Category: Regulatory

New Poll Underscores Growing Support for National Data Privacy Legislation

Over half of all Americans would support a federal data privacy law, according to a recent poll from Politico and Morning Consult. The poll found that 56 percent of registered voters would either strongly or somewhat support a proposal to “make it illegal for social media companies to use personal data to recommend content via algorithms.” Democrats were most likely to support the proposal at 62 percent, compared to 54 percent of Republicans and 50 percent of Independents. Still, the numbers may show that bipartisan action is possible.

The poll is indicative of American’s increasing data privacy awareness and concerns. Colorado, Virginia, and California all passed or updated data privacy laws within the last year, and nearly every state is considering similar legislation. Additionally, Congress held several high-profile hearings last year soliciting testimony from several tech industry leaders and whistleblower Frances Haugen. In the private sector, Meta CEO Mark Zuckerberg has come out in favor of a national data privacy standard similar to the EU’s General Data Protection Regulation (GDPR).

Politico and Morning Consult released the poll results days after Senator Ron Wyden (D-OR) accepted a 24,000-signature petition calling for Congress to pass a federal data protection law. Senator Wyden, who recently introduced his own data privacy proposal called the “Mind Your Own Business Act,” said it was “past time” for Congress to act.

He may be right: U.S./EU data flows have been on borrowed time since 2020. The GDPR prohibits data flows from the EU to countries with inadequate data protection laws, including the United States. The U.S. Privacy Shield regulations allowed the United States to circumvent the rule, but an EU court invalidated the agreement in 2020, and data flows between the US and the EU have been in legal limbo ever since. Eventually, Congress and the EU will need to address the situation and a federal data protection law would be a long-term solution.

This post was authored by C. Blair Robinson, legal intern at Robinson+Cole. Blair is not yet admitted to practice law. Click here to read more about the Data Privacy and Cybersecurity practice at Robinson & Cole LLP.

For more data privacy and cybersecurity news, click here to visit the National Law Review.

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

New Tools in the Fight Against Counterfeit Pharmaceuticals

The explosive growth of internet pharmacies and direct-to-consumer shipment of pharmaceuticals has provided increased access to, and reduced the cost of, important medications. Unfortunately, these same forces have increased the risks that counterfeit medicines will make their way to consumers, endangering patient safety and affecting manufacturers’ reputation in the public eye.

While the Food and Drug Administration attempts to police such misconduct through enforcement of the Food, Drug, and Cosmetics Act (FDCA), the resources devoted to enforcement are simply no match for the size and scope of the counterfeiting threat. Fortunately, pharmaceutical manufacturers are not without recourse, as several well-established tools may be used in the right circumstances to stop counterfeiters from profiting from the sale of knock-offs.

Experienced litigators can use the Lanham Act and the Racketeer Influenced Corrupt Organizations (RICO) Act to stop unscrupulous individuals and organizations from deceiving customers with counterfeit versions of trademarked drugs. Until recently, these legal weapons – including search warrants, seizures, forfeitures, and significant penalties – were typically wielded only by the government and only in criminal prosecutions.

As one recent case demonstrates, however, many of the tools that law enforcement has used for years to combat counterfeiters are also available to pharmaceutical manufacturers. In Gilead Sciences, Inc. v. Safe Chain Solutions, LLC, et al., the manufacturer of several trademarked HIV medications filed a civil complaint, under seal, alleging violations of the Lanham Act and RICO against scores of individuals and companies that were allegedly selling counterfeit versions of these drugs to patients across the country.

By deploying private investigators and techniques typically used by law enforcement, Gilead was able to gather a substantial amount of evidence before even filing the case. The company then used this evidence to secure ex parte seizure warrants and asset freezes, allowing it to locate and seize thousands of counterfeit pills and packaging before they could be shipped to unsuspecting consumers. Through the seizure of the financial proceeds of the alleged counterfeiting, Gilead prevented the dissipation of assets. If the company can successfully prove its RICO case, it stands to recover treble damages and attorneys’ fees as well.

Manufacturers of trademarked pharmaceuticals may consider using these and other tools to tackle the threat posed by counterfeiters. By drawing upon the experience and skills of trained litigators – particularly counsel who previously deployed these tools on behalf of the government while serving as federal prosecutors – companies can proactively protect their intellectual property and the consumers who depend on their products.

Article By Eric J. Beste, Anthony J. Burba and Heather F. Delgado of Barnes & Thornburg LLP

For more health law legal news, click here to visit the National Law Review.

© 2022 BARNES & THORNBURG LLP

Legal Considerations for Ready-to-Drink Cocktails

The ready-to-drink cocktail or “RTD” category has exploded in recent years, and it’s occupied by more than merely craft distillers familiar with a carefully made cocktail. Brewers, distillers and even vintners have joined in, capitalizing on consumers’ desires for pre-made, no-fuss beverages. The most unexpected development to emerge with RTDs, however, is the legal complexity surrounding these products—something the industry is only beginning to understand.

Many of these legal issues stem from the fact that the legal regulatory landscape in most states has not caught up with the rapidly evolving alcohol industry. That leaves ready-to-drink cocktails, much like hard seltzers, as not having a specific class or type in certain states. Suppliers looking to enter the space have plentiful options when creating a new product, subject to what licenses the manufacturer holds and what those licenses allow them to produce.

Ready-to-drink cocktails can be spirits, malt, sugar, cider or wine-based. The base of the RTD product, nonetheless, is the key federal factor. It is also an important factor in most states when determining how the product will be treated from a legal perspective in the following areas:

  • Licensing needed to manufacture, distribute and sell the product;
  • Applicable franchise law (Do beer franchise laws apply to low-proof spirits?);
  • Available channels of distribution (Can you sell this product in grocery or convenience store?);
  • Excise tax rate charged to the manufacturer (Does state law have a lower excise tax rate for low ABV products?);
  • Labeling and advertising considerations (Is your product a modified traditional product?); and
  • Trade practice considerations/promotions (Do spirits laws apply?).

Industry members dabbling in a sphere that is relatively new to the market, state regulators and legislatures should be mindful of the patchwork of emerging regulations. Like hard seltzer, ready-to-drink cocktails are not a clearly defined category under existing alcohol law. Meanwhile, states are working quickly to legislate in this domain. New Jersey is considering a reduced alcoholic beverage tax rate on low-ABV liquors to align with the beer tax rate (NJ SB 701), Vermont is considering legislation to define “low alcohol spirits beverage” and treat it as a “vinous beverage” (VT HB 590) and the Washington State Senate has a bill pending that would establish a tax on low-proof beverages (WA SB 5049).

From franchise issues to excise tax, the issues discussed here are only a glimpse of the nuanced and complicated legal landscape that governs the distribution of RTDs and alcoholic beverages across all categories.

Article By Nichole D. Shustack and Isabelle R. Cunningham of McDermott Will & Emery

For more food and beverage legal news, click here to visit the National Law Review.

© 2022 McDermott Will & Emery

PFAS Water Cleanup…Have You Bought Yourself a Multi-Million Dollar Superfund Issue?

The last two years have seen an incredible uptick in activity with respect to PFAS regulations, and media coverage of PFAS continues to fuel the fires from the public, non-government organizations and environmental groups for additional action to be taken. The EPA continues its process of determining Maximum Contaminant Levels for PFAS. The FDA is examining the ways that it might regulate PFAS levels in both food and food packaging. Meanwhile, states, bombarded with constituent outcries and under pressure to take action to fill the gap until the EPA and FDA finish their regulatory review processes, quickly enact drinking water limits for PFAS and ban PFAS-containing products, such as children’s toys and food packaging.

As states continue setting drinking water limits for PFAS and in preparation for the EPA’s final determination of a Maximum Contaminant Level for PFAS in drinking water, many water utilities are beginning to evaluate the steps needed to come into compliance with existing or anticipated water regulations. Comprehensive compliance programs are being created and costly well testing sites are being built to determine PFAS content at various points along the waterways for drinking water sources. At water treatment facilities, expensive water filtration systems are being installed to remove as many PFAS as possible from drinking water sources. With water utilities coming under fire in the litigation world for PFAS issues, these steps may curtail the short-term issues and costs associated with PFAS litigation.

However, the long-term impact of the remediation steps that water treatment facilities ae taking may only be pushing litigation costs further down the road, not eliminating them. In addition, little considered Superfund laws may be triggered through PFAS water filtration that could end up costing water treatment facilities tens or hundreds of millions of dollars in cleanup costs.

CERCLA and PFAS

Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), once a substance is designated as “hazardous” by the EPA, the Act gives the EPA considerable power to designate sites containing such substances as Superfund sites and force parties responsible for the pollution to pay for the cleanup of the site. Without a designation of a substance as “hazardous” (and therefore a site as a Superfund site), the EPA may either pay for the cleanup of the site itself or attempt to pursue, through time-consuming and costly litigation, the property owner for the costs of cleanup.

One of the most closely watched developments in the PFAS world is whether the EPA will make the determination that PFAS are “hazardous” under CERCLA. Although the EPA has promised its determination soon and various lawmakers are pressuring the EPA to make a determination in the near future, it is still uncertain as to when the EPA will issue its final regulations.

In the meantime, however, water utilities are under increasing pressure to filter out PFAS from drinking water. These PFAS are typically deposited in landfills. Out of sight, out of mind? Not exactly, when it comes to PFAS. As the quantity of PFAS accumulate in landfills, if the EPA makes a determination that PFAS are “hazardous” substances under CERCLA, the EPA could immediately designate landfills full of PFAS as Superfund sites and take action to pursue parties to pay for the cleanup. Water utilities could therefore be at significant risk of having to pay for Superfund site cleanup.

Further, in some instances, water utilities may have previously been involved with Superfund site cleanup for other reasons and believed the site issues to be fully remediated.  However, since PFAS have not yet been classified as “hazardous”, Superfund sites were never tested for PFAS. Should the EPA determined that PFAS are “hazardous” under CERCLA, the EPA will have the right to reopen previously closed Superfund sites for further testing and remediation specific to PFAS, even if parties deemed responsible for the pollution already paid millions of dollars to clean up the site for other contaminants.

Water utilities in particular must pay special attention to PFAS developments under CERCLA. Proactive planning is needed to determine alternate means of disposing of or eliminating PFAS from water sources. Failure to enact forward-thinking strategies may very well end up costing water utility companies tens of millions in unexpected and unwanted costs if they fail to do so.

©2020 CMBG3 Law, LLC. All rights reserved.

ARTICLE BY John Gardella at CMBG3 Law.

Proposed Class Action Lawsuit Claims Arizona Beverage’s Gummies are Not “All Natural” Because They Contain Synthetic Ingredients

On February 11, 2020, Christopher Silva, a New York resident, filed a proposed class action lawsuit against Hornell Brewing Co. Inc., Arizona Beverages USA LLC, Beverage Marketing USA, Inc., and Arizona Beverage Co. (“Defendants”) over defendants’ “all natural” gummy snacks.

The plaintiff claims that defendants’ advertising and marketing campaign is false, deceptive, and misleading because the gummies contain several synthetic ingredients, such as ascorbic acid, citric acid, gelatin, dextrose, glucose syrup, and modified food starch.  Silva seeks to represent a New York class and individual classes for all 49 other states.

In the complaint, Silva cited to the United States Department of Agriculture’s Draft Guidance Decision Tree for Classification of Materials as Synthetic or Nonsynthetic (natural).  Per that guidance, a substance is natural – as opposed to synthetic – if (a) it is manufactured, produced, or extracted from a natural source (i.e. naturally occurring mineral or biological matter); (b) it has not undergone a chemical change (i.e. a process whereby a substance is transformed into one or more other distinct substances) so that it is chemically or structurally different than how it naturally occurs in the source material; or (c) the chemical change was created by a naturally occurring biological process such as composting, fermentation, or enzymatic digestion or by heating or burning biological matter.

Silva noted that while the synthetic ingredients are all listed on the back of the package, reasonable consumers are not expected or required to review the ingredients list on the back in order to confirm or debunk defendants’ prominent front-of-the-product claims.  The package in question includes the phrase “All Natural” on the packaging behind the words, “Arizona” and “fruit snacks.” We will continue to monitor any developments.

© 2020 Keller and Heckman LLP

For more on food ingredient labeling regulation see the National Law Review Biotech, Food and Drug law section.

FDA Issues Warnings to 15 Companies for Illegally Selling Products Containing CBD

On November 25, 2019, the U.S. Food & Drug Administration (“FDA”) published a press release, published a revised Consumer Update, and announced the issuance of new warning letters to 15 companies for illegally selling and marketing various products containing hemp-derived cannabidiol (“CBD”).

To quote the FDA:

“Today’s actions come as the FDA continues to explore potential pathways for various types of CBD products to be lawfully marketed.  This includes ongoing work to obtain and evaluate information to address outstanding questions related to the safety of CBD products, while maintaining the agency’s rigorous public health standards.  The FDA plans to provide an update on its progress regarding the agency’s approach to these products in the coming weeks.”

In the meantime, however, these steps appear to be an effort to stem the tide of proliferation of CBD products on the market – and the growing consumer demand for those products.  It is great that the FDA intends to provide an update on its efforts to develop a regulatory pathway for CBD products under the Federal Food Drug & Cosmetic Act (“FD&C Act”).  But, it is frustrating that the FDA still refuses to identify a set date for that update – or, to publicly commit to a meaningful resolution of the regulatory uncertainty that persists for CBD products today.

A Reminder: Don’t Make Unsubstantiated Claims

As made clear in prior FDA warning letters – and the 15 letters released on November 25th – there continues to be significant regulatory risk in the labeling and marketing of CBD products for sale in interstate commerce.  However, the FDA’s enforcement efforts still appear to be focused on companies and products that engage in the most egregious violations of the FD&C Act – including those making disease claims and those marketed to (or for use by) children and other vulnerable populations.

Among other things, this round of warning letters address the following major issues:

  • Marketing products for use by children and other vulnerable populations.
  • Including a supplements facts panel on product labels, which indicated the company’s intention to market the product as a dietary supplement.
  • Marketing products that are intended for use in the cure, mitigation, treatment, or prevention of diseases and/or intended to affect the structure or any function of the body.
  • Posting materials on the companies’ social media websites that link to a third party’s content indicating that CBD can be used in the cure, mitigation, treatment, or prevention of diseases and/or intended to affect the structure or any function of the body.
  • Misbranding products intended to be marketed as drugs.
  • Marketing human and animal food containing CBD in interstate commerce.
  • Marketing unapproved new animal drugs by selling pet products containing CBD that are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in animals and/or intended to affect the structure or any function of the body of animals.

Many of these issues have been referenced in prior actions and warning letters released by the FDA.  By now, it should be clear to all market participants that it is illegal (and irresponsible) to market your CBD products as a cure for cancer, Alzheimer’s, diabetes, or other medical diseases, ailments, or conditions.  CBD companies should heed this clear warning and stop the practice.  Just don’t do it.

The New Concerns

This round of enforcement action seems to signal that the FDA is taking a more aggressive stance on its view of CBD health and safety issues.  The press release and the consumer update both indicate that the FDA has broad safety concerns about CBD products, that there exist many unanswered questions and data gaps about CBD toxicity, and that some of the data available to the FDA raises serious concerns about potential harm from CBD.

The consumer update contains troubling statements like “CBD has the potential to harm you, and harm can happen even before you become aware of it,” and “CBD can cause liver injury.”  But, no direct evidence or substantiation for these claims is linked to the consumer update or press release.  Instead, the consumer update attempts to draw a corollary line between the data obtained from trials performed in connection with one FDA-approved CBD drug and the non-pharmaceutical products available on the market today.  Equating that data against the products available to consumers today does not produce an apples-to-apples comparison.  There are likely different scientific outcomes from, and different levels of toxicity caused by, the delivery of high dosages of concentrated CBD to mice in a clinical laboratory setting versus the relatively low dosages of CBD found in many food and supplement products available to consumers today.

More scientific research is absolutely needed on the efficacy and safety of CBD used in products intended for human consumption.  And that research will come in time.  But, the information released by the FDA this week appears to be an overstatement of the potential health risks associated with CBD products – at least, as they are known today.  There are health risks associated with bad products – and there are bad products on the market today – but that merely highlights the need for clear regulatory guidance from the FDA.

The Future of CBD

The FDA recognizes that there is a significant public interest in CBD.  It also recognizes that there are reports of CBD products containing potentially harmful contaminants, such as pesticides and heavy metals.   Yet, despite that strong interest and recognition of a need for regulation in the industry, the FDA has delayed its development and implementation of meaningful regulatory guidance for CBD companies.  That continuing delay does a disservice to the industry and to the general public.

Companies that cut corners and sell CBD products containing potentially harmful substances need to be regulated out of existence.  Consumers deserve to know that the CBD brands they purchase and use have been responsibly grown, responsibly and safely manufactured, and are free from potentially harmful substances, like heavy metals and pesticides.  And well-intentioned, responsibly operating CBD companies need and deserve clear regulatory guardrails within which they can safely – and legally – operate their business.

Unfortunately, it appears that regulatory uncertainty will continue to persist until there is more scientific data to support the safety and efficacy of CBD in consumer products.  Obtaining that additional research and data will take time, so the industry may face a long slog until the FDA identifies a clear, detailed regulatory “pathway forward” for CBD.  Until then, it is important for CBD companies to carefully consider the FDA’s position on CBD and the warnings sent this week, and to incorporate those factors into their internal compliance practices as they develop, produce, advertise, and sell their products in interstate commerce.

© 2019 Ward and Smith, P.A.. All Rights Reserved.

For more on cannabidiol/CBD regulation, see the National Law Review Biotech, Food & Drug law page.

A short United States Department of Justice memorandum with big legal consequences

On Jan. 25, 2018, the United States Department of Justice (U.S. DOJ) issued a memorandum limiting the use of federal agency guidance documents in civil enforcement actions that could have far reaching consequences in the private sector. See here.

Under the directives contained in this memorandum, U.S. DOJ attorneys are instructed not to use noncompliance with federal agency guidance documents that have not gone through formal rule-making under the Administrative Procedures Act as evidence of violations of applicable law in federal civil enforcement actions. In particular, the U.S. DOJ instructs its attorneys that they may not use a private party’s noncompliance with an agency guidance document for presumptively or conclusively establishing that a party violated an applicable statute or rule that an agency has delegated authority to implement. The memorandum continues by saying “[t]hat a party fails to comply with agency guidance expanding upon statutory or regulatory requirements does not mean that the party violated those underlying legal requirements; agency guidance documents cannot create any additional legal obligations.”

In the past, federal agency guidance policy has been used by agencies as well as the U.S. Department of Justice as evidence of whether a regulated party has complied with federal statutes. For example, this use of guidance policies for enforcement decision has been regularly used by numerous federal agencies, such as the EPA, OSHA, SEC, Labor, the Treasury, FTC and many other federal agencies, in referring matters to the U.S. DOJ for enforcement of the federal statutes and regulations that these agencies have delegated authority to administer.

The U.S. DOJ memorandum will provide creative lawyers with new ammunition for negotiation with federal agencies when those agencies use noncompliance with their guidance as evidence of violations of laws that carry significant civil penalties for such actions. In addition, these same creative lawyers in the private sector will use the memorandum as evidence that a federal agency should not use guidance documents as evidence for important agency decision making such as permit decision making or related important agency decisions that have important consequences for the regulated community.

 

Copyright © 2018 Godfrey & Kahn S.C.
This post was written by Arthur J. Harrington of Godfrey & Kahn S.C.
Read more of the National Law Review’s  Coverage of Government Regulations.

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.
This post was written by the Food and Drug Law at Keller and Heckman of Keller and Heckman LLP., © 2017
For more Biotech, Food & Drug legal analysis, go to The National Law Review

U.S. State Department Contractor to Resolve Allegations of Improper Vetting with $5 Million Settlement

On September 14, 2017, Pacific Architects & Engineers Incorporated (PAE) settled a whistleblower lawsuit alleging the company did not follow proper vetting procedures for its personnel that performed and billed work to the U.S. State Department. The $5 million settlement resolves allegations without any determination of liability of contract violations.

PAE is a company originally incorporated in California in 1955. The company first served the rebuilding of Japan after WWII and has since grown to participate in projects and government contracts globally. In 2007, already a contractor with the U.S. State Department, PAE was assigned the task of training U.S. personnel in Afghanistan and conducting extensive background checks and documentation for those in high-risk positions. Reporting the names, nationalities and background information on contract employees in these positions was a requirement of the contract for work between PAE and the U.S. government.

After its investigation, the U.S. Justice Department alleged that “PAE was aware of these contractual requirements but did not comply with them for extended periods.”

Robert Palombo, the former PAE manager, filed this whistleblower lawsuit against his employer alleging that this was the case and that PAE continued billing for work done under the contract.

PAE, however, contends that “The invoices specifically identified the names of employees for whom the lawsuit alleges that requisite notice was not made. The employees whose background investigations were allegedly inadequate were not involved in any security incidents or injuries. The services called for under the contract were provided in full.”

Without admitting fault or liability, PAE has decided to settle these allegations of improper vetting by paying the U.S. government $5 million, $875,000 of which whistleblower Robert Palumbo is entitled to receive.

This post was written by Tycko & Zavareei Whistleblower Practice Group of Tycko & Zavareei LLP © 2017

For more legal analysis go to The National Law Review

President Trump Signs the “Securing our Agriculture and Food Act”

President Trump recently signed the “Securing our Agriculture and Food Act” (H.R. 1238). The bill amends the Homeland Security Act of 2002 to direct the Assistant Secretary for Health Affairs for the Department of Homeland Security (DHS) to carry out a program to coordinate DHS efforts related to defending the food, agriculture and veterinary systems of the United States against terrorism and other high-consequence events that pose a high risk to homeland security.

According to Michigan Farm News, the law will:

  • Provide oversight and management of DHS’s responsibilities pursuant to Homeland Security Presidential Directive 9 – Defense of United States Agriculture and Food;
  • Provide oversight and integration of DHS activities related to veterinary public health, food defense and agricultural security;
  • Lead DHS policy initiatives related to food, animal and agricultural incidents and to overall domestic preparedness for, and collective response to, agricultural terrorism;
  • Coordinate with other DHS components on activities related to food and agriculture security and screening procedures for domestic and imported products; and
  • Coordinate with appropriate federal departments and agencies.
This post was written by Aaron M. Phelps of  Varnum LLP© 2017
For more legal analysis go to The National Law Review