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Lapse in Government Funding Continues to Affect FDA, USDA

As previously covered on this blog, without either a fiscal year 2019 appropriation or a Continuing Resolution, a partial government shutdown, which began on December 22, 2018, has continued to impact both the U.S. Department of Agriculture and the U.S. Food and Drug Administration. As of the time of this blog’s publication, the government has been partially shut down for over 20 days.

Most recently, in a Twitter thread, FDA Commissioner Scott Gottlieb noted that the agency stopped a limited number of domestic food inspections because of the shutdown, but the agency is, “taking steps to expand the scope of food safety surveillance inspections we’re doing during the shutdown to make sure we continue inspecting high risk food facilities.” Several commodities are deemed “high risk” and include: seafood, soft cheeses, fresh fruits and vegetables, spices, shell eggs, infant formula and medical foods. Gottlieb noted that the mechanism to expand the domestic inspections will be in place beginning the week of January 14.

As for the USDA, Senator Debbie Stabenow submitted a letter to the Secretary of Agriculture on January 9 requesting information on the impact that the shutdown is having on the agency, including the delay in implementing the recently-passed Farm Bill. As of the time of this publication, the Secretary has yet to respond. USDA put out a press release at the end of 2018 regarding activities that would be affected by the shutdown, but the department has not updated it since that time.

This post was contributed by Food and Drug Law at Keller and Heckman.

For more legal news on the Food and Drug Administration check out the National Law Review’s Biotech Food and Drug Type of law page.

FDA 2018 Year in Review

The US Food and Drug Administration’s (FDA’s) 2018 regulatory agenda spurred significant activity throughout the year, including implementation of several initiatives and mandates required by the 21st Century Cures Act (Cures Act). FDA continues to take measures to reduce regulatory barriers to market entry for innovative products, and it is leveraging traditional administrative processes, such as the citizen petition process, to advance its policy goals, including increasing generic competition. FDA initiated targeted enforcement actions in areas of traditional focus, such as good manufacturing practice (GMP) compliance, but it also signaled renewed focus on tobacco advertising, unapproved stem cell procedures, and compounding. FDA also issued important guidance documents throughout 2018.

This Special Report reviews notable actions that shaped FDA-regulated industries and products last year and offers insight into the agency’s 2019 priorities and expected actions.

The Year Ahead

FDA’s activities and initiatives in 2018 suggest that 2019 will bring greater focus on data strategy; patient perspectives; and innovative ways to leverage data to influence product development, risk management and regulatory decisions. The agency’s focus on data may lead to greater emphasis and renewed focus on data integrity and data quality issues throughout the product lifecycle, from clinical research to manufacturing. The continued focus on novel products and new expedited review processes for digital health, regenerative therapies and novel devices may mean fewer barriers to market entry for novel products, but it may also mean more significant post-market data collection and surveillance requirements. Policy and regulatory initiatives on cybersecurity and interoperability suggest the possibility of increased enforcement and scrutiny of these issues in standard quality and cGMP inspections. While warning letters and other FDA enforcement actions remain static, the agency appears to be leveraging procedural and administrative processes to influence broader policy objectives in areas such as drug pricing and generic competition. Life sciences companies may benefit from greater flexibility regarding the use of data from nontraditional sources to drive product development, advertising and promotion and quality. They may also benefit from the availability of a number of means to engage in pre-development and pre-submission discussions with the agency.

This post was written by Vernessa T. Pollard, Veleka Peeples-Dyer, T. Reed Stephens, Michael W. Ryan and Anisa Mohanty of McDermott Will & Emery.

Read more Legal News on the National Law Review’s Biotech Type of law page.

Medical Products & FDA: What to Watch for in 2019

Major legislation impacting FDA often accompanies user fee reauthorizations every 5 years. However, Congress has acted to address public health issues between user fee cycles. FDA regulates 20¢ of every U.S. consumer dollar spent on products ranging from heart valves to insulin to breakfast cereal, so there’s always something Congress can do in the realm of FDA’s statutory authorities. Many FDA-related bills are often bipartisan, too, which suggests action despite different parties in power in the House and Senate. Here are a few key medical product issues we’ll be tracking in 2019.

Laboratory Developed Tests (LDTs)

An LDT is a type of in vitro diagnostic test that is designed, manufactured, and used within a single laboratory. In recent years, FDA has attempted to more actively regulate LDTs, claiming they are more complex now than when the agency was granted authority to regulate devices in the 1970s (FDA had, until recently, generally ignored LDTs using a policy known as enforcement discretion). A few years ago, the agency published a proposed approach that caused a stir in Congress and the lab industry and after years of debate Congress seems ready to act on LDTs, which some are now calling In Vitro Clinical Tests (IVCTs). However, New Jersey Democrat Frank Pallone, the likely incoming chairman of the House Energy & Commerce Committee has expressed concern with FDA’s proposed approach to IVCT regulation, especially its heavy reliance on review by accredited persons (i.e., third party review) and pre-certification. FDA’s position was outlined by Commissioner Scott Gottlieb, who in a September 2018 speech stated that FDA envisions reviewing only 10% of IVCTs, 40% would use the pre-certification model, and the remainder would not be subject to FDA premarket review.

Who blinks first? Based on my experience at FDA, the agency is likely to wait for Congress to make the first move largely because FDA went all in by submitting 59 pages of “technical assistance”—essentially a draft bill—to Congress in August 2018. A Democrat-controlled E&C may push for more oversight or a phased-in approach, which is something FDA has resisted. Sure to further complicate discussions is the role of user fees in funding an IVCT regulatory program. Among the questions that need to be answered: how much IVCT oversight will FDA have relative to third parties, how much will that cost, and who’s paying the bill? As a former user fee negotiator for FDA, I can tell you those conversations are not going to be easy.

Digital Health

FDA’s exploration of a new regulatory paradigm for digital health products hit a bump in the road on October 10 when Senators Warren, Murray, and Smith (all Democrats) sent a letter to FDA asking, among other things, what the legal basis is for the digital health pre-cert program. Because FDA does not have the staff capacity or expertise to review all digital health products (including software), part of its solution is to rely on certifications that a product developer has a culture of quality and organizational excellence. FDA also says the current review paradigm is not well-suited to software and similar products that have fast, iterative development cycles. This idea has merit but the details need to be hammered out—likely in statute. And while 2019 is too early to expect legislation, the October 10 letter foreshadows intense scrutiny from HELP Committee Democrats. The agency is still collecting comments on its proposed framework.

Medical Device Cybersecurity

FDA recently made a splash with its cybersecurity playbook and a recently updated premarket cybersecurity guidance. However, while I was at FDA we responded to a lot of requests for technical assistance from both sides of the aisle on legislative language that would: mandate convening stakeholders to recommend guidelines for improving cybersecurity of devices, mandate software bills of materials, or provide basic cybersecurity operational standards for Internet-connected devices, among other ideas. The jury is out on how much any of these ideas would meaningfully improve the nation’s cybersecurity infrastructure at least as it pertains to medical devices. Considering cybersecurity is a hot topic in other contexts (e.g., election security, personal computing), the 116th Congress will likely continue to look for legislative wins in this space and we’ll be watching closely to see what the impacts could be on medical products.

Device Servicing

FDA continues to look for a solution to problematic device servicing and will be holding another public meeting in December 2018. While we’re optimistic FDA will come out of that meeting with a draft policy (the agency said it plans to issue a draft guidance document before October 2019), we see challenges with some of the ideas mentioned in a discussion paper the agency released in October 2018. Even as FDA reviews public comments and publishes guidance, there could be a role for Congress, such as to ensure appropriate oversight of servicing through mandated inspections. We’re looking forward to seeing how interaction between OEMs, servicers, and FDA at the December workshop could influence the draft guidance.

OTC Monograph Reform

As noted in our Lame Duck Preview for health issues, OTC monograph reform legislation passed the House but awaits action in the Senate, where it’s stuck in committee. An OTC monograph is like a recipe for an over-the-counter drug that, once approved by FDA, can be used by any drug manufacturer without FDA pre-approval of the manufacturer’s specific drug. The bill would speed up the regulatory process for OTC monographs by allowing use of administrative orders rather than rulemaking. Both bills authorize FDA to grant exclusivity for the monograph developer, which would protect market access, though the amount of exclusivity differs (18 months in the House bill; 24 months in the Senate bill). Likely incoming House E&C Chairman Pallone is—again—who we’re looking to regarding action on this. Despite voting for the House version, it is well-known that Rep. Pallone has concerns about the exclusivity provision. The OTC monograph process has not changed since 1972 and reform efforts have been brewing for a while; if this does not move in the lame duck, this could be in play in 2019.

Opioids

Congress passed major opioids legislation in September 2018 so while Congress may shift its focus to other issues, we’ll be keeping an eye on how the administration is implementing its mandates. FDA in particular has as full plate with:

Holding a public meeting to address challenges of developing non-addictive medical products for acute or chronic pain;
Issuing new or updating existing guidance documents addressing, among other topics, how FDA considers pain, pain control, or pain management in assessing whether a disease or condition is serious or life-threatening and how FDA may require postmarket studies to assess reductions in effectiveness of a drug that change the drug’s benefit-risk profile;
Issuing prescribing guidelines for the indication-specific treatment of acute pain;
Developing a list of controlled substances to refer to Customs and Border Protection and other import controls; and
Implementing new authority to require unit dose packaging (aka blister packs).

This list is not exhaustive, yet it’s clear FDA will be busy. We’ll be keeping a close eye on administration and congressional actions related to these and other important public health issues in 2019.

ARTICLE BY

Aaron L. Josephson

Preparing for the Repeal of Cook County’s Beverage Tax: Requesting Credits and Refunds

Earlier this fall, the Cook County Board voted to repeal its constitutionally suspect, politically unpopular one cent per ounce sweetened beverage tax (Tax). The short-lived Tax will expire at the end of the County’s fiscal year on November 30, 2017.

Having been tasked with implementing the Tax, the Cook County Department of Revenue (Department) is now charged with unwinding it. Distributors and retailers who have paid the Tax are entitled to credits or refunds on their unsold inventory at month’s end. The Department recently issued guidance on the credit/refund procedure.

Retailers that have paid Tax to their distributors may claim a credit/refund from their distributors for Tax paid on their unsold inventory by completing the Department form entitled “2017 Sweetened Beverage Retailer Inventory Credit Request Form and Schedule A.” Retailers should complete and submit the form to their distributors, not the Department.

Distributors must file a final Tax return with the Department on or before December 20 (Final Return). To the extent a distributor already has refunded or credited Tax to its retailers, the distributor may claim a credit for the amount refunded on the “other deductions” line of its Final Return. Distributors must file the Department’s standard refund application, found on the Department’s website, to claim refunds for amounts refunded or credited to retailers after December 20. The Department has issued a new form (the “Sweetened Beverage Tax Distributor Credit Form Schedule”) to be submitted by distributors to the Department in support of any credit or refund claims. The form requires distributors to identify the retailers to which it has provided credits/refunds and the amounts thereof.

Retailers who self-remit the Tax may take a credit on their Final Return with supporting documentation. In addition, retailers that have unsold inventory as of December 1, on which they previously remitted floor tax, may obtain a refund of the floor tax through the Department’s standard refund procedure.

Practice Notes:

To the extent possible, Taxpayers should take advantage of the opportunity to claim a credit on their Final Returns in order to avoid the time and expense associated with the County’s standard refund procedure.
Since the Tax was repealed, enthusiasm has waned for various Illinois House Bills (HB 4082-84) proposing to limit the authority of localities to impose beverage taxes. It’s difficult to predict whether the bills will be enacted.
However, the State of Michigan has passed legislation, signed into law by Governor Snyder on October 26, 2017, which prohibits municipalities from levying local taxes on food or beverages.

For more legal go to The National Law Review

USDA Withdraws Biotech Regulation Proposal

As previously covered on this blog, on January 19, 2017, the U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) published a proposed rule to update its regulations regarding the importation, interstate movement, and environmental release of certain genetically engineered (GE) organisms in response to advances in genetic engineering and the Agency’s understanding of the plant pest and noxious weed risk posed by genetically engineered organisms. These requirements have not been comprehensively revised since they were established in 1987.
On November 7, 2017, APHIS published a notice in the Federal Register (82 Fed. Reg. 51582) announcing its withdrawal of the January 19^th proposed rule. In withdrawing the proposed rule, APHIS cited stakeholder feedback critical of the proposed revisions. As previously covered on our blog this summer, in comments submitted to APHIS, industry stakeholders applauded the Agency’s proposed rule as underscoring the need to promote innovation in biotechnology and for proposing to ease regulation of gene-edited products. But at the same time, industry called out a number of proposed revisions as improperly expanding USDA’s review process in certain respects which could effectively hamstring developers before they can even begin testing products.
In its November 7^th withdrawal of the proposed rule, APHIS stated that it is committed to exploring “a full range of policy alternatives” and that the Agency will “re-engage with stakeholders to determine the most effective, science-based approach for regulating the products of modern biotechnology while protecting plant health.” Now that APHIS has decided to go back to the drawing board, industry has an opportunity to work with APHIS to develop revised requirements to facilitate a regulatory framework that promotes innovation in biotechnology.

For more Biotech, Food & Drug legal analysis, go to The National Law Review

FDA Issues Final Regulations Easing the Path for Direct-to-Consumer Genetic Testing

New regulations issued on November 7, 2017 by FDA will make it easier for companies to offer certain types of genetic tests directly-to-consumers, without a health-care provider intermediary.

The first regulation finalizes a new medical device classification for “autosomal recessive carrier screening gene mutation detection systems.” This regulation essentially codifies classification already established by FDA in response to a request by 23andMe, and enables other laboratories to offer their DTC tests according to the criteria specified in the classification regulation. These tests may be offered without the need for FDA premarket review.

Similarly, the second regulation finalizes a new medical device classification for DTC “genetic health risk assessment” (GHR) (i.e., predictive) tests. The classification specifies the conditions under which these tests may be marketed, and includes the requirement for a 510(k) premarket notification to FDA. However, in a Federal Register Notice, also issued yesterday, FDA proposes to exempt GHR tests from the 510(k) premarket submission requirement after a lab has successfully obtained FDA clearance of its first GHR assay. Comments to this proposed exemption are being accepted by FDA until January 8.

For more Health Care legal analysis, go to The National Law Review

GM Labeling Update: Ingredient Disclosure Debate

As previously reported on this blog, legislation requiring labeling of genetically modified (GM) foods and food ingredients was signed into law on July 29, 2016. This law directs the U.S. Department of Agriculture (USDA) to develop regulations and standards to create mandatory disclosure requirements for bio-engineered foods by July 2018. On June 28, 2017, USDA’s Agricultural Marketing Service (AMS) posted a list of 30 questions to obtain stakeholder input to facilitate the drafting of mandatory disclosure requirements to implement the National Bioengineered Food Disclosure Law. One of those questions is:
- “Will AMS require disclosure for food that contains highly refined products, such as oils or sugars derived from bioengineered crops?”
USDA has not yet posted the comments it has received, which were due by August 25, 2017; however, several organizations have posted the comments they submitted in response to the questions. Among the organizations supporting disclosure were the Grocery Manufacturers Assn. (GMA), the International Dairy Foods Assn. (IDFA)and the Consumers Union. Noting that excluding highly refined ingredients (HRI) from the scope of the mandatory disclosure standard would result in roughly 80% fewer products being subject to the disclosure requirements under the federal law, GMA wrote, “A clear, simple, and consistent mandatory disclosure standard that includes HRI will assist manufacturers in educating consumers about biotechnology as a safe and beneficial method of plant breeding.”
In contrast, the Information Technology & Innovation Foundation (ITIF) and The Biotechnology Innovation Organization (BIO) are opposed to mandatory disclosure of HRI. ITIF suggested that some refined products do not contain residual DNA sequences and that “[t]here are not analytical methods that would allow such products to be identified as coming from ‘GM’ plants or animals vs. others.”
While USDA develops mandatory disclosure requirements for bio-engineered foods, a number of class action laws suit have been filed suggesting that products containing GM ingredients are falsely labeled as natural. For example, last week, the U.S. Supreme Court refused to hear a bid by Conagra Brands Inc. to avoid a class-action lawsuit concerning cooking oil labeled 100% natural that contains GM ingredients (see S. News). And earlier this month, Frito-Lay North America agreed to not make any non-GMO claims on certain products “unless the claim is certified by an independent third-party certification organization”(see Food Navigator).
We will continue to monitor developments on the National Bioengineered Food Disclosure Standard and report them to you here.

For more Biotech, Food & Drug legal analysis, go to The National Law Review

CNN Investigates Expanding Use of Nuedexta in Nursing Homes

A recent investigation by CNN brought to light the expanding and allegedly inappropriate use of the prescription drug Nuedexta in nursing homes throughout the country. Nuedexta is FDA-approved to treat a rare condition known as pseudobulbar affect (PBA).

What is Pseudobulbar Affect?

Pseudobulbar affect is characterized by sudden and uncontrollable laughing or crying. It is associated with people who have multiple sclerosis (MS) or amyotrophic lateral sclerosis (ALM), known as Lou Gehrig’s disease. Avanir Pharmaceuticals has been aggressively targeting elderly nursing home residents with the drug, the CNN investigation found, although PBA reportedly impacts less than 1 percent of Americans, based on a calculation using the drug maker’s own figures.

What the Investigation Revealed

Nuedexta prescription use in nursing homes is rising at a rapid rate, even though Avanir Pharmaceuticals acknowledges that the drug has not been extensively studied in elderly patients, according to CNN.

CNN found that Avanir Pharmaceutical’s sales force is focused on expanding the drug’s use among elderly patients suffering from dementia and Alzheimer’s disease, coupled with “high-volume prescribing and advocacy efforts by doctors receiving payments from the company.”

Since 2012, more than half of all Nuedexta pills have gone to long-term care facilities, according to data obtained from QuintilesIMS, which tracks pharmaceutical sales. Total sales of Nuedexta reached almost $300 million that year.

In response to requests to be interviewed for the CNN article, Avanir reportedly responded by email with a statement that PBA is often “misunderstood” and that the condition can affect people with dementia and other neurological disorders that are common in nursing home residents.

Nuedexta is approved by the Food and Drug Administration (FDA) to treat anyone with PBA, including those with neurological conditions such as dementia. But geriatric physicians, dementia researchers, and other medical experts reportedly told CNN that PBA is extremely rare in dementia patients.

How Can Nuedexta Impact Nursing Home Residents?

One study of 194 patients with Alzheimer’s disease found that patients taking Nuedexta suffered more than twice as many falls as those patients taking a placebo.

CNN reports that Lon Schneider, director of the University of Southern California’s California Alzheimer’s Disease Center, reviewed information from several hundred reports obtained by CNN through the Freedom of Information Act. Schneider expressed concern about potential interactions between Nuedexta and other medications intended to treat problematic behaviors. These medications may include antipsychotic drugs, antidepressants, and anti-anxiety medication which are often given to nursing home residents to suppress anxiety or aggression that may occur with Alzheimer’s disease and other dementia types.

Why Are Doctors Prescribing Nuedexta to Nursing Home Residents?

According to CNN’s analysis of government data, between 2013 and 2016, Avanir and its parent company, Otsuka, paid almost $14 million to physicians for Nuedexta-related consulting, promotional speaking, and other services. The companies also spent $4.6 million on travel and dining costs. CNN found that in 2015 nearly half the Nuedexta claims filed with Medicare came from doctors who had received money or other perks.

According to the investigation, state regulators have found that doctors may inappropriately diagnose nursing home residents with PBA to justify the use of Nuedexta to treat confusion, agitation, and unruly behavior. Further, doctors may inappropriately diagnose nursing home residents with PBA to justify the use of Nuedexta to treat confusion, agitation, and unruly behavior. A diagnosis of PBA may be used because “off-label” prescriptions written by doctors using Nuedexta to treat patients who have not been diagnosed with PBA would typically not be covered by Medicare.

What Adverse Events Have Been Reported With Nuedexta Use By Nursing Home Patients?

Soon after Nuedexta came on the market, doctors, nurses, and nursing home patients’ family members began filing reports including rashes, dizziness, and falls as well as comas and death. CNN found that Nuedexta was listed as a “suspect” medication in nearly 1,000 adverse event reports received by the FDA. These reports disclosed side effects, drug interactions, and other issues. According to CNN, the FDA declined to comment on adverse events or the approval process for Nuedexta.

For more legal analysis, go to The National Law Review

Worried About Fake News? You Should Really Worry About Fake Drugs

While the concept of “fake news” continues to trigger Twitter followers and grab headlines, the trade in counterfeit drugs is a worldwide problem of significant scale. This article discusses the problem and talks about some things trademark owners are doing to address the public safety issues posed by fake drugs.

The Problem.

Trademark counterfeiting? Most think of fake Rolex watches sold on city street corners or faux designer purses sold in suburban kitchens. While knock-off luxury goods may seem harmless, the economic harm inflicted on legitimate businesses—and the workers they employ—is enormous. The Federal Bureau of Investigation estimates that the dollar value of counterfeit goods sold in the U.S. at $200-250 billion annually. Many of North Carolina’s leading industries, including tobacco, furniture, apparel and pharmaceuticals, are among the most frequent targets of trademark counterfeiting. Also, according to Interpol, trademark counterfeiting often provides for a source of income and reliable import channel for those with other nefarious purposes, such as illegal drug or human trafficking and potentially even terror activities.

In addition to these very negative economic consequences, there is a particular level of harm associated with certain kinds of trademark counterfeiting. Counterfeit goods aren’t subject to the same regulatory standards and safety inspections as items produced by legitimate manufacturers. So, in areas of manufacture where quality control is important, counterfeit products fall short. Consider, for example, the potential harm that could be caused by substandard, bogus automobile tires or airplane parts.

Counterfeit pharmaceutical drugs are clearly an area where public safety concerns are paramount. Counterfeit medicines have been found in all areas of the globe, including the highly regulated U.S. market, and extend to medicines, vaccines, testing and diagnostic equipment, and other medical devices. Both branded and generic pharmaceutical products can be falsified. And sales are not just limited to the black market—such products make their way to hospitals and pharmacies, often through internet sales trade channels.

Lifestyle or “popular” drugs are often counterfeited, and there have been recent increases in cosmetic, weight loss and opioid drugs. However, such drugs are not limited to such trends—counterfeit malaria vaccines, cholesterol medications and cancer treatments can also be found in the U.S. The World Health Organization (WHO) estimates that an average of up to 10% of medicines are counterfeit, and in developing countries, that percentage is considerably higher.

The Center for Medicine in the Public Interest estimates the annual worldwide dollar value of counterfeit pharmaceuticals at $200 billion annually and rising. Sadly, the damage is far greater than lost sales. WHO estimates that approximately 200,000 people die each year as the result of ineffective counterfeit anti-malarial drugs.

Counterfeit medicines also may cause adverse affects or allergic reactions, and they may not effectively treat the ailment for which prescribed. They may promote drug resistant disease strains or contain no active ingredient, the wrong active ingredient, or the incorrect strength (too much or too little) or dosage of the intended ingredient. According to a WHO investigation, approximately 1/3 of such drugs contain no effective ingredient. Given the lack of inspection of counterfeit manufacturing facilities, such products are often produced under non-sterile circumstances, resulting in bacterial or other contamination. Clearly, the ways in which counterfeit drugs can cause serious negative patient outcomes are extensive and extreme.

Combating the Problem.

Drug companies, and their attorneys and security departments, take a multi-pronged approach to combating counterfeiting. Many of these efforts are used to combat counterfeiting generally, but some have been developed with particular focus toward the nuances of the counterfeit pharmaceutical market.

The counterfeiting problem can appear daunting, given an array of unknown manufacturing sources, the breadth of possible sales outlets, and the strong consumer preference for the “cheap but name brand” combination. Successful anti-counterfeiting practices do not generally follow a reactive “Whack-A-Mole” approach, attempting to squelch every low-level advertisement or email blast that comes out. Rather, systematic and strategic prosecution, akin to practices used in the intelligence community, is preferred. Investigations of networks and relationships, rather than merely products and sellers, can help identify high-payoff targets, the disruption of which can have positive effects across several echelons of the counterfeit trade. Focusing limited enforcement resources on valuable choke points which contribute to an ecosystem response can often be the most fruitful and strategic approach.

Counterfeit pharmaceuticals in particular, given their specific methods of typical advertisement and sale, are prone to certain forms of interdiction over others. It is well known that counterfeit pharmaceuticals are advertised heavily on both internet ads and email “spam” messages, all of which attempt to direct a prospective purchaser to a product-ordering website. Attempting to interdict the advertising messages, which are often sent by botnets or third-parties through a referral-affiliate relationship, or to shut down specific websites, is a losing proposition. This is the case because there are hundreds of thousands or more of each, and the costs to re-establish a confiscated website are negligible compared to the significant enforcement costs. However, academic researchers working with industry and enforcement contacts identified several potential chokepoints on which these sorts of pharmaceutical sales pathways rely. See Dharmdasani et al., “Priceless: The Role of Payments in Abuse-advertised Goods,” CCS ’12, October 16–18, 2012, Raleigh, N.C. One key chokepoint relationship for online transactions is a seller’s host bank, nearly always non-U.S. and non-EU, that is willing to accept abusive credit card transactions related to these unlawful goods from card processors such as Visa and MasterCard.

Nearly all online counterfeit pharmaceutical revenue can flow through these concentrated banking relationships, and researchers discovered that intercepting just one or two of these banking relationships, and seizing related funds, could have ripple effects disrupting thousands of drug transaction websites and referral affiliates. For example, a 2011 study determined that across 95% of spam e-mail for pharmaceuticals and similar goods, only three acquiring bank institutions were used. Id. This research demonstrates a guiding principal of anti-counterfeiting efforts: enforcement is most successful where the “termination cost [to the counterfeiter] is inevitably far higher— in fines, in lost holdback, in time and in opportunity cost—than the cost of the intervention itself [by the rights holder]. … [R]elatively concentrated actions with key . . . institutions can have outsized impacts.” Id.

Targeted investigations and enforcement are only one aspect of a comprehensive anti-counterfeiting approach. Successful rights holders employ a broad-based strategy, involving secured supply chain management, thorough technology and distribution agreements with market partners, and high-tech security solutions such as secure packaging, microchips, holograms, and the like. The combination of many of these controls can make enforcement actions easier and more productive, and thus reduce the prevalence and success of counterfeit competitors. In addition, it is important to inform consumers and retailers about both the dangers of counterfeits and the value of accessing authentic products. Pharmaceutical companies should engage in advertising to alert the marketplace to the dangers of counterfeit pharmaceuticals and to also assist others in identifying counterfeit drugs – including examination of packaging and medicines for quality, condition, spelling and grammar; and checking manufacturing and expiration dates and batch numbers on both exterior and interior packaging.

The problem of fake drugs is in fact very real news and companies here in North Carolina and around the world are taking steps to defend their brands and protect their customers in the marketplace.

Authentic Vial Counterfeit Vial

This article originally was published in the August 2017 edition of the Newsletter of the Board of Legal Specialization, a publication of the North Carolina State Bar.

For more Intellectual Property Law legal analysis go to The National Law Review

Court Orders Monsanto Roundup Safety Documents to be Disclosed

Monsanto is catching a lot of heat now that a court has unsealed documents that cast the company in a negative light and suggest that it was responsible for providing false assertions to the government and public regarding the safety of Roundup. As the most popular herbicide in the world, Roundup and similar products produced by Monsanto are used across the globe for the elimination of pests from lawns, crops, gardens and nurseries. It has provided research that opposes the belief Roundup’s main active ingredient can cause cancer, but the documents unsealed by the court show that these accounts were misleading and, in some cases, false.

Ghostwritten Research

The research that was presented to defend the safety of its products was in fact, ghostwritten and attributed to academics. It also claimed that a senior EPA official attempted to dismiss a report from the United States Department of Health and Human Services that the product could in fact be linked to the deaths of numerous people who suffered from non-Hodgkin’s lymphoma. The evidence tells a story of arguments within the Environmental Protection Agency and conflicting beliefs over whether Roundup and similar products were safe to use.

Emails between Monsanto executives and Jess Rowland of the EPA discuss an effort to disrupt the efforts of the Department of Health and Human Services to make its own determination and review of the product. Rowland states in the emails that he should receive a medal if he is able to succeed in his interference.

World Health Organization Classifies Products as Carcinogenic

The growing litigation over Roundup was sparked off by the classification of Roundup as a carcinogen, due to the discovery of a link between glyphosate and cancer in animals and the destruction of DNA and chromosomes in human cells. Despite the research provided by the WHO, Monsanto went to great lengths to continue the defense of its product and to assert that it was as safe to consume as salt.

While Monsanto claims that glyphosate is safe, those who have come forward with claims against the company allege that Monsanto has repeatedly falsified research and information in order to fool the government and the public. In its defense, Monsanto has claimed that the unsealed documents are being presented out of context and that they provide isolated information. Numerous health agencies around the world have presented conflicting arguments over the safety of these products, so the science has not been settled just yet.

For more legal analysis go to The National Law Review

Category: FDA

Lapse in Government Funding Continues to Affect FDA, USDA

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