Attorney East Hampton

By JP Ellison & Alan M. Kirschenbaum —

In United States of America ex rel Streck v. Allergan Inc., a federal False Claims Act (FCA) case alleging that several pharmaceutical manufacturers knowingly calculated false Average Manufacturer Prices (AMPs) that affected their Medicaid rebate payments, the U.S. Court of Appeals for the Third Circuit agreed with the district court that the relator failed to adequately plead such a claim. Hyman, Phelps & McNamara, P.C. represented two of the manufacturers in the case.

We previously posted here about the district court’s decision. The relator alleged that the manufacturers had failed to include so-called “price appreciation credits” as a price adjustment in calculating AMP. The issue considered on appeal by the Third Circuit was whether the relator had pled that the manufacturers had acted “knowingly,” a required intent for an FCA claim. In concluding that the relator had not done so, the court quoted from a D.C. Circuit decision reasoning: “Consistent with the need for a knowing violation, the FCA does not reach an innocent, good-faith mistake about the meaning of an applicable rule or regulations. Nor does it reach those claims made based on reasonable but erroneous interpretations of a defendant’s legal obligations.” (quoting U.S. ex rel Purcell v. MWI Corp., 807 F.3d 281, 287-288 (D.C. Cir. 2015).

Relying on Purcell, the Third Circuit applied a three part test: (1) whether the relevant statute was ambiguous; whether the defendant’s interpretation was objectively reasonable; and (3) whether the defendant was “warned away” from that interpretation “by available administrative and judicial guidance.” With respect to the last item, it is noteworthy that Purcell, citing to the Supreme Court’s 2007 decision in Safeco Insurance Co. of America v. Burr, made it clear that such guidance must be “authoritative guidance” because “[i]n Safeco the Supreme Court explained that informal guidance . . . is not enough to warn a regulated defendant away from an otherwise reasonable interpretation.” The FCA violations alleged by the relator took place between 2004 and 2012. The Third Circuit found that, during that period, the available CMS guidance on calculating AMP in general “failed to articulate a coherent position on AMP and, specifically, price-appreciation credits.” Under those circumstances, the court found that the relator had failed to plead that the defendants were “warned away” from their interpretation that price appreciation credits were excluded from AMP.

Based on the Purcell framework, the Third Circuit agreed with the district court that the manufacturers’ alleged failure to include price appreciation credits as a price adjustmemt in calculating AMP could not sustain an FCA claim, because even if their interpretation was incorrect — which the Third Circuit did not decide but assumed for purposes of its analysis — it was not unreasonable.

It is important to note that, following the period of the violations alleged in the Streck case, CMS did specifically address price appreciation credits. In the preamble to a 2016 regulation, CMS expressed its view that price appreciation credits amount to a price adjustment that should be recognized in AMP. 81 Fed. Reg. 5170, 5228 (Feb. 1, 2016). Therefore, although the Third Circuit’s decision provides helpful support for the proposition that an FCA claim may not be proven based on an innocent mistake about the meaning of ambiguous regulations or guidance, it is questionable whether the exclusion of price appreciation credits from AMP could be defended based on Purcell and the Third Circuit’s decision in Streck after CMS’s 2016 preamble statement.

By John A. Gilbert & Larry K. Houck —

In an effort to address, in Attorney General Jeff Sessions’ words, “the worst drug crisis in American history,” the U.S. Department of Justice (“DOJ”) and the Drug Enforcement Administration (“DEA”), are for the third straight year proposing to reduce the quantity of Schedule II opioid pain medications that can be manufactured. DOJ, Press Release, Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019 (Aug. 16, 2018). For 2019, in addition to reducing the Aggregate Production Quotas (“APQs”) of oxycodone, hydrocodone and fentanyl, DOJ/DEA also proposes to further reduce the quantities of morphine, hydromorphone and oxymorphone. Proposed Aggregate Production Quotas for Schedule I and II Controlled Substances and Assessment of Annual Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2019, 83 Fed. Reg. 42,164, 42,168 (Aug. 20, 2018).

We continue to be troubled by the paucity of scientific and medical support for this three-year trend that has resulted in a dramatic decrease in quotas for much needed pain medicine. Continuing to generally blame the opioid crisis for such reductions is in our opinion short-sighted and pre-supposes that simply reducing the amount of available inventory will reduce abuse and diversion. Moreover, we do not believe the DEA or DOJ is showing appropriate concern for legitimate patients and the impact on medical care.

The DEA must establish APQs on an annual basis which limit the total amount of a certain drug that can be manufactured in a given year. Moreover, each manufacturer must apply for an individual manufacturing quota and the sum of these quotas may not exceed the APQ.

The proposed APQ reductions in 2019 of the six opioids equate to between seven percent (morphine for sale) and 15 percent (oxymorphone for sale) compared to 2018 levels. DEA reduced the APQs for these opioids minimally in 2018, but had reduced them in 2017 by at least 27 percent of 2016 levels, with hydrocodone, fentanyl, morphine and oxymorphone levels reduced by at least 40 percent. The 2017 APQ reductions eliminated a 25 percent buffer that DEA had added to APQs annually between 2013 and 2016 to guard against shortages. See DEA, Press Release, DEA Reduces Amount of Opioid Controlled Substances To Be Manufactured in 2017 (Oct. 4, 2016).

These huge cuts in opioid production will eventually lead to shortages for legitimate medical use. The Attorney General, in discussing the proposed reductions, further observed that “President Trump has set the ambitious goal of reducing opioid prescription rates by one-third in three years.” DOJ, Press Release, Justice Department, DEA Propose Significant Opioid Manufacturing Reduction in 2019 (Aug. 16, 2018). We understand the rationale in proposing to reduce the quantity of highly abused opioids that will be manufactured next year and recognize that state Prescription Drug Monitoring Programs and the Centers for Disease Control and Prevention (“CDC”) opioid prescribing guidelines have led practitioners to prescribe these medications in fewer quantities. However, DOJ/DEA should not make the reductions simply to meet an arbitrary benchmark; the reductions must be based upon meaningful data.

We also note that these reductions come on the heels of DEA recently modifying the criteria it would use to establish quotas. Controlled Substances Quotas, 83 Fed. Reg. 32,784 (July 16, 2018). That rule, which became effective on August 15, 2018, adds two additional factors for consideration:

• The extent of any diversion of the controlled substance; and
• Relevant information obtained from the Department of Health and Human Services, including FDA, the CDC, and the Centers for Medicare and Medicaid Services, “and relevant information obtained from the states.”

However, this DEA rulemaking also fails to provide sufficient rationale or guidance on how DEA will determine what the “extent of any diversion” means. Also, the involvement of the states in the DEA quota process also raises more concern about the impact on DEA’s timely establishing of such quotas. For example, if one state raises objections about the quota for a drug, it appears that DEA may then need to hold hearings on the quota which could again result in delays in granting of individual manufacturing quotas.

In short, reducing the APQs in 2019 may lead to less opioid medications available for potential diversion from legitimate channels to misuse and abuse in 2019, but will also result in less supply that is available for the millions of patients who legitimately need them. Simply reducing the quantity of opioids manufactured does not in itself ensure that only legitimate patients, rather than those who would misuse and abuse the medications, will have access to them. There is the risk with reduced APQs that supply will not meet legitimate needs if doctors and other practitioners are not diligent about issuing prescriptions only to the patients who need them.

Written comments on the proposed APQs must be postmarked on or before September 19, 2018.

By Kurt R. Karst —

Last month, Representatives John Sarbanes (D-MD) and Bill Johnson (R-OH) introduced H.R. 6478, the “Biosimilars Competition Act of 2018.”  The bill would amend the Public Health Service Act (“PHS Act”) to require that certain agreements between biosimilar applicants and reference product sponsors be reported to the Department of Justice (“DoJ”) and to the Federal Trade Commission (“FTC”).  According to Rep. Sarbanes, the bill is intended to address so-called “pay-for-delay” agreements.

Specifically, H.R. 6478 would amend PHS Act § 351(l) to add item “(10)” to require the reporting of any agreement between a biosimilar applicant and a reference product sponsor, or an agreement between two or more biosimilar applicants, regarding the manufacture, marketing, or sale of the biosimilar product(s) for which a 351(k) aBLA was submitted to FDA, or the brand-name reference product. Such agreements also include agreements that are contingent upon, provide a contingent condition for, or that otherwise relate to an agreement regarding the manufacture, marketing, or sale of the biosimilar or reference products. Agreements that solely concern purchase orders for raw material supplies, equipment and facility contracts, employment or consulting contracts, or packaging and labeling contracts would be excluded from reporting under H.R. 6478.

While the House considers H.R. 6478, the United States Senate is considering legislation concerning the reporting of patent settlement agreements involving biosimilars. Specifically, S. 2554, the “Patient Right to Know Drug Prices Act,” would amend the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) – and, in particular, Sections 1111-1118 – to require that certain agreements reached between biosimilar applicants and reference product sponsors be reported to the FTC. Section 1112 of the MMA requires that certain types of agreements executed on or after January 7, 2004 between a brand-name drug company and a generic drug applicant be filed with the FTC and the DoJ; MMA § 1113 states that “[a]ny filing required under Section 1112 shall be filed with the DoJ and the [FTC] not later than 10 business days after the date the agreements are executed;” and MMA § 1115 provides that the failure to timely file applicable agreements may result in a civil penalty of $11,000 for each day that a required filing has not been made. (For additional information on current FTC reporting requirements and reports, see here and here.)

The reporting requirements proposed in S. 2554 for biosimilar agreements would be similar to the requirements currently in place for drug products regulated under the FDC Act. S. 2554 is making its way through the Senate as calls for reporting of biosimilar agreements to the FTC have increased in the past couple of months (see here).

By Jeffrey N. Gibbs —

Since 1992, the Food and Drug Administration’s (FDA’s) efforts to regulate laboratory developed tests (LDTs) have been one of the most controversial device regulatory topics.  We have written about this topic multiple times (see our list at the end of this post).

The focus of many of these posts has been FDA’s efforts to use guidance documents to regulate LDTs under the Federal Food, Drug, and Cosmetic Act.  In short, we have questioned the legality of those efforts, and given the constraints imposed by the existing legal framework, its desirability.

However, there is another way to approach LDT regulation: by enacting legislation.  That would address the legality issue, and, if properly crafted, its desirability.  A new law could provide an unassailable legal framework, while also addressing multiple concerns that have been raised: LDTs and kit manufacturers should be on a level playing field; the regulatory requirements should be based on the clinical role and risk of the test, not whether it was an LDT or distributed test kit; the role played by laboratories in innovation and meeting underserved populations; recognition that labs are already subject to extensive regulation under the Clinical Laboratory Improvement Amendments (CLIA); etc.  FDA was asked to provide Technical Assistance (TA) regarding legislation, the Diagnostic Accuracy and Innovation Act (DAIA), that is designed to accomplish these and other goals.

In response, FDA went much further than providing technical comments on the legislation.  FDA has instead advanced a different framework, with different statutory language, which would substantially change the regulatory regime for in vitro diagnostics (IVDs).  As FDA said in accompanying comments, the agency is “taking a fresh look at how the Agency is encouraging the development of innovative tests and continuous improvements to diagnostics already on the market.”  Underscoring that the TA is not just tweaking existing mechanisms, FDA says it “believes it is necessary to create pathways” (emphasis added).

The Medical Device Amendments of 1976 placed diagnostics into the same category as all other devices.  The definition of device included the term “diagnosis,” but otherwise did not recognize that IVDs existed except as part of the broader world of devices.  Although the statute has been amended multiple times since then, diagnostic products have continued to be lumped in with all other devices.  The issue that FDA has decided to address head on is whether that should continue.  And FDA answered with a strong “no,” by introducing novel concepts such as “priority review,” “precertification,” “provisional approval,” and “test groups.”

FDA’s TA document is not tinkering with the regulatory regime for IVDs. It is a revamp of how all IVDs should be regulated, LDTs and distributed diagnostic products alike.  (DAIA, of course, also proposed significant revisions to how diagnostic tests are regulated; the purpose of this blog is not to compare and contrast the new proposals.  Notably, the TA does not attempt to address the role of CLIA.)

For LDTs, it would mean a new regulatory framework.  Some labs have voluntarily submitted 510(k)s or premarket approval applications (PMAs) to FDA.  If FDA’s proposal were adopted, labs and manufacturers would be subject to the same criteria for when applications would need to be submitted.  Labs would also be subject to other FDA requirements beyond the submission of marketing applications.

Putting kits and LDTs on the same footing, though, is not the most striking aspect of the proposal.  Rather, it is FDA’s rewriting of the IVD regulatory process, both for entering and remaining on the market.  Many of the regulatory terms and constructs that have governed IVD regulation for decades ‒ would be discarded.  A whole new vocabulary would be adopted, complete with their own statutory definitions, e.g. “in vitro clinical test” and “developer” and “test group” and “analytical validity” and “first-of-a-kind.”  This legislation, although it borrows from some past concepts, should be viewed as revolutionary, not evolutionary.

We will be writing about more of the details later.  One example, though, suffices to show how FDA’s proposal would dramatically alter the regulatory system.  For 42 years, the primary route for FDA review of new IVDs has been the 510(k) premarket notification.  To obtain a 510(k) clearance, a company has had to show “substantial equivalence” to a “predicate device.”  Those terms ‒ 510(k), substantial equivalence, and predicate device ‒ have been part of regulatory lingo for over four decades.  Under FDA’s framework, they would disappear.

The concept of “predicate device” is dropped.  A new phrase is created: “test group.”  The squishiness of the term “predicate device” vanishes; a more precise and multifaceted term is created.   A test group means tests that have the following common elements: 1) the substance measured, 2) the type of specimen, 3) the test method, 4) the test purpose, e.g., screening or monitoring, 5) the disease or condition, 6) the patient population, and 7) the place of use, e.g., OTC or clinical lab.  Yet, the role the “test group” concept plays is not analogous to that of ‘predicate devices.’”  The TA is not simply displacing one definition with another, but falling within – or outside ‒ a “test group” has different consequences than being able to cite a single device as a predicate for a 510(k), e.g., it becomes a factor in determining whether a modification to a marketed device needs prior approval.

FDA’s TA will unquestionably be controversial.  There will certainly be numerous questions about the specifics.  One provision reads: “any interested person may obtain review, in accordance with section [appeals], of an order of the Secretary approving an application.”   As written, this would suggest third parties could readily challenge an approval obtained by another company, an outcome that FDA would not want.  Another example: limiting the criterion for exemption for rare diseases to fewer than 8000 patients in the U.S. who require testing will substantially limit the utility of this provision. And another one: The TA would also confer upon FDA the power to withdraw the approval of a product if “there is a reasonable likelihood that the in vitro clinical test would cause death or serious adverse health consequences, including by causing the absence, delay, or discontinuation of appropriate medical treatment.”  This would give FDA a power that it currently lacks for 510(k)-cleared tests, as well as tests that have gotten de novo authorization.

Rewriting the laws for IVDs is a complicated business, and every word needs to be scrutinized, both for what is intended and for potential unintended consequences.  There are multiple pieces to the new jigsaw puzzle FDA has proposed.  When all the pieces are placed together, will they create a coherent image?  In its transmittal explanatory note, FDA states, “DAIA could have the unintended consequence of creating inconsistencies in the marketplace.”  FDA’s proposal also needs to be carefully vetted for its own possible unintended consequences.

But beyond the question of the specifics of the legislation, there is the most basic question of all: should the laws governing the entry on to the market of IVDs be updated.  There are good reasons to say the answer is yes.

Over time, the fit between novel IVDs and the existing regulatory framework has become increasingly uneasy.  Today’s IVDs are much more heterogeneous than when the FDC Act was enacted.  IVDs play widely divergent roles.  They are evaluated in ways differently than most other products, with the need to show analytical performance.  (The TA has multiple provisions explicitly dealing with analytical testing.) Clinical performance is judged through different kinds of metrics, such as sensitivity and specificity, positive predictive value and negative predictive value, positive and negative percent agreement.  Those concepts don’t always align neatly with the language of substantial equivalence or even de novo.  Yes, other devices have their own vocabulary and requirements, but this issue of fit is even more pronounced for IVDs as a class of products.

More pressing, the rate of change in the industry is accelerating.  With next generation sequencing and proteomics and metabolomics and artificial intelligence and deep learning and liquid based biopsies (predicted to be a $2 billion market in four years) and other new tools and methods, the ability of IVDs to be cut or tugged into the standard regulatory Procrustean bed is fraying.  The challenge of squeezing these new tests into the existing framework is made even worse by the need for these IVDs to be updated rapidly.  The plodding model of obtaining 510(k) clearance/de novo/PMA using standards that do not take into account some of the unique attributes of IVDs, assess whether a change requires a new application (note that the guidance document for when to submit a 510(k) for changes devotes many pages to IVDs), and then submitting and waiting for a decision simply will not work for some of these new products, where the clinical market needs much faster modifications and updates.  The current approach also causes its own headaches for FDA and how it does reviews and allocates resources.  The statutory provisions governing regulation and product review should be more explicitly based on risk.

The momentum for overhauling the way IVDs are regulated is growing.  Multiple stakeholders have endorsed the concept. FDA’s TA is consistent with the principle that change is necessary, albeit there are numerous differences in approach and details.  FDA was asked for its views, and it was not going to throw away its shot by limiting itself to minor technical comments.

Last week, two of my colleagues began their blog post by quoting Foreigner.  For this post, a somewhat more obscure song reference (War of the Worlds) seems appropriate.  While I would not analogize FDA’s TA to post-apocalyptic Earth after a Martian invasion, the lines “In a brave new world  . . . We’ll start all over again” seem appropriate for labs, manufacturers, and FDA.

FDA Law Blog LDT Posts

• FDA Considers Fundamental Shift in Federal Oversight of Laboratories (link) – June 20, 2010
• FDA Reopens Oversight of Laboratory-Developed Tests Comment Period; Will Accept Comments Until September 15 (link) – August 19, 2010
• FDA Plans to Regulate Laboratory Developed Tests; Many Questions Remain as to Details of Regulatory Scheme (link) – July 27, 2010
• FDA Commissioner Calls for More Active FDA Regulation of Laboratory-Developed Tests, and ACLA Promptly Responds with a Petition Opposing FDA (link) – June 5, 2013
• FDA Notifies Congress of Draft Guidance Documents Regarding LDTs (link) – Aug. 4, 2014
• TRICARE Announces Demonstration Program that Would Expand LDTs Eligible for Coverage During 3-Year Period and Possibly Beyond; Coalition Urges FDA to Create Single Framework for both Diagnostic Kits and LDTs (link) – June 27, 2014
• Senators Send Letter to OMB Requesting Release of LDT Draft Guidance (link) – July 6, 2014
• FDA Issues Draft LDT Guidance Documents; Provides 120-Day Comment Period and will Host October Public Meeting (link) – October 2, 2014
• CDRH Holds Webinar on Draft LDT Guidances – Highlights that Guidances Hold More Questions than Answers (link) – October 28, 2014
• OIR Head Alberto Gutierrez Discusses Draft LDT Framework at Federal Laboratory Advisory Committee Meeting; Provides Additional Insights on Agency Plans to Regulate LDTs (link) – November 11, 2014
• LDT Battle Lines Drawn: FDA Announces Jan. 8-9 Public Meeting on LDT Framework; Lab and Medical Groups Send Letter to FDA Commissioner Urging Notice-and-Comment Rulemaking; FDA and Patient Groups Advocate for LDT Framework on Hill (link) – November 25, 2014
• As Part of Effort to Prepare 21st Century Cures Legislative Discussion Draft, House Committee Seeks Comment on FDA Proposed Framework to Regulate LDTs (link) – December 12, 2014
• As Snow Falls, We See a Flurry of Developments Related to FDA Efforts to Actively Regulate LDTs (link) – February 22, 2015
• Diagnostic Test Working Group Proposes Alternative to FDA’s LDT Framework (link) – April 16, 2015
• Molecular Pathologist Group Proposes Legislative Solution to Modernize CLIA, Including CMS/Third-Party Premarket Review, as Substitute for FDA’s LDT Framework (link) – August 14, 2015
• Back from Break: FDA Issues Letter to Pathway Genomics for Cancer Screening LDT; Proposed Legislative Alternatives to FDA Framework Continue to Emerge (link) – September 29, 2015
• FDA Plans to Issue Final LDT Framework in 2016; Subcommittee Members, CMS and FDA Officials Critique Proposed Legislative Approach that Would Give CMS LDT Premarket Review Authority (link) – December 20, 2015
• FDA Will Not Finalize Draft LDT Guidances in 2016 – But That’s Not the End of LDT Regulation (link) – November 21, 2016
• No Final LDT Guidance, But FDA Provides Insight into What a Future Guidance Might Contain (link) – January 26, 2017
• LDTs: The Saga Continues (link) – May 14, 2017

By Hyman, Phelps & McNamara, P.C. —

The American Conference Institute’s (“ACI’s”) popular “FDA Boot Camp” – now in its 32nd iteration – is scheduled to take place from September 26-28, 2018, at the Omni Parker House, in Boston, Massachusetts. The conference is billed as the premier event to provide folks with a roadmap to navigate the difficult terrain of FDA regulatory law.

ACI’s FDA Boot Camp will provide you not only with the essential background in FDA regulatory law to help you in your practice, but also key sessions that show you how this regulatory knowledge can be applied to situations you encounter in real life. A distinguished cast of presenters will share their knowledge and provide critical insights on a host of topics, including:

• The organization, jurisdiction, functions, and operations of FDA
• The essentials of the approval process for drugs and biologics, including: INDs, NDAs, BLAs, OTC Approval, the PMA process and the Expedited Approval Process
• Clinical trials for drugs and biologics
• Unique Considerations in the approval of combination products, companion diagnostics, and stem cell therapies
• The role of the Hatch-Waxman Amendments in the patenting of drugs and biologics
• Labeling in the drug and biologics approval process
• Off-Label use and a New World Order
• cGMPs, adverse events monitoring, risk management and recalls

Highlights from this year’s program include an up-to-the-minute “Ripped from the Headlines” section covering recent hot issues such as the FDA Reauthorization Act, states attempts to affect drug pricing, and the potential effects of the mid-term elections on federal legislation and FDA regulations.

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst and Axinn, Veltrop & Harkrider LLP’s Suchira Ghosh will present in a session titled “Navigating the Approval Process for Drugs and Biologics.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: P10-999-FDAB18.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference.

By Riëtte van Laack —

As readers of this blog know, the Agricultural Marketing Service of the USDA (AMS) is mandated to implement the 2016 National Bioengineered Food Disclosure Standard (“NBFDS” or the “Standard”). Congress set a time line for AMS to take certain actions toward implementing the Standard.  AMS, however, has had trouble staying on schedule.  Although the Agency was required to issue the final regulation and standard for disclosure statements on bioengineered (BE) foods by July 2018, in fact it issued the proposed rule barely three months before that deadline.  It is, therefore, no surprise that AMS did not meet its statutory deadline.  And it is questionable whether AMS will be able to complete the rulemaking any time soon.  According to the latest count, it received more than 14,000 comments to the proposed NBFDS rule.

Meanwhile, the Center for Food Safety (CFS) has consistently acted to keep pressure on AMS, and move the rulemaking along. In September, 2017, CFS sued AMS for failing to release in a timely manner the results of a study on possible technical challenges to obtaining BE information through electronic or digital disclosure methods mandated by NBFDS.  Shortly after CFS filed its complaint, AMS did release the study results.

On July 3, 2018, CFS again sued the government in connection with the NBFDS. This time it sued the Office of Budget Management’s (OMB’s) for its alleged failure to produce records in response to CFS’s FOIA request.  As described in the complaint, CFS submitted a FOIA request to OMB on May 3, 2018 and as of early July, a mere two months later, had not received the requested documents.

Now, a week ago, two days after the statutory deadline, CFS (together with the Center for Environmental Health) has again sued AMS. This most recent suit alleges that AMS has unreasonably delayed the BE labeling rulemaking and has failed to meet the mandatory deadline set by Congress, in violation of the Administrative Procedures Act (APA) § 702.  In their complaint, Plaintiffs take the position that AMS’s “failure to implement a national disclosure standard is withholding information from the public, a practice that is inimical to the democratic process. U.S. consumers have already waited decades for mandatory GE labeling, and further delay of the final rule has caused still more harm to the public and the stakeholders.”

Plaintiffs ask that the Court order AMS “to finalize and issue the regulations implementing the statute as soon as reasonably practicable, according to a Court-ordered timeline.” They further ask that the Court retain jurisdiction to ensure compliance with the ordered time line.

We will be monitoring further developments.

By Sara W. Koblitz & Kurt R. Karst —

Well, we haven’t quite waited the lifetime that Foreigner did, but it’s exciting nonetheless. Only about one year after signing the provisions into law, FDA announced the approval of the first generic drug with a Competitive Generic Therapy (“CGT”) designation: ANDA 211067 for potassium chloride oral solution in 20 and 40 MEQ/15 mL strengths. Created to expedite the development and approval of generic drugs for reference products that lack significant competition, a CGT designation offers applicants benefits, like enhanced communications with FDA officials, expedited ANDA review, and potential eligibility for CGT exclusivity. A reference product that lacks significant competition is one for which there is no more than one approved ANDA for a specific reference product listed in the Orange Book.

In announcing the approval of Apotex ANDA 211067, FDA Commissioner Gottlieb touted the effectiveness of the Agency’s new Drug Competition Action Plan, explaining that the product was approved in its first cycle of review. Potassium chloride oral solution is intended for the treatment and prevention of hypokalemia (low potassium blood levels) in patients on diuretics when dietary management with potassium-rich foods is insufficient or diuretic dose reduction is not possible.

We haven’t yet seen the ANDA Approval Letter or any approval materials, and there are several Potassium Chloride products listed in the Orange Book. Only one of the Potassium Chloride products is included on the current List of Off-Patent, Off-Exclusivity Drugs, FDA’s “hit list” for generic manufacturers, published in December 2017 (another Potassium Chloride product was included on the original June 2017 list, but because an ANDA referencing the NDA has been approved since the previous list publication, it was moved to the Appendix). By deductive reasoning, the Reference Listed Drug (“RLD”) for Apotex’s ANDA is Potassium Chloride approved under NDA 206814 in December 2014. Apotex’s version is the second approved generic drug referencing NDA 206814, with another generic drug manufacturer receiving approval of ANDA 210041 without CGT status on July 19, 2018.

Apotex’s CGT-designated ANDA additionally received CGT exclusivity, which provides a “first approved applicant” for a product with “inadequate generic competition” with 180 days of exclusivity. A “first approved applicant” is defined in the statute as (1) any applicant with an ANDA approved on the first day that any ANDA for a designated CGT is approved; (2) that is not eligible for Paragraph IV 180-day exclusivity; and (3) is not a drug for which all drug versions have forfeited eligibility for 180-day exclusivity. 21 U.S.C. § 355(j)(5)(B)(v)(III)(bb). “Inadequate generic competition” is defined as a drug for which there is no more than one approved ANDA for the corresponding reference product. 21 U.S.C. § 356h(e)(2). Assuming Apotex starts commercially marketing within 75 days of approval, a subsequent generic will not be approved to market for 180 days after launch. However, this exclusivity will not preclude the marketing under ANDA 210041, which received approval prior to the Apotex even though Apotex is technically the “first approved applicant.” This is because “first approved applicant” applies only to CGT-designated applicants.

Apotex has only 75 days to start commercially marketing to block the approval of other applicants for 180 days, but nothing in the statutory language precludes FDA from approving other applicants prior to Apotex’s commercial launch (and the triggering of CGT 180-day exclusivity). The statute prohibits FDA from approving subsequent applicants only if the first approved applicant has commenced commercial marketing. And applicants approved prior to Apotex’s commercial launch wouldn’t be blocked from marketing during Apotex’s 180- day exclusivity period because the statute blocks only the approval of a subsequent applicant for 180 days after commercial launch – not the marketing. Contrast this with Paragraph IV 180-day exclusivity, which blocks the approval of a subsequent applicant after a first applicant has submitted an application containing a Paragraph IV certification thereby preserving the first applicant’s exclusivity until commercial launch or forfeiture.

Once Apotex actually starts commercially marketing, the CGT exclusivity will block the approval of all applications for the RLD. This too differs from 180-day exclusivity for Paragraph IV filers, which blocks approval of only ANDAs containing Paragraph IV certifications.

Apotex has significant incentive to start commercial marketing as soon as possible, but it will be interesting to see how all of these potential scenarios play out if Apotex delays.

We talked to our friend, Terri Stewart of Abraxeolus Consulting (and former VP of Global Regulatory Policy, Intelligence & Compliance at Teva Pharmaceuticals) about how the CGT program came about. Terri is credited with developing the CGT pathway (and therefore, we’ll say she’s the Mother of the CGT Program). Here’s what Terri had to say:

In 2015, Congress began paying very close attention to rising prices of several older medicines. After oversight hearings to examine the steep price increases of medicines such as Daraprim, Epipen, Nitropress, and Isuprel, they passed legislation that would impose an additional rebate or consumer price index (CPI) penalty on generic medicines that increase their prices beyond the rate of inflation. However, this did little to solve the underlying problem, due in large part to the fact that these medicines, while on the market for decades, were brand drugs. Generic manufactures had either not targeted or not successfully gotten approval for these medicines, the step the health system relies upon to decrease prices. When the FDARA legislation presented an opportunity to once again address the issue and create a way to insert competition into the market it was the Schrader and Bilirakis offices that sought the advice of the pharmaceutical industry to find a new policy. I worked closely with their staff to develop what is today the Competitive Generic Therapy exclusivity, an incentive not for the filing of an ANDA for one of these older medicines but a benefit that is bestowed upon approval. Since passage of the legislation, I have discussed with many in the industry the impact that this has had on product selection and in may ways the return for these medicines of the promise of generic drugs – to insert competition into the market.  We often take for granted the impact that generics have for patients until we see these instances where they are not present within the life cycle of a medicine. With today’s first approval under the new pathway, I am hopeful that our efforts to solve one of the key drug pricing issues of today will continue to be successful.

Thanks Terri! We look forward to seeing additional CGT approvals and what new and interesting 180-day exclusivity issues might arise.

By Jennifer M. Thomas —

Last month, FDA announced the creation of a new Drug Shortage Task Force, intended to address continuing shortages of medically necessary drug products. The Task Force expands FDA’s existing group focused on drug shortages and, according to Commissioner Scott Gottlieb, will “delve more deeply into the reasons why some shortages remain a persistent challenge.” Indeed, drug shortages have been a critical issue for years, yet some shortages linger despite FDA’s regulatory focus and the serious impacts on healthcare.  It is unclear whether the new Drug Shortage Task Force will uncover any new causes of shortages, as these have been the subject of considerable investigation and scholarship already – a more important goal is the Task Force’s aim of seeking new solutions to address those causes.

The Agency’s recent announcement came on the heels of its Annual Drug Shortages Report to Congress, which reported 39 new drug shortages in 2017. It also responds to a June 15, 2018 letter from a bipartisan group of U.S. Senators requesting FDA to:

[D]evelop a report and recommendations to Congress regarding the root causes of drug shortages and the authorities FDA and other agencies need to address these causes and ensure that appropriate supplies of essential medications are always available.

In comments discussing the creation of the Drug Shortage Task Force, Commissioner Gottlieb implied that new strategies may be in the works relating to federal reimbursement policies, which would attempt to address the economics that often contribute to or perpetuate drug shortages. Namely, Commissioner Gottlieb said that FDA, the Center for Medicare and Medicaid Services, and the Department of Veteran’s Affairs, would be investigating how they could adjust reimbursement policies to increase investment in manufacturing for certain drugs prone to shortage.

Even before its recent announcements on the establishment of the Drug Shortage Task Force, FDA had renewed its focus on manufacturing quality metrics programs, announcing a Quality Metrics Feedback Program after a lengthy hiatus. One of the primary goals of quality metrics programs is to predict and prevent supply disruptions that can cause drug shortages.  However, as we noted earlier this year, the Agency’s most recent guidance on such programs seemed to take a step back from the goal of requiring drug manufacturers to establish a quality metrics program.  The Feedback Program seeks information from applicants and manufacturers who have voluntarily implemented quality metrics programs.  Industry initially objected to a mandatory quality metrics requirement as overly burdensome, at least as proposed by the Agency in 2015, and the Agency’s current statutory authority to implement such a requirement is ambiguous. The Senators’ recent bipartisan request, specifically seeking information on “authorities FDA and other federal agencies need” may encourage FDA to seek a legislative fix to the latter problem, at least.

Of course, FDA cannot prevent or resolve every problem that leads to a critical drug shortage – at least not within its current statutory authority. CDER Deputy Director for Regulatory Affairs, Dr. Douglas Throckmorton, made that clear in his recent detailed description of three ongoing drug shortages. We would welcome the thoughts of our readers as to the feasibility of FDA’s current ideas to combat critical drug shortages, and any new strategies to address shortages that have not been discussed here.

By Riëtte van Laack —

As readers of this blog may recall, last year, FDA issued a draft guidance describing how FDA would prioritize enforcement and regulatory actions regarding homeopathic drug products marketed in the United States. This new guidance document, once finalized, would replace the compliance policy guide, CPG 400.400, which had been in use for approximately three decades.

FDA’s new draft guidance was not well-received by the homeopathic community. Comments submitted show a concern about the loss of the CPG 400.400 which provided clear guidance about the manufacturing and marketing of homeopathic drug products. In contrast, the new guidance was considered vague and created uncertainty.

Concerned that the new guidance would reduce the access to homeopathic products, Americans for Homeopathy Choice submitted a Petition to FDA requesting that FDA convert the existing CPG to regulations and establish an advisory committee.

Americans for Homeopathy Choice is a non-profit advocacy organization that “exist[s] to ensure consumer access to homeopathic medicines that meet the standards for strength, quality, and purity set forth in the Homeopathic Pharmacopoeia of the United States.”  The organization previously met with FDA and submitted detailed comments to the draft guidance. Their Petition is the organization’s response to FDA’s invitation for alternatives to its approach in the draft guidance.

The three main requests by the organization are 1.) Withdrawal of the 2017 draft guidance; 2.) the establishment of an advisory committee consisting of licensed or certified homeopathic practitioners and academicians and consumers of homeopathic medicines; and 3.) The establishment of regulations for homeopathic products by converting a slightly modified CPG. In the interim, the current version of the CPG would continue to be the guiding document.

Comments may be submitted through Jan. 28, 2019.