RLD.  If you do not notify the Agency within 30 days, the date of first commercial marketing will be deemed to be the date of the drug product’s approval. See 21 CFR 314.107(c)(2).

We knew there had to be more to FDA’s decision, so we obtained a copy of the Agency’s November 9, 2017 Exclusivity Determination.  Apparently FDA was forced to make the determination early, prior to approving Teva’s ANDA, in light of approval decisions that needed to be made on subsequent Paragraph IV ANDAs.

According to FDA, different changes or approval requirement reviews imposed after the November 21, 2007 (5 mg, 10 mg and 20 mg) and October 14, 2008 (2.5 mg) ANDA submission dates nullified the 30-month period under FDC Act § 505(j)(5)(D)(i)(IV) for each strength. As to the 5 mg, 10 mg and 20 mg strengths under Teva ANDA 090141, FDA cites a change in chemistry review requirements:

On April 15, 2010, approximately one month and six days before the 30-month forfeiture date of May 21, 2010 for the 5 mg, 10 mg, and 20 mg strengths, Teva submitted a chemistry amendment in response to FDA’s October 9, 2009 chemistry deficiencies. . . . FDA’s review of Teva’s April 15, 2010 amendment . . . extended past the 30-month forfeiture date of May 21, 2010 for the 5 mg, 10 mg, and 20 mg strengths.  FDA completed its review on October 15, 2010, which was after the 30-month forfeiture date of May 21, 2010 for the 5 mg, 10 mg, and 20 mg strengths but approximately six months before the 30-month forfeiture date of April 14, 2011 for the 2.5 mg strength.

. . . FDA generally will presume that the failure to obtain tentative approval of approval was caused by a change in or review of approval requirements if, at the 30-month date, the evidence demonstrates that the sponsor was actively addressing the change in or review of approval requirements (or FDA was considering such efforts), and these activities precluded tentative approval (or approval) at that time.  At the 30-month forfeiture date for the 5 mg, 10 mg, and 20 mg strengths, FDA was considering Teva’s efforts to address the change in requirements for approval. . . .  Accordingly, this change was a cause of Teva’s failure to obtain tentative approval or approval by the 30-month forfeiture date of May 21, 2010 for the 5 mg, 10 mg, and 20 mg strengths.  However, this change was not a cause of Teva’s failure to obtain tentative approval or approval by the 30-month forfeiture date of April 14, 2011 for the 2.5 mg strength, as FDA determined that Teva had adequately addressed the change in approval requirements . . . on October 15, 2010, approximately six months before the 30-month forfeiture date of April 14, 2011 for the 2.5 mg strength.

But as to the 2.5 mg strength under Teva ANDA 090141, FDA cites a change in CIALIS labeling that caused Teva’s failure to obtain timely tentative approval for that strength:

After the ANDA amendment was submitted for addition of the 2.5 mg strength on October 14, 2008, labeling changes were approved for the RLD on February 1, 2010. The RLD labeling changes provide for:

updates under Recent Major Changes in the HIGHLIGHTS OF PRESCRIBING INFORMATION and revisions to CONTRAINDICATIONS (4.2) and WARNINGS AND PRECAUTIONS (5.11) sections of the Physician Insert, and to the Patient Package Insert, to achieve consistency with the ADCIRCA labeling and to replace a previous contraindication. The updated labeling provides for a revised warning against use of CIALIS with other phosphodiesterase (PDE5) inhibitors including ADCIRCA.  ADCIRCA also contains tadalafil and is indicated for the treatment of pulmonary arterial hypertension.  In addition, the updated labeling replaces a previous contraindication in patients with known serious hypersensitivity to tadalafil.

. . . . The evidence [] demonstrates that there was a change in approval requirements related to labeling, which were imposed after the amendment for the 2.5 mg strength was submitted.  The evidence further demonstrates that Teva had addressed the change in approval requirements and FDA was reviewing the response to such change at the 30-month forfeiture date of April 14, 2011 for the 2.5 mg strength.  Specifically, on March 22, 2010, approximately seven weeks after the RLD labeling change and one year and 23 days prior to the 30-month forfeiture date of April 14, 2011, Teva submitted an unsolicited labeling amendment with “an updated package insert and patient package insert . . . in accord with the most current labeling of the reference-listed drug Cialis® Tablets, approved on February 1, 2010.”  FDA’s review of Teva’s March 22, 2010 unsolicited labeling amendment extended past the 30-month forfeiture date of April 14, 2011.  FDA completed its review of the March 22, 2010 amendment on October 31, 2011, approximately six months and 17 days after the 30-month forfeiture date of April 14, 2011. . . .  FDA generally will presume that the failure to obtain tentative approval or approval was caused by a change in or review of approval requirements if, at the 30-month date, the evidence demonstrates that the sponsor was actively addressing the change in or review of approval requirements (or FDA was considering such efforts), and these activities precluded tentative approval (or approval) at that time.  In this case, FDA was considering Teva’s efforts to address the RLD labeling change of February 1, 2010, at the 30-month date.  Accordingly, this change was a cause of Teva’s failure to obtain tentative approval or approval by the 30-month forfeiture date of April 14, 2011 for the 2.5 mg strength.

Teva reportedly launched all strengths approved under ANDA 090141 on September 27, 2018, thereby triggering 180-day exclusivity. The number of tentatively approved ANDAs for generic CIALIS indicates that after that exclusivity expires on or about March 26, 2019, stiff competition (just an innocent reference to Cheap Trick) among generic competitors will likely ensue.

By Kurt R. Karst —

Few drugs in the history of Hatch-Waxman have as storied a history as RESTASIS (cyclosporine) Ophthalmic Emulsion, 0.05%. First, there was litigation against FDA as to the status of the drug as an “antibiotic” (see here).  Second, there’s the recent fight over whether the St. Regis Mohawk Indian Tribe can use tribal sovereign immunity to shield patents covering RESTASIS from challenges at the U.S. Patent and Trademark Office (see here).  And now there’s a fight over 180-day exclusivity for a generic version of the drug product with Teva Pharmaceuticals USA, Inc.’s (“Teva’s”) October 17, 2018 filing of a Complaint and Motion For a Preliminary Injunction in the U.S. District Court for the District of Columbia alleging that a recent Agency interpretation of the definition of “first applicant” at FDC Act § 505(j)(5)(B)(iv)(II)(bb) is unlawful.

We suspected that a lawsuit against FDA concerning generic RESTASIS 180-day exclusivity might be in the offing when the Agency issued a July 13, 2018 Letter Decision explaining the Agency’s rationale for determining that eligibility for 180-day exclusivity for certain strengths of generic SUBOXONE (buprenorphine and naloxone) Sublingual Film was forfeited (see our previous post here).  But before we go down that road, some background is in order.

FDC Act § 505(j)(5)(B)(iv)(II)(bb) defines the term “first applicant” to mean:

an applicant that, on the first day on which a substantially complete application containing a [Paragraph IV certification] is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a [Paragraph IV certification] for the drug.

FDA has broken this definition down into three prongs:

[1] on the first day on which a substantially complete application containing a [paragraph IV certification] is submitted for approval of a drug [hereinafter the “when” prong],

[2] submits a substantially complete application that contains . . . [a paragraph IV certification for the drug] [hereinafter the “submit” prong] and

[3] lawfully maintains a [paragraph IV certification] for the drug [hereinafter the “lawfully maintains” prong].

Under what FDA terms the “First Effective Approach” in the Agency’s SUBOXONE Letter Decision, which is the approach affirmed in cases such as Purepac Pharmaceutical Co. v. Thompson, 354 F.3d 877 (D.C. Cir. 2004) and TorPharm, Inc. v. Thompson, 260 F.Supp.2d 69 (D.D.C. 2003), the Agency says that it creates a problem under the 2003 Medicare Modernization Act (“MMA”), which, among other things, added the “first applicant” definition to the statute:

When considering the issue prior to enactment of MMA and prior to FDA’s exclusivity determination in this case, FDA has taken an approach to determining eligibility for 180-day exclusivity (termed the “First Effective” approach for purposes of this letter) that when the first paragraph IV certification occurs in an amendment or supplement to an ANDA, the first generic drug applicant that both (1) submits a substantially complete application (amendment or supplement) with a paragraph IV certification and (2) makes it “effective” for the drug by providing notice in a timely fashion, is eligible for 180-day exclusivity.

Under this approach, an applicant who submits an amendment or supplement to a substantially complete application with a paragraph IV certification, but who fails to give timely notice, could lose eligibility for 180-day exclusivity if another applicant submits an amendment or supplement to a substantially complete application with a paragraph IV certification later but gives notice first. Under this approach, the day on which eligibility for 180-day exclusivity is determined would not be fixed; it could change if the first-to-file generic drug applicant submits an amendment or supplement to a substantially complete application with a paragraph IV certification but does not provide notice of that certification before another applicant completed both of those actions. . . .

Presented with questions regarding the meaning of “First Applicant” in this case in the post-MMA context, and upon further review of the relevant statutory and regulatory provisions, FDA has concluded that the “First Effective” approach, which likely grew out of the application of the principles of the pre-MMA statutory framework in the Purepac case, is not consistent with the statutory definition of “First Applicant” as defined by Congress in the MMA. This is so because application of the “First Effective” approach post-MMA effectively writes out of the statutory definition of “First Applicant” the reference to the “first day” in the “when” prong of that definition in cases where notice is not timely given.  Thus, . . . in interpreting the MMA statutory language and applying the post-MMA statutory scheme, FDA rejects the “First Effective” approach to determining which applicants are “First Applicants” and is adopting the interpretation explained below to determine “First Applicant” status and eligibility for exclusivity for ANDAs referencing Suboxone 4 mg/1 mg and 12 mg/3 mg strengths.  This interpretation is most consistent with the text and structure of the MMA.

Instead, FDA’s SUBOXONE Letter Decision adopts what the Agency terms the “First Submitted Interpretation Approach,” which the Agency explains as follows:

[U]nder the statute, a “First Applicant” is “an applicant that, on the first day on which a substantially complete application containing a [paragraph IV certification] is submitted for approval of a drug, submits a substantially complete application that contains . . . [a paragraph IV certification for the drug] and lawfully maintains a [paragraph IV certification] for the drug.” Under the “First Submitted” interpretation, the definition of “First Applicant” is read such that the “when” prong (i.e., “on the first day on which a substantially complete application . . .”) refers to a single specific date on which an application was submitted to qualify its sponsor as a “First Applicant”; whereas the “submit” and “lawfully maintain” prongs describe requirements for specific applications submitted on this single fixed date to maintain eligibility for exclusivity. Under this reading of the statute, there can only ever be one “first day on which a substantially complete application containing a paragraph IV certification [or an amendment to a substantially complete application with a paragraph IV certification] is submitted,” regardless of whether the applicant that submits its application (or an amendment or supplement to its application) on that “first day” gives or fails to give timely notice of and/or otherwise lawfully maintains its paragraph IV certification. Thus, while an applicant must meet all three prongs to obtain 180-day exclusivity, the “when” prong refers to a specific, static date determined by the specific first day on which any applicant submits a substantially complete application (or an amendment or supplement to a substantially complete application) containing a paragraph IV certification to a patent listed for that product. This specific date is fixed and does not change because of subsequent events.

Now back to the RESTASIS story . . . .

In July 2015, FDA issued a “Dear Applicant Letter” (Docket No. FDA-2015-N-2713) requesting comment on a Hatch-Waxman issue concerning generic RESTASIS 180-day exclusivity.  As we discussed in a post back then, FDA explains that “[t]he first patents for Restasis were listed in the Orange Book in late 2008: U.S. Patent Nos. 4,839,342 (the ‘342 patent) and 5,474,979 (the ‘979 patent).”  The ‘342 patent expired on August 2, 2009, and the ‘979 patent expired on May 17, 2014; however, FDA says that “[o]ne or more ANDAs or patent amendments submitted after the ‘342 patent expired but before January 14, 2014 contained a paragraph IV certification to the ‘979 patent, potentially qualifying the ANDA sponsor(s) as a ‘first applicant’ eligible for 180-day exclusivity.” January 14, 2014 is the date on which U.S. Patent No. 8,629,111 (“the ‘111 patent”) was submitted to FDA and listed in the Orange Book for RESTASIS.  Also on that date, “one or more [ANDA] applicants submitted a paragraph IV certification to the ‘111 patent,” according to FDA.

FDA then throws a complicating fact into the mix:

Until the ‘111 patent was listed on January 14, 2014, the ‘979 patent was the only patent listed in the Orange Book for Restasis since expiry of the ‘342 patent in 2009.

The one or more paragraph IV certifications to the ‘979 patent submitted to FDA after the ‘342 patent expired but before January 14, 2014, were the first paragraph IV submissions made for Restasis. But the ‘979 patent expired before FDA issued an Acknowledgement Letter to any applicant with a pending ANDA for this drug product, and before any sponsor had the opportunity to provide notice of the paragraph IV certification to that patent.

Given this complicated scenario, FDA says that there are two issues before the Agency:

(1) the one or more applicants that submitted ANDAs or patent amendments with paragraph IV certifications to the ‘979 patent after the ‘342 patent expired but before January 14, 2014, and that did not receive Acknowledgement Letters until after the ‘979 patent had expired, are “first applicants” under FD&C Act section 505(j)(5)(B)(iv)(II)(bb); and

(2) whether 180-day generic drug exclusivity for this product was forfeited on May 17, 2014, when the ‘979 patent expired, such that no ANDA applicant for Cyclosporine Ophthalmic Emulsion, 0.05%, is eligible for 180-day generic drug exclusivity.

Several comments were submitted to FDA in response to the Agency’s request, including comments submitted on behalf of Teva (here) and Akorn Pharmaceuticals (“Akorn”) (by Hyman, Phelps & McNamara, P.C.) (here).   Akorn took the position that FDA should conclude that any ANDA applicant that certified Paragraph IV to the now-expired ‘979 patent before January 14, 2014, when the ‘111 patent was listed in the Orange Book, and that did not receive an Acknowledgment Letter from FDA until after May 17, 2014, when the ‘979 patent expired, is not a “first applicant” under FDC Act § 5050)(5)(B)(iv)(II)(bb). Instead, any ANDA sponsor that certified Paragraph IV to the ‘111  patent on January 14, 2014, and that timely perfected that certification is a “first applicant” eligible for 180-day exclusivity.  As Akorn noted in its comments, this means:

• the ‘979 patent was not an exclusivity-bearing patent;
• 180-day exclusivity for Cyclosporine Ophthalmic Emulsion, 0.05%, has not been forfeited under FDC Act § 5050)(5)(D)(i)(VI) because of patent expiration; and
• the ANDA sponsor (or sponsors) that certified Paragraph IV to the ‘979 patent, but that did not certify Paragraph IV to the ‘111 patent on January 14, 2014, is not a “first applicant,” but instead “an applicant other than a first applicant” (i.e., a subsequent applicant), id. § 5050)(5)(B)(iv)(II)(aa), subject to a first applicant’s 180-day exclusivity, unless otherwise forfeited.

The Teva and Akorn comments were consistent with FDA’s position at that time; however, FDA’s SUBOXONE Letter Decision and new “First Submitted Interpretation Approach” drastically changed things. According to Teva:

Until now, FDA consistently maintained that eligibility for 180-day exclusivity hinges on a generic applicant submitting a legally valid challenge to the innovator’s patents that complies with all statutory requirements for such challenges—including the requirement to notify the brand manufacturer of any such challenge so that it can evaluate whether to sue the generic applicant for patent infringement. Not surprisingly, both this Court and the D.C. Circuit agreed with that commonsense position. See, e.g., TorPharm, Inc. v. Thompson, 260 F. Supp. 2d 69, 80 (D.D.C. 2003), aff’d sub nom. Purepac Pharm. Co. v. Thompson, 354 F.3d 877, 888-89 (D.C. Cir. 2004).  And while this case arises under a more recent version of the statute, FDA recently promulgated binding regulations—after formal notice-and-comment rulemaking—that not only affirmed its longstanding position, but expressly relied on the court cases upholding that well-settled rule.  Abbreviated New Drug Applications and 505(b)(2) Applications—Final Rule (the “MMA Final Rule”), 81 Fed Reg. 69580, 69609 (Oct. 6, 2016) (adopting proposed rule that applicants must “satisfy the notice requirement of the [Hatch-Waxman] Act … to qualify for 180-day exclusivity”); see also Abbreviated New Drug Applications and 505(b)(2) Applications—Proposed Rule (the “MMA Proposed Rule”), 80 Fed. Reg. 6802, 6835 (Feb. 6, 2015) (citing Purepac to support proposal that a patent challenge is “effective only as of the date that the applicant has both submitted … the paragraph IV certification and sent the notice”).  FDA’s attempt to jettison that rule in the context of a quasi-adjudicatory proceeding is thus as procedurally defective as it is substantively baffling.

Teva is seeking declaratory and injunctive relief, including a declaration that FDA’s SUBOXONE Letter Decision “was issued without observance of procedure required by law and otherwise is arbitrary, capricious, an abuse of discretion and not in accordance with law,” a declaration that Teva’s ANDA for generic RESTASIS (ANDA 203880) is entitled to 180-day exclusivity, and that the court enjoin FDA from approving any ANDA for generic RESTASIS that “was not substantially complete as of January 14, 2014 and/or for which the ANDA’s sponsor did not submit a lawfully-maintained Paragraph IV certification on January 14, 2014.”

By John A. Gilbert & Larry K. Houck —

We previously blogged on the Drug Enforcement Administration’s (DEA’s) rescheduling of Epidiolex. In that blog we highlighted that further action by the World Health Organization (“WHO”) and the UN Commission on Narcotic Drugs (“CND”) could further affect scheduling of cannabidiol (“CBD”) and cannabis in the United States.  The Food and Drug Administration’s (“FDA’s”) recent notice on international scheduling, International Drug Scheduling; Convention on Psychotropic Substances; Single Convention on Narcotic Drugs; ADB-FUBINACA; ADB-CHMINACA; Cyclopropyl Fentanyl; Methoxyacetyl Fentanyl; para-Fluoro Butyrfentanyl; Tramadol; Pregabalin; Cannabis Plants and Resin; and Eight Additional Substances; Request for Comments, 83 Fed. Reg. 50938 (Oct. 10, 2018), provides an opportunity for the regulated industry to comment on these actions.

By way of background, the United States is a signatory to the 1961 Single Convention on Narcotic Drugs and the 1971 Convention on Psychotropic Substances (“Psychotropic Convention”) (together “international drug control treaties”) designed to establish effective control over international and domestic traffic in controlled substances. 21 U.S.C. § 801(7).  The U.S. is obligated to enact drug control laws consistent with the scheduling under the treaties.  The CND, of which the U.S. is a voting member, is the United Nations regulatory body that makes decisions related to amending the treaties.  The WHO serves as an advisory group that makes recommendations to the CND related to additions or changes to drugs controlled under the treaties.  The WHO utilizes an Expert Committee on Drug Dependence (“ECDD”) to conduct evaluations of substances  (called “critical reviews”) that form the scientific and medical basis for recommendations to the CND.  The CND will next meet in March 2019 to consider WHO’s recommendations.

WHO previously conducted a critical review of CBD at its June 2018 meeting. WHO has also announced that the ECDD will meet between November 12-18, 2018, to conduct a critical review of a number of substances including cannabis.  (The ECDD is also conducting a critical review of several synthetic cannabinoids and fentanyl analogues, as well as tramadol and pregabalin.)

First, in regard to CBD, the ECDD has already recommended that pure CBD should not be scheduled within the international drug conventions as it “was not found to have psychoactive properties, and presents no potential for abuse or dependence.” WHO, News Briefing-40th WHO Expert Committee on Drug Dependence (ECDD) (Sept. 13, 2018).  This means that WHO will very likely send a recommendation to the CND recommending decontrol of CBD.  As previously discussed, DEA rescheduled only FDA-approved drugs containing CBD, a cannabinoid extract from cannabis, with no more than 0.1 percent tetrahydrocannabinols (“THC”) in Schedule V of the Controlled Substances Act.  All other CBD formulations remain Schedule I controlled substances.  Remember also, that one of the reasons DEA provided for keeping CBD in Schedule V was to comply with the international treaties.

We noted in our October 1, 2018, post that for rescheduling the Epidiolex CBD formulation, DEA sought and received a scheduling evaluation from HHS. We have had the opportunity to review the HHS eight-factor analysis provided to DEA as part of the Epidiolex rescheduling.  HHS concluded, based on its scientific and medical eight factor evaluation required by 21 U.S.C. § 811(c), that CBD does not have significant potential for abuse and could be removed from control, but to maintain treaty obligations, recommended that DEA place CBD in the Schedule V, the least restrictive schedule.  Department of Health and Human Services, Basis for the Recommendation to Place Cannabidiol in Schedule V of the Controlled Substances Act, 2-3 (May 16, 2018).  Thus, the actions by the CND could impact further scheduling of CBD in the U.S.

Second, in regard to cannabis, the June 2018 ECDD conducted a pre-review of:

• Cannabis plant (e.g., marijuana) and cannabis resin (e.g., hashish);
• Extracts and tinctures of cannabis (oils, edibles and liquids);
• THC (e.g., dronabinol); and
• Isomers of THC.

A pre-review is the initial step for the ECDD determining through later critical review whether there is sufficient evidence to make an informed recommendation about placing a substance under international control and the level of that control. The ECDD has announced that it will conduct a critical review of these substances at the November 2018 meeting.  Any recommendations coming out of that meeting will likely be forwarded to the CND for consideration at the March 2019 meeting.  Thus, the CND decisions in March 2019 could also impact U.S. scheduling of cannabis.

As we asked in our prior post, if CND removes CBD from regulation under the international drug control treaties, will HHS and DEA support descheduling all CBD formulations? Likely more controversial will be what recommendations WHO provides related to cannabis, THC or other extracts and how will the U.S. react to any recommendations to reschedule these substances.

HHS will provide responses to WHO in regard to its solicitation of information related to its review of these substances. Thus, we encourage interested persons to provide comments to HHS through the FDA notice for public comments by October 31, 2018 to ensure that all of the relevant information is included as part of the HHS submission to WHO.

By Dara Katcher Levy —

What is “truthful and non-misleading” in prescription drug promotion is often in the eye of the beholder. And, when it comes to enforcement, FDA is usually the arbiter. Over the years, FDA has taken on a number of initiatives and invested significant resources to better understand consumer comprehension of direct-to-consumer (DTC) prescription drug promotion.  One of its oldest drug advertising guidances still in effect, dating back to 1999, relates to consumer-directed broadcast advertisements and significant attention has been given to consumer comprehension of DTC promotion in several draft guidances, including one on Risk Presentation and another on Brief Summary Requirements.

In its new draft guidance, FDA asserts that conveying efficacy and safety information to consumers quantitatively, as opposed to qualitatively, may increase consumer comprehension. The draft guidance, entitled “Presenting Quantitative Efficacy and Risk Information in Direct-to-Consumer Promotional Labeling and Advertisements” (hereinafter, “Draft Guidance”), raises concerns that consumers differ in their interpretations of qualitative descriptors such as “rare, common, most,” and that consumers may not understand relative frequency information presented (e.g., 33% reduction in symptoms). To help improve consumer comprehension, FDA recommends the following with regard to the content and format of quantitative efficacy and safety information:

• Use Absolute Probability Presentations – firms should convey information in terms of absolute frequencies (e.g., 57 out of 100) or percentages (57%); if relative frequency information is provided (e.g., 50% reduction of risk), absolute probability measures should also be provided (e.g., 50% reduction of risk – 1% had a stroke compared to 2% in the control group).
• Choose a Consistent Format – presentations should be consistent throughout a piece, frequencies should use the same denominator (preferably a multiple of 10), and when possible, whole numbers should be used.
• Use Appropriate Visual Aids – visual aids help consumer comprehension and should be carefully and clearly labeled and defined, should include information proportionate to the quantity described (bar graphs representing appropriate proportions), and should include both the numerator and denominator of ratios or frequencies.
• Include Comparator Numbers – both the treatment and the control groups should be represented to improve consumer perceptions about a drug’s efficacy and risk.

While the information in the Draft Guidance is not really “new,” what is new (to this blogger, at least) is the lack of reference to health care providers. Although the Draft Guidance specifically addresses DTC promotion of prescription human drugs and biologics, prior guidances relating to DTC promotion have acknowledged the role of the health care provider with regard to prescribing and care of patients. In its draft guidance on Brief Summary Requirements, FDA states that “the consumer brief summary should include the indication for the use being promoted, any clinically significant drug interactions, and information regarding topics or issues consumers should discuss with their health care providers.” FDA, Draft Guidance, Brief Summary and Adequate Directions for Use: Disclosing Risk Information in Consumer-Directed Print Advertisements and Promotional Labeling for Prescription Drugs, 8 (Revision 2) (Aug. 2015). In its Draft Guidance on Presenting Risk Information, FDA states that presenting risk information in consumer promotion is important as it “helps consumers know whether drugs or devices may be appropriate for them as well as what they should tell their healthcare professionals about before taking or using or while taking or using a product.” FDA, Draft Guidance, Presenting Risk Information in Prescription Drug and Medical Device Promotion, 2 (May 2009). And FDA’s final guidance on Consumer Directed Broadcast Advertisements acknowledges that the broadcast advertisement must not be false or misleading which, in the case of a prescription drug, would include “communicating that the advertised product is available only by prescription and that only a prescribing healthcare professional can decide whether the product is appropriate for a patient.” FDA, Guidance, Consumer-Directed Broadcast Advertisements, 2 (Aug. 1999). The absence of any mention of the health care provider’s role in facilitating consumer comprehension of a prescription drug’s efficacy/safety, or appropriateness, is surprising.

By Jennifer M. Thomas —

Earlier this year, we blogged on an interesting case out of the District of Delaware, FTC v. Shire ViroPharma, No. 17-cv-00131 (D. Del. Feb. 7, 2017), which called into question the FTC’s authority to litigate pursuant to section 13(b) of the FTC Act (15 U.S.C. § 53(b)).  The ViroPharma case is currently on appeal to the Third Circuit, with briefing completed and pending oral argument.

Meanwhile, the FTC is facing a ViroPharma problem. Courts are re-examining their historical reliance on the Commission’s assertions that, pursuant to section 13(b), a defendant “is violating, or is about to violate” a law enforced by the FTC, and instead are more carefully evaluating whether the FTC has properly pleaded its claim under the FTC Act.

On Monday, the U.S. District Court for the Northern District of Georgia vacated its own previous denial of a motion to dismiss in FTC v. Hornbeam Special Situations, No. 17-cv-3094 (N.D. Ga. Oct. 15, 2018). Citing ViroPharma, the court in Hornbeam found that the FTC must satisfy federal pleading standards for a case brought pursuant to the FTC Act section 13(b) by adequately alleging that each defendant is “about to” violate the law – more than a “mere likelihood of resuming the offending conduct” – and called on the FTC to amend its pleading accordingly.

As an initial matter, the Hornbeam court determined that the language of section 13(b) “creates a precondition to the FTC’s statutory authorization to bring suit . . . .” such that the FTC “may only sue when it has a ‘reason to believe’ that a violation of law is occurring or about to occur . . . .” While the Commission’s decision to bring suit may be “committed to agency discretion” for purposes of the Administrative Procedure Act, the FTC must still meet Fed. R. Civ. P. 8 pleading requirements to be entitled to relief. Rule 8 requires that a complaint “plead[] factual content that allows the court to draw the reasonable inference” that the plaintiff is entitled to relief. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

The court further reasoned that it would be odd to simply defer to the FTC with respect to whether the requirements of section 13(b) have been met, given that the FTC’s complaint was based on conduct that ceased long ago. Importantly, the court noted that “[s]ince filing, two Defendants have died,” and it “strains credulity to blindly accept that the dead men are violating (or about to violate) any laws.” The court also rejected the FTC’s argument that the standard for “about to violate” should be whether misconduct in question is “likely to recur” – analogous to the showing required to establish that a request for injunctive relief is not moot. Instead, it found that the plain meaning of “about to” implies “imminence, as if the offending action could be resumed with little delay.” This is so, the court held, despite the fact that once the FTC has adequately pleaded a claim under section 13(b), it is only required to demonstrate a likelihood of recurrence to justify injunctive relief.

The Hornbeam court lamented past judicial rulings that allowed section 13(b) to expand beyond its statutory language, noting that section 13(b)

[I]s not, on its face, a broad and sweeping avenue of relief, certainly not as broad as it has become through generous interpretation. It is simply an injunctive remedy, a stop-gap to discontinue ongoing or threatening conduct violative of the laws the FTC enforces. . . . If applying the plain language means that the showing to get into the courthouse is greater than the one required once the FTC is inside . . . that is fine because that is what the language demands.

Following its substantive holding, the court went on to skewer at length “the ubiquitous holding of the courts of appeals that equitable relief under [§ 13(b)] other than injunctions is available.” It noted that additional equitable remedies such as disgorgment are “not supported by the plain text of the statute, but ha[ve] been read into it by well-meaning judicial efforts to effect the ‘purpose’ of the statute.” The court specifically noted that, while section 13(b) by its language does not specifically permit other forms of equitable relief, another provision of the FTC Act does: Section 19 (15 U.S.C. § 57b). By pursuing equitable relief almost exclusively under section 13(b) rather than section 19, the FTC has effectively written section 19 out of the statute in an effort to avoid that section’s 3-year statute of limitations.

While admitting itself bound to the higher authority of the circuit court rulings permitting disgorgement and restitution under 13(b), the Hornbeam court advised that “meta-textual pontifications seem good in the short run, but a long journey on even a narrowly wrong heading can be ruinous.” Thus, the court committed itself to preventing “further deterioration of this statutory scheme.”

Given this further attack on the FTC’s authority, and following on the heels of ViroPharma, an eventual appeal of the court’s holding in Hornbeam seems inevitable. If the FTC’s actions in ViroPharma are any indication, the Commission may choose to stand on its existing pleading in Hornbeam and allow the court to issue an order of dismissal that can be appealed to the Eleventh Circuit.

By Kurt R. Karst —

The rubber has finally hit the road on an idea that earlier this year was considered (and rejected) by Congress, supported in a presidential tweet, and promoted by FDA Commissioner Gottlieb and HHS Secretary Azar. A proposed rule released today by CMS would require pharmaceutical companies to disclose wholesale acquisition cost (WAC) in TV advertisements for prescription drugs.

The rule is relatively straightforward. Any advertisement on TV (including broadcast, cable, streaming, or satellite) for a prescription drug or biological would have to contain 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 consistent with the current Medicare Part B definition relating to average sales price reporting. 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 would have 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 (though not the proposed rule itself) states that manufacturers would also be permitted to include truthful and non-misleading information about a competing product’s WAC.

The proposed 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 “shame” list on CMS’s web site. However, CMS anticipates that 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.”

The preamble explains that the purpose of this regulation is to reduce the price to consumers of prescription drug and biological products by providing “relevant information” to Medicare and Medicaid beneficiaries so they can make informed decisions to minimize their own out-of-pocket costs and costs to Medicare and Medicaid.

The critical question is whether the WAC is “relevant information.” WAC is defined as the manufacturer’s list price to wholesalers or direct purchasers. Consumers virtually never pay the WAC for a drug. Will the WAC mean anything to consumers or just confuse them? CMS has a three-fold response to the question of relevance. First, according to the preamble, WAC is relevant to patients in the deductible period who have to pay cash. CMS explains that over 40% of beneficiaries in the commercial market are in high deductible plans, under which they may have to pay thousands of dollars in drug costs. However, this fact is of little relevance to Medicare or Medicaid, under which drug deductibles are relatively low or absent. Moreover, while patients in a Medicare or Medicaid deductible period must pay cash, that payment is rarely based on WAC. For example, Medicare Part D enrollees in the deductible period pay the “negotiated price,” which is essentially the amount the Part D plan reimburses the pharmacy for the drug, and which may be quite different from the WAC.

The second reason why WAC is purportedly relevant is that “plan designs are built off of list price, because the negotiated rebate is not paid until months after the product was dispensed.” This statement is incorrect because drug costs taken into account in the design of plan formularies are not list prices, but the plan’s costs for a drug net of manufacturer rebates. Moreover, even if the statement were correct, the WAC would not inform the beneficiary what his or her own expense will be for the advertised drug.

Thirdly, CMS asserts that WAC is relevant to patients who pay a percentage of the list price as co-insurance. That is partially true in some cases. For drugs on specialty or non-preferred tiers, patients may pay a percentage of the allowed amount, though that             amount will not necessarily be the WAC. More importantly, CMS neglects to say that in the overwhelming majority of cases, the copay is a fixed dollar amount, to which the WAC has no relevance.

In short, CMS is correct that there are categories of patients who pay cash or have percentage-based copays, to whom WAC would be at least an indicator of out-of-pocket cost. However, for the large majority of Medicare and Medicaid beneficiaries – those who are insured and have fixed-dollar copays – WAC is irrelevant at best. CMS should consider the possibility that, for this majority, no information in a TV ad is better than confusing information. An insured individual who sees a high WAC in a TV ad may be discouraged from even discussing the drug with his or her physician, not understanding that his or her out-of-pocket expense is a small fraction of that amount. A patient who sees a TV ad comparing the WAC prices of two competing drugs might explore only the one with the lower WAC, though the co-pay for that drug may be the same as, or even greater than, that of the other product. On the other hand, in the absence of any price information in TV ads, an interested patient seeks out accurate and truly relevant information. The patient checks with his or her physician to determine the best treatment, with the insurance plan to find out the actual out-of-pocket cost, and then makes an informed decision.

The preamble addresses a First Amendment objection that will undoubtedly by raised by commenters, and possibly litigants. Freedom of speech encompasses a right not to speak. CMS explains that “courts have upheld required disclosures in the realm of commercial speech where the disclosure reasonably relates to a government interest and is not unjustified or unduly burdensome such that it would chill protected speech.” While few would disagree that CMS has a substantial interest in reducing drug costs for government programs and beneficiaries, it is questionable whether requiring disclosure of information that is of modest relevance to some patients, is of no relevance to most patients, and is potentially confusing is an approach that is reasonably related to that interest.

The proposed rule will be published in the Federal Register on October 18 and CMS will accept comments until December 17.

By Kurt R. Karst —

If we’ve said it once, we’ve said it a thousand times: timing matters when it comes to pretty much anything concerning Hatch-Waxman. . . especially Paragraph IV 180-day exclusivity. And the new Competitive Generic Therapy (“CGT”) 180-day exclusivity regime created by the 2017 FDA Reauthorization Act (“FDARA”) (see our summary here) is no different in that respect compared to “traditional” Paragraph IV 180-day exclusivity.  But that’s about where the similarity ends, as FDA has opined in a new Letter Decision concerning CGT 180-day exclusivity for Potassium Chloride Oral Solution USP, 20 mEq/15mL (10%) and 40 mEq/15 mL (20%) – the first ever grants of CGT 180-day exclusivity (which we’re now listing under a new tab in our popular 180-Day Exclusivity Tracker.)

As we previously reported, [https://ift.tt/2OoeTJV] FDA designated Apotex, Inc.’s (“Apotex’s”) Potassium Chloride Oral Solution USP, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%), drug products as “Competitive Generic Therapies” and then approved Apotex ANDA 211067 on August 8, 2018. Both drug products are generic versions of Potassium Chloride Oral Solution, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%), approved under NDA 206814.  In approving ANDA 211067, FDA noted:

This exclusivity will begin to run from the date of the first commercial marketing of these CGTs (including the commercial marketing of the listed drug) by Apotex, as specified in section 505(j)(5)(B)(v) of the FD&C Act. Furthermore, in accordance with section 505(j)(5)(B)(v)(I) of the FD&C Act, this 180-day CGT exclusivity will not block approval of other applications until Apotex has commenced commercial marketing.  Please submit a correspondence to this ANDA informing the Agency of the date you begin commercial marketing.  Please also submit notice of first commercial marketing via e-mail to the Patent and Exclusivity Team at CDER-OGDPET@fda.hhs.gov.  This e-mail should be sent the same day you commence commercial marketing.  Reference is also made to the Special Forfeiture Rule for Competitive Generic Therapy in section 505(j)(5)(D)(iv) of the FD&C Act.  Please be aware that, pursuant to this forfeiture rule, you will forfeit your eligibility for the 180-day CGT exclusivity period for Potassium Chloride Oral Solution USP, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%) if you fail to market these CGTs within 75 days after the date on which the approval of this application is made effective. [(Emphasis added)]

Apotex did not begin commercially marketing the drug products until a few weeks later, thus triggering CGT 180-day exclusivity eligibility. (CGT 180-day exclusivity for the 20 mEq/15mL (10%) drug product expires on February 25, 2019, and on March 6, 2019 for the 40 mEq/15 mL (20%) drug product.)  But it’s not what happened after Apotex launched its drug products (thereby triggering exclusivity) that raised some eyebrows at the company, but what happened immediately before FDA received notice from Apotex on August 29, 2018 that commercial marketing had begun for the first of the two launched strengths (20 mEq/15mL (10%)).

Earlier in the day on August 29, 2018 – at 3:44 PM Eastern time – FDA approved Novel Laboratories, Inc’s (“Novel”) ANDA 209786 for Potassium Chloride Oral Solution, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%). Apotex notified FDA through the Electronic Submission Gateway at 9:03 PM on August 29, 2018 that the company initiated commercial marketing of the 20 mEq/15 mL (10%) drug product and apparently “provided an internal email showing that it ordered shipment of this drug product at 4:26 PM on August 29.”  And that’s when the controversy began . . .

Apotex, in a series of letter submissions to FDA, requested that FDA rescind the approval of Novel ANDA 209786. Apotex argued “that upon CGT designation, CGT exclusivity, unless forfeited, prevents FDA from approving additional ANDAs referencing the same drug product until the end of the exclusivity period;” that “the granting of that [CGT] designation perfected Apotex’s right to the two CGT exclusivity periods (one each for the 10% and 20% dosage strengths);” that “interpreting [FDC Act § 505(j)(5)(B)(v)] to mean that exclusivity blocks subsequent applicants only after the first approved applicant has begun commercial marketing ‘reads [FDC Act § 505(j)(5)(D)(iv)] out of the statute;’” and that, in the alternative, “FDA’s approval of Novel’s potassium chloride 10% product was unlawful because FDA approved Novel’s application on the same day (albeit earlier in the day) that Apotex informed FDA that it had begun commercial marketing of its potassium chloride 10% product, and CGT 180-day exclusivity blocks approval of any application otherwise ready for approval that day.”  Novel, represented by Hyman, Phelps & McNamara, P.C., also sent in letter correspondence to FDA addressing Apotex’s arguments.

In an October 2, 2018 Letter Decision, FDA sided with Novel, concluding that the Agency properly approved ANDA 209786 consistent with FDC Act § 505(j)(5)(B)(v), and declining to rescind the ANDA approval.

As to FDA’s reading of FDC Act § 505(j)(5)(B)(v), the Agency concluded that its interpretation follows the plain language of the statute. According to FDA:

Under the plain language of this provision [(i.e., FDC Act § 505(j)(5)(B)(v)(I))], subsequent applicants are blocked only under the condition that the “first approved applicant has commenced commercial marketing.” In the present case, when FDA approved Novel’s ANDA 209786, Apotex had not begun marketing either strength of potassium chloride under ANDA 211067.  Despite Apotex’s commencement of commercial marketing for potassium chloride 10% later that same day, the threshold condition in the statute (i.e., that “any first approved applicant has commenced commercial marketing”) had not been met when FDA approved Novel’s ANDA. . . .  By arguing that a first approved applicant’s CGT exclusivity prevents FDA from approving a subsequent ANDA from the time of the first applicant’s approval, Apotex reads the “commenced commercial marketing” language out of the statute entirely.

As to Apotex’s alternative argument that even if FDA’s approval of a subsequent application prior to commencement of commercial marketing by the applicant that is eligible for CGT exclusivity is lawful, approval must occur prior to the date of commencement of marketing or after exclusivity has run, FDA also shot down this argument. According to FDA:

Apotex’s argument ignores the statutory language that is relevant to this situation.  The section of the provision on which Apotex relies defines the duration of exclusivity for the subsequent applicants that such exclusivity blocks.  However, as described above, the relevant portion of the provision here is the “commenced commercial marketing” clause, which is the language that determines whether a subsequent application can be approved or whether approval is blocked by CGT exclusivity.  The statute does not state or imply that a “date of” rather than a “time of” approach should be used to determine when an applicant with CGT exclusivity “commenced commercial marketing.”  If a first approved applicant has not “commenced commercial marketing” as of the time a subsequent applicant is ready for approval, approval of that subsequent application is not blocked by CGT exclusivity, and the beginning and ending dates of that exclusivity have no bearing on such applications.

FDA’s Letter Decision includes some additional analysis of the CGT 180-day exclusivity provisions that is helpful in understanding the Agency’s position. We understand that FDA is in the process of drafting guidance to clarify the CGT designation process; however, it is unclear when such guidance might be published in draft form.