- FDA Finalizes Two Guidance Documents Regarding Medical Product Communications – The Beat @ Cooley Health
- House Passes 12 Bills Aimed at Combating Opioid Crisis – Quarles & Brady
- Could More M&A Activity in MedTech Be on the Way? – MD+DI
- Stop, Collaborate, and Listen – Or Get a Waiver (re: REMS changes) – FDA Law Blog
Temperatures in our nation’s capital are returning to some vague sense of normalcy, which may or may not have anything to do with the normal functions of the Supreme Court and the FDA. Either way, both these entities have delivered some important news in the month of April, although it will be May or later before the related effects will make themselves felt. In the spirit of the vernal renewal of life, we offer the following.
Inter Partes Review Survives Challenge at SCOTUS
One of the most significant developments in the area of intellectual property in recent weeks was the Supreme Court decision in the case of Oil States Energy Services LLC v. Greene’s Energy Group LLC, which challenged the constitutionality of the inter partes review process. Had the Court decided in favor of Oil States, the IPR process would have been declared unconstitutional, thus bringing an end to one of the more controversial aspects of the America Invents Act (AIA).
The 7-2 opinion penned by Justice Clarence Thomas said that trials and other procedures addressing patent validity need not take place in an Article III court, but also that an IPR hearing does not violate the Seventh Amendment right to a jury trial. Thomas pointed to the ex parte reexamination of patents as an example of administrative proceedings that do not take place in a courtroom, a procedure that has been part of routine practice at the Patent and Trademark Office since 1980. He also cited the existence of the inter partes reexamination, which was replaced by the IPR process via the AIA.
Justice Neil Gorsuch wrote the dissenting opinion with the concurrence of Chief Justice John Roberts, stating that no courts other than federal courts were empowered to invalidate a patent until 1980. Gorsuch said the outcome does not “represent a rout, but it at least signals a retreat from Article III’s guarantees,” going on to argue that enforcement of Article III is principally about “ensuring that people today and tomorrow enjoy no fewer rights against governmental intrusion than those who came before.”
Gorsuch wrote the majority opinion in another IP case delivered on April 24, SAS v. Iancu, which held that the Patent Trial and Appeal Board must make a determination on each of the claims challenged by a petitioner in an IPR. In contrast to Oil States, this case squeaked by in a 5-4 vote, but the newest Supreme Court justice is definitely making his mark on the Court’s handling of patent law despite a lack of certainty on his views when he was appointed last year.
Gilead Up, Nargol Down at SCOTUS
We previously reported that two cases pertaining to the False Claims Act were the subjects of petitions for cert at the Supreme Court, and not unexpectedly, the Court passed on a chance to hear Medical Device Business Services, Inc. v. United States ex rel. Nargol. The Court said Justice Alito had taken no part in deciding whether to hear the case, although no explanation for that was given. The Court’s interest in Gilead v. Campie seems to have quickened, however, given that the justices have asked the Solicitor General to file a brief.
It may be too soon to speculate as to how the Trump administration would advise the Court regarding Gilead, but the 8-0 outcome in the Supreme Court’s review of Escobar would suggest that Solicitor General Noel Francisco has a limited amount of wiggle room for suggesting that the standard for materiality in False Claims Act cases ought to be relaxed. Conversely, however, federal attorneys are loathe to give up any leverage where FCA cases are concerned, and it might be pertinent to recall that the Thompson memo arose from an administration that might have been presumed to be less unfriendly to business than the administrations that preceded and followed.
In the end, the Solicitor General has the option to opine on nothing more than whether the Court should hear the case. The reader will hopefully excuse the cliché that this case “bears watching” as the Court will at the very least provide some additional clarity regarding the current standard for materiality.
FDA Issues First Inspection Report under FDARA
The legislation for the most recent series of FDA user fee agreements stipulated that the agency publish data on inspections for drugs and devices needed to approve that drug or device, and while the data are interesting, they are perhaps most useful as a baseline for evaluating the agency’s performance in this area over the next few years.
The report, which fulfills Section 902 of the Food and Drug Administration Reauthorization Act of 2017 (FDARA), covers calendar year 2017 only, not an unexpected limitation given the novelty of the requirement. The report states that for new drug and abbreviated new drug applications, the median elapsed time between the agency’s internal request for an inspection and the date of the inspection was 102 calendar days. Drug makers may be accustomed to such delays, but might not be happy with them all the same.
The median elapsed time for issuance of forms 483 for inspections with compliance issues was seven calendar days from the start of the inspection, and the agency pointed out that 483s are typically issued upon the close of the inspection. Perhaps more problematic is that 191 days on average passed between the date of the 483 and the date of any related warning letter, while any regulatory meetings to review the inspections on average took place 169 days later.
Ergo, the numbers suggest that a drug maker could end up waiting 300 days from the date of an internal FDA request for inspection to see a warning letter for that inspection, which sounds like a significant problem when trying to get a new drug to market. The report does not cover inspections related to biologics license applications, but does include data on inspections for supplemental drug filings.
The report states that FDA used the complete response (CR) letter to deny 94 new drug applications and supplemental filings for chemistry, manufacturing and controls in calendar 2017, a relatively small denominator in comparison to the more than 2,460 CR letters issued last year. However, the agency said it had issues another 194 facility-related CRs for a total of 288 facility-related CR letters in 2017, although there is little information on what sort of facility-related issues drove those additional 194 CRs. In any case, these numbers are likely to shift at least somewhat thanks to the concept-of-operations paradigm now in force at the Center for Drugs.
The dust-up between the FDA and device makers regarding inspection delays is well known – and the total number of original PMAs in any given year is presumably still fewer than 50 – so it’s no surprise that the numbers for device inspections differ significantly from those for drugs. The agency needed only a median of 35 days between the request for the inspection and the first day of that inspection, and the average time to issuance of a 483 was five days. As was the case for the drug inspection numbers, data pertaining to supplemental filings were included.
At first glance, it seems odd that Congress had included pre-clearance inspections for 510(k) applications in Section 902 if one takes the FDA at its word when it states that clearance of a device “does not require a pre-clearance inspection.” While the statement is sufficiently generic to be more or less defensible, it seems somewhat contradicted by the March 25, 2014, draft device classification rule, in which the agency acknowledged that it had conducted pre-clearance inspections for 510(k) applications, although it had done so only on “rare occasions.”
Jordan Lipp | Attorney, Managing Member | Childs McCune
On March 16, 2018, the Massachusetts Supreme Court weighed in on the issue of whether a brand name drug manufacturer is liable for a plaintiff’s use of the generic form of the drug, and it reached a surprising result. As discussed in the previous blog post on December 22, 2017, Conte on Steroids, most states conclude that a brand name drug manufacturer cannot be liable for damages caused by the generic version of the drug. In a detailed analysis, the Massachusetts Supreme Court followed the vast majority of its sister courts, concluding that a brand name drug manufacturer cannot be held liable in product liability or negligence for a plaintiff who ingested the generic version.
But then, borrowing from case law involving such disparate subjects as landowner duties to trespassers and liability releases for sporting activities, the Massachusetts Supreme Court explained that “public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness.” Rafferty v. Merck & Co., No. SJC-12347, 2018 Mass. LEXIS 161, at *29 (Mar. 16, 2018). As such, the Court found that a brand name drug manufacturer can be liable for the generic version of the drug “where, for instance, a brand-name manufacturer learns that its drug is repeatedly causing death or serious injury, or causes birth defects when used by pregnant mothers, and still fails to warn consumers of this danger.” Id. at *29-30 (Mar. 16, 2018).
The ramifications of this novel approach are significant. Setting aside the fact that this decision comes from a court in one of the hubs of innovation in the life sciences, it is important to note that the decision is the very first of its kind. No other court has determined to bar negligence claims yet permit reckless claims with regards to brand name drug liability resulting from generic use. The Massachusetts Supreme Court even admits that it is “the only court” to make this distinction. Id. at *32.
While this is a new issue in the context of drug and device litigation, other types of litigation shed light on what the repercussions of this decision may be. As referenced above, this distinction of not permitting negligence claims but permitting reckless claims exists in the context of both sporting participants who have signed a release and trespassers who claim injury. On one hand, the higher standards in these types of cases has discouraged lawsuits and made summary judgment easier for defendants to obtain. On the other hand, requiring a plaintiff to meet a reckless standard certainly does not eliminate litigation. And, depending upon the situation and insurance policy, the reckless standard can have serious insurance ramifications as some insurance policies do not cover reckless conduct. The other question, of course, is whether courts in other jurisdictions may start to follow Massachusetts’ novel approach on brand name drug liability.
Regardless, for brand name drug manufacturers, it is a brave new world in Massachusetts.
The European Medicines Agency published a draft guidance for clinical trial transparency in 2013, and the agency scored a win recently at the European Court of Justice in what appears to be the first legal challenge of transparency to reach the ECJ. The decision in the case of Pari Pharma v. EMA affirms the legal standing of this practice, but the decision also makes clear that broad assertions of confidentiality and unsupported claims of damaged commercial interests will not sway the European Union’s high court.
Novartis, Pari in Nebulizer Standoff
EMA announced early in February that the court had declared that three companies, including Pari Pharma of Starnberg, Germany, had no legitimate claim that the disclosures of their data constituted a compromise of intellectual property. The court’s decision makes clear that Pari’s cause was thwarted by Novartis, which along with the French government pushed the court to side with EMA in the dispute.
Novartis’ interest in the market for tobramycin nebulizers was driven by its Tobi Podhaler, which like Pari’s Vantobra aerosol is indicated for pediatric cystic fibrosis. According to an earlier court document, Novartis had acquired a marketing authorization for the Tobi via an orphan product designation in 1999, but subsequently received an extension of marketing exclusivity through 2023.
Pari had claimed its product offered superior safety, and won that debate in 2015, when EMA granted the product a CE mark. The EMA’s decision summary makes clear that the European Commission had misgivings about how EMA had interpreted orphan product legislation on the point of product similarity, but in any event, Novartis lost its exclusivity for this treatment and indication.
No General Presumption of Confidentiality
Pari’s argument before the ECJ seems to revolved in part around the notion that the information found in its filings enjoyed “a general presumption of confidentiality,” an argument the court found unpersuasive. Pari also argued that both publicly available and confidential information together would disclose the company’s proprietary strategy for obtaining marketing authorization. The Court replied that this purported strategy was enabled in part by an exchange with the EMA as “part of a specific regulatory process” and consequently not entitled to discretion.
Pari further asserted that its strategy constituted intellectual property as defined by the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), but the Court would have none of it, in large part due to the fact that much of the information in question was already in the public domain. The Court said also that knowledge of the effect of the use of a nebulizer on intolerance to dry powder “could be obtained without difficulty and without any particular inventiveness.”
Pari fared no better on the confidentiality of its patient survey data, either, largely because the data set included information drawn from a patient registry set up by the European Cystic Fibrosis Society. According to the court, much of Pari’s survey data was little or nothing more than a “refinement” of the ECFS registry data. Much of Pari’s problem with the ECJ was due to what the court said on several occasions was as a failure to demonstrate any damage to the company’s commercial interests stemming from the disclosure.
There were two other cases in this clutch of losses on the transparency question – PTC Therapeutics fared no better over disclosure of data related to its treatment for Duchenne muscular dystrophy, Translarna (ataluren) – but only time will tell whether drug and device makers will eventually score a win at ECJ over the EMA transparency paradigm. In any event, Pari’s experience makes clear that nebulous arguments and better nebulizers won’t win the day at the European Union’s high court.
The Difference Between Faster and Earlier
To some, the term “regulatory harmonization” might suggest more or less simultaneous approvals across jurisdictions, but a recent study of drug approvals by three regulatory agencies hints that this dream is still just a dream. There are confounders in the latest study of drug approvals, however, including that the approved indications are anything but identical.
The Feb. 22 issue of the European Journal of Clinical Pharmacology states that the FDA, Swissmedic and the European Medicines Agency approved a total of 134 new drugs between 2007 and 2016. The FDA is credited with being the first to approve 66.4 percent of these, while the EMA was the first to approve nearly 31 percent, leaving Swissmedic with a paltry three percent first-to-approve rate.
While this report has gained some traction in the trade press, non-subscribers to the journal have only the abstract to rely on, which states that the approved indications were similar in only 23 percent of the drugs across all three agencies. The differences between the Swissmedic and EMA approvals were few, while the differences in labeled indications between the FDA and EMA were “significant.”
Obviously it is difficult to know what to make of this information without knowing how those labeled indications varied, but another absent piece of this puzzle is the total premarket review time for each drug at each agency. It’s one thing to say that agency A approved a product sooner than agency B, but it’s quite another to say the total review time was shorter. Without that context, this abstract has little to offer.
As might be expected, the total review time question has its own moving parts as this study in the New England Journal of Medicine suggests. The authors of this write-up from April 2017 indicate that cancer therapies and orphan drug applications moved more swiftly through the FDA premarket process than was seen in the EMA process, but that does not apply to all drug types or drug application types. The take-away from all this is that comparisons remain nettlesome and often are not particularly informative.
The Department of Justice has released a new memo addressing the standard for dismissal of relator lawsuits under the False Claims Act, and both the content and the tone of the memo are starkly different from what might have been expected under previous administrations. Precisely how this memo will change routine practice is “difficult to predict,” as the saying goes, but the memo is at the very least a suggestion that some of the less credible qui tam suits will have a very short shelf life, indeed.
Resources an Issue for DoJ
The DoJ memo says the annual total of qui tam actions has neared or exceeded 600 new matters in each of the past several years, a disclosure that might surprise no one, given the related provisions of the Affordable Care Act. However, the rate of federal interventions “has remained relatively static,” the memo stated, although the department must nonetheless expend resources to monitor cases in which the government ultimately does not intervene.
One might impute a number of motives for the memo overall, but one thing is clear: DoJ is seeking to economize when it comes to dealing with relator lawsuits, as demonstrated by the passage directing the reader’s attention to “the government’s limited resources.”
The memo points out that the department can dismiss an action over the relator’s objections, although that relator may be entitled to an appeal of that decision. DoJ lists seven factors that seem to have driven dismissals since 1986, including the curbing of meritless cases and prevention of relators who seek to piggyback onto an ongoing government investigation. Another factor would be whether the federal agency affected by the action expects the case to interfere with the policies and programs of that agency.
Standard for Dismissal Clarified
In addition to the factors cited above, the memo states that dismissal is an option to address a case pockmarked with “egregious procedural errors,” citing the case of Surdovel v. Digirad Imaging as an instance. This case was dismissed in 2013 after government attorneys determined that the relator had “failed to serve the United States with the complaint and disclosure of all material facts.” However, the memo indicated that federal attorneys should feel free to leverage both the unfettered discretion and the rational basis standards for dismissal.
As might be expected, the D.C. District Court is one jurisdiction where the unfettered discretion standard is at work, although the Ninth and Tenth Circuits have made use of the rational basis test. The memo argues that even the rational basis standard “was intended to be a highly deferential” standard, and the memo advises a federal attorney to notify the court as to the basis for a motion to dismiss in jurisdictions where a standard has not been identified.
The memo offers some tactical advice, suggesting for instance that prosecutors separately assert any alternative grounds for seeking dismissal, citing the bars on public disclosure and pro se relators as examples. This approach provides independent legal bases for dismissal, but partial dismissal is another tactic available to federal attorneys.
Interestingly, the memo concludes with language suggestive of a view that the rate of meritless qui tam actions is on the rise, stating that relators have dismissed more than 700 actions since the beginning of 2012 when the department declined to participate. This more routine withdrawal of a qui tam, the memo states, “has significantly reduced the number of cases where the government might otherwise have considered seeking dismissal.”
A number of regulatory and enforcement items have been up for grabs at the FDA over the past year, but few carry the weight of the agency’s review of the intended use rule. The FDA announced recently that it is suspending the implementation date for the rule, and is separating the tobacco-related portions of the rule from those governing drugs and devices. It’s a welcome step and one that is long overdue, but it is not clear yet where the agency will land on this matter.
Dexcom Warning Letter Pulled
To recap, this problem dates back to at least 2011, when Par Pharmaceutical Inc. sued the agency over the latter’s attempts to suppress Par’s on-label discussion of the company’s appetite stimulant, Megace ES, in a setting in which the drug was likely to be used off-label. Par agreed to pay a $45 million fine two years later, and the five-year corporate integrity agreement is finally set to expire later this year.
Glucose monitor maker Dexcom subsequently received an FDA warning letter alleging the device maker was aware that its devices had been sold for uses that fell outside the labeled indication, but the agency has since deleted that document from the warning letter database. The agency took an explicit approach to the issue in a Federal Register announcement in September 2015, a peculiar attempt to devise a rule that would cover tobacco products along with drugs, devices and biologics. The FDA said its intent was to clarify some of the related issues, but the 10-page draft included the curious observation that a lack of clarity might lead consumers to use tobacco products “in place of FDA-approved medical products.”
The final rule appeared in early 2017 and retained the plus-tobacco features of the proposed rule, but the document grew to 25 pages and included a more or less lengthy discussion of the Central Hudson test and other issues that came up in comments to the docket. However, the agency then delayed implementation of the final rule to March 21, 2017, and then to March 19, 2018, and FDA commissioner Scott Gottlieb said in the agency’s Jan. 12 statement that the final rule will be suspended yet again “until further notice.”
A Procession of Concessions Fails
The 2015 proposed rule rattled observers by stating that the agency’s determination of a product’s intended use “is not bound by” explicit claims made by the manufacturer, but can instead be inferred by “objective evidence,” including the circumstances “surrounding the distribution of the product or the context in which it is sold.” The FDA tried to assuage industry’s concerns by vowing that it would not act on distribution of a product “based solely on a firm’s knowledge” of off-label use, but this concession did little to mollify industry.
The agency took a somewhat different approach in the final rule, stating that “a totality of the evidence” would be employed to determine an intent to knowingly distribute a drug or device for off-label uses. However, the Advanced Medical Technology Association argued that an approach based on the totality of the evidence is “more outcome determinative than prescriptive,” and thus manufacturers would have little choice but to “curb important product-related communications.”
The intended use rule does not entirely capture the regulated speech problem, but it is a significant hazard, particularly since whistleblowers and the Department of Justice can readily avail themselves of fodder for prosecution. It is pertinent to note that the Par Pharma case involved multiple relators, who had netted more than $4 million when all was said and done.
States Moving Ahead
There are several questions looming for the FDA, but whether the agency is in a position to stand pat is not one of those questions. The State of Arizona passed a law last year that takes up the off-label communication issue, and there are indications that other states may soon follow suit. Gottlieb has already noted that the FDA must come to grips with recent jurisprudence on the off-label issue, and the agency can scarcely afford to be swamped by a pixelated map of state policymaking where commercial speech is concerned.
The easy answer to all this is that Gottlieb will scuttle the totality-of-evidence standard, but little beyond that is especially obvious. The FDA said it will take comment through Feb. 5 on this latest iteration of the intended use scrum, so there is still time to weigh in. Given that the docket for this issue already features nearly 2,000 comments, it’s clear that significant change is in the works.
2017 is now a part of the past, and everyone has their own idea as to which were the most crucial developments of the year. Following is a nomination for two FDA guidances that are at least strong candidates for the title of the most important guidances of 2017, along with developments in two ongoing dramas that could prove pivotal in this new year.
What’s Old is New (yet) Again
The FDA’s Center for Devices and Radiological Health had little to offer in the way of guidances in the first half of 2017, but the center made up for that in a big way in the latter part of the year. CDRH issued 19 draft and final guidances in the last three months of the year, but the month of September was a busy one, too.
Still, the most important guidances might not have been the most widely discussed. The October final guidance for 510(k) changes and the companion software 510(k) changes final guidance might not have the splash value of the agency’s moves in the digital health realm, but it’s easy to forget how long the 510(k) changes controversy has strained relations between the FDA and industry.
Thinking back to the legacy K97 guidance of 1997, this discussion has been the subject of formal regulatory interest for only 20 years despite that the Medical Device Amendments were added to the statute more than 40 years ago. The agency took a stab at rewriting K97 in 2011, but that attempt proved futile thanks to the opposition it triggered.
Traditionally, the estimates of the number of 510(k) clearances each year is somewhere between 3,500 and 4,000, a much greater number than the volume of original PMAs, which hasn’t hit 100 in recent memory, if ever. Are digital health guidances “hotter” in terms of novelty and hence media coverage?
Apparently, but make no mistake: The 510(k) program and the agency’s overarching administration thereof is easily the most important regulatory development in calendar year 2017, particularly given that the new med tech regulations in Europe could drive a lot of traffic back to American shores.
2018: Commercial Speech Comes of Age?
2017 was a regulatory banner year for med tech, thanks to the 21st Century Cures Act and the provisions of the fourth device user fee agreement, so it’s difficult to see how 2018 can measure up. Still, this new year has at least one blockbuster story in store if recent remarks by FDA commissioner Scott Gottlieb are any indication.
Gottlieb said the agency needs “a legally enforceable set of rules” where commercial speech is concerned, a nod to recent court losses, such as Caronia. Hence, Gottlieb’s said the FDA “can’t be operating from a platform where our regulations might be perpetually in conflict with the courts.”
The agency’s January 2017 draft guidance for payer communications is still in draft form, but that’s to be expected with the change in the commissioner’s office, particularly a commissioner with Gottlieb’s views on the commercial speech question. Another consideration is that a payer communication framework might be the lowest hanging of the several commercial speech questions, and there was little indication at the time that the FDA had adopted a less restrictive approach to off-label communications to physicians.
Gottlieb’s comments from September 2017 suggest he wants the agency to provide industry with some rules of the road for the entirety of the commercial speech problem, but the agency’s chief counsel, Rebecca Wood, avoided the subject in her prepared remarks to a gathering of the Food and Drug Law Institute in early December 2017. The net effect is something of a black box inside which the regulatory version of Schrödinger’s cat awaits our collective scrutiny, but Gottlieb seems determined to settle this matter by one means or another, even if there is some understandable skepticism as to the durability of any resolution. This is a matter worth watching as we move into 2018.
Yates Memo; Up for Grabs?
On the other hand, those who are concerned about a hangover from the Yates memo might be encouraged by the fact that FDA’s Woods conceded that it is time for the FDA to revisit the question of vicarious criminal liability in Park doctrine cases. The question here is whether the agency and the Department of Justice are on the same page, given that these two parties have not necessarily agreed on these issues in the past.
The corporate liability question seems ripe for review if only because Sally Quillian Yates is no longer at the Department of Justice, but deputy attorney general Rod Rosenstein acknowledged that the Yates memo is under review in a speech to the Heritage Foundation in September 2017. Although he offered no details other than to affirm that prosecution of individuals is still seen as important as a deterrent, he stated, “I do anticipate that we may in the near future make an announcement about what changes we are going to make to corporate fraud principles.”
Rosenstein confirmed in an October 2017 speech to New York University that the memo is still in play, explaining that any changes “will reflect our resolve to hold individuals accountable for corporate wrongdoing.” However, Rosenstein also said federal attorneys will not be permitted to “use criminal authority unfairly to extract civil payments.”
While there are few tea leaves to work with, the statement about the use of criminal authority to extract civil payments is at the very least some indicator as to where DoJ may be headed. On the other hand, there are those who worry that the prison sentences handed down in the case of Jack De Coster and Peter De Coster could be part of an emerging pattern despite that the De Costers’ egg businesses routinely and egregiously ran afoul of the law over a period of decades. The corporate prosecution story is clearly another story worth tracking as we work through this new year.