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.

 

U.S. Supreme Court Clamps Down on Mass Tort State Court Lawsuits

Jordan Lipp | Partner, Davis Graham & Stubbs LLP

Yesterday morning, in an 8-1 decision, the United States Supreme Court determined that plaintiffs who did not reside in California could not sue Bristol-Myers Squibb in California.  The decision is the latest one in a string of decisions from the United States Supreme Court, which are limiting the scope of personal jurisdiction – i.e., where a company can get sued.  The question of where a company can or cannot get sued is one of the most important issues in defending lawsuits against life science companies.  And this lawsuit is a classic example of these issues.

As discussed more in earlier blog posts as we’ve followed this litigation, this appeal involved personal jurisdiction issues in a case where 678 individuals, consisting of 86 California residents and 592 nonresidents, all alleged adverse consequences from the use of Bristol-Myers Squibb’s drug Plavix.  Bristol-Myers Squibb is incorporated in Delaware, headquartered in New York City, with substantial operations in New Jersey.  The lawsuits were filed in San Francisco Superior Court.  Bristol-Myers Squibb challenged the jurisdiction of California courts to hear the claims of plaintiffs who did not reside in California.  While the California Supreme Court found there was no general jurisdiction (i.e., whether a defendant can be sued in the forum regardless of whether the case is related to the forum), the California Supreme Court found that there was specific jurisdiction (i.e., case-linked jurisdiction) due to Bristol-Myers Squibb’s “wide ranging” contacts with California.

Yesterday, the United States Supreme Court reversed the California Supreme Court.  As “the nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California,” the United States Supreme Court Court found specific jurisdiction lacking.  Specific jurisdiction in these circumstances is absent no matter how many other connections Bristol-Myers Squibb had to California, no matter how many California residents had sued Bristol-Myers Squibb for the same conduct in California, and no matter how efficient having combined litigation  in California might be.  While hardly a surprising ruling, this decision could have far reaching consequences in large-scale drug and device litigation.  While a drug or device company can be sued in the state in which it is headquartered or incorporated (i.e., the concept of general jurisdiction), it will be much harder for plaintiffs to sue drug and device companies in any other plaintiff-friendly jurisdictions.  Rather, this Bristol-Myers Squibb decision will continue the trend in confining plaintiffs to suing drug and device company only in their own home-state, or where the drug or device company is headquartered / incorporated.

Biosimilars, Biostatisticians, and the New EEU

There are very few days during which the worlds of drugs and medical devices are entirely quiescent, thanks to very active American courts and international regulatory churn. There is some good news in all this, but how good is it?

If you’re in the biosimilars business, the latest news is quite good, indeed.

SCOTUS rules for Sandoz

The U.S. Supreme Court ruled on June 12 that makers of biosimilars do not have to wait six months after the issuance of a biologics license application to begin marketing that product, a development that could bring some less costly biotech drugs to market more quickly and possibly take a bite out of spending on these agents.

In a 9-0 vote, the Court ruled in favor of Sandoz in Sandoz v. Amgen, a case that made a stop at the Court of Appeals for the Federal Circuit, where the outcome was quite different. Sandoz had argued that the terms of the Biologics Price Competition and Innovation Act of 2009 had essentially worked to add half a year of exclusivity to the 12 years already granted by the statute, and by some accounts, Sandoz’s Zarxio is about 15 percent less expensive than Amgen’s Neupogen, a drug for chemotherapy-induced neutropenia.

The news might not change the field dramatically in the near term, given that the FDA has approved only about half a dozen biosimilars to date, but one possible candidate for a quick entry to market is an oncology biosimilar for Avastin, which will undergo an FDA advisory committee review in mid-July. In an ironic twist, Amgen teamed up with Allergan to produce this biosimilar.

Expert witness refuted in Zoloft lawsuit

Pfizer scored a victory in the running lawsuit pertaining to the company’s flagship antidepressant Zoloft, but what may have been the most interesting part of this story is that a court rejected expert testimony relating to allegations that the selective serotonin reuptake inhibitor (SSRI) causes congenital heart defects.

The decision may have brought to a close an effort by more than 300 litigants, which absorbed a second consecutive negative outcome in the U.S. Court of Appeals for the Third Circuit. Both the appeals court and a district court decreed that the expert witness, Nicholas Jewell, a biostatistician at the University of California at Berkeley, had failed to plausibly link the drug to the birth defects. Among the problems with Jewell’s presentation is that he had rejected meta-analyses he had previously cited in a separate lawsuit pertaining to another SSRI.

Whether the plaintiffs will take this lawsuit any further is difficult to forecast, but a footnote on page 10 of the Appeals Court decision remarked that the plaintiffs’ attorneys had conceded that they are “unable to establish general causation” if the courts jettisoned Jewell’s testimony. Summary judgment was granted in favor of Pfizer.

This is not the only multi-district litigation keeping attorneys at Pfizer busy, however. A very active set of lawsuits dealing with proton pump inhibitors and purportedly associated kidney damage would seem to implicate the OTC version of Nexium, marketing rights for which Pfizer picked up five years ago in a deal with AstraZeneca. The U.S. Judicial Panel on Multidistrict Litigation (JPML) declined in January to consolidate these lawsuits, but another motion for consolidation has been filed by attorneys with Seeger Weiss of New York.

Regulations, regulatory agreements on the move

Efforts to ramp up medical device regulatory schemes in outside-U.S. jurisdictions are nothing new, but device makers can add Malaysia and the Eurasian Economic Union (EEU) to the list of national and international entities diving into deeper regulatory waters. The news for device makers is somewhat mixed, but greater clarity alone is sometimes enough to overcome other considerations.

First, Malaysia’s Medical Device Authority has declared that adverse events associated with medical devices will have to be reported to the agency within 30 days. This apparently applies to all devices that are on the Malaysian market, regardless of where the adverse event took place. Any fatalities have to be reported within 10 days, and device makers have a mere 48 hours to advise the agency of any problems that might carry a public health consideration.

The EEU continues to work toward a single market for drugs and devices, a move which if successful would capture the markets of Russia and four other nations for a total 2015 population of nearly 184 million. There are reports that Tehran is interested in a free trade agreement with the EEU, although there is no indication that Iran would take part this new med tech regulatory bloc despite the deepening geopolitical ties with Moscow. Serbia is likewise said to be interested in doing business with the EEU, but it’s not clear whether Belgrade has full-blown membership in mind, either, although the protracted and difficult negotiations for entry into the European Union might strike some as suggestive.

To date, the EEU regulatory regime lacks several critical documents, such as a framework for quality management systems. Registration requirements for this international regulatory system would be phased in over the next four years, however, giving industry a little breathing room for offerings already available in this market.

Of Combo Products and High Courts

Tourists to our nation’s capital can always find plenty to do, and the same can be said for those in the life sciences with an ear for crucial policy matters. Following are two items of interest to makers of FDA-regulated products, one of which may have a significant influence over FDA regulation over an increasingly important class of medical products, while the other addresses federal prosecution under the responsible corporate officer doctrine.

Misgivings regarding the FDA’s CPPC

The FDA’s Combination Products Policy Council (CPPC) has a pretty serious lift in front of it, not the least of which is the thorny problem of differences in culture and attitude at the various centers that will be caught up in these combo product applications.

For some time, it has been known that many reviewers at the Center for Drug Evaluation and Research are no fans of the 510(k) program, apparently seeing it as an unforgivably fast track to market. Of course, the notion of substantial equivalence is a stranger in a strange land at CDER, which might explain a lot of the antipathy toward 510(k) devices there.

The agency opened a docket at regulations.gov in January, seeking feedback on topics the CPPC might address, and as might be expected, some of the consternation has to do with the process for determining a combo product’s primary mode of action. One concern in particular is how the agency will go about determining what sort of evidence will be needed to establish a product’s PMOA.

Other concerns relate to procedures for handling inter-center disputes regarding PMOA when the Office of Combination Products seems unable to broker a conflict. On the other hand, some have indicated that the interactive review process at CDER is more cumbersome than at the Center for Devices and Radiological Health, and thus would add time to what already promises to be a difficult review process.

One issue that was not conspicuous in comments to the docket was that of user fees. A sponsor will obviously have to pay more if the product’s PMOA is declared to be that of a drug, but what about fee sharing between centers? Will the lead center share user fees with the other center or centers? That’s not clear, and while reviewers at CDRH might find the drug user fees more than adequate, reviewers at CDER might find the device fee schedule unacceptably miserly.

SCOTUS says no to DeCoster

In one of the more interesting Park doctrine cases of recent vintage, the Supreme Court has opted not to hear arguments in the case of Decoster v. U.S., which allows to stand a three-month jail sentence imposed on the father-son ownership team in the egg business.

Many members of the bar see DeCoster as an outlier in that it entailed a jail sentence for Jack and Peter DeCoster, who are said to have been unaware of the violative behavior going on at their company, but more important is the prospect that this case will serve as a precedent for federal prosecutors who want to imprison those in the food, drug and device industries for problematic products. The high court’s decision to pass on the case means the two men will serve their jail sentences, but it also suggests that the Supreme Court will not hear this case until an appeals court other than U.S. Eight Appeals renders a different verdict in a similar case.

It may be an odd source of comfort to note that federal prosecutors will likely try out this new enforcement tool fairly promptly, which suggests that a different appeals court will have a crack at this question in fairly short order. Understandably, nobody in the food, drug or device business wants to serve as the subject of that case, but industry as a whole might want to see this question resolved as quickly as possible.

There is some question as to whether the current composition of the Supreme Court makes this the ideal time to take up such a case, but it’s difficult to predict which of the justices will be the next to leave the Court. Ruth Bader Ginsberg is a leading candidate for retirement because of her age (84), but Anthony Kennedy is no kid, either, as his 81st birthday is fast approaching. A Trump administration replacement for Ginsburg would seem to guarantee DeCoster will be overturned, but those in search of a predictable legal environment might say sooner is better, regardless of the prospects for churn at 1 First St. NE in our nation’s capital.

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?

Petition for Cert Revisits Park Doctrine

Those in the life sciences need little or no explanation regarding the implications of Park doctrine, but this relatively relaxed threshold for federal criminal prosecution may soon undergo a scrub-down at the Supreme Court of the U.S. Whether the Court will conclude the time is ripe to revisit Park doctrine is tough to predict, particularly since the acting Solicitor General has argued that this case deserves none of the Court’s attention. Nonetheless, there is a new justice at the Supreme Court, one whose track record suggests a degree of skepticism about deference to the federal government’s position on legal matters.

Jail time at heart of debate

The case of Decoster v. U.S. revolves around a three-month jail sentence imposed on the father-son team of Jack and Peter DeCoster, whose Quality Egg LLC company was charged in connection with an outbreak of Salmonella in 2010. The DeCosters agreed to pay personal fines of $100,000 each, and Quality Egg gave up nearly $7 million as well.

Prosecutors were unable to offer evidence that the DeCosters were aware that the company was shipping tainted eggs, and thus the three-month sentence imposed in the district court hearing is seen as a break with routine sentencing practice under Park doctrine. The district court judge concluded that the duo had acted negligently, and the U.S. Court of Appeals for the Eight Circuit upheld the jail term by a 2-1 vote. Subsequently, a request for an en banc hearing at the Eight Circuit was denied, whereupon counsel for the defendants petitioned the Supreme Court to take the case.

In response to the petition, acting Solicitor General Jeffrey Wall argued that the petitioners had effectively waived “any challenge to the statutory basis for their convictions” with their guilty pleas in district court, a state of affairs that carried over to the appeals court proceedings. Wall is unlikely to hold onto the job, given that the White House has named Noel Francisco, formerly a partner at Jones Day, as the administration’s pick for the position. Little or nothing has happened since the White House mentioned Francisco, however, so it may that Wall’s is the only name from the Solicitor General’s office the Supreme Court will hear in connection with DeCoster before deciding whether to grant cert.

WLF cites ‘disturbing trend’ in federal cases

In marked contrast to the position staked out by the federal government, the Washington Legal Foundation – no stranger to controversies surrounding federal prosecution of FDA-regulated entities – has written in support of a Supreme Court review, citing a “disturbing trend at the federal level to criminalize normal, everyday business decisions.” WLF argued that the prison sentence “vastly expands the scope of the Park doctrine beyond constitutional limits,” and that should this outcome develop into a trend, “it will become intolerably risky to be an executive in the food and drug industries” in the U.S.

Also on record with a friend-of-the-court brief is the National Association of Criminal Defense Lawyers, but that may not be the last of the organizations that will weigh in on this matter. The Pharmaceutical Research and Manufacturers of America and the Cato Institute both made their opposition to the jail term known as the case made its way through the lower courts, a clear sign that this case has piqued the interest of a wide range of stakeholders.

Companies in the life sciences will certainly want to track this case closely, particularly since the confirmation of Justice Neil Gorsuch to the bench would seem to suggest that the Court would at least be open to the notion that the district court was out of bounds in imposing a jail sentence. There is little to indicate that Gorsuch has a track record in Park doctrine cases, but he has exhibited a willingness to question the practice of judicial deference to the positions staked out by the executive branch. That skepticism on Gorsuch’s part offers some hope that the Court will not simply accept at face value the Solicitor General’s opinion that this case merits no review.

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.