In the Federal Register posted on August 14, 2019, the Centers for Medicare and Medicaid Services (CMS) published proposed regulations that, if finalized, would expand the Open Payments reporting requirements initially introduced under the Physician Payments Sunshine Act. The Open Payments program sheds light on some of the payments (and other transfers of value) made from certain drug, device, biologicals and medical supply manufacturers to covered recipient physicians and teaching hospitals. Under the Physician Payments Sunshine Act, the applicable manufacturers must report certain payments made to the covered recipients through the Open Payments program on an annual basis. Such disclosures are available to the public. The categories of payments or transfers of value that must be disclosed include: research, honoraria, gifts, grants, travel expenses, and marketing, education or research for a specific covered drug or device.
FDA Releases Guidance on REMS Modifications and Revisions
On July 9, 2019, the U.S. Food and Drug Administration (FDA) released a final guidance on changes to approved Risk Evaluation and Mitigation Strategies (REMS). For certain drugs, the FDA may require a REMS as an additional risk management plan to ensure that the benefits of the drug outweigh the risks. The final guidance describes the three different types of changes to an approved REMS, how application holders should submit changes to REMS, and how the FDA will process submissions from application holders for changes to REMS.
FTC Issues Report on Its Authority Under Section 5 of the FTC Act to Challenge Pharmaceutical Drug Price Increases
On June 24, 2019, in response to a directive from Congress, the Federal Trade Commission (FTC) issued a report to the House and Senate Appropriations Committees on the use of the FTC’s standalone authority under Section 5 of the Federal Trade Commission Act to address high pharmaceutical prices. The committees had directed the FTC to examine, in consultation with the U.S. Food and Drug Administration, Congress’ intent regarding unfair methods of competition in Section 5 and in the FTC’s standalone Section 5 authority regarding unreasonable price increases, including those that occur over multiple years, on off-patent pharmaceutical drugs and biologics. The report broke down along party lines. The FTC’s Republican majority concluded that attempts by the Commission to rein in unreasonable drug prices using Section 5 alone, untethered from accepted theories of antitrust liability under the Sherman Act, are unlikely to find success in the courts. Democratic Commissioners Rohit Chopra and Rebecca Kelly Slaughter issued a dissenting statement in which they urged the FTC to examine ways to use its enforcement tools to restrain pharmaceutical pricing. Challenging high pharmaceutical drug prices has recently been a hotly debated political topic, and the report, along with the dissenting statement, will likely factor into that debate.
FDA Adds Useful Information to the ANDA Paragraph IV Certifications List for Better Transparency and Predictability
The U.S. Food and Drug Administration took another step to implement its Drug Competition Action Plan on June 18, 2019, by updating the information provided in the Paragraph IV Certifications List. The updated list will provide greater transparency regarding Paragraph IV certifications and potential exclusivities. That transparency will in turn lead to greater predictability for generic manufacturers regarding the potential timing of approval for their ANDAs and the potential degree of competition. The additional information will also give the public better insight into the status of generic regulatory exclusivities and the potential future availability of lower-cost generic alternatives for specific drug products.
FDA Comments on the Public Hearing on Products Containing Cannabis and Cannabis-Derived Compounds and Extends Comment Period
At the U.S. Food and Drug Administration’s (FDA) public hearing on May 31, 2019 (read more about the hearing), over 100 people presented to a panel of FDA stakeholders and to over 500 attendees. Last week, FDA stated in a post that it recognizes the “significant public interest in these products, for therapeutic purposes and otherwise” but reiterated that “there are many unanswered questions about the science, safety, and quality of many of these products.”
The good news for the industry is that FDA “recognize[s] the need to be clear and open about where things stand, and about the efficient and science-based way in which we are moving forward,” including “being transparent and up-front” as they continue to collect data and information on CBD. FDA is taking an “Agency-wide, integrated, and collaborative approach” to regulating products made from CBD and is exploring potential pathways to market for CBD products. However, FDA still grapples with how to balance the desire for widespread availability of CBD products with the desire to preserve incentives for research and drug development of CBD products.
Supreme Court Rules That Judges, Not Juries, Must Decide Preemption of Failure-to-Warn Claims
On May 20, 2019, the Supreme Court of the United States issued a rare unanimous decision in Merck Sharp & Dohme Corp. v. Albrecht, et al., holding that judges, not juries, must decide whether state law failure-to-warn claims against brand-name drug manufacturers are preempted by the FDA’s labeling regulations. In so holding, the Court further clarified the preemption standard set forth in an earlier decision, Wyeth v. Levine, concluding that such claims are preempted where a drug manufacturer can show “that it fully informed the FDA of the justifications for the warning required by state law and that the FDA, in turn, informed the drug manufacturer that the FDA would not approve changing the drug’s label to include that warning.”
FDA Releases Draft Guidance on Voluntary Recalls – Comments Due June 24
The Food and Drug Administration (FDA) recently released a draft guidance on voluntary recalls urging companies to institute recall plans and procedures in advance to ensure quick and effective execution when a recall is necessary: Initiation of Voluntary Recalls Under 21 CFR Part 7, Subpart C. FDA broke the guidance into four main parts: (1) preparation for a recall; (2) response to a reported problem with a product; (3) initiation of a recall; and (4) FDA’s role in initiation of a recall. As firms develop plans for voluntary recalls, we recommend that they consult with counsel to ensure that they comply with regulatory requirements and appropriately address the concerns raised by the FDA in this draft guidance.
FDA Announces Its Next Steps for Cannabis Products
With the enactment of the Agriculture Improvement Act of 2018 (also known as the 2018 Farm Bill), hemp-derived CBD appeared to be on the table for marketing all across the country. However, the U.S. Food and Drug Administration’s (FDA) press release issued that same day put a hold on the jubilation, stating that FDA considered any and all cannabis-containing or cannabis-derived products as drug products and not food or dietary supplements, regardless of whether the CBD was hemp-derived.
On April 2, 2019, departing FDA Commissioner Scott Gottlieb issued a statement about FDA’s next steps to advance a regulatory pathway for cannabis-containing and cannabis-derived products. At the same time FDA updated its cannabis-containing products and cannabis-derived products Q&A. It is clear that, at this point, FDA has not changed its position.
AdvaMed Releases Updated Code of Ethics, Effective 2020
The Advanced Medical Technology Association (AdvaMed) has published its updated Code of Ethics. The updated code will become effective on January 1, 2020. AdvaMed has also published an overview of changes.
The updated AdvaMed Code now includes “Key Concepts” at the beginning of each section, with visuals, graphics, callout boxes, examples, explanations and FAQs.
The AdvaMed Code provides medical technology companies with guidance on ethical interactions and relationships with healthcare professionals (HCPs) to ensure that medical decisions are based on the best interests of the patient.
Because the medical technology industry is highly divergent, the AdvaMed Code drafters recognize no single compliance program fits each company. Therefore, AdvaMed encourages companies to adopt an “appropriately tailored” ethics and compliance program, accounting for the specific types of risks that apply to their operations. Companies adopting the AdvaMed Code are encouraged to submit to AdvaMed an annual certification stating adoption of the AdvaMed Code and implementation an effective compliance program.
What Competitors Don’t Know Can Hurt You: SCOTUS Rules Secret Sales Can Trigger On-Sale Bar Under AIA
The Supreme Court of the United States recently affirmed the decision of the U.S. Court of Appeals for the Federal Circuit in Helsinn Healthcare v. Teva Pharmaceuticals, 855 F.3d 1356 (2017), which invalidated a patent-in-suit under the post-AIA on-sale bar. The question presented, answered by the Court in the affirmative, was “[w]hether, under the Leahy-Smith America Invents Act [AIA], an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.”
Justice Thomas, writing for the Court, concluded that the “on sale” provision in §102(a)(1) of the AIA was a re-enactment of the “on sale” bar provision in the pre-AIA patent statute that did not alter its meaning or interpretation, despite the inclusion of the phrase “or otherwise available to the public” in post-AIA §102(a)(1). Thus, based on the Federal Circuit’s “settled precedent,” and consistent with the Supreme Court’s decision in Pfaff v. Wells Electronics, 525 U.S. 55 (1998), the Court held that “a commercial sale to a third party who is required to keep the invention confidential may place the invention ‘on sale’ under [the AIA].” Details of the ruling and some takeaways for companies entering into licenses and supply agreements are discussed below.