Tag: drug

FDA Issues Warning Letters to 7 Dietary Supplement Companies for Drug Claims

  • On November 17, 2022, FDA posted warning letters to 7 companies for selling different dietary supplements with claims that caused the products to be “drugs” in violation of the Federal Food, Drug, and Cosmetic Act (FD&C Act).  Under the FD&C Act, products intended to diagnose, cure, treat, mitigate, or prevent disease are drugs and are subject to the requirements that apply to drugs, even if they are labeled as dietary supplements.

  • The claims were found on the 7 companies’ websites, social media pages, and/or Amazon or Walmart storefronts, and included a variety of statements regarding the products’ claimed abilities to cure, treat, mitigate, or prevent cardiovascular disease (or related conditions, such as atherosclerosis, stroke, or heart failure).  Six of the companies at issue sell a product(s) containing one or more dietary ingredients identified as Vitamin B3, red yeast rice, pine bark extract, EPA and DHA omega-3 fatty acids, magnesium, zinc, bergamot, Hawthorn berry, Hawthorn extract, Coleus forskohlii, hops, taurine, garlic powder, amino sulfonic acid, Co-Q-10, and/or octacosanol.  The seventh company does not list a dietary ingredient but identifies its product as a “glycocalyx regenerating product” and notes various “pathologies associated with impaired endothelial glycocalyx.”  As noted in the warning letters, FDA has not evaluated whether the unapproved products are effective for their intended use, the proper dosage, potential interaction with FDA-approved drugs or other substances, or whether they have dangerous side effects or other safety concerns.  Further, in addition to characterizing the products as unapproved “new drugs,” FDA’s letters note misbranding charges based on the impossibility of writing adequate directions for a layperson to use the products safely for the intended purpose of treating one more diseases that are not amenable to self-diagnosis or treatment without the supervision of a licensed practitioner.

  • FDA requested that the companies respond to the warning letters within 15 working days and describe how they will address the issues, or provide reasoning and substantiation as to why they believe the products are not in violation of the law.  Failure to adequately address could result in legal action, such as product seizure and/or injunction.

For more Biotech, Food and Drug Law news, click here to visit the National Law Review

© 2022 Keller and Heckman LLP

Federal Criminal Drug Counterfeiting Defense

Introduction: What is Drug Counterfeiting?

Selling fake drugs may subject you to criminal liability under 21 U.S.C. § 331. Section 331 makes it illegal to sell a misbranded or adulterated drug in interstate commerce. The sale of counterfeit drugs must involve interstate commerce. If you sell a counterfeit drug and it crosses state lines, you will have violated this section. For instance, if you buy aspirin in New York and sell it as codeine in New Jersey, then you may be convicted under the federal counterfeit drug statute. In addition, 18 U.S. Code § 2320 – trafficking in counterfeit goods or services – may also apply. This section makes it a federal crime to traffic goods or services and then knowingly use a counterfeit mark in connection with the good or service. An example of a federal crime includes an individual creating a counterfeit drug that replicates a genuine drug, or selling fake drugs. Conduct under this statute includes possessing, manufacturing and then promoting and selling the counterfeit drug to the public.

You may also face liability for criminal fraud under 18 U.S.C. 1001. This section makes it illegal to knowingly and willfully falsify or cover up a material fact; make a materially false or fraudulent statement, or make or use false writing or document knowing that it is false. An example of criminal fraud includes telling a buyer that the product is a powerful painkiller when in fact it is a combination of baby aspirin and vitamins, and you know this. The above sections also apply to black market transactions. For instance, if you tell someone they are buying heroin when you know it is a combination of flour and caffeine, you just knowingly made a materially false statement. This article explains drug counterfeiting, definition, penalties, and tips for choosing a law firm.

Penalties for Drug Counterfeiting

Selling counterfeit drugs or fake drugs can lead to significant penalties. Under 21 U.S.C. §§ 331 and 333, if you are convicted of selling counterfeit drugs across interstate commerce and you had no intent to mislead, you face a fine of up to $1,000 and a sentence of one year or less imprisonment, or both. On the other hand, if you are convicted of selling counterfeit drugs across interstate commerce and you had the intent to mislead, you face a fine of up to $10,000 and up to three years imprisonment, or both. Each sale you conduct is a separate offense—meaning that if you intentionally sell a counterfeit drug to 20 people, you face charges for 20 separate accounts. This amounts to 60 years imprisonment and a $200,000 penalty.

Also, if charged with criminal fraud under 18 U.S.C. § 1001 and convicted, you could face up to five years imprisonment and/or fines of not more than two times the gross gain or loss from the counterfeit drug sale. In addition to penalties and jail time, these charges may lead to loss of your medical license or driver’s license, termination from your employment, difficulties finding another job, loss of your immigration visa, difficulty securing a home to buy or rent, and a permanent criminal record for being a drug offender. Because of this possibility, it is important to retain a federal criminal defense attorney experienced in federal counterfeiting defense. This will give you the best defense and chance of a successful outcome.

“Several years ago, the DOJ announced efforts to expand the scope and extent of its federal investigations into suspected criminal activity as well as to increase both the charges brought and the penalties for violating federal law. Further, many counterfeiting charges require intent to defraud. Without this intent element, you cannot be found guilty. Only an experienced team can tackle this challenge and provide you with a strong defense.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

Four Steps to Take When Choosing Criminal Defense Lawyers

1. Make sure the law firm is focused on federal criminal law. You must be wise when choosing a criminal defense attorney because it can mean all the difference. Now is not the time to go with a junior attorney or the attorney who offers lower costs. Do not choose an attorney who claims to have a good understanding of counterfeiting defenses but who does not have a successful track record. Grand jury subpoenas and investigations are serious matters. Serious matters demand the services of a serious defense team—a defense team with a proven track record in successfully defending clients against federal counterfeiting charges.

2. Pick a law firm with an intricate knowledge of federal counterfeiting. You would not choose a doctor who does not fully understand your medical condition. You would choose the best medical professional for a serious medical condition. Do the same with your criminal defense attorney. A good attorney can find loopholes and exceptions in the law and argue them in your favor. A good attorney will go the extra mile for you. Your attorney should be able to answer questions such as their knowledge of federal counterfeiting, defenses available, their track record of success, federal trial court experience, and experience in federal criminal law.

3. Ask about your attorney´s success rate. An attorney is only as good as the results they obtain. It is important to have an honest attorney-client relationship so make sure to get an honest answer when asking your attorney about their success rates in cases similar to yours. A good attorney is often able to keep federal criminal matters out of the news by ending the federal investigation early on. A successful track record includes obtaining the following results for clients:

  • Quashing federal subpoenas;
  • Getting clients acquitted at trial;
  • Dismissing the entire indictment;
  • Avoiding criminal charges and penalties altogether; and
  • Getting sentences of probation over charges that often call for several years’ imprisonment.

4. Pick a law firm that is dedicated and committed to your case. A good law firm demonstrates dedication and open communication to its clients. Your attorney should be committed to fighting for you. It is often easy to tell whether your attorney truly wants to help you or whether they just want to make money from handling your case. Assess the sincerity of your attorney. Similarly, you must be able to freely talk to your attorney. Without open and continuous communication channels, many clients become anxious about the next stages in the investigation.

Conclusion

Drug counterfeiting charges are not to be taken lightly. Charges of criminal drug counterfeiting crimes can be devastating to an individual’s career. Not only can such charges lead to criminal penalties and jail time, but they could also result in the permanent loss of your ability to practice medicine, thereby destroying your reputation. It is therefore critical to retain an attorney that is experienced in federal counterfeiting crimes legislation, delivering strong defenses, and vigorously defending their clients against criminal charges and prosecutions.

Oberheiden P.C. © 2022
For more about crime, visit the NLR Criminal Law/Business Crimes type of law page.

Is Your School District Ready for the Next Round of Cyber Attacks?

It isn’t if, but when, the next round of cyber-attacks will happen. One common type of cyber-attack that schools face is ransomware, where a hacker takes over a school district’s computer systems and holds the systems “hostage” until the district pays a ransom or can restore the system on its own. Restoration for some districts can be nearly impossible.

Like any other multi-million-dollar organization with sensitive data, schools are unfortunately natural targets for cyber-attacks. Per one leading anti-malware provider, in 2021 alone, 62 school districts and 26 colleges and universities were impacted by ransomware. These attacks disrupted learning at 1,043 individual schools. The recovery costs following an attack can be very significant. For example, Baltimore County Public Schools spent more than $8.1 million on recovery after an attack at the end of 2019.

And it isn’t just the ransom amounts that can be frightening. Public concern over compromised data security, feelings of invasion of privacy, and negative public perception can also pose real and significant consequences for school districts. Imagine the response of a guardian or parent who receives notice that his or her student’s personal information has been compromised. The inability to access necessary computer or network systems may also require schools to close and disrupt both short- and long-term operations. In 2021, on average, a school in the United States experienced seven days of downtime following a cyber-attack before resuming educational operations, and significant additional time was required to fully recover from the attack.

Why Are Schools Attractive Targets?

School districts are appealing targets for two main reasons: (1) school districts often have one of the largest budgets in the community, making them an appealing financial target; and (2) the data school districts store includes highly-sensitive student and employee personal information, including Social Security numbers, health information, and other pupil data. This information can be a gold mine to cyber criminals who are interested in identify theft or simply extorting money from a school district.

What Should School Districts Do?

School district administration should embrace cybersecurity best practices to protect their schools from cyber-attacks. This requires administrators to review current practices and thereafter remain vigilant in conducting an ongoing review of such practices. Here are a few things school districts can do to help protect themselves:

  • Develop a communication plan. Time is critical when a cyber-attack occurs. It is essential that you are ready to address guardians and parents, the media, and the community, and to work with your insurers and law enforcement immediately when an attack happens. Different laws require notice to individuals affected by privacy breaches. Your district should pre-emptively develop a communication plan so it is immediately ready to address required stakeholders. This communication plan should be routinely discussed with relevant administrators and employees.
  • Update Systems. Network users should apply software patches and updates as soon as possible. Hackers often exploit systems that don’t timely install patches and updates.
  • Create a strong password policy. Password policies must require users to update in regular intervals and integrate best practices, including passphrases, sequences and having different passwords for multiple accounts.
  • Purge outdated technology. Schools may hang on to older devices due to budget constraints. However, older devices may not be as secure as newer systems.
  • Implement multi-factor authentication to protect network access.

Some tips to help districts recover more quickly include:

  • Back up essential data frequently. The ability to restore data is a significant factor in determining whether a school district should pay a ransom.
  • Train employees. Train staff to recognize phishing emails and other types of cyber-attacks.
  • Develop a cyber-attack response plan. Schools should work with their IT staff, IT providers and legal counsel to pre-emptively develop a plan to handle varying cyber-attacks and return to normal operations.
  • Evaluate cyber liability insurance coverage. Based on publicly available information, ransom demands vary dramatically: as low as $10,000 to millions of dollars.
  • Stay in close contact with experienced legal counsel. To the extent protected personal information was accessed or taken, notification to the victims and, in some states, notification to data protection authorities may be required. Legal counsel familiar with these situations help coordinate communication with law enforcement and communication with staff, students, and the public. Legal counsel also communicates with the threat actors, coordinates with your insurance company, and assists with records requests that may come in post-attack.

Most importantly, school districts should engage with their insurance agent, legal counsel and IT staff now to develop and gain a mutual understanding of the process that will be followed at the time of a cyber-attack, as well as best practices that are to currently be utilized by district employees and officials. These pre-emptive, relationship-building opportunities may expose vulnerabilities and will best prepare your district for a cyber-attack. A proactive approach may also help your district avoid an attack altogether or, at a minimum, reduce the damage.

©2022 von Briesen & Roper, s.c
For more about education, visit the NLR Public Education & Services section.

Same As It Ever Was: FDA Reiterates That CBD Cannot Be Included in Food or Dietary Supplements

While we enter a new season this week, the same cannot be said for the FDA which, on November 16, reiterated that its approach to regulating the cannabidiol (CBD) industry will be “the same as it ever was”—a regulatory minefield. Grail Sipes, acting Deputy Center Director for Regulatory Policy at the FDA’s Center for Drug Evaluation and Research, emphasized the agency’s position that it needs additional CBD research and safety data before the agency will consider CBD for uses beyond prescription drugs, including usage as a food additive or dietary supplement. This, she said, is because “clear answers to many important questions are still lacking, such as what adverse reactions may be associated with CBD from hemp-derived products and what risks are associated with the long term use of these products.”

So why should industry stakeholders care about the FDA’s opinion anyway? Wasn’t hemp-derived CBD legalized at the federal level by the Agriculture Improvement Act of 2018, also known as the Farm Bill?

Yes, but as we discussed in a previous blog post, the FDA and FTC have overlapping enforcement authority over CBD marketing, with the FDA having primary authority over labeling. The FDA has previously issued guidance stating that CBD can be used as an ingredient in cosmetics so long as it does not cause the product to be “adulterated or misbranded.” However, a product containing CBD cannot be marketed as a drug absent FDA approval—a lengthy and costly process. Companies marketing CBD products must therefore ensure compliance with the FDA’s labeling requirements and guidance regarding CBD products.

The FDA has not been shy to issue warning letters to CBD companies that fail to heed the agency’s labeling requirements and guidance. Starting in April 2019, the FDA (together with the FTC) began issuing warning letters to companies marketing CBD products as treatments and cures for a variety of diseases and illnesses. Those agencies continued to issue warning letters for marketing and labeling violations throughout 2019, largely for improper health-based claims about CBD products (those letters are described in more detail here and here). The most recent iteration came in 2021 when the agencies issued two warning letters to companies selling over-the-counter (OTC) drugs for pain relief that contained CBD. Sipes made clear the FDA will continue to monitor the CBD marketplace and issue warning letters to companies making improper health claims in her November 16 comments.

Given these comments, we can expect the cat-and-mouse game between federal regulators and CBD companies that push the marketing envelope to continue. To mitigate the risk of falling within the FDA’s crosshairs, CBD companies must ensure compliance with the various state and federal regulations governing the labeling and advertising of their products. We provided several marketing dos and don’ts in a previous blog post. But given the FDA’s unchanging position, the biggest takeaway remains the same: don’t make claims that a CBD product “can prevent, treat, or cure” or a disease.

Article By Rachel L. Sodée and J. Hunter Robinson of Bradley Arant Boult Cummings LLP

For more news on biotech, food, and drug law, click here to visit the National Law Review.

© 2021 Bradley Arant Boult Cummings LLP

Former JUUL Employee Seeks Injunction Against Pre-Employment NDA

On June 4, 2020, a former employee of electronic cigarette maker JUUL Labs, Inc., filed a complaint in California District Court seeking to enjoin JUUL’s enforcement of a non-disclosure agreement (“NDA”) she was required to sign as a condition of her employment. The former employee, Marcie Hamilton, alleges in her complaint that JUUL required her to sign an NDA prohibiting her from disclosing “essentially, everything related to JUUL” (emphasis in original) prior to beginning her employment. She further alleges that the “terrorizing effect” of the NDA, which JUUL requires all of its employees to sign prior to beginning their employment, unlawfully precludes employees from “blowing the whistle” to government or law enforcement agencies about suspected illegal activity, in violation of California law.

As alleged in the complaint, the JUUL NDA requires employees to “hold in strictest confidence” and not disclose, among other things, JUUL’s customers, products, markets, and any “information disclosed by the Company to [the employee] and information developed or learned by [the employee] during the course of employment.”  Employees are prohibited from disclosing such information to “any person, firm, or corporation, without written authorization from the Company’s Board of Directors.”  Having no temporal limit, the prohibition “lasts forever.”  According to the complaint, JUUL relies on these NDAs to prevent employees from providing relevant information in ongoing government investigations, as well as administrative and judicial actions, into the use of JUUL’s products by minors and the health dangers of its products, more broadly.

Ms. Hamilton alleges that the NDA’s prohibition on disclosing seemingly any information about JUUL whatsoever to any entity whatsoever violates California Labor Code § 1102.5(a). Section 1102.5(a) prohibits employers from making, adopting, or enforcing a rule, regulation, or policy that “prevent[s] an employee from disclosing information to a government or law enforcement agency,” or to “any public body conducting an investigation, hearing, or inquiry,” if the employee reasonably believes the information discloses a violation of law. Ms. Hamilton also alleges that the NDA violates California Government Code § 12964.5. Section 12964.5 was enacted in response to the #MeToo movement and prohibits employers from requiring employees to sign any document that “purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.”  Ms. Hamilton alleges that in violating these and other California statutes, the NDA has caused “ongoing and irreparable public harm.”  In her lawsuit, she seeks a finding that the NDA is unenforceable and an order enjoining JUUL from attempting to enforce it against her, as well as other forms of relief.

Employers’ Use of NDAs to Intimidate and Muzzle Employees

Unfortunately, NDAs like the one JUUL requires employees to sign as conditions of their employment are not uncommon. To the contrary: large corporations – and powerful individuals – often require employees to sign similar NDAs as conditions of their employment in an effort to stymy competition, insulate themselves from prosecution, and even protect themselves from public embarrassment. As Ms. Hamilton points out in her complaint, former Hollywood producer and convicted rapist Harvey Weinstein used similar pre-employment NDAs to prevent victims of his sexual abuse from reporting it to law enforcement. See Edward Helmore, “Harvey Weinstein lawsuit: attorney general says ‘we have never seen anything as despicable,’” (February 12, 2018).

Disgraced restauranteur Mike Isabella likewise used draconian NDAs to prevent his employees from reporting sexual harassment in his restaurants, including by prohibiting employees from disclosing any “details of the personal and business lives of Mike Isabella, his family member, friends, business associates and dealings” – seemingly without any employment-related purpose whatsoever. In that case, an employee’s breach of the NDA carried with it an unconscionably high penalty of $500,000 per breach, plus attorneys’ fees expended by the company as a result of the breach. See Maura Judkis and Time Carman, “Mike Isabella’s restaurants used nondisclosure agreements to silence sexual harassment accounts, lawsuit alleges.” (April 3, 2018).

Not all states have statues like California’s, which expressly prohibit employers from restricting employees’ ability to disclose information about suspected violations of law to government or law enforcement agencies. But many states nevertheless uphold a clear public policy against doing so. If you signed an NDA as a condition of your employment and want to blow the whistle about any type of illegal conduct by your employer, consider consulting with an employment attorney to determine whether the agreement prohibits you from providing information about violations of law to government or law enforcement agencies and, if so, whether it may be unenforceable.

©Katz, Marshall & Banks, LLP

For more on non-disclosure agreements, see the National Law Review Labor & Employment law section.

The 2019 Honig Act Means New Obligations for New Jersey Employers Around Cannabis at Work

Employers cannot afford to ignore the direct impact of the 2019 amendments to the law permitting legal medicinal marijuana use in New Jersey. Among the most important areas of concern, employers must be prepared to (1) create policies that will comply with federal, state and local laws, as well as maintain a safe workplace and (2) respond to a potential increase in positive drug tests and the resultant challenges to any employer action taken in response to a positive test result (e.g., denial of employment for an applicant or termination of the employment of a current employee).

New Jersey’s former Compassionate Use of Medical Marijuana Act (CUMMA) contained language stating:

[N]othing in [CUMMA] shall be construed to require… an employer to accommodate the medical use of marijuana in any workplace. N.J.S.A. 24:6I-14.

On July 2, 2019, Governor Murphy signed into law the Jake Honig Compassionate Use Medical Cannabis Act, N.J.S.A. 24:6I-2, et seq. (Honig Act), which replaced CUMMA. The revised employment law provisions of the Honig Act create job protections. The above-cited language from CUMMA changed, and the Honig Act provides as follows:

It shall be unlawful to take any adverse employment action against an employee who is a registered qualifying patient based solely on the employee’s status as a registrant with the commission [i.e., the Cannabis Regulatory Commission established pursuant to the law].

The Honig Act defines “adverse employment action” as “refusing to hire or employ an individual, barring or discharging an individual from employment, requiring an individual to retire from employment, or discriminating against an individual in compensation or in any terms, conditions, or privileges of employment.” N.J.S.A. 24:6I-3. State regulations were adopted to support CUMMA (N.J.A.C. 8:64-1 et seq.) but no new regulations were promulgated in furtherance of the Honig Act.

The patient/employee-friendly provision moves New Jersey into the group of states with medical marijuana laws that expressly provide employment law protections for medical marijuana users (e.g., Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Minnesota, New York, Nevada, Oklahoma, Pennsylvania, Rhode Island and West Virginia).

The Honig Act establishes a procedure employers must follow when an employee tests positive for marijuana. If an employee (or prospective employee) tests positive for cannabis, the employer is required to (1) provide written notice of the right to provide a valid medical explanation for the test result and (2) offer an opportunity to present a valid medical explanation for the result. N.J.S.A. 14-6I-9.

The employee or applicant has three (3) working days after receipt of the employer’s written notice to explain the result or request a retest of the original sample (at the employee’s expense). The Act does not define “working days.” A valid explanation for the positive test result may include an authorization for medical cannabis issued by a health care practitioner or proof of registration with the medical marijuana commission.

If an employee demonstrates she is a valid medical marijuana user, employers will not be permitted to use that alone as a basis to take adverse employment action, unless the employer can demonstrate that one of the federal exemptions applies.

The Honig Act permits employers to take adverse action if an employee possesses or uses an intoxicating substance during work hours, or if such use would require an employer to commit any act that would cause the employer to be in violation of federal law.

“Cannabis” has the meaning given to “marijuana” in section 2 of the New Jersey Controlled Dangerous Substances Act, N.J.S.A. 24:21-2. The NJ Controlled Dangerous Substance Act includes cannabis as a Schedule I(e) hallucinogenic that has a high potential for abuse, has no accepted medical use in treatment in the United States, or lacks accepted safety for use in treatment under medical supervision. Accordingly, we assume “intoxicating substances” includes medical marijuana as it’s used in the Honig Act.

Nothing in the Honig Act requires an employer to commit any act that would cause the employer to be in violation of federal law, lose a licensing-related benefit pursuant to federal law, or lose a federal contract or federal funding. For example, most federal contractors are required to comply with the federal Drug-Free Workplace Act (DFWA), which precludes the possession or use of controlled substances at work sites. 41 U.S.C. §8101(a)(5)(B).

Future lawsuits surrounding marijuana use are likely to be focused on the types of reasonable accommodations employers should make and what jobs are too safety-sensitive to permit an accommodation for medical marijuana use. Due to the Honig Act’s infancy, it is not clear if New Jersey courts will follow precedent from other states imposing a burden on the employer to engage in an interactive process with the employee to determine if there are medical alternatives that are equally effective, and the use of which would not violate company policy.

In some other states, when there are no equally effective alternatives, the employer bears the burden of proving that the use of a medication would cause an undue hardship to the employer’s business to justify the employer’s refusal to make an exception to an anti-drug policy. In addition, the use of medical marijuana may be for an underlying condition meeting the definition of a disability, a condition that affords job protections, including the need to engage in the interactive process seeking to reach a reasonable accommodation.

For example, in Massachusetts, an employer may be able to show an undue hardship exists where accommodating the medical marijuana use would impair the employee’s performance of her work; pose an unacceptably significant safety risk to the public, the employee or fellow employees; or violate an employer’s contractual or statutory obligation and thereby jeopardize its ability to perform its business. We do not yet know how New Jersey will interpret what constitutes an undue hardship in accommodating an employee’s medical marijuana use.

On March 27, 2019, New Jersey’s Appellate Division, the second-highest court, issued an unpublished opinion in Wild v. Carriage Funeral Holdings, Inc. et al., A-3072-17T3 (March 27, 2019). Mr. Wild appealed dismissal of his lawsuit against his former employer alleging various Law Against Discrimination (LAD) violations and common-law defamation. His lawsuit claimed his employer discriminated against him for his use of medical marijuana, which he used as part of his cancer treatment. Both parties pointed the Appellate Division to the fact that “nothing” in CUMMA requires an employer to accommodate a medical marijuana user. Based on that the defendants argued, the plaintiff’s claims under the LAD could not go forward.

The Wild court analyzed whether the plaintiff pleaded a case under the LAD; it did not weigh and analyze proofs. The court concluded the plaintiff set forth allegations necessary to his cause of action and the matter was reversed and remanded for further proceedings. The Appellate Division held CUMMA’s declaration should not be construed to “require” an accommodation, but does not mean such a requirement might not be imposed by other legislation. N.J.S.A. 24:6I-14. Further, the court concluded that CUMMA’s refusal to require an employment accommodation for a user does not mean CUMMA immunizes employers from obligations already imposed elsewhere. Essentially, CUMMA does not limit the LAD by permitting an employer’s termination of a cancer patient’s employment by discrimination without compassion.

The Appellate Division rejected the argument CUMMA and the LAD are in conflict because CUMMA states that “nothing in this act shall be construed to require … an employer to accommodate the medical use of marijuana in any workplace.” N.J.S.A. 24:6I-14. CUMMA intended to cause no impact on existing employment rights; CUMMA neither created new employment rights nor destroyed existing employment rights. CUMMA imposes no burden on defendants, and negates no rights or claims available to a plaintiff under the LAD.

The New Jersey Supreme Court agreed to review the case and heard oral argument on February 4, 2020. The State Supreme Court is considering the impact of the Honig Act’s amendments providing employment protections to medical marijuana users. Because the Honig Act was passed after the events leading to Wild’s termination, it is unclear how it will affect his case on appeal. The Court may address whether the Honig Act, as amended, grants employees a private right of action, and, if so, whether the amendments are retroactive. We anticipate the Supreme Court’s decision within the next three to six months.

While the Honig Act grants employee protections, it is likely that employees still will seek to bring suits under the LAD as a continued source of protection because, unlike the Honig Act, the LAD allows the possibility for punitive damages and contains a fee-shifting provision.

For now, employers should, at a minimum, make sure they comply with the notice and communication provisions in the Honig Act when an employee/applicant tests positive.

© 2020 Wilson Elser

For more on marijuana and employment see the National Law Review Labor & Employment section.

In The Weeds: Key Intellectual Property Takeaways For The Cannabis Industry

1. Patent Filings Are Rapidly Increasing

The number of patent filings at the United States Patent and Trademark Office (“PTO”) directly correlates to the rise of cannabis legalization. According to Magic Number, a data analytics company, between 2017 and 2018 the PTO issued almost 250 cannabis-related patents—more than in the previous seven years combined. These filings cover a range of inventions, including medical treatments and pharmaceutical compositions, cultivation techniques, vaporizers, and cannabis-infused products like toothpaste, coffee beans, and alcoholic drinks. With this uptick in patent filings, the volume of cannabis-specific prior art is on the rise as well. Those interested in obtaining patent protection in the cannabis industry should not fall behind their peers nor wait until the prior art field has fully developed. Early filing is critical.

2. Cannabis is Still Illegal Under Federal Law

Despite the growing number of patent filings, it is important to recognize that processing and distributing cannabis is still illegal under the federal Controlled Substance Act. Recent scholarly articles have argued that federal courts should not entertain most cannabis patent infringement suits due to illegality. Nonetheless, some courts have allowed these cases to proceed on the merits. United Cannabis Corporation v. Pure Hemp Collective Inc. is the first trial involving a cannabis patent in federal court. Specifically, the patent in dispute relates to the extraction of pharmaceutically active components from plant materials (e.g., liquid cannabinoid formula including THC). The plaintiff filed a patent infringement suit against a competitor maker of CBD products. In April 2019, a judge ruled in favor of United Cannabis Corporation by rejecting the argument that the plaintiff’s formulations are not patent eligible. Although the legal status of cannabis is not an issue in the case, it is important to remember that cannabis is not legalized at the federal level and that federal case law is still developing.

3. Design Patents can be a Valuable Component of an IP Portfolio

Design patents are a valuable form of protection in the cannabis space and are often a good alternative to utility protection. While 10 percent of patents issued overall are design patents, less than one percent of cannabis-related filings are designated as design patents. Design patents are quicker and cheaper to obtain; this may be desirable for fast-developing and/or cost-conscious companies and particularly for products having short life cycles. Design patents are particularly valuable for covering the ornamental aspects of well-known cannabis-related products, such as vaporizers, to deter wholesale copying. Business owners should consider the role design patents may play in protecting their products.

4. Trademark Filings are Similarly Increasing

Roughly 110 new cannabis-related federal trademark applications are filed each month since Congress approved the 2018 Farm Bill 11 months ago. Among other things, the Farm Bill removed “hemp” from the list of controlled substances under the Controlled Substances Act. This removal created an avenue for federal trademark registrations covering certain goods and services derived from hemp that contain no more than 0.3 percent THC. However, all other cannabis related products are currently ineligible for trademark protection due to its illegality. Namely, trademark law requires that the goods in connection with a particular trademark must be lawfully sold or transferred in commerce. To provide some flexibility given the tension between state and federal law for cannabis, trademark applicants should file applications using broad wording for the goods and services, which can allow applicants to narrow as needed to obtain a trademark registration. To register a cannabis-related trademark at the federal level, the cannabis-related business should be prepared to argue that the goods or services associated with the mark are not illegal under the Controlled Substances Act. Additionally, trademark registrations may be available in certain states for cannabis-related products and services. Although state registrations do not offer nation-wide protection, a company should consider filing for state trademark protection in conjunction with federal trademark flings. Companies should consider filing applications in states where cannabis is legalized.

5. IP Protection Strategy Beyond the United States

As of 2018, more than thirty countries have legalized cannabis, in one form or another, according to Marijuana Business Daily. The World Intellectual Property Organization notes that approximately 10,246 cannabis-related applications have been filed since 1978 under the Patent Cooperation Treaty, with 6,137 applications coming after 2008. Thus, the trends and recommendations above regarding domestic protection of cannabis are, likewise, relevant on the international stage. Likewise, companies should also consider foreign trademark filings in countries that have legalized cannabis. In particular, most foreign countries follow a first-to-file rule when it comes to trademarks. As a result, it is important to consider foreign trademark filings as early as possible.

Closing

With the drastic increase of cannabis-related patent and trademark applications, companies need to act quickly to protect their innovations in this rapidly growing industry. With cannabis-related patents, despite the uncertain legal landscape, early filings may be unexpectedly successful, given the infancy of the prior art field. With cannabis-related trademarks, companies should ensure that the goods or services associated with that trademark are not illegal under the Controlled Substances Act. Companies should also continue to monitor developments on a state-by-state and nation-by-nation basis. Given trends, it is expected that legalization will continue to expand to additional jurisdictions.

 

Copyright 2019 K & L Gates

ARTICLE BY Matthew S. Dicke, Sana Hakim, Kevin T. McCormick and Brittany Kaplan of K&L Gates.
For more in cannabis industry news, see the National Law Review Biotech, Food & Drug law page.

FDA Toughens Enforcement of Homeopathic Products

FDA recently announced that it was taking two significant actions with respect to products marketed as homeopathic drugs, suggesting that increased enforcement related to these products is imminent. Homeopathy is a form of alternative medicine that is based on the idea that illnesses and their symptoms can be treated by small doses of ingredients that produce similar symptoms in healthy people.

First, the Agency has withdrawn Compliance Policy Guide (CPG) Sec. 400.400, entitled “Conditions Under Which Homeopathic Drugs May be Marketed.” The CPG was issued in 1988 and described an enforcement policy that permitted unapproved homeopathic drugs to be marketed if certain conditions related to labeling, ingredients, manufacturing, and other considerations were met. In withdrawing the CPG, the Agency observed that products that seemed to meet the criteria described in the CPG nonetheless caused or could have caused serious harm.

Second, the Agency has revised its draft guidance entitled “Drug Products Labeled as Homeopathic.” The revised draft guidance describes enforcement priorities for homeopathic drugs marketed without required approval. According to the revised draft guidance, these priorities include:

•Products with reports of injury that, after evaluation, raise potential safety concerns.  For example, MedWatch reports on other information submitted to the Agency can indicate or signal a potential association between the product and an adverse event, medication errors, or other safety issues.

•Products that contain or purport to contain ingredients associated with potentially significant safety concerns. For example, potentially significant safety concerns are raised by products that contain or purport to contain:

– An infectious agent with the potential to be pathogenic;

– A controlled substance, as defined in the Controlled Substances Act, 21 U.S.C. 812;

– Multiple ingredients that, when used in combination, could result in possible interactions, synergistic effects, or additive effects of the various ingredients; and,

– Ingredients that pose a risk of toxic, or other adverse effects, particularly when the ingredients are concentrated or in low dilution presentations (e.g., 1X, 2X, or 1C), or are not adequately controlled in the manufacturing process.

  • Products for routes of administration other than oral and topical. . . .
  • Products intended to be used for the prevention or treatment of serious and/or life-threatening diseases or conditions. . . .
  • Products for vulnerable populations. . . .
  • Products with significant quality issues. . . .

The revised draft guidance stresses that “nothing in the FD&C Act exempts homeopathic drug products from any of the requirements related to approval, adulteration, or misbranding, including labeling requirements.” It further emphasizes that “any homeopathic drug product that is being marketed illegally is subject to FDA enforcement at any time.”

©2019 Greenberg Traurig, LLP. All rights reserved.

For more FDA regulations, see the National Law Review Biotech, Food & Drug law page.

A Win for Hemp in Court, and What it (Might) Mean for North Carolina

The hemp and cannabidiol (“CBD”) industries today face substantial uncertainty, and they lack clear Federal rules, regulations, and guidance within which governments and businesses can safely operate.

That dearth of guidance has, to some degree, left individual states to wrestle with how best to regulate and control the production and sale of hemp and hemp-derived products within their own borders.  At the epicenter of this struggle to address and regulate hemp in North Carolina is “smokable hemp.”

Where Do Things Stand in North Carolina?

When we last commented on the state of legislative efforts in North Carolina, the House of Representatives – along with local and state law enforcement agencies and county district attorneys – were fighting hard to kill the smokable hemp market in our state.  The proposal set forth in the current version of the NC Farm Act of 2019 (“SB 315”) seeks to immediately ban and reclassify smokable hemp as marijuana (the Senate version of the bill included a ban as well but on a much more delayed timeline), and to subject its cultivation, sale, possession, and consumption to the same criminal and civil penalties as those for marijuana.  The arguments and justifications for this ban have shifted over time, but generally include: that failing to ban smokable hemp will create “de facto” marijuana legalization in our state; that hemp and marijuana are indistinguishable in appearance and smell; that law enforcement will lose probable cause for drug-related searches and seizures; and that they will have to purchase expensive equipment to perform THC analysis in crime labs; that they will have to retire or retrain drug-sniffing canines (yes – this is apparently more important to House Republicans than the livelihood of our farmers and citizens’ civil liberties); that officers will have to be retrained and assigned to other jobs within their departments; and a general unwillingness to police and enforce marijuana laws differently in the future.

Since then, additional changes have been made to SB 315 – none of which are industry-friendly – and the bill was passed and approved by the House by a vote of 63 to 48.  Among other things, the revised House version of SB 315:

  • More broadly defines the technical definition of “smokable hemp” to mean all “harvested raw or dried hemp plant material, including hemp buds or hemp flowers, hemp cigars, and hemp cigarettes.” This overly broad, sweeping definition appears to cover and include the entire hemp plant once it is harvested.
  • Classifies smokable hemp as marijuana and criminalizes the manufacture, distribution, dispensing, delivery, sale, purchasing, or possession of smokable hemp in our state. Violations are punishable by civil and criminal penalties, including possible prosecution for a Class I felony.

Fortunately, SB 315 is not law.  The North Carolina Department of Agriculture and the North Carolina Senate – especially Senator Brent Jackson – have continued to showcase their support for the hemp and CBD industries.  Following its passage in the House, SB 315 was immediately referred to the Committee on Rules and Operations of the Senate, and there have been no indications so far that the bill will be considered for a concurrence vote this session – let alone be finalized, passed, and sent to Governor Cooper for signature or veto.

The Struggle is Real

North Carolina is not alone in its struggle.  Other states are also considering – and some have passed – legislative bans that, in effect, criminalize the production, sale, transportation, and possession of smokable hemp.  Indiana is one such state.  In response to the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”), Indiana enacted and signed into law Senate Enrolled Act No. 516 (“SEA 516”) on May 2, 2019.

SEA 516 adopted the 2018 Farm Bill’s definition of hemp.  However, SEA 516 also criminalizes the manufacture, finance, delivery, and possession of smokable hemp, which it defines as “a product containing not more than three-tenths percent (0.3%) delta-9 tetrahydrocannabinol (THC), including precursors and derivatives of THC, in a form that allows THC to be introduced into the human body by inhalation of smoke.”  The definition of smokable hemp in SEA 516 specifically includes “hemp bud” and “hemp flower.”

On June 28, 2019, a group of hemp industry plaintiffs filed suit (the “Indiana Lawsuit”) in the United States District Court for the Southern District of Indiana (the “Federal Court”), challenging the constitutionality of SEA 516’s smokable hemp provisions on the basis that they are preempted by federal law.  Shortly thereafter, the plaintiffs moved for a preliminary injunction that would temporarily halt Indiana’s enforcement of the smokable hemp ban pending the outcome of the case.  The State opposed that request, and the parties briefed their positions and presented their arguments to the Federal Court for consideration.

On September 13, 2019, the Federal Court granted the plaintiffs’ request for a preliminary injunction (the “Preliminary Order”)[1].  In doing so, at least for the time being, the Federal Court has prohibited the State of Indiana from enforcing the portions of SEA 516 that criminalize the manufacture, financing, delivery, or possession of smokable hemp.  It is important to remember that the Preliminary Order is not a permanent or “final” injunction and the Indiana Lawsuit is still ongoing.  But, the Preliminary Order is strongly worded and seems to forecast an ultimate outcome that favors the hemp and CBD industries.

How Does the Indiana Lawsuit Affect Us?

Just like Indiana’s SEA 516, North Carolina’s SB 315 adopts a definition of “smokable hemp” that differs from the definition of “hemp” set forth in the 2018 Farm Bill.  SB 315 classifies smokable hemp as “marijuana,” and in doing so, attempts to criminalize the manufacture, distribution, dispensing, delivery, purchase, or possession of smokable hemp in North Carolina.  These actions appear to be expressly preempted by Federal law.  They also preclude the transportation of hemp or hemp products in or through North Carolina in direct contravention of the 2018 Farm Bill’s express prohibition on restricting the transportation of hemp and its derivatives in interstate commerce.

SB 315’s restrictions on smokable hemp also appear to violate conflict preemption principles.  In the Preliminary Order, the Federal Court states that “the plain language of the 2018 Farm Bill, as well as statements from its legislative sponsors, reflect Congress’s intent to de-stigmatize and legalize all low-THC hemp, including its derivatives and extracts, and to treat hemp as a regulated agricultural commodity in the United States.”  Provisions of law that seek to criminalize the manufacture, distribution, dispensing, delivery, purchasing, or possession of smokable hemp (including hemp bud and hemp flower) – “hemp derivatives of the kind specifically legalized under the 2018 Farm Bill – frustrates these congressional purposes and objectives.”

Further, the Preliminary Order indicates that the anti-preemption provision of the 2018 Farm Bill only applies to hemp production, which means that states can enforce laws “prohibiting the growing of hemp” within their borders.  As noted by the Federal Court in its Preliminary Order, states (like, North Carolina) are free to place limits on the acreage that can be used to grow hemp within their borders or to dictate the type of seeds that can be used or planted by growers.  But, states may not pass laws that interfere with the right to transport in interstate commerce hemp – including hemp derivatives like “hemp buds” and “hemp flower” – that has been lawfully produced.  SB 315’s smokable hemp provisions, as they stand today, do just that.

The Preliminary Order also discredits many of the arguments raised to date by opponents of smokable hemp in North Carolina, including:
  • That there is no evidence that Congress ever contemplated, let alone had the intention of, legalizing smokable hemp with passage of the 2018 Farm Bill.

The Federal Court dismissed this argument by stating that “[t]he 2018 Farm Bill’s expansion of the federal definition of hemp and removal of all low-THC hemp from the federal list of controlled substances evinces a clear congressional objective to legalize all forms of low-THC hemp, including” smokable hemp.  This analysis can be easily applied to arguments raised by House Republicans and law enforcement groups that, during the 2015 legislative session, our General Assembly never contemplated the legalization of smokable hemp when it passed the industrial hemp research pilot program authorizing legislation.

  • That legalization of smokable hemp (or a failure to re-criminalize smokable hemp) will create significant obstacles for law enforcement agencies to enforce and prosecute North Carolina’s laws against marijuana.

In response to nearly identical arguments and public policy considerations raised in the Indiana Lawsuit, the Federal Court recognized that “the fact that local law enforcement may need to adjust tactics and training in response to changes in federal law is not a sufficient basis for enacting unconstitutional legislation.”

So What Comes Next?

Industry advocates and opponents alike will continue to monitor the Indiana Lawsuit. With limited case law to rely upon, the Federal Court’s final decision, though non-binding, will likely have a ripple effect in North Carolina and other jurisdictions across the country. For now, our hope is that the North Carolina Senate will continue to refuse a concurrence vote on the House version of SB 315 – and, that the Preliminary Order will chill additional efforts (like those occurring in North Carolina) to classify “smokable hemp” as marijuana or to otherwise ban, restrict, or criminalize possession of the plant.

[1] C. Y. Wholesale, Inc. et al., v. Eric Holcomb, Governor, in his official capacity, et al., S.D. Ind., No. 1:19-cv-02659-SEB-TAB (Doc. 31) (September 13, 2019).

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

For more on marijuana, cannabis & hemp-derived product regulation, see the National Law Review Biotech, Food & Drug law page.

FDA Issues Warning Letters to Companies Illegally Selling Unapproved, Misbranded Kratom Products

On June 25, FDA issued warning letters to two marketers and distributors of kratom products – Cali Botanicals and Kratom NC. FDA determined that the companies were illegally selling unapproved, misbranded kratom-containing drug products with unproven claims about their ability to treat or cure opioid addiction and withdrawal symptoms. Additionally, FDA found that the companies also made claims about treating pain, as well as other medical conditions like depression, anxiety, and cancer.

In FDA’s press release, Acting FDA Commissioner Ned Sharpless noted that there are no FDA-approved uses for kratom and the agency has been active in warning consumers about the serious risks associated with kratom. For example, as our readers may know, FDA has warned about both the high levels of heavy metals found in kratom products and the contamination of certain kratom products with salmonella. Indeed, FDA issued its first ever mandatory recall order for the salmonella-containing kratom products.

The June 25 warning letters allege that the companies used their websites and social media to illegally market kratom products and made unproven claims about the ability of the products to cure, treat, or prevent disease. Examples of the claims include:

  • “Kratom acts as a μ-opioid receptor-like morphine.”
  • “In fact many people use kratom to overcome opiate addiction.”
  • “Of course, people who are using kratom to overcome a preexisting opiate addiction may need to use kratom daily to avoid opiate withdrawal.”
  • “Usage: It is for the management of chronic pain, as well as recreationally.”

FDA reiterates that “[t]hese products have not been demonstrated to be safe or effective for any use and may keep some patients from seeking appropriate, FDA-approved therapies. Selling these unapproved products with claims that they can treat opioid addiction and withdrawal and other serious medical conditions is a violation of the Federal Food, Drug, and Cosmetic Act.” FDA has requested responses from both companies within 15 working days.

© 2019 Keller and Heckman LLP
For more on FDA regulation see the National Law Review Biotech, Food and Drug page.