Life Science Compliance Update

December 29, 2015

FDA DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised)

The Drug Supply Chain Security Act (DSCSA) requires most of the entities along the drug supply chain--from manufacturers to wholesale distributors to dispensers (primarily pharmacies)--to comply with new requirements regarding product tracing. The intent of the law is to enhance the FDA's ability to protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful by improving detection and removal of potentially dangerous drugs from the drug supply chain to protect U.S. consumers. The development of the system will be phased in with new requirements over a 10-year period. The DSCSA mandates that the FDA develop standards, guidance documents, pilot programs, and conduct public meetings, in addition to other efforts, to support efficient and effective implementation.

Starting in 2015, manufacturers, wholesale distributors, dispensers, and repackagers are required to provide the subsequent purchaser of certain prescription drugs with product tracing information. The trading partners are to obtain product tracing information and maintain the applicable information for at least six years following the date of the transaction.

The FDA had previously issued a Compliance Policy on July 6, 2015, which stated that the FDA did not intend to take action until November 1, 2015, against dispensers that accepted ownership of product without receiving the product tracing information, or dispensers who did not capture and maintain the product tracing information as required by law. This essentially gave dispensers a "free pass" and a bit more time to get their procedures in compliance with the law.

With the November 1 deadline rapidly approaching, last week, the FDA issued a new guidance, DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised). The new guidance "addresses the readiness of dispensers in the pharmaceutical distribution supply chain to comply with the provisions in section 582 of the Federal Food, Drug, and Cosmetic Act ... related to the exchange of transaction information, transaction history, and transaction statements (product tracing information)."

This most recent guidance announced that the FDA will extend the previously issued Compliance Policy grace period from November 1, 2015 to March 1, 2016 because some dispensers have expressed that they needed additional time to comply with the law. The FDA does not intend to take action against dispensers who, prior to March 1, 2016, accept ownership of a product without receiving the product tracing information, under section 582(d)(1)(A)(i) of the FD&C Act. This compliance policy, however, does not extend to the requirements under section 582(b)(1), (c)(1), and (e)(1) that other trading partners (manufacturers, wholesale distributors, and repackagers) provide product tracing information to dispensers.

This new compliance policy also does not extend to transactions in which dispensers must provide the subsequent owner with product tracing information, including transaction history, as required by section 582(d)(1)(A)(ii).

As a result of the FDA not taking action against most dispensers who accept ownership of a product without a transaction history, transaction information, and transaction statement, the FDA does not intend to take action against dispensers who do not maintain the product tracing information for a minimum of six years as required under section 582(d)(1)(A)(iii).

However, the grace period was extended by only four months and it is uncertain if the FDA will continue to extend the grace period. Therefore, if a dispenser has not received product tracing information prior to, or at the time it takes ownership of a product, the FDA recommends that the dispenser work with the previous owner to receive this information to ensure complete compliance with the law.

It is important to note that this guidance does not change the current requirements for manufacturers, wholesale distributors, nor repackagers. This guidance only affects dispensers who do not need to provide a subsequent owner with product tracing information. All other dispensers, or manufacturers, wholesale distributors, and repackagers are still required to obtain and maintain tracing information as required under the FD&C Act.

October 29, 2015

Turing Pharmaceuticals – Compounding Pharmacy Fights Back

Turing Pharmaceutical's purchase of Daraprim from Impax Laboratories in August 2015 for $55 million was followed by a huge frenzy in the news media. Daraprim, which is used to fight toxoplasmosis, was previously priced at 13.50 per tablet. Once Turing purchased the drug, they raised the price per tablet to $750.

Turing's rationale behind the price jump was to place the additional money into research and development, to develop better treatments for toxoplasmosis, with fewer side effects, and to invest in marketing and education tools to make people more aware of the disease. Martin Shkreli, the founder and CEO of Turing, stands by his decision to raise the price of the drug, stating, "This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business."

While Shkreli believes he and his company are doing a service to the pharmaceutical industry and patients as a whole by reinvesting in R&D, the Infectious Diseases Society of America and the HIV Medicine Association estimate that it would cost $336,000 a year to treat someone with toxoplasmosis at the $750/pill price. Both organizations believe that "this cost is unjustifiable for the medically vulnerable patient population in need of this medication."

Dr. Judith Aberg of Mount Sinai said that some hospitals will now find Daraprim too expensive to keep in stock, possibly resulting in treatment delays. Mt. Sinai will continue to use the drug, but each use of the drug requires special review.

After the initial outcry over the price hike of Daraprim, Shkreli responded by stating they would lower the price of the drug to an unidentified price, which would still allow the company to break even or even retain a small profit. To date, they have still not noted the new, lower price of Daraprim, but a spokesman did state the company is capping patient copayments at $10.

Recently, however, Imprimis Pharmaceuticals a compounding pharmacy claims they can make a close, customized version of Daraprim for just $1 a tablet. Imprimis Pharmaceuticals is known of mixing approved drug ingredients to fill individual patient prescriptions.

Imprimis CEO Mark Baum states, "While we respect Turing's right to charge patients and insurance companies whatever it believes is appropriate, there may be more cost-effective compounded options for medications, such as Daraprim, for patients, physicians, insurance companies and pharmacy benefit managers to consider."

Not only is Imprimis working on a more cost-effective tablet for fighting toxoplasmosis, but they are also "forming a new program called Imprimis Cares, which is aligned to [Imprimis'] corporate mission of making novel and customizable medicines available to physicians and patients today at accessible prices."

Imprimis says their version of the tablet, which would have to be compounded to order, has something extra known as leucovorin. "According to the Centers for Disease Control and Prevention, pyrimethamine [Daraprim's generic name] works to block folic acid synthesis in the parasite T. gondii, the cause of toxoplasmosis, and leucovorin helps to reverse the negative effects on bone marrow caused by the mechanism of this action," according to Imprimis. Imprimis is planning to sell their form of the tablet in oral capsules starting as low as $99.00 for a 100 count bottle.

Compounded drugs are typically made to fill a doctor's prescription for an individual patient, sometimes because the mass-produced version is either in short supply or completely unavailable. Compounded drugs can also allow for customized patient-specific formulations or dosages. Unlike drugmakers who make huge batches of drugs on complex production lines, compounders do not need Food and Drug Administration approval to create their compounded drugs.

It is worth keeping an eye on Imprimis to see what other drugs they imitate for a lower price. Imprimis CEO Baum stated, "We are looking at all of these cases where the sole-source generic companies are jacking the price way up. There'll be many more of these" compounded drugs coming in the near future.

April 22, 2015

Drug Shortages Policy Update

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We have covered drug shortage issues numerous times, including their impact on the healthcare system and patient care. Previous government studies have concluded that its own regulatory agencies have failed to address the problem, and in some cases may be responsible for furthering shortages.

The Food and Drug Administration (FDA) explains that shortages of pharmaceuticals can happen for a variety of reasons including manufacturing issues, quality control problems, and production delays. This puts patient’s lives at risk, as illustrated by the many recent stories on drug availability. In one example, the bladder-cancer drug BCG is currently sold by just one company, Merck, and they do not expect to produce enough of the medication until next year. Hospitals used to get around 20 vials of medicine a week, now one says it is limited to receiving six every two months. With 16,000 deaths projected this year alone, bladder cancer is the fourth-most common type of disease in men with around 76,000 new cases estimated this year among both men and women. The standard treatment for aggressive early-stage bladder cancer is BCG, a medication patients often need for months or even years.

GAO study and Congressional hearing

According to a recent report from the Government Accountability Office (GAO), the U.S. Drug Enforcement Agency (DEA) and the FDA should work together more closely to prevent shortages of prescription medications containing controlled substances, and the DEA should improve its process for authorizing quotas of the controlled substances used in these drugs. The report was requested by members of Congress, where there is bipartisan interest in combating increasingly serious drug shortages. Sen. Charles Grassley (R-IA) and Sen. Sheldon Whitehouse (D-RI) commissioned the GAO report in 2012, and soon, Grassley and Sen. Dianne Feinstein (D-CA), the leaders of the Caucus on International Narcotics Control, are scheduled to hold a hearing on the report's findings. The initial hearing was scheduled for April 14, but was postponed. A new date for the hearing has not yet been selected.

GAO findings

The GAO study looked at: (1) the trends in drug shortages; (2) the effect on patients and providers; (3) DEA’s administration of the quota process; and (4) coordination between DEA and FDA to prevent and mitigate shortages. The GAO analyzed data from 2001 through 2013 from the University of Utah Drug Information Service, which is generally regarded as the most comprehensive source of drug shortage data, and from 2011 and 2012 from YERS/QMS, which is the official record for the quota process. The GAO interviewed officials from DEA, FDA, organizations representing patients and providers, and drug manufacturers. In its conclusion, the GAO recommended the DEA and FDA take several actions to improve their management of the quota process. HHS agreed with the recommendations, although the DEA raised objections to the report.

Specifically, the GAO recommended that the DEA Administrator establish controls, including periodic data checks, to ensure that the Year End Reporting and Quota Management System (YERS/QMS) data, which is the official record of the quota process, accurately reflects both manufacturers' quota submissions and DEA's decisions. The GAO found that DEA’s lacking systematic data checks is “inconsistent with federal standards for internal control, which calls for agencies to have appropriate control activities in place, such as periodic data checks, to ensure that the data used by the agency for decision making are accurate.” The DEA told GAO that it does not monitor data from YERS/QMS to assess the administration of quotas, and without such it will be unable to evaluate its responses to manufacturers’ quota applications or understand the nature of its workload.

Additionally, the Administrator should establish measures for the agency related to quotas and ensuring an adequate and uninterrupted supply of controlled substances for legitimate use. Without these standards, the DEA does not have sufficient information to make decisions to manage its programs effectively. The quotes should be established along with internal policies for processing quota applications and setting aggregate, annual, and supplemental quotas to ensure that staff conduct these activities consistently and in accordance with the agency's regulations. DEA officials cited staffing problems for their failure to meet regulatory timeframes for the proposal and establishment of quotas.

The GAO strongly recommended DEA and FDA establish formal policies and procedures to facilitate coordination, including a specific timeframe in which DEA will respond to FDA request to expedite shortage-related quota applications. Interestingly, the Food and Drug Administration Safety and Innovation Act (FDASIA) already requires DEA and FDA to coordinate where additional quota may be needed to address a shortage of a drug containing controlled substances. The GAO report states that the agencies lack compatible policies and procedures and disagree on what constitutes a shortage of controlled substances.

Finally, the GAO recommended the DEA and FDA quickly update their MOU (memorandum of understanding) regarding steps each will take to reduce drug shortages. It further calls on the DEA and FDA to outline the type of information they will share and the timeframe for doing so in response to current or potential drug shortages.

FDA on shortages

In an April 10 blog post, FDA described how the agency works with its drug shortages team to ensure adequate supplies of FDA-approved drugs in the United States. FDA describes examples of manufacturers obtaining approval for formerly unapproved products, highlighting collaboration between the offices within the agency. FDA states:

Such approvals highlight the strength of collaborations between FDA’s shortages staff, our unapproved drugs team, and the Office of New Drugs. These approvals are crucial for FDA: once a drug is approved, we know what ingredients are in the drug, how it is made, and that it has been shown to be safe and effective for its labeled use. Approval of formerly unapproved products also helps alleviate FDA’s concerns about a potential market disruption or shortage of these drugs, because the manufacturers of approved drugs have invested in a manufacturing process that helps to ensure the drug is produced the same way every single time, lowering the risk for shortage.

FDA further explains if a single manufacturer is the sole maker of a newly-approved product it may result in the drug’s prices being higher than what patients and prescribers paid for an unapproved version of the drug. FDA specifically notes that it “does not factor costs” into the approval of drugs and encourages companies to apply for the approval of generic versions of medication, citing neostigmine, a formerly unapproved drug that now has two approved manufacturers.

The FDA’s blog post does not address one of the more interesting conclusions from the GAO study, which found that disagreements over the official meaning of a “drug shortage” might ironically help facilitate them. According to a report citing the University of Utah Drug Information Service (UUDIS), there was a 47 percent drop in new drug shortages between 2011. In 2015 the UUDIS was tracking 301 active shortages, an increasing trend according to a 2014 GAO report. However, during the same time period, FDA claims drug shortages declined. While UUDIS defines a shortage as a supply disruption that affects how a pharmacy prepares or dispenses a drug product or that influences patient care when prescribers must use an alternative agent, FDA’s definition considers whether the combined supply from all manufacturers in a specific drug market meets historical demand patterns.

FDA’s definition considers the relevant market in which the drug exists, looking at the clinical implications of the supply disruption in question. The agency may question if patients may use another version of the drug containing the same active ingredient. FDA uses third-party market research databases to assess the market share of possible disruptions, then contacts manufacturers of products in the relevant market who generally will voluntarily provide information such as their inventory status, rate of demand (units per month), manufacturing schedules, and any changes in ordering patterns. FDA may conclude that supply meets the historical or anticipated demand. This higher level of information differentiates the FDA drug shortage data from UUDIS, the latter of which will not delist an issue until all presentations or forms of the drug are back on the market.


We will continue to monitor drug shortages, including their impact on the effectiveness of medical treatment in the United States and the government’s response. The upcoming Congressional hearing on the recent GAO report will provide additional insight into potential legislative and regulatory vehicles that may be employed to deal with the current crisis. Clarity and consistency over the definition of a drug shortage could be a topic, if the GAO report is any indication.


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