Attorney East Hampton

By Riëtte van Laack —

On June 26, FDA announced a public meeting to discuss the implementation of the Nutrition Innovation Strategy (NIS), a broad initiative intended to promote public health through efforts to empower consumers to make better and more informed decisions about their diets and health, foster the development of healthier food options, and expand the opportunities to use nutrition to reduce morbidity and mortality due to chronic disease. The public meeting took place on July 26.  Agenda items included updating standards of identity (SOIs), ingredient statements (naming of ingredients) and consumer education.

FDA Commissioner Scott Gottlieb’s opening remarks focused on standards of identity and were consistent with his written statement released immediately after the remarks. Dr. Gottlieb repeated and elaborated on his concerns regarding plant-based products using dairy related terms.

During the remaining presentations, discussions, and comments, SOIs were by far the most frequently mentioned topic. Besides the issue of using defined terms from SOI regulations in naming of products that do not meet the SOI, discussions addressed a need for a revision of SOIs to allow innovation of healthier options (e.g., some standards do not allow salt replacement by salt substitutes); questions as to the purpose of SOIs (is it related to nutrition or to assure authenticity of the food, or both); and consumer understanding, including how on-line purchasing will affect the need for, and understanding of, SOIs.  A recurrent suggestion was for FDA to consider amendments that applied to all SOIs (horizontal regulations) instead of reviewing and revising the more than 300 SOI regulations one by one.

Comments related to ingredient statements were limited and included vitamin naming (last year, DSM petitioned FDA to permit declaration of vitamins by letter and number rather than by chemical name), and use of all caps (which presumably makes the ingredient statement difficult to read).

The breakout sessions titled Claims and Statements Used on Food Labels / Icon for “Healthy” highlighted the need for a reconsideration of the “healthy” claim, as well as the wide diversity of opinion on what constitutes “healthy” and how the term should be defined. Concerns about the icon related to competition with other icons and potential overconsumption of foods carrying the icon.  Several individuals expressed a need to do consumer research as well as consumer education.

Discussions regarding claims generally suggested that FDA needs to consider moving away from a focus on nutrients to a focus on food groups and positive claims because consumers foods rather than nutrients as such.

Opinions on consumer education also greatly varied as to how FDA can promote healthy eating in general. Again, there appeared to be support for a focus on food groups rather than on nutrients. The role of influencers via social media was also brought up.

The 40 plus public comments included comments encouraging FDA to enforce the SOIs for milk and other dairy products, comments opposing the strict interpretation of dairy and other terms, and comments about medical foods.

During the wrap-up, FDA mentioned that it will try to summarize the breakout sessions’ discussions and will place the summary in the docket. Meanwhile, the Agency encouraged submission of comments and suggestions to the docket. The deadline for submissions is Aug. 27, 2018.

By Sara W. Koblitz —

With one paragraph in a Summary Judgment Order issued last week, the Northern District of California further expanded the patent safe harbor under 37 U.S.C. § 271(e)(1). Though not a huge leap from previous safe harbor decisions, the Order in Nevro Corp. v. Boston Scientific Corp. held that use of a patented invention in clinical trials falls within the safe harbor provision “even after the patients have completed their participation in the trial.”  Docket No. 16-cv-06830 (N.D. Cal. July 2018).

In this case, Nevro sued Boston Scientific alleging infringement of its patents relating to Nevro’s Senza and HF10 spinal cord stimulation systems.  The Senza is a spinal cord stimulator using high-frequency pulses rather than low-frequency, approved for marketing by FDA in May 2015 with labeling stating that the device is superior to conventional spinal cord stimulators using low-frequency therapy.  Boston Scientific manufactures a competing spinal cord stimulator, the Spectra WaveWriter, as well as the Precise with Multiwave system.  Nevro sued Boston Scientific for patent infringement in 2016 asserting that Boston Scientific infringed its patents covering methods for delivering spinal cord stimulation therapy at frequencies between 1.5 kHz and 100 kHz in its use of high-frequency therapy with Boston Scientific’s spinal cord stimulation devices.  Both parties filed cross-motions for summary judgement with respect to these patents.

Because Boston Scientific used high-frequency spinal cord systems only in a clinical trial, the Court determined that its use of Nevro’s patented technology was protected by the patent safe harbor codified in 35 U.S.C. § 271(e). The safe harbor protects the use of patented technology in the development and approval of a drug:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

In Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990), the Supreme Court read the safe harbor to include all inventions rather than only drug-related inventions because the safe harbor must be read in conjunction with the patent term restoration provisions in 35 U.S.C. § 156.  In time, the standard for the applicability of the safe harbor extended to any use of the patented technology as long as it is “reasonably related” to FDA approval. Abtox v. Exitron Corp., 122 F.3d 1019, 1029 (Fed. Cir. 1997).

Use of information obtained under the exemption – even if not related to regulatory approval – is also protected under the safe harbor as long as the initial use is related to regulatory approval. See Telectronics Pacing Sys. v. Ventritex, Inc., 982 F.2d 1520, 1523-24 (Fed. Cir. 1992).  In 2012, the Federal Circuit explained that the safe harbor will still protect use even if a non-infringing alternative exists.  Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348 (Fed. Cir. Aug. 3, 2012), the Federal Circuit explained that the safe harbor will still apply even if a non-infringing alternative exists.

Building from this safe harbor framework, Nevro v. Boston Scientific explained that use of the patented invention in a clinical trial is clearly reasonably related to the development and submission of information to FDA for device approval.  Continued use of the invention after the clinical trial ends is necessarily included in the safe harbor because FDA “specifically approved a trial plan” that allowed patients to continue using the treatment protected by the safe harbor even after the relevant data for FDA submission was obtained and the trial concluded.  Further, international standards for medical research require trial sponsors to allow participants to access the studied treatment even after the trial’s conclusion.

The Court here marginally extends the safe harbor to include the continued use of a patented invention even after the trial has ended and no further data will be submitted to FDA since it is still “reasonably related” to an FDA submission. This makes sense: the safe harbor is clearly intended to protect research and encourage innovation; denying clinical trials protection from a safe harbor is therefore nonsensical.  While continued use after the clinical trial may seem like more of a reach, denying such protection would preclude the continued treatment of the studied population – a consequence that would inherently deter other patients from participating in clinical trials down the line.  Given the congressional intent to encourage innovation and the safe harbor cases preceding Nevro v. Boston Scientific, this result is only logical.

By Mark I. Schwartz —

Earlier this month, FDA published a Notice of Availability for its Draft Guidance entitled, Field Alert Report Submission, Questions and Answers. We have previously blogged about Field Alert Reporting (FAR) requirements here and here.

The draft guidance makes recommendations to NDA and ANDA holders regarding the submission of information to FDA during a FAR. The FAR is described in the guidance as part of “…an early warning system to protect patient health.”

What follows are a few potentially useful nuggets of information from the draft guidance:

• To determine whether a chemical, physical, or other change or deterioration in the distributed drug product is “significant” as per the regulatory requirements, the applicant should evaluate the potential impact of the change or deterioration on the drug product’s identity, strength, purity, stability, and efficacy, and how that change or deterioration could impact an individual using the product.
• Information about “packaging or components” used in the manufacture of the distributed drug product that meet the criteria outlined in the FAR regulation (i.e., not just the drug product itself or its labeling) necessitate the submission of a FAR.
• Although the submission of a follow-up FAR and a final FAR are recommended, they are not required. Only the initial FAR is required. The information in the follow-up and final FAR is used by FDA to assess the risk to public health and the adequacy of the firm’s response.
• Aseptic process simulation failures for a distributed drug product require a FAR when the failure indicates a potential problem related to sterility assurance that requires an investigation, including an assessment on the impact of distributed drug product that has been produced since the last successful media fill.
• Even if the root cause of a problem related to a distributed drug product is identified and corrected within three working days, the applicant must still submit a FAR if the problem had originally met the criteria under 21 CFR 314.81(b)(1).
• The undertaking of a recall does not absolve the applicant of the responsibility to perform a FAR, if the issue with the drug product which led to the recall meets the criteria for a FAR under 21 CFR 314.81(b)(1).
• FARs associated with multiple NDAs/ANDAs need to be submitted on separate Forms (Form FDA 3331a), one for each NDA/ANDA.
• Ultimate responsibility for submitting the FAR rests with the NDA/ANDA holder, even if certain steps in the manufacturing, holding, packaging, labeling or distribution of the drug product in question are contracted out to other parties.
• Failing to submit a required FAR within the three working day timeframe is not only a violation of 21 CFR 314.81(b)(1), but also a violation of section 505(k) of the Federal Food, Drug and Cosmetic Act (FDCA) as well as section 301(e) FDCA.

We will keep you posted on any interesting comments posted to the docket for this draft guidance, as well as the publication of any revised or final guidance documents by the agency.

By Karla L. Palmer —

Monday was a big day for those monitoring whether and when FDA will add certain previously nominated bulk substances to its various “Bulks Lists” for Section 503A pharmacies and Section 503B outsourcing facilities. As previously blogged about here, back on March 23, 2018, FDA announced it was “revisiting” the Section 503B Bulks List nomination process, discussing clinical need and “medical justification” for those substances, in particular those that include components of approved drugs.  FDA provided a 60-day comment period on its new process as well.  Notwithstanding the conclusion of the comment period, and no FDA action yet on the nomination process itself, FDA announced yesterday that it was revising the 503A and 503B lists to add substances to the lists, move substances among the lists, and remove others from the lists altogether.  While we roundly applaud FDA’s long-awaited efforts to act on nominations for bulk substances that were the subject of submissions and in the “queue” for review for a year or more (as this surely enables greater patient access to certain substances),  we remain confused as to why FDA has not made a final determination concerning exactly what its nomination and review process will be for Section 503B Bulks prior to taking this next step (especially considering the draft guidance the Agency just issued in March 2018, and given that the industry comment period just ended).

Bulks List Changes

FDA’s revised interim Bulks Lists for Section 503A and Section 503B are here and here.  FDA summarizes the July 2018 changes on the final pages of those lists – definite reads for any compounder.

PCAC Meeting 

FDA also announced that will hold a meeting of its Pharmacy Compounding Advisory Committee on September 12, 2018, and address six substances that were nominated for use in compounding by 503A facilities: alpha lipoic acid, coenzyme Q10, creatine monohydrate, pyridoxal 5 phosphate, choline chloride and quercetin dihydrate.

Collaboration Efforts with Two Universities

The Agency also announced two new research collaborations (with University of Maryland and Johns Hopkins University) to support development of the Bulks List for Section 503B, and to “help inform public understanding of the use of bulk drug substances in compounding.” The press release can be viewed here. These institutions are two of FDA’s Center of Excellence in Regulatory Science and Innovation (CERSI) partners.  Specifically, FDA stated:

• The University of Maryland will be working closely with medical specialty groups and researching information about the use of drug products including certain bulk drug substances historically and in current clinical practice.
• The Johns Hopkins University will systematically study available safety and effectiveness information on certain bulk drug substances for use in compounding drug products for patients with autism spectrum disorder.

Cesium Chloride Risk Alert and Move to List 2

FDA also addressed in its press release a “compounding risk alert” that it issued for cesium chloride and its response to a citizen petition filed by Public Citizen. FDA issued the compounding risk alert to warn health care providers, compounders and patients of certain dangers compounding using the bulk substance cesium chloride. FDA noted that cesium chloride is sometimes used by cancer patients notwithstanding a lack of evidence of its safety and efficacy for that or any use. The Agency also cited serious adverse events associated with use of the substances and other cesium salts that include abnormal heart rhythms (arrhythmias), low potassium (hypokalemia), seizures, fainting (syncope), cardiac arrest and death.  Relatedly, FDA stated that it  intends to move cesium chloride to category 2 under the FDA’s interim policy on compounding with bulk drug substances under Section 503A because  it raises “significant safety risks in compounding.” If the Agency encounters a compounder using a substance in category 2, it “intends to take action, such as issu[ing] a warning letter or. . .seiz[ing]. . . product.”

Lastly, FDA noted that it responded to a citizen petition filed by Public Citizen related to cesium chloride, and that it granted the petition in part, but it did not mention that it responded after Public Citizen filed a lawsuit against FDA for failing to take action on that petition since 2016 and after FDA found that the substance presented “serious safety concerns.” Public Citizen’s press releases are here and here.

By Sara W. Koblitz —

Just like last year when it held a public hearing and rolled out the Generic Drug Action Plan, FDA is following its recent announcement of the Biosimilar Action Plan with a Public Hearing on competition in the biologics market entitled Facilitating Competition and Innovation in the Biological Products Marketplace.  This hearing seeks input from the public on how FDA can enhance efforts to increase access to the innovative treatment options in the biological products marketplace.  The Public Hearing will be held at FDA on September 4, 2018 from 9 a.m. to 5 p.m. and will involve presentations from public stakeholders rather than Agency officials or invitees.

FDA is looking for information and comments from a broad group of stakeholders (i.e. patients, researchers, healthcare providers, manufacturers, professional organizations, and the public) on how the Agency can best facilitate greater availability of biosimilar and interchangeable products while balancing competition and innovation. FDA is particularly looking for input on Agency goals enumerated in the Biosimilar Access Plan (explained here): facilitating efficient development of biosimilar and interchangeable products; developing information resources and tools to streamline development; enhancing efficiency of FDA review of biosimilar and interchangeable products; providing additional clarity about FDA’s regulation of biological products; increasing stakeholder understanding of biological products; and addressing attempts to “game” FDA requirements or otherwise delay market entry of competing biological products.

FDA also raises several questions about additional steps with respect to the regulation of biological products. These questions are on topics of interest to stakeholders of all types, such as biosimilar access to markets, use of the Purple Book, ensuring marketplace confidence, costs of studies required for approval, non-U.S.-licensed comparators, and product lifecycle incentives.

Not surprisingly given the subject matter, FDA’s questions seek to balance incentives for innovation with access to biosimilar and interchangeable products. FDA specifically asks what it can do to ensure an appropriate balance with respect to multiple licensed conditions of use.  Presumably, this is to address the concerns that have been raised by innovators for years about the fairness of carve-outs.

Interestingly, FDA raises questions about the potential application of “umbrella exclusivity” under the exclusivity provisions for reference products section 351(k)(7) of the Public Health Service Act. Previously addressed in the 1989 Proposed Rule implementing ANDA regulations, umbrella exclusivity attaches to all versions of the active moiety or innovative change entitled to such exclusivity rather than only the specific drug product that received approval. Approval of a new dosage form or other types of changes does not destroy exclusivity.  FDA ultimately decided to adopt this interpretation of exclusivity under the Hatch Waxman Amendments and is now considering whether it would help shield certain biologics that are not otherwise eligible for exclusivity under section 351(k)(7)(c).  FDA is hoping to hear arguments in favor and against umbrella exclusivity with a robust discussion of its impact on innovation and market entry.

The Public Hearing will be held at FDA’s White Oak location. Those interested in attending or presenting at the hearing should register by sending an email to OMPTfeedback@fda.hhs.gov by August 14, 2018. Requests for participation in the open public hearing will be accepted until 9 a.m. on Tuesday, September 4, 2018.

By Michelle L. Butler & Alan M. Kirschenbaum —

On July 10, 2018, the Court of Federal Claims found the Department of Veterans Affairs’ (“VA’s”) interpretation of the Trade Agreements clause to be arbitrary and capricious in Acetris Health, LLC v. United States, No. 18-433C (Fed. Cl. July 10, 2018) (the “Decision”). This action arose out of the VA’s rejection of an offer by Acetris Health (“Acetris”) in response to a solicitation to supply Entecavir Tablets to the VA and the Department of Defense. Acetris sued the United States seeking declaratory and injunctive relief. The Decision came on cross-motions on the administrative record.  (The government moved to dismiss Acetris’ bid protest for lack of standing. The Court disagreed, finding that Acetris did have standing to pursue its claims. Id. at 2-3.)

Before getting to the specifics of this case, we note that it is one of two actions filed by Acetris regarding these issues. The second action was brought by Acetris in the Court of International Trade (No. 1:18-cv-00040-RWG) and seeks a reversal of administrative rulings made by Customs and Border Patrol (“CBP”).  Notice of Issuance of Final Determinations Concerning Certain Pharmaceutical Products, 83 Fed. Reg. 5118-39 (Jul. 7, 2017).  Acetris had submitted requests for rulings from CBP on the country of origin of a number of products, including Entecavir Tablets. In those rulings, CBP determined that the country of origin of each of the products was the country of origin of its active pharmaceutical ingredient (“API”), finding that the manufacturing processes to put the products into final dosage form, which occurred in the United States, did not constitute substantial transformation of the API. This second action is ongoing.  (The government recently answered the complaint. Dispositive motions, if any, are due by July 17, 2019, and a trial, if necessary, is currently scheduled to begin October 17, 2019.)

Legal Background

We thought it would be useful to provide background on the various statutes and definitions at issue in this case.

The Buy American Act (“BAA”) generally restricts the goods that can be acquired by the federal government to “manufactured articles, materials, and supplies that have been manufactured in the United States substantially all from articles materials, or supplies mined, produced, or manufactured in the United States.” 41 U.S.C. § 8302(a). The Federal Acquisition Regulation (“FAR”), which implements this and other statutory provisions, uses the term “domestic end products” to describe the products that can be procured in accordance with the BAA, though that term is not used in the statute. See FAR 25.001(a)(1). A domestic end product is defined as “[a]n end product manufactured in the United Sates if–(i) [t]he cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components . . . or (ii) [t]he end product is a [commercially available off-the-shelf (“COTS”)] item.” Id. 25.003. A COTS item is a commercial item (which is an item of a type that is customarily used by the general public and has been offered for sale to the general public) that has been sold in substantial quantities in the commercial marketplace and offered to the government under a contract in the same form in which it is sold in the commercial marketplace. See id. 2.101. Most pharmaceutical products would likely be considered COTS items.

The Trade Agreements Act (“TAA”) allows the federal government to waive the BAA restrictions so that eligible products of designated countries would be treated as favorably as United States products. See 19 U.S.C. § 2511(a); see also FAR 25.402(a)(1). The federal government has exercised its TAA authority and waived the BAA restrictions for acquisitions meeting an acquisition value threshold and covered by trade agreements such as the World Trade Organization Government Procurement Agreement (“WTO GPA”) and Free Trade Agreements (“FTAs”). See FAR 25.402(a)(1), (b). For an acquisition covered by the WTO GPA, federal government purchases are restricted to “U.S.-made or designated country end products” unless there are no offers received for such products or the offers received are insufficient. Id. 25.403(c)(1). A “U.S.-made end product is “an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from the article or articles from which it was transformed.” Id. 25.003. A “designated country end product” is an end product from the groups of countries subject to the identified trade agreements. See id.

For this case, the key term is “U.S.-made end product.” According to the Court, based on various provisions of the FAR, “domestic end products” are a subset of “U.S.-made end products.” In other words, a U.S.-made end product can be either a “domestic” end product or a “non-domestic” end product. Reading the definition of a U.S.-made end product and a domestic end product together, the Court finds that a “non-domestic” end product is a product that is substantially transformed in the United States. See Decision at 2-3.

Factual Background

According to the Decision, on March 28, 2018, Acetris submitted an offer to the VA in response to a solicitation for bids for a national contract for Entecavir Tablets. The solicitation incorporated by reference the Trade Agreements clause found at FAR 52.225-5 and included a Trade Agreements Certificate. The Trade Agreements clause contained the VA’s determination that the WTO GPA and FTAs applied to the acquisition and that “only U.S.-made or designated country end products” could be supplied under the contract.” FAR 52.225-5(b). Consistent with the Trade Agreements clause, the Trade Agreements Certificate required an offeror to certify that “each end product . . . is a U.S.-made or designated country end product” as defined in the Trade Agreements clause. The VA also directed offerors to make an additional certification not required by the Trade Agreements clause, that is, “whether or not the end product offered in response to this solicitation is [TAA] compliant.” The solicitation also required offerors to identify the country of origin for the end product and the API.

The Acetris bid was ultimately rejected by the VA. According to the Decision, “the VA informed [Acetris] that it had rejected [Acetris’] proposal ‘because the manufacturing location’ of [Acetris’] Entecavir Tablets–India–‘is not a [TAA] designated country.’” Decision at 10 (citation omitted). In documentation prepared by the VA that described its source selection decision, the VA relied on the CBP decision finding the country of origin of Entecavir Tablets to be India as there was no substantial transformation in the U.S. or a TAA designated country. Id. at 10-11.

Decision

The legal standard in a bid protest case provides that “a reviewing court shall set aside the agency action if it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’” Id. at 19 (citations omitted).

Acetris asserted that the VA improperly: “(1) construed and applied the solicitation’s Trade Agreements clause, (2) included a provision in the solicitation that was contrary to the Trade Agreements clause, and (3) relied on the CBP’s country-of-origin determination rather than independently construing and applying the solicitation’s Trade Agreements clause.” Id. at 20.

On the first claim, the Court agreed with Acetris’ argument that the Trade Agreements clause allows the VA to purchase U.S.-made or designated country end products and that all domestic end products qualify as U.S.-made end products. The Court found that the record made it clear that the VA did not consider the term “U.S.-made end product” to include domestic end products, which caused the VA to misconstrue the Trade Agreements clause to give priority to TAA-compliant products as assessed by the TAA rule of origin test over what it viewed as non-TAA-compliant drugs, based on its flawed interpretation. See id. at 23. The VA’s failure to properly construe the Trade Agreements clause was arbitrary, capricious, and contrary to law.

On the second claim, the Court agreed with Acetris that it was arbitrary and capricious for the VA to require manufacturers to certify that the offered products were Trade Agreements Act compliant. Id. at 23-24. However, the Court found that the VA was entitled to direct offerors to identify the country of origin of the product as it “is relevant (even if not sufficient) to determining whether the Entecavir Tablets qualified as U.S.-made end products of a domestic nature (manufactured in the United States), U.S.-made end products of a nondomestic nature (substantially transformed in the United States), or designated country end products.” Id. at 24.

On the third claim, the Court agreed with Acetris that the VA should have made its own determination regarding whether the offer complied with the Trade Agreements clause rather than relying on the CBP’s prior ruling. In coming to this decision, the Court stated that “it is apparent that CBP is empowered to determine whether a product is ‘wholly’ manufactured in a foreign country in accordance with the [TAA’s] rule of origin, but is not empowered to determine the threshold question of whether an offered product is a U.S.-made end product (particularly, whether an offered product is a domestic end product) pursuant to the Trade Agreements clause.” Id. at 25-26.

The Court granted most of the relief requested by Acetris. The Court declared the following:

• The term ‘U.S.-made end product,’ as used in the Trade Agreements clause, includes ‘domestic end products,’ as that term is defined in the FAR.
• The VA’s failure to construe the term ‘U.S.-made end product,’ as used in the Trade Agreements clause, to include ‘domestic end products,’ as that term is defined in the FAR, was arbitrary, capricious, and contrary to law.
• It was arbitrary and capricious for the VA to require manufacturers to certify that the offered products were ‘[Trade Agreements Act] compliant.’
• The VA’s failure to independently assess whether plaintiff’s Entecavir Tablets qualified as U.S.-made end products under the Trade Agreements clause was arbitrary, capricious, and contrary to law.

In addition, the Court enjoined the VA in future procurements from:

• construing the term ‘U.S.-made end product’ in the Trade Agreements clause as excluding products manufactured in the United States (in other words, domestic end products), and
• relying on CBP rather than independently ascertaining whether an offered product is manufactured in the United States (in other words, a domestic end product) pursuant to the definition of the term ‘U.S.-made end product.’

Id. at 31.

Any appeal of the decision would be made to the Federal Circuit and would need to occur within 60 days from the date of the decision – i.e., by September 8, 2018.

Follow-Up

There appear to be at least a couple of questions that remain unanswered by this Decision.

First, the Court did not weigh in on how the VA should interpret the term “manufactured in the United States” that is present in the definition of a domestic end product. If the VA were to interpret this term similarly to substantial transformation, Acetris may be back in the same place it was before. However, if a broader definition is used, then the Acetris Entecavir Tablets could be considered to be a U.S.-made end product that could be considered for award regardless of the country of origin of products in competing offers. Acetris argued that the Court should declare that the term “manufactured in the United States” should have the same meaning as that in the definition of “place of manufacture” in the clause implementing the BAA, that is “the place where an end product is assembled out of components, or otherwise made or processed from raw material into the finished product that is to be provided to the Government.” FAR 52.225-18. If this definition were to be used, a pharmaceutical put into final dosage form in the United States would be considered a domestic product and therefore a U.S.-made end product, even if the API were manufactured in a non-designated country. However, the Court did not address Acetris’ proposed definition or otherwise address the proper interpretation of “manufacturer in the U.S.,” leaving it to the VA to do so.

Second, the issue of the interpretation of substantial transformation that has been advanced by the CBP for pharmaceutical products was not addressed by the Court because it was not raised by Acetris in this case. (It is the subject of Acetris’ case that is pending before the Court of International Trade.) Interestingly, although the TAA was intended to permit consideration of offers of designated country end products in a non-discriminatory manner compared to U.S.-made end products, this Decision coupled with the current CBP interpretation of substantial transformation would result in differential treatment of a product with API from India that is put into final dosage form in the United States compared to a product with API from India that is put into final dosage form in a WTO GPA country such as France. The former would be considered a U.S.-made end product as a result of being a domestic product, while the latter would not be considered a designated country end product because of the lack of substantial transformation in a designated country.

We will continue to follow these two cases and provide updates as we have them.

By Kurt R. Karst —

For those of us in the Hatch-Waxman Community, June 14, 2018 sowed a lot of confusion. That’s the date on which FDA approved three ANDAs for generic versions of Indivior Inc.’s SUBOXONE (buprenorphine and naloxone) Sublingual Film, 2 mg/0.5 mg, 4 mg/1 mg, 8 mg/2 mg, and 12 mg/3 mg (approved under NDA 022410); specifically Dr. Reddy’s Laboratories, Inc. ANDA 205299 (2 mg/0.5 mg and 8 mg/2 mg) and ANDA 205806 (2 mg/0.5 mg and 8 mg/2 mg), and Mylan Technologies Inc. ANDA 207607 (8 mg/2 mg).  Noticeably absent from the ANDA approval letters is any discussion of 180-day exclusivity for the 4 mg/1 mg, 8 mg/2 mg, and 12 mg/3 mg strengths approved under the ANDAs.  The absense of any discussion in an ANDA approval letter generally means that FDA determined that eligibility for 180-day exclusivity was forfeited by a “first applicant.”  But what was FDA’s rationale for making such a determination??  Adding more confusion to the mix was a change in the “Date of Submission” listed on the ANDA Paragraph IV Certifications List for one strength of generic SUBOXONE (12 mg/3 mg), as well as a tentative approval letter FDA issued earlier in the day on June 14, 2018 for Mylan ANDA 207607.

Fast-forward a few weeks and we now have some clarity on the situation. Late on July 20, 2018, FDA finally published a July 13, 2018 Letter Decision explaining the Agency’s rationale for determining that eligibility for 180-day exclusivity was forfeited for each of the 4 mg/1 mg, 8 mg/2 mg, and 12 mg/3 mg strengths of Buprenorphine and Naloxone Sublingual Film.  (As to the 2 mg/0.5 mg strength, the ANDA Paragraph IV Certifications List notes that the ANDA submission was withdrawn or that exclusivity was relinquished.)  FDA’s 180-day exclusivity forfeiture decisions are pretty significant, particularly for the 4 mg/1 mg and 12 mg/3 mg strengths of SUBOXONE.

But before we get into the meat of FDA’s Letter Decision, let’s set the scene . . . .

FDA initially determined that the first ANDAs for generic SUBOXONE containing a Paragraph IV certification to one or more Orange Book-listed patents – either through an original ANDA submission or an amendment to a substantially complete ANDA – were submitted on October 15, 2012 (2 mg/0.5 mg and 8 mg/2 mg), May 14, 2013 (4 mg/1 mg), and March 26, 2014 (12 mg/3 mg). Presumably those patent certifications were to U.S. Patent Nos. 8,017,150 (“the ‘150 patent”), 8,475,832 (“the ‘832 patent”), and 8,603,514 (“the ‘514 patent”), which were listed in the Orange Book at the time of those initial ANDA submissions.  Thus, despite subsequent patent information listings in the Orange Book for SUBOXONE, only the ‘150, ‘832, and ‘514 patents are “exclusivity-bearing” for an ANDA “first applicant.”  On June 14, 2018, FDA updated the ANDA Paragraph IV Certifications List to identify that eligibility for 180-day exclusivity as to the 2 mg/0.5 mg strength was forfeited.  FDA also changed the March 26, 2014 date initially listed for the 12 mg/3 mg strength to May 14, 2013.

As to the “first applicant” – a term we will get back to shortly – with respect to the 4 mg/1 mg and 12 mg/3 mg strengths of SUBOXONE, FDA says that “[t]he May 14, 2013 First Applicant later withdrew its application for the 4 mg/1 mg and 12 mg/3 mg strengths,” that “[t]he May 14, 2013 First Applicant also informed FDA that it had not given notice to the NDA holder or patent owner for these strengths,” that “FDA’s review of the record confirms that the May 14, 2013 First Applicant did not submit any documentation to its ANDA of providing such notice,” and that “[a]t least one other applicant submitted a substantially complete ANDA (or an amendment to a substantially complete ANDA) for Buprenorphine and Naloxone Sublingual Film, 4 mg/1 mg and 12 mg/3 mg, after May 14, 2013 with a paragraph IV certification and provided notice to the NDA holder and patent holder.”

Ok . . . so you may be thinking that here the purported “first applicant” was not even a “first applicant” in the first instance because the applicant failed to perfect its Paragraph IV certifications by failing to send notice, and that another applicant that first perfected its Paragraph IV certifications is the one true “first applicant.” After all, courts have affirmed prior FDA rulings that a Paragraph IV certification is not perfected until notice is sent. See Purepac Pharmaceutical Co. v. Thompson, 354 F.3d 877 (D.C. Cir. 2004), aff’g TorPharm, Inc. v. Thompson, 260 F.Supp.2d 69 (D.D.C. 2003).  And although both the Purepac and TorPharm decisions were made in the context of the version of the statute that existed prior to the December 2003 enactment of the Medicare Modernization Act (“MMA”), one might reasonably believe that the principle articulated by FDA and affirmed by the courts (i.e., that a Paragraph IV certification becomes effective only when the ANDA applicant ultimately provides notice) applies equally under the post-MMA version of the statute.  Indeed, in FDA’s 2015 Proposed Rule to implement certain provisions of the MMA, the Agency proposed an administrative consequence “to address ANDA applicants that fail to timely provide notice of a paragraph IV certification by moving forward the date of submission of the ANDA by the number of days beyond the required time frame that the applicant delayed in sending its notice.”  FDA, Proposed Rule, ANDAs and 505(b)(2) Applications, 80 Fed. Reg. 6802, 6840 (Feb. 6, 2015).  FDA recognized that, as a result of this consequence, “an ANDA applicant may lose its first applicant status and thus its eligibility for 180-day exclusivity as a result of providing late notice . . . if another applicant submits a substantially complete ANDA containing a paragraph IV certification on the same first day and provides timely notice.” Id. Ultimately, FDA did not adopt this interpretation, but it seems to support the views in both the Purepac and TorPharm decisions.

Well, if you thought the Purepac and TorPharm rationale would come into play, you were correct. . . but not in the way you might have thought.  Instead of embracing that law, FDA rejected it and went in a different direction.  As FDA notes in the July 13, 2018 Letter Decision, “[t]he withdrawal of the application and the lack of documentation of notice for the (now withdrawn) 4 mg/1 mg and 12 mg/3 mg strengths gave rise to unique questions regarding 180-day exclusivity for these two strengths. . . .” and ultimately resulted in the “first applicant” – the applicant that submitted the first Paragraph IV ANDA on May 14, 2013, but that never perfected its Paragraph IV certifications – forfeiting eligiblity for 180-day exclusivity under the so-called “withdrawal of application” provision at FDC Act § 505(j)(5)(D)(i)(II).

The FDC Act (at § 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’s July 13, 2018 Letter Decision breaks 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,” which is the approach affirmed in the Purepac and TorPharm decisions, the Agency says that it creates a problem under the MMA:

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.

The “interpretation explained below to determine ‘First Applicant’ status and eligibility for exclusivity for ANDAs” is referred to as the “First Submitted Interpretation Approach,” and it goes like this:

[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.

According to FDA, the “First Submitted Interpretation” approach “is most consistent with the plain meaning of the ‘First Applicant’ definition because it gives full effect to the ‘when’ prong, including the use of the indefinite article ‘a’ that modifies ‘substantially complete application,’ which suggests that the ‘when’ prong date is set permanently once a substantially complete application (or an amendment or supplement to a substantially complete application) containing a paragraph IV certification is first submitted.” Thus, “[a]ny application, whether an original application, amendment, or supplement, submitted after this ‘first day’ cannot satisfy the ‘when’ prong and cannot be a ‘First Applicant,’ as there can be only one ‘first day on which a substantially complete application containing a paragraph IV certification is submitted.’”  FDA goes on to provide other arguments as to why the “First Submitted Interpretation” approach is, according to the Agency, consistent with the plain meaning and structure of the statute and injects some certainty and predictability into the 180-day exclusivity landscape.

Applying this approach to a 180-day exclusivity analysis for the 4 mg/1 mg and 12 mg/3 mg strengths of generic SUBOXONE, FDA concluded as follows:

[T]he May 14, 2013 First Applicant qualified as the “First Applicant” for both the 4 mg/1 mg and 12 mg/3 mg strengths. The first day on which a substantially complete ANDA application (or an amendment or supplement to a substantially complete application) containing a paragraph IV certification was submitted for Buprenorphine and Naloxone Sublingual Film, 4 mg/1 mg and 12 mg/3 mg, was May 14, 2013, the day on which the May 14, 2013 First Applicant submitted its application or amendment. Thus, the “first day” under the definition of “First Applicant” is May 14, 2013 as there was no applicant that submitted a substantially complete ANDA with a paragraph IV certification (or amended its substantially complete application with a paragraph IV certification) prior to that date. Because the May 14, 2013 First Applicant withdrew its application for the 4 mg/1 mg and 12 mg/3 mg strengths, it forfeited 180-day exclusivity under section 505(j)(5)(D)(i)(II). Its forfeiture means there were no barriers to approval of subsequent applicants for those strengths.

Moving on to FDA’s 180-day exclusivity analysis for the 8 mg/2 mg strength of generic SUBOXONE, we see for the first time FDA’s application of an interpretation the Agency discussed in a January 2017 draft guidance document on 180-day exclusivity. As we previously posted, that interpretation concerned the so-called “failure-to-market” forfeiture provision at FDC Act § 505(j)(5)(D)(i)(I).

By way of background, the FDC Act provides that a first applicant’s eligibility for 180-day exclusivity may be forfeited if the first applicant fails to market the drug by the later of two “bookend” dates. The first date is the earlier of 75 days after final approval of the first applicant’s ANDA and 30 months after the date of submission of the first applicant’s ANDA.  The second date is calculated 75 days after a final court decision.  Specifically, the statute provides:

(bb) with respect to the first applicant or any other applicant (which other applicant has received tentative approval), the date that is 75 days after the date as of which, as to each of the patents with respect to which the first applicant submitted and lawfully maintained a certification qualifying the first applicant for the 180-day exclusivity period under subparagraph (B)(iv), at least 1 of the following has occurred:

(AA) In an infringement action brought against that applicant with respect to the patent or in a declaratory judgment action brought by that applicant with respect to the patent, a court enters a final decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that the patent is invalid or not infringed.

(BB) In an infringement action or a declaratory judgment action described in [FDC Act § 505(j)(5)(D)(i)(I)(bb)(AA)], a court signs a settlement order or consent decree that enters a final judgment that includes a finding that the patent is invalid or not infringed.

(CC) The patent information submitted under [FDC Act § 505(b) or (c)] is withdrawn by the holder of the application approved under subsection (b).

FDA interprets FDC Act § 505(j)(5)(D)(i)(I)(bb) to require an “all-in-one” approach instead of a “mix-and-match” approach. Under the “all-in-one” approach, the parenthetical “(which other applicant has received tentative approval)” provides that the 75-day period is triggered when the same subsequent applicant has both tentative approval and a final court decision that the relevant patent is invalid or not infringed.  Under the “mix-and-match” approach, the parenthetical allows different subsequent ANDA applicants to have tentative approval and a final court decision.

FDA’s draft guidance also addresses FDC Act § 505(j)(5)(D)(i)(I)(bb) with respect to whether or not the order in which an “other applicant” obtains a court decision and tentative approval counts. In a hypothetical situation described in the draft guidance, FDA clarifies that a relevant court decision triggers the 75-day period once tentative approval is obtained, even if that tentative approval is later obtained by the same applicant.  Thus, it is not the completion of the two events – tentative approval and a court decision – that triggers the 75-day countdown (unless the tentative approval comes before the court decision), but the court decision that is solely relevant.  So, a later-obtained tentative approval makes a previously-obtained court decision (by the same applicant) operative, such that if tentative approval is obtained one year after the court decision, 180-day exclusivity is forfeited retroactively (absent any commercial marketing by the first applicant).  (We will leave for another day whether or not this interpretation is consistent with the intent of this forfeiture provision.  After all, the Chairman of the Federal trade Commission (“FTC”) testified in 2003 as the forfeiture provisions were being discussed by Congress that “if a subsequent generic applicant is ‘ready to go,’ the first applicant’s exclusivity should not block its entry. . . provided the first applicant [has] a reasonable period for which to begin commercial marketing.”  Examining The Senate And House Versions Of “The Greater Access To Affordable Pharmaceuticals Act,” Hearing Before The Sen. Jud. Comm., at 116 (Aug. 1, 2003) (prepared statement of the Hon. Timothy Muris, Chairman of the FTC) (emphasis added).)

With that background in place, here are the facts as provided by FDA:

• “One or more first applicants submitted a substantially complete ANDA (or an amendment to a substantially complete ANDA) for a generic Buprenorphine and Naloxone Sublingual Film, 8 mg/2 mg containing a paragraph IV certification on October 15, 2012.” This is likely ANDA 204383, which FDA tentatively approved on October 24, 2017.
• “The October 15, 2012 First Applicant qualified as a ‘First Applicant’ and therefore was eligible for 180-day exclusivity for its generic Buprenorphine and Naloxone Sublingual Film, 8 mg/2 mg absent forfeiture.”
• “A subsequent applicant submitted an ANDA after October 15, 2012 and provided notice to the NDA holder and patent owner. This subsequent applicant was sued for patent infringement, and the suit included the patent or patents qualifying the October 15, 2012 First Applicant for 180-day exclusivity. More than 75 days prior to FDA’s exclusivity determination on June 14, 2018, a federal district court entered a consent decree and final judgment in favor of the subsequent applicant on the Qualifying Patent. The consent decree and final judgment included a finding that the Qualifying Patent was not infringed. The subsequent applicant was tentatively approved on June 14, 2018.” Ahha! That explains the July 14, 2018 tentative approval of Mylan ANDA 207607.  It made the forfeiture of 180-day exclusivity effective.

Given these facts, FDA posits that an “earlier of” (aa) bookend date occurred (i.e., “30 months after the date of submission of the application of the first applicant”), as well as a (bb) bookend date that was later than (aa).  The (bb) bookend date, which is based on a (bb) subitem (BB) court decision, “transpired more than 75 days before FDA’s exclusivity determination on June 14, 2018,” when FDA tentatively approved Mylan ANDA 207607.  Thus, according to FDA, “[t]he October 15, 2012 First Applicant did not market its product by the later of the item (aa) date and the item (bb) date.  Accordingly, it forfeited its eligibility for 180-day exclusivity for Buprenorphine and Naloxone Sublingual Film, 8 mg/2 mg, under the failure to market forfeiture provision.”

By Sara W. Koblitz —

Though the pace of biosimilar approval has quickened substantially over the last year (with 6 approvals since this time last year alone), the biosimilar market remains sparse and slow. Unsurprisingly, FDA has noticed.  This week, FDA unveiled a Biosimilars Action Plan (BAP) aimed at speeding up approvals in an effort to enhance access to lower cost biologics.

Like the Drug Competition Action Plan announced about a year ago, Commissioner Gottlieb explained in remarks delivered at the Brooking Institution that the BAP seeks to preserve the “balance between innovation and competition” through “efficient, predictable and science-based pathways for drug review.” An FDA analysis discussed in these remarks showed that if American consumers had the opportunity to purchase successfully marketed FDA-approved biosimilar drugs, they could have saved more than $4.5 billion in 2017.

Dr. Gottlieb explained that even though biosimilars are new, biologic manufacturers have taken a page out of the small-molecule handbook and have adopted tactics to delay and frustrate biologic competition. Learning from the generic drug experience, the BAP applies many of the lessons learned from the implementation of the Hatch-Waxman Act to the biosimilar market.  FDA knows the tactics likely to be used: refusing to negotiate on REMS, patent evergreening, eroding public trust in the review process for biosimilars, and delaying biosimilar entry until potential manufacturers withdraw from an unprofitable market, and FDA is trying to strengthen its defense.  To this end, Dr. Gottlieb emphasized the use of carve outs in biosimilars and announced that FDA is developing a guidance to assist biosimilar manufacturers in carving out labeling information protected by patent.

With biologics representing 40% of all prescription drug spending, FDA is trying to better manage review and licensure pathways to facilitate competition and modernize policies to make review more efficient. The BAP focuses on four areas: efficiency of development and approval; scientific and regulatory clarity; effective communication; and reducing gaming of FDA requirements or other delays in competition.  As part of the BAP, FDA committed to encouraging innovation and completion and to taking action by:

• Developing and implementing new FDA review tools, like standardized review templates for biosimilar and interchangeable products;
• Creating information resources and development tools for biosimilar sponsors;
• Enhancing the Purple Book to make it more useful;
• Exploring data sharing agreement with foreign regulatory authorities to facilitate increased use of non-U.S-licensed comparator products;
• Establishing an Office a Therapeutic Biologics and Biosimilars;
• Continuing to provide education to health care professionals about biosimilar and interchangeable products;
• Publishing guidances on biosimilar product labeling;
• Providing additional clarity on demonstrating interchangeability;
• Providing additional clarity and flexibility on analytical approaches to support a demonstration of biosimilarity;
• Providing additional support to product developers regarding product quality and manufacturing processes; and
• Engaging in public dialogue about the biosimilar program.

The promises on the list include the development of an enhanced Purple Book! It’s slated to be a “modernized, interactive user experience,” and will reportedly contain information beyond the current, which is basically just product name, BLA number, date of licensure.

Additionally, FDA has committed to holding public meetings and hearing, as well as prioritizing the development of guidance on various aspects of the Biologics Price Competition and Innovation Act. In fact, FDA released its first guidance of the BAP in tandem with the BAP announcement.  The guidance, Labeling for Biosimilar Products, explains that biosimilar product labeling should be predominantly the same as the reference product. However, modifications for safety information updates, Medication Guides, and additional conditions of use may be appropriate.

Information specific to the proposed biosimilar product should be included in the labeling only when necessary to inform the safe and effective use of the product by a healthcare provider. Data or descriptions from clinical biosimilarity studies should not be included.  The guidance even has detailed explanations for situations in which the biosimilar’s proprietary name, the biosimilar’s proper name, the reference product name, and the core name should be included in the labeling.  Approaches to specific sections of biosimilar product labeling, including a biosimilarity statement, are also described.  Finally, the guidance addresses FDA-approved patient labeling and revisions to biosimilar product labeling.

This guidance does not address labeling requirements for interchangeable products, as FDA will provide that in future guidance. But this does imply that more discussion on obtaining the brass ring, the interchangeable biosimilar, is hopefully forthcoming.

By Jeffrey N. Gibbs & Jennifer M. Thomas —

Following our blog post on the topic, in which we urged others to comment in response to FDA’s Proposed Product Jurisdiction rule changes, we decided to take our own advice. On July 15, 2018, Hyman, Phelps & McNamara, P.C. filed comments to Docket No. FDA-2004-N-0191.

Our requests were modest but important, and reflect our deep frustrations with the Request for Designation (“RFD”) process as described in previous posts.   Specifically, we asked the Agency to (1) establish a timeframe for review of RFD decisions by the Office of Special Medical Programs when requested by the sponsor, pursuant to 21 C.F.R. § 10.75, and (2) remove the 15-page limitation for RFDs at 21 C.F.R. § 3.7.  These requested changes would help streamline the RFD process and make it work better for both sponsors and the Agency.

The lack of any timeframe for review of RFD appeals can result in appeals languishing for many months. This delays sponsors from seeking product approval, and may consequently deprive the public of beneficial products for months or years.  The current 15-page limitation also frustrates both the Agency’s and sponsors’ goals by stymieing the free exchange of relevant information about a proposed product.  Fifteen pages is simply not enough to provide FDA with all the requested information for an RFD, especially as FDA continues to place an increasingly high burden on sponsors to establish a product’s mode of action.

In addition to these requests, we asked FDA to reconsider its approach to determining whether a product or product component achieves its primary intended purposes through chemical action, thereby excluding it from the statutory device definition. FDA alluded to this topic in its proposal, but then proposed no changes.  In our experience, FDA’s current approach can wrongly result in a combination product that exhibits very minimal chemical action being regulated as a drug or biologic rather than a device.  This approach – which we have seen repeatedly – is not consistent with the statutory language and should be revisited, particularly in light of the 21st Century Cures Act. Comments filed by the Washington Legal Foundation demonstrate why FDA needs to modify the way in which it makes these jurisdictional decisions.

By Hyman, Phelps & McNamara, P.C. —

By Michelle L. Butler & Eliot Markman* –

On July 4, 2018, 2017 ME S 432, titled “An Act To Require Drug Manufacturers To Comply with Federal Law” (the “Act”), became law without Maine Governor Paul LePage’s signature.  The Act amends 32 M.R.S.A. § 13702-A and requires a drug manufacturer or wholesaler licensed in Maine to make a drug distributed in the State available for sale to “an eligible product developer.”  An eligible product developer is defined as “a person that seeks to develop an application for the approval of a drug under the Federal Food, Drug, and Cosmetic Act [FDC Act], Section 505(b) or 505(j) or the licensing of a biological product under the federal Public Health Service Act, Section 351.”  We note that this definition is not limited to a person seeking approval of an ANDA or a biosimilar application.  Although the term “reference sample” is not used in the text of the statute itself, the section discussing the intent of the statute calls the drugs that are to be made available under this provision reference samples.

The Act requires a manufacturer or wholesaler to make the drug available for sale “at a price no greater than the wholesale acquisition cost [WAC] and without any restrictions that would block or delay the eligible product developer’s application in a manner inconsistent with [the FDC Act’s provision prohibiting the use of a REMS program to delay competition].” WAC is defined as “the manufacturer’s list price for a brand-name drug or a generic drug per person per year or course of treatment when sold to wholesalers or direct purchasers in the United States, not including discounts or rebates, for the most recent month for which information is available.”  As a consequence of purchasing a drug under this provision at a price no greater than WAC, the eligible product developer must charge consumers in Maine the same price or less for the drug it manufactures, presumably after obtaining approval from FDA of an application.  The Act permits the State to seek injunctive relief against a person who fails to comply with these new provisions.

A number of questions arise from the language of the Act, including some that raise the specter of a lawsuit:

• While the title of the Act suggests that it is only working to implement an existing federal requirement, the FDC Act does not require a manufacturer to make drug available to a person seeking to develop a generic or biosimilar drug in all circumstances; rather, under the FDC Act, a manufacturer is not permitted to use a REMS program to block or delay approval of an ANDA or 505(b)(2) NDA.
• The Act’s requirement for a wholesaler to make drug available may raise issues for the wholesalers. A wholesaler that is distributing drug subject to a REMS and/or closed distribution system would likely be reticent to provide drug to an eligible product developer without the permission of the manufacturer with whom it likely has a contractual relationship that does not permit such distribution.

In addition, the definition of WAC in the Act is not consistent with the real-world definition of WAC. It is appropriate that the definition describes WAC as a list price and does not include discounts or rebates.  However, WAC is the list price for a specific package size of a drug (e.g., a bottle of 100 tablets or a bottle of 1000 tablets) and is not tied to a course of treatment or “per person per year.”  The Act’s definition is likely to lead to confusion.

The Act also includes an exemption from liability for “product of another.” The Act states that a manufacturer or wholesaler is not liable for the failure to include adequate safety warnings or for product defects when the manufacturer or wholesaler has made a drug available to an eligible product developer pursuant to the Act and the product was not manufactured or sold by that manufacturer or wholesaler.  While the language is not entirely clear, it appears that the exemption is intended to shield a manufacturer or wholesaler that provides product to an eligible product developer from liability for the competing generic or biosimilar drug that is ultimately developed and sold by the eligible product developer.

Senate Democratic Leader Troy Jackson, the bill’s sponsor, stated in a press release dated July 5, 2018 that the Act will lower prescription drug prices by making cheaper generic drugs available more quickly after a drug’s patent expires.  According to the press release, the Act is intended to prevent companies from withholding products from generic manufacturers through closed distribution systems that may be implemented as part of a REMS.

We will continue to monitor this and similar laws that states have enacted aimed at curbing drug prices.

* Summer Associate