On May 9, 2017, Scott Gottlieb, M.D. was confirmed by the Senate as the new Commissioner of the Food and Drug Administration (“FDA”).  As Commissioner, he will be immediately responsible for shaping FDA policy on a number of current issues, including addressing and implementing several mandates stemming from the 21st Century Cures Act, (“Cures Act”), which was signed into law on December 13, 2016 with tremendous bipartisan support. The Cures Act contains over 200 sections that create new obligations for FDA; however, most pressing for Commissioner Gottlieb are three requirements that must be fulfilled within 180 days of the Cures Act’s passage (June 11th, 2017).

These requirements are:

  • Submission of a work plan to the Committee on Health, Education, Labor, and Pensions and the Committee on Appropriations of the Senate and the Committee on Energy and Commerce and the Committee on Appropriations of the House of Representatives for any projects, which will use funding from the FDA Innovation Account created under Section 1002 of the Cures Act;
  • Development of “a plan to issue draft and final versions of one or more guidance documents, over a period of 5 years, regarding the collection of patient experience data, and the use of such data and related information in drug development” pursuant to Section 3002 of the Cures Act, which is codified at 21 U.S.C. 360bbb-8c; and
  •  Publication of “a list of reusable device types” pursuant to Section 3059 of the Cures Act, which is codified at 21 U.S.C. 360.

Commissioner Gottlieb has a long professional history in the pharmaceutical industry working in both the public and private sectors. His firsthand experience as a former Deputy Commissioner at the FDA provides him with unique insights into the internal workings of the administration. As a former consultant advising on FDA policies to the pharmaceutical industry, Commissioner Gottlieb is also familiar with recent issues and trends affecting the industry, many of which are addressed within the Cures Act.  Despite having only one month to organize and address the mandates of the three above-referenced sections of the Cures Act, we believe Commissioner Gottlieb will likely meet these deadlines based on his prior knowledge and experience.

We will continue to monitor and provide insight on Commissioner Gottlieb’s activity as FDA Commissioner, and the implementation of key Cures Act provisions as they develop. For insight into how Commissioner Gottlieb has historically viewed key issues impacting the FDA, and mandates under the Cures Act, please view our previously published client alert.

Recent federal and state legislative efforts signal an increased focus on a significant and largely underappreciated public health threat – antimicrobial resistance (i.e., when a microorganism (such as a bacteria or virus) is able to resist the effects of medications such as antibiotics and antivirals, causing such medications to be ineffective). The results of a 2014 study underscore the magnitude of the threat of so-called “superbugs,” estimating that the number of deaths worldwide attributable to antimicrobial resistance will reach 10 million by 2050.  By comparison, the same study projected 8.2 million deaths from cancer, and 1.2 million deaths from traffic accidents by 2050.  Legislative efforts to address antimicrobial resistance span from encouraging development of new pathways to market for antimicrobial drugs to expanding data collection and monitoring efforts to better understand the scope of the problem.  The combination of new data and less-restrictive pathways to market simultaneously provide pharmaceutical companies with a faster entry into the market for antimicrobial drugs and a better understanding by local health departments and hospitals of the need for new drugs to combat resistant strains of microorganisms.

Federal Initiatives

On the federal side, the 21st Century Cures Act (the “Act”), signed into law by President Obama on December 13, 2016, includes several measures related to antimicrobial resistance.  For example, the Act creates a new approval pathway for “limited population drugs,” which are antibacterial or antifungal drugs “intended to treat a serious or life-threatening infection in a limited population of patients with unmet needs.” While the Act allows FDA to approve limited population drugs with less data than typically would be required, the approval is restricted to “the intended limited population,” and the manufacturer must meet additional labeling requirements to inform physicians of the drug’s limited approved use.  In addition, manufacturers of drugs approved through this pathway are required to submit any promotional materials to FDA at least 30 days before they plan to use them.

While adding specific labeling requirements for new drugs approved for limited populations, the Act also changes labeling requirements for susceptibility test interpretive criteria. Susceptibility test interpretive criteria includes the myriad of testing options used to determine whether a patient is infected with a specific microorganism or class of microorganism that can effectively be treated by a drug.  The Act requires pharmaceutical manufacturers to replace the currently existing susceptibility test interpretive criteria from the drug’s packaged insert or labeling with a reference to a FDA website to be built where such criteria for all drugs will be held.  Manufacturers have one year from the day the website is established to move its susceptibility test interpretive criteria to the so-called “Interpretive Criteria Website.”

The Act also increases monitoring and reporting of antimicrobial drug use and antimicrobial resistance at federal healthcare facilities, like VA hospitals and facilities run through the Indian Health Service or the Department of Defense. Further, it requires annual federal data reporting on aggregate national and regional trends related to antimicrobial resistance. A broad base of reliable data on antimicrobial resistance and the associated morbidity and mortality does not currently exist. However, along with the federal government, certain states are also making efforts to improve data collection in this space.

State Initiatives

Many states receive funding from the Centers for Disease Control (CDC) to collect data about patients with extremely resistant strains of microoganisms, like carbapenem-resistant Enterobacteriacea, or “CRE” – a bacteria that kills an estimated 600 Americans each year. The Illinois Department of Health, for example, developed a registry in 2014 that tracks positive lab tests for extremely drug-resistant organisms, including CRE.  Illinois began tracking this information following a deadly outbreak of CRE in 2013.  Health care facilities participating in the registry receive alerts when an infected patient is transferred in and must report CRE-positive culture results of patients within seven calendar days.  The most recent annual report shows a 7% increase in overall cases; however, a recent article posits that the increase may be somewhat attributable to better reporting efforts by hospitals gaining experience identifying CRE.  Similar programs exist in many states, but these programs typically do not track the outcomes of CRE cases.

A recently proposed bill in California (California Senate Bill 43) would require hospitals to include information within death certificates that identifies whether “any antimicrobial-resistant infection…was a factor in the death.”  Specifically, the bill would require the “attending physician [who] is legally obligated to file a certificate of death” to determine whether, in the physician’s professional judgment, an antimicrobial-resistant infection was a factor in the patient’s death.  State law already mandates tracking of over 80 communicable diseases, like HIV and Hepatitis (A-E), but only tracks antibiotic-resistant infections of VRE and MRSA if they are contracted while a patient is already in the hospital.

Given the magnitude of the potential threat, it is reassuring that legislative initiatives are showing an increased focus on antimicrobial resistance. New pathways to market for antimicrobial drugs and increased public awareness of the rising threat of “superbugs” should lead to additional innovation by drug manufacturers.  The limited population pathway may also cause some manufacturers to reassess their pipelines and strategies to market drugs toward limited populations.  For manufacturers facing expensive and burdensome FDA requirements to market new antimicrobials to a general population, the limited population pathway may provide a cheaper and faster entry into the market.  Early entry into the market can then fund additional efforts expand the label beyond a limited population.

Health care providers, life sciences companies and other entities subject to regulation by the Food and Drug Administration (“FDA”) or the Centers for Medicare & Medicaid Services (“CMS”) should be aware that the U.S. Department of Health and Human Services (“HHS”) is increasing the maximum civil monetary penalty amounts that may be assessed by the agency.

The new maximum adjusted penalty amounts may have a significant impact on entities that violate or fail to meet mandatory reporting requirements set by FDA or CMS. Of the 299 enumerated increased fines, 137 fines (45.8%) have increased by over 75%, 100 fines (33.4%) increased by over 97%, and 64 fines (21.4%) have doubled or more.  These increased fines affect a wide variety of activities and providers illustrated by the following examples:

Fine Previous Penalty New, Increased Penalty
Fines for failure to report drug samples required by 21 U.S.C. § 353(d)(3)(E) $100,000 per instance $197,869 per instance
Fines for participating in prohibited conduct under 21 U.S.C. § 331 (misbranding, unapproved alteration, use of counterfeits, and other conduct related to the use of drugs or devices) $1,000,000 $1,781,560
Fines for any related series of violations of requirements relating to electronic products under 21 U.S.C. § 360pp(b)(1) $375,000 $937,500
Improper billing fines for Hospitals, critical access hospitals, or skilled nursing facilities under 42 U.S.C. § 1395cc(g) $2,000 $5,000
Fines for certain biological product recall violations under 42 U.S.C. § 262(d) $100,000 $215,628
Fines to Medicaid MCOs that improperly expel or refuse to reenroll a beneficiary under 42 U.S.C. § 1396b(m)(5)(B)(i) $100,000 $197,869
Fines for failure to report medical malpractice claims, or breaching confidentiality of information within such a claim, to the National Practitioner Data Bank under 42 U.S.C. § 11131(b)(2)-(c) $10,000 $21,563
Skilled Nursing Facility fines for noncompliance under 42 U.S.C. § 1395i-3(h)(2)(B)(ii)(l) $10,000 $20,628
Fines for failure to promptly provide appropriate diagnosis codes to CMS under 42 U.S.C. § 1395u(p)(3)(A) $2,000 $3,957
Daily fines for failure by a home health agency to be in compliance with statutory requirements per 42 U.S.C. § 1395bbb(f)(2)(A)(i) $10,000 $19,787

The adjusted civil monetary penalty amounts became effective on September 6, 2016, and are applicable only to HHS civil penalties assessed after August 1, 2016 for violations that occurred after November 2, 2015.  Pursuant to the Bipartisan Budget Act of 2015 (“2015 Act”) and the Administrative Procedures Act (5 U.S.C. 553(b)(3)(B)), HHS finalized the interim rule without prior notice or comment period.  As the 2015 Act provided a straight forward formula to calculate future civil monetary penalty adjustments, HHS determined that there was good cause for immediate implementation without a notice and comment period.

While penalties that more than double their previous amounts may be alarming, a penalty increase is not surprising considering some penalties have remained unchanged since 1968.[1]  These increases represent only the initial “catch up” adjustments required by the 2015 Act.  Similar to the U.S. Department of Justice and U.S. Railroad Retirement Board penalty increase adjustments for the False Claims Act discussed previously, HHS must also make subsequent annual civil monetary penalty adjustments for inflation by January 15 each  year. These increased penalties, along with the anticipated yearly inflation adjustments, provide companies with additional incentives to increase their compliance efforts in the hope of limiting their exposure to additional penalties.

[1] For example, 21 U.S.C. 360pp(b)(1) increased the penalty for any person who violated requirements for electronic products 150% from its pre-inflation penalty, from $1,100 per unlawful act or omission pre-adjustment to $2,750 per act or omission post-adjustment.

The Food and Drug Administration (FDA) issued a draft guidance (Draft Guidance) on July 11, 2016 that allows some generic drug manufacturers holding an Abbreviated New Drug Application (ANDA) to update the label of the drug they manufacture with new safety information.  The Draft Guidance provides new clarifications and recommendations to generic drug manufacturers seeking to update a generic label after withdrawal by the name brand manufacturer of the reference listed drug (RLD) (a “Withdrawn RLD”).  The Draft Guidance explains how a generic manufacturer may submit an updated label of a generic drug to the FDA for approval after withdrawal of the RLD.  The FDA must approve the proposed new label before the new generic label may be issued.  The Draft Guidance also reminds applicants that the FDA continues to retain the authority to request the ANDA-holder with a Withdrawn RLD to update the label of the drug under its ANDA for safety reasons.

The issue of generic labeling was put in the spotlight in 2011 with the US Supreme Court’s decision in  PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011), which held that generic drug manufacturers could not be held liable for failure to warn under state tort law because such laws were preempted by FDA regulations.  The specific regulations at issue prohibit generic manufacturers from changing a drug label unless and until the label of the RLD is amended.    Per Justice Thomas:

[t]he FDA denies that [generic drug manufacturers] could have… unilaterally strengthen[ed] their warning labels. The agency interprets… [its regulations] to allow changes to generic drug labels only when a generic drug manufacturer changes its label to match an updated brand-name label or to follow the FDA’s instructions. 

In response to public outcry over the decision in PLIVA, the FDA published a proposed rule entitled, “Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products” (Proposed Rule). This Proposed Rule gives generic manufacturers much broader powers and responsibilities over the labels of the generic drugs they manufacture.  The Proposed Rule was issued in 2013 and has been subject to controversy within the pharmaceutical industry.  This controversy has led to multiple delays in the finalization of the Proposed Rule and the unusual step by appropriations committees in the House of Representatives and the Senate to approve budgets that prohibit spending on the Proposed Rule.  As we reported in a June blog post, publication of the Proposed Rule has now been pushed out to at least the Summer of 2017.

In the interim, FDA’s Draft Guidance focuses on changes to generic drug labeling under a much narrower set of circumstances where the New Drug Application (NDA) of the RLD has been withdrawn by the brand name manufacturer for reasons other than safety or efficacy.

Currently, holders of a NDA or ANDA are each required to collect post-marketing safety data and provide the FDA with reports and safety data they receive for a drug under an NDA or ANDA. Based upon the data and reports submitted to the FDA, the FDA may request or require a change to the label of the corresponding drug (either a NDA or an ANDA with a Withdrawn RLD) in accordance with 21 USC §355(o)(4).  Additionally, NDA holders have available a mechanism by which the NDA holder can update the label of the drug under the NDA on its own or by providing a suggested label to the FDA for review.  This mechanism has typically been unavailable to ANDA holders. (See “Guidance for Industry: Safety Labeling Changes – Implementation of Section 505(o)(4) of the FD&C Act,” footnote 10).  The Draft Guidance clarifies that this second avenue for updating a drug’s label is available for an ANDA holder with a Withdrawn RLD if changes become necessary based upon new safety information it obtains.

Additionally, the Draft Guidance describes the other sources of data available to the holder of an ANDA with a Withdrawn RLD to aid in determining whether a label should be updated. Specifically, the FDA suggests that such an ANDA holder should review the labels of other drugs, both NDAs and ANDAs, containing the same active ingredient as they may have been updated more recently than the label of the RLD at the time it was withdrawn.

The ability to update a label under these circumstances is important for an ANDA holder with a Withdrawn RLD to avoid misbranding allegations. As the Draft Guidance states:

as a Drug is used over time, the scientific community’s understanding of the drug may evolve based on data from various sources…. Therefore, the labeling of ANDAs that rely on the withdrawn RLD might eventually become inaccurate and outdated, resulting in labeling that is false and/or misleading…

While review of new data and undergoing the process of supplementing a drug’s label with new safety information may be burdensome for ANDA holders, it is likely preferable to the risk of facing misbranding allegations.

The avenue for updated labeling in the Draft Guidance also resembles the concept of Expedited Agency Review (EAR) included in the alternative to the Proposed Rule issued jointly by the Generic Pharmaceutical Association (GPhA) and the Pharmaceutical Research and Manufacturers of America (PhRMA). While the Draft Guidance only applies to a very small and specific set of generic labels, the similarities between EAR and the FDA’s process for updating the label of an ANDA with a Withdrawn RLD demonstrates cooperation between the FDA and industry to at least find common ground on the issue of generic labeling. While the recommendations set forth in the Draft Guidance may be a sign the FDA is willing to listen to industry suggestions, the Draft Guidance’s impact is too limited to predict whether the FDA will  continue to search for middle-ground with the remaining generic labeling issues raised in the Proposed Rule.

Per the listing in the Federal Register, any comment on the Draft Guidance must be submitted by September 9th, 2016 in order to be considered in rendering the final guidance.