FDA Law Update

FDA Looks to Boost Criminal Prosecutions

Sheppard Mullin — Thu, 11 Mar 2010 06:44:32 -0800

In the wake of a scathing March 4^th GAO Report, FDA has informed Congress that it will boost criminal prosecutions of pharmaceutical and food industry executives.[1] Although the Agency’s Office of Criminal Investigation (OCI) can prosecute ‘responsible corporate officials,’ according to the GAO Report OCI has failed to exercise this enforcement tool to achieve FDA priorities and has underperformed comparable agencies in bringing misdemeanor prosecutions.

The Report determined that OCI instead operates independent from broader FDA priorities and with little accountability to top FDA officials. As the authors noted, “FDA’s oversight of OCI’s investigations of individuals and companies external to FDA is limited.” In her letter to Senator Charles Grassley (R-Iowa), FDA Commissioner Margaret Hamburg acknowledged that OCI and FDA’s various centers must improve their communication. If they do not, OCI will continue to operate outside the context of emerging Agency policies and priorities, and OCI’s prosecution trends cannot inform FDA policies or support appropriate allocation resources for inspections, civil enforcement, and risk communication.

Industry insiders find the lack of OCI accountability and oversight especially troubling during FDA’s public campaign for increased transparency. Meanwhile, FDA has allowed OCI to lag comparable federal agencies in developing performance standards; indeed, the GAO reports that OCI has failed to complete 70% of required assessments. Although Hamburg promises greater communication between OCI and high-level FDA administrators, there is no small gap to bridge.

Although the Report focused principally on improved communication, accountability, and oversight, what caught the press’s attention is the prospect of increased misdemeanor prosecutions. No surprise. The American public has not forgotten last year’s rash of adulterated imports, and the public has a keen interest in FDA-regulated products.

Prudently, however, FDA does not expect to see widespread and aggressive criminal prosecutions in all areas. Instead, stepped up criminal enforcement will likely more specifically target issues concerning counterfeiting, diversion, tampering, and adulteration: key Agency priorities. Under the FDCA's strict-liability provisions, fraudulent information is fraud; misdemeanor prosecutions can proceed without proof of intent to defraud.

Commissioner Hamburg expects revised OCI policies and procedures to incorporate some newly developed criteria for selecting cases to prosecute.

Authored by:

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

[1] GAO, “Food and Drug Administration: Improved Monitoring and Development of Performance Measures Needed to Strengthen Oversight of Criminal Misconduct Investigations,” 29 January 2010, released 4 March 2010. Available http://gao.gov/products/GAO-10-221

FDA Proposed Rule: Sponsors Must Report Suspicions of Falsified Study Data

Sheppard Mullin — Thu, 11 Mar 2010 06:39:14 -0800

A proposed FDA rule would require all “sponsors” (defined broadly) to report not only known falsification of study data but also falsifications merely suspected. The rule, “Reporting Information Regarding Falsification of Data,” defines falsification as “creating, altering, recording, or omitting data in such a way that the data does not represent what actually occurred.” The rule proposes strict timeframes for reporting. The duty to report would be undiminished even where evidence of falsification is slight.

Parties seeking to comment on the proposed rule must submit comments by May 20, 2010.

Broadly Defining “Sponsor”

The proposed rule would include petitioners submitting food additive, color additive, nutrient content claim, and health claim petitions; manufacturers or distributors submitting new dietary ingredient notifications; and sponsors as defined in §§ 58.3(f) (non-clinical laboratory studies), 312.3(b) (clinical investigations), 510.3(k) (animal drugs), and 812.3(n) (investigational device exemptions). The Agency says this broad definition of “sponsor” is needed to prevent ambiguities.

Falsfications by Whom, and When?

Sponsors would report a finding or suspicion that any person has engaged in falsification in reporting of study results. Similarly, reports would be required for falsification during the course of proposing, designing, performing, recording, supervising, or reviewing studies that involve human subjects or animal subjects. The rule would cover falsifications discovered or suspected before, during or after study completion, as well as after review, approval, or authorization of the affected product or labeling.

Suspected Falsification

The proposed rule would require sponsors to report suspected falsification. Sponsors need not make definitive determinations of falsification prior to reporting, but they cannot avoid making a report of suspicion merely for lack of evidence. The Agency has declined to set a specific evidentiary threshold. “Rather, a sponsor would be required to report information of which it is aware suggesting that a person has, or may have, engaged in the falsification of data in connection with studies conducted by, or on behalf of, the sponsor, or relied on by the sponsor. This reporting obligation would exist regardless of the amount of evidence….” 33 Fed.Reg. 7415 (Feb. 19, 2010).

Timeframe for Reporting

Sponsors must report no later than 45 days after becoming aware of the falsification. In the case of suspected falsification, it is unclear whether the 45-day period is delayed for purposes of further investigation or whether satisfactory further investigation would relieve a sponsor’s obligation.

Information Included in Such Reports

Reports must include the name of the person suspected or confirmed to have engaged in falsification, and his or her address and phone number. The sponsor must identify the potentially affected study and, if applicable, information about the drug or device application. In addition, the sponsor must provide the information that led to the suspicion. FDA is considering whether reports should include additional information, such as the National Clinical Trail (NCT) number.

Reports can be made to the appropriate FDA center via telephone, facsimile, mail, or electronic mail. FDA will determine whether to investigate further.

Penalties

The Agency has not yet determined appropriate penalties. Under consideration: Making failure-to-report a violation of section 301(e) of the Federal Food, Drug, and Cosmetic Act (i.e., failure to make a required report); or a violation of 18 U.S.C. 1001, submission of a false statement to the government.

Reminder: comments must be submitted by May 20, 2010.

Authored by:

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

and

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

Clinical Investigators Beware: FDA is Reviewing What You Say

Sheppard Mullin — Thu, 04 Feb 2010 05:29:56 -0800

While it is common knowledge that the Food and Drug Administration (“FDA”) is being more active in its review of prescription drug advertising by drug product manufacturers, it may not be widely known that FDA is reviewing what clinical investigators are stating about drugs for which they served as an investigator and which are not yet FDA approved. Recently, FDA posted on its website a Notice of Violation Letter sent January 11, 2010, to Dr. Leslie Baumann of the Baumann Cosmetic and Research Institute. The letter – coded MACMIS #18181 – can be found here.

Dr. Baumann was a clinical investigator involved in trials of the product abobotulinumtoxinA for Injection, also known as Reloxin and Dysport. FDA alleged that Dr. Baumann made statements in violation of FDA requirements in certain magazines (allure, ELLE) as well as on a TODAY show segment entitled “Today’s Health: Better Than Botox?” FDA acknowledged that the drug product sponsor and Dr. Baumann had provided statements that the drug product sponsor “had no involvement or influence over” what Dr. Baumann said in the article or on TV, that she acted independently and was not paid for the allegedly violative activities in which the statements were made.

The statements she made that FDA objected to were, among others, as follows:

"Reloxin, the new Botox, will likely come out later this year. Early data shows it may last longer and kick in faster than Botox. It will be nice to have competition on the market—the Botox people (Allergan) raised their price another 8 percent this year!” (allure article)
“I can’t wait to use Reloxin, known in Europe as Dysport. This Botox alternative will be available in the U.S. next year. Effects last a month longer than Botox and, hopefully, it will cost less.” (ELLE article)
“It’s time that we have something that lasts a little bit longer, and I’m hoping that the minute the FDA approves this, I’ll be able to use it in my practice.” (Today Show)

FDA alleged that the statements

“…clearly suggested that Dysport was safe and effective before it was approved, and that it was in fact superior to the approved product Botox because it lasts longer and starts working faster than Botox. These statements thus violate 21 CFR 312.7(a)[i] because they represented that Dysport was safe and effective before the product was approved, and otherwise promoted the drug before it was approved (i.e., as superior to the approved product Botox). We note that this suggestion of superiority, in addition to promoting the product before approval, is also misleading in that it is not supported by substantial evidence or substantial clinical experience. In fact, we are not aware of any adequate and well-controlled head-to-head trials that compare Dysport to Botox to determine whether Dysport lasts longer or starts working faster than Botox.”

FDA concluded by stating that representations by a clinical investigator that an investigational new drug is safe or effective, or representations that otherwise promote use of an investigational drug, violate the Federal Food, Drug and Cosmetic Act and FDA regulations – when made “in a promotional context”.

What does this mean for drug product sponsors and clinical investigators?

First of all, it does not mean clinical investigators cannot comment upon an investigational drug for which they have served as a clinical investigator. FDA conceded that “[t]here are mechanisms by which investigators and sponsors may engage in the full exchange of scientific information concerning drugs that are under investigation…” As long as an investigator limits his/her comments about a drug to venues involving a peer review setting allowing for a balanced presentation of scientific information[ii], and the investigator is not paid by the drug product sponsor to make statement, he or she should not be concerned about potential FDA action.

Second of all, it does mean that clinical investigators – at least in FDA’s review – do not have an unlimited right to discuss – in a promotional context – drugs that are under investigation, if they have served as a clinical investigator on studies of that product. Of course, what constitutes “a promotional context” is always potentially an issue; there is no FDA guidance for what type of activities – beyond magazine articles and TV appearances – FDA may consider to fall within their definition of “a promotional context”. Clinical investigators, if they wish to avoid the bad publicity that could arise from such a letter,[iii]will need to think twice before making any public statements about an investigational product outside of the peer review context.

Third, it does mean both drug product sponsors and their clinical investigators need to be aware that FDA is reviewing what investigators say and the context in which they are making statements. While there may have been an impression that clinical investigators as doctors have an unlimited right to express their scientific and medical judgment, FDA is taking action that reflects a view that those rights are not unlimited. This puts doctors in a position where they may be wondering what they can and cannot say.[iv]

Whether actions such as this will have a chilling effect on independent statements of doctors remains to be seen, but there may be more reason for concern than the medical profession and the drug industry have been led to believe.

Authored By:

Peter S. Reichertz
(202) 772-5333
preichertz@sheppardmullin.com

i. That regulation provides: A sponsor or investigator, or any person acting on behalf of a sponsor or investigator, shall not represent in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation or otherwise promote the drug” (emphasis added).

ii. See, eg, Guidance for Industry: Industry Supported Scientific and Educational Activities, 62 Fed. Reg. 64093 (December 3, 1997).

iii. The FDA letter to Dr. Baumann was the subject of an article in the Business Day section of The New York Times on February 1, 2010, entitled F.D.A. Aims At Doctors’ Drug Pitches, at page B1. According to the article, Dr. Baumann said she had discussed the matter with FDA and the matter is considered closed.

iv. Id., at B6.

Shift in FDA's Regulation of Products Marketed as Dietary Supplements and Functional Foods?

Sheppard Mullin — Wed, 23 Dec 2009 12:38:59 -0800

Manufacturers of liquid supplements and energy drinks appear to be in the FDA crosshairs.

On December 3, 2009, FDA’s Center for Food Safety and Applied Nutrition (CFSAN) published a draft guidance, “Factors that Distinguish Liquid Dietary Supplements from Beverages, Considerations Regarding Novel Ingredients, and Labeling for Beverages and Other Conventional Foods.” The guidance took many industry insiders by surprise. Because the guidance is still in draft form, CFSAN has invited comments from stakeholders.

If the guidance’s title seems innocuous, the shift in FDA's thinking that it perhaps signals is not. In distinguishing between supplements and other beverages marketed as foods, the guidance appears to signal an Agency intention to put functional foods under the microscope.

Beverages with “novel ingredients” – including, for example, numerous botanicals and extracts -- have found a vibrant market in recent years. Between 2001 and 2006, the market increased more than 500%, and the growth has shown little indication of weakening.

Labeling these beverages as dietary supplements, manufacturers have included novel ingredients and health claims acceptable for dietary supplements but not necessarily for foods. If strictly regulated as foods, and scrutinized more closely, some of these products may be alleged to include unapproved food additives. A requirement to obtain prior FDA approval to market those ingredients can take a manufacturer down a long toward a “GRAS” declaration – that is, Generally Recognized as Safe.

Traditionally, the distinction in FDA regulatory status – food or supplement – typically comes down to the way a product is labeled. The guidance reiterates the Agency’s longstanding position that designators like “drink,” “water,” “juice,” “beverage,” signal a conventional food, but it also went further. Under special scrutiny are liquid products packaged to look like conventional beverages, bearing product names that encourage treatment as such, or packaged in a volume suggestive that the product constitutes rather than supplements a diet. The guidance suggests that the Agency will be paying closer attention to liquid products packaged “in bottles or cans similar to those in which single or multiple servings of beverages like soda, bottled water, fruit juices, and iced tea are sold.”

The guidance signals further scrutiny, too, of ingredients used at higher levels than traditional. For example, caffeine.

Moreover, FDA imposes significantly tighter controls on the health claims permitted for foods. Claims for foods must be related to nutritive value, taste, or aroma – in other words, very narrowly restricted.

From an industry perspective, of course, so-called liquid supplements deliver dietary supplements to consumers in a palatable and convenient form. Those who market functional foods view FDA as failing to keep up with technological advances and the concomitant evolution of the marketplace.

In sum, products that blend supplements with more conventional foods and drinks has occupied somewhat of a grey area in Agency regulation for some time – but the recent draft Guidance suggests that all may soon change.

Authored by:

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

FDA's New Reportable Food Registry Requirements

Sheppard Mullin — Fri, 02 Oct 2009 06:48:27 -0800

The Food and Drug Administration (FDA) recently launched its Reportable Food Registry (RFR) electronic portal. In conjunction with this launch, FDA has issued a final guidance further discussing the specific requirements.

The RFR requires responsible parties to file a report through the RFR electronic portal at http://rfr.fda.gov when there is a reasonable probability that the use of, or exposure to, an article of food will cause serious adverse health consequences or death to humans or animals. Such foods are deemed by FDA to be “reportable foods.” A “responsible party” (defined below) must notify FDA of a reportable food within 24 hours of its discovery. These new reporting requirements apply to food and animal feed products. Infant formula and dietary supplement products are excluded.

FDA envisions that the new requirements will assist in faster responses to potential public health risks related to food. Notably, however, although the RFR requirements become effective on September 8, 2009, FDA has announced that it will exercise enforcement discretion until December 8, 2009.

Key RFR definitions and requirements are summarized below.

Reportable Food

A reportable food is an article of food that has a reasonable probability of causing serious adverse health consequences or death to humans or animals. Examples of potential contamination that may trigger the reporting requirement include, without limitation, bacterial contamination, allergen mislabeling or elevated levels of certain chemical components, such as dioxins, benzene, ethyl carbamate, furan, and melamine. Responsible parties must notify FDA as soon as possible, and no later than within 24 hours of determining that an article of food is a reportable food.

However, a food is not required to be reported if (1) the adulteration originated with the responsible party, (2) the responsible party detected the adulteration prior to any transfer to another person, and (3) the responsible party corrected such adulteration or destroyed the affected food.

Responsible Party

The term “responsible party” refers to any entity that is required to be registered with FDA as a food establishment (i.e., any facility that manufacture, processes, packs, or holds food for sale or consumption (human or animal consumption) in the U.S.). Federal, State and local governments are also considered responsible parties. However, their reporting requirements are considered voluntarily rather than mandatory.

Once a responsible party believes there is a possible contamination it is required to do the following:

(1) Investigate the cause of adulteration if the adulteration of the food originated with the responsible party; and

(2) Submit the required data elements in an initial report and to follow-up with supplemental reports on an as-needed basis. Required data elements include: Food Facility Registration Number, date the article was determined to be a reportable food, description of the food (quantity and amount), extent and nature of the adulteration, results from investigation of the cause of adulteration, disposition of the article of food, and product information typically found on packaging sufficient to identify the article of food.

In addition, a responsible party is required to work with FDA on any follow-up that may be deemed necessary.

The failure to comply with the RFR requirements is a prohibited act under the Federal Food, Drug, and Cosmetic Act, and is punishable by imprisonment of up to one year or a fine of up to $1,000, or both.

Although the RFR entries are not publicly accessible via the FDA website, the RFR record is available under the Freedom of Information Act (FOIA). Thus, this information will be furnished to third parties making a FOIA request, subject to redaction of proprietary information (including the food facility registration number).

FDA Final Guidance

To further clarify the new reporting requirements, FDA published a Final Guidance on September 8, 2009 entitled “Guidance for Industry: Questions and Answers Regarding the Reportable Food Registry as Established by the Food and Drug Administration Amendments Act of 2007.” The guidance explains the role of responsible parties as outlined above, defines a “reportable food,” and expands on other specific questions concerning the RFR.

In this guidance, FDA announces that although the RFR requirements are in effect as of September 8, 2009, it intends to exercise enforcement discretion until December 8, 2009 so as to permit industry an opportunity to implement the necessary protocols for compliance.

A key issue addressed in the guidance is how a responsible party should handle a conflicting test result. That is, where a responsible party initially receives a positive microbiological test result, thus triggering the reporting requirements, but then obtains a negative result after retesting. Because there are a number of reasons why a food may test positive and then negative, FDA encourages responsible parties to report in all cases.

As noted above the RFR requirements are not triggered when certain criteria are met, including when the responsible party detects the adulteration prior to any transfer to another person of the affected food. In the Guidance, FDA further explains that a “transfer” occurs when the responsible person releases the food to a third party. FDA states that an “intra-company transfer in a vertically integrated company” is not considered a transfer.

Finally, the Guidance notes that in addition to the requirements that responsible parties submit a report to FDA within 24 hours after discovery and to conduct a root-cause analysis, FDA may also require responsible parties to notify the immediate previous source(s) and/or immediate subsequent recipient(s) of the reportable food.

The guidance can be located at the following link.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

OTC Drug and Dietary Supplement Labeling: Adverse Event Reporting Information

Sheppard Mullin — Tue, 15 Sep 2009 13:42:09 -0800

Recently, FDA issued its final guidance on the requirements for OTC drugs and dietary supplement labeling to include contact information for consumer reporting of a serious adverse event. This guidance builds upon requirements that were passed into law in the Dietary Supplement and Nonprescription Drug Consumer Protection Act of 2006 (“the Act”).

The issues that FDA’s final guidance address are: (1) the contact information to be provided for consumers to report a serious adverse event; and (2) the placement of an introductory statement before that contact information.

With respect to the first issue, Section 502(x) of the Act requires the label of an OTC drug (marketed in the United States without an approved application) to include “a domestic address or domestic phone number through which a responsible person (i.e. the manufacturer, packer, distributor, or retailer identified on the drug label) . . . may receive a report of a serious adverse event” associated with taking or using the product. FDA specifies that this must include the responsible person’s full U.S. mailing address including either the street address or P.O. Box, and the city state, and zip code. Further, if one chooses to provide a domestic telephone number rather than a domestic address for adverse event reporting, FDA specifies that the phone number must include the area code (e.g. a toll-free area code 800 or similar area code or a local area code).

With respect to the second issue, FDA states that a prefatory statement is recommended though not explicitly required. In the guidance, FDA also provides suggestions for the specific wording and placement of such an introductory statement. For example, for OTC drug product labeling that provides a domestic telephone number, FDA explains that one can include a clarifying statement such as “You may report serious side effects to [insert phone number],” either under any of the following sections of the labeling the “Questions or Questions or comments,” “Other Information,” or “Drug Facts.” FDA recommends a similar prefatory statement for OTC drug products labeling that includes a domestic address rather than a telephone number. Regardless of whether a prefatory statement is included, FDA states that the domestic address should be included either under the “Other Information” section or outside of the “Drug Facts” section where the label identifies the manufacturer’s place of business.

In addition, FDA notes that one can provide on the product label an e-mail address or URL to which reports can be made. However, the domestic phone number or domestic address must still also be provided.

FDA’s final guidance sets forth its intention to exercise enforcement for the new labeling requirements through September 30, 2010.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

Hamburg at the Helm: FDA Commissioner Sets New Enforcement Priorities

Sheppard Mullin — Fri, 14 Aug 2009 05:19:10 -0800

With “effective enforcement” and “transparency” as her resounding themes, the new FDA Commissioner, Margaret A. Hamburg, M.D., on August 6^th, 2009, introduced herself and the FDA’s priorities to the attendees at a conference sponsored by the Food Drug Law Institute. The Commissioner used this opportunity to emphasize her commitment to “swift, aggressive, and effective enforcement of FDA laws and regulations” as well as Agency transparency.

Commissioner Hamburg was somewhat critical of FDA’s handling of certain issues over the past several years, specifically stating that the FDA had been hampered by unnecessary and unreasonable delays and had allowed serious violations to go unaddressed for too long. Commissioner Hamburg emphasized that she is committed to change and the creation of a “strong FDA” that is transparent, responsible to the public, that partners with other agencies (U.S. state and local, as well as international agencies), and aggressively enforces the law. Further, she explained a “strong FDA” that holds companies accountable for unsafe products and practices, preventing others “from having to choose between doing the right thing and staying competitive.”

In her words, “effective enforcement” will make a “strong FDA.” The Commissioner explained the elements for achieving effective enforcement are for the FDA to be vigilant, strategic, quick, and visible. In the Commissioner’s view, “vigilant” means regular inspections and identifying issues early; “strategic” means a focus on “significant risks” and strong punishments; “quick” means a rapid response to all significant risks; and “visible” means transparent, including the publicizing of enforcement actions and the rationale for them. In response to an audience member’s follow-up push for specifics, the Commissioner said she defines “significant” not based on a quantity of violations but based on how the violations affect public health and safety.

The key focus of the Commissioner’s speech was to outline FDA’s six steps to improve the “effectiveness and timeliness” of the FDA regulatory system. The six steps set forth are: (1) setting post-inspection deadlines; (2) accelerating issuance of warning letters and warning letter procedures; (3) working closely with FDA’s regulatory partners; (4) prioritizing follow-up on warning letters and other enforcement actions; (5) enhancing preparedness to immediately responding to public health risks; and (6) developing and implementing a formal warning letter “close-out” process.

In the Commissioner’s discussion regarding accelerating warning letter procedures, she noted that the past policy under the prior Administration had required all letters to be reviewed by FDA’s Office of Chief Counsel (OCC). Under the new process this will no longer be required. Commissioner Hamburg explained the former policy was too cumbersome without providing benefit. Under the new policy, therefore, only letters involving novel, complex, or sensitive issues will require OCC review.

Elaborating on her goals of “post-inspection deadlines” and “prioritizing follow-up on warning letters and enforcement actions,” the Commissioner detailed how these goals will be implemented. When non-compliance at a facility is revealed during an inspection, the company will have 15 business days in which to respond before FDA issues a warning letter or takes enforcement action. FDA will conduct a detailed review of the response before making such determination. FDA published a formal announcement of this policy in the August 11^th Federal Register (74 Fed. Reg. 40211-12). See http://edocket.access.gpo.gov/2009/pdf/E9-19107.pdf. The new policy takes effect on September 15, 2009. In addition to this 15-day policy, Commissioner Hamburg intends to implement a policy that after a warning letter or major recall has occurred, FDA will promptly reinspect or investigate whether corrective action has been effective. Commissioner Hamburg further noted that FDA in some cases may take enforcement action without issuing a formal warning letter, where there are “significant health concerns or egregious violations that pose an immediate threat to health.”

Commissioner Hamburg also elaborated on the close-out process and how it would benefit industry. Once issues in the warning letter have been addressed, the Agency will send out a letter confirming that all compliance issues have been handled. In this way, Agency will attempt to work with industry “to support and foster rapid recovery when they’ve done the right thing and fixed the problem and consumers should have confidence in that product.” FDA intends to post close-out notices on its Web site. The Commissioner hopes that close-out letters will “spur corrective action” and that it will become a priority for industry to receive a close-out letter. In this way, the close-out process is hoped to provide incentive for firms to address warning letter issues quickly and effectively.

In addition to the new policies that are to be implemented, the Commissioner discussed what she expects the FDA to accomplish internally. She emphasized the integration of internal and field work operations of the FDA. She explained that she would like to see the FDA more effectively explain enforcement actions and regulations to the public, and to engage more actively with the public to identify areas in which FDA should be more vigilant. In conjunction with working with international and domestic companies, Commissioner Hamburg stated that she wants to work with Congress to strengthen legislation and FDA authority.

Although she has been in office just a little more than a few weeks, the Commissioner also highlighted recent FDA actions in an effort to demonstrate how FDA’s new action plan under her leadership is already in place. As an example, she pointed to the Swine Flu (H1N1 virus) incident. Many products were unlawfully advertised over the internet as diagnosing and curing the H1N1 virus. Commissioner Hamburg noted that FDA has sent out 65 Warning Letters to websites making such false claims and that 80% already have complied with FDA’s request to immediately cease and desist. In addition, she reported that “by mid-June, the rate at which new websites were cropping up had slowed from 10 per day to about two per week.” Commissioner Hamburg noted that most people saw this as “extraordinary” enforcement by FDA. She used this public perception to illustrate another of her key goals: that FDA effective enforcement no longer be seen as “extraordinary” but instead as the norm. Commissioner Hamburg cited as another example of recent FDA enforcement activity, the Agency’s response to concerns about the unlawful marketing of anabolic steroids as dietary supplements. FDA has addressed this issue with an extensive warning letter campaign and had issued a public health advisory regarding this illegal activity. Commissioner Hamburg reported that this enforcement action, too, has been successful, and explained that “by pairing enforcement action with education, we hope to prevent others from being harmed by these products.”

Only time will tell whether the Commissioner’s goals can be successfully implemented, and how FDA-regulated companies will be affected.

* * *

And while we’re on the topic of recent developments under the new FDA Commissioner, it is also worth noting that Dr. Daniel Schultz, the director of CDRH, this week announced his resignation. This decision is reported as having been reached by “mutual agreement” with Commissioner Hamburg, and not related to any specific device-related issue. Notably, however, CDRH has been criticized as of late for approval decisions perceived by some to favor industry to heavily. Any such claims have always been vigorously denied with all approval decisions defended as being based on sound scientific data.

Transitions under a new FDA Commissioner are always interesting, and developments under the current Administration are proving thus far to be no exception.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

Vermont Data Mining Law Under Review By 2nd Circuit Appeals Court

Sheppard Mullin — Mon, 29 Jun 2009 14:03:59 -0800

We reported recently that Vermont’s data mining law (i.e. Vermont’s Prescription Confidentiality Law), which is to take effect on July 1, was upheld by the U.S. District Court for the District of Vermont. The law will ban all use of prescriber data for marketing purposes unless a physician explicitly agrees to a waiver. On June 23, 2009, the 2nd Circuit was petitioned to prevent enactment of the law in an appeal from a district court holding that although prescriber data is protected speech under the First Amendment, the law itself is not unconstitutional because it satisfies the three-prong test used by courts to analyze statutory limitations of commercial speech.

The companies appealing the lower court decision are known as health information organizations (“HIOs”). HIOs create prescriber profiles by purchasing doctors’ prescribing information from pharmacies. Such prescribing information includes the physician’s name, specialty, practice site, and which and how many prescriptions the physician writes. HIOs sell this information to pharmaceutical companies who use the information to tailor marketing strategies to individual physicians.

Attorneys representing IMS Health Inc., Verispan LLC, and Source Healthcare Analytics Inc., argued to the 2nd Circuit that Vermont’s data mining law would violate the First Amendment rights of HOIs because information collected is noncommercial speech protected by the First Amendment. Since the parties are expected to follow up with written arguments within the next two months, the attorneys for the HIOS have argued that implementation of the law be stayed until the 2nd Circuit issues its ruling.

Proponents for the Vermont data mining law argued the ban on use of prescriber data for marketing purposes promotes public health, medical privacy and will contain health care costs. Attorneys for proponents further argue the state has proven that data mining by companies leads to higher health care costs and contributes to inappropriate prescribing decisions. The HIOs strongly opposed these statements, responding that the state could not prove that the law will result in lower health care costs, and, in fact, that the law likely will drive up health care costs.

We await the 2nd Circuit’s decision.

As noted in our previous post, the U.S. Supreme Court also has been asked to review the data mining issue, specifically the 1st Circuit Court of Appeals decision to uphold New Hampshire’s Prescription Privacy Law. The Supreme Court has not indicated whether it will take up this issue.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

Reverse Payment Issue Continues to Sizzle

Sheppard Mullin — Mon, 29 Jun 2009 13:59:24 -0800

We reported recently that the issue of reverse settlement payments to generic drug manufacturers was continuing to heat up this summer. FTC Chairman Jon Leibowitz’s recent comments on the issue further support this forecast. In a speech before the Center for American Progress, Leibowitz stated that the FTC "has made stopping these deals a top priority," and he urged Congress to do the same.

Reverse settlement payments occur after a brand-name drug manufacturer sues a generic manufacturer for patent infringement. In settling the case, the companies enter a "pay-for-delay" agreement, whereby the generic accepts a payment to stay out of the marketplace for a certain period of time.

In his speech Tuesday, Chairman Leibowitz articulated a strong position against these agreements. "Clearly, these are win-win deals for both companies," he said. "But they leave American consumers footing the bill." Leibowitz argued that, by conservative FTC estimates, banning these payments could lower health care costs by $3.5 billion annually. Given that the federal government is responsible for approximately one third of the nation's $235 billion prescription drug bill, this would mean that $1.2 billion would be available for other federally funded programs if this estimate were accurate.

The speech coincided with the FTC's release of an interim report on authorized generic drugs and their impact on reverse settlement payments. While the report did state that retail drug prices are 4.2 percent lower when an authorized generic is marketed against the "first-filer" generic during the 180 day exclusivity period, it also noted that these authorized generics decrease the first-filer's revenue on average by 47-51 percent. As a result, first-filers are more likely to enter into pay-for-delay agreements, delaying the availability of any generic for at least 180 days. Since 2004, approximately 25 percent of final patent settlements reviewed by the FTC were the result of an authorized generic leading to a pay-for-delay agreement.

Leibowitz seemed optimistic about stopping these agreements despite a recent setback at the Supreme Court. Last Wednesday, the Court denied cert in the case of In Re:Ciprofloxacin, a decision from the Federal Circuit approving a reverse settlement payment. This decision would have resolved a circuit split on the legality of these payments. It is the third time the Court has declined to hear the issue.

The chairman expressed hope that the new administration and Congress would take action on the issue. He noted that legislation is working its way through Congress. In the House, H.R. 1706 passed the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection in June. The markup of Senate version, S. 369, was deferred last week by the Senate Judiciary Committee, but is expected to be taken up at some point before the August recess.

The full text of Chairman Leibowitz's speech can be found here: http://www.ftc.gov/speeches/leibowitz/090623payfordelayspeech.pdf.

The full text of the report can be found here: http://www2.ftc.gov/os/2009/06/P062105authorizedgenericsreport.pdf.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

and

Ryan Roberts

Congress Passes Legislation Giving FDA Authority Over Tobacco Products

Sheppard Mullin — Mon, 15 Jun 2009 13:13:09 -0800

On June 12, 2009, Congress passed a legislation empowering the Food and Drug Administration to regulate cigarettes and tobacco products. Just one day after the Senate approved the bill, the House decided to forgo its own version of the bill and passed the Senate bill with a final vote of 307-97. President Obama stated he will promptly sign the bill into law. Enactment of such legislation will end a long battle over the years to give FDA the authority to regulate the manufacturing, marketing and sale of cigarettes and other tobacco products. The bill, authorizes sweeping regulation of the tobacco industry.

Under its new authority over tobacco products, the FDA will be able to regulate cigarette content, including flavorings and the maximum amount of nicotine that may contain. FDA will also be able to regulate the promotion of tobacco products by limiting advertising, requiring agency review of all new products before they are introduced to the market, and strictly limiting youth access and marketing. Additionally, the bill prohibits the use of descriptors, such as "light", "mild" and "low," to describe a product and will require a manufacturer to receive agency authorization before marketing any tobacco product as presenting a "modified risk." In addition, the FDA will have significant authority over the content and format of warning labels on tobacco products and in print advertisements.

Matthew L. Myers, president of Campaign for Tobacco-Free Kids, has supported the bill through all stages and stated this bill will fundamentally change the way tobacco products are marketed and advertised. However, the bill did face opposition. For example, Senator Richard Burr (R-NC) opposed the bill because he believes FDA is the wrong entity to regulate a “dangerous commodity”. He stated that the bill will prevent efforts to develop new and less harmful tobacco products.

To accommodate this additional regulatory authority, a new office will be set up in the FDA, with administrative costs paid for by a fee imposed on tobacco companies.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

and

Celia Cohen

Restaurants, Too?

Sheppard Mullin — Mon, 15 Jun 2009 13:09:47 -0800

As the Senate works toward health-care reform legislation, the Senate HELP Committee has released the 615 page bill that Senator Chris Dodd (D-Conn.) will soon introduce on behalf of Senator Edward Kennedy (D-MA), The Affordable Health Choices Act. The Senate’s HELP and Judiciary committees expect to begin the markup process this month.

Included with a plan to cover millions of uninsured, the bill aims to lower health-care spending by mandating various preventive measures. One of these: A requirement to disclose nutrition facts for menu items served in America's chain restaurants.

Rationale? A hope that American diners will make wiser nutritive choices if provided with details about caloric content and recommended daily calorie intake. Calories are the current focus of the nutrition information disclosure, but the legislation empowers the Secretary to promulgate regulations requiring disclosures of additional nutrition facts.

Subjected to the disclosure requirements are all “standard menu items” offered by any restaurant with 20 or more locations. To be considered a chain, the same business name suffices; varying ownership arrangements has no effect. Similar disclosure requirements apply to any owner of 20 or more vending machines.

Requirements:

On the menu, adjacent to the menu item’s name, a clear and conspicuous nutrition information statement listing the number of calories in the item as usually prepared;
Prominently on the menu, a succinct statement about suggested daily calorie intake;
Prominently on the menu, a statement that the nutrition information is available in another written form by patron request;
Prominently on the menu board (including drive-through board), a succinct statement about suggested daily calorie intake, a statement that the nutrition information is also available in written form by patron request, and adjacent to each item a clear and conspicuous nutrition information statement listing the number of calories in each item as usually prepared;
Elsewhere on the restaurant premises (for patron request), in written form, the nutrition information and recommended caloric intake statements included on the menu and/or menu board;
At buffets, salad bars, and other self-serve facilities, adjacent to the food or beverage item, a sign that lists calories per item/serving; and
On vending machines, if the machine does not permit purchasers to examine an item’s Nutrition Facts Panel prior to purchase, a sign placed in close proximity to the item listing calorie content.

Under the HELP bill, restaurants would not be required to provide information on items not listed on the menu or menu board, such as daily specials, temporary items (available < 60 days/year), and market test-items (< 90 days/year). Nutrient content disclosures must derive from some reasonable basis, whether laboratory analysis, nutrient database, cookbook, or other means.

It remains to be seen whether these provisions, or even something similar, will make it into the healthcare reform legislation that is ultimately enacted. With the increased emphasis being given to preventative measures such as these as another tool to reduce healthcare costs, it seem highly likely.

Authored by:

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

Reverse Payments - Hot Button Issue

Sheppard Mullin — Mon, 15 Jun 2009 13:06:38 -0800

The issue of a patent litigation settlement in the form of payments by a brand name drug company to the defendant to delay marketing a generic version of its brand name counterpart is heating up this summer. Indeed, it is currently both before the Supreme Court and Congress.

A group of indirect purchasers filed a petition with the Supreme Court seeking review of the Federal Circuit’s decision in In Re:Ciprofloxacin finding that Bayer’s $398 million payment to Barr and Hoechst Marion Roussel (now Sanofi-Aventis) to delay marketing a generic version of a drug did not violate federal antitrust laws. Arkansas Carpenters Health and Welfare Fund is asking the court to determine whether reverse payments to settle patent litigation are per se lawful without regard to the amount paid or strength of the underlying patent challenge. This is the third time the issue of reverse payments has been brought to the Supreme Court. The Court refused to hear the prior two cases.

Should the Supreme Court decide to hear this case, its decision will resolve a current split among the Circuit Courts regarding the legality of reverse payments. The U.S. Court of Appeals for the Sixth Circuit has held that such payments are illegal; the Second and Federal Circuits have upheld them. The Eleventh Circuit adopted a more nuanced stance, holding that reverse payments should be analyzed under the antitrust rule of reason.

In the present case for which Supreme Court review is sought, the Federal Circuit concluded that reverse payments to settle patent litigation do not violate antitrust law as long as (1) the suit is not a sham or otherwise baseless; and (2) the settlement does not impose restrictions on the alleged infringer that extend beyond the scope of the patent. It remains to be seen whether the Supreme Court will grant the petition to review this decision and settle the current split.

Recently, private class action suits also have been filed against these reverse payment settlements. The most recent class action against these companies marks the 11^th private suit concerning this reverse payment settlement agreement. The United Food and Commercial Workers Union and Employers Midwest Health Benefits Fund filed a putative class action suit in the District of Minnesota, seeking to recover what it called overcharges stemming from the “unlawful delay and exclusion” of generic AndroGel. The unlawful delay and exclusion was a result of Unimed making payments to Watson, Par, and Paddock in exchange for keeping their less expensive generics off the market. Prior to this class action, the FTC and state of California both sued Watson, Par, Paddock, and Unimed in California claiming that the reverse payment was unlawful. The case was subsequently transferred to the Northern District of Georgia, where the case is still pending.

Notably, its not just the Judiciary that is currently grappling with the reverse payment issue. The issue is also now before Congress. The House Judiciary Committee’s Courts and Competition Policy Subcommittee held a hearing on June 3, 2009 regarding reverse payments and the proposed Protecting Consumer Access to Generic Drugs Act of 2009 (H.R. 1706). At this hearing, FTC Bureau of Competition Director Richard A. Feinstein testified in support of the bill stating the Commission strongly supports the Protecting Consumer Access to Generic Drugs Act of 2009 (H.R. 1706), which would prohibit these reverse settlement (“anticompetitive settlements”). Feinstein further opined stated that this legislation would “subvert the goals of the Hatch-Waxman Act, which was designed to prevent weak patents from obstructing lower-cost generic competition.” Over the years, the Federal Trade Commission has consistently opposed reverse payments but its court challenges of them have been unsuccessful.

Also testifying at the June 3^rd Congressional hearing, Guy T. Donatiello, Vice President of Intellectual Property at Endo Pharmaceuticals, voiced opposition to the bill stating H.R. 1706 would discourage settlement and instead force companies to engage in patent disputes that they otherwise would not, costing consumers. Bret M. Dickey, Senior Vice President of Economic Consulting firm Compass Lexecon, concurred with Donatiello and testified that patent settlements can benefit consumers by keeping litigation costs and risk of litigation low.

Notably, on the same day as the House Judiciary Committee hearing, the House Energy and Commerce Committee, Commerce, Trade, and Consumer Protection Subcommittee approved this same bill (H.R. 1706) with a 16 to 10 vote, sending it to the full Committee for further action. Subcommittee members did, however, express concern that the bill could inadvertently result in less access to generic drugs. Representative Joseph R. Pitts (R-Pa.) said brand drug companies will have no incentive to settle cases, thus further expressing concern that, generic companies may only challenge a patent if a positive outcome is highly likely. An amendment proposed by Representative George P. Radanovich (R-Calif.) and approved by a voice vote of the Subcommittee, requires the Government Accountability Office to conduct a study two years after the legislation is enacted to analyze the impact of the legislation on patent litigation. The analysis will be focused on whether generics actually enter the market earlier as a result and if there are any resulting harm or benefits to consumers. The bill will now go to the Energy and Commerce Committee for markup.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

Data Mining Bans and Restrictions

Sheppard Mullin — Mon, 15 Jun 2009 13:00:15 -0800

Pharmaceutical companies may face increasing hurdles in marketing their products to physicians as states begin to ban prescription data mining. To date, legal challenges to such state laws have largely failed. Prescription data mining is an important marketing tool for pharmaceutical companies.

Health information organizations ("HIOs") create prescriber profiles by buying prescription information (minus patient names) from pharmacies and cross-checking this information against a list of individual physician prescription identities that are purchased from the American Medical Association ("AMA").[1] These prescriber profiles include information such as the physician's name, specialty, practice site, and which and how many prescriptions the physician writes and are sold to pharmaceutical companies to allow their salespeople to tailor marketing strategies to individual physicians. Currently, New Hampshire, Vermont, and Maine all have laws banning prescription data mining. Other states, including Hawaii, Maryland, Massachusetts, Nevada, New York, Washington, and the District of Columbia, have introduced legislation to limit data mining. The restrictions contained in both the existing and the proposed legislation target the sale and use of patient or prescriber data for marketing or commercial purposes. The legislation does not limit the sale and use of such data for purposes such as insurance reimbursement, dispensing prescriptions, utilization review, public health research, law enforcement, adverse effects reporting, or compliance with Medicaid or private insurance rules.

In 2006, New Hampshire passed the Prescription Privacy Law, which prevents patient and prescriber identifying data from being sold or used for advertising, marketing, promotion or any activity intended to influence sales or market share of a pharmaceutical product. The law was passed as a consumer protection and public health measure, and was intended to safeguard privacy in prescribing.

In 2007, the Vermont legislature passed a law banning all use of prescriber data for marketing purposes unless a physician explicitly agrees to waive the protections. Such a waiver would take the form of an opt-in provision at the time of licensure or renewal and would be managed by Vermont's professional licensing board.

Also in 2007, the Maine legislature passed the Maine Prescription Restraint Law, which established a state-sponsored opt-out process for physicians, physician assistants and nurse practitioners to prevent access to practitioner specific prescribing data. Specifically, the legislation required the state's Board of Licensure to include in its licensure and renewal processes a confidentiality protection for prescribing data. Applicants must be informed that their prescription drug information is used for marketing purposes, and they must be instructed on how to opt-out of this data gathering system. Maine's law is generally considered a weaker alternative to the prescribing data protection systems in Vermont and New Hampshire.

As noted, legal challenges to the New Hampshire and Vermont laws by HIOs have been mostly unsuccessful. In IMS Health Inc. v. Ayotte, 550 F.3d 42 (1st Cir. 2008), the First Circuit reinstated New Hampshire's ban after the law had been found unconstitutional by a United States District Court for the District of New Hampshire. The challenge to New Hampshire's law was based on a claim that the confidentiality law infringed free speech. The First Circuit concluded that the regulated data transfers did not embody restrictions on protected speech, and, even if it did, the law still passed constitutional muster. The court stated that "In combating this novel threat to cost-effective delivery of health care, New Hampshire has acted with as much forethought and precision as the circumstances permit and the Constitution demands." On March 27, 2009, the HIOs filed a joint petition for a writ of certiorari with the U.S. Supreme Court. Thirteen Amicus briefs have been filed to date, including one by the State of Vermont. The Court has set a conference date of June 25, 2009.

HIOs have also independently challenged the Maine and Vermont laws, filing two separate suits in 2007. The U.S. District Court for the District of Maine struck down Maine's law, holding that it violated the free speech guarantee of the First Amendment. However, because Maine is within the First Circuit, it remains unclear whether the lower court’s decision would be upheld on appeal. The Attorney General’s office has yet to state whether they will wait for Supreme Court review of the First Circuit decision on the New Hampshire law or whether they will proceed with their appeal.

Finally, Vermont’s data mining law was recently upheld by the U.S. District Court for the District of Vermont. Unlike the First Circuit, the U.S. District Court for the District of Vermont (a member of the U.S. Court of Appeals for the Second Circuit) held that prescriber data is protected speech under the First Amendment; however, it upheld the law because Vermont's restrictions satisfied the three-prong test used by courts to analyze commercial speech. The court also addressed the HIOs' dormant commerce clause claim, holding that HIOs could gather and sell data originating in other states but could not use or sell data originating in Vermont, even if that data had been transferred to a pharmacy's out-of-state parent company.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

and

Celia Cohen

[1] The prescription information is able to be sold despite federal privacy protections in HIPAA. The AMA has stated that it only sells physician prescription identity numbers to those clients who are licensed to received information from the U.S. Department of Commerce National Technical Information Service.

PhRMA Revised Clinical Trial Principles

Sheppard Mullin — Mon, 15 Jun 2009 12:53:37 -0800

Pharmaceutical Research and Manufacturing of America (“PhRMA”) has revised its Principles on Clinical Trials to further reflect its commitment to transparency in clinical trials and build upon FDAAA requirements. PhRMA's updated principles trial address four key issues: protecting research participants; conduct of clinical trials; ensuring research objectivity; and providing clinical trial information. The PhRMA Principles on Conduct of Clinical Trials and Communication of Clinical Trial Results take effect on October 1, 2009.

Key PhRMA recommendations made include the following:

The timely registration (21 days after enrollment of first patient) of all interventional clinical trials involving patients, including some Phase 1 studies, on a public website (www.clinicalTrials.gov for FDAAA-required and voluntary registry of trials or, for those trials that are voluntarily registered on another public website such as www.clinicalstudyresults.org). For clinical trials subject to FDAAA, sponsors are instructed to list the data elements required by statute i.e. Descriptive Information, Recruitment Information, Location and Contact Information, and Administrative Data. However, PhRMA encourages sponsors to provide FDAAA data elements for all clinical trials without regard to whether they are subject to FDAAA.
The timely submission (12 months after clinical trial ends or within 30 days after approval of drug) of all safety and efficacy results summaries on a public website for all clinical trials conducted involving the use of either an investigation or marketed product regardless of whether the investigational drug was approved or the study was discontinued and regardless of outcome. In addition, PhRMA principles include a commitment that sponsors will work with investigators to publish data determined to be of significant medical importance for any clinical trial.
PhRMA has adopted the authorship standards of the International Committee of Medical Journal Editors (ICMJE), which requires that to be designated as an author a person must: (a) provide substantial contribution into conception or design of study, or data acquisition, or data analysis and interpretation; (b) write or revise the manuscript involving important intellectual content; and (c) have final approval of the revision to be published. PhRMA’s principles further specify that acquisition of funding, collection of the data and/or general supervision of the research group alone does not justify authorship. Finally, all authors are to be provided with the underlying statistical tables, figures, and reports supporting the publication.
PhRMA also has adopted the contribution standards of ICMJE which require that contributions should be recognized appropriately in publications – either as an author or as a contributor depending on the level of contribution. Contributors that do not meet all three of the author criteria should be listed in the acknowledgements section and their role or contribution identified. In addition, authors should disclose any assistance received, and acknowledge any financial or material support.
PhRMA has also adopted ICMJE disclosure standards for publication of a medical journal manuscript. Authors submitting manuscripts are instructed to disclose all financial or personal relationships that might present a conflict of interest and disclose names of anyone who has provided writing or other assistance. Authors are further instructed to describe the role of sponsors in designing the study, collecting and interpreting data, writing the report, and in the decision to submit the report for publication. If the sponsor had no involvement, the author should state that as well.
Other publication issues addressed in the PhRMA principles include sponsor’s right to review a manuscript, presentation or abstract prior to submission for publication and the sponsor’s commitment to timely review and to work with authors to resolve through scientific debate any differences of opinion or interpretation of data that may arise. In addition, PhRMA principles provide that sponsors should agree to furnish clinical trial protocol information to a reviewing medical journal upon its request.

Authored by:

Arianna B. Chernove
(202) 772-5361
achernove@sheppardmullin.com

and

Deborah M. Shelton
(202) 772-5351
dshelton@sheppardmullin.com

EU Cosmetics Regulation Receives Welcome Facelift

Sheppard Mullin — Mon, 15 Jun 2009 12:52:20 -0800

Last month, the European Parliament approved new rules that will increase cosmetic safety and simplify regulatory procedures in the European Union. The legislation, which resulted from a compromise negotiation between Parliament and Council representatives, will take the form of a single regulation that applies to all member states simultaneously, and will replace the patchwork of 27 sets of national rules and 55 amendments that comprise the EU Cosmetic Directive of 1976.

The new text will increase manufacturer responsibility and strengthen market surveillance, while establishing clear guidelines that will cut administrative costs and unnecessary litigation. Noteworthy changes include:

Notification, Assessment, and Labeling of Nanomaterials. For the first time, Parliament introduced laws regulating cosmetics containing nanomaterials, which the new text defines as “an insoluble or bio-resistant and intentionally manufactured material with one or more external dimensions, or an internal structure, on the scale from 1 to 100 nm.” Nanomaterials, which may be thousands of times finer than a human hair, and estimated to be in about 5% of cosmetic products, are now subject to compulsory notification, safety assessment, and labeling measures. For instance, a manufacturer must inform the European Commission (the "Commission") six months prior to launching a product containing nanomaterials. If there is a safety concern, the Commission will consult the Scientific Committee on Consumer Safety for an opinion. Additionally, all nanomaterials in the cosmetic must be mentioned on the list of ingredients on the packaging, with the names of such ingredients followed by the word “nano” in brackets.

Strict Treatment of CMR Substances. The regulation essentially forbids the use of substances in cosmetics that are carcinogenic, mutagenic, or toxic for reproduction ("CMR"), which may only be used in exceptional cases under strict conditions. A new clause also addresses substances with endocrine-disrupting properties, which will be regulated when European or internationally agreed upon criteria for identifying such substances are available, or five years after the regulation is in force. However, the rules still allow for the continued use of ethanol, which is widely used in perfumes.

Common Criteria for Product Claims. The regulation provides that labeling and advertising of cosmetics may only mention the real effect of a product. The Commission is asked to draw up an action plan and adopt a list of common criteria for claims which may be used in connection with cosmetics.

Strengthening In-Market Control. The regulation creates a single, central notification system overseeing cosmetics that will replace various national procedures. Additionally, new provisions increase market surveillance cooperation between authorities, reinforces a tracing system that ensures identification of a product through the supply chain, monitors undesirable side effects induced by a product, and sets up minimum requirements for the manufacturer in assessing product safety.

Once approved by the Council, the regulation will enter into force 20 days after publication in the EU Official Journal, and will apply 42 months later (2012), except for certain parts on nanomaterials and CMR substances that will apply from an earlier stage. Existing provisions concerning animal testing on cosmetics from now until 2013 will remain intact.

Generally, the new amendments have been favorably received. With these changes, Parliament has expressed its aim to "remove legal uncertainties and inconsistencies, while increasing the safety of cosmetics." Additionally, these improvements may influence other countries such as the U.S., whose cosmetics regulations are less clear and less stringent, to take notice and toughen up.

Limiting Liability in Clinical Trials: Non-Lawyers, Lawyers Beware

Sheppard Mullin — Mon, 15 Jun 2009 12:50:27 -0800

Clinical trials are the lifeblood of biotech. Finding the right service providers (CROs, safety, IVRS, consultants, contract manufacturers and many others), as well as the right clinical investigators and sites, results in a complex web of legal obligations and potential liabilities. Limitation of liability clauses can reduce a party's exposure if a contractual obligation is breached. More often, limitations of liability provisions are used to shift risk to the sponsor of the clinical trial. But, if your contracts are well negotiated and drafted, the risks can be carefully and fairly allocated between the parties in a balanced and reasonable manner. Because of the complexity of the legal relationships and liabilities found in clinical trials, this article is limited to a brief description of limitation of liability clauses, and their general strengths and weaknesses.

Click here to read full article.

Authored By:

Beni Surpin
(858) 720-8950
bsurpin@sheppardmullin.com

and

Blaine E. Templeman
(212) 332-3854
btempleman@sheppardmullin.com

and

Michael Murphy
(858) 720-7423
mmurphy@sheppardmullin.com