To close out 2018, FDA published a revised draft guidance on human drug compounding for outsourcing facilities

In accordance with the United States Food & Drug Administration’s (“FDA”) 2018 Compounding Policy Priorities Plan, on December 11, 2018, FDA published its revised draft guidance regarding human drug compounding by outsourcing facilities entitled, “Current Good Manufacturing Practice—Guidance for Human Drug Compounding Outsourcing Facilities Under Section 503B of the FD&C Act Guidance for Industry,” (the Revised Draft Guidance). FDA released this Revised Draft Guidance to describe FDA’s current thinking on what FDA has described as a new flexible and risk-based approach to Current Good Manufacturing Practice (“cGMP”) requirements for outsourcing facilities.

Outsourcing facilities must comply with cGMP requirements, and failure to do so risks that the compounded drug will be deemed adulterated under Section 501(a)(2)(B) of the Federal Food, Drug, and Cosmetic Act (“FDCA”). FDA has taken the position that it intends to promulgate more specific cGMP requirements for Section 503B outsourcing facilities in the future, but until FDA does so, outsourcing facilities are subject to the cGMP requirements established in 21 CFR parts 210 and 211. The Revised Draft Guidance illustrates FDA’s current thinking on certain standards with examples of cGMP requirements where FDA would generally not take regulatory action as applied to outsourcing facilities.

Outsourcing facilities must comply with cGMP requirements, and failure to do so risks that the compounded drug will be deemed adulterated under Section 501(a)(2)(B) of the Federal Food, Drug, and Cosmetic Act (“FDCA”). FDA has taken the position that it intends to promulgate more specific cGMP requirements for Section 503B outsourcing facilities in the future, but until FDA does so, outsourcing facilities are subject to the cGMP requirements established in 21 CFR parts 210 and 211. The Revised Draft Guidance illustrates FDA’s current thinking on certain standards with examples of cGMP requirements where FDA would generally not take regulatory action as applied to outsourcing facilities.

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Join Us: Free CLE Webinar on Best & Worst Drug/Medical Device Decisions of 2018

Reed Smith’s Life Sciences Health Industry Group will be hosting an upcoming CLE webinar, “The Good, the Bad and the Ugly: The Best and Worst Drug/Medical Device Decisions of 2018” on Wednesday, January 16, 2019 at 12 p.m. ET.

Each year since 2007, Reed Smith’s Drug and Device Law blog contributors have compiled and posted lists of the 10 best and 10 worst drug and medical device court decisions for that year. Starting with their 2013 lists, the bloggers have followed up with a webinar discussing these decisions. These cases are selected based on their likely precedential value, their importance to drug and device manufacturers, and their inherent (and subjective) merit.

In this webinar, our litigators who blog for Drug and Device Law will explain the significance – whether good or bad – of each case and provide insight into how the cases will likely be influential in the future.

This program is presumptively approved for 1.5 general CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.5 credit under New York’s Approved Jurisdiction Policy.

You can register by clicking here.

FDA Announces Its Plan for Encouraging Reliance on Newer Predicate Devices and Medical Device Performance Criteria

On November 26, 2018, the Food & Drug Administration (FDA) announced its intent “to modernize the FDA’s 510(k) clearance pathway”1 by encouraging manufacturers to rely on newer (that is, 10 years old or less) medical devices as predicate devices in 510(k) notifications, and providing an alternative 510(k) pathway that allows manufacturers to rely on objective safety and performance criteria, at least for certain well-known devices. This revised approach comes at a time when advances in technology are rapidly outpacing FDA’s ability to review and clear new medical device technology for market. FDA has also come under increasing criticism in recent years for failing to detect problems in certain medical devices, which have, in some instances, caused injuries to consumers. FDA believes that this new approach will improve medical devices’ safety and performance, and expects hope that this new pathway will become the norm for approval of medical devices.

While the plan’s specifics remain to be seen, FDA’s new approach has the potential to greatly impact medical device manufacturers’ plans for the future. Below, we describe FDA’s plans for encouraging reliance on newer predicate devices and objective safety and performance criteria.

Reliance on Newer Predicate Devices

FDA has set forth a two-prong approach for its modernization efforts. First, FDA will encourage manufacturers to designate newer medical devices as predicate devices for comparative purposes in 510(k) clearance notifications. The agency believes that older predicate devices may not reflect accepted technological advancements or understanding of a device’s safety and efficacy profile. FDA proposes that newer devices should serve as the predicates because older devices may not be the best comparison the modern technologies incorporated into the newer devices.

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FDA to implement OIG suggestions on IoT cybersecurity

The Office of the Inspector General (OIG) published a report in September 2018 after a review of the Food and Drug Administration’s (FDA) policies, procedures, and guidance relating to cybersecurity reviews of networked medical1 devices. In its findings, covered in our recent client alert, the OIG determined that while the FDA has started to include cybersecurity concerns in its review process, the FDA should take steps to ensure their cybersecurity review is systematic and consistent. The OIG specifically provided three recommendations for the FDA:

  • Promote the use of the FDA’s pre-submission program (Pre-Sub Program) to discuss cybersecurity concerns
  • Include cybersecurity documentation as a criterion in the FDA’s current Refuse To Accept checklists
  • Revise its “Smart” template to prompt FDA reviewers with specific cybersecurity questions

The FDA has voiced its agreement with all three of the recommendations and intends to incorporate them in its next round of updates to these items. The FDA will likely promote new policies and procedures in response to OIG’s recommendations in the near future, and medical device manufacturers should prepare for these updates.

  1. U.S. Dep’t of Health & Human Servs., Office of the Inspector General, OEI-09-16-00220, FDA Should Further Integrate Its Review of Cybersecurity Into the Premarket Review Process for Medical Devices 1 (Sept. 2018).

OIG Gives Stamp of Approval for Innovative Warranty Program

The Office of Inspector General (OIG) recently gave the green-light on a medical device manufacturer’s proposed warranty program, wherein the company would provide a refund to the hospital at which a patient underwent joint replacement surgery using the company’s knee or hip implant and related products, if the patient was readmitted within 90 days because of a surgical site infection or need for implant replacement surgery. Advisory Opinion No. 18-10 concluded that although the suggested proposal did not meet the particular specifications of the warranty safe harbor to the Anti-Kickback Statute (AKS), it nonetheless posed an acceptably low risk of fraud and abuse. OIG’s approval of this warranty program is consistent with several other recent signals from OIG indicating its increasing interest in value-based arrangements.

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OIG Issues RFI Regarding Federal Anti-kickback Statute and Beneficiary Inducement CMP

The Office of Inspector General (OIG) of the Department of Health Human Services (HHS) is seeking input on Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducements CMP. The OIG describes this request for information (RFI) as part of HHS’s endeavor “to transform the health care system into one that better pays for value.” The RFI looks to identify ways to amend or add new safe harbors to the Anti-Kickback Statute (AKS) and exceptions to the beneficiary inducements provisions of the Civil Monetary Penalty (CMP) statute, in order to foster arrangements that promote care coordination and advance the delivery of value-based care. The OIG notes that, through internal discussions and input from external stakeholders, it has identified the broad reach of these provisions as “potential impediment[s] to beneficial arrangements that would advance coordinated care.” Comments on the RFI will be accepted by the OIG through October 26, 2018.

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Brexit and the Pharmaceuticals Sector: The Key Issues

The United Kingdom (UK) is scheduled to leave the European Union on 29 March 2019. Certain key aspects of the Brexit deal now seem to have been agreed upon, including a 21 month “transitional period” after the UK’s exit, but the full agreement has not yet been finalized and there is currently a risk of no deal being reached. The UK pharmaceuticals sector is a key industry seeking clarity, particularly on the following important areas:

  • Continued membership of the UK in the European Medicines Agency (EMA) regime. The EMA is the European Union (EU) body responsible for the regulation of medicines supplied in EU territories (currently situated in London; scheduled to relocate to Amsterdam next year). It is also responsible for the market authorization of pharmaceuticals across the EU and EEA-EFTA states. If the UK leaves the EMA regime on Brexit, the regulation and authorization process will likely become more costly and time-consuming because pharma companies may need to submit a separate application to gain approval for a product to reach the UK (as opposed to EU) market. Last month, the government voted on this issue and confirmed that the UK’s continued membership of the EMA should be a key priority in ongoing negotiations with the EU;
  • The status of the EU Clinical Trials Regulation. This Regulation is currently scheduled to be implemented from 2020 (i.e., during the UK’s transitional period). It will promote a uniform framework for the authorization of clinical trials across EU member states, with all applications and communications to be submitted via a single online portal (currently, clinical trials are authorized nationally, meaning that clinical trial sponsors must apply for authorization to conduct trials in each separate country). If the Regulation does not apply in the UK post-Brexit, pharma companies will need a separate UK authorization for trials they intend to progress in the jurisdiction. The government has confirmed its commitment to implement this Regulation into English law as far as possible post-Brexit;
  • The future of the Unitary Patent and the Unitary Patents Court. In April 2018, the UK government ratified the Unified Patent Court Agreement, an EU initiative aimed at developing a single European patent that would be enforceable across the different EU jurisdictions and subject to the jurisdiction of one EU led entity. In a white paper published last month, the government confirmed its intention to explore implementing the unitary patent system after its leaves the EU;
  • Continued rights of EU citizens to live and work in the UK. The pharmaceuticals industry is powered by its talented workforce, particularly in the research and development sphere, and research by recruiter DHR International published in January of this year suggests that senior applicants for pharmaceutical roles from outside the UK have dropped from 40 percent to 15 percent since the referendum due to uncertainty around Brexit. Life sciences companies will want to see a commitment by the government to ensure that this skilled workforce remain welcome in the UK post-Brexit.

On 23 August, the UK government also issued contingency guidance in the event of a “no deal” scenario. Notably, the government wrote to pharmaceutical companies that supply medicines to the National Health Service asking them to ensure they have a six week “buffer” of additional medical supplies in place before Brexit. It also issued six technical notices dealing with specific life sciences issues, confirming for example that new medicines and other medical products will have to go through separate national assessment before they can receive market authorization to be sold in the UK (meaning that companies will need to seek double approval from both the UK and the EU).

As is clear from the above, the road to Brexit is by no means smooth and these issues will be thrashed out with intensity in the coming months to try and avoid the no-deal scenario.

It is also clear, however, that the government understands how important the pharmaceuticals industry is to the UK as a whole. The industry in the UK is worth circa £42 billion and employs around 113,000 people, many in the research and development sphere where the UK has a prestigious reputation. In 2016, current UK Prime Minister Theresa May even said that “it is hard to think of an industry of greater strategic importance to Britain.”

Equally, the industry itself continues to show commitment to the UK. Soon after the Brexit vote, GSK invested £275 million to expand its manufacturing sites. And in December 2017, the government announced its Life Sciences Sector Deal, which saw 25 global life sciences organizations pledge future investment in the UK to facilitate continued research and development and strengthen the environment for clinical trials.

The UK, it seems, remains an attractive prospect for the pharmaceuticals industry (inside or outside the EU) – and the UK government seems committed to ensuring that Brexit is as smooth and painless for the industry as possible, even if that means seeking a higher level of cooperation with the EU than it might do in other areas.

Major Medical Device Changes In China Introduced by the 2018 Draft Amendment to the “Regulations on the Supervision and Administration of Medical Device”*

Following the issuance of the “Opinions on Deepening the Reform of Examination and Approval System and Encouraging Innovation in the Industries of Pharmaceuticals and Medical Devices” by the Central Office of the Communist Party of China and the Office of the State Council on October 1, 2017, the former China Food and Drug Administration** formulated and published the Amendment to the “Regulations on the Supervision and Administration of Medical Device” (Draft for Public Comments) in October 2017, upon which a further revised draft amendment was announced for public comments from June 26, 2018 to July 24, 2018 (the 2018 Draft Amendment). The 2018 Draft Amendment is believed to be very close to its final version and will have a significant impact on all market players in the medical device industry. The major changes introduced by the 2018 Draft Amendment are summarized as follows:

  • Improve the Market Authorization Holder (MAH) Mechanism

Prior to the 2018 Draft Amendment, the term “MAH” was adopted and used in the 2016 “Notice of the General Office of the State Council on the Pilot Plan of the Drug Market Authorization Holder System.” The 2018 Draft Amendment provides for a clear definition of MAH, the entity that obtains from the competent drug supervision authority a medical device filing receipt or registration certificate for sale of the medical device into markets. In addition, the 2018 Draft Amendment adds specific provisions on MAH’s rights and obligations. For instance, MAHs may produce or sell their products or entrust others to do the same; MAHs shall ensure that their quality systems operate effectively and their products satisfy the relevant requirements; MAHs shall submit self-inspection reports to the relevant supervision authority every year; MAHs shall establish a medical device adverse event monitoring system and assume responsibility for the recalling of defective products. In addition, the 2018 Draft Amendment imposes detailed obligations on foreign MAHs’ agents in China.

  • Reform Clinical Trial Management System

Pursuant to the 2018 Draft Amendment, “medical device clinical evaluation” refers to a process where an applicant, through clinical literature, clinical experience and data, clinical trials, etc., verifies whether a medical device satisfies the relevant clinical uses and requirements. The 2018 Draft Amendment clarifies that for the filing of all Category I medical devices, no clinical evaluations are required; for registration of Category II medical devices, in principle, no clinical evaluations are required; and for registration of Category III medical devices, clinical evaluations are required unless the devices have a proven record of safety. For the purpose of making clinical evaluations, subject to any implementing rules to be promulgated along with or after the promulgation of the 2018 Draft Amendment, it is understood that the 2018 Draft Amendment indicates that foreign clinical study data may be accepted and recognized, except for evaluations of those devices that involve very high risks or are used to support or maintain life.*** This would be one of the most noteworthy changes brought by the 2018 Draft Amendment and would save considerable time for imported medical devices (with low or moderate risks) to enter into Chinese market.

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Little-Known Trap in U.K. Intellectual Property Litigation Could Cost Successful Plaintiffs: What Life Sciences Companies Need to Know

Did you know the U.K. patents system penalizes a failure to record a patent transaction at the Patent Office by depriving a successful plaintiff of its entitlement to recover its full legal costs in any subsequent infringement litigation on that patent?

It’s a little-known trap for the unwary, and the subject of our London partner Jonathan Radcliffe’s recent article, “Unregistered Patent Transaction? Even in Win, That’ll Cost You,” in Bloomberg Law’s World Intellectual Property Report.

The article is a very worthwhile read for multinational pharmaceutical and medical device companies looking to protect their intellectual property in this important jurisdiction. In it, Jonathan discusses how the findings from a recent U.K. Patents Court judgment in a medical devices case have clarified the extent of litigation sanctions imposed when there is a failure to record a patent transaction at the Patent Office. The U.K. patents system may deprive a successful plaintiff of its entitlement to recover its full legal costs in these circumstances.

This case will also affect trademarks and registered designs, as these statutes have identical provisions. This decision will impact potential litigants and future commercial transactions; they must make sure they register an interest, and make sure their due diligence in corporate and commercial transactions consider this potential situation.

To read the full article, please click here.

Join Us for a Webinar on “GDPR: Live”

The Global Data Protection Regulation (GDPR), the new European data privacy regulation that will have world-wide reach, goes into effect on May 25, and will significantly affect life sciences companies.

If you have been wondering what life is going to look like in a GDPR world, please join Reed Smith attorneys Cynthia O’Donoghue, Dr Andreas Splittgerber, Philip Thomas, Daniel Kadar, and Gerry Stegmaier at 9:30 a.m. on May 25 for a CLE webinar on “GDPR: Live.”

Topics covered will include expected developments in the coming months, an update on national legislation implementation, and prioritizing next steps in a GDPR world.

This program is presumptively approved for 1.0 general CLE credit in California, Illinois, New Jersey, Pennsylvania and Texas. For lawyers licensed in New York, this course is eligible for 1.0 credit under New York’s Approved Jurisdiction Policy. The program is also presumptively approved for 1.0 New Jersey CPE credit.

To register for this free webinar, please click here.