FDA’s Legally-Suspect Shift of Clinical Lab Test Regulation Through Guidance Documents

_MG_8707Guest Commentary

by Gail Javitt, Sidley Austin LLP*

The penchant of the Food and Drug Administration (FDA) to use “guidance” documents as a means to effectuate substantive regulatory change may have reached its zenith on July 31, 2014, when FDA’s Center for Devices and Radiological Health announced its intent to issue two new draft guidances. Those draft guidances would fundamentally alter the oversight of clinical laboratory testing in the United States, by regulating clinical laboratories as medical device manufacturers and the laboratory developed tests (LDTs) they perform as medical devices.

As mandated by Congress under the 2012 Food and Drug Administration Safety and Innovation Act (FDASIA), FDA notified the House and Senate committees of jurisdiction that the agency intended to issue draft guidance, and also unveiled advance copies of the guidance documents. These documents announce the agency’s “risk-based” framework for LDTs, which comprise essentially all laboratory testing that is not performed using an in vitro diagnostic test kit in accordance with a manufacturer’s instructions for use.

Under the proposed framework, all clinical laboratories that perform laboratory developed tests will, at a minimum, be required to register with FDA, list the LDTs they perform, and report “adverse events” to FDA. LDTs that FDA classifies as “high” or “moderate” risk will also need to obtain FDA premarket review and authorization. They will additionally be subject to quality system regulatory requirements for medical devices, although the agency has not yet explained how it plans to adapt these to the clinical laboratory context. Continue reading

Washington Post Parrots Activists’ Skewed Spin of FDA’s “GRAS” Process

The ScreamJust below the fold in the print and digital versions of this morning’s Washington Post blares the headline “Food additives on the rise as FDA scrutiny wanes.” The story dutifully advances the perspective of professional activists that the Food and Drug Administration’s (FDA) “generally recognized as safe” (GRAS) process for food additives is perilously broken. Food nanny organizations such as Center for Science in the Public Interest and the Natural Resources Defense Council have ramped up their attacks on GRAS over the past several years, assisted by a 2010 Government Accountability Office (GAO) report calling for changes to the process.

As explained in a Washington Legal Foundation Legal Backgrounder by Hyman, Phelps & McNamara attorneys Roberto Carvajal and Nisha Shah, the GRAS process dates back to 1958, when Congress determined that certain uses of substances in foods that were generally recognized as safe need not go through formal FDA approval. For nearly four decades, FDA applied that exception very narrowly, but the Clinton-era agency leadership altered that interpretation in 1997. They concluded that narrow application of the GRAS exception deeply strained agency resources and chilled food industry innovation. The agency’s new approach permitted food processors to self-report new uses of certain substances and provide FDA with the science supporting the GRAS conclusion. In response to the critical 2010 GAO report, the agency acknowledged that while the GRAS process could be improved, “FDA believes that the GRAS concept has continuing utility as a practical tool for distinguishing between substances and new uses of substances that merit a full pre-market safety evaluation by FDA and those that do not.”

FDA’s resolve on the GRAS process seems to be weakening, however. The Post article features a troubling front-page quote from FDA’s Deputy Commissioner Michael Taylor: “We simply do not have the information to vouch for the safety of many of these chemicals.” He goes on to proclaim later in the article, “We aren’t saying we have a public health crisis.” But of course Deputy Commissioner Taylor understands that when FDA uses the term “public health crisis,” even when denying the existence of one, it sounds alarm bells. FDA’s latest statements could be setting the stage for regulatory action against such common, widely-used ingredients as caffeine and sodium, which the agency has long considered GRAS.

For those who might be interested in learning more about the GRAS process from a far different perspective than the Washington Post provided today, watch WLF’s free July 10 Web Seminar, The Future of FDA’s “GRAS” Designation in an Era of Increased Scrutiny. The Powerpoint presentation utilized by our speakers, Keller and Heckman LLP’s Melvin Drozen and Evangelia Pelonis, is available here.

FDA Advisory Committee Not Rife with Conflicts of Interest? — “Please!” Quips Federal Judge

FDAIn order to achieve results that it believes are vital to public health, the Food and Drug Administration (FDA) has demonstrated time and again that it’s not afraid to trample laws and constitutional rights along the way. Occasionally, judges reintroduce FDA to the Rule of Law. We applaud one such recent rebuke by Judge Richard Leon, whose July 21 Lorillard v. FDA decision reminded FDA that it cannot stack a science advisory panel with members who will tell the agency what it wants to hear.

FDA tobacco control. After the U.S. Supreme Court rejected the agency’s attempt to seize regulatory oversight of tobacco products in 2000 (FDA v. Brown & Williamson), Congress granted FDA the authority it coveted in 2010. Banning or severely restricting the use of menthol in cigarettes has long been a goal of FDA’s friends in the anti-tobacco movement. FDA created a science advisory panel, the Tobacco Products Scientific Advisory Committee (TPSAC) to study menthol. The TPSAC concluded in 2011 that menthol had a negative effect on public health. Two companies filed suit in Febuary 2011, charging that FDA violated federal law by appointing members to the TPSAC who had clear conflicts of interest. The plaintiffs asked the court to strike the TPSAC’s report from the regulatory record.

Judge Leon’s opinion. The TPSAC members in question had ongoing contracts to testify as expert witnesses for plaintiffs in suits against tobacco companies. They also served as consultants to manufacturers of tobacco cessation products. FDA didn’t feel such relationships conflicted with their duties on the TPSAC. Judge Leon was quite flabbergasted by FDA’s decision. “Please!” he exclaimed, adding, “This conclusion defies common sense.” With regard to the members’ work with plaintiffs’ lawyers, Judge Leon explained that they had a financial incentive not to make any recommendations that would compromise the lawsuits in which they would testify. On the product consulting work, the judge noted that any FDA regulation of menthol would likely inspire more smokers to quit, potentially with the assistance of cessation products. Thus the TPSAC members also had a financial incentive to offer advice that would encourage a ban or restrictions on menthol. Judge Leon concluded that such blatant disregard for obvious conflicts violated federal law, and he enjoined FDA from utilizing the report in its assessment of menthol. Continue reading

Alameda County, California Drug Disposal Ordinance Should Take a Hike

packAs an avid hiker in our National Parks, I am familiar with the saying “Pack It In, Pack It Out.” When it comes to minimizing our impact on Mother Nature, this slogan reminds us to carry out of the backcountry any food or other material we brought in with us.

Not only does this practice reduce litter and preserve natural beauty, but it also promotes personal responsibility. Following this ethic—and teaching it to our kids—leads hikers not to take more with them than they need, and it puts the onus for reducing and removing waste on the very people who created the waste in the first place.

Yet, when it comes to cleaning up prescription drugs and other unused medicines, elected officials in Alameda County (and elsewhere in California) seem to think that drug companies should do it for us. The U.S. Court of Appeals for the Ninth Circuit (in San Francisco) will hear oral arguments tomorrow in a challenge to Alameda County’s Safe Drug Disposal Ordinance (PhRMA vs. Alameda Co., California).

The lawsuit contests the ordinance’s constitutionality, not its wisdom as a policy matter. However, it’s important to recognize that if the Court strikes down this program as unconstitutional—as it will if it heeds WLF’s amicus brief—no one who cares about the problem of unused drugs should mind. Rather, such a ruling will clear the way for thinking about real solutions to the disposal challenge.

Alameda’s ordinance requires prescription drug manufacturers whose products enter Alameda County to establish programs (individually or jointly) to collect and safely dispose of all unused prescription medicines in the county. Local pharmacies are explicitly excluded from the producers who must contribute, and the producers are forbidden from charging a collection fee or imposing a fee on the sale of drugs in the county to cover these costs. In other words, the drafters of this ordinance went out of their way to ensure that the purchasers of the medicine (who generate the waste) do not have any responsibility to pay for its disposal. Continue reading

Finger on the Pulse: From Our Blogroll and Beyond

  • Five take-aways from FDA’s response to drug company coalition citizen petition regarding promotion of off-label uses (Original Source)
  • Class action lawyers will do anything to keep their cases alive, even asking courts to reopen discovery so they can find replacement lead plaintiffs (Class Action Countermeasures)
  • Why POM Wonderful SCOTUS ruling doesn’t alter landscape of food labeling class actions (we agree in this post) (Class Defense)
  • SEC Commissioner addresses boards of directors’ responsibilities in preventing and responding to cyberattacks and data breaches (D&O Diary)
  • With Solicitor General’s brief in Medtronic v. Stengel, federal government changes its tune on preemption (Drug & Device Law)
  • FDA issues two more “draft guidances” on social media use to promote medical products, one of which boils down to don’t use Twitter (FDA Law Blog)
  • The Supreme Court will review a critically important matter of administrative law in its October 2014 term: when does a change in established guidance require rulemaking? (Federal Regulations Adviser)

Court Upholds FTC Rule for Pharma Patent License Transfers

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino,Wilson Sonsini Goodrich & Rosati

Last November, I wrote about a new Federal Trade Commission (FTC) rule which, in a change to long-standing policy, made the transfer of a license providing an exclusive licensee with “all commercially significant rights” over a patent within a therapeutic area reportable under the Hart-Scott-Rodino Act. In practice, this meant that licensing agreements which previously required only the signatures of the two parties, now required a waiting period and an FTC blessing.

Shortly before the rule was to become operative, the Pharmaceutical Research and Manufacturers of America (PhRMA), an industry group representing biopharmaceutical researchers and biotechnology companies sued to block it. The group argued that the FTC had not observed the appropriate procedures under the Administrative Procedures Act and that the FTC lacked authority to issue an industry-specific rule rather than a rule of general application, among other claims.

In a lengthy opinion on May 30, 2014, Judge Beryl A. Howell of the United States District Court for the District of Columbia, sided with the FTC and tossed PhRMA’s claims, finding that the FTC had followed the correct processes, had a reasoned basis for creating and instituting this rule, and should be shown deference. This bottom line is this puts us right back to where the FTC hoped it would be back in November: the transfer of “all commercially significant rights” over a patent is a HSR-reportable event.

That’s the headline but there are at least two questions that result from the opinion worth pausing to consider. First, this rule continues to only apply to the pharmaceutical industry. There are virtually no other industries with HSR-specific rules applicable only to them. Does this mean the FTC plans to extend HSR-specific rules to other industries? Or is the pharma industry so important in its own right that proper antitrust enforcement demands a different set of rules? Only time will tell. More importantly, perhaps, the FTC has not defined the phrase “all commercially significant rights.” What are the contours of this definition? What’s included or excluded? How, if at all, will the FTC provide guidance to the pharma community? PhRMA has up to 60 days to appeal so this may not be the last word. Stay tuned.

Second Circuit Mixes Clarity with Opacity in Ruling on Trial Courts’ Review of SEC Settlement

MatskoGuest Commentary

by Gary S. Matsko, Davis Malm & D’Agostine P.C.

It is curious how an appellate court can resolve cases before it in a manner and spirit that are vastly at odds with the driving philosophy behind the lower court’s decision. The U.S. Court of Appeals for the Second Circuit’s decision in United States Securities and Exchange Commission v. CitiGroup Global Markets, Inc.is such a case. Judge Jed Rakoff’s decision below, S.E.C. v. CitiGroup Global Markets, Inc., 827 F. Supp. 2d 328 (S.D.N.Y. 2011), in which he declined to enter a consent decree that resulted from settlement negotiations, was driven by the judge’s intense displeasure that the settlement presented to him failed to include an admission of guilty. The decision emboldened advocates who believed that the SEC should require admissions, and likely played a role in the agency announcing that it would so require them in certain matters.

The counsel appointed to represent Judge Rakoff’s view in the Second Circuit did not forcefully argue that a trial court could require admission as a predicate to approving settlement. The Second Circuit thus curtly brushed that perspective aside. Instead, the appellate court clipped the wings of trial judges who embrace an expansive substantive role for courts in reviewing consent decrees, underscoring the deference owed to a prosecuting agency. Despite that distinct conclusion, CitiGroup Global Markets did not offer clear guidance on the trial court’s role in assessing facts, and, surprisingly, invited the SEC to turn to its administrative forum if it is unhappy with the remaining limited intervention reserved to the trial judge. Continue reading

Wall Street Journal’s “The Americas” Column References WLF Publication on Mexican Antitrust Proposal

Flag_of_Mexico_(reverse)In today’s Wall Street Journal, influential “The Americas” columnist Mary Anastasia O’Grady focuses on a troubling overhaul of Mexico’s competition laws in Mexico’s Anti-Market Antitrust Law ($). Ms. O’Grady references a March 14, 2014 WLF Legal Backgrounder, Proposed Change To Mexican Antitrust Law: Erecting A Barrier To Competition?, in her explanation of why the new law will chill competition and curtail investment.  She writes:

How troublesome are these provisions? A March 14 memo written by antitrust lawyers John Roberti and Meytal McCoy of Mayer Brown in Washington and published by the Washington Legal Foundation helps explain. It points out that a company may be cited for ‘barriers to competition’ if the regulator identifies ‘the existence of market dominance or concentration in a critical input and not necessarily the unlawful exercise of that power.’ In other words, there is no need to commit a violation to qualify as a monopolist. One only has to produce something that many people buy.

Mr. Roberti and Ms. McCoy warn that the law allows for ‘industry-wide investigations.’ These might end in ‘structural remedies and price regulation and could be imposed without any obligation to make company-specific findings of the existence of anticompetitive conduct or agreements.’ They further note that ‘this ‘barriers to competition’ concept is not found in competition regimes elsewhere in the world.’ Revisions to the law’s text in Congress did not resolve these issues.

FDA’s Proposed Regulation of Brewers’ Spent Grains is All Wet

spent brewing grains

spent brewing grains

During his February 5, 2014 appearance at a House Energy and Commerce Committee hearing, Food and Drug Administration (FDA) Deputy Commissioner Michael Taylor stated that “the whole goal of [the Food Safety Modernization Act (FSMA)] is to achieve the food safety goal without imposing regulations, just for the sake of regulation.” Dr. Taylor must have been unaware of his agency’s proposal to require that brewers, distillers, and vintners develop extensive hazard analysis and control plans before selling or donating their spent grains or grape pomace to farmers for livestock feed. This proposal seems to be the epitome of regulating for the sake of regulating.

Farmers have been procuring and feeding their livestock spent brewing grains and grapes for centuries. These livestock “happy hour” arrangements advance environmental sustainability, engender bonds among local businesses, and financially benefit both parties. Farmers get low cost whole grain feed packed with fiber, protein, and, of particular importance to livestock in arid climates, moisture. Alcohol makers save millions by not having to landfill the by-products.

FSMA Section 116 exempts activities at facilities which “relateto the manufacturing, processing, packing, or holding of alcoholic beverages.” In a proposed animal food safety regulation, FDA essentially nullifies this statutory exemption. The agency “tentatively concludes” that when brewers or distillers go through the “mashing” process—soaking grains in hot water—and then offer the by-product to farmers, they suddenly become food producers. The same goes for winemakers and their grape pomace. FDA’s conclusion has sparked a deserved firestorm of opposition from the affected industries as well as members of Congress. Continue reading

Does FTC Glass Settlement Break the Efficiencies Mold?

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino,Wilson Sonsini Goodrich & Rosati

(Editors note: The Legal Pulse would like to (belatedly) congratulate Andrea on her promotion to partner, the announcement for which at the end of last year escaped our discovery)

As expected, on April 11, 2014, the Federal Trade Commission (“FTC”) announced the resolution of their investigation and administrative court challenge into the $1.7 billion acquisition of Saint-Gobain Containers, Inc. (“St. Gobain”) by Ardagh Group SA (“Ardagh”). In order to allow the transaction to proceed and resolve the pending administrative trial, Ardagh agreed to sell six of its nine glass container manufacturing plants in the United States to an FTC-approved buyer within six months, including all tangible and intangible assets, and customer contracts. (All pleadings and filings for all parties, including the original complaint, which argued that the acquisition would harm competition in the markets for glass containers used to package beer and spirits, are available online.)

The fact that this litigation was resolved via a divestiture of brick-and-mortar facilities in an industry like glass manufacturing is not news of note to this FTC observer. What is worthy of pause, however, is that the vote to approve this consent was not unanimous (it was 3-1) and that the efficiencies defense stands front-and-center in the dispute between the majority and minority.

For the majority, Chairwoman Ramirez and Commissioners Brill and Ohlhausen, found that the transaction as originally structured would have resulted in a violation of Section 7 of the Clayton Act. When presented with a carefully crafted remedy, these Commissioners believed that the remedy would “fully replace[ ] the competition that would have been lost in both the beer and spirits glass container markets had the merger proceeded unchallenged.” Thus, they voted to accept the settlement. Continue reading