Food and Drug Law November 29, 2010

1. Food and Drug LawNovember 29, 2010 Ralph F. Hall

2. Overview • Current events • Product liability • Inspections • Enforcement

3. Product Liability Issues

4. Key Issues • Practice of medicine • Warnings • To whom • About what • Preemption • Drugs • Devices • Non-identification theories of liability

5. §396 • “Nothing in (the FDCA) shall be construed to limit or interfere with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease …” • FDA still has the right to: • Restrict sales of devices • Establish labeling • Prohibit promotion of unapproved uses of devices

6. Duty to WarnHistorical view • Prescription drugs and devices require physician involvement • Ordinary consumer not capable of understanding risks and benefits • Physician acts as “learned intermediary” • Warnings must be adequate for physician, not for lay person • Content • Complexity • Read and rely requirement

7. Perez v. Wyeth • Rise in direct to consumer advertising (DTC) • Does DTC “bypass” the physician as the decision maker? • DTC requires disclosure of major risks • 30-60 second ad can’t provide “fair balance” and complete information • Impact of DTC on the role of the physician • Encourage prescription • Read and rely • Learned intermediary doctrine does not apply (at least in NJ) to products promoted through DTC channels

8. Patient Information • DTC implications • Available information • Internet • Clinical trial sites • Direct patient notification of product issues • HRS conference • GDT Independent Panel • Role of physician • Abdication of responsibility? • Role of patient

9. Preemption • Product liability historically a state matter • Interface between state product liability law and federal regulatory systems • Express preemption • Implied preemption • Conflict preemption • Field preemption • Breach of FDA regulation as a private cause of action • Action against FDA

10. Express Preemption • 360(k) • “(N)o state … may establish … with respect to a device … any requirement – • which is different from, or in addition to, any requirement applicable under this chapter to a device and • which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to a device … • No equivalent drug provision • Prescription drug labeling rules state that there is preemption

11. Medtronic v. Lohr • Pacemaker lead case • Defective lead required emergency surgery • 510(k) device • Plaintiff asserted design defect, failure to warn and strict liability theories • Medtronic asserted preemption as a complete defense • Summary judgment motion

12. Medtronic v. Lohr • Role of product liability actions • Promote safety • Compensation • 510(k) is a “substantial equivalence” determination, not a safety determination • Need for concrete, specific federal requirements, not general 510(k) requirements • State requirement must conflict with federal requirement • Violation of FDA regulation • Stand alone cause of action • per se negligence

13. Riegel v. Medtronic • PMA case • Tort cases can create “requirements” • PMA creates device specific requirements • “Parallel” claims permitted • “different from or in addition to” claims preempted • What is an FDA requirement? • Guidance? • What is parallel?

14. Implied preemption • No direct statutory preemption • FDA fully “occupies the field” • Field preemption • Any private litigation result in favor of claimant would necessarily impinge on regulatory structure • Conflict preemption • Adequacy of labeling (PMA or NDA product) • Would any finding of inadequacy of labeling implicate adequacy of FDA decision

15. Wyeth v. Levine • Pharmaceutical case • Drug labeling • Do not put IV in artery • Stop if pain • Risk of gangrene • Drug administered into artery; patient report severe pain • Amputated arm • Suit against HCP settled • Suit against Wyeth • Inadequate warning

16. Wyeth v. Levine • Jury verdict for Levine • Product should not be on market • Wyeth argued implied preemption on appeal • Can’t change label without FDA approval • Regulatory history supports (but not conclusive) that FDA wouldn’t change label • Court relied on “changes being effected” regulation • Wyeth could have changed label

17. Fraud on FDABuckman Orthopedic bone screw case • 510(k) device • Plaintiff sued asserting that the defendant committed fraud on the FDA • But for the fraudulent statements, FDA would not have approved the device • Fraud claim based solely on breach of FDA requirements • Claims preempted • FDA has specific provisions dealing with false statements • Risk to applicants • Conflicting requirements • Increased cost and delays

18. Fraud on FDA • Analyzed as preemption • Any private cause of action for violation of law? • What about False Claims Act? • Violation as evidence of negligence • Violation as way to avoid preemption • Validity of theory • Impact on discovery

19. Strict Liability • Drugs as “unavoidably unsafe” products • Restatement of Torts 2nd (402A comment k) • Restatement of torts 3rd. • Does that turn a strict liability case into a negligence case? • State of the art as a defense • Reasonableness of testing, development, etc.

20. Non-identification theories • Statement of the problem • Generic product • Same chemical agent • Allegation of injury • Inability to determine actual manufacturer of product the particular person ingested • Traditionally, had to show that defendant was responsible for (e.g. made) the product that caused the injury

21. Non-identification theories • Alternative liability (Summers v. Tice) • All tortfeasors present and equal accountability • Concerted action/conspiracy • Parallel action • Enterprise liability (Hall v. DuPont) • Industry standards • Market share (Sindell) • Defining and proving market shares • Collins • Sue one manufacturer who made DES of the type taken by mother • Others can be joined (by defendant) • Comparative negligence

22. Economic Liability • Antitrust laws • DOJ • FTC • Merger issues • HSR premerger filings • EU antitrust clearance • Consumer fraud • FTC • Lanham Act • State laws

23. Antitrust Issues • Unfair competition • Price fixing • Control of raw or intermediate materials • PBM issues • Access to formularies • Pricing and preferences • Patent licensing/Hatch-Waxman related issues • Collusive settlements • Patent tie ins

24. Consumer Fraud • FTC • Deceptive advertising • Jurisdictional MOUs • Lanham Act • Unfair competition • Private cause of action • Zeneca v. Lilly

25. Enforcement

26. Enforcement History • Event/crisis based enforcement provisions • Generic drug scandal • ANDA provisions • Prescription drug sampling • Sulfanilamide • Public pressure • Competitor pressure • Economic/budget pressures • Enforcement provisions modified to reflect new business models • CIAs • DPAs

27. Major Enforcement ActionsFines and Penalties • Quest Diagnostics • $302 million • TAP • $875 million in fines • Abbott • $100 million in fines • Products pulled from market - $1 billion in lost sales • Schering Plough • $500 million • Park Davis (Pfizer) • $425 million in penalties • Pfizer • $2.3 billion • Glaxo • $750 million

28. Major Enforcement ActionsIndividuals • Purdue Pharma • 3 executives pled guilty – debarred as well • Harkonen • Wire fraud • Snowbeck • GC facing civil enforcement actions • TAP and Bard • Convictions (and some acquittals) • BMS • Executive conviction • Caputo • CEO convicted

29. Key Enforcement Questions • Was some legal obligation violated • FDCA • Other • What was the harm? • Injury to user • Consumer fraud • Fraud on FDA • Other • Linkage with other regulatory structures • Intent? • Prosecution process • What are the enforcement avenues • What are the remedies/punishments

30. Enforcement • Federal basis for enforcement • FDCA • False Claims Act • Antikickback provisions • General criminal provisions • Other federal agencies • HHS/OIG • FTC, SEC, etc. • State enforcement • State false claims act • State Consumer protection laws • Private enforcement • product liability • qui tam actions • Direct actions

31. Enforcement • Interstate commerce requirement • Jurisdictional requirement • Constitutional basis for jurisdiction • Generally three approaches to enforcement • Prohibited acts (§331) • Adulterated products • Misbranded products • Specific FDCA provisions • §355 (a) – no introduction of a new drug into interstate commerce without an approval • General statutory requirements and provisions • False statements, wire fraud, conspiracy, etc. • Remember Buckman and §337

32. Related FDCA Sections • § 337 – Federal government has sole enforcement rights or obligations • § 336 – minor or “technical” violations • § 372 • Right to conduct examinations and inspections • Samples • Search warrants, firearms, seizure actions, etc. • § 373 – records of interstate shipment • § 374 – factory inspection provisions • § 375 - publicity

33. Enforcement Chain (§331) Adulteration Prohibited Act Misbranding Criminal Civil Administrative §331 “A&M Plus” §§332-334, other FDCA Provisions

34. Prohibited Acts • Based on adulteration and misbranding concepts • Covers multiple parts of the distribution process • Introduction into interstate commerce - §331(a) • Receipt in interstate commerce §331 (c) • Linkage of adulteration/misbranding provisions to §331 • §§351, 352, 342, 343, 361, 362

35. Prohibited Acts • Other specific actions under §331 • Refusal to permit access to records • Refusal to permit inspections • Movement of a detained device • Improper drug importation (§ 384 linkage) • Failure to register • Forging certain labels, marks, etc. • Fraudulent drugs • Defining specific acts as rendering products “misbranded”

36. Linkage to Substantive Provisions • §331 linked to penalty provisions • §332-334 • Liberal construction • Role of general or common law remedies • Equitable powers • RX Depot & Lane Labs • Linked to penalty provisions • General civil and criminal provisions • triggers general penalty provisions

37. Other Relevant Provisions • False Statements (18 USC §1001) • Material misstatements • Intent • Oral or written statements • Completeness • Mail/wire fraud (18USC §1341) • Broad interpretation • False Claims Act (31 USC §3729) • HHS fraud and abuse provisions

38. Other General Criminal Provisions • Conspiracy • Aiding and abetting • Tax issues • Money laundering • Obstruction of justice • SEC violations

39. Biologics • 42 USC § 262 • List of “illegal” acts • Shipping unapproved product • False label • §262 (f) penalties • Linkage to general FDCA provisions (§262(j)) • General enforcement provisions

40. Specific FDCA Provisions • Certain provisions include specific prohibitions • §355(a) • Difference between enforcement actions and challenges to agency actions • Appealing final agency decisions • Arbitrary and capricious standard • Role of Chevron/Bacto-Unidisk • Some specific procedures • §348(f) • Enforcement • Government burden • Judicial deference

41. Obligation to Enforce • Prosecutorial discretion • Great latitude • Focus on high risk and high impact cases • Creating examples • § 336 • FDCA doesn’t require government to prosecute minor violations if the public interest is served by a warning or written notice • Lethal injection cases • No obligation to enforce

42. Sources of Enforcement Information • Reports to FDA • Inspections • Routine • Required inspections (pre NDA/PMA) • For cause • Whistleblowers • Other companies • Public pressure

43. Responsible Party • Corporate entity • Parent • Involved individuals • Authority and responsibility • Knowledge • Role of lawyers? • Role of compliance officers • Responsible corporate executives • CEO/president

44. FDA Trends Typical Establishment Inspections: District Decisions

45. FDA Trends Consequences of a Medical Device Inspection

46. Enforcement Actions • Administrative actions • Inspections • 483 observations • Warning letter • Recalls • Seizures/detention/condemnation • Injunction • Consent decree • Debarment/delisting • Civil penalty actions • Corporate Integrity Agreements/Probation terms • Criminal actions • Misdemeanor • felony

47. Recalls • Recalls are not enforcement • Recall as a remedy for violations • 21 CFR Part 7 – “Violative” products • Limited recall authority • Most recalls are “voluntary” • Failure to conduct a recall can lead to more formal actions • Seizure or detention • Reporting and corrective action obligations

48. 483s • Issued at inspection • List of deviations • Little or no FDA management involvement • Not binding on FDA • Other issues can be added • Additional enforcement action possible • Three ratings (NAI, VAI, OAI) • Response to FDA addressing corrective actions • Admissions against interest?

49. Warning Letters • Addressed to CEO/President • Reviewed by district, center and Chief Counsel office prior to issuance • 3-6 month process • Often follow 483 observations • Often state that the product is “adulterated” or “misbranded” • Impact on shipments • Impact on approvals • Impact on exports • Requires response and corrective action • Follow up inspection

50. Civil Enforcement • Can be linked to criminal action • Same prosecutorial discretion • Purpose of criminal enforcement • Punishment • Deterrence • Entity/individual focus • Purpose of civil enforcement • Restitution/disgorgement • Remedial actions • Either entity or product directed • Equitable competition