1. Life Sciences Regulatory Framework
1.1 Legislation and Regulation for Pharmaceuticals
and Medical Devices
The primary legislation governing the authorisation, marketing,
sale and supply of pharmaceutical products by the US Food and Drug
Administration (FDA) is the Federal Food, Drug, and Cosmetic Act
(FD&C Act), which has been amended many times over the years to
reflect increasing FDA mandates for the regulation of
pharmaceutical products. The Public Health Service Act (PHS Act) is
the specific authority utilised to approve or license biologic
(including biosimilar) products. The primary FDA regulations
governing drugs and biologics are found at Chapter 21 of the Code
of Federal Regulations. Controlled substances, such as opioids, are
also scheduled, and subject to quotas and distribution controls,
under the Controlled Substances Act administered by the Drug
Enforcement Administration (DEA).
A drug is defined as:
- a substance recognised in the US Pharmacopoeia,
Homeopathic Pharmacopeia or National Formulary; - a substance intended for use in the diagnosis, cure,
mitigation, treatment or prevention of disease; - a substance (other than food) intended to affect the
structure or any function of the body; - a substance intended for use as a component of a
drug, but not a device or a component, part or accessory of a
device.
A biologic is defined under the PHS Act as “a virus,
therapeutic serum, toxin, antitoxin, vaccine, blood, blood
component or derivative, allergenic product, protein, or analogous
product, or arsphenamine or derivative of arsphenamine (or any
other trivalent organic arsenic compound), applicable to the
prevention, treatment, or cure of a disease or condition of human
beings”. Notably, a protein is any alpha amino acid polymer
with a specific, defined sequence that is greater than 40 amino
acids in size. Biological products are also included within the
drug definition and are generally covered by most of the same laws
and regulations, but differences exist in the regulatory
approach.
Medical devices are also regulated by the FDA under the FD&C
Act, and, although subject to similar intent standards, such
products generally are primarily intended to act via mechanical
rather than chemical or biological modes of action. Medical devices
are classified by risk, and may be exempt from FDA review, subject
to a “510(k)” pre-market notification process based upon
a showing of substantial equivalence to a “predicate”
device, subject to down-classification via the de novo submission
process, or eligible for full approval via a pre-market approval
application (PMA).
Although the FDA has traditionally been given significant
independence as an agency, and the Commissioner is confirmed by the
Senate, the FDA is part of the Department of Health and Human
Services (HHS).
The government agencies touching on pricing and reimbursement
vary, depending upon the payer programme, and include the Centers
for Medicare & Medicaid Services (CMS) (also part of HHS), the
Veterans Health Administration, and state Medicaid agencies. In
addition, the HHS Office of Inspector General oversees laws
governing fraud and abuse in the sale of biomedical products and
healthcare services. The Federal Trade Commission (FTC), an
independent agency, regulates the advertising of non-prescription
drugs and non-restricted medical devices.
Agency decisions may be challenged either informally, via
guidance-driven processes governing informal dispute resolution, or
via more formal regulatory processes specified under FDA
regulations. In addition, a general-purpose vehicle for bringing
issues before the agency is the Citizen Petition, which allows the
petitioner to bring a request before the agency and initiate a
public docket in which comments can be lodged. The FDA also
maintains ombudsmen in the various centres reviewing products,
whose role is intended to facilitate the resolution of disputes.
Although procedures for dispute resolution vary by the specific
statutory provisions at issue and the FDA Center responsible for
the category of products, such processes generally follow APA
standards for permitting due process and creation of an
administrative record.
Once administrative processes are exhausted, parties with
appropriate standing may challenge FDA agency decisions in court
under the Administrative Procedure Act (APA). Although
administrative processes vary by category, APA requirements are
largely the same across products, and typically involve a
demonstration that an agency action was arbitrary or capricious or
otherwise not in accordance with governing law.
Although the default status for drug approvals is technically
over the counter (OTC), ie, non-prescription, most initial drug
approvals specify that new drug products are subject to
prescription drug controls. Prescription drugs must be labelled as
such and are subject to physician prescribing and pharmacy
dispensing and substitution controls under state law.
However, it is possible to seek an initial FDA approval for the
sale of a drug product OTC, or seek to “switch” a
prescription product to OTC status by demonstrating that the
condition is capable of self-diagnosis and treatment in accordance
with labelling. Moreover, over the decades, the FDA has also
developed OTC monographs that permit the marketing, without
approval, of certain OTC drugs that meet the specific terms –
ingredients, dosing, directions for use, etc – for that class
of drug under the relevant monograph. Such drugs remain subject to
establishment registration, listing, labelling and current Good
Manufacturing Practice (cGMP) requirements. Recent legislation
liberalised the processes for amending OTC monographs, which could
help reinvigorate OTC product development in the US.
Medical devices may also be restricted to non-restricted
(including OTC) or restricted status, depending on their
classification and the FDA’s determination as to appropriate
status under clearance and approval processes.
2. Clinical Trials
For drugs and biologics, unless subject to specific exemptions,
an investigational new drug application (IND) must be submitted to
obtain FDA clearance prior to engaging in clinical research. Such
submissions typically include extensive pre-clinical data,
information on chemistry, manufacturing and controls, prior human
data and the proposed protocol(s). The FDA has 30 days either to
allow the clinical study to proceed or to impose a clinical hold
until outstanding issues are resolved. Similar rules apply to
medical device research and, depending upon the risk posed by the
device, a device study may require the submission of an
investigational device exemption (IDE) prior to initiating clinical
research. Non-significant risk device studies may be conducted with
just Institutional Review Board (IRB)/Ethics Committee approval.
The FDA maintains an array of good clinical practice regulations
governing clinical research, including study sponsor, IRB, and
investigator responsibilities.
As noted, in addition to obtaining clearance to proceed with
clinical research by filing an IND or IDE, as appropriate,
virtually all studies must be reviewed by one or more IRBs prior to
initiation. FDA regulations specify the requirements applicable to
the composition and activities of IRBs.
The US National Institutes of Health maintains a database
at www.clinicaltrials.gov, and most
controlled, interventional clinical investigations, other than
Phase I clinical investigations, of drugs or biologic products
subject to FDA regulation, must be registered with the site. While
there is no general requirement to publish clinical trial data in
journals, as a practical matter the industry has pledged to seek
such publications where possible.
Online tools may be used as long as they comply with applicable
requirements (eg, privacy, data security, informed consent and
other good clinical practice requirements, and establishing lawful
status if such tools incorporate certain regulated medical device
functionalities). Particular requirements apply to recruiting
subjects for clinical studies, whether online or otherwise.
The personal data resulting from clinical trials would be
considered protected, although in certain scenarios the sponsor and
the FDA will have access to such information, including
patient-identifiable information, in order to conduct and analyse
the data from the study properly.
As long as any transfer of resulting data to a third party or an
affiliate is consistent with contractual obligations, informed
consent, and privacy protections, such transfers are permitted.
A database containing personal or sensitive data may be subject
to both contractual and statutory protections obliging maintenance
of data security and privacy.
3. Marketing Authorisations for Pharmaceutical or Medical
Devices
Such determinations are typically made by assessing the primary
mode of action of the product and whether it works by chemical,
biological, mechanical, or other means. If the product has both
chemical/biological and mechanical modalities, a Request for
Designation may be submitted. A recent decision in the Genus v FDA
case has recently changed the FDA’s historical approach,
requiring compliance with device requirements in certain cases in
which the FDA has previously treated certain products solely as
drugs.
Drug products are approved via New Drug Applications (NDAs), and
additional indications, dosage forms, etc, may be added via NDA
supplements. Biologic products are approved via a virtually
identical process via Biologics License Applications (BLAs). The
standard for approval is “substantial evidence” of safety
and effectiveness, based upon at least one, and typically several,
adequate and well-controlled clinical studies. The typical drug or
biologic review process takes ten months after initial acceptance
for filing (a 60-day period), although a priority review of six
months is given to certain drugs and biologics intended to treat
serious or life-threatening conditions.
Substantial user fees are required to facilitate a review of
applications, at the high end currently ranging to approximately
USD3.1 million for an NDA or BLA containing clinical data.
There is no mandatory re-authorisation process for approved
products. However, the FD&C Act and FDA regulations include
processes for the withdrawal or revocation of an approval based
upon non-compliance with approval requirements, or a significant
safety or effectiveness issue. Such processes can be expedited in
the event of an imminent hazard, but processes for challenging a
revocation may be invoked in most cases. Such actions are rare, and
in most cases a manufacturer will withdraw a product voluntarily
rather than pursue a formal hearing. In general, a marketing
authorisation may not be revoked merely because the product has not
been placed on the market, although a failure to market an orphan
drug could result in a loss of orphan exclusivity.
As noted, the pathways for approval of drugs consist of the
submission of an NDA (including a 505(b)(2) NDA relying on data for
which the applicant does not have a right of reference), and the
Abbreviated New Drug Application (ANDA) for generic products, which
demonstrates equivalence to a reference listed drug. A biologic is
licensed via the submission of a BLA, although that process is
largely the equivalent of an NDA submission. A biosimilar
application demonstrates that the biosimilar is, based on the
totality of the evidence, either “highly similar” to, or
interchangeable with, a reference biologic.
The FDA is authorised to require paediatric studies of drugs or
biologics when other approaches are insufficient to ensure that the
products are safe and effective for use in children. The Agency may
also issue a written request for paediatric research, and if the
sponsor fulfils the data request, it may obtain six months of
paediatric exclusivity.
As noted, changes to an existing marketing authorisation may be
obtained through supplements or amendments to existing
applications. With respect to medical devices, the submission of an
additional 510(k) submissions can result in the clearance of
significant changes to previously cleared device products, and a
PMA may also be supplemented or amended.
In many cases, the transfer of a clearance or approval without
manufacturing site or significant product changes requires only
fairly simple notifications to the FDA.
The FDA maintains regulations permitting expanded access to
investigational products. Such expanded access INDs and IDEs may
relate to an individual patient (often called a “compassionate
use”) or may allow broad use by patients not eligible for
controlled clinical trials, depending upon the seriousness of the
disease and the availability of alternative treatments. Sponsors of
such INDs may not charge patients for the investigational drug
without specific authorisation from the FDA permitting cost
recovery only.
In addition, the 2018 “Right to Try” Act permits
certain eligible terminal patients to have broad access to eligible
investigational drugs in certain circumstances. To date, most
companies have shown a reluctance to permit their products to be
used via this pathway in lieu of the more traditional IND
pathway.
There is also a very limited Humanitarian Device Exemption (HDE)
pathway for approval of a Humanitarian Use Device (HUD) intended to
benefit patients in the treatment or diagnosis of a disease or
condition that affects or is manifested in not more than 8,000
individuals in the USA per year.
Every drug, biologic or device product is subject to ongoing
requirements relating to establishment registration, product
listing, compliance with cGMPs/quality systems, track and trace
requirements, and safety/adverse event reporting regulations. In
certain cases, the FDA may require closer, ongoing oversight of a
drug or biologic under a Risk Evaluation and Mitigation Strategy
(REMS), or mandate post-market studies or trials.
While the FDA does release approval letters and – after
review for redaction of confidential and trade-secret information
– summary review and approval documents, the FDA does not
currently publish “Complete Response Letters” that reject
an application under review. Available information on approved
products may be obtained via the FDA’s Drugs@FDA website.
Often, extensive information about pending applications is released
in the form of briefing papers and presentations used at FDA
Advisory Committee meetings. The FDA does not reveal the existence
of pending INDs or IDEs unless the sponsor has publicly
acknowledged the filings.
Third parties may submit requests for information under the
Freedom of Information Act (FOIA), although there are a variety of
exceptions from disclosure, and there is a major FDA backlog of
requests. Most importantly, the FDA has an obligation under the
FOIA to refrain from publication of trade secrets or confidential
commercial or financial information. Sponsors/applicants are
afforded an opportunity to review potential releases of information
and request confidential treatment under those FOIA exceptions.
The Drug Supply Chain Security Act (DSCSA) mandated a system to
identify and trace certain prescription drugs as they are
distributed in the USA. The objective is to enhance the FDA’s
ability to help protect consumers from exposure to drugs that may
be counterfeit, stolen, contaminated, or otherwise harmful, and
improve detection and removal of potentially dangerous drugs from
the drug supply chain.
Although for medical devices a Unique Device Identification
System is being implemented, that identification system serves
various purposes, including providing a standardised identifier
that will allow manufacturers, distributors and healthcare
facilities to manage medical device recalls more effectively, and
providing a foundation for a global, secure distribution chain,
helping to address counterfeiting and diversion.
The FDA’s Office of Criminal Investigation (OCI) has primary
responsibility for policing drug and medical device counterfeiting
and diversion, and at times companies will approach the OCI and
other law enforcement bodies to seek an investigation and
enforcement action.
The FDA and Customs and Border Protection work together to
identify and detain counterfeit medical products, and it is
possible to work with those agencies to seek enhanced surveillance
with respect to potential importation of such products. The FDA has
extensive powers to stop products at the border if they are
suspected of being adulterated or misbranded. In addition,
companies may file actions seeking an investigation under Section
337 of the Tariff Act with respect to unfair acts in the
importation of articles, although such actions may fail if
positioned as an attempt to enforce the Federal Food, Drug, and
Cosmetic Act (FD&C Act) privately.
4. Manufacturing of Pharmaceutical and Medical
Devices
In general, manufacturing plants are not subject to a separate
authorisation from the related product approvals, although they
must be registered with the FDA (and the products produced at the
facility must be listed as associated with the establishment).
Moreover, in most cases, the FDA will conduct a pre-approval
inspection of the facility before approving a drug or device, and
such establishments are also subject to both routine (typically
every two years) and for-cause (eg, in response to a product defect
and recall) inspections.
5. Distribution of Pharmaceutical and Medical
Devices
In general, wholesale activities are subject to licensure
requirements at the state level and registration as distributors at
the federal level. The requirements and length of such licences
vary by state.
The FDA may inspect any facility holding drugs for shipments,
and state inspection activities and fees vary greatly. Significant
additional requirements administered by the Drug Enforcement
Administration and states apply to wholesale trade in controlled
substances.
The authorisation to trade in pharmaceuticals varies greatly by
state, but most pharmaceutical distributors must hold a state
licence. Such requirements often do not apply to entities that are
not physically handling drug products.
Drugs may be either prescription (as defined under state law,
generally subject to prescription by a designated healthcare
practitioner and dispensing by a licensed pharmacist), or over the
counter (permitting sale without intervention by a healthcare
practitioner or pharmacist). Certain products (pseudoephedrine) are
required to be kept behind the pharmacy counter due to specific
statutory requirements, and the FDA is exploring methods for
expanding direct availability of products with pharmacist-only
involvement, such as via use of mobile apps and kiosks in
pharmacies permitting education and diagnostic screening.
6. Importation and Exportation of Pharmaceuticals and
Medical Devices
The FD&C Act and general import and export administration
laws govern the import/export of pharmaceuticals and medical
devices. In general, imported medicines and medical devices must be
subject to an approval or clearance, if applicable, in the USA.
Only the original manufacturer of a drug may reimport a drug
product back into the United States, subject to limited programmes
to demonstrate that the importation of certain drugs can be
accomplished in an attempt to reduce prices, which may nor may not
proceed in the coming years. The importation of even an identical
drug produced at a facility that is not inspected in the course of
the US approval would be considered unlawful. Limited exceptions
are permitted for individuals to engage in personal, physical
importation of foreign products for their own use based upon a
prescription from a healthcare professional and a lack of
alternatives in the USA.
At the border, the primary regulators are the FDA, administering
the FD&C Act for potential violations, and US Customers and
Border Protection, administering the broad array of US laws
governing customs matters. Other agencies, such as the Department
of Commerce and Department of Agriculture, may have
responsibilities as well, depending on the nature of the imported
article.
Importers of record may be designated by the manufacturer or
distributor, and they have specific responsibilities. A US importer
of record (ie, the owner, purchaser, or licensed customs broker
designated by the owner, purchaser, or consignee) files entry
documents for the goods with the port director at the goods’
port of entry. It is the importer of record’s responsibility to
arrange for the examination and release of the goods. Initial
importers may also be responsible for registration and listing
requirements. Customs requires the importer of record to file an
importation bond, typically, at least equal to three times the
invoice value of the goods.
A drug or medical device must be cleared or approved (and the
product properly listed in association with a registered
establishment), or the subject of an active IND or IDE, in order to
be lawfully imported. Exceptions are made for importation of a very
limited amount of a product for personal use, and the FDA will work
with potential importers in certain situations (eg, compassionate
use, short supply) to expedite satisfaction of regulatory
requirements.
Upon entry into the USA, declarations and information must
utilise the Customs Harmonized Tariff Schedule codes according to
the Harmonized Tariff Schedule of the US (HTSUS), and FDA product
codes. Such declarations are subject to specific regulations issued
by Customs and the FDA. A failure to classify a product properly
may result in an improper payment of Customs duties, and associated
penalties.
The USA is a member of the World Trade Organization and has
free-trade agreements in effect with 20 countries. Some are re
bilateral agreements, but others are multi-lateral in nature. The
USA is also a party to Trade and Investment Framework Agreements
that provide frameworks for governments to discuss and resolve
trade and investment issues at an early stage, as well as bilateral
Investment Treaties to help protect private investment, develop
market-oriented policies in partner countries, and promote US
exports. The US FDA is also a party to various memoranda of
understanding and mutual recognition agreements to facilitate
global discussions and risk assessments with respect to, for
example, inspections.
7. Pharmaceutical and Medical Device Pricing and
Reimbursement
The USA has little in the way of price controls for
pharmaceutical products and medical devices. Therefore, in most
cases, the manufacturer of a product sets the initial price and
adjusts prices (including rebates and other price concessions) over
time in response to market conditions. However, there are a few
federal laws that cap pharmaceutical prices to certain purchasers
or require minimum rebate levels:
- subject to ongoing litigation over the scope and
terms of the programme, manufacturers sell their outpatient drugs
to “covered entities” (generally, certain clinics and
hospitals thought to serve safety-net functions) at or below a
statutorily set ceiling price under the section 340B drug-discount
programme; - manufacturers must sell brand name drugs to four
federal agencies (the Department of Veterans’ Affairs, the
Department of Defense, the Public Health Service and the Coast
Guard) at or below a “federal ceiling price” determined
by a statutory formula; and - manufacturers must pay a rebate set by a statutory
formula on each unit of their outpatient drugs paid for by the
Medicaid programme. This is not literally a
“price-control” programme because it only controls the
rebate paid to Medicaid after the drug has been dispensed or
administered – the price that Medicaid pays up front to the
dispensing pharmacy or to a physician’s office or clinic that
administers a drug is not affected by the Medicaid rebate
programme.
The price level of a pharmaceutical or medical device does not
depend on the prices for the same product in other countries.
Programmes developed in the previous Administration that would
incorporate international reference pricing have now been abandoned
in favour of other approaches.
The largest healthcare programme in the United States today is
the Medicare programme, which provides healthcare coverage for
people who are 65 and older, disabled (for two years or more), or
have end-stage renal disease. Medicare accounts for roughly 20% of
US health spending. Most pharmaceutical products are eligible for
some form of Medicare coverage, either through:
- Part B (Medicare’s traditional outpatient
benefit, which covers a small but important set of drugs, such as
physician-administered drugs); - Part D (the new Medicare drug benefit that started in
2006, which provides broad coverage for pharmacy-dispensed oral
drugs); or - Part A (Medicare’s inpatient benefit, which
covers drugs furnished as part of covered inpatient hospital stays
and in certain other inpatient settings).
The second-largest healthcare programme today – accounting
for roughly 17% of US health spending – is the Medicaid
programme, which is a joint federal-state programme providing
coverage for certain low-income individuals (with the specific
eligibility criteria varying by state). Medicaid is run chiefly by
states, with federal government oversight, and state Medicaid
programmes generally provide broad coverage for prescription drugs.
Medicaid programmes have sometimes imposed coverage restrictions on
high-cost drugs that arguably conflict with their statutory
obligations.
The process and evidence that US payors use to make decisions
about pharmaceutical and medical device coverage varies widely by
payor (and is not always entirely transparent). These variations
can include the criteria considered appropriate for evaluation (eg,
whether a product’s cost or cost-effectiveness is taken into
account in coverage decisions), the scientific rigour of the
evidence considered, and the weight placed on the types of evidence
considered, the decision-making body and the processes for making
coverage decisions, and the legal standards that apply to the
coverage decision-making process and the resulting package of
covered products and services. There are several organisations
engaged in developing value-assessment tools of various sorts,
which essentially are tools designed to help payors, healthcare
providers and patients compare certain demonstrated outcomes of
competing pharmaceuticals on a systematic basis and thus reach
conclusions about their value in a more systematic and rigorous way
than is common today.
Pharmacists are paid for dispensing prescriptions by the
patient’s insurer (assuming the patient is insured, and the
product is covered) and the patient. The circumstances in which
pharmacists may dispense a substitute for the prescribed product
without obtaining the prescriber’s authorisation are governed
by state law. State laws on this issue can vary, but generally they
permit pharmacists to substitute a product approved by the FDA as a
generic equivalent for the prescribed product (unless the
prescription specifically states “dispense as written” or
a similar phrase indicating no substitution).
Over the past several years, the standards for permitting
pharmacists to substitute a “biosimilar” product for a
prescribed biological have been a topic of considerable debate. The
provisions of these laws vary, but often they permit biosimilar
pharmacy-level substitution only if the substituted product has
been designated as “interchangeable” with the prescribed
biological by the FDA, which has not occurred to date, the
prescriber and the patient are both notified of the substitution,
and the pharmacist maintains records of the substitution.
8. Digital Healthcare
The FDA has been very active in providing guidance in this area
and has carved out large categories of apps and platforms from
regulation. The US Food and Drug Administration (FDA) has issued
several guidance documents designed to “encourage
innovation” and “bring efficiency and modernisation”
to the agency’s regulation of digital health products. The
guidance documents address, in part, the important changes made by
Section 3060 of the 21st Century Cures Act (Cures Act) to the
medical device provisions of the FD&C Act that expressly
excluded from the definition of medical device five distinct
categories of software or health products. The FDA’s extensive
guidance documents in this area include guidance on Clinical and
Patient Decision Support software, regulation of software as a
medical device (SaMD), and general wellness products, which
establishes common principles for regulators to use in evaluating
the safety, effectiveness, and performance of SaMD. The FDA has
also issued a Discussion Paper on the regulation of SaMD
incorporating artificial intelligence.
The FDA does not regulate the practice of medicine, and the
Agency generally defers to the states to determine what is a valid
physician-patient relationship and prescription. Although
telemedicine has expanded enormously in the US due to the pandemic,
and more and more physician consultations are being provided online
via chat-based or video examinations, the regulation of such
activities varies by state. Various laws govern issues such as the
corporate practice of medicine, minimum rules for a genuine patient
relationship, cross-border prescribing and lab orders, privacy, and
payments and referrals to telemedicine physicians. The availability
of electronic prescribing also varies by state, although states
generally permit online dispensing of approved drug and medical
device products pursuant to valid prescriptions.
Medicinal and medical device products may generally be promoted
online, on company websites, and via social media. However, such
media present special challenges to ensure that the promotion is
fairly balanced, truthful and non-misleading, transparent as to the
company’s involvement, and adequately provides safety
information in particular. The FDA has developed several guidance
documents in this area to provide information to a company
regarding when the Agency considers user-generated information on a
company’s webpage or social media to be promotional (largely
based on the level of control over the site and placement of
information) and how to convey information properly in a
character-limited social media environment. Additional rules apply
to online marketing practices, such as the FDA and FTC requirements
pertaining to endorsements and testimonials in online
promotion.
Electronic prescribing of drug products is governed by state
laws and Board of Pharmacy rules. Most states do permit some form
of electronic prescribing, although the specific rules (such as for
specifying use of the brand-name drug, etc) vary by state. Special
rules may apply to interstate prescribing, particularly with
respect to controlled substances, and licensure in multiple states
may be required where reciprocity in licensure recognition is not
provided.
Online sales of prescription drug and device products are
permitted if there is otherwise a valid prescription for the
product and the pharmacy is duly licensed in the states to which
the products are shipped. Special rules apply to certain controlled
substances. To the extent that prescribing of the drug or device
also occurs online, the prescriber must satisfy state requirements
pertaining to valid physician-patient relationships and
telemedicine-based prescribing. Online sales of drugs into the
United States from ex-US pharmacies, whether or not pursuant to a
valid prescription, are generally prohibited.
In addition to FDA rules, addressed previously, regarding
digital tools that convey health records and images, there are many
other aspects to the regulation of electronic health records in the
US. In particular, the HHS Office of the Co-ordinator for Health
Information Technology (ONC) is responsible for implementing
statutory provisions relating to advancing inter-operability,
clarifying the Health Insurance Portability and Accountability Act
(HIPAA) privacy rules, prohibiting information-blocking, and
enhancing the usability, accessibility, and privacy and security of
health IT. The Health Information Technology for Economic and
Clinical Health (HITECH) Act of 2009 provided the HHS with the
authority to establish programmes to improve healthcare quality,
safety, and efficiency through the promotion of health IT,
including electronic health records and private and secure
electronic health information exchange.
9. Patents Relating to Pharmaceuticals and Medical
Devices
The statutory framework for US patent law is generally set out
in United States Code Title 35. The Leahy-Smith America Invents Act
(AIA) effected sweeping changes to US patent law; one of the most
significant of these changes was to bring the USA largely into
compliance with the rest of the world with respect to prior art
determinations. Pre-AIA, the USA was considered a “first
inventor” jurisdiction (ie, the first person to invent the
invention was entitled to the patent); post-AIA, the USA is a
“first-inventor-to-file” jurisdiction approaching the
“first-to-file” methodology employed virtually everywhere
else in the world.
As explained in further detail below, in the USA, patent
protection and certain regulatory exclusivities may share certain
traits but are distinct. The Drug Price Competition and Patent Term
Restoration Act, commonly known as the Hatch-Waxman Act, amended
the FD&C Act and affected the government’s regulation of
generic drugs. Hatch-Waxman provides for both brand product
exclusivities as well as 180-day exclusivity to companies that are
the “first-to-file” an ANDA against branded drug
patent-holders. This regulatory exclusivity is in addition to the
patent term of patents claiming the branded drug and a statutory,
30-month stay of approval permitted in the event of patient
litigation.
Similarly, the Biologics Price Competition and Innovation Act of
2009 (BPCIA) amended the Public Health Service Act to create an
abbreviated licensure pathway for biological products that are
demonstrated to be “biosimilar” to or
“interchangeable” with an FDA-licensed biological
product.
To be patentable under US law, an invention must be: (i)
patentable subject-matter, (ii) novel, and (iii) not obvious.
Patentable subject-matter includes “any new and useful
process, machine, manufacture, or composition of matter” (35
U.S.C. §101). Novelty requires that the invention has not
previously been “patented, described in a printed publication,
or in public use, on sale, or otherwise available to the public
before the effective filing date of the claimed invention” (35
U.S.C. §102). Finally, an invention must not be obvious
– ie, it cannot be the case that “the differences
between the claimed invention and the prior art are such that the
claimed invention as a whole would have been obvious before the
effective filing date of the claimed invention to a person having
ordinary skill in the art to which the claimed invention
pertains” (35 U.S.C. §103).
In addition to these requirements, a patent must “contain a
written description of the invention, and of the manner and process
of making and using it, in such full, clear, concise, and exact
terms as to enable any person skilled in the art to which it
pertains, or with which it is most nearly connected, to make and
use the same, and shall set forth the best mode contemplated by the
inventor or joint inventor of carrying out the invention” (35
U.S.C. §112).
There are no requirements specific to pharmaceutical products or
medical devices, but various claim-drafting structures and
statutory requirements are commonly at issue in cases involving
pharmaceuticals or medical devices.
In the wake of two 2012 US Supreme Court decisions regarding
what constitutes patentable subject-matter, companies have sought
to distinguish their inventions from laws of nature and
unpatentable phenomena through narrower claim drafting. The case
law in this area is evolving. As of the beginning of 2022,
method-of-treatment claims involving treatment steps are
patent-eligible even if they also recite diagnostic steps.
Nonetheless, method-of-diagnostic claims remain patent-ineligible,
while certain method-of-preparation claims have been held
patent-eligible.
Patent protection is available for new uses of known compounds,
processes, manufactures, etc, that satisfy the general requirements
for patentability (including novelty and non-obviousness). As
previously noted, claims may be directed to “methods of
treatment”.
A new dosage regime may be patentable if it satisfies the
requirements for patentability; however, such claims are often
subject to obviousness challenges.
A claim could be directed to a method of treating a patient
suffering from new disease X by administering an effective amount
of known compound Y to the patient. A claim could also be directed
to a method of treating a selected patient having disease X by
administering compound Y at dose Z to the patient, wherein the
selected patient is tested positive for a biomarker.
Direct or indirect infringers as well as inducers of
infringement may be sued, although induced infringement can be
found only when one “party” performs every step of a
patent. In Limelight Networks Inc v Akamai Technologies Inc et al,
the Supreme Court held that induced infringement can be found only
when one party performs every step of a patent.
35 US Code §§ 154 and 156 address certain adjustments
and extensions of patent term, with Section 156 being particularly
applicable to drugs and biologics. Certain medical devices may also
be eligible for patent-term extension; however, such devices must
be reviewed and approved via pre-market approval. The FDA assists
the United States Patent and Trademark Office (USPTO) in
determining a product’s eligibility for patent-term restoration
and provides information to the USPTO regarding a product’s
regulatory review period. The USPTO is responsible for determining
the period of extension, subject to statutory requirements.
A third party may file a due diligence petition challenging the
FDA’s regulatory review period determination by alleging that
an applicant for patent-term restoration did not act with due
diligence in seeking FDA approval of the product during the
regulatory review period.
Infringement may occur if the defendant has made, used, sold,
offered to sell or imported an infringing invention or its
equivalent. A generic applicant may file an ANDA, which allows that
applicant to rely on the safety and efficacy studies supplied by
the brand name manufacturer if the generic manufacturer shows that
its generic product contains the same active ingredient as, and is
bio-equivalent to, the brand-name drug listed in the Approved Drug
Products with Therapeutic Equivalence Evaluations publication,
commonly known as the “Orange Book”. In doing so, the
generic applicant must make one of four certifications with respect
to any patents associated with the drug. The fourth is that the
“patent is invalid or will not be infringed by the
manufacture, use, or sale of the new drug for which the application
is submitted” (21 U.S.C. §355(j)(2)(A)(vii)). Such a
“paragraph IV” certification is deemed a constructive act
of infringement, and the patent-holder then has 45 days to file an
infringement lawsuit against the ANDA applicant. If such a lawsuit
is filed, the FDA generally may not grant final approval of the
ANDA for 30 months after the filing date or until the ANDA filer
prevails in litigation. If patent validity and infringement remain
unresolved after the 30-month stay, the FDA may approve the
ANDA.
The BPCIA provides a conceptually similar (though procedurally
very different) framework by which the filing of a biosimilar
application by an applicant is an artificial act of infringement
giving rise to a statutorily prescribed process governing
subsequent patent-infringement litigation and biosimilar regulatory
approval. A BLA sponsor is required to provide certain patent
information regarding the reference product to FDA within 30 days
of when such information is provided to the biosimilar applicant as
a part of the “patent dance.” The FDA is then required to
include this patent information when it updates the Purple Book
every 30 days. There is no equivalent statute and regime for
medical devices.
For patent infringement, the threat of infringement can form the
basis of a declaratory judgment action, which can examine the
validity of patents and whether the action constitutes
infringement. Because this action is brought by the alleged
infringer, the alleged infringer can select the venue for the case,
which can have great strategic value in US patent litigation.
However, because many patent-owners desire to avoid a declaratory
judgment action, notice letters and cease-and-desist letters are
not as commonly used as in the past, and patent-litigation suits
are often filed before the alleged infringer could claim that the
threat of infringement exists.
Under 35 U.S.C. § 271(e)(1), it is not an act of
infringement to make, use, offer to sell or sell within the USA or
import into the USA a patented invention “solely for uses
reasonably related to the development and submission of information
under a federal law which regulates the manufacture, use, or sale
of drugs or veterinary biological products”. In Merck KGaA v
Integra Lifesciences I, Ltd, the US Supreme Court held that the
statute exempts from infringement all uses of compounds that are
reasonably related to submission of information to the government
under any law regulating the manufacture, use or distribution of
drugs. This safe harbour continues to be narrowed in recent
District Court decisions. For example, in an early 2022 decision,
the District Court of Delaware excluded the use of patented host
cells to produce gene therapy product from safe-harbour protection,
reasoning that the patented host cells are merely tools used in the
preparation of the product to be approved.
Compulsory licences are available only in very specific
situations, and generally not under patent law. For example, the US
National Institutes of Health may, under certain circumstances,
threaten to issue a compulsory licence if a licensee has failed to
take effective steps to pursue the government-licensed invention or
in certain scenarios involving public health need, but has never
done so.
Typically, the patent-owner brings the suit alleging patent
infringement. Depending on the wording of the licence agreement, an
exclusive licensee may also have standing to enforce the licensed
patent.
Remedies may include a temporary or permanent injunction,
destruction of infringing articles, the award of damages (including
the infringer’s profits) and, in certain limited circumstances,
attorneys’ fees.
Patent litigation is much like other civil litigation in the
federal district courts in the USA (including a very high
settlement rate). First, the plaintiff files a complaint alleging
infringement of one or more US patents. Then, the plaintiff serves
the complaint on the defendant, who typically answers by alleging
non-infringement and asserting defences such as patent invalidity
and other equitable defences. Common invalidity defences include
invalidity based on ineligible patentable subject-matter,
combination of prior art references, and double patenting. The
defendant may also assert a counterclaim, such as a declaratory
judgment of non-infringement. The defendant may also file a motion
to dismiss for improper venue in view of TC Heartland LLC v Kraft
Food Group Brands LLC and Valeant Pharmaceuticals North America LLC
v Mylan Pharmaceuticals Inc. A case-management conference regarding
scheduling, among other matters, is required. Certain district
courts may also have local patent rules that set forth additional
requirements. Next, fact and expert discovery are conducted, which
typically includes depositions, document requests, interrogatories,
expert reports and the like. Often, a claim construction hearing
(also known as a Markman hearing) occurs, in which the parties ask
the court to interpret certain terms of claims in the patent(s) at
issue. The parties also typically file various motions, such as a
summary judgment motion of patent invalidity.
If the case proceeds, pre-trial briefing and then trial (by
judge or jury) and post-trial practice occur. A jury may render an
opinion as to whether the patent is invalid. An appeal may be taken
to the Federal Circuit and then to the Supreme Court if the Supreme
Court grants a petition for certiorari.
In addition to raising invalidity as a defence in court, a
potential infringer (or any third party) can challenge the validity
of a patent in proceedings before the Patent Trial and Appeal Board
(PTAB). A “post-grant review” permits a person who is not
the owner of a patent to challenge a patent’s validity on any
ground that could be raised under §282(b)(2) or (3) no later
than nine months after the date of the grant of the patent (35
U.S.C. §321). An “inter partes review” (IPR) may be
requested by a person who is not the owner of a patent after the
later of nine months after the grant of the patent or the
termination of a post-grant review, if one has been instituted (35
U.S.C. §311(a), (c)), but may not be filed more than one year
after the complainant has been served with a complaint alleging
infringement. The validity of a patent subject to an IPR can only
be challenged on a ground that could be raised under
§§102 or 103, and only on the basis of prior art
consisting of patents or printed publications (35 U.S.C.
§311(b)).
In SAS Institute Inc v Iancu, the Supreme Court did away with
the PTAB’s prior practice of “partial institutions”
of IPR challenges – going forward, the PTAB must decide the
validity of all challenged claims when it institutes review of a
patent. In Arthrex v Smith & Nephew, Inc, the Supreme Court
agreed with the Federal Circuit ruling that the statutory scheme
for appointing PTAB Administrative Patent Judges (APJs) violated
the Appointments Clause of the US Constitution but saved the IPR
proceedings by providing the Director authority to review any final
decisions unilaterally. The USPTO has since implemented an interim
director review process to rehear cases.
As previously described, an ANDA filer must make one of four
certifications with respect to any patents associated with the
drug. It is possible that, after making a Paragraph IV
certification, the patent-holder may elect not to file an
infringement lawsuit. If the patent-holder does not bring suit, the
FDA may approve the ANDA. An ANDA filer may not file a declaratory
judgment suit during the 45-day period in which the patent-holder
may elect to bring a suit. If the patent-holder files suit against
the generic applicant within the 45-day period, the generic may
file a declaratory judgment counterclaim, as long as an actual case
or controversy continues to exist. A generic drug-maker may be able
to request correction or delisting of a patent claim from the
Orange Book as part of a counterclaim or non-infringement
declaratory judgment action.
An ANDA filer and the patent-holder may also reach a licensing
or other agreement, although such “reverse payment”
settlements can be subject to antitrust scrutiny.
The phrase “clearing the way” is not a term of art in
US patent law, but a generic drug manufacturer may launch “at
risk” if patent validity and infringement remain unresolved
after the 30-month stay and the FDA approves its ANDA. In such
cases, the generic may be liable for damages if the
patent(s)-in-suit are ultimately held to be valid and
infringed.
An NDA includes patent information for listing in the FDA Orange
Book and the FDA considers patent listing as part of the approval
process for brand drug applications. If a patent that covers the
drug exists and is listed, marketing approval will not be granted
to a generic until the patent has expired or is found to be invalid
or not infringed.
10. IP Other than Patents
Trade-mark and trade-dress owners can sue manufacturers and
sellers of counterfeit pharmaceuticals and medical devices for
infringement. Additionally, a general exclusion order can be sought
in the International Trade Commission (ITC), which can help to
combat counterfeits that are being imported into the USA. Under the
general exclusion order, any such infringing articles would be
seized at the border by customs.
The possession, trafficking, and purchasing of counterfeit
pharmaceuticals and medical devices can also be criminally
actionable on the federal or state level.
Other than general trade-mark requirements, the controls on
trade marks are usually regulatory in nature. For example, trade
marks that could be deemed claims must not be false or misleading,
ie, may not misbrand the product. In addition for prescription
drugs, the trade-marked brand name – known as the
“proprietary name” – is subject to approval by the
FDA as part of the drug and biologic approval process. This is done
to ensure that it does not misbrand or create a risk of medical
errors.
Trade-dress protection is available for colour, shape (including
pill shape) A “US adopted name” (USAN), which is a
non-proprietary name reviewed by the World Health Organization, is
necessary to market a pharmaceutical in the USA. The USPTO reviews
and registers federal trade marks (pursuant to the Lanham Act). In
doing so, the USPTO considers the likelihood of confusion with
other marks and whether the mark is distinctive, along with whether
the mark is a surname, likeness, geographically descriptive of the
origin of the goods, disparaging or offensive, a foreign term that
translates to a descriptive or generic term or is purely
ornamental. The US Trademark Trial and Appeal Board (TTAB) hears
petitions related to the status of trade marks (including their
cancellation). The TTAB may cancel a mark if it finds that a
registrant was using the mark to misrepresent the source of the
corresponding goods, or differences with prior marks do not offset
the likelihood of confusion.
The FDA has authority under the FD&C Act to determine
whether a pharmaceutical is “misbranded” – ie,
“its labelling is false or misleading in any particular”
(21 U.S.C. § 352(a)), which can be due to the proprietary name
of the product, which the FDA must approve as part of the drug
application.
The Lanham Act and the Tariff Act may provide a basis to bring
claims in a federal district court against parallel importers for
damages and injunctive relief. Any resulting injunction would be
enforced through the federal courts rather than the Customs and
Border Patrol. Sometimes, the district court action is stayed
pending the outcome of an International Trade Commission (ITC)
proceeding.
Parallel importation may violate Section 337 of the Tariff Act,
which grants the ITC jurisdiction to investigate claims of
trade-mark infringement. The ITC cannot award damages but can issue
exclusion orders that are enforced by the Customs and Border
Patrol. The ITC can bar the importation of items that infringe US
trade marks, copyrights or patents.
Customs and Border Patrol works with the FDA to prevent parallel
import. Trade mark-owners typically contact the FDA and then the
FDA contacts the Customs and Border Patrol.
and packaging that identifies the source of the product and
otherwise distinguishes the product but is not purely functional or
likely to be confused with the trade dress of another product.
For pharmaceuticals, under the Hatch-Waxman Act described
previously, there is a period of data exclusivity of five years
from the date of approval of data exclusivity for new chemical
entities, and a period of data exclusivity of three years from the
date of approval for supplemental applications, incorporating
clinical studies sponsored by the applicant that are essential to
the approval. The first approved biologic may be subject to 12
years of exclusivity, but subsequent supplemental applications for
the product will not accrue additional exclusivity without
clinically meaningful changes to the structure of the product. Such
periods can run irrespective of, but concurrent with, any patent
term associated with the drug or treatment using the drug.
Other exclusivities are available for designated orphan drugs
(seven years of market exclusivity), designated Qualified
Infectious Disease Products (five years of additive exclusivity),
180 days (first generic applicant filing a patent certification),
and satisfying paediatric study requests (six months of additive
exclusivity).
There is no exclusivity framework for medical devices, and
510(k)-cleared devices may be designated as predicate devices
immediately upon clearance. However, subsequent applicants for a
class III device generally may not rely on data in PMA-approved
medical device products.
11. COVID-19 and Life Sciences
The FDA relaxed various regulatory requirements relating to
COVID-19 countermeasures, as well as FDA-regulated product
generally. Many of these policies were intended to provide some
flexibility, given the limitations of virtual interactions and
similar constraints. A complete directory of the various FDA
policies in this area can be found on the FDA website.
The FDA issued and has periodically updated an extensive
guidance entitled Conduct of Clinical Trials of Medical Products
During the COVID-19 Public Health Emergency, found at https://www.fda.gov/media/136238/download.
After the issuance of a declaration of a national emergency, the
FDA has utilised existing authority to permit unapproved medical
products or approved medical products for unapproved uses to be
manufactured and distributed under specific conditions and
labelling during the period of a declared pandemic or other health
emergency. The FDA has issued hundreds of such Emergency Use
Authorizations (EUAs) for COVID-19-related therapeutics, devices,
diagnostics, and vaccines. These EUAs are only in effect during the
period specified in the emergency declaration and an additional
time-period specified for ensuring proper disposition of the
product. An EUA does not substitute for (and is not intended to
delay) applications for actual clearance or approval, and the
agency can revoke or terminate an EUA at any time.
The FDA does not provide separate certifications for
manufacturing, but rather inspects facilities both prior to product
approval/licensure and then on a periodic or for-cause basis. While
now actively inspecting, the FDA has faced considerable
difficulties in accomplishing inspections during the COVID-19
emergencies and had been relying largely on record reviews and
other measures where inspections were deemed too risky, given the
pandemic. This has resulted in delays in approval of products and
supplements in certain cases, and a large backlog.
The Trump Administration had imposed restrictions on the export
of masks and other protective equipment, which was modified over
time due to a significant backlash, and also prioritised US
citizens in the distribution of US-made vaccines. The Biden
Administration modified those policies to focus on ensuring an
adequate US supply of vaccines and diagnostics, with a selective
use of the Defense Production Act, which puts the US government at
the “front of the line” as a customer. More generally,
there is an ongoing policy debate, subject to some legislation to
date, about ensuring a more secure and domestic supply chain for
products needed during an emergency.
There has been an extensive relaxation of limitations on virtual
and telemedicine interactions during the pandemic, as well as
policies fostering the use of digital devices to address public
health needs during the pandemic. See the FDA website for further
details.
Under the Bayh-Dole Act, the US government has very limited
“march-in” rights with respect to intellectual property
licensed from the government. To date, despite some controversies
over the use of government intellectual property and pressures due
to COVID-19 product pricing, this authority has not been utilised.
Unrelated to COVID-19, at this time, the National Institutes of
Health is reportedly considering another petition for such a
“march-in” on government-licensed patents for a drug
product.
The 2005 Public Readiness and Emergency Preparedness (PREP) Act,
which has been invoked in a declaration in the case of COVID-19,
provides immunity for the manufacture, testing, development,
distribution, administration and use of specific covered
counter-measures against threats such as COVID-19. Individuals who
suffer injuries from administration or use of products covered by
the PREP Act’s immunity provisions may seek redress from the
Countermeasures Injury Compensation Program (CICP), which is
administered by the Health Resources and Services Administration.
Immunity protections are broad, and contrary state and local laws
and rulings are widely pre-empted; practically, the only time a
manufacturer of a COVID-19 counter-measure would not benefit from
PREP Act immunity would be if a suit were brought in the US
District Court for the District of Columbia by a plaintiff who has
suffered a serious injury or death, has rejected a payment from the
fund (which is not currently funded for COVID-19-related claims),
and has demonstrated by clear and convincing evidence that the
manufacturer engaged in “wilful misconduct,” as defined
in the statute.
Existing provisions have been used and new ones introduced to
allow the requisition or conversion of manufacturing resources due
to COVID-19. The Defense Production Act (DPA) is the primary source
of Presidential authorities to expedite and expand the supply of
materials and services from the US industrial base, including for
certain emergency preparedness activities, and protection or
restoration of critical infrastructure. Under the DPA, the
government can impose “rated” or “priority
orders,” pursuant to which the President may compel companies
to accept and prioritise contracts for supplies critical to
national defence. These orders also flow down the recipient’s
supply chain, such that subcontractors or suppliers must also
prioritise the rated order over competing obligations. The
government can also impose “allocation orders” to compel
industry, on a proportional basis, to allocate resources, for
example by reserving manufacturing capability or supplies in
anticipation of a rated order or allocating manufacturing
capability to a particular purpose. Failure to comply with a DPA
order carries a criminal penalty. These authorities have been
invoked with respect to certain diagnostic, personal protection
equipment, and vaccine production capacity in the US. In other
cases, the US government has funded the development of additional
production capacity, such as for vaccine vials.
As previously noted, during the pandemic the government has
utilised a wide variety of public procurement and funding
strategies for needed medical counter-measures, some of them
unprecedented and based upon emergency authorities.
Originally published by Chambers and Partners
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
link
