FDA Law Blog is the blog of Food and Drug Attorney @Hyman, Phelps & McNamara, P.C. ("HPM") and it is intended primarily for other attorneys and regulatory professionals. It will always strive to be unbiased in its reporting.
On February 11, 2019, Dr. Gottlieb issued a statement that appears to build on statements from December 2018. In December 2018, as part of remarks to the FDLI Enforcement, Litigation, and Compliance Conference, Dr. Gottlieb had alluded to FDA’s plans to step up its efforts regarding dietary supplement safety and deceptive claims. Dr. Gottlieb expressed concern that the industry had grown and outpaced the Agency’s capacity to manage new risks. As a first step, he had created a Dietary Supplement Working Group at the FDA, “comprised of representatives from multiple centers and offices across the agency” tasked to take “a hard look at what more the FDA can be doing within our existing authorities, including re-examining our own internal operating structure and procedures – and what new authorities might make sense.”
The February 11 statement provides additional details. As Dr. Gottlieb mentions, the Dietary Supplement Health Education Act (DSHEA) is almost 25 years old. The industry today is very different from the industry in 1994; among other things, it has grown significantly; “[w]hat was once a $4 billion industry comprised of about 4,000 unique products, is now an industry worth more than $40 billion, with more than 50,000 . . . different products available to consumers.” As a result, FDA has had to consider how to keep up with this growth and how it can continue to ensure that dietary supplements are safe, maintain product integrity, and to foster an environment of informed decision making by consumers and health care professionals.
Dr. Gottlieb announced five initiatives to increase oversight:
Rapid response tool: Dr Gottlieb mentioned that, in an effort to increase communication speed to consumers, the Agency has developed a rapid-response tool to alert the public when a supplement contains an illegal ingredient or poses a health risk. No further details were provided.
Update of FDA’s policies regarding New Dietary Ingredient Notifications (NDINs): Under the law, NDINs are required for new dietary ingredients (i.e., dietary ingredients that were first marketed after October 15, 1994) that are not already present in the food supply in a form not chemically altered. The NDINs provide FDA with an opportunity to evaluate safety. As readers of this blog know, FDA believes that the number of NDINs is too low; the Agency believes that there are many dietary ingredients marketed that are new dietary ingredients (NDIs) that would require an NDIN. Thus far, FDA has made two attempts to provide clarity about its policy regarding when an ingredient is an NDI and when an NDIN is needed. Gottlieb’s comments suggest that FDA may make another attempt. It plans to update its policy to “foster the submission” of NDINs by possibly providing some sort of reward (e.g, exclusivity) and help ensure that the regulatory framework is both sufficiently flexible and adequately protects public safety. FDA plans to schedule a meeting with industry this spring.
Creation of a Botanical Safety Consortium, a public-private partnership with the goal of providing appropriate tools to evaluate the safety of botanical ingredients. Among other things, this group “will look at novel ways to use cutting-edge toxicology tools, including alternatives to animal testing, to promote the goals of safety and effectiveness we share with consumers and other stakeholders.”
Enforcement actions against unlawful claims and ingredients: Dr. Gottlieb reports that FDA has improved efficiency of its internal processes regarding enforcement actions against illegal ingredients and points to actions against tianeptine, highly concentrated caffeine, and male enhancement products that contained sildenafil and/or tadalafil as examples. He mentions that the Agency will continue its efforts to take actions against unlawful claims and develop new enforcement strategies, and points to the concurrent press release regarding FDA’s action against companies marketing dietary supplements with illegal claims for Alzheimer’s. The Agency sent 12 warning letters and five advisory letters to marketers of more than 58 products which claims to prevent, treat, or cure Alzheimer’s disease and other serious health conditions such as diabetes and cancer. Three of these warning letters were jointly issued by FDA and the Federal Trade Commission.
Modernization of DSHEA. DSHEA is approaching its 25th anniversary. While Dr. Gottlieb recognizes the need to preserve DSHEA’s “essential balance,” he believes it might be valuable to consider certain amendments. He mentions FDA plans to engage in a public dialogue regarding the possible need to modernize DSHEA to establish avenues for dietary supplement exclusivity, providing industry with incentives to develop new products. Dr. Gottlieb also mentions the possibility of creating an FDA registry, for the mandatory listing of dietary supplements and ingredients. Presumably, such a registry would allow FDA to better track dietary supplements and concentrate enforcement efforts.
On February 5, 2019, FDA issued the guidance document The Least Burdensome Provisions: Concept and Principles (Final Guidance). This version supersedes the prior version in place since October 2002. FDA published a draft of the guidance (Draft Guidance) in December 2017, which we blogged on here.
As in the Draft Guidance, the Final Guidance defines “least burdensome” to be “the minimum amount of information necessary to adequately address a relevant regulatory question or issue through the most efficient manner at the right time.” Final Guidance at 4. The three elements of the definition, the minimum information necessary, the most efficient means, and the right time, continue to be the least burdensome principles discussed in the guidance. Overall, there are not any many differences in the Final Guidance compared to the Draft Guidance.
The seven guiding principles that FDA intends to apply, and industry is also encouraged to apply, when taking a least burdensome approach are unchanged, although additional details are added to their discussions. Related to industry’s least burdensome submission of material, FDA adds in the Final Guidance that “[i]ndustry should not submit information unrelated to the regulatory decision to FDA” and that “[i]ndustry should reference applicable FDA guidance documents where FDA recommendations were considered.” Id. at 8.
It can be a challenge for sponsors to know exactly what will be used in the regulatory decision making as the Agency continues to request new and different information to establish a reasonable assurance of safety and effectiveness or substantial equivalence. For 510(k)s, sponsors are required to include a signed statement that no material fact has been omitted and thus, may question whether omission of a study they performed might be problematic even if it does not seem necessary for regulatory decision making.
Additional examples of FDA’s use of less burdensome approaches have been added. Though not discussed as a problem with the least burdensome provisions, in addition to adding examples, FDA also removed an example from the Draft Guidance of their use of registries initially designed for postmarket surveillance to support expanded indications for vaginal mesh devices. FDA has been criticized for their oversight of these and other implanted devices where reports of safety issues are raised after being placed on the market.
There are several additions to the Final Guidance that should be welcomed by industry. For example, FDA says, “when discussing alternative approaches, FDA intends to take appropriate consideration of the time and resource implications of [their] additional information requests,” and “[t]he type and amount of minimum information requested by FDA can change over time based on new information that the Agency receives and a better understanding of the technology.” Id. at 13, 19. This latter statement is made in the context of FDA’s discussion of “smart regulation,” with examples such as 510(k) exemptions and enforcement discretion provided to support it. However, it often seems that perhaps more often, the changes over time go in the other direction toward requesting new and different data, studies, labeling, and so forth.
The Final Guidance also expands on the discussion of FDA’s intent to use least burdensome principles when contributing to global harmonization efforts and their down classification of devices. The last addition of note is a section titled “Just-in-time testing,” which promotes the “right time principle for IDE applications” allowing certain early feasibility studies to be “based on less nonclinical data than would be expected for a traditional feasibility or pivotal study.” Id. at 22.
While industry may still feel that they are continually being asked for more information, data, and studies to support their devices, the Final Guidance, by way of sharing examples where FDA has used least burdensome approaches, suggests that, in many cases, it could be worse. As noted in the Final Guidance, readers are encouraged to interact with the Agency early on so as to develop least burdensome approaches, especially in situations where their device may have or be perceived to have different risks.
By way of background, FDC Act § 505(q) was added to the law by the 2007 FDA Amendments Act (“FDAAA”) and is intended to prevent the citizen petition process from being used to delay approval of pending ANDAs and 505(b)(2) applications. The law was amended by Section 301 of Pub. L. No. 110-316 (2008), and again by Section 1135 of the 2012 FDA Safety and Innovation Act (“FDASIA”). Among other things, FDASIA changed the original 180-day response deadline to 150 days, and made the law applicable to citizen petitions concerning biosimilar applications submitted to FDA pursuant to PHS Act § 351(k). In June 2011, FDA issued final guidance on FDC Act § 505(q). That guidance was revised in November 2014 to account for changes made to the law by FDASIA. In January 2012, FDA issued proposed regulations to amend the Agency’s citizen petition regulations to implement changes made to the law by Section 505(q). FDA issued a final rule in November 2016.
Most recently, in October 2018, FDA issued a revised draft guidance that describes factors FDA will consider in determining whether a petition is submitted with the primary purpose of delaying the approval of a generic application (see our previous post here). Although the statute provides that FDA may summarily deny a petition submitted with the primary purpose of delaying ANDA, 505(b)(2) application, or 351(k) biosimilar approval, the Agency has never done so. FDA’s actions and words continue to build a firmer basis and procedure for someday doing so.
Under FDC Act § 505(q), FDA shall not delay approval of a pending ANDA, 505(b)(2) application, or 351(k) biosimilar application as a result of a citizen petition submitted to the Agency pursuant to 21 C.F.R. § 10.30 (citizen petition) or § 10.35 (petition for stay of action), unless FDA “determines, upon reviewing the petition, that a delay is necessary to protect the public health.” FDA is required to “take final agency action on a petition not later than 150 days after the date on which the petition is submitted.” FDA may not extend the 150-day period “for any reason,” including consent of the petitioner.
FDC Act § 505(q)(3) requires that each Report to Congress specify: “(A) the number of applications that were approved during the preceding 12-month period; (B) the number of such applications whose effective dates were delayed by petitions . . . during such period; (C) the number of days by which such applications were so delayed; and (D) the number of such petitions that were submitted during such period.” FDA says in its Tenth Annual Report to Congress that:
During the FY 2017 reporting period, the Agency approved 763 ANDAs, 57 505(b)(2) applications, and 3 biosimilar biological product applications. No approvals for biosimilar biological product applications or ANDAs were delayed because of a 505(q) petition in this reporting period. The approval of one 505(b)(2) application was delayed because of one 505(q) petition. During FY 2017, FDA received 25 505(q) petitions.
The delayed 505(b)(2) approval was delayed by 28 days. “FDA was concerned that if it approved the 505(b)(2) application before resolving the issues raised in the petition and later concluded that one or more of the arguments against approval were meritorious, then the presence on the market of a drug product that did not meet the requirements for approval could negatively affect public health,” says FDA in the report (in what is now boilerplate language). FDA does not identify by name or application number the particular approval delayed.
As to the number of 505(q) citizen petitions submitted in FY 2017, the Report says that the Agency received 25 petitions, which is up from 19 in FY 2016. The outcomes of FDA’s 210 petition responses from FY 2008 through FY 2017 are shown in a table included in the report. Approximately 67% (141 petitions) of the 210 petition decisions have been denials, while another approximately 25% (53 petitions) have been denied in part and granted in part. Only about 5% (10 petitions) have been granted. Two petitions were granted in FY 2017, which is the first year in which FDA has granted a 505(q) petition since FY 2013. We think both of those petition decisions concerned the availability of New Chemical Entity exclusivity (see here and here). The remaining 6 petitions (about 3%) were voluntarily withdrawn by the petitioner. (You can view all relevant petitions on the FDA Law Blog Citizen Petition Tracker.)
As to 505(q) petitioning trends and FDA concerns, the Agency continues a trend of paring down comments that appeared in previous reports. That being said, FDA’s bottom line in the FY 2017 Report maintains the tone adopted in the FY 2016 report and concludes with the statement, “Accordingly, as part of the Drug Competition Action Plan, FDA is reviewing what actions can be taken to address these issues.”
FDA Commissioner Dr. Scott Gottlieb announced the Agency’s Drug Competition Action Plan (“DCAP”) in Spring 2017 (here). The intent of the DCAP is to encourage generic drug development and competition. Since the creation of the DCAP, FDA has taken several steps to implement that plan, including holding a public meeting in July 2017, issuing REMS guidance in May 2018 (here), and issuing last week a Manual of Policies and Procedures on internal FDA responsibilities and procedures for developing a single, shared system REMS or a separate REMS (here). Given FDA’s statement that the Agency is reviewing what actions can be taken under the DCAP to address citizen petition concerns, more new citizen petition initiatives may be on the horizon.
The recent government shutdown gave us some time to reflect on 2018, a year that was full of device-related posts. Inspired by the recent Academy Awards nominations, we are now listing our Top Ten Device Posts of 2018. Some are blockbusters, and others indie stories, but they all earned a coveted place in the HPM Top Ten. Accompanied by a brief explanation for why they made the list, they are:
The draft guidance indicates that FDA will not regulate functions of a multi-function product that do not meet the statutory device definition or are devices that are subject to an existing enforcement discretion policy. Although issued in the context of medical device software, FDA states that it will apply the same principles to traditional devices as well.
FDA’s request for feedback on the Software Precertification Program, in which data is leveraged so that FDA can adopt a risk-based, streamlined approach to Software as a Medical Device review. This could – someday – replace the need for a premarket submission or allow for a streamlined premarket review for higher risk products.
FDA was asked to provide Technical Assistance regarding the Diagnostic Accuracy and Innovation Act (DAIA), intended to provide a regulatory framework for Laboratory Developed Tests. FDA advanced a different framework than that set forth in DAIA, one which essentially revamps the regulation of all In Vitro Diagnostics. These blog posts consider the implications of the proposed changes for industry. Many of these suggestions were incorporated in revised draft legislation. (See our recent post on draft IVD legislation here).
The Voluntary Malfunction Summary Reporting Program permits manufacturers to report certain device malfunctions for low-risk products in summary form on a quarterly basis, as an alternative to the Medical Device Reporting (MDR) requirements. This program has several significant limitations, described in detail in the blog post.
FDA sets forth a framework for analyzing the benefit-risk profile of a new device when determining whether it is as safe and effective as the predicate device in the review of substantial equivalence. This guidance is intended to improve predictability, consistency and transparency in the 510(k)-review process.
FDA announced a plan for revamping the 510(k) Third Party Review Program, including the issuance of a draft guidance that says it all: “510(k) Third Party Review Program.” This blog post reviews the current Third Party Review Program, how this new guidance purports to change it, and our assessment of its likelihood of making a difference.
This post reviews two new guidance documents that consolidate information on voluntary consensus standards used in medical device premarket submissions: (1) a draft guidance titled “Recognition and Withdrawal of Voluntary Consensus Standards”; and (2) a final guidance titled “Appropriate Use of Voluntary Consensus Standards in Premarket Submissions for Medical Devices.”
This post reviews the implications of an announcement by FDA Commissioner Dr. Scott Gottlieb and Dr. Jeffrey Shuren, Director of the Center for Devices and Radiological Health, that FDA is planning to “modernize” the 510(k) process through the elimination of old predicates and the creation of an alternative “Safety and Performance Based” 510(k) Pathway. This new story got a lot of buzz in the broader media.
This post outlines a recent example where the government targeted a manufacturer for failure to file adverse event reports associated with its duodenoscope product, rendering the product misbranded. The plea agreement requires the company to distribute to its U.S. customers a notice about the plea agreement, undertake certain compliance measures specific to MDR processes, and pay a fine of $80 million as well as a $5 million forfeiture.
(Dec. 13, 2018)
On December 4, 2018, FDA issued a proposed rule that would govern the de novo classification process. This post analyzes the implications of the proposed rule, including an assessment of whether it unduly increases the burden on applicants. Spoiler alert. We think it does.
This post analyzes FDA’s draft guidance, “Consideration of Uncertainty in Making Benefit-Risk Determinations in Medical Device Premarket Approvals, De Novo Classifications, and Humanitarian Device Exemptions,” which is intended to describe factors that FDA will consider when assessing uncertainty as part of a benefit-risk assessment in PMA, De Novo, and HDE submissions.
In all, 2018 was a year filled with worthy contenders for a Top Ten ranking. With the shutdown, 2019 is off to a slow start, but there’s plenty of time to catch up.
Hyman, Phelps & McNamara, P.C. (“HP&M”) is pleased to announce that Michael Shumsky has become its newest Director. Mike joined HP&M in February 2019 after nearly 15 years at Kirkland & Ellis LLP, where he played a key role in developing that firm’s FDA and pharmaceutical practices.
As a Director at HP&M, Mike will continue to provide strategic advice and counseling to U.S. and global pharmaceutical companies pursuing FDA approval of NDAs, 505(b)(2) products, ANDAs, BLAs and biosimilar applications. In addition to helping clients develop successful regulatory strategies and perfect high-stakes regulatory submissions, Mike has litigated a number of significant Hatch-Waxman matters arising from the award or denial of 180-day exclusivity, 3-year and 5-year exclusivity, orphan drug exclusivity, 30-month stays, and REMS-related matters. Courts and commentators alike have praised Mike’s abilities as both a writer and oral advocate, and he repeatedly has been recognized as a “Rising Star” in both the Life Sciences and Appellate Litigation fields.
Mike graduated from Harvard College, where he was elected to Phi Beta Kappa, and Yale Law School, where he was an officer on the Yale Law Journal. After law school, Mike clerked for the Hon. Diarmuid F. O’Scannlain on the U.S. Court of Appeals for the Ninth Circuit. He currently serves as a Lecturer in Law at Columbia Law School, where he teaches a popular seminar on the U.S. Supreme Court.
Readers who work with laboratory tests are likely aware that such tests can be subject to regulation by FDA, CMS, and individual states. A few state laws, particularly those in Maryland, New York, New Jersey, and Rhode Island, currently constrain how some laboratory tests are offered in those states.
On February 2, 2019, two bills were introduced to the Maryland General Assembly to address Maryland’s constraints. HB0526 and SB0495 both propose to modify Maryland Health General Code § 17‑215, which prohibits advertising or soliciting for medical laboratories. The Maryland law currently states: “A person may not directly or indirectly advertise for or solicit business in this State for any medical laboratory, regardless of location, from anyone except a physician, hospital, medical laboratory, clinic, clinical installation, or other medical care facility.” Under Maryland law, a “medical laboratory” includes “any facility, entity, or site that offers or performs tests or examinations in connection with the diagnosis and control of human diseases or the assessment of human health, nutritional, or medical conditions or in connection with job-related drug and alcohol testing.” Md Health Gen. Code § 17‑201(c). The cross-filed bills seek to create an exception to the current prohibition for laboratory tests that are ordered by a physician and performed by a medical laboratory certified under 42 U.S.C. § 263a (e.g., a CLIA-certified laboratory). If passed, the change would take effect on October 1, 2019.
It appears that the advertising prohibition has been in effect in Maryland since 1957, but the reasoning behind this particular law may be lost in the history books. Regardless, there have been many, many changes and developments in the field of laboratory testing and the regulations that apply to laboratory testing over the past 60+ years. For example, federal regulation of laboratory testing was introduced in 1967 (see Pub. Law 90-174 § 5(a)) and then amended by the Clinical Laboratory Improvement Amendments of 1988. FDA’s views and regulation of laboratory tests have also changed over the past 60+ years, particularly for laboratory developed tests (LDTs) (see previous posts here, here, here, here, here, and here). Congress is currently considering changes to the regulatory framework for laboratory tests (see our coverage of the VALID Act here).
We work with a number of clients who have been restricted by the current Maryland law and believe that the law is likely limiting the laboratory testing available to Maryland residents. We will continue to monitor these efforts to expand access to laboratory testing in Maryland.
Since FDA announced in late 2016 that it would not finalize its laboratory developed test (LDT) guidances, it has become clear that any change to the LDT regulatory framework (at least during this administration) would need to come through a statutory change. The first such proposal came in early 2017 with the release of the Diagnostic Accuracy and Innovation Act (DAIA). FDA provided Technical Assistance (TA) on the DAIA last summer (see our earlier posts here and here). As noted in our posts, FDA’s TA was essentially a complete rewrite of the DAIA, and the changes were viewed negatively by many in the industry.
While we do not expect that the discussion draft will be finalized in anything like its current form, we thought our readers would be interested in reading a short summary of the draft bill to understand the revised framework as it is radically different from what IVD manufacturers and labs are operating under today. Our summary can be found here. We encourage those with a stake in this legislation to contact their legislators, trade organizations, or other groups to provide feedback to this draft. If finalized, this legislation could profoundly affect the availability and innovation of diagnostic tests.
We would also note that the discussion draft contains explicit requests for feedback. Some sections relating to critical topics, e.g., breakthrough IVDs, are blank placeholders, or are bracketed, e.g., transfer or sale of approval or the precertification program.
Finally, we would emphasize that in a bill this complicated, careful drafting is essential. Even seemingly modest tweaks to the established but complex IVD regulatory universe can have large ramifications, and the draft bill is anything but a modest tweak.
In yet another step to address drug pricing, Commissioner Gottlieb announced last week several new initiatives, including an update to the reveredOrange Book. Cue the crazy Muppet arms! Proclaiming the Orange Book update a “transparency initiative,” FDA expects that this undertaking will “provide greater certainty around timing of market entry and enable more informed decisions.” This is all part of the Agency’s extensive effort to enhance competition, which has resulted in several new guidance documents pertaining to generic development, efforts to reform the Citizen Petition process, new priority reviews, an ICH proposal, and other efforts to expedite generic approval. As Commissioner Gottlieb points out, FDA has made great strides in streamlining the generic review process in the last few years, including record numbers of generic drug approvals and tentative approvals in 2017 and 2018.
Over the course of 2019, FDA intends to issue two Orange Book-focused draft guidances. The first is a draft guidance document explaining the process for therapeutic equivalence evaluation and the assignment of the TE codes listed in the Orange Book. This is intended to facilitate requests for TE codes, as well as encourage development of more therapeutically equivalent drugs – particularly under the 505(b)(2) pathway, as 505(b)(2) applicants typically must request a TE code by Citizen Petition (unlike ANDAs, where a TE code is routinely assigned upon listing). As such, FDA also believes that such clarity on TE codes may facilitate development of complex generics through the 505(b)(2) pathway. The second Orange Book guidance will be a draft guidance with FAQs about reading and using the Orange Book.
FDA also plans to solicit public comment on the use of the Orange Book with an emphasis on potential enhancements. It also seems like FDA may finally address whether drug-device patents – or now, given the hi-tech era we are in – drug-digital app patents should be listed in the Orange Book. Industry has been asking for instruction on this issue for about 15 years, and without word from FDA, many manufacturers have decided to list them anyway if the device is integral to the drug as approved, so it will be interesting to see if FDA will change the current practice. Again, FDA is doing this for the purposes of transparency so that potential manufacturers can now determine if a digital app patent might block marketing of a generic drug before investing resources.
FDA also announced a new guidance document, Marketing Status Notifications Under Section 506I of the Federal Food, Drug, and Cosmetic Act; Content and Format, which provides notification instructions for discontinued drugs, as required under FDARA. 506I of the FDCA requires manufacturers to provide notification to the Agency of the drug withdrawn from sale or the unavailability of a drug and requires the submission of a one-time report on marketing status for actively marketed drugs. These statutorily-required notifications are intended to help the Agency understand which products are actively marketed and where there is a need for more generic competition.
Of note, the guidance explains that “withdrawn from sale” does not mean that the NDA or ANDA itself has been withdrawn, but that the drug has been discontinued from marketing – even temporarily. FDA will use these notifications to determine whether to move products not available for sale to the “Discontinued” list. Applicants withdrawing their product from sale must submit the notification 180 days prior to withdrawal, and newly approved drugs must submit the notification within 180 days of the date of approval of a drug if that drug will not be available for sale within 180 days of the date of approval. Notifications are expected to include NDC numbers (for previously marketed drugs); the established name of the drug; the proprietary name of the drug, if applicable; the NDA or ANDA number; the strength of the drug; the date in which the drug will no longer be for sale or on which the drug will be available for sale, if known; and the reason for withdrawing or not marketing the drug. Application holders who fail to submit this notification may also find their drugs moved from the “Active” to the “Discontinued” list.
Needless to say, we here at the FDA Law Blog are excited.
Over the 12 years that we’ve been doing this blogging gig, we’ve never before drawn inspiration for a post from Lebowski Pony – a.k.a. “the Dude” – that iconic character from the 1998 film The Big Lebowski, written and directed by Joel and Ethan Coen. (By the by, “the Dude” is supposed to be making an appearance in a Super Bowl commercial on Sunday.) But the Dude came to mind while cogitating on a bill – the Bringing Low-cost Options and Competition while Keeping Incentives for New Generics Act, or “BLOCKING Act” – introduced on January 31, 2019 by Representatives Kurt Schrader (D-OR) and Earl L. “Buddy” Carter (R-GA) to amend the FDC Act’s 180-day exclusivity provisions. Well, as the Dude says, “[t]his will not stand, ya know, this aggression will not stand, man.”
We’de normally give you a lot of background on the issue at this point in our post, but channeling our inner Dude, we’ll just say: “This is a very complicated case, Maude. You know, a lotta ins, lotta outs, lotta what-have-you’s. And, uh, lotta strands to keep in my head, man. Lotta strands in old Duder’s head. Luckily I’m adhering to a pretty strict, uh, drug regimen to keep my mind, you know, limber.”
Well, on second thought, we may need a little more here than the Dude’s script can offer. (Ha! Get it?) . . . .
Last February, the Trump Administration released a proposed Fiscal Year 2019 Budget. Tucked into the Proposed Budget are provisions concerning 180-day generic drug exclusivity billed as an incentive to increase generic drug competition. But as we noted in a post at the time, the Budget Proposal could have exactly the opposite effect. Here’s a small taste of how the 180-day exclusivity provisions are described in the Budget Proposal:
The proposal ensures that first-to-file generic applicants who have been awarded a 180-day exclusivity period do not unreasonably and indefinitely block subsequent generics from entering the market beyond the exclusivity period. Under this proposal, when a first-to-file generic application is not yet approved due to deficiencies, FDA would be able to tentatively approve a subsequent generic application, which would start the 180-day exclusivity clock, rather than waiting an indefinite period for the first-to-file applicant to fix the deficiencies in its application.
In short, the concern the Trump Administration appears to want to address is a first applicant’s ability to “park” 180-day exclusivity eligibility because of alleged “deficiencies” (e.g., unresolved cGMP concerns) that prevent FDA from granting final ANDA approval and commercial marketing under that application (thus triggering 180-day exclusivity) while subsequent ANDA applicants otherwise ready for approval are blocked from obtaining final approval solely because of a first applicant’s continuing eligibility for exclusivity. (Perhaps the most prominent examples of the occurrence of this scenario concerned Ranbaxy Laboratories. Ranbaxy, which was a first applicant eligible for 180-day exclusivity on several blockbuster drugs – e.g., valsartan, esomeprazole magnesium, and valganciclovir HCl – entered into a Consent Decree with FDA and the Department of Justice in January 2012, and was placed on FDA’s Application Integrity Policy List because of alleged fraudulent activity in connection with ANDA submissions. Those concerns and allegations prevented FDA from granting final ANDA approval, and resulted in “parked” 180-day exclusivity until an alternative basis for forfeiture of 180-day exclusivity was found by FDA.)
The Fiscal Year 2019 Budget did not include draft language to implement the proposal discussed above. That task became FDA’s (HHS’s) responsibility, and draft language was eventually forwarded to Capitol Hill. Now that draft language has made its way into a bill: the BLOCKING Act.
The BLOCKING Act would amend FDC Act § 505(j)(5)(B)(iv), titled “180-day exclusivity period,” to place some new conditions on when a subsequent Paragraph IV ANDA can be approved, and thus, when 180-day exclusivity is triggered. Below is the relevant text from the bill with proposed additions identified in red, italicized, bold typeface:
(iv) 180-day exclusivity period.—
(I) Effectiveness of application.—Subject to subparagraph (D), if the application contains a certification described in paragraph (2)(A)(vii)(IV) and is for a drug for which a first applicant has submitted an application containing such a certification, the application shall be made effective on the date that is 180 days after the earlier of—
(aa) the date of the first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant; or
(bb) the applicable date specified in subclause (III).
(III) APPLICABLE DATE.—The applicable date specified in this subclause, with respect to an application for a drug described in subclause (I), is the date on which each of the following conditions is first met:
(aa) The approval of such an application could be made effective, but for the eligibility of a first applicant for 180-day exclusivity under this clause.
(bb) At least 30 months have passed since the date of submission of an application for the drug by at least one first applicant.
(cc) Approval of an application for the drug submitted by at least one first applicant would not be precluded under clause (iii).
(dd) No application for the drug submitted by any first applicant is approved at the time the conditions under items (aa), (bb), and (cc) are all met, regardless of whether such an application is subsequently approved.
Let’s take a closer look at the proposed (III) conditions – all of which must be in place for 180-day exclusivity to be triggered – one at a time . . .
Condition “(aa)” assumes a “but for” world in which a subsequent Paragraph IV ANDA could be approved if no first applicant were eligible for 180-day exclusivity. In the “real world” this means that a subsequent Paragraph IV ANDA can only be tentatively approved because of a first applicant’s eligiblity for 180-day exclusivity.
Condition “(bb)” seems to assume – at least when read in connection with condition “(dd)” – that if a first applicant is unable to secure final ANDA approval within 30 months of ANDA submission, then there must be problems (i.e., deficiencies) with the application. In fact, in a case where there are multiple first applicants, all it takes under the language of the bill is any one of those first applicants to reach the 30-month mark without approval. We note in passing that FDA’s Fiscal Year 2019 Justification of Estimates for Appropriations Committees says that the “Median Review Time from ANDA Receipt to Approval” was 37.26 months (FY 2017 Actual), is 37.00 months (FY 2018 Annualized CR), and is estimated to be 36.75 months (FY 2019 President’s Budget). Those figures are alarming when matched up with the 30-month provision in the bill (i.e., condition “(bb)”).
Condition “(cc)” – again referring to “at least one first applicant” – says that ANDA approval would not be precluded under FDC Act § 505(j)(5)(B)(iii). That provision governs 30-month patent infringement litigation stays. In other words, if at least one first applicant no longer has a 30-month litigation stay in effect (perhaps because of a license agreement and dismissal of litigation) or there is no court-ordered preliminary injunction, then this condition goes into effect. We note that in cases in which a company with a pending ANDA amends (or supplements) that application to include a Paragraph IV certification to newly-listed patent information, the statute precludes the imposition of a 30-month litigation stay on ANDA approval. Thus, in cases in which all ANDA applicants qualify as a first applicant by virtue of a Paragraph IV amendment to newly-listed patent information, this condition would not apply.
Finally, condition “(dd)” says that regardless of what may happen in the future with respect to first applicant approval, 180-day exclusivity is triggered, perhaps as early as the date that is 30 months after the first ANDA submission (regardless of whether or not that initial ANDA was later amended to contain a Paragraph IV certification), because no first applicant ANDA is approved at the time a subsequent Paragraph IV ANDA is tentatively approved (because of a first applicant’s eligiblity for 180-day exclusivity), and there is no 30-month stay or preliminary injunction in effect for at least one first applicant.
There’s a lot to object to in this proposal to amend and augment the FDC Act’s 180-day exclusivity provisions. But first off . . . is a legislative change even necessary?? After all, FDA already has sufficient statutory and regulatory authority to determine that a first applicant has forfeited eligibility for 180-day exclusivity because of ANDA “deficiencies” preventing final approval.
First, there’s the “withdrawal of application” forfeiture provision at FDC Act § 505(j)(5)(D)(i)(II). That provision states that eligibility for 180-day exclusivity is forfeited under either of the following circumstances:
(II) WITHDRAWAL OF APPLICATION.—The first applicant withdraws the application or the Secretary considers the application to have been withdrawn as a result of a determination by the Secretary that the application does not meet the requirements for approval under paragraph (4).
The withdrawal of application provision provides for forfeiture under two conditions: (1) if the first applicant withdraws the application or (2) if FDA considers the application withdrawn for failure to meet the various general requirements for approval laid out in section [FDC Act § 505(j)(4)]. A first applicant’s affirmative withdrawal of its ANDA would meet the first condition, resulting in a forfeiture under this provision. FDA has not yet considered a forfeiture under the second condition.
Second, FDA’s ANDA regulations (at 21 C.F.R. § 314.107(c)(3)) have for decades allowed the Agency to conclude that 180-day exclusivity will not be awarded to a first applicant that does not diligently pursue ANDA approval: “If FDA concludes that a first applicant is not actively pursuing approval of its ANDA, FDA may immediately approve an ANDA(s) of a subsequent applicant(s) if the ANDA(s) is otherwise eligible for approval.” In promulgating this regulation (59 Fed. Reg. 50,338, 50,354 (Oct. 3, 1994)), FDA commented that:
For purposes of this rule, the phrase “actively pursuing approval” is intended to encompass a drug sponsor’s good faith effort to pursue marketing approval in a timely manner. In determining whether a sponsor is actively pursuing marketing approval, FDA will considerall relevant factors, such as the sponsor’s compliance with regulations and the timeliness of its responses to FDA’s questions or application deficiencies during the review period. [(Emphasis added)]
Despite FDA’s apparent hesitance to make a determination under either FDC Act § 505(j)(5)(D)(i)(II) or 21 C.F.R. § 314.107(c)(3) that a first applicant has forfeited or otherwise lost 180-day exclusivity, the Agency has clear authority to make such a determination. In particular, FDC Act § 505(j)(5)(D)(i)(II), by virtue of its internal reference to FDC Act § 505(j)(4), gives FDA broad discretion to determine if an ANDA is considered withdrawn. Among other things, FDC Act § 505(j)(4) provides that FDA will not approve an ANDA because of certain cGMP and bioequivalence deficiencies.
If the intent of the BLOCKING Act is to address a first applicant’s ability to “park” 180-day exclusivity eligibility because of alleged “deficiencies” that prevent FDA from granting final ANDA approval and commercial marketing under that application while subsequent ANDA applicants otherwise ready for approval are blocked from obtaining final approval solely because of a first applicant’s continuing eligibility for exclusivity, then the BLOCKING Act doesn’t quite hit the mark. It would punish ANDA applicants eligible for 180-day who are diligently pursuing final application approval, and would further dilute and cheapen the 180-day exclusivity incentive Congress created in the Hatch-Waxman Amendments.
After reading and re-reading the BLOCKING Act – and now at 2:32 AM in the morning – we have some initial specific concerns with the bill. First, the BLOCKING Act is immensely and unnecessarily complex and becomes more complex with the addition of each variable (e.g., multiple first applicants). Enactment of the proposed language would almost certainly lead to costly and time-consuming litigation. Second, the BLOCKING Act makes 180-day exclusivity eligibility unpredictable for ANDA applicants. Factors that can lead to the triggering of exclusivity under the proposed legislative language are not readily available (or are not immediately available) to the public, such as the time of a subsequent applicant’s tentative approval and the date of submission of an ANDA. (Indeed, FDA may not update the Agency’s Drugs@FDA website for several days after tentatively approving an ANDA. Moreover, the basis of such tentative approval is not known because FDA does not regularly post tentative approval letters.)
Moreover, the BLOCKING Act could allow for myriad other circumstances outside of alleged ANDA “deficiencies” to trigger 180-day exclusivity. Some potential examples include:
New bioequivalence or other required testing (e.g., elemental impurity testing or new or updated USP standards) that a first applicant is working diligently to complete;
A pending Citizen Petition specific to a first applicant’s ANDA (e.g., formulation-specific) that has not been resolved at the time FDA grants tentative approval to a subsequent applicant’s ANDA; and
Circumstances outside of an applicant’s control, such as: (a) the need to repeat bioequivalence studies, re-assay biostudy samples, or commission a scientific audit by a qualified independent expert because of concerns raised by FDA about the validity of reported studies conducted by a contract research organization (e.g., MDS Pharma Services); (b) catastrophic events such as explosion, fire, storm damage to manufacturing facilities; and (c) events that could not have been reasonably foreseen, and for which the applicant could not plan (e.g., abrupt discontinuation of supply of active ingredient, packaging material, or container closure system, or relocation of a facility or change in an existing facility because of a catastrophic event).
Although “the Dude abides” in The Big Lebowski, this FDA Law Blog dude does not and cannot abide with the BLOCKING Act.
Today the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (“OIG”) released a proposed rule to put into practice an idea floated in HHS’ May 2018 Blueprint for lowering drug prices: eliminating discount safe harbor protection for manufacturer rebates offered to Medicare Part D plans (including Medicare Advantage Prescription Drug Plans), Medicaid Managed Care Organizations (MMCOs), and their PBMs, as an incentive for drug manufacturers to reduce list prices. The proposed exclusion was accompanied the addition of new proposed safe harbors for manufacturer point-of-sale discounts provided to such plans and PBMs, and non-volume based administrative fees paid to PBMs. The intent of these amendments taken together is simply stated by the OIG: it is “to eliminate rebates from manufacturers to PBMs, and replace them with discounts provided to beneficiaries at the point of sale.” (p. 66)
OIG’s case against formulary rebates: In brief, the preamble presents a three-pronged criticism of the current rebate framework:
PBM rebates increase drug costs to beneficiaries in the deductible phase and those with percentage-based cost-sharing obligations, since both of these out-of-pocket costs are based on the list price (WAC), which does not take into account rebates paid by the manufacturer to the plan or its PBM. According to the OIG, PBMs and manufacturers benefit from higher WACs, but beneficiaries pay more.
Current rebates skew PBM and plan formulary decisions in favor of drugs with the highest rebates, which may be more expensive and/or less effective than drugs with lesser rebates.
Current rebates are not transparent. Since manufacturer-PBM rebate agreements are confidential, plan sponsors do not know what portion of manufacturer rebates to PBMs, if any, are passed on to the plans.
Narrowing of Discount Safe Harbor: To address these problems, the proposed rule would add an exclusion from the current discount safe harbor for “a reduction in price or other remuneration from a manufacturer in connection with the sale or purchase of a prescription pharmaceutical product to a plan sponsor under Medicare part D, a Medicaid Managed Care Organization, or to a pharmacy benefit manager acting under contract with a plan sponsor …, unless it is a price reduction or rebate that is required by law.” Interestingly, the OIG expresses its view that the discount safe harbor even in its current form does not protect rebates paid for formulary position to Part D plans, MMCOs, or their PBMs, because these entities are not “buyers” as contemplated under the safe harbor. (Many in the industry have heretofore taken a more expansive interpretation, since health plans arguably are ultimately “buyers” of prescription drugs.) This raises the question why an amendment to the safe harbor is necessary. The OIG’s answer is that the agency is acting “out of an abundance of caution and desire to offer bright line guidance regarding the treatment of retroactive payments to PBMs that they retain.” (p. 19 and note 36).
The preamble makes clear OIG’s intent that the discount safe harbor continue to protect discounts offered to other entities, including wholesalers, hospitals, physicians, pharmacies, and third-party payors in other Federal health care programs. (p. 41). (One wonders how the latter payors (e.g., the Indian Health Service) can be considered “buyers” when Part D plans and MMCOs are not.) OIG also does not intend the safe harbor exclusion to affect existing value-based arrangements between manufacturers and Part D and MMCO plan sponsors, though the text of the proposed amendment, as drafted, contains no exclusion that would protect such arrangements. The OIG also does not intend the amendment to affect Medicaid supplemental rebate agreements.
New safe harbor for point-of-sale price reductions: Along with the stick the OIG offers a carrot: a new safe harbor for a reduction in price charged by a manufacturer for a drug that is payable by a Part D plan, an MMCO, or their PBMs, if the reduction is applied to the price charged to the beneficiary at the point of sale. The rule requires that the price reduction be set in advance under a contract with the plan or PBM, and it may not “involve a rebate unless the full value of the reduction in price is provided to the dispensing pharmacy through a chargeback or series of chargebacks . . . .” Although this proposal is not crystal clear, the preamble describes a system under which the manufacturer would enter into a contract with the plan or PBM to offer a reduced price to network pharmacies. This can be done through a chargeback or rebate to the pharmacy if the full price reduction to the pharmacy, combined with the patient’s cost sharing and the plan’s reimbursement to the pharmacy, is at least equal to the price agreed upon between the manufacturer and the plan or PBM. The pharmacy, in turn, would be required to pass the entire manufacturer price reduction through to the beneficiary at the point of sale. (p. 47)
New Safe Harbor for Administrative Fees to PBMs: Currently, many PBMs charge administrative fees that are based on a percentage of WAC or sales. The OIG objects that these variable fees can “function as a disguised kickback.” (p. 23) Accordingly, a new safe harbor is proposed for PBM administrative fees that are for services that are specified in a written agreement that covers all of the services the PBM will provide in connection with the PBM’s arrangements with health plans during the term. Importantly, the fees must be fixed (i.e., not percentage-based), fair market value, and not take into account business generated between the parties or between the manufacturer and the PBM’s health plans. In addition, the PBM must disclose at least annually, and to HHS on request, the services rendered by the PBM to the manufacturer. The OIG is considering, and solicits comments on, whether PBMs should also be required to disclose their fee arrangements to their client health plans, though this requirement is not reflected in the propose rule.
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It is by no means certain that the anticipated shift from formulary rebates to point-of-sale discounts will have the desired effect of reducing pharmaceutical list prices and beneficiary out-of-pocket costs. The proposed safe harbor amendment does not affect plans other than Part D or MMCO plans, so drug manufacturers may contract to provide discounts to these plans but leave their WACs, and current rebating practices, in place for the commercial market. Among beneficiaries, there will be winners and losers. Beneficiaries in the deductible phase and with co-insurance based on a percentage of list price will benefit from reductions in out-of-pocket expenses. Those with flat copays will benefit less, and all Part D and MMCO beneficiaries will see their premiums increase as plans stop applying manufacturer rebates to reduce premiums. The OIG believes that total reductions in cost-sharing will exceed total premium increases (p. 99), but critics disagree. What can be said with confidence about the proposal is that it will increase transparency. Government beneficiaries will know that their deductible costs and percentage-based cost-sharing are based on an actual net price.
The proposed rule will appear in the Federal Register on February 6. The proposed effective date for the discount safe harbor amendment is January 1, 2020, and that of the of the new safe harbor for point-of-sale discounts is 60 days following publication of the final rule. (The proposed effective date for the new safe harbor for PBM administrative fees is not specified.) Comments on the proposed rule will be due on April 7.