Life Science Compliance Update

February 22, 2017

Citizens Petition Challenges FDA’s Off-Label Rule


On February 8, 2017, three organizations called on the United States Food and Drug Administration (FDA) to overhaul a newly finalized regulation giving the agency wide latitude to police off-label promotion, saying it contains abrupt and unconstitutional policy changes. The three organizations include: Pharmaceutical Research and Manufacturers of America, the Biotechnology Innovation Organization, and the Medical Information Working Group (a coalition of pharmaceutical manufacturers).

The three organizations collectively represent essentially all major drugmakers, and the petition challenges a January 9, 2017, final rule issued by the FDA. The final rule revised the definition of “intended use” to include a new “totality of the evidence” standard that wasn’t in the proposed rule. The final rule caught the pharmaceutical and medical device industries off guard because the proposed rule simply deleted the knowledge-based labeling directive without hinting at a change to a totality-of-evidence standard.

The Citizens Petition

The three groups filed a citizens petition because they believe that the FDA violated the Administrative Procedure Act (APA) because stakeholders were not given fair notice of the revision and opportunity to comment. It also undercuts the FDA’s reasoning for implementing a totality-of-evidence standard, stating that such a standard is overly vague and not supported by relevant case law.

The petition states that, among the consequences resulting from the revised definitions, the open-ended, subjective totality of the evidence standard will result in: (1) increased False Claims Act (FCA) litigation because qui tam relators will be emboldened to use circumstantial evidence to allege that manufacturer communications caused the government to pay for off-label uses of medical products; and (2) a chilling of free speech about legitimate scientific data related to off-label uses of medical products.

According to Bloomberg, some attorneys agree with the three organizations that the FDA violated the APA when it made the change to the final rule.

Stay of Rule Requested

The industry groups said in the petition the FDA should indefinitely stay the final rule, reconsider it and use a final definition of “intended use” that is consistent with the proposed rule issued in 2015.

The final rule, published in the Jan. 7 Federal Register, also describes when a product made or derived from tobacco intended for human consumption will be subject to regulation as a drug, device or a combination drug/device product under the Federal Food, Drug and Cosmetic Act. The rule’s effective date was Feb. 8, but the FDA postponed it until March 21 in a Feb. 7 Federal Register notice.

The FDA has 180 days to respond to a citizen petition, but the agency can respond by saying it is still considering the issue, Bradley Merrill Thompson, a Washington-based attorney with Epstein Becker & Green PC, told Bloomberg BNA. Therefore, the deadline is not really that effective.

Totality of the Evidence

In the proposed rule, the FDA deleted from the “intended use” definition a provision that said if a manufacturer has knowledge that a drug or device is used for off-label conditions, the manufacturer is required to provide adequate labeling for that use. But in the final rule, the FDA replaced that provision with languages saying it would consider “the totality of the evidence” when deciding whether a company needs to provide labeling for an off-label use.

The petition said that under a totality of evidence standard, “everything may be considered to establish a product’s intended use. This standard would allow FDA to rely even on non-promotional scientific exchange as evidence of intended use” and could include clinical practice guidelines and a company’s response to unsolicited requests for information about off-label uses.

Anne K. Walsh, an attorney with Hyman, Phelps & McNamara PC in Washington, told Bloomberg BNA the totality of evidence standard “it’s clear to me that FDA tried to avoid the notice and comment requirements of the APA,” Walsh said. Walsh said the petitioner’s APA argument “is certainly strong enough that they could have filed directly with the court and challenged it on an APA basis.”

Deborah M. Shelton, a partner in the FDA Practice Group of McCarter & English in Washington, told Bloomberg BNA the FDA “is saying [in the final rule] it’s not the knowledge in and of itself that would inform the ‘intended use,’ but that could be part of the equation and could go into the totality of evidence.”

“The petitioners have a very strong argument that this is actually a change in position from the proposed rule. To do that in the final rule without providing an opportunity for comment, is arguably violative of the APA,” Shelton said. Shelton noted that she felt it makes sense for the FDA to stay the final rule.

Public Citizen’s Health Research Group Disagrees

Michael Carome, director of Public Citizen’s Health Research Group, told Bloomberg BNA Feb. 13 that he doesn’t think the FDA violated the APA in making the change in the final rule. “We don’t think there’s anything unique there that’s inconsistent with the existing regulation or what was proposed in 2015,” Carome said.

The proposed rule struck the last sentence of the definition of “intended use,” which said “that if a manufacturer knows that a drug or device is being used for off-label uses such knowledge would require the manufacturer to update the labeling for that use,” Carome said.

February 07, 2017

FDA Announces Safety Labeling Changes Program


As reported by Regulatory Focus, the FDA announced the “safety labeling changes” (SLC) program. It will be reportedly managed by the Center for Drug Evaluation and Research’s (CDER) Office of Communications. This program includes a database that provides public data that is both downloadable and searchable. The Drug Safety Labeling Changes (SLC) database provides approved safety labeling changes from January 2016 forward. Data prior to January 2016 will continue to be available on the MedWatch website.

According to the FDA, this will enable health information technology vendors to more efficiently gather, organize and distribute information related to drug safety label changes. The SLC program will provide drug safety labeling changes to health care vendors as quickly as possible to facilitate having the data further integrated into systems frequently accessed by health care providers. Ultimately, the FDA expects that prompt access to these vital safety data by health care providers and consumers will better promote patient health.

Regulatory Focus also reported CDER director Janet Woodcock’s statement in an email to FDA staff. “With this transition, safety labeling change (SLC) data on the Web will now be available much faster for health care providers, health information technology vendors, and the public to view, search, and download,” she wrote.

Industry guidance on safety label changes was last published in 2013. In the guidance, FDA explained its thinking on the definition of new safety information under the FDAAA. The agency also explained how it will review required labeling statements and notify application holders of required changes. Details such as dispute resolution and the enforcement requirements of safety label changing are also outlined by FDA in the guidance.

Furthermore, according to recent research, label changes, as the communication tool of the FDA, are a common occurrence with about 400 to 500 product label changes occurring every year. The FDA receives approximately 500,000 reports each year. Because the drug companies are mandated to report any adverse effects, the majority of spontaneous reports from doctors and patients are first reported to the drug companies, which then must enter a report with the FDA. The rest occur via spontaneous reports from doctors and consumers who report directly to the FDA any new safety information. Two separate studies of product label changes conducted in 2007-2009 and 2010 found that 59 and 52 percent of label changes arose from these spontaneous reports, respectively.

The majority of label changes begin with spontaneous reports that are either reported to drug companies or directly to the FDA, and while this gives consumers and doctors a prominent voice in drug safety, spontaneous reports are easily generated leading to a regular need for label revisions. The current system allows case reports, especially those reporting a severe, adverse event, to drive the process of label changes. The case reports can indicate a correlation with the usage of a drug, but are not perfect indicators of causation. The FDA has been trying to create a more reliable process through the Sentinel Initiative. However, the pilot project for this initiative is ongoing, and as a result, the effects of the Sentinel Initiative remain to be seen. While waiting for more advanced technologies and data, the public and FDA must still mainly rely on spontaneous reports, which will inevitably increase the number of needed label changes. These repeated revisions have become standard practice in the current system of post-marketing surveillance from the FDA, and each change should not be interpreted as a significant event.

January 27, 2017

Advanced BioHealing (Shire) Settlement Largest in Medical Device History


Earlier this month, the Department of Justice (DOJ) announced that Shire Pharmaceuticals LLC and other subsidiaries of Shire plc will pay $350 million to settle federal and state False Claims Act (FCA) allegations that Shire and Advanced BioHealing (ABH) – a company Shire acquired in 2011 – employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product Dermagraft, a bioengineered human skin substitute approved by the Food and Drug Administration (FDA) for the treatment of diabetic foot ulcers.

The DOJ initiated both civil and criminal investigations in June 2011, with U.S. attorneys in Florida and Washington, D.C., participating in the process. Shire mentioned the investigation two-and-a-half years later when it sold off Dermagraft at a loss of $650 million, saying that it would retain the liabilities of the investigation. The proposed settlement, if finalized, will be the second that Shire has reached with the government over FCA violations in as many years.

The allegations resolved by the settlements were brought in six separate lawsuits filed under the qui tam provisions of the FCA, all of which were either filed or transferred to the U.S. District Court for the Middle District of Florida. The matters were investigated by a wide array of stakeholders, including: the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Middle District of Florida, District of Columbia, Middle District of Tennessee, and Eastern District of Pennsylvania; the FBI; the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG); the VA OIG and the Department of Defense Criminal Investigative Service.

The settlement resolves allegations that salespeople for Dermagraft unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates, to induce the use of Dermagraft. The United States alleges that as a result of their violations of provisions of the Anti-Kickback Statute, ABH and Shire submitted or caused to be submitted to federally-funded health care programs hundreds of millions of dollars of false claims for Dermagraft.

In addition to the kickback allegations, the settlement also resolved allegations that Shire and its predecessor ABH unlawfully marketed Dermagraft for purposes not approved by the FDA, made false statements to inflate the price of Dermagraft, and caused improper coding, verification, or certification of Dermagraft claims and related services.

This settlement is the largest FCA recovery by the United States in a kickback case involving a medical device. Principal Deputy Assistant Attorney General Benjamin C. Mizer noted as such, and continued, saying, “Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”

Shire cooperated in the government’s investigation and has been operating under a Corporate Integrity Agreement entered into with HHS that was implemented in late 2014, after the alleged unlawful conduct resolved by today’s settlement occurred, in connection with the settlement of separate False Claims Act allegations.

“Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” said Chief Counsel Gregory E. Demske to the HHS Inspector General. “The Office of the Inspector General will continue to monitor Shire’s compliance with federal healthcare programs through its oversight of Shire’s Corporate Integrity Agreement.”

BioHealing Executives Charged

This settlement follows an arrest in March 2016 of Advanced BioHealing Inc. executive Todd Clawson. Clawson was charged with bribery and health care fraud for paying kickbacks to VA podiatrists and clinicians who promoted the company’s product. In court papers, the prosecutors stated that Clawson and his coworkers at Advanced BioHealing and VA physicians conspired to “defraud the United States by impeding and impairing the governmental functions of the VA, including those intended to regulate the ethical practice of physicians working for the VA.”


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