Attorney East Hampton

By Sara W. Koblitz & Douglas B. Farquhar —

On the heels of Genus Medical Technologies’ successful lawsuit against FDA—Genus was represented by Hyman, Phelps & McNamara PC—in both the District Court of D.C. and the Court of Appeals for the D.C. Circuit, FDA published a Federal Register Notice today (August 9) soliciting comments on its proposed approach to implementing the Court’s interpretation of the Federal Food, Drug, and Cosmetic Act (FDCA) distinction between drugs and devices.  As you may remember, Genus sued FDA back in 2019, alleging that FDA’s classification of, and putative regulation of, its barium sulfate products as drug products violated the FDCA because barium sulfate meets the statutory definition of medical device and therefore must be regulated as a device.  The FDCA definition hinges on the mechanism by which a product meets its primary intended purposes.  FDA claimed that Congress afforded FDA the discretion to regulate devices as drugs based an overlap in the statutory definitions of “drug” and “device” and chose to do so in the case of contrast agents in response to a 1997 court decision and related Citizen Petition.  Both courts disagreed with FDA’s broad assertion of discretion, as neither the statutory construction nor the legislative history supported such discretion.  Ultimately, FDA decided not to request a hearing en banc nor to seek review of the decision in the Supreme Court.

In light of this decision, FDA has acquiesced to regulating barium sulfate as a device, and is now exploring the application of this decision beyond the Genus products at issue in the litigation.   To that end, FDA’s Federal Register Notice explained that “FDA intends to regulate products that meet both the device and drug definition as devices, except where the statute indicates that Congress intended a different classification . . . .”  Further, FDA will comb through its previous classifications to “bring previously classified products into line with the Genus decision.”  Products—not just barium sulfate products or contrast agents—that satisfy the device definition will hereafter be regulated as devices regardless of previous classification.

FDA stated that it will now use as the determining factor, in accordance with the definitions in the FDCA, “whether the product achieves its primary intended purposes through chemical action within or on the body or is dependent upon being metabolized for the achievement of its primary intended purposes.”  While FDA previously stated in guidance that these factors typically determine how to regulate medical products, the Federal Register Notice admits that “FDA has not always examined these factors”—the exact problem that led to the Genus litigation in the first place—due to its presumed discretion.  Now, however, the courts have made clear that FDA must regulate devices as devices unless other provisions of the FDCA say otherwise.  Thus, FDA will evaluate the primary intended purposes and mechanism of action for all products, and then comb the statute for any language suggesting otherwise.  Previously, FDA applied that analysis only to those products that FDA decided merited such an analysis.

The Federal Register Notice specifically addresses medical imaging products, like those at issue in the Genus case.  While FDA previously regulated all imaging agents as drugs regardless of how they achieve their primary intended purposes, FDA will now “reexamine whether individual imaging agents meet the device definition.”  Existing approved imaging agents will transition from drug status to device status where applicable, and the Agency will aim to transition products in a way that does not disrupt supply.  FDA will publish a Federal Register Notice with a tentative list of approved products that will transition from drug to device and will provide an opportunity for industry to comment on the specific product’s classification.  Recognizing that the transition will require sponsors to shift from compliance with the drug regulatory scheme to the device scheme, FDA requests that stakeholders provide comments on the timeline for implicated products to come into compliance with device regulations, such as updating labeling, establishing procedures that comply with FDA’s Quality System Regulations, and preparing for device inspections.  FDA also seeks industry suggestions to facilitate the transition without disrupting supply.

FDA explains that the transition will take some time and consequently products previously regulated as drugs will still be subject to drug approval user fees (PDUFA and GDUFA user fees) until they transition: The Federal Register Notice explains that FDA “does not anticipate that the identification and transitioning of products from drug status to device status pursuant to the Genus decision will be completed before October 1, 2021.”  Thus, FDA suggests that sponsors of implicated products pay the drug user fees to avoid placement on the arrears list and any associated penalties.  Sponsors can then request a refund.  This could get complicated though, as FDA explains that the transition may affect program fee tier assessments for ANDA holders or facility fees.  And it is unclear how the excess user fees collected for devices would factor into the estimates to set the next year’s user fee rates.

FDA encourages all sponsors of implicated products to submit comments on this notice.  Until FDA takes action, there is nothing else for sponsors to do but to sit tight, but FDA includes no anticipated timeline for taking action.  However, for all “time-sensitive” inquiries, questions can be directed to a Genus-transition-specific email address at Drug_Device_Transition_Inquiry@fda.hhs.gov.  FDA also requests comments on “statutory provisions other than the drug and device definitions that may indicate Congressional intention regarding the appropriate regulatory pathway (i.e., drug or device) for certain types of products.”

Interestingly, throughout Genus’s dealings with FDA, the Agency insisted that very few products had been subject to its “discretion” to regulate devices as drugs, but the Federal Register Notice implies that the transition will affect more than a handful of stakeholders.  It’s unclear at this time how many products have been erroneously classified due to FDA’s purported discretion, and its request for comments on other statutory provisions that may direct the appropriate regulatory pathway suggests that application of this discretion may not have been limited to devices.  In that case, it’s not entirely clear how far FDA believed its discretion extended, and on what basis that discretion was predicated.  It definitely seems possible that FDA’s exercise of discretion went farther than the Agency represented.  We look forward to seeing the tentative list of products that need to transition, and reading industry comments.

Comments are due on October 8, 2021.

By Jeffrey N. Wasserstein & Dara Katcher Levy —

We are old enough to remember the “poke” function on Facebook, and too old to remember what purpose it served.  We are similarly at a loss to understand the purpose of Facebook’s new policy requiring that pharmaceutical manufacturers, telehealth companies, and online pharmacies apply for permission to advertise on Facebook.  This new policy goes into effect on August 25, 2021.

The new policy restricts advertising prescription drugs to the three types of entities mentioned above.  Prior to advertising prescription drugs, these entities must apply for permission to do so.  The application form is fairly basic and seems designed to ensure that the advertiser is a legitimate business. Telehealth companies and online pharmacies must submit certification from LegitScript, an organization that provides certification for online health entities, primarily in the addiction treatment space.  Pharmaceutical companies do not need to do this.

Advertisers are limited to promoting prescription drugs in the US, Canada, and New Zealand, and only to people over the age of 18.

So far, so good.  This is pretty basic, although other than ensuring that the entities are real and not scammers or selling illicit drugs, we’re not sure what purpose this serves.  For example, while pharmaceutical companies do submit paid advertisements, much of their Facebook and social media activity is on their own pages, whether corporate, product, or disease state (or, in many cases, all three).  This policy doesn’t seem to restrict those activities.  While those pages require activity by the user to view them, as opposed to ads which are proactively put in the Facebook user’s feed, it still seems to be inconsistent.  And what about influencer marketing?  It is unlikely that this policy impacts sponcon – an increasingly popular means to deliver messaging to a particular demographic.

Nor does the policy apply to prescription medical devices which we’ve also seen advertised endlessly on Facebook.  (Hey, as we opened with, we’re “of a certain age”.  And Facebook is good at targeting our demographic.  They don’t advertise video games and acne products to us.)

Facebook has stated that it can take up to four to six business days to validate information provided and to approve the application.  Since the policy goes into effect on August 25th, advertisers should postpone those summer vacations and “poke” Facebook.  (Seriously, can someone explain the poke function?)

By Faraz Siddiqui —

On Monday August 2, 2021, the Senate took up for review H.R. 3684, the Infrastructure Investment and Jobs Act, following House passage of its version last month. Although the bipartisan bill largely deals with the nation’s transportation infrastructure, Section 90006 delays the so-called “rebate rule,” a Trump-era rule finalized by the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services in December 2020 to prevent Medicare Part D and Medicaid Managed Care plans from receiving rebates from manufacturers unless the rebates are passed through to pharmacies to reduce patient out-of-pocket expenses.

We previously explained the rebate rule and its likely impact on patients and payors here. The rebate rule significantly narrows the anti-kickback statute (AKS) safe harbor for discounts, so that it excludes manufacturer rebates to Medicare Part D plans (or their pharmacy benefits managers (PBMs)). See 42 C.F.R. § 1001.952(h). At the same time, the rule establishes a new safe harbor protecting rebates paid by manufacturers to Part D plans, Medicaid Managed Care plans, or their respective PBMs if the rebates are passed through to the dispensing pharmacy.  OIG argued that confidential manufacturer rebates to Medicare Part D plan sponsors and PBMs generally do not reduce patient out-of-pocket costs but act as kickbacks to these “middlemen.” CMS estimated that the rule would result in savings in individual out-of-pocket costs but such savings would be more than offset by increased premiums. The rule was estimated to cost the federal government around $196 billion over ten years.

The new safe harbor was originally effective on January 29, 2021 and the new discount safe harbor exclusion on January 1, 2022, but these effective dates were delayed until January 1, 2023 pursuant to court orders in a lawsuit brought by the PBM industry association.  Section 90006 of the proposed infrastructure bill would further delay implementation of the rebate rule until January 1, 2026, providing the government with an estimated savings of $49 billion. See bipartisan bill summary at 5. If the infrastructure bill passes the Senate, the rebate rule delay would still have to survive reconciliation with the House version of the infrastructure bill, which did not contain the delay provision.

By Kurt R. Karst —

Last week the Drug Enforcement Administration (“DEA”) issued a direct final rule clarifying requirements about who may record the supplier’s DEA registration number on a single-sheet DEA Form 222 (“single-sheet form”).  Clarification Regarding the Supplier’s DEA Registration Number on the Single-Sheet DEA Form 222, 86 Fed. Reg. 38230 (July 20, 2021).  DEA issued a final rule in September 2019 implementing a new single-sheet form to replace triplicate carbon copy DEA Form 222s (“triplicate forms”).  New Single-Sheet Format for U.S. Official Order Form for Schedule I and II Controlled Substances (DEA Form 222), 84 Fed. Reg. 51368 (Sept. 30, 2019).

DEA requires registrants use DEA-222s to transfer schedule I and II controlled substances.  (Registrants may also use DEA’s electronic Controlled Substance Ordering System (“CSOS”)).  Both the single-sheet and triplicate forms require information about the supplier, including their name, address and DEA registration number.  21 C.F.R § 1305.12(c).  DEA explained, consistent with the triplicate form, that the final rule requires the supplier when filling the order to record their DEA registration number on the DEA-222.  DEA notes that the field on the triplicate form for the supplier’s registration number is in the section marked “To Be Filled in By Supplier” while the field on the single-sheet form for the supplier’s registration is in the section titled “To Be Filled In By the Purchaser.”  Needless to say, the inconsistency has caused some confusion for DEA registrants.

The final rule clarifies that either the purchaser or, if not entered by the purchaser, the supplier, may record the supplier’s DEA number on a single-sheet form.  Allowing the purchaser to omit a supplier’s DEA registration number for the supplier to add later provides flexibility for when a supplier may have to fill an order from a different registered location than the one contemplated by a purchaser.

As a reminder, registrants may only use their triplicate forms until they exhaust their supply, after which they must use single-sheet forms.  But in any case, registrants must cease using triplicate forms as of October 30, 2021, after which time they must use single-sheet forms.  21 C.F.R. § 1305.20.

As a direct final rule, the rule becomes effective October 18, 2021, unless DEA receives significant adverse comment.  DEA will withdraw the rule by September 20, 2021, if it receives significant adverse comment.  Electronic comments must be submitted, and written comments postmarked, on or before August 19, 2021.

By Serra J. Schlanger —

Maine and Nevada previously enacted laws requiring drug manufacturers to report information about the pricing of their products. (See our coverage here and here). As summarized below, each state has recently updated their reporting requirements.  Both states’ new requirements will become effective in October 2021 and should be considered as manufacturers prepare for state drug price transparency reporting in 2022.

Maine

LD 686 provides the Maine Health Data Organization with new authority to publish a list of the prescription drugs for which the manufacturer has: (A) increased the wholesale acquisition cost (WAC) of a brand-name drug by more than 20% per pricing unit; (B) increased the WAC of a generic drug that costs at least $10 per pricing unit more than 20% per pricing unit; or (C) introduced a new drug with a WAC that exceeds the threshold for a specialty drug under the Medicare Part D Program (currently $670). This list will be posted on a publicly accessible website no later than January 30, 2022 and updated annually thereafter.

LD 686 also revises the process for disclosures by manufacturers, wholesale drug distributors and pharmacy benefits managers (PBMs). Previously, manufacturers, wholesale drug distributors and PBMs were required to provide “pricing component data” within 60 days of a request from the state. Now, the state will post a list of drug product families for which it intends to request pricing component data from manufacturers, wholesale drug distributors, and PBMs on a publicly available website on or before February 15th each year. No sooner than 30 days after the posting of the list, the state shall provide notice via email to manufacturers, wholesale drug distributors, and PBMs of its request for pricing component data. These entities will then have 60 days to provide the pricing component data to the state. “Drug product family” is defined as “a group of one or more prescription drugs that share a unique generic drug description and drug form.” In determining which drug product families are included on the list, the state intends to consider prescription drugs included on the public notice list described above, as well as the 25 costliest drugs, the 25 most frequently prescribed drugs, and the 25 drugs with the highest year-over-year cost increases.

The definition of “manufacturer” has also been updated to specify that a manufacturer is an entity that manufactures or repackages, and sets the WAC for, prescription drugs.

Finally, LD 686 updates the confidentiality provisions that apply to information disclosed to the state by manufacturers, wholesale drug distributors and PBMs. While information could previously be shared in the aggregate if it did not allow for the identification of an individual drug, the state may now share information in the aggregate “as long as it is not released in a manner that allows the determination of individual prescription drug pricing contract terms covering a manufacturer, wholesale drug distributor or [PBM].” In addition, the state may share information that is publicly available.

Nevada

Nevada’s reporting requirements have previously been primarily focused on drugs deemed to be essential for treating asthma and diabetes and included on an annual list published by the state (the “Essential Drug List”). SB 380 removes asthma from the Essential Drug List, and provides the state with authority to compile an additional new list of drugs for which manufacturers will need to report information. The latter list, which will be published at the same time as the Essential Diabetes Drug list, will consist of prescription drugs with a WAC exceeding $40 for a course of therapy that have been subject to an increase in WAC of 10% or greater during the immediately preceding calendar year or 20% or greater during the immediately preceding two calendar years (the “WAC Increase List”). A “course of therapy” is defined as the recommended daily dosage as set forth on the FDA-approved label for 30 days, or, if the normal course of treatment is less than 30 days, the recommended daily dosage set forth on the FDA-approved label for the duration of the recommended course of treatment. Manufacturers of drugs that appear on either or both of the current Essential Drug List or WAC Increase List must submit reports to the state by April 1 of each year. The elements of the manufacturer’s reports remain substantially the same, however SB 380 adds new reporting elements if the manufacturer acquired the intellectual property for the drug within the immediately preceding five years.

SB 380 also updates the reporting requirements for PBMs and adds a new reporting requirement for wholesalers that sell prescription drugs included on either or both of the lists compiled by the state. By April 1 of each year, wholesalers that sell these products must report information regarding WAC and rebates with manufacturers, pharmacies, PBMs, and other entities. Wholesalers that do not comply with the reporting requirements are subject to the same penalties that can be assessed against manufacturers and PBMs – i.e., up to $5,000 per day of violation.

By Riëtte van Laack —

On July 1, 2021, the Federal Trade Commission (FTC) announced the availability of the pre-publication of the final rule on “Made in USA” (MUSA) claims in the Federal Register. The final rule was published on July 14, 2021.  We previously reported on events that resulted in this rule.

FTC received more than 700 comments in response to the notice of proposed rulemaking from individuals, industry groups, consumer organizations, and members of Congress. FTC concluded that none of the comments provided a compelling basis to change the substantive requirements of the proposed rule.

The rule does not set a new standard for MUSA claims.  Instead, it authorizes FTC to seek not only an injunction but also civil penalties of up to $43,280 per violation of the final rule.

The new rule applies not only to product labeling, but to any “mail order catalog” or “mail order promotional material” that includes a seal, mark, tag, or stamp that labels a product as having been made in the United States.  Mail order catalogs and promotional material are defined as “any materials, used in the direct sale or direct offering for sale of any product or service, that are disseminated in print or by electronic means, and that solicit the purchase of such product or service by mail, telephone, electronic mail, or some other method without examining the actual product purchased.”

As we previously reported, two Commissioners did not support the proposed rule and questioned FTC’s application of the rule to materials that did not appear to constitute labels, such as mail order catalogs.  In the preamble to the final rule, FTC concludes that the final rule does not cover MUSA claims in all advertising.  Instead, it covers labels appearing in all contexts, whether, for example, they appear on product packaging or online.  FTC does not clarify the definition of labels and we anticipate that the meaning of that term will become a topic of discussion when FTC asserts that a Company is liable under the new rule for a claim appearing in a context that arguably does not constitute a “label.”

Some notes about the final rule:

• It applies only to unqualified MUSA label claims.  For false or misleading qualified MUSA claims, FTC authority remains limited to injunctive relief.
• It includes a list of equivalents to “Made in USA” in 16 C.F.R. § 323.1 (listing “made,” “manufactured,” “built,” “produced,” “created,” or “crafted” in the United States or in America).  However, this list is not exhaustive.
• The final rule does not supersede, alter, or affect the application of any other federal statute or regulation relating to country-of-origin labeling requirements, including but not limited to regulations issued under the Federal Meat Inspection Act, the Poultry Products Inspection Act.; or the Egg Products Inspection Act.  As readers of our blog know, “Product of USA” and other country of origin labeling issues on meat and poultry products have been an issue of discussion in recent years.  Last year, in response to a Petition regarding such claims, USDA committed to  rulemaking to address the voluntary use of “Product of USA” claims on meat and poultry.  On July 1, 2021, USDA announced its plan to initiate a top-to-bottom review of “Product of USA” claims.  (Incidentally, earlier in June, the National Cattlemen’s Beef Association submitted a Petition to USDA requesting notice and comment rulemaking regarding “Product of USA” claims on beef products).
• The effective date of the rule is Aug. 13, 2021.

By Dara Katcher Levy —

In case you missed it, FDA took to email and social media earlier this week (the equivalent of shouting it from the rooftops) to announce that it has notified Amgen Inc. of Neulasta (pegfilgrastim) misbranding due to false or misleading promotion.  This is OPDP’s second Untitled Letter and fourth letter overall this year.

Notably, this Untitled Letter is solely based on false or misleading benefit claims – FDA did not take ANY issue with Amgen’s presentation of safety.  This is only the second letter of this type in over five years; in the first instance, FDA took issue with a demonstrably false claim.  FDA’s 2018 CFL Guidance seemed to signal to industry that FDA would be more flexible on Rx drug benefit claims.  Generally, FDA has stayed true to that approach – with a focus on promotion that has some element of risk minimization.  Given this background, what happened here?

What happened is likely FDA’s concerns that the Neulasta promotion misleadingly sought to sow doubt about the efficacy of biosimilars.  While not a specifically stated priority for OPDP, FDA has prioritized biosimilar development to encourage innovation and competition among biologics.  As part of its initiatives on this front, FDA issued a Draft Guidance in February 2020 on Promotional Labeling and Advertising Considerations for Prescription Biological Reference and Biosimilar Products (Biologics Promotional Guidance).

The Neulasta promotion identified in the Untitled Letter is an animated banner that compares the rates of febrile neutropenia (FN) between “pegfilgrastim” pre-filled syringes (PFS) and Neulasta Onpro.  The banner presents claims that PFS resulted in a 31% increase in the rate of FN compared to Onpro.  This claim is based on a real world, retrospective study of 11,000 patients, comparing Neulasta PFS and Neulasta Onpro.  While the study evaluated Neulasta products in both arms, the banner refers to the PFS arm as “pegfilgrastim PFS,” NOT Neulasta PFS.  OPDP called out the use of this terminology in its letter:

The above misleading claims and presentations are particularly concerning from a public health perspective because they could undermine confidence not just in Neulasta delivered via PFS but also in FDA-licensed biosimilar pegfilgrastim products, which are only delivered via PFS. The above claims prominently present “Pegfilgrastim PFS” (emphasis added) as the comparator arm vs. “Neulasta Onpro” and “Onpro.” The use of the proper name (i.e., nonproprietary name) of Amgen’s PFS product, on the one hand, and the proprietary name of its OBI product, on the other, could result in healthcare providers failing to understand that Amgen’s Neulasta was used in both arms of the study. Healthcare providers could conclude that a biosimilar pegfilgrastim product delivered via PFS is not as effective as Amgen’s OBI product (i.e., Neulasta Onpro). As noted above, the study cited is inadequately designed and precludes the drawing of conclusions regarding the comparative risk of FN in patients taking Amgen’s pegfilgrastim products depending on delivery method. It likewise does not support conclusions about any other FDA-licensed pegfilgrastim products.

The Untitled Letter’s discussion about the name used aligns with FDA’s position, as articulated in its Biologics Promotional Guidance, on clearly identifying biological products in promotion:

Firms should carefully evaluate the information presented in promotional materials for reference products or biosimilar products to ensure that in each instance where the promotional materials address a product or products, the materials correctly and specifically identify the product or products to which the information applies (e.g., the reference product, the biosimilar product, or both the reference product and the biosimilar). . . Clearly and correctly identifying the relevant biological product or products in promotional materials can help prevent presentations that are inaccurate because they attribute data or information to the wrong product. It can also help the audience identify which product or products are the subject of a particular promotional presentation.

Biologics Promotional Guidance at 4.

Notwithstanding the name used, OPDP pointed out the following inadequacies with the study that render the claims misleading.  The study

• was not designed to ensure that patients with FN were appropriately identified;
• had no control to ensure the study populations were adequately balanced; and
• selection bias was possible given the small absolute difference in rates between the arms.

FDA also stated that the disclosure of study limitations in the last two frames of the animation did not mitigate the misleading claims and presentations in the banner.

Interestingly, while FDA focused on an animated banner, it also called out its receipt of complaints through the FDA Bad Ad Program “regarding promotional communications with similar claims and presentations as the one discussed in this letter.”  The statement seems to suggest that this may be a course of conduct by Amgen with regard to Neulasta promotion.  Twenty years ago, FDA’s Warning Letter to AstraZeneca sent a strong message to industry that FDA would not tolerate brand messaging that suggested generic drugs were somehow less safe or effective than reference products.  We are interested to see whether OPDP will continue this approach through the strategic use of enforcement letters to protect biosimilars.

By Karin F.R. Moore & Ricardo Carvajal —

While some of us are just starting to recover from graduations, ends of fiscal years, or just looking forward to a summer vacation and listening to the Rolling Stones, time is decidedly not on your side if you have not yet determined if your food or dietary supplements need to be labeled under the National Bioengineered Food Disclosure Standard (BE standard).

With the approach of the January 1, 2022 mandatory compliance deadline for the BE standard, manufacturers and importers of food and dietary supplements should work to develop strategies for compliance and evaluating each product’s bioengineered (BE) status if they have not already done so. For those still in the process of doing so, or those who want a refresher on the requirements, we just authored an article for the Regulatory Affairs Professionals Society outlining the requirements under the BE standard. Prior posts on the BE Standard and its implementing regulations can be found here, here, and here.

The mandatory disclosure requirement of the BE standard applies to human food, including dietary supplements, that is subject to the labeling requirements under the Federal Food, Drug, and Cosmetic Act, as well as some products under the jurisdiction of the USDA’s Food Safety and Inspection Service. There are several express exemptions to the disclosure requirement in the regulations, including an exemption for very small manufacturers, a threshold for inadvertent or technically unavoidable presence of BE substances of up to 5% for each ingredient, and food and supplements certified under AMS’s National Organic Program. The BE standard and its implementing regulations require food containing any amount of a bioengineered substance that is not inadvertent or unintentional to bear a disclosure.

While our article was written for the dietary supplement industry, the requirements are the same for foods.

By Alan M. Kirschenbaum —

On Friday, President Biden issued a wide ranging Executive Order seeking to address overconcentration, monopolization, and unfair competition in the U.S. economy.  Using an aptly named “whole-of-government” approach, the Order calls on the Department of Justice, the Federal Trade Commission, the Agriculture Department, the Treasury Department, the Department of Commerce, the Department of Health and Human Services (DHHS), and other agencies to implement wide-ranging policies to combat the “excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony – especially as these issues arise in labor markets agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets) . . . .”

Among the Order’s mandates for DHHS are several relating to prescription drugs.  The Secretary of Health and Human Services is directed to submit to the White House, by August 23, a plan to “combat excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce pries paid by the Federal Government for such drugs, and to address the recurrent problem of price gouging.”  DHHS is also called upon to implement existing laws and initiatives supporting the development, approval, and Medicare and Medicaid payment for generics and biosimilars.

But the Order’s most specific mandate relating to prescription drugs pertains to the importation of drugs from Canada.  The Order calls on FDA “to reduce the cost of covered products to the American consumer without imposing additional risk to public health and safety, [by working] with States and Indian Tribes that propose to develop section 804 Importation Programs . . . .”  Section 804 was added to the Federal Food, Drug, and Cosmetic Act in 2003 to authorize the importation of prescription drugs from Canada under certain conditions, but until 2020, no administration had made the statutorily required certification that an importation program will pose no additional risk to the public’s health and safety and will result in a significant reduction in the cost of covered products to the American consumer.  On September 20, 2020, HHS under the Trump Administration made the required certification for the first time, and concurrently issued a final rule to permit states, and, in certain circumstances, pharmacies or wholesale distributors, to seek authorization from FDA to import certain drugs from Canada.  (See our blog post on the rule.)  However, the rule places the burden of demonstrating consumer savings on the sponsors of importation plans.  Two states have submitted importation plans to FDA for approval, but the rule and the certification were promptly challenged in federal court by the Pharmaceutical Research and Manufacturers of America (PhRMA) and other interest groups.

Prior to this Executive Order, the Biden Administration seemed to be ambivalent about drug importation.  The Justice Department recently filed a motion to dismiss the PhRMA lawsuit for lack of subject matter jurisdiction, or alternatively, for failure to state a claim, which would indicate that the Administration wanted to retain at least the option to implement drug importation through the 2020 regulation.  On the other hand, the Justice Department’s brief went into detail about how difficult it will be to pass the statutory hurdle and obtain FDA approval to import drugs from Canada, and also pointed out that Canada’s Minister of Health has issued an order restricting Canadian sellers from distributing drugs outside of Canada.

The Executive Order places the Biden Administration firmly behind drug importation.  Although the Order is careful to repeat Section 804’s requirement that importation may not impose additional risk to public health and safety, it calls on FDA to work with states and Indian Tribes to find a way to make importation work.

Despite the measures described above, the Order’s provisions relating to drug pricing are, on the whole, relatively modest.  In contrast to Donald Trump, President Biden apparently does not intend to address drug pricing primarily through this or other Executive Orders, or even through regulations.  Instead, the Order announces the President’s intention “to support aggressive legislative reforms that would lower prescription drug prices, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and through other related reforms.”  This statement (and a similar statement in the President’s FY 2021 budget) reflects Biden’s strategy of leaving the bulk of the work on drug price reduction to Congress.