DTC Gene Tests, Tax Reform in the News

2017 is starting to wind down as evidenced by the resurgence of holiday-themed music and Christmas jingle-riddled television commercials, but Washington is nonetheless making good use of these last few weeks of the year. In one of the more significant regulatory concessions in recent memory, the FDA said it will use a more streamlined approach to direct-to-consumer genetic tests, but the current state of tax reform seems headed for game-stopping controversy unless significant concessions are made.

‘Precert’ the New Approach to DTC Gene Risk Tests

The notion of pre-certification, or “precert,” has gained a lot of momentum at the FDA this year. First, the FDA said in July it would use a precert program for some moderate-risk digital health applications, and now the agency is making use of that same concept in connection with direct-to-consumer genetic tests that disclose the customer’s risk for diseases. The announcement affirms yet again that the agency has adopted a much less militant approach to its regulation of the life sciences under the new leadership.

Readers will remember the controversy over DTC marketing of such tests shortly after Margaret Hamburg took the commissioner’s chair in 2009, which led to a warning letter to several makers of these DTC genetic propensity tests. The agency wrote a warning letter to 23andMe of Mountain View, Calif., in 2010 about this kind of activity, but even two years ago, the FDA was still trying to keep a lid on such activity as indicated by a Sept. 21, 2015 warning letter to Pathway Genomics Inc. of San Diego for the company’s marketing of its Cancer Intercept test.

FDA commissioner Scott Gottlieb said in a statement that these tests do carry some risk, but he also cited the need to devise a regulatory regime that avoids strangling innovation in technological spaces that move at a more rapid pace than the agency can hope to match. Gottlieb made reference to a de novo filing for the 25-hydroxyvitamin D test system by AB Sciex LLC of Redwood City, Calif., but the FDA also announced it had approved a de novo application by 23andMe for the company’s Personal Genome Service (PGS) test on the same day the agency announced the precert program.

The net effect is certainly a positive change for makers of these tests, but any allegations that a false negative cost a consumer their life will undoubtedly spark a severe case of whiplash, at least on Capitol Hill. The real test in this scenario is how the FDA would respond to such criticism.

Tax Reform Gains Momentum

The push for corporate tax reform is heating up on Capitol Hill, and both the House and the Senate have legislation in the works. While neither proposal seems to include a repeal of the medical device tax, both versions eliminate at least some of the credit for orphan drug development, a move that seems certain to drive resistance among drug makers and patient groups alike.

The House Ways and Means Committee passed its tax reform vote on Nov. 9 in a party-line vote, perhaps a predictor of how this issue will play out on both sides of the Capitol. Section 3401 of the Tax Cuts and Jobs Act of 2017 completely eradicates the tax credit for clinical testing for orphan drugs, which the authors of the legislation say will save the taxpayer roughly $54 billion over 10 years.

The Senate took a less stringent but more convoluted approach, with the net result that drug makers will lose $30 billion in tax credits over 10 years. At least one patient group, the American Cancer Society Cancer Action Network, voiced its opposition to several features of the House bill, stating that the majority of cancer drugs qualify for orphan drug status “at some point in their lifecycle.” The group also said a study conducted in 2015 suggested that elimination of the orphan drug tax credit “would be to decrease orphan drug development by one third.”

The issue of the device tax is not necessarily dead despite the failure of both chambers to include a repeal in their respective bills. Much of the conversation about a device tax repeal seems to revolve around the reauthorization of the Children’s Health Insurance Program, which must be completed by Dec. 31. Ways and Means chairman Kevin Brady lent credence to that expectation, stating recently that temporary relief from the device tax will arrive via an unidentified legislative vehicle “before the end of the year.”

Of Patents and the Parsing of Words

Makers of FDA-regulated products usually have a lot to keep track of, and the last few weeks are no exception. Recently, the FDA seemed to tell industry, “do as I say, not as I do” in connection with combination product classification, while a federal court breathed new life into a lawsuit that could badly damage a very expensive patent for a cholesterol statin.

FDA; Devices are Drugs, too

Some systems of justice say you are innocent until proven guilty, but the FDA guidance for combination product classification has a different approach, stating that in conceptual terms, “all FDA-regulated medical products meet the definition of a drug.” The passage seems to resurrect industry concerns that the primary mode of action (PMOA) controversy is not over yet after all.

The 21st Century Cures Act purportedly fixed a number of problems with combination products, including the PMOA problem as seen in Section 3038 of the Cures Act. That portion of the legislation stated that the PMOA is “the single mode of action of a combination product expected to make the greatest contribution to the overall intended therapeutic effects of the combination product.”

Granted that this passage is no novelty where the regulation is concerned, but the inclusion of this language in the statute might be seen as putting the FDA’s Office of Combination Products on notice that would get away with no adventurism on the PMOA question. As is widely known, the FDA has locked horns with industry, in and out of the courts, on a number of occasions over the agency’s product classification process, partly because the agency seemed to develop a penchant for seeing any chemical mode of action at all as necessarily categorizing the product as a drug.

This bias toward categorization  of a combo product as a drug was a significant bone of contention with industry in the 2011 draft guidance for determination of product classification. One of the arguments raised by industry at the time was that the text and the legislative history of the Food, Drug and Cosmetic Act suggested that if anything, the bias should be that a medical product is a device, not a drug. However, the final guidance states, “conceptually, all FDA-regulated medical products” meet the definition of  a drug “due to the broader scope of the drug definition.”

For what it’s worth, the agency addressed the chemical action question a bit more forthrightly than it has in the past, vowing that it will not assume that a product with a chemical action in the body is necessarily a drug, but that passage may prove to be of little consolation when the next inevitable close call shows up at OCP’s doorstep.

Patent Scrum Over PCSK9s Not Over Yet

Amgen v. Sanofi is headed back to a district court after the Court of Appeals for the Federal Circuit overturned a couple of determinations by a district court, and upheld a couple of others. The Federal Circuit lifted an injunction the district court placed on one of these cholesterol statins, but the more interesting matter may be how the Federal Circuit ruled on whether evidence developed after the patent priority date can be used to invalidate a patent.

Amgen’s lawsuit against Sanofi and Regeneron alleged infringement of Amgen’s patents for Repatha, the PCSK9 inhibitor that hit the market a couple of years ago with an eye-popping price tag that had payers in an uproar. Prior to the hearing at the Federal Circuit, the case was heard in a district court in Delaware, where U.S. District Judge Sue Robinson affirmed Amgen’s argument that the patent was not obvious, and ordered the defendants to pull Praluent off the market.

Robinson also excluded evidence about the patents for Repatha that was based on data developed after the patent priority date of January 2008. The question here seems to revolve around whether Amgen was required to characterize all the species of antibodies that bind to the PCSK9 enzyme, a bit of biochemistry that is necessary to achieve the cholesterol-lowering effect of this class of drugs.

Amgen is said to have screened 3,000 species of antibodies to arrive at the two that are used in the drug, but Robinson had ruled that Sanofi and Regeneron could not introduce evidence that the written description for Repatha failed to comport with the statute governing patents. The passage in question, Title 35 of the U.S. Code (§112), states that a patent applicant must characterize the patented item in “full, clear, concise and exact terms,” a standard the sponsors of Praluent said Amgen had failed to fulfill.

Robinson’s rationale was that the evidence offered by Sanofi and Regeneron would not have served to “illuminate” the state of the art at the time of the filing of the Repatha patent, but the Federal Circuit saw otherwise, essentially concluding that the question is not whether the evidence was illuminating, but rather whether Amgen’s written description of these antibodies was sufficient to support a patent.

The Federal Circuit also said Robinson’s instructions to the jury led the jurors to believe that a description of a novel antibody would suffice to cover the requirement that a patent describe a correlation between structure and function. The net effect of all this is that the case will head back to the district court, but a date has not been set, and Robinson is said to have left the court. Her absence will likely be felt, given that TC Heartland v. Kraft will soon load the court with a large volume of cases thanks to that decision’s effect on the long-standing forum question and the presence of a huge number of LLCs in the Blue Hen State.

A Festival of Device Guidances

Now that the first half of 2017 is vanishing in the rear-view mirror, the FDA’s device center has resumed its steady production of draft and final guidances. Thanks to the 21st Century Cures Act and the FDA Reauthorization Act of 2017, there’s much more to come, but regulatory geeks can now celebrate the end of a long guidance drought at the Center for Devices and Radiological Health.

Data Disharmony on Display

Between regulatory harmonization and regulatory convergence, the latter is the less implausible, but the FDA final guidance for demographic representation and reporting in clinical trials does not mesh well with the current state of affairs in the European Union, which may complicate the conduct of multinational clinical studies.

The CDRH final guidance for enrollment and reporting of different demographic groups in clinical studies stems at least in part from congressional mandates, but the statute in several European jurisdictions may complicate the gathering of demographic information for participants in those studies. For instance, Article 8 of the European Data Privacy Directive 95/46/EC states that EU member nations “shall prohibit the processing of personal data revealing racial or ethnic origin” and a number of other pieces of information, including anything pertaining to “health or sex life.”

At least two EU nations, France and Portugal, have similar laws on the books, so it’s not as if the problem can be handled in its entirety in Brussels (although by some accounts, the updated French statute carves out an exception for clinical studies). Because of the congressional mandates, the FDA also has little room to breathe.

Whether the authors of the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA) realized there was an impasse in the offing for multinational clinical studies is not clear, and it should be noted that the EU directive does not kick in until May 2018. Nonetheless, consent is likely to be more worksome in these instances, particularly since the EU law also addresses de-identified sources of data.

FDA Rejects Five-Year Follow-Up in HPV Final

The term of follow-up is always a bone of contention between the FDA and device makers, but the agency resisted calls from clinicians to tack on a five-year follow-up requirement in the final guidance for diagnostics for the human papillomavirus.

This is a document with some history behind it, including a 2009 draft that drew fire for its insistence that all precision studies be conducted at one site. The final guidance allows a sponsor to use two external and one internal testing sites for reproducibility studies, which typically encompass evaluations of precision.

Perhaps of greater importance is that the final guidance requires that sponsors follow patients for a shorter span of time than was recommended by several professional societies. The American Society of Cytopathology and the College of American Pathologists were among those who urged the agency to require that sponsors follow a subset of women with negative co-testing results for five years, but the agency indicated no interest in such a requirement despite the societies’ argument that this would comport with their guidelines for co-test screening intervals.

In a somewhat related development, CDRH announced in the Sept. 8 issue of the Federal Register that it has scheduled a Jan. 11, 2018, workshop for self-collection devices for pap tests. Clearly the agency’s primary interest is in public health – the agency remarked that there are still gaps in screening for cervical cancer – but the development might also seem to portend a more relaxed approach on the agency’s part to home sample collection going forward. It’s too soon to anticipate where this particular conversation might be headed, but testing labs would probably have to more vigorously demonstrate the reliability of their tests than is currently the case, and designers of collection kits might be charged with usability studies to ensure those kits can be reliably used by those with limited familiarity with such things.

Cosmetic Industry on Oodles Of Needles

Those who are in the business of making microneedling devices for cosmetic purposes might want to take heed of the draft guidance recently issued by the FDA’s Center for Devices and Radiological Health, which appears to take on a burgeoning set of offerings from the cosmetic industry. The agency clarified the characteristics that would distinguish items that are and are not regulated as devices, explaining that the length and sharpness of the needles in these needle arrays is one indicator of whether such an instrument is indeed a medical device.

Another factor is whether the item in question achieves its primary intended purpose through chemical action within or on the human body, which if so would constitute a medical device. Claims that suggest the device is intended to do nothing more than remove the outermost regions of the epidermis, (the stratum corneum) would not be subject to regulation, but anything suggestive of penetration or delivery of an effect “beyond the stratum corneum into living layers of skin” would likely make that item a medical device.

As of yet, no microneedling devices have gone through regulatory review, and thus anyone who files for a premarket review faces either a class III designation or must file a de novo application. De novo filings are now subject to $93,000 in user fees under the fourth device user fee agreement, although the agency is on the hook for a turn-around of 150 days under this new de novo paradigm. In this first year of the MDUFA IV, only half of de novos have to meet that 150-day turn-around, however.

FDA Releases Final Guidance on Interoperable Devices

Courtney S. Young, Esq. |Senior Attorney, Medmarc Risk Management

Last week, the FDA released its final guidance on “Design Considerations and Pre-market Submission Recommendations for Interoperable Medical Devices.” The draft of this document was issued on January 26, 2016.

The document begins with FDA’s acknowledgment of the increasing prevalence of interconnected medical devices and a statement that “FDA intends to promote the development and availability of safe and effective interoperable medical devices.” It then defines interoperability in this context as “the ability of two or more products, technologies, or systems to exchange information and to use the information that has been exchanged. It relies on § 201(h) of the FD&C Act for the definition of interoperable medical device.

Regarding potential harms associated with errors in interoperability, the guidance provides the example of “transmission of weight in kilograms [by one device] when the receiving medical device assumes the measurement is in pounds” and states that such an error “could lead to patient harm and even death.”

Design Considerations for Interoperable Devices

The guidance highlights the following considerations as appropriately tailored “to the selected interface technology, and the intended use and use environments for the medical device.” I will provide some of the elements the guidance lists under each consideration.

  1. Purpose of electronic interface
  • Types of devices that it is meant to connect to
  • Need for time synchronization
  • What the user should or should not do with the electronic interface including contraindications, warnings, and precautions on the use of the exchanged information
  • Functional and performance requirements of the device as a result of the exchanged information
  • The transmission of metadata (UDI, software version, configuration, settings).
  1. The anticipated user (and what information each user group needs to know)
  • Users, operators, and clinicians need to know the clinical uses and potential risks relevant to the use environment and the clinical task at hand;
  • Equipment maintenance personnel and hospital clinical engineers need to know what actions to take to verify correct configuration
  • Patients may need specific instruction son how to use their device in a home environment
  1. Risk management considerations
  • Whether implementation and use of the interface degrades the basic safety or risk controls of the device
  • Whether appropriate security features are included in the design
  1. Verification and validation

A manufacturer should:

  • Verify and validate that when data is corrupted is can be detected and appropriately managed;
  • Perform testing to assure that the device continues to operate safely when data is received in a manner outside of the bounds of the parameters specified.
  • Verify only authorized users (individuals, devices, systems) are allowed to exchange information with the interoperable device
  • Assure that reasonably foreseeable interactions do not cause incorrect operation of other networked systems
  1. Labeling considerations
  • The manufacturer should determine the appropriate way to provide the information based upon the anticipated users and the risk analysis.
  1. Use of consensus standards
  • FDA recognizes the benefits of relying on published consensus standards in the design of medical devices, in general, and in the development of interoperable medical devices, in particular.

Recommendations for Contents of Pre-Market Submissions

The last part of the guidance focuses on what manufacturers of interoperable devices should include in their pre-market solutions. The guidance elaborates on each of these elements: device description, risk analysis, verification and validation, and labeling.

 

 

Life Sciences News Roundup, 6/22

Courtney S. Young, Esq. | Senior Attorney, Medmarc Risk Management

MedPAC Calls for Action to Reduce Number of PODs 

On June 15, the Medicare Payment Advisory Commission (MedPAC) issued its annual report, which enumerated problems with PODs and outlined actions that could be taken to reduce their prevalence. You can read more here.

FDA Seeks Comment on Two New Drug Promotion Studies

The FDA published two notices in the Federal Register on Monday articulating its plans to undertake new studies on drug promotion: (1) Experimental Study on Risk Information Amount and Location in Direct-to-Consumer Print Ads; and (2) Disclosures of Descriptive Presentations in Professional Oncology Prescription Drug Promotion.

 

FDA Back in the News Sans Guidances

After a drought in terms of guidances and other regulatory documents, the FDA is back in the news in a big way in the week of May 8, although there are no guidances or other regulatory documents at play. It’s tempting to try to read a lot of things into some of these developments, but other developments seem to hint at a need for more investment for not necessarily more return.

Gottlieb; same old thing or something different?

Former FDAer Scott Gottlieb is the back at the FDA, this time in the commissioner’s chair, thanks to his successful navigation of the Senate minefield. The opposition to Gottlieb included allegations that he will run roughshod over the drug and device review processes, and that he is “a doctor with ties to the drug industry.” Of course, Robert Califf was also a doctor with ties to the drug industry, but try finding a doctor who doesn’t have those ties. FDA advisory committees wrestle madly trying to find such a unicorn so they don’t have to go through the irksome vetting process.

On the other hand, there are those who hail Gottlieb as a breath of fresh air and a much-needed source of level-headedness at the agency. The trade associations issue the usual bland statements such as “we look forward to working with” Gottlieb, but they are not publicly predicting any radical changes at the agency under him, and they shouldn’t.

Anyone who hopes Gottlieb will effect an immediate transformation of the agency’s outlook on product reviews or on commercial speech would do well to remember how much difficulty the agency’s managers have had with the rank-and-file in times gone by. We might recall the letters from device reviewers to the Obama administration and a couple of members of Congress back in 2009, which stirred the political pot quite vigorously. However, the accompanying allegations of regulatory misconduct never quite stuck, and those letters – replete as they were with trade secrets – cost more than one FDA employee their job.

Nonetheless, it took quite some time for the agency to root out those problems, so there are many reasons to be skeptical about an impending change of “culture.” Jeff Shuren, director of the FDA device center, pointed to this cultural difficulty in a recent hearing regarding the user fee agreement, and he should know. He took over the directorship of the Center for Devices and Radiological Health shortly after the FDA renegades started stirring up controversy eight years ago, and despite industry’s misgivings about him in the first couple of years, Shuren was in no mood for the misadventures of these malcontents. Still, it took some time before he was able to give anyone the heave-ho.

User fee bills passed

The Senate HELP Committee put the user fee legislation in a nice, tidy bundle for consideration of the full Senate thanks to a May 11 markup, but there is one provision therein that might have some interesting effects on clinical trials in the years to come.

Sen. Orrin Hatch of Utah proposed an amendment that would require that the FDA mandate that clinical studies both offer greater access to several demographics, including infants and children, while also stipulating that clinical study enrollment more accurately reflect the population that would receive the treatment in question. This amendment, which passed on a voice vote, will also streamline IRB review of individual petitions for access to an investigational product.

It might be argued that there’s a tension of sorts between broader access and ensuring that enrollees reflect real-world usage, but either way you cut it, enrollment in clinical studies seems certain to increase. Needless to say, this could substantially increase the cost of a clinical study, which in the case of some medical devices can easily exceed $50,000 per enrollee.

It’s not clear how this pays off for industry, however, given that the additional enrollment required by the FDA might be of patient subgroups that exhibit a differential response. Supposing this subgroup experiences a lower therapeutic effect than the patient population as a whole, but that the sponsor cannot enroll enough members of this sub-group to allow for a separate analysis?

As for access by individuals, one has to wonder whether IRBs will be swamped with individuals applying to take part in a study for which they might not be a natural fit. Patients aren’t exactly bashful these days, after all, and it does not stretch the imagination to think that IRBs end up with a lot more work to do. Will the additional workload interfere with an IRB’s review of a drug or device study proposal?

Liability in EU Market Promises to Grow

Device makers doing business in the U.S. don’t always care for the current state of tort law, but at least they know what to expect. The legal environment in other markets is undergoing some changes that promise to up the ante where financial liability is concerned.

The European Parliament recently voted on the overhaul of device regulations for the European Union, bringing to a close an effort of several years’ duration. As has been previously described at this blog, the notified bodies have their own recent issues with liability in the EU nations, but one of the less conspicuous features of the new Medical Device Regulations is that device makers will have to ensure they can make compensation to all patients who have been harmed by defective medical devices.

The version of the new regulatory framework adopted by the EP includes a requirement that device makers develop “a robust financial mechanism” that will compensate patients who “receive defective products.” There are several factors that go into the calculation of that “robust” mechanism, including the class of the device and the associated risk, but the legislation also points to the size of the manufacturer as a factor. The legislation further stipulates that device makers put themselves in a position to “rapidly and effectively” compensate patients, even when the company has gone out of business.

It requires no reading of tea leaves to realize this provision was sparked at least in part by the silicone gel breast implant scandal, which gained momentum in 2009 when implant rupture rates began to spike. The manufacturer, Poly Implant Prothèse, went bankrupt the following year. The metal-on-metal hip implant problem might also have figured into this provision.

The summary for this legislation is not specific about the nature of this financial mechanism, so it would appear that liability policies will serve in the stead of cash reserves. Whether a manufacturer opts to self-insure or cover this requirement by other means, one thing companies cannot do is leave themselves open to a raft of lawsuits without some sort of plan in place to deal with any claims.

Company beats shareholder suit despite CIA

Minnesota-based Cardiovascular Systems, Inc., persuaded a federal judge to toss out a class-action shareholder lawsuit based on alleged illegal sales tactics, but the suit may be refiled. District Court judge Donovan Frank dismissed the suit (Shoemaker v. Cardiovascular Systems) due to the absence of information specific enough to support the allegations, but Frank left the door open to a reopening of the suit. Cardiovascular had already settled a qui tam lawsuit with the federal government in the amount of $8 million, but the company is also working under a five-year corporate integrity agreement with the Office of Inspector General at the Department of Health and Human Services, which went into effect in June 2016.

PTO to revisit controversial AIA program

Holders of patents who have grown fatigued with the inter partes review process at the U.S. Patent and Trademark Office may be relieved to know the PTO is undertaking a retrospective review of this and other procedures handled by the agency’s Patent Trial and Appeals Board (PTAB). The inter partes review, one of several functions added to the PTO’s to-do list via the America Invents Act (AIA) of 2012, has been widely blasted as doing little to slow down the stream of cases landing at the Court of Appeals for the Federal Circuit, but also for allowing parties with no direct interest in a patent to damage or destroy the patent.

Hedge fund billionaire Kyle Bass has not been uniformly successful with the inter partes process, losing a challenge to the patent for Shire’s Lialda (mesalimine) late in 2016, but Bass has managed to invalidate a number of important patents via the process. PTO director Michelle Lee has instructed PTO staffers to review issues such as multiple petitions, motions to amend, and claims construction. The PTO announcement did not identify a date by which the review would be complete, however.