By Jennifer D. Newberger –

It is not often that CDRH guidance documents get much attention outside the trade press and medical device circles.  So when The Wall Street Journal and The Washington Post both publish articles about a draft guidance document on the same day, it must mean big, important news.  Or must it?

On June 13, The Washington Post published an article titled, “FDA, facing cybersecurity threats, tightens medical-device standards.”  The Wall Street Journal gets to the point more directly with the title, “Patients Put at Risk By Computer Viruses.”  The reality seems to be that FDA has not actually tightened its medical device standards (which, of course, can’t be done through a draft guidance, not legally, anyway), and that while the potential for patient harm from viruses or malware exists, neither FDA nor industry is actually aware of such harm occurring.  Despite the WSJ title, the article itself states that FDA is not actually aware of deaths or injuries resulting from computer viruses or other cybersecurity breaches. 

So what is really going on, and what does FDA’s guidance actually address?  It is not news that many more medical devices today operate using wireless and Internet- and network-connected features.  With that comes the risk that the software running these devices will get a bug or virus that could interrupt the functionality of the device, or could intentionally be hacked.  FDA has been addressing the issue of cybersecurity for medical devices at least as far back as 2005, when it issued a guidance document titled, “Cybersecurity for Networked Medical Devices Containing Off-the-Shelf (OTS) Software” ("OTS Guidance").  That guidance document focused largely on quality system, post-market controls the manufacturer could put in place to reduce the likelihood of a cybersecurity attack.  The draft guidance issued on June 13, “Content of Premarket Submission for Management of Cybersecurity in Medical Devices,” addresses what companies should include in their premarket submissions “to reduce the risk that device functionality is intentionally or unintentionally compromised.”  Draft Guidance, at 2.

The draft guidance focuses on three “security controls”:  confidentiality, integrity, and availability.  Confidentiality means data are accessible only to authorized individuals; integrity means the data are accurate and have not been improperly modified; and availability means that data are “accessible and usable on a timely basis in the expected manner.”  Id.  To maintain these controls, the guidance asks that manufacturers “consider cybersecurity during the design phase of the medical device, as this can result in more robust and efficient mitigation of cybersecurity risks.”  Draft Guidance, at 3.

The guidance states that manufacturers should provide the following information in a premarket submission to demonstrate the cybersecurity of the medical device:

* Hazard analysis, mitigations, and design consideration pertaining to intentional and unintentional cybersecurity risks associated with the device; * A “traceability matrix” linking the actual cybersecurity controls to the cybersecurity risks considered; * Plan for providing validated updates and patches to operating systems or software as needed; * Appropriate documentation to demonstrate that the device will be provided to purchasers free of malware; and * Device instructions for use and product specifications related to recommended anti-virus software and/or firewall use. The real question is, what does this mean for medical device development?  The Washington Post article brazenly states that the new “tightened standards” expressed in the draft guidance “will allow the FDA to block approval of devices if manufacturers don’t provide adequate plans for protecting them.”  This seems to go beyond what the draft guidelines say, and beyond what FDA has the statutory and regulatory authority to do.  Let’s not forget that for 510(k) devices, the question is only if the device is substantially equivalent to a predicate device.  If the proposed device meets that standard, FDA would be hard pressed to issue a not substantially equivalent letter based solely on whether the 510(k) notice addresses cybersecurity protection to FDA’s satisfaction.  (Of course, industry has seen many examples where FDA has applied tighter standards through draft guidance, and showing that a new device is as safe and effective as the predicate device is not enough.)  For PMAs, the standard is one of reasonable assurance of safety and effectiveness.  If FDA can show that the potential, unrealized cybersecurity risks prevent the device from making that showing, it could perhaps hold up the application.  However, both articles make clear that while there have been instances of viruses infecting computer device software, FDA is not aware of any injuries or deaths resulting from the viruses, nor is it aware of any evidence that hackers have deliberately targeted a hospital network or medical device “for a malicious cyberattack.” 

This doesn’t mean it couldn’t happen, and of course manufacturers should attempt to design against these potential risks as much as possible.  In discussing what manufacturers could be doing for currently marketed devices, the issue of what corrections need to be reported to FDA seems to have reared its ugly head.  The Washington Post article states that “manufacturers typically refuse to apply software patches, claiming the FDA does not allow updates to regulated devices, but FDA officials say that is not the case.”  According to the WSJ, “manufacturers argue that FDA regulations limit the changes that can be made to a device’s software.”

This concern on the part of manufacturers may stem from a draft guidance we discussed in a prior blog post.  In that draft guidance, FDA took a new position, stating that corrections that do not meet the definition of a recall, but rather are only “product enhancements,” still must be reported to FDA.  Under this flawed analysis, FDA may be able to take the position that something as simple as a software patch would need to be reported, if it believed the patch was introduced to reduce a risk to health.  This would significantly increase the regulatory burden for device manufacturers as well as deter these improvements.  This would also be in conflict with FDA’s earlier statements in the 2005 OTS Guidance, in which FDA clearly stated that neither a new 510(k) submission nor a report under Part 806 would usually be required for implementation of a software patch to address cybersecurity vulnerability.  OTS Guidance, at 4, 5.  In discussing the Part 806 reporting requirements, FDA said that reporting would not usually be required “because most software patches are installed to reduce the risk of developing a problem associated with a cybersecurity vulnerability and not to address a risk to health posed by the device. In most cases, therefore, you would not need to report a cybersecurity patch under 21 CFR Part 806 so long as you have evaluated the change and recorded the correction in your records.”  Id. at 5.  Hopefully, this is the position FDA would take today, and an improvement to cybersecurity would not been seen as an action taken to reduce a risk to health.

FDA will need to consider how to go about encouraging manufacturers to take the steps necessary to protect their currently marketed devices from cybersecurity, while at the same time not imposing additional regulatory burdens.  The same is true for new devices.  Manufacturers should consider the cybersecurity risks when designing a new product, but not all potential eventualities can be adequately considered and addressed, and FDA should not be looking for manufacturers to guarantee the absolute cybersecurity of their devices any more than they can guarantee there will be no adverse events associated with use of the device.  Given the pace of development in computer technology, the goal of preventing all future risks is not achievable.  Hopefully FDA and industry can work together to strike a balance that will enhance cybersecurity without inhibiting the ability of new devices to come to market.

(The title of this post is taken from Ki Mae Heussner, “FDA to medical-device manufacturers: batten the hatches, the hackers are coming,” GigaOM. )

By Jennifer D. Newberger –

On June 14, 2013, FDA issued a draft guidance, “FDA Decisions for Investigational Device Exemption (IDE) Clinical Investigations,” to provide clarity around certain IDE decisions, and to introduce a “voluntary program intended to facilitate the development of trial designs that may support a marketing approval or clearance.”  Draft Guidance, at 2. 

IDE DECISIONS

After evaluating an IDE, FDA takes one of the following three actions: approval, approval with conditions (traditionally referred to as “conditional approval”), or disapproval.  The draft guidance focuses primarily on the second of these options, approval with conditions.

When FDA approves an IDE with conditions, the sponsor may begin enrollment in the clinical study but must respond to the issues identified by FDA within 45 days from the date of FDA’s decision letter.  FDA may issue an approval with conditions “if FDA has determined that, despite some outstanding issues, the information provided is sufficient to justify human clinical evaluation of the device and the proposed study design is acceptable with regard to protection of study subjects.”  Draft Guidance, at 4. 

FDA may also grant a “staged approval,” which allows enrollment of a limited number of subjects while the sponsor responds to outstanding questions posed by FDA.  Once the sponsor addresses those issues, it may expand enrollment in the clinical trial.

IDE DISAPPROVALS

Though FDA may deny an IDE for a variety of reasons, section 601 of FDASIA, which modified section 520(g) of the FDC Act, specified that FDA may not disapprove an FDA based on a finding by FDA that the investigation may not support a marketing application.  In the draft guidance, FDA notes that, while it will abide by this requirement not to disapprove an IDE that may not support a marketing application, it believes that the sponsor will benefit from knowing what modifications FDA believes are necessary to obtain approval.  FDA states that it “will convey such considerations to the sponsor to provide greater clarity and predictability.  In addition, FDA will convey certain considerations that FDA believes will be important for future submissions related to the proposed investigation.”  Draft Guidance, at 9.

FDA will communicate these considerations in any combination of the following:  study design assessment (e.g., are endpoints appropriate), study design considerations (e.g., randomization, statistical plan, enrollment criteria, blinding), or future considerations (e.g., limitations of the data with regard to supporting certain claims or indications, or required non-clinical testing).

PRE-DECISIONAL IDE REVIEW PROCESS

This process is intended to “provide sponsors with information regarding study designs that will support market approval or clearance.”  Draft Guidance, at 12.  This process, known as a “Pre-Decisional IDE,” is “a voluntary approach to enable sponsors to obtain timely feedback from review staff on a near-final IDE application, with the opportunity for a mid-cycle interaction with the review team to promote a clearer understanding and quicker resolution of major issues with device or subject safety as well as study design.”  Id.  FDA is implementing this program in the hopes it will result in faster approval of IDEs that may support a marketing application.  Eligibility is limited to pivotal studies for which an IDE is required.

The initial step of the application process is similar to that of a traditional IDE.  Within five days of submission, FDA will evaluate whether the application is eligible and sufficiently complete for substantive review.  One the application is accepted, a 30-day review clock begins. 

At the end of the review cycle, FDA will issue to the sponsor questions agreed to by division management that would, if the application were submitted as an IDE, lead to a disapproval, result in an approval with conditions, or constitute a design consideration that FDA believes would not support a marketing application.  Draft Guidance, at 14.

A meeting to discuss the application will be scheduled to occur within 15 days after the end of the 30-day period, or at another time agreed to by both FDA and the sponsor.  The meeting should be no more than 90 minutes, and the sponsor must provide meeting minutes to FDA within seven days of the meeting.

After the meeting, the sponsor may choose to request the Pre-Decisional IDE be converted to an actual IDE.  Such a request must be made within seven days of the meeting, and FDA will issue the decision letter within 15 days of receipt of the request.  The inclusion of any additional information in the conversion request will result in the commencement of a standard IDE review, with a decision to be rendered within 30 days.

If the sponsor does not request a conversion, FDA must provide written feedback within 15 days of the meeting, including any deficiencies or recommendations noted during the review.  The sponsor may then submit a formal IDE application; respond to the issues identified by FDA in the original Pre-Decisional IDE; or respond to FDA’s feedback and submit a request to repeat the Pre-Decisional IDE process.

It is not immediately obvious from the draft guidance precisely how a sponsor will benefit from the multi-step Pre-Decisional IDE process.  If there are no concerns with the IDE, the review time is the same—30 days.  If there are concerns, the sponsor and FDA will engage in a series of exchanges to resolve the issues.  It may offer more opportunity for interactive feedback from FDA, but it is not yet clear if it will actually lead to faster IDE approvals or a higher percentage of IDE approvals.  Nevertheless, for complicated submissions, it may provide more in-depth, useful feedback at an earlier stage in the review process, giving the sponsor an opportunity to better understand and address FDA’s concerns.

Transparency and data disclosure are this year’s hot issues for pharmaceutical companies. On the clinical trial front, Europe is leading the way, with initiatives from the European Medicines Agency and the European Parliament that will impact drug research and development world-wide. The proposed TEST Act and FDA initiatives concerning disclosure of safety and efficacy data signal that the United States is not far behind (see our previous post here).  Mandatory disclosures concerning the details of trial protocols and results, if required, will have significant practical and strategic ramifications, particularly if retroactive disclosure is imposed.

Please join partners from Dechert’s Life Sciences practice and regulatory attorneys from Hyman, Phelps & McNamara, P.C. for a webinar, titled "Clinical Trial Disclosure: Keeping Ahead of the Wave," on where these initiatives stand, what to expect and how reforms could impact pharmaceutical companies.

_SEMINAR TOPICS_ :

 Update on EU and US legislative and regulatory proposals for clinical trial disclosures:

- overview of current EU and US disclosure framework - who is driving the push for expanded disclosure and how industry is or is not responding - what is being proposed - timeline for change impacting companies inside and outside the EU

 The real-world effects on current and future clinical development programs:

- considerations regarding clinical trial design and management - implications for compliance and reporting programs

 Other immediate and long-term business impacts:

- on securities-related disclosures and securities litigation risk - on IP protection - increased product liability risks

_SPEAKERS:_

David B. Clissold, Director, Hyman, Phelps & McNamara, P.C.   Hope S. Freiwald, Partner, Complex Commercial Litigation/Life Sciences, Dechert LLP  David A. Kotler, Partner, White Collar and Securities Litigation/Life Sciences, Dechert LLP Jonathan A. Schur, Partner, Corporate and Securities/Life Sciences, Dechert LLP  Roger C. Thies, Director, Hyman, Phelps & McNamara, P.C.

_WHEN:_

Tuesday, June 25, 2013, from 12:45 PM - 1:45 PM EDT.  Please confirm your attendance by Monday, June 24. Further details, including how to connect to the webinar, will be provided closer to the program.  Application for Continuing Legal Education ("CLE") credit is currently pending in California, New Jersey, New York and Texas.  Please email Pamela Lashbrook (pamela.lashbrook@dechert.com) with any questions, or if you require CLE credit in another jurisdiction.

 

By Katie Bond –

FTC Chairwoman Edith Ramirez announced on Monday the appointment of Jessica Rich to head the agency’s Bureau of Consumer Protection ("BCP").  Ms. Rich is a 20-year veteran of the FTC with experience overseeing policy work and enforcement especially in the areas of privacy, data security, and the use of evolving technologies, such as mobile applications, in marketing. 

Under David Vladeck, the BCP’s last non-Acting Director, the Bureau had a pronounced focus on health benefit advertising – with high-profile cases involving products such as muscle-toning tennis shoes and breakfast cereals marketed with claims about boosting children’s immunity and cognitive function.  Privacy and data security cases were not uncommon during Mr. Vladeck’s tenure; several settlements were announced with companies, such as Google and Facebook.  It would not be surprising, however, to see even greater enforcement focus on privacy, data security, and online marketing matters during Ms. Rich’s tenure.  There could also be more cases involving both emerging technologies and health benefit advertising.  The 2011 investigation of a mobile application marketed as an acne treatment provides an example of such a case.  

Ms. Rich previously served, since January 2012, as Associate Director of the BCP, heading the Division of Financial Practices.  She served as BCP Deputy Director under then-Director Vladeck from November 2009 until 2012.  From 1998 until 2009, Ms. Rich served as Assistant Director of the Division of Financial Practices and as Assistant Director, and then Acting Associate Director, of the Division of Privacy and Identity Protection. 

By Karla L. Palmer –

On Friday, June 14, 2013, Congressman Morgan Griffith (R-VA) released a draft bill addressing compounding of human drugs.  The draft primarily was influenced by the revised draft guidance document the Food and Drug Administration (“FDA”) was prepared to release in the fall of 2012, prior to the New England Compounding Center (“NECC”) incident.  This bill does not define a “compounding pharmacy” or create a “compounding manufacturer” category, unlike the pending Senate Health, Education, Labor and Pensions Committee (“HELP”) legislation (S. 959).  Congressman Griffith’s draft proposal retains two categories – pharmacies and manufacturers – and clarifies how FDA would distinguish compounding pharmacies from drug manufacturers.  The issue of linking compounding to identified patients is a key feature of the bill.  

The draft also requires that all compounding pharmacies comply with both USP <795> (non-sterile compounding) and USP <797> (sterile compounding).  The draft proposal emphasizes sharing of information between FDA and states, and provides a framework to ensure FDA receives timely notifications from states concerning whether a compounding pharmacy may be acting as a drug manufacturer.  When a state provides notice to FDA that a compounder is or may be violating the law, for example, FDA would be required to provide notification to other states and make a determination whether there is enough evidence to inspect the pharmacy in question.  The draft proposal gives FDA full inspection authority of a compounding pharmacy, but only if there is prior evidence that a compounding pharmacy is acting as a manufacturer in violation of the FDCA.  Under current practice, FDA often conducts a comprehensive inspection of a pharmacy to determine whether that pharmacy was entitled to the more limited inspections authorized for pharmacies.

The draft does not include in its definition of “essentially copies of a commercially available drugs” (i.e., drugs which cannot be compounded) those products that appear on FDA’s drug shortage list.  Lastly, the draft proposal makes falsifying a prescription for a drug compounded under section 503A a violation of the FDCA subject to criminal penalties.  Comments on the proposed draft are due by close of business on Thursday June 20, 2013.  Below is a more detailed summary of the proposed bill. 

SUMMARY OF PROPOSED AMENDMENTS TO FDCA SECTION 503A

The draft proposal amends Section 503A of the FDCA (21 U.S.C. § 353a).  Sections 501(a)(2)(B) (cGMPs), 502(f)(1) (adequate directions for use labeling), and 505 (new drugs) of the FDCA will not apply to a compounded drug product if each of the following conditions is met:

• _INDIVIDUAL PATIENT PRESCRIPTION REQUIREMENT:_  The product is for an _IDENTIFIED INDIVIDUAL PATIENT_ based on a prescription demonstrating the compounded product is necessary for that patient; and

    o The product is compounded by a state-licensed pharmacist/physician/other licensed practitioner. 

• _ANTICIPATORY COMPOUNDING:_  A drug can be compounded in limited quantities _PRIOR TO THE RECEIPT OF AN INDIVIDUAL PRESCRIPTION_ when: 

    o The pharmacist/ physician has historically received prescriptions for the compounding of the product; and      o     The orders have been generated solely within an established  physician/pharmacist relationship with the patient or the physician who will write the order.

• _OFFICE USE COMPOUNDING:_  A pharmacist/physician may _COMPOUND A NON-PATIENT-SPECIFIC PURCHASE ORDER FROM A HEALTH CARE PROVIDER_, after receiving assurances that:

    o The drug will be administered within a doctor’s office, hospital or health care setting;     o One or more patient-specific orders or notations will be submitted to the compounder within 7 days of drug administration that will account for the full amount of drug product compounded; and      o The drug may not be compounded for office use or in anticipation of a prescription if prohibited under state law. 

• _BULK SUBSTANCES: _ If a drug is compounded using bulk substances, it must comply with a USP or NF monograph if such exist, and USP chapters on compounding (including sterile preparations).  If a USP/NF monograph does not exist, then the drug must be compounded using components of approved drug products.  If a monograph does not exist and the drug is not compounded using components of approved products, then it must appear on a substance list published in FDA regulations.  Bulk substances used in compounding also must be manufactured at a FDA-registered establishment, and accompanied by a valid certificate of analysis. 

    o If, however, a drug is compounded using ingredients _OTHER THAN BULK SUBSTANCES_, then those ingredients must comply with USP/NF monograph, if applicable, and USP chapters on compounding (including sterile preparations). 

• _DO NOT COMPOUND LIST:_ The compounded drug must not appear on a list published by FDA (per regulations) concerning drugs or drug components withdrawn for reasons of safety or effectiveness.  For drugs that are _DEMONSTRABLY DIFFICULT TO COMPOUND_, FDA will publish a “do not compound list” of those drugs that reasonably demonstrate an adverse effect on the safety or effectiveness of that product. 

• _ESSENTIALLY COPIES OF AVAILABLE DRUGS/FDA DRUG SHORTAGE LIST:_ The compounded drug may not be a copy or essentially a copy of a commercially available drug.  “Essentially a copy of a commercially available drug product” _WOULD NOT INCLUDE_: (1) a drug product for which there is a change for an identified individual patient which produces for that patient a significant difference, as determined by the prescribing or  practitioner, between the compounded drug and the commercially available drug; or (2) a drug product that appears on the drug shortage list in effect under FDCA section 506E.

• _FEDERAL/STATE NOTIFICATION SYSTEM:_ FDA is required to develop, in consultation with NABP, a notification system for receiving and reviewing submissions from state boards of pharmacy on actions taken against compounding pharmacies.  Submissions from state boards warranting FDA notification would include: (1) warning letters, sanctions or penalties for violations of state regulations; (2) suspension/revocation of a state issued pharmacy license; and (3) recall(s) of compounded drug products due to quality or purity concerns.  FDA must implement the notification system within one year after implementation of the act. 

    o The proposal requires FDA to review state submissions and other necessary information including information collected through an inspection or maintained in the Adverse Event Reporting System database; FDA would make a determination whether the pharmacy is in violation of section 503A. 

• _INSPECTIONS: _ Within 60 days after receipt of a state submission, FDA must assess whether there is evidence suggesting that the pharmacy is in violation of the section, and, if so, must conduct an inspection in coordination with the state board. 

• _SECTION 704 INSPECTION AUTHORITY:_ FDA also would have inspection authority under FDCA section 704 (inspections) to determine whether a compounding pharmacy is not eligible for the inspection exemption under 704(a)(2) (pharmacies) _ONLY IF_ the FDA receives the above-described submission from a state described above. 

    o If, after receiving a _STATE SUBMISSION_, FDA determines that a pharmacy is in violation of section 503A, then FDA would be required to notify other state boards of pharmacy. 

• _ADVISORY COMMITTEE:_  Before issuing regulations, FDA would be required to convene an advisory committee (including representatives from NABP, USP, physician and consumer groups, and experts) on compounding unless FDA claims that issuance of such regulations more promptly is necessary to protect the public health. 

• _DEFINITIONS/CRIMINAL PENALTIES:_  “Compounding” is defined as not including mixing, reconstitution, or following other directions provided by the manufacturer.  The proposal would permit criminal penalties for intentionally falsifying a prescription order for a compounded drug product. 

By Kurt R. Karst –      

On June 17th, the U.S. Supreme Court issued its much-anticipated opinion in Federal Trade Commission v. Actavis, Inc., 570 U.S. ___ (2013) (Docket No. 12-416) concerning drug patent settlement agreements (aka “reverse payment agreements” or “pay-for-delay agreements”).  In a 5-3 opinion delivered by Justice Breyer (joined in by Justices Kennedy, Ginsburg, Sotomayor, and Kagan), the Court declined to hold that reverse payment settlement agreements are presumptively unlawful, and that “Courts reviewing such agreements should proceed by applying the ‘rule of reason,’ rather than under a ‘quick look’ approach.”  Notwithstanding the Court’s holding on the appropriate test to apply to drug patent settlement agreements, however, the Court – applying a set of five circumstances – also held that the FTC should have been given the opportunity to prove its antitrust claims and that the exclusionary potential of a patent does not immunize a drug patent settlement agreement from antitrust attack.  The FTC, a longtime opponent of drug patent settlement agreements, almost immediately issued a press release hailing the decision as a “significant victory.”

As we previously reported (here, here, and here) the Supreme Court agreed to hear the case after the U.S. Court of Appeals for the Eleventh Circuit affirmed, in April 2012, a February 2010 decision by the U.S. District Court for the Northern District of Georgia largely dismissing multidistrict litigation brought by the FTC (and certain private plaintiffs) challenging certain drug patent settlement agreements in which Solvay Pharmaceuticals, Inc. (“Solvay”) allegedly paid some generic drug companies to delay generic competition to Solvay’s drug product ANDROGEL (testosterone gel).  The Eleventh Circuit, following the Court’s previous holdings in Valley Drug Co. v. Geneva Pharm., Inc., 344 F.3d 1294, 1296 (11th Cir. 2003), Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005), and Andrx Pharmaceuticals, Inc. v. Elan Corp., 421 F.3d 1227 (11th Cir. 2005), held that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.”  This “scope of the patent test” is different from the so-called “quick look rule of reason” analysis advocated by the FTC.  As the U.S. Court of Appeals for the Third Circuit explained in In Re: K-DUR Antitrust Litigation in rejecting the “scope of the patent test” and applying the “quick look” rule, under the “quick look” rule “the finder of fact must treat any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market as prima facie evidence of an unreasonable restraint of trade, which could be rebutted by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.”

The Court’s three-part holding is as follows:

(a)  Although the anticompetitive effects of the reverse settlement agreement might fall within the scope of the exclusionary potential ofSolvay’s patent, this does not immunize the agreement from antitrust attack.  For one thing, to refer simply to what the holder of a validpatent could do does not by itself answer the antitrust question.  Here, the paragraph IV litigation put the patent’s validity and preclusive scope at issue, and the parties’ settlement—in which, the FTC alleges, the plaintiff agreed to pay the defendants millions to stay outof its market, even though the defendants had no monetary claim against the plaintiff—ended that litigation.  That form of settlement is unusual, and there is reason for concern that such settlements tend to have significant adverse effects on competition.  It would be incongruous to determine antitrust legality by measuring the settlement’s anticompetitive effects solely against patent law policy, and not against procompetitive antitrust policies as well.  Both are relevant in determining the scope of monopoly and antitrust immunityconferred by a patent, _see, e.g., United States v. Line Material Co._, 333 U. S. 287, 310, 311, and the antitrust question should be answered by considering traditional antitrust factors. For another thing, this Court’s precedents make clear that patent-related settlement agreements can sometimes violate the antitrust laws.  _See, e.g., United States v. Singer Mfg. Co._, 374 U. S. 174; _United States v. New Wrinkle, Inc._, 342 U. S. 371; _Standard Oil Co. (Indiana) v. United States_, 283 U. S. 163.  Finally, the Hatch-Waxman Act’s general procompetitive thrust—facilitating challenges to a patent’s validity andrequiring parties to a paragraph IV dispute to report settlement terms to federal antitrust regulators—suggests a view contrary to the Eleventh Circuit’s.  Pp. 8-14.

(b)  While the Eleventh Circuit’s conclusion finds some support in a general legal policy favoring the settlement of disputes, its related underlying practical concern consists of its fear that antitrust scrutiny of a reverse payment agreement would require the parties to engage in time-consuming, complex, and expensive litigation to demonstrate what would have happened to competition absent the settlement.  However, five sets of considerations lead to the conclusion that this concern should not determine the result here and that the FTC should have been given the opportunity to prove its antitrust claim.  _FIRST_, the specific restraint at issue has the “potential forgenuine adverse effects on competition.”  _FTC v. Indiana Federation of Dentists_, 476 U. S. 447, 460-461.  Payment for staying out of themarket keeps prices at patentee-set levels and divides the benefit between the patentee and the challenger, while the consumer loses.  And two Hatch-Waxman Act features—the 180-day exclusive-rightto-sell advantage given to the first paragraph IV challenger to win FDA approval, §355(j)(5)(B)(iv), and the roughly 30-month period that the subsequent manufacturers would be required to wait out before winning FDA approval, §355(j)(5)(B)(iii)—mean that a reversesettlement agreement with the first filer removes from considerationthe manufacturer most likely to introduce competition quickly.  _SECOND_, these anticompetitive consequences will at least sometimesprove unjustified.  There may be justifications for reverse paymentthat are not the result of having sought or brought about anticompetitive consequences, but that does not justify dismissing the FTC’scomplaint without examining the potential justifications.  _THIRD_, where a reverse payment threatens to work unjustified anticompetitive harm, the patentee likely has the power to bring about thatharm in practice.  The size of the payment from a branded drugmanufacturer to a generic challenger is a strong indicator of such power.  _FOURTH_, an antitrust action is likely to prove more feasibleadministratively than the Eleventh Circuit believed.  It is normally not necessary to litigate patent validity to answer the antitrust question.  A large, unexplained reverse payment can provide a workablesurrogate for a patent’s weakness, all without forcing a court to conduct a detailed exploration of the patent’s validity.  _FIFTH_, the fact that a large, unjustified reverse payment risks antitrust liability doesnot prevent litigating parties from settling their lawsuits.  As in other industries, they may settle in other ways, _e.g._, by allowing the generic manufacturer to enter the patentee’s market before the patentexpires without the patentee’s paying the challenger to stay out prior to that point.  Pp. 14-20. [(Emphasis added)]

(c)  This Court declines to hold that reverse payment settlement agreements are presumptively unlawful.  Courts reviewing suchagreements should proceed by applying the “rule of reason,” rather than under a “quick look” approach.  _See California Dental Assn. v.FTC_, 526 U. S. 756, 775, n. 12. Pp. 20-21.

Chief Justice Roberts filed a dissenting opinion in the case (joined in by Justices Scalia and Thomas) saying that the majority opinion “departs from the settled approach separating patent and antitrust law, weakens the protections afforded to innovators by patents, frustrates the public policy in favor of settling, and likely undermines the very policy it seeks to promote by forcing generics who step into the litigation ring to do so without the prospect of cash settlements.”  (Justice Alito took no part in the consideration or decision of the case.)  Indeed, within minutes of the decision, some commentators were already speculating an end to drug patent settlement agreements.  That seems unlikely, although as PhRMA notes in a press release: “the Court’s decision creates a degree of uncertainty that will make it less likely that innovator pharmaceutical and generic companies will be able to settle these disputes in the future.”  GPhA's press release echoes a similar concern: “the Court’s ruling will require generic companies to take on a greater administrative burden to pursue a patent challenge, potentially lowering the number of challenges.  As a result, consumers may have access to fewer generic options.”   

The full import of the Court’s decision will likely take some time to appreciate as courts – in currently pending and in new antitrust cases – grapple with how to apply the various circumstances and tests identified by the Supreme Court.  In turn, brand and generic companies will have to determine on a case-by-case basis whether and how to structure drug patent settlement arrangements.  As Actavis notes in a press release about the decision, althought it “does place an additional and unnecessary administrative burden on our industry,” it “continues to provide for a lawful and legitimate pathway for resolving patent challenge litigation in a manner that is pro-competitive and beneficial to American consumers.” 

_ADDITIONAL READING:_

* Senators Klobuchar, Grassley Statements on U.S. Supreme Court’s Decision in FTC v. Activas, Inc.

By Ricardo Carvajal –

In previous postings (see here and here),  we reported on the Center for Food Safety’s ("CFS’s") lawsuit seeking to compel FDA to accelerate its implementation of FSMA.  In April, the presiding court ruled that FDA’s delay violated the APA and ordered FDA and CFS to attempt to set a mutually acceptable schedule for implementation.  That negotiation proved fruitless, apparently because CFS insisted on specific deadlines – a nonstarter for FDA.  Thus, the parties submitted their own proposed implementation schedules to the court (see here for FDA's proposal, and here for the CFS proposal).

FDA explained its disinclination to set specific deadlines as follows:

FDA determined that, because there are numerous factors and variables that will affect the length of time required for the development of draft final rules for regulations that have already been proposed, as well as the development of proposed rules that are not yet completed, it is not feasible to predict with anything approaching certainty when the final FSMA regulations will be ready to be published. Therefore, FDA developed a schedule of target timeframes that the Agency will endeavor to meet in completing its tasks, with the caveat that future developments, such as the need to supplement the administrative records with additional information, or the need to re-open one or more regulations, may render FDA unable to act within all of these timeframes.

The “factors and variables” referred to above include coordination of policy issues based on comments received on the five “foundational” FSMA rules (Preventive Controls for Human Food, Produce Safety, Foreign Supplier Verification, Preventive Controls for Animal Food, and Third Party Accreditation), accommodation of public input and response to comments, OMB and interagency review, and the agency’s limited resources.  The agency therefore proposed the following “aggressive but achievable” schedule for submitting final rules to the Federal Register:

* Preventive controls for human food – 19 months after the close of the comment period (currently set for September 16)  * Produce Safety – 21 months after the close of the comment period (currently set for September 16) * FSVP and Accreditation of 3rd party auditors – the proposed rule would publish in Summer 2013 with a 120-day comment period; the final rule would be submitted 19 months after the close of the comment period * Preventive controls for animal feed – the proposed rule would publish in Fall 2013; the final rule would be submitted 19 months after the close of the comment period * Sanitary transportation – the proposed rule would publish in the 2nd quarter of 2014; the final rule would be submitted 15 months after the close of the comment period * Intentional contamination – an ANPRM would publish in the 2nd quarter of 2014; the proposed rule would publish 15 months after the close of that comment period; the final rule would be submitted 15 months after the close of the comment period for the proposed rule CFS strongly objected to FDA’s proposal:

Defendants’ proposal utterly fails to comply with the Court’s Order and FSMA...  A deadline is a deadline, a firm parameter with meaningful consequences, not a “target timeframe.”  Contrary to Defendants’ mischaracterization, Defendants’ Proposal provides nothing remotely resembling a closed-ended process, not in accordance with the Court’s Order and congressional intent in setting firm deadlines for rulemaking in FSMA.

CFS proposed its own implementation schedule with much tighter timeframes.  With the exception of the rule for accreditation of third party auditors (for which the comment period would close on November 30 with submission of the rule to follow by December 31, 2013), all comment periods would close on December 31, 2013, and final rules would be submitted by May 1, 2014.  In part, CFS’s timeframes count on foregoing OMB review, which CFS contends is “not required where, as here, rulemaking requirements are governed by FSMA’s statutory deadlines and the pending court-imposed injunction.”

Stay tuned.  We will be monitoring the court’s response.

By James E. Valentine* & David B. Clissold –

The pendulum has been swinging: the medical research community and public health advocates want access to clinical trials data used to support marketing applications of FDA-regulated medical products.  In 2007 that pendulum picked up momentum, with the enactment of Section 801 of the FDA Amendments Act of 2007 (“FDAAA”), which amended the PHS Act § 402 to expand the clinical trial registry data bank created by Section 113 of the FDA Modernization Act of 1997 (“FDAMA”).  Areas of expansion included the types of clinical trials that must be registered in ClinicalTrials.gov, the data elements that must be submitted, and the required submission of certain results data. 

Requiring the registration and submission of summary results of clinical trials of medical products was seen as a way to, among other things, allow the use of research results to contribute to medical knowledge for the benefits of patients, the research community, and the general public.

As it turned out, FDAAA Section 801 was not the end-all-be-all solution, especially since the statute left a plethora of questions on how to comply with the requirements: including questions as to who is a “responsible party” and what is an “applicable clinical trial” that would be subject to results reporting (we covered these early developments in 2008 and 2009 here, here, here, here, here, and here; NIH has a webpage with current information on the FDAAA 801 requirements). 

Although no refinements were made in the  latest round of FDA-focused legislation, the FDA Safety and Innovation Act of 2012 (“FDASIA”), policymakers on both sides of the aisle, as well as FDA, have recently proposed additional ways to increase transparency and access to clinical trial data and results in hopes of spurring medical product innovation and improving public health.

REP. ED MARKEY (D-MA) REINTRODUCES THE TRIAL AND EXPERIMENTAL STUDIES TRANSPARENCY (“TEST”) ACT

For over a year now, Rep. Markey, along with Rep. Waxman and other House democrats, have been discontent with the underreporting of clinical trial results as required by FDAAA Section 801 (we previously reported here).  Rep. Markey first introduced the Trial and Experimental Studies Transparency (“TEST”) Act in August 2012 (see here), but it never made it out of the committee stage.

As it was introduced this session, on May 16, 2013, H.R. 2031 would increase results reporting by expanding the reporting requirements for ClinicalTrials.gov, closing what is describes as “loopholes” in the original 2007 scheme.  The TEST Act would do so by:

* Expanding reporting requirements to include interventional studies conducted outside the United States. * Expanding reporting requirements to postmarket surveillance of class II or class III devices that involve data collection from human subjects.  * Requiring the submission to ClinicalTrials.gov of supporting documents, including protocol documents and consent documents used to enroll trial subjects. * Requiring all interventional studies to be registered with the database before the first participant is enrolled in the trial. * Strengthening reporting requirements so that results from all covered trials are posted on ClinicalTrials.gov within one year of the completion of the trial, while also limiting the delayed submission of results to only trials on medical products that have never before been approved for any use and up to only two years after trial completion. The TEST Act also attempts to increase compliance by:

* Requiring the NIH Director and FDA Commissioner to report to Congress on the number of clinical trials with information submitted and steps taken to enforce compliance. REP. TOM REED (R-NY) REINTRODUCES THE RENAMED CLINICAL TRIAL CANCER MISSION 2020 ACT

Another advocate for increasing clinical trials results reporting to ClinicalTrails.gov is Rep. Reed, who sees clinical trial results availability not only as a way to improve medical knowledge and research, but as a way to “safeguard taxpayer dollars from funding redundant research” (see Reed’s press release here).   His legislation, the Clinical Trial Cancer Mission 2020 Act (“CTCM 2020”) Act came just about a month after the introduction of the TEST Act, and takes a different approach to increasing clinical trial results reporting to ClinicalTrials.gov.

As it was introduced this session, on May 16, 2013, H.R. 2301 (no, this is not déjà vu, the bill number is just very similar to the TEST Act’s) addresses what he describes as a “lack of enforcement in reporting clinical trial results.” 

The CTCM 2020 Act would do two primary things:

* Adds a provision to include a clinical trial whether or not it results in a positive or negative outcome, as well as subject Department of Defense-funded clinical trials to the requirements to certify information submission to the NIH. * Adds an “enhanced enforcement” subsection that would make the penalty for failure to report required clinical trial information to ClinicalTrials.gov within a 30-day correction period ineligibility for grant funding from the United States government, as well as create a repayment obligation for any grant amount provided. (For a more detailed overview of this legislation, see our previous post here from last session).

FDA ANNOUNCES “AVAILABILITY OF MASKED AND DE-IDENTIFIED NON-SUMMARY SAFETY AND EFFICACY DATA”

Going beyond the summaries of clinical trials data that FDAAA Section 801 requires to be reported to ClinicalTrials.gov, FDA is proposing to use its new mandates under FDASIA Section 1124, “Advancing regulatory science to promote public health innovation,” to make available de-identified (i.e., cannot identify individual study participants) and masked (i.e., cannot identify a specific product or application) data derived from medical product applications.

In a Federal Register notice (Docket No. FDA-2013-N-0271), FDA announced as part of its Regulatory Science Initiative, this effort which has goals similar to that of the results reporting to ClinicalTrials.gov:

* To improve efficiency and effectiveness of medical product development by making available this clinical and preclinical data derived from marketing applications, which would then facilitate innovation in the development of new products.  * To maximize the contribution of patients who participate in clinical trials to the benefit of society. FDA expects that allowing other experts outside of the Agency to conduct analyses of the data will contribute to identification of potentially valid endpoints for clinical trials, understanding of the predictive value of preclinical models, clarification of how medical products work in different diseases, and information for development of novel clinical designs and endpoints.  Additionally, FDA hopes that this information could be used by sponsors, e.g.,  being used as a model of disease progression in control arms for future studies of the same disease or indication even without the identification of a product or even product class, for the characterization of risk factors only involving control group data, and validating a biomarker as a surrogate clinical outcome or as a predictive classifier of potential treatment response using class-wide data to show consistency.

FDA is currently accepting comments on the availability of this data to aid the Agency in the difficult task of establishing methods to appropriately mask the clinical trial data to prevent someone from identifying the product or application. 

* Law student

By Larry K. Houck –

Pharmacists are under increasing pressure to take extraordinary steps to verify prescriptions for controlled substances, especially in light of the fact that the Drug Enforcement Administration (“DEA”) has asserted that pharmacists are the gatekeepers or the “last line of defense” in the fight against prescription drug abuse.  Alan G. Santos, DEA, Combatting Pharmaceutical Diversion: Targeting “Rogue Pain Clinics” & “Pill Mills,” Prescription Drug Awareness Conference, May 4-5, 2013, unnumbered slides.  However, if the American Medical Association (“AMA”) adopts either of two committee resolutions at its 2013 meeting, pharmacists who serve that gatekeeper role should not expect cooperation from prescribing physicians.  One AMA delegation has introduced a resolution to the Organized Medical Staff Section that would characterize routine pharmacist inquiries “for verification of the rationale behind prescriptions, including diagnosis, treatment plan, ICD-9 codes and/or previous medications/therapies that were tried/failed, and for routine pharmacist calls for such verification of this rationale, to be an inappropriate interference with the practice of medicine and unwarranted.”  AMA Organized Medical Staff Section Resolution 12 (A-13), AMA Response to Drug Store Chain Intrusion into Medical Practice, received May 15, 2013.  Delegations from New England have put forth an almost identical resolution to the AMA House of Delegates that also, while noting the regulations “only” require pharmacists to ensure the prescription is legitimate, pharmacists are “under no circumstances should be required to confirm the appropriateness of a prescription; the decision is purely a medical one, completely in the purview of the treating physician.”  AMA House of Delegates Resolution 218 (A-13), AMA Response to Drug Store Chain Intrusion into Medical Practice, received May 17, 2013.  Furthermore, calls from pharmacists to doctors’ offices to verify prescriptions will be deemed an “inappropriate interference with the practice of medicine and unwarranted ….”  Id.  If  pharmacists continue to conduct routine prescription verification, the AMA plans to take its fight to the implicated companies (i.e., drug store chains), DEA, and other involved state and federal regulators to stop what the AMA believes is interference in the physicians’ practice of medicine and their medical treatment decision-making.  If those efforts fail, the AMA will turn to Congress for legislation to eliminate any form of pharmacist prescription verification requirement, or to otherwise clarify physician and pharmacist roles in dispensing controlled substances. 

The impetus for the AMA resolutions appears to be the policy of a “national drug store chain” that requires its pharmacists to call and speak with the practitioner to “verify” controlled substance prescriptions prior to filling them.  While both proposed resolutions recognize a pharmacist’s “responsibility to vet any prescription for legitimacy,” they characterize pharmacist due diligence efforts not as a “last line of defense” against the prescription drug epidemic but instead an invasion of the patient-physician relationship.  The resolutions suggest that pharmacists’ questioning prescribers about their controlled substance prescriptions is a perversion “of the “spirit and intent” of DEA’s pharmacist corresponding responsibility regulations.  While DEA regulations do not specifically require a pharmacist to contact practitioners to verify controlled substance prescriptions, DEA’s interpretation of its regulations and recent administrative actions against pharmacies demonstrate that closely scrutinizing most if not all controlled substance prescriptions, including verifying prescriptions with prescribing physicians, is at a minimum exactly what DEA expects pharmacists to do. 

DEA regulations have long established that a corresponding responsibility rests with dispensing pharmacists to ensure, with the prescribing practitioner, that a prescription for a controlled substance has been issued for a legitimate medical purpose by the individual practitioner acting in the usual course of professional practice.  21 C.F.R. § 1306.04(a).  Many pharmacists, even with the current prescription abuse epidemic fueled by rogue practitioners, remain reluctant to question a practitioner about their controlled substance prescriptions.  This is not unreasonable, given that it is the physician, armed with a medical degree and clinical training, sees the patient, treats the patient, and determines the appropriate medical treatment.  While pharmacists are responsible for guarding against fraudulent prescriptions and potential doctor-shopping patients, questioning the prescribing practices and medical judgment of a physician and evaluating whether a prescription was issued for a legitimate medical purpose is far more difficult.

DEA traditionally viewed medical practitioners as the gatekeepers who determined through examination, administering, dispensing and prescribing which patients legitimately needed controlled medications.  However, in recent years, because of the diversion created by rogue Internet pharmacies and pain clinics, DEA has focused more on pharmacists as the controlled substance gatekeepers, holding them accountable for dispensing pursuant to prescriptions not issued for legitimate medical purposes.  See East Main Street Pharmacy; Affirmance of Suspension Order; 75 Fed. Reg. 66149 (Oct. 27, 2010).  DEA officials have expressed their belief that the pharmacist, with their pharmacological training, rather than practitioners, is the “drug expert” in the healthcare arena and therefore responsible for policing practitioners.  Responding to the Prescription Drug Abuse Epidemic: Hearing Before the S. Caucus on Int’l Narcotic Control, 112th Cong. 2 (2012) (Statement of Joseph T. Rannazzisi Deputy Assistant Administrator, DEA).  Pharmacists must fulfill their corresponding responsibility through reasonably diligent efforts and judgment to ensure that a prescription has been issued for a legitimate medical purpose.  See East Main Street Pharmacy; Affirmance of Suspension Order, 75 Fed. Reg. 66149 (Oct. 27, 2010). 

The AMA’s proposed resolutions are directly at odds with DEA’s legal and regulatory position on a pharmacist’s corresponding responsibility to ensure that prescriptions are issued for a legitimate medical purpose and in the course of a physician’s professional practice.  For example, DEA has based an Order to Show Cause, in part, on a pharmacist’s assertion that it was “not [his] job to question a physician.”  Id.  DEA also requires pharmacists to resolve certain “red flags” signaling invalid prescriptions, including at a minimum verifying controlled substance prescriptions with the physician’s office prior to filling those prescriptions.  See id.; Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195; Decision and Order, 67 Fed. Reg. 62315 (Oct. 12, 2012).

Noticeably absent from the resolutions are any indication that the AMA will urge its physician members to assist pharmacists in their corresponding responsibility to ensure that controlled substances are issued for a legitimate medical purpose.  If the AMA adopts either of the proposed resolutions, pharmacists will not only encounter continued physician resistance to prescription verification, but also find it even more difficult to comply with their corresponding responsibility to ensure that the prescriptions they fill have been issued for legitimate medical purposes.

The AMA and DEA must come to a consensus concerning the scope of a pharmacist’s corresponding responsibility to ensure that prescriptions are legitimate in light of the prescription drug epidemic so that patients obtain needed medication, pharmacists are not second-guessing medical decisions, and pharmacists who fill controlled substance prescriptions are not legally culpable for a physicians’ illegal or otherwise improper prescribing practices.

The AMA Organized Medical Staff Section and House of Delegates will consider the resolutions during the association’s 30th Annual Assembly this week in Chicago.

By Kurt R. Karst –      

A Draft Committee Report made available by the U.S. House of Representatives Committee on Appropriations that would, once finalized, accompany the Fiscal Year 2014 Agriculture/FDA Apprropriations bill (currently available as a Full Committee Draft), lays out a laundry list of concerns and new action items for FDA to meet. 

Below we categorize each of the items in the Draft Committee Report.  Many of the items concern issues currently being debated in Congress, and, more broadly, within the food and drug-regulated industry.

GENERAL ISSUES

_Transparency Concerns._—The Committee is concerned about the unpredictable nature and pace at which FDA moves guidance, rules, and regulations through the process. The Agency must understand that FDA is often viewed as a primary source of information for consumer decisions that impact their health and wellbeing. The Committee understands that many rules and regulations get through the agency and the department only to languish at the Office of Management and Budget (OMB). On the other hand, FDA has discretion to issue advisories and guidance without the need for OMB clearance. In a number of critical health areas, American consumers and industry are faced with no guidance at all or inconsistent messages on many important issues. The following is a list of examples: seafood advisory for pregnant women; sunscreen ingredients; new dietary ingredients for dietary supplements; and, Bisphenol A. The Committee directs FDA to report to the Committees on Appropriations by September 1, 2013, on how the agency plans to develop new methods of communicating with its stakeholders on future actions affecting critical policy issues, including estimated timeframes for when regulations, advisories, and guidance are planned for release and what decision points are necessary before these policy documents can be made.

_Low-Risk, Expedited Imports._—The current fiscal environment and the growing number of import entries require that efforts to enhance safety must be directed towards the most serious compliance infractions. The Committee strongly encourages FDA to establish a pilot project to expedite imports for importers with strong safety records. Such project could be modeled on the Customs and Border Protection (CBP) Customs-Trade Partnership Against Terrorism and Importer Self-Assessment programs which address security of imported products. The goal would be new trade facilitation methods for low-risk importers that provide accurate and reliable data, have a history of importing compliant products, and low risk cargo that could be incorporated into the import inspection process, thereby enabling FDA to better leverage financial resources. FDA is strongly encouraged to provide clear guidelines for those importers that are low-risk and to collaborate with CBP and other relevant agencies to enhance information sharing between agencies on this work. FDA is directed to provide a report to the Committee on its efforts in this regard by December 1, 2013.

_Statutory Deadlines._—The Committee is aware the Administration continues to miss statutory deadlines for rulemaking to implement Public Law 111–353. The Committee expects the Administration to meet the statutory timelines for implementing Public Law 111–353 and directs FDA to provide a report every 180 days detailing the reasons and justification for any proposed rule or final regulation being 120 days or more beyond its statutory deadline.

USER FEES

_FDA User Fee Collections/Obligations._—The Committee is concerned about the large unobligated balances that continue to occur in FDA’s user fee programs. While Congress did allow for some exemptions from fiscal year limitations and for some amounts to be carried forward into subsequent fiscal years, it could not have been anticipated that FDA would be carrying in excess of $1,000,000,000 in unobligated user fees halfway into any fiscal year. In the Tobacco user fee program alone, the fiscal year 2012 unobligated balance that carried over into fiscal year 2013 was $600,000,000. While FDA estimates this figure will drop to $250,000,000 by the end of fiscal year 2013, the Committee remains skeptical that this will occur. The Committee directs that not later than November 1, 2013, and each month thereafter through the months covered by this Appropriations Act, the Commissioner to submit to the Committees on Appropriations of the House and the Senate a report on user fees collected for each user fee program included in the bill. The report shall also include monthly obligations incurred against such fee collections. The first report shall include a distinct categorization of the user fee balances that are being carried forward into fiscal year 2014 for each user fee account as well as a detailed explanation of what accounts for the balance and what the balance will be used for.

_User Fees._—The Committee is concerned about subjecting FDA user fees to sequestration as these fees are not normal tax revenue. It is important to maintain the integrity and industry support for user fee programs. The Committee encourages FDA to reevaluate its calculations of sequestration in regard to user fees.

_Impact on Small Businesses._—The Committee is concerned by unintended consequences of the Generic Drug User Fee Act (GDUFA) fee structure. While the Committee understands that user fees provide the resources to facilitate generic drug approvals, the Committee believes FDA should study the impact of smaller generic manufacturers’ ability to pay at the same level as large manufacturers. The Committee directs FDA to provide a report to the Committees on Appropriations on the impact of the GDUFA fee structure on smaller generic drug manufacturers within 180 days of enactment of this Act.

PRESCRIPTION DRUGS & BIOLOGICS (HUMAN)

_Non-Tropical Diseases (NTD)._— [NOTE: The reference to "Non-Tropical Diseases" should probably be a reference to "Neglected Tropical Diseases."] The Committee has become aware that Chagas disease is not on the list of neglected diseases as currently defined by FDA. The Committee urges FDA to make the necessary modifications to include Chagas disease in its list of neglected diseases in line with World Health Organization’s list of NTDs. Additionally, the Committee directs that FDA build stronger partnerships with global regulatory stakeholders and strengthen its internal capacity to review products for neglected diseases.

_Food and Drug Safety and Innovation Act._—The Committee is aware that shortages of critical drugs persist following the enactment of the Food and Drug Safety and Innovation Act. Surveys conducted by the American Association of Nurse Anesthetists, the American Hospital Association, and the American Society of Health-System Pharmacists report persistent shortages of drugs used in anesthesia care, oncology, and other services, owing primarily to problems in manufacturing, which impair patient access to care and patient experiences in the healthcare system, delay surgical procedures, and possibly increase overall healthcare costs. The Committee directs the Commissioner to continue to prioritize the public reporting of manufacturing shortages and to work with industry to prevent conditions that might lead to drug shortages.

_Compounded Drugs._—The Committee is concerned by the quantity and volume of recalls of compounded sterile products and therapies. The Committee awaits the results of a study by GAO providing updated information on state and Federal oversight of compounding. Furthermore, the Committee encourages FDA and the States to work together to improve and strengthen oversight and enforcement of compounding pharmacies.

_Abuse-Deterrent Drugs._—The Committee supports FDA’s recent efforts to ensure that certain opioids are kept off the market and commends the agency for removal of those products for reasons of safety or effectiveness. The Committee understands that FDA established draft guidance in January 2013 entitled Evaluation and Labeling of Abuse-Deterrent Opioids, and encourages the agency to move expediently to finalize such guidance.

PRESCRIPTION DRUGS & BIOLOGICS (ANIMAL)

_Guidance for Industry._—The Committee directs the Secretary of Health and Human Services to finalize Guidance for Industry (GFI) #213 prior to January 1, 2014. The Committee directs the Secretary of Health and Human Services to publish a report not later than one year following the date of finalization of GFI #213 that (1) lists the following, for each medically important antimicrobial new animal drug administered in feed or water to food-producing animals with one or more approved production claims (including any growth promotion, feed efficiency, or weight gain claims) and/or that are approved for over-the-counter (OTC) marketing, provided that such antimicrobial is in a class of drugs that FDA determines accounts for 10 percent or more of all physician prescriptions: (a) the drug’s new animal drug application (NADA) number(s), (b) sponsor, (c) all antimicrobial active ingredients contained in the drug, and, (d) all production claims approved for the drug; and (2) specifies the number of sponsors of the new animal drugs listed that have notified the FDA of their intent to participate in the voluntary process described in GFI #213. The Committee further directs the Secretary, beginning not later than one year following the finalization of GFI #213, to publish annual reports that (1) specify the number of antimicrobial new animal drugs for which sponsors have submitted applications under GFI #213 to change existing approvals, broken out by type of change sought (i.e., removal of production claims; addition of treatment, control, and/or prevention claims; and removal of OTC marketing status); and (2) list the applications submitted under GFI #213 that have been approved by the agency by NADA number, and if not approved or rejected, indicate whether the inaction was a result of insufficient FDA resources, insufficient information from sponsors or some other reason.

_Data Collection._—To assist efforts intended to address antibiotic use, the Committee directs the Secretaries of Health and Human Services and Agriculture to require appropriate agencies to collaborate to (1) identify approaches for collecting detailed data on antibiotic use in food-producing animals, (2) seek stakeholder and broad public input to develop a proposal for collecting this information, and (3) use the data to assess the effectiveness of policies to curb antibiotic resistance. The Committee further directs FDA to ensure that ARS continues to analyze, characterize, and report on data collected through NARMS.

FOODS & DIETARY SUPPLEMENTS

_Nutrition Labeling._—The Committee remains concerned with FDA’s proposed rule to regulate Nutrition Labeling of Standard Menu Items at Chain Restaurants. The Committee urges FDA to use the proposed alternative Option 2 definition of the rule which only applies to restaurants or retail establishments where the primary and majority of business is the selling of food for consumption or the selling of food that is processed or prepared on the premises. The Committee believes the agency should take into account the increased costs and logistical challenges chain restaurants will face in meeting the requirements of the proposed rule. To meet the requirements of the law, FDA should consider a clear, conspicuous statement of required nutritional information on a prominently displayed poster adjacent to the menu board and nutritional information to be provided in pamphlet form prominently displayed next to drive-through menu boards as meeting such requirements.

_Food safety monitoring._—The Committee notes that the National Agriculture and Food Defense Strategy Plan is being finalized as required by Section 108 of Public Law 111–353. As research needs are identified to carry out this section, the Committee encourages FDA to consider funding research that would provide portable and technologically advanced testing platforms needed to effectively monitor and protect against intentional adulteration of the food supply.

_New dietary ingredients._—The Committee notes that FDA has not addressed issues relating to its July 2011 draft guidance on New Dietary Ingredients (NDI) for Dietary Supplements despite this Committee’s urging it to do so last year. The Committee continues to be concerned that this guidance is being utilized by FDA for enforcement activities despite the document only being draft guidance. The Committee directs FDA to report back within 60 days of enactment of this Act with a timeline on how it intends to re-engage the dietary supplement community to develop a final guidance on what constitutes a NDI.

_Food Safety Centers of Excellence._—The funding provided for CFSAN supports the base funding for the CFSAN Centers of Excellence at the FY 2011 level, including Food Safety Modernization Act collaborative efforts with these Centers. The Committee encourages FDA to maintain an appropriate funding level for both Food Safety Modernization Act related and other food safety related activities performed by these Centers of Excellence.

_Food and Veterinary Medicine._—The Committee is aware of the important support provided to FDA’s food and veterinary medicine programs and through its research and program relations with their centers of excellence. The Committee encourages FDA to maintain an appropriate funding level for both Food Safety Modernization Act related activities and the base work performed by these centers.

_Food Product Tracing._—Pursuant to Section 204 of the Food Safety Modernization Act, FDA initiated pilot projects for improving product tracing along the food supply system and the establishment of recordkeeping requirements for high-risk foods. These pilots were conducted by the Institute of Food Technologists, in consultation with various industry sectors, USDA, state agencies, and consumer groups. A report on these projects was published on March 4, 2013, and that report affirmed that industry and government continue to pursue traceability goals on separate tracks and with little collaboration. The Committee directs the Commissioner, in consultation with the Secretary of Agriculture, to create a science-based, international food traceability initiative through a collaborative public-private partnership model. Furthermore, the Committee directs the Commissioner to provide a report within 180 days of enactment of this Act detailing the structure, goals, and implementation status of such traceability initiative.

_Seafood Advisory._—FDA must publish a final seafood advisory in conjunction with all applicable parties as directed in House Report 112–101 and Senate Report 112–73. The advisory must be consistent with USDA’s dietary guidelines and be completed and available to the public by June 30, 2013.

_Canned Tuna._—The Committee directs FDA to revise the standard of identity for canned tuna to adopt the drained weight fill of container standard as requested in the 1994 ‘‘Citizens Petition to Amend Canned Tuna Standard of Identity, 21 CFR 161.190, Docket No. 94P–0286.’’ According to the Congressional Research Service, the United States is the only country that uses the pressed cake weight fill of container standard that requires outdated 1950s technology. CODEX, the Association of Official Analytical Chemists, and all other countries use the drained weight fill of container. FDA shall revise the standard of identity for canned tuna to replace the pressed cake weight method with the drained weight method by December 31, 2013. FDA shall approve temporary marketing permits that adopt the drained weight method consistent with international standards until such time as final regulations are published updating the standard of identity for canned tuna.

OVER-THE-COUNTER DRUGS & COSMETICS

_Sunscreen._—Approximately two million cases of skin cancer are diagnosed each year and an estimated one in five Americans may develop skin cancer during their lifetime. Since sunscreen use can help prevent this disease, the Committee is concerned that FDA has taken no final action to approve new sunscreen ingredients  under the Time and Extent Applications (TEA) process. The Committee understands that new sunscreen ingredient TEAs have been pending at FDA for more than 10 years without any approvals despite their widespread safe and effective use in other countries. FDA has listed final action on sunscreen ingredient applications in its Unified Agenda every year since 2008; however, no such action has ever been taken. Therefore, FDA shall take final action on all sunscreen ingredient applications currently pending by June 1, 2014, and shall work with Congress and stakeholders—including ingredient manufacturers, finished product manufacturers, dermatologists, cancer prevention organizations and others—to develop a new process that will allow safe and effective sunscreen ingredient market applications to receive a final decision from FDA within one year of application date.

_Cosmetics._—The Committee directs the Office of Cosmetics and Colors to respond by September 30, 2013, to a citizen petition setting safety levels for trace amounts of lead in cosmetics.

_Cough and Cold Products for Children._—The Committee is concerned that FDA has not issued a proposed rule revising the monograph regulating the labeling of over-the-counter cough and cold products for children. The Committee directs the agency to publish a proposed rule by December 31, 2013, based on scientific evidence for safety and efficacy in pediatric populations and taking into consideration the October 19, 2007, joint recommendations of its Pediatric Advisory Committee and Nonprescription Drugs Advisory Committee.

MEDICAL DEVICES & RADIOLOGICAL HEALTH

_Mammography Quality._—The Committee urges FDA to follow up the November 2011 meeting of the National Mammography Quality Assurance Advisory Committee by promptly reviewing the evidence supporting including information related to an individual’s breast density in the mammogram patient report and physician report.

TOBACCO PRODUCTS

_Regulations._—The Committee appreciates FDA’s acknowledgement that exclusive tobacco products may raise different questions of public health and may need to be treated differently. Further, the Committee notes that there are key differentiating and unique characteristics of premium cigars and that any effort to bring these products under the ‘‘deeming’’ rule should proceed with these factors being taken into consideration.

_Center for Tobacco Products Performance._—The Committee understands that GAO is conducting a study of FDA’s premarket review of tobacco products. The Committee directs that, upon publication of that study, FDA shall use it to identify a set of regulatory performance standards that will address pending and new substantial equivalent applications, pending and new modified risk applications, citizen petitions, and meeting requests. The Committee further directs FDA to report to the Committees on Appropriations by March 31, 2014, on the implementation of such performance standards.