Medicinal product regulation and product liability in the United States: overview

A Q&A guide to medicinal product regulation and product liability law in the United States.

The Q&A gives a high level overview of key issues including pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability.

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in the United States: overview.

To compare answers across multiple jurisdictions, visit the Medicinal product regulation and product liability Country Q&A tool.

The Q&A is part of the global guide to life sciences law. For a full list of jurisdictional Q&As visit www.practicallaw.com/lifesciences-guide.

Alexander J Varond and James E Valentine, Hyman, Phelps & McNamara, P.C., with contributions by Shook, Hardy & Bacon LLP
Contents

Regulatory overview

1. What are the main legislation and regulatory authorities for pharmaceuticals in your jurisdiction?

Legislation

The primary legislation governing pharmaceuticals is the Federal Food, Drug, and Cosmetic Act (FDCA) (21 USC § 301, et seq.). A list of laws enforced by the US Food and Drug Administration (FDA, or the agency) and related statutes is available at www.fda.gov/RegulatoryInformation/Legislation/default.htm.

Regulatory authorities

The FDA (www.fda.gov) is the primary regulator of medical products. It is responsible for protecting the public health by regulating:

  • Human drugs.

  • Veterinary drugs

  • Biological products.

  • Medical devices.

  • Food.

  • Cosmetics.

  • Dietary supplements.

  • Products that emit radiation.

  • Tobacco products.

The agency also advances public health by helping to expedite product innovation and facilitate access to accurate science-based information regarding the products it oversees. While the FDA does not develop, manufacture or test drugs, it requires evidence of a new drug's safety and effectiveness, demonstrated through non-clinical trials and clinical trials of the drug on human volunteers, before it will approve a drug for marketing. Drug manufacturers submit marketing applications, which include chemistry, manufacturing, and controls, non-clinical, pharmacokinetic and bioavailability, and clinical data, so that the FDA can determine:

  • Whether the drug is safe and effective for its proposed indication.

  • What information should be included in the drug's labelling.

  • Whether the manufacturing methods and quality controls are adequate.

Within the FDA, the Center for Drug Evaluation and Research (CDER) (www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/default.htm) oversees the research, development, manufacturing and marketing of drugs including certain therapeutic biologics. Drugs are defined as (21 USC §321(g)(1)):

  • Articles recognised in the official US Pharmacopoeia, official Homoeopathic Pharmacopoeia of the US, official National Formulary, or any supplement of those.

  • Articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals.

  • Articles (other than food) intended to affect the structure or any function of the body of man or other animals.

  • Articles intended for use as a component of any article specified above.

Within the FDA, while the Center for Biologics Evaluation and Research (CBER) usually regulates biologics, certain therapeutic biological products are regulated by CDER, including monoclonal antibodies, proteins for therapeutic use, and immunomodulators.

The Federal Trade Commission (FTC) (www.ftc.gov) is responsible for promoting consumer protection and preventing anti-competitive business practices. This includes regulating the marketing and advertising of OTC drugs (Updated FTC-FDA Liaison Agreement - Advertising of Over-the-Counter Drugs, 4 Trade Reg. Rep. (CCH) 9,851 (1971)).

 
2. Briefly outline how biologicals and combination products are regulated in your jurisdiction.

Biological and combination products are regulated by the FDA (see Question 1). Also within the FDA, CBER (www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CBER/default.htm) regulates many biological and related products for human use, including blood and blood components, vaccines, allergenics, tissues, cellular and gene therapies, and recombinant therapeutic proteins. A biologic is defined as "a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component, or derivative, allergenic product, or arsphenamine or derivative of arsphenamine...applicable to the prevention, treatment, or cure of a disease or condition of human beings" (42 U.S.C. §262(i)(1), Public Health Service Act). Biologics also include other types of products, including tissues and transplants, which are subject to good tissue practices and other regulatory requirements.

Combination products combine components that would be individually regulated by separate FDA Centers with varying regulatory authority (that is, biologics, devices and drugs). The Office of Combination Products (OCP) determines which FDA Center is responsible for the regulation of various combination products. OCP assigns primary jurisdiction to the agency centre based on a determination of the "primary mode of action" (PMOA) of the combination product. For example, if the PMOA of a device-drug combination is attributable to the drug product, CDER would have primary jurisdiction and the sponsor of the application would be required to submit a drug marketing application and pay the corresponding user fee. OCP releases updates that announce the jurisdiction of specific product classes.

 
3. Briefly outline how medical devices and diagnostics are regulated in your jurisdiction. Is there any specific regulation of health IT issues and mobile medical applications?

Medical devices and radiation-emitting products are regulated by the FDA (see Question 1). Within the FDA, the Center for Devices and Radiological Health (CDRH) (www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDRH/) oversees the research, development, manufacturing and marketing of medical devices.

A device is defined as (21 USC §321(h)) "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:

  • Recognised in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them.

  • Intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals.

  • Intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolised for the achievement of any of its primary intended purposes".

Devices are classified based on the amount of control necessary to assure the safety and effectiveness of the device. The three classes of medical devices are:

  • Class I devices are low risk devices. They are subject to the fewest regulatory controls (that is, only "general controls"). These devices are not intended to support or sustain life or be substantially important in preventing impairment to human health and cannot present an unreasonable risk of illness or injury. Examples include elastic bandages and hand-held surgical instruments (see 21 C.F.R. § 860.3).

  • Class II devices are moderate risk devices. General controls alone cannot assure the safety and effectiveness of Class II devices. Special controls may include special labelling requirements, mandatory performance and design standards, and post-market surveillance. Examples include powered wheelchairs, infusion pumps, and surgical drapes (see 21 C.F.R. § 860.3).

  • Class III devices are high risk devices. Insufficient information exists for the devices to assure safety and effectiveness solely through general or special controls. Class III devices require pre-market approval and include devices that support or sustain human life or present a potential unreasonable risk of illness or injury. Examples include implantable pacemakers, pulse generators, and automated external defibrillators (see 21 C.F.R. § 860.3).

There are two general regulatory pathways for marketing medical devices:

  • The most common is the pre-market notification or 510(k) submission. For a 510(k) submission, the applicant must demonstrate that its device is "substantially equivalent" to a previously marketed predicate device (see 21 CFR §807.92(a)(3)). The 510(k) submission identifies characteristics of the new or modified medical device as compared to a medical device with a similar intended use that is currently legally marketed in the US (the "predicate" device) (see 21 CFR §807.92(a)(3)). For 510(k)s, FDA only determines if the device is substantially equivalent to the predicate device even if the safety and effectiveness of the predicate device have never been assessed. FDA "clears" rather than "approves" 510(k)s. The statutory timeframe for review of a 510(k) is 90 days; however, the 510(k) process can take substantially longer.

  • The second is the Premarket Approval (PMA), which is similar to the new drug approval (NDA) process (see 21 C.F.R. §807.81). The applicant must provide "valid scientific evidence" giving "reasonable assurance" that the device is safe and effective for its intended use. PMA submissions require extensive testing (including, for example, clinical trials) and voluminous amounts of data. The statutory time frame for review of a PMA is 180 days; however, PMA approvals can take several years.

A third, less frequently used regulatory pathway, called the de novo process, is available for moderate-risk devices for which there is no predicate but due to the risk posed by the device, the PMA pathway is overly burdensome.

Health IT Issues

The Office of the National Coordinator for Health Information Technology (ONC) is authorised to regulate health IT by the Health Information Technology for Economic and Clinical Health (HITECH) Act (Pub. L. No. 111-5, 123 Stat. 226 (17 February, 2009). 

The HITECH Act authorises the US Department of Health and Human Services to establish programmes to improve healthcare quality, safety, and efficiency through the promotion of health IT, including electronic health records and private and secure electronic health information exchange. ONC authors regulations that set the standards and certification criteria electronic health records must meet to assure healthcare professionals and hospitals that the systems they adopt are capable of performing certain functions (see www.healthit.gov/policy-researchers-implementers/health-it-legislation-and-regulations).

FDA's jurisdiction extends to mobile applications (apps) that meet the definition of device in section 201(h) of the Federal, Food, Drug, and Cosmetic Act. FDA issued a final guidance in February 2015, stating that FDA intends to take a risk-based approach and apply its oversight only to those apps that meet the definition of a medical device and that could pose a risk to a patient's safety if the app were to not function as intended. According to the guidance, FDA will not enforce requirements under the FDCA against apps that meet the definition of medical devices but present only low risk to patients. Apps that undergo FDA review will be evaluated using the same regulatory standards and risk-based approach that the agency uses for other medical devices (see Mobile Medical Applications - Guidance for Industry and Food and Drug Administration Staff, http://www.fda.gov/downloads/MedicalDevices/.../UCM263366.pdf).

 
4. What is the structure of the national healthcare system, and how is it funded?

There is currently no national healthcare system that covers all citizens in the US. Most Americans have medical insurance through private insurance companies, which pay a percentage of healthcare costs. Employers may provide or subsidise the cost of medical insurance premiums. Two government programmes, Medicare and Medicaid, cover or assist with medical costs for the elderly, poor and disabled.

The Patient Protection and Affordable Care Act (Affordable Care Act, or ACA) (Pub. L. No. 111-148, 124 Stat. 119, enacted in March 2010) provides for significant reform to the US healthcare system, including reform to healthcare insurance and funding. The law includes various provisions to be phased in over the next decade, with a number of the key reforms implemented by 2014. Starting in 2014, most citizens are required to either buy health insurance or pay a tax penalty, with certain exceptions for the poor. Additionally, the law provides incentives for employers to provide healthcare benefits for their employees.

 
5. How are the prices of medicinal products regulated?

Pharmaceutical companies can set their own prices according to market demands. Anti-trust regulations overseen by the Federal Trade Commission (FTC) apply to the marketing of pharmaceuticals. Manufacturers and wholesalers generally negotiate with customers, including hospitals, Health Maintenance Organisations (HMOs), Managed Care Organizations (MCOs), Pharmacy Benefit Managers (PBMs), large chain pharmacies and smaller independent pharmacies to set prices.

There are also statutory discounts required for Medicaid, certain safety-net providers, and federal government purchasers.

There is also indirect influence through government control of drug reimbursements under the Medicare and Medicaid programmes.

 
6. When is the cost of a medicinal product funded by the state or reimbursed? How is the pharmacist compensated for his dispensing services?

Medicaid is a joint federal and state programme that provides medical assistance (including prescription drugs) for low income individuals who meet certain criteria. Under the federal Medicaid Drug Rebate Program, drug manufacturers must pay rebates on prescription drugs to state Medicaid programmes if they want their drugs to be eligible for Medicaid reimbursements or other payments by the federal government under certain other programmes.

Medicare prescription drug plans are available to all individuals covered by Medicare, regardless of income, health status, or current prescription expenses. To be eligible for Medicare, an individual must be either 65 years or older, qualify due to a disability or illness, or have kidney failure requiring dialysis or a transplant. Insurance companies and other private companies work with Medicare to offer these drug plans and prices. Like other insurance, Medicare prescription drug plans require payment of monthly premiums, deductibles and part of the prescription cost. Assistance with payments associated with the Medicare prescription drug plans is available for individuals with limited resources.

The Affordable Care Act has and will continue to affect the benefits provided by Medicaid and Medicare, including prescription drug benefits. The law expands Medicaid coverage and eligibility, and provides for certain rebates and discounts on prescription drugs under Medicaid and Medicare.

 

Clinical trials

7. Outline the regulation of clinical trials.

Legislation and regulatory authorities

Clinical trials are regulated under the Federal Policy for the Protection of Human Subjects, otherwise known as the "Common Rule", which applies to "all research involving human subjects conducted, supported or otherwise subject to regulation by any federal department or agency…" (the US Department of Health and Human Services (HHS) codified the Common Rule at 45 C.F.R. Part 46).

The FDA has established its own regulations that differ somewhat from, but closely track, the Common Rule, which apply only to research subject to regulation by the agency (21 C.F.R. Parts 50 and 56). These federal regulatory frameworks have two principal objectives: to protect the welfare of human study subjects and to ensure the integrity of study data.

FDA's human subjects protections regulations provide requirements for obtaining informed consent from human research subjects and for the oversight of clinical investigations by an institutional review board (IRB) with authority to oversee research conducted at the clinical investigator's institution (21 C.F.R. Parts 50 and 56, respectively). FDA has additional detailed regulations regarding the conduct of clinical trials of investigational drugs and devices (21 C.F.R. Parts 312 and 812, respectively).

Authorisations

Federal law requires that a new drug must be the subject of an approved marketing application prior to its introduction into interstate commerce (FDCA § 505(a)). However, a marketing application for a new drug must contain reports from clinical investigations of the new drug showing that it is safe and effective for its intended use (FDCA § 505(b)(1)(A)). Therefore, to introduce an unapproved new drug into interstate commerce to conduct clinical trials necessary to support its marketing application, the law provides an exemption from having an approved marketing application if it is for "drugs intended solely for investigational use" by qualified investigators (FDCA § 505(i)).

This exemption is conditioned on the sponsor providing to FDA in an investigational drug application (IND) preclinical tests, investigator certifications, a commitment to establish and maintain records and make reports regarding the investigational use of the drug, and a statement of the sponsor's intent with respect to assessing the safety and effectiveness of the drug in paediatric patients. The FDCA permits such clinical investigations of new drugs to proceed 30 days after a submission containing the information indicated above, in an Investigational New Drug Application (IND) (21 CFR §312.23), using FDA Form 1571 (available at www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/default.htm).

An IND must also contain a clinical protocol. An investigator cannot participate in a clinical trial on human subjects until he or she provides the sponsor with specific information (21 CFR § 312.53(c)), including a completed, signed statement from the investigator (FDA Form 1572) (available at www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/default.htm).

The investigator must agree to conduct the study according to the protocol, report any adverse experiences, and maintain adequate and accurate records. An IRB must also review and approve all clinical studies before an investigator begins conducting research.

Consent

Informed consent must be obtained from each study subject who will be administered an investigational drug (21 CFR § 312.60).

Trial pre-conditions

Before beginning a clinical trial, a protocol must be established, describing:

  • Types of patients that can participate.

  • Schedule of tests and procedures.

  • Drugs to be tested.

  • Dosages to be administered.

  • Length of the study.

  • Outcomes to be measured.

Procedural requirements

Sponsors of clinical trials involving human drugs, biological products, and combination products have numerous procedural requirements and obligations while conducting a clinical trial (for example, 21 CFR Parts 50, 54, 56, and 312). These obligations require that sponsors (21 CFR § 312.50):

  • Select qualified investigators.

  • Provide the information required to conduct a proper investigation.

  • Monitor the investigation.

  • Ensure that investigators are informed of known risks and that they are promptly informed of any new risks or adverse effects (the Investigator's Brochure).

After submission of an IND, the next steps before approval of a drug for marketing (see Question 9) include clinical testing on human subjects in the following phases (21 CFR § 312.21):

  • Phase 1. Small studies of 20 to 80 patients to determine toxicity and pharmacological information.

  • Phase 2. Small studies of several hundred patients to determine safety and efficacy.

  • Phase 3. Large studies of several hundred to several thousand patients to determine safety, efficacy and adequacy of labelling.

    After the FDA approves the New Drug Application (NDA), the drug can be marketed. After that, Phase 4 and other post-marketing studies may be required to be conducted to collect additional information about the risks, benefits and optimal use of a particular drug (21 CFR § 312.85).

 

Manufacturing

8. What is the authorisation process for manufacturing medicinal products?

Registration

Companies that manufacture, prepare, propagate, compound, or process drugs and human biological products in the US or are offered for import into the US must register their establishment(s) and submit to the FDA a listing of every product in commercial distribution (FDCA § 510 (21 USC § 360)). Foreign establishments must identify a US agent at the time of their registration. Registration must be renewed annually.

The Food and Drug Administration Safety and Innovation Act (FDASIA) was enacted in July 2012 (Public Law 112-144). Among other things, this legislation changes the registration process under the FDCA. Specifically, FDASIA requires the FDA to establish a unique facility identifier (UFI) system for both US and foreign drug establishments. After FDA establishes such a system, companies will be required to include a UFI for each establishment in their registrations. Further, companies will be required to include information about manufacturers of drug excipients of products listed, including the establishments used by the manufacturers to produce the excipients and the UFI of each (section 703, FDASIA (21 USC § 360(j))). FDA has proposed the UFI system in a draft guidance, available at http://www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm367199.pdf.

The FDA Division of Compliance Risk Management oversees the drug establishment registrations and listings, which must be submitted electronically unless a waiver is granted. Instructions regarding the FDA's electronic drug registration and drug listing are available at www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/ DrugRegistrationandListing/ucm078801.htm.

A manufacturer must register with the FDA as a drug establishment within five days of beginning the manufacturing, preparing, compounding, or processing of a drug or biological product (21 CFR § 207.20-21). The registration must list every drug that is in commercial distribution by the establishment. A distributor of a drug manufactured or processed by a registered establishment may also submit a drug listing.

Each drug establishment must renew its registration annually (21 CFR § 207.21(a)). Drug listing information must be updated every June and December (21 CFR § 207.21(b)). Any changes in the manufacturing of drugs and their packaging are reviewed by the FDA. Manufacturers must notify the FDA in advance of these changes by filing a manufacturing supplement to a new or generic drug application.

Annual fees are allocated to each establishment named in a New Drug Application (NDA) or Biologics License Application (BLA) or has an NDA/BLA or supplement pending (21 USC §§ 379h( a)(2)(A), 379j-42, and 379j-52). Annual drug establishment fees are available at http://www.fda.gov/ForIndustry/UserFees/PrescriptionDrugUserFee/.

The FDA has statutory authority to ensure product safety, effectiveness and compliance with current good manufacturing practices (CGMPs), including:

  • Seize any drug that is adulterated or misbranded when initially introduced into the market, while in interstate commerce or while held for sale (21 USC § 334).

  • Enter any factory, warehouse or establishment in which food, drugs, devices, tobacco products, or cosmetics are manufactured, processed, packed or held for introduction into interstate commerce, or to enter any vehicle used to transport or hold such products (21 USC § 374(a)(1)).

  • Inspect at reasonable times, within reasonable limits and in a reasonable manner, that facility or vehicle (see bullet point above) and all relevant equipment, finished and unfinished materials, containers and labelling (21 USC § 374(a)(1)).

  • Collect samples of drug products (21 USC§ 372(b)).

  • Inspect records, files, papers, processes, controls and facilities related to drug products (21 USC § 374(a)( 1)).

  • Require production of documents in physical or electronic form in advance of or in lieu of an inspection (21 USC § 374(a)( 4)).

FDA inspection procedures and policies are described in the FDA's Investigations Operations Manual (see www.fda.gov/ICECI/Inspections/IOM/default.htm).

FDASIA amended the FDCA to replace the previous biennial schedule for inspections with a risk-based schedule for both domestic and foreign facilities based on an establishment's ''known safety risks''. The FDA considers factors including an establishment's compliance history, the history of recalls related to the establishment, the inherent risks of products produced at the establishment, the frequency of prior inspections of the establishment, and whether the establishment has been inspected by certain foreign governments or agencies. Establishments manufacturing devices are subject to inspection at least once every two-year period (21 USC § 360(h)).

Biologics are subject to stringent manufacturing regulations, and each manufacturing facility must meet CBER guidelines to ensure safety of that particular biologic product (21 CFR § 601.20). FDA must be notified of any changes to the manufacturing process of any drug (see 21 CFR 314.70) or biologic product (see 21 CFR § 601.12 and 21 USC § 356a).

If a company fails to comply with CGMPs or biologic manufacturing guidelines, the FDA can:

  • Issue an untitled or warning letter.

  • Request a product recall.

  • Impose an import detention.

  • Initiate a seizure action.

  • Seek an injunction.

  • Impose a clinical hold on any planned or ongoing trials.

  • Assess a civil monetary penalty.

  • Suspend, revoke or fail to approve an application to market a drug or biologic.

 

Marketing

Authorisation and abridged procedure

9. What is the authorisation process for marketing medicinal products?

Application

Manufacturers must obtain approval of a New Drug Application (NDA) from the FDA before marketing a prescription drug. Biologics manufacturers must submit a Biologics License Application (BLA) and obtain a biologics licence from CBER before placing a biologic into interstate commerce. FDA Form 356h is used for both NDAs and BLAs and can be found at www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/default.htm.

An NDA must include the information set out in 21 CFR § 314.50, which generally includes:

  • An application form.

  • Index.

  • A summary.

  • Five (or six) technical sections.

  • Chemistry, manufacturing, and controls information, non-clinical data, pharmacokinetics/bioavailability, microbiology (only for anti-infectives), clinical data, and statistical analyses.

  • Case report forms.

  • Drug samples and labelling.

A BLA must include the information set out in 21 CFR § 601.2, which includes similar information to what is required for a NDA.

Authorisation conditions

FDA approval of an NDA depends on sufficient evidence that the drug meets the statutory standards for:

  • Safety and effectiveness.

  • Manufacturing and controls.

  • Labelling.

  • Bioequivalence (where applicable).

Likewise, the FDA will approve a BLA after it determines that the product, manufacturing process, and manufacturing facilities meet applicable requirements to ensure the continued safety, purity and potency of the product. This includes an assessment of the storage and testing of cell substrates used in manufacturing the biologics.

Key stages and timing

The two main stages for product approval are:

  • IND review and clinical investigations.

  • NDA or BLA review and approval for marketing or licensure.

Once adequate safety and effectiveness information is developed for a drug, the manufacturer may obtain FDA approval by submitting an NDA or BLA (see above, Application). Companies can submit their NDAs or BLAs electronically.

Starting in May 2017, NDAs and BLAs must be submitted electronically in a format developed by the International Conference on Harmonization (ICH), called the electronic common technical document (eCTD). The FDA will review the application within 60 days of submission to review whether the NDA or BLA is "sufficiently complete to permit a substantive review". If the NDA or BLA is "fileable", the FDA will accept the NDA or BLA for filing. The FDA's review clock starts once the NDA is accepted for filing. The FDA has committed to reviewing 90% of applications within ten months of filing for standard reviews, and six months of filing for priority reviews.

Fee

Fees are set by the Prescription Drug User Fee Act (PDUFA), Medical Device User Fee Act, Generic Drug User Fee Amendments of 2012 (GDUFA), and the Biosimilar User Fee Act of 2012 (BsUFA). The user fee for filing an NDA is US$2,374,200 (for 2016). For fee information, see www.fda.gov/ForIndustry/UserFees/default.htm.

Period of authorisation and renewals

Authorisation to market a drug continues unless and until it is withdrawn from the market, either voluntarily by the manufacturer or by FDA, or FDA withdraws its approval of an NDA or BLA.

Monitoring compliance and imposing penalties

The FDA continually assesses the safety and effectiveness of approved prescription drugs and biologics by requiring that adverse event reports, and other post-marketing reports, are filed with the FDA by the manufacturer (21 CFR §§ 314.80–81 and 600.80).

If the FDA no longer believes that the data support the safety and efficacy of an approved drug or biologic, it can:

  • Issue a written notice or warning.

  • Suspend or withdraw the NDA approval or biologics licence.

  • Seize the drug or biologic.

Violations of the FDCA can also result in both civil and criminal penalties.

 
10. What commitments and pharmacovigilance obligations apply after a company has obtained marketing authorisation? Are there further conditions concerning how the drug is distributed and accessible to patients?

After an NDA is approved, companies are required to report post-marketing adverse drug experiences (21 CFR § 314.80). For example, the manufacturer must report each serious and unexpected adverse drug experience, whether foreign or domestic, as soon as possible, but no later than 15 days after initial receipt of the information. Manufacturers must report adverse events quarterly for the first three years and then once annually. In addition, companies must submit annual reports that include a summary of "significant new information from the previous year that might affect the safety, effectiveness, or labelling of the drug product" (21 CFR § 314.81(b)(2)). Licensed manufacturers of a biologic must comply with similar adverse event reporting requirements (21 CFR § 600.80).

In addition, the FDA has issued a pharmacovigilance guidance document that provides recommendations about identifying and describing safety signals, investigating a signal through observational studies, interpreting safety signals and developing a pharmacovigilance plan, available at http://www.fda.gov/downloads/RegulatoryInformation/Guidances/UCM126834.pdf.

 
11. Which medicinal products can benefit from the abridged procedure for marketing authorisation and what conditions and procedure apply? What information can the applicant rely on?

Sponsors seeking FDA approval to market a drug can benefit from two abridged pathways.

Right of Reference NDA (505(b)(2) NDA). A sponsor can file a 505(b)(2) NDA if it wishes to rely on investigations it did not conduct or were not conducted on its behalf, "and for which [it] has not obtained right of reference or use from the person by whom the investigations were conducted". The 505(b)(2) pathway cannot be used for products that duplicate a listed drug (an Abbreviated New Drug Application must be submitted instead) or whose only difference from a listed drug is that the active ingredient is less readily absorbed or available.

Abbreviated New Drug Application (ANDA). A sponsor seeking to duplicate an innovator drug (that is, to create a generic drug) can submit an ANDA (21 CFR § 314.92, et seq.). The main advantage of submitting an ANDA is that the FDA generally does not require ANDA sponsors to include preclinical or clinical data to establish safety and effectiveness. An ANDA sponsor must demonstrate that its product is bioequivalent to the innovator drug (that is, it displays comparable bioavailability when studied under similar experimental conditions to the innovator drug). The generic drug must have identical active ingredients, dosage form, strength, route of administration and conditions of use, including labelling.

Sponsors seeking to market a biologic can use a pathway established in March 2010, when the Biologics Price Competition and Innovation Act (BPCIA) was enacted as part of the Patient Protection and Affordable Care Act. The BPCIA establishes an abbreviated approval pathway for biological products that are "highly similar to" or "interchangeable with an FDA-approved biological product", also known as biosimilar products. The sponsor must demonstrate that there are no clinically meaningful differences between the biological product and the reference product in terms of safety, purity and potency.

In addition to the two abridged pathways, sponsors can expedite access to a drug or speed the FDA's review of an application by using the following programmes.

Fast Track (21 USC § 356(b)). Fast track designation is intended to expedite FDA review of drugs for serious or life-threatening conditions with non-clinical data that demonstrate the potential to address unmet medical needs. Fast track designation provides for more frequent meetings and correspondence with the FDA and the ability to submit an NDA in sections, through a process called "rolling review". Sponsors can request fast track designation at the time of their original submission of the IND or any time afterwards, but ideally no later than the sponsor's pre-NDA or pre-BLA meeting (21 USC § 356(b)).

Priority Review. The FDA will designate an NDA or BLA for priority review at the time of filing if the therapy offers significant improvement in safety or effectiveness over available therapy, or if it provides a treatment option where adequate therapy is not currently available. Priority review is also available for drugs designated as Qualified Infectious Disease Products, and for sponsors redeeming a priority review voucher (which are granted by the FDA at the time of approval of certain drugs treating tropical diseases or rare paediatric diseases (21 USC §§ 360n, 360ff). Priority review shortens the FDA's review time from ten months to six months (Prescription Drug User Fee Act, 1992).

Accelerated Approval (21 USC § 356(b), 21 CFR § 314.500, et seq.). Unlike the fast track, priority review, and breakthrough therapy designations, accelerated approval shortens the sponsor's clinical development time. Accelerated approval permits sponsors to use "surrogate endpoints" that are likely to predict clinical benefit (for example, viral load or tumor shrinkage) as opposed to requiring sponsors to prove substantial evidence on a clinical endpoint (for example, survival or remission). Accelerated approval is available for therapies for serious conditions with a meaningful advantage over available therapy. Accelerated approval is provisional and a written commitment to complete clinical studies to demonstrate clinical benefit is required (that is, confirmatory studies) (see also 21 CFR Part 601, Subpart E).

Breakthrough Therapy (21 USC § 356(a)). The FDA will designate a drug as a breakthrough therapy if it is "intended, alone or in combination with 1 or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on 1 or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development". Importantly, breakthrough therapy designation requires "preliminary clinical evidence", which is more than is required for Fast Track designation. Breakthrough therapy designation enables the sponsor to submit their NDAs through "rolling review" and to request intensive guidance from the FDA on an efficient drug development programme, beginning as early as Phase 1. Sponsors also receive an organisational commitment from the FDA involving senior FDA leadership to expedite development and review.

Qualified Infectious Disease Products (QIDPs). Certain new antibacterial and antifungal products intended to treat certain serious infectious diseases, including drug resistant pathogens, may be eligible for QIDPs designation. QIDPs receive priority review and fast track status. They are also eligible for additional non patent exclusivity. (21 U.S.C. §§ 355f and 356(b)(1)).

 
12. Are foreign marketing authorisations recognised in your jurisdiction?

Foreign marketing authorisations of medicinal products are not recognised in the US.

 

Parallel imports

13. Are parallel imports of medicinal products into your jurisdiction allowed?

The FDCA (21 USC § 331) prohibits interstate shipment of any unapproved new drugs. This includes foreign-made versions of US-approved drugs that have not received FDA approval. Importers must show that any drugs offered for importation have been approved by the FDA.

FDASIA amended the FDCA to require commercial importers of drugs to register with the FDA and submit a unique identifier for its principal place of business. The FDA has proposed a system for implementing the unique facility identifier requirement (see Question 8). Drugs imported by unregistered importers will be considered misbranded (section 714, FDASIA, 21 U.S.C. § 352).

 

Restrictions on dealings with healthcare professionals

14. What are the restrictions on marketing practices such as gifts, sponsoring, consultancy agreements or incentive schemes for healthcare establishments or individual medical practitioners?

Federal anti-kickback statutes regulate the remuneration that can be provided. Offering or receiving any type of remuneration, directly or indirectly, to any person or entity in a position to purchase, lease, order or prescribe (or influence such) a service or item reimbursed by a federal healthcare programme could violate the federal Anti-Kickback Statute (42 USC §1320a-7b(b)), if one purpose of the item of value provided to the healthcare professional is to induce federal healthcare programme business. Pharmaceutical manufacturers must, therefore, carefully scrutinise sales and marketing practices involving gifts, donations or other forms of remuneration that may be given to medical professionals and/or facilities.

No gift can generally be given to healthcare providers in exchange for prescribing products or a promise to continue prescribing products. Gifts provided to physicians should primarily be for the benefit of the patient. In January 2009, the Pharmaceutical Research and Manufacturers of America (PhRMA) revised its Code on Interactions with Healthcare Professionals. The revised code:

  • Prohibits non-educational gifts of any value, including pens, mugs and medical equipment.

  • Allows for the distribution of materials of minor value (that is, less than US$100) that are intended for the education of patients or healthcare personnel.

  • Allows for occasional modest meals to be provided to doctors in conjunction with an educational presentation, but only in the office or hospital setting.

The American Medical Association (AMA) provides guidance to physicians as to the gifts it considers acceptable in its Gifts to Physicians from Industry (Council on Ethical and Judicial Affairs, Opinion 8.061). Similar to the PhRMA's revised Code, the AMA's Opinion sets out the guiding principles that gifts given to physicians should:

  • Primarily benefit the patient.

  • Not be of substantial value.

  • Not influence the physician.

The AMA indicates that gifts of minor value that serve an educational purpose are appropriate, including textbooks and modest meals. The AMA finds that a physician can receive modest meals at educational functions, but does not set location limitations similar to the PhRMA Code. Unlike the PhRMA Code, the AMA allows for physicians to receive gifts of minimal value related to their work (for example, pens and notepads) and also medical equipment of non-substantial value. The PhRMA and AMA agree that items intended for the personal benefit of the physician, including cash or cash equivalents, are considered inappropriate (except as compensation for bona fide services).

Under the FDCA, representatives of drug manufacturers have traditionally been banned from promoting the use of medications for uses that have not been approved by the FDA (known as off-label use). The FDA permits manufacturers to lawfully distribute material concerning off-label use in certain circumstances. Manufacturers can respond to unsolicited requests for information about FDA-regulated products by providing truthful, balanced, non-misleading and non-promotional scientific or medical information that is responsive to the specific request, even if it includes unapproved or uncleared indications.

The FDA's Office of Prescription Drug Promotion (OPDP) (formerly Division of Drug Marketing, Advertising and Communications (DDMAC)) advises the pharmaceutical industry on proposed advertising and promotional labelling (21 CFR § 202.1(j)(4)). The OPDP has requested that launch campaigns be submitted voluntarily for comment before dissemination. Companies can request an advisory opinion on non-launch promotional pieces before they use them (21 CFR § 10.85).

The Foreign Corrupt Practices Act (FCPA) prohibits certain types of payments to government officials outside the US. The anti-bribery portion of the FCPA prohibits companies with operations in the US, including drug and device manufacturers, from influencing foreign government officials or gaining improper advantage by offering, paying, or promising to pay foreign officials anything of value.

 

Sales and marketing

15. What are the restrictions on selling medicinal products? Are there specific regulations for the sale of medicinal products on the internet, by e-mail and by mail order?

Prescription drugs and over-the-counter drugs (OTC) are subject to different requirements. Prescription drugs must be prescribed by a physician to a particular patient, and must be purchased from a pharmacy. OTC drugs do not require a doctor's prescription and can be purchased outside of a pharmacy.

Pharmaceutical products can be marketed and sold over the internet or by mail order. A patient must, however, have a prescription from a physician to purchase a prescription drug. Given the difficulties of regulating the internet and uncertainty over who exactly has the authority to regulate it, many people may be purchasing prescription drugs without prescriptions.

Some states have attempted to regulate prescribing drugs on the internet by enacting laws that make it illegal for a doctor to prescribe a drug without an examination. For further information, see www.fda.gov/ForConsumers/ProtectYourself/default.htm.

 

Advertising

16. What are the restrictions on advertising medicinal products?

Legislation and regulatory authority

Under the FDCA, the FDA has the authority to regulate drug labelling. Labelling is defined broadly. The Federal Trade Commission (FTC) also has the authority to regulate drug advertising under the Federal Trade Commission Act. Under a 1971 Memorandum of Understanding between the FDA and the FTC:

  • The FDA is primarily responsible for the regulation of prescription drug labelling and advertising.

  • The FTC is primarily responsible for the regulation of drug advertising for OTC drugs.

FDA regulations concerning prescription drug advertising are designed, in part, to ensure that claims are supported by credible scientific evidence (21 CFR § 202.1). FDA's OPDP is responsible for ensuring truthful advertising and promotion of prescription drugs. A drug is considered "misbranded" if an advertisement fails to satisfy the requirements of the FDCA and FDA regulations (21 USC § 352).

The FDA regulates the labelling of medical devices. Medical device advertising may also be regulated by the FTC. In practice, the FTC plays a minor role in medical devices regulation. The FDA exercises jurisdiction over advertising of "restricted devices". The Lanham Act (15 USC § 1051, et seq.) allows lawsuits based on claims of false advertising. Competitors can sue to challenge advertising as false or misleading (§ 43(a), Lanham Act, 15 USC §1125(a)(1)(B)).

Restrictions

Advertising to patients and healthcare providers is generally permitted. However, such advertising cannot be false or misleading. Advertisements for prescription drugs must also present a "fair balance" between information on effectiveness and risk, and reveal material facts that a healthcare provider or patient would find important in assessing whether to use a drug. Sponsors that wish to make claims comparing their products to other products must provide "substantial evidence" through adequate and well-controlled studies. The FDA's ability to restrict off-label communication, although fairly broad, is subject to review and challenge under the First Amendment of the US Constitution.

Generally, prescription drug advertisements do not require prior FDA approval (21 USC § 352(n)). In the case of accelerated approval products, however, all promotional materials intended for dissemination within 120 days of approval must be submitted to the FDA during the pre-approval period (21 CFR § 314.550). Advertisement pre-approval may also be required, in special circumstances, as part of an enforcement action.

Manufacturers must submit all advertisements to the OPDP when the advertisement is initially published (21 CFR § 314.81(b)(3)(i)). The OPDP also offers comments on any adverts submitted before publication.

While physicians can prescribe a drug for an off-label indication, manufacturers can only promote the drug for the indications for which the drug is approved. Promotion for a use outside the scope of the approved indication is known as "off-label promotion". There are limited exceptions to this general rule.

Devices are regulated similarly to drugs, but there are certain key differences. For example, the level of evidence required for advertising claims substantiation differs between devices. PMA-approved devices must be supported by "valid scientific evidence" while the standard for 510(k)-approved devices is less clear and substantiation data can be "on file". Also, the FTC regulates "non-restricted devices". Devices are considered restricted devices if the FDA issues a regulation designating a class of devices as restricted or if the FDA classifies the device as a restricted device as a condition of PMA approval.

Internet advertising

The FDA applies the same regulations to the advertising and promotion of drug and medical devices on the internet as it does with print and television. Indeed, the FDA has shown its willingness to carry out enforcement actions against sponsors in these media. Clear guidance from the FDA has, however, come at a very slow pace. Despite its general unwillingness to make special exceptions for this new medium, the FDA has relaxed its requirement for postmarketing submission of interactive promotional materials (www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM381352.pdf).

 

Data protection

17. Do data protection laws impact on pharmaceutical regulation in your jurisdiction?

The Health Insurance Portability and Accountability Act 1996 (HIPAA) regulates, among other things, the use and disclosure of Protected Health Information (PHI) held by certain "covered entities". The US Department of Health and Human Services (HHS) published a final HIPAA "Privacy Rule" in December 2000, which was later modified in August 2002. This Rule set national standards for the protection of individually identifiable health information by three types of covered entities: health plans, healthcare clearinghouses, and healthcare providers who conduct the standard healthcare transactions electronically. Compliance with the Privacy Rule was required as of 14 April 2003 (14 April 2004, for small health plans). A summary of the HIPAA Privacy Rule is available at http://www.hhs.gov/hipaa/for-professionals/privacy/laws-regulations/index.html.

PHI is information held by a covered entity concerning health status, provision of healthcare, or payment for healthcare that can be linked to an individual patient. This includes a patient's medical records and payment history. With limited exceptions, covered entities can only disclose PHI after receiving written authorisation from the patient. Covered entities must notify individuals of their uses of PHI, and must keep track of disclosures of PHI and document privacy policies and procedures.

HIPAA permits disclosure of PHI for two purposes that are related to pharmacovigilance:

HHS published a final HIPAA "Security Rule" in February 2003. This Rule sets national standards for protecting the confidentiality, integrity, and availability of electronic protected health information. Compliance with the Security Rule was required as of 20 April 2005 (20 April 2006, for small health plans). A summary of the HIPAA Security Review can be found here: http://www.hhs.gov/hipaa/for-professionals/security/laws-regulations/index.html.

 

Packaging and labelling

18. Outline the regulation of packaging and labelling of medicinal products.

Legislation and regulatory authority

The FDA requires that specific requirements are met for drug labelling to be approved. The general labelling provisions are applicable to all drug labels and a variety of information must be included (21 CFR Part 201).

Information requirements

General labelling provisions. Information included on drug labels must be prominent and conspicuous. There must be no misleading statements on a drug label with regard to another drug, device, food or cosmetic (21 CFR § 201.6). A drug label must clearly bear the name and place of business of the manufacturer, packer or distributor (21 CFR § 201.1). Directions for use must be included and provide the following information (21 CFR § 201.5):

  • Statements of all conditions, purposes or uses for which the drug is intended.

  • Quantity of doses for different age groups.

  • Frequency and duration of administration.

  • Time of administration in relation to meals or other time factors.

  • Method of administration and preparation for use.

Labelling requirements for prescription drugs. A prescription drug label must contain:

  • The established name of the drug as one of its principal features (21 CFR § 201.50).

  • The net quantity of the content (21 CFR § 201.51).

  • A summary of the essential scientific information needed for the safe and effective use of the drug (21 CFR § 201.56(a)( 1)).

This information should be based on data derived from human experience whenever possible (21 CFR § 201.56(a)( 3)).

The required format and content of the label for prescription drugs are set out in 21 CFR §§ 201.56 and 201.57.

For some prescription medicines with serious risks, the FDA may require manufacturers to establish a risk evaluation and mitigation strategy (REMS). REMS include medication guides, patient package inserts, communications plans and, for drugs with the most serious risks, elements to assure safe use (ETASUs). ETASUs can include restricted distribution plans, physician certification, patient registries and other similar requirements (21 USC § 355-1).

Labelling requirements for over-the-counter (OTC) drugs. As OTC drugs are used without the supervision of a physician, additional labelling requirements apply (21 CFR Part 201 Subpart C). The FDA has issued regulations to provide easy-to-understand labelling for OTC drugs (21 CFR § 201.66). These regulations require use of a standardised format that clearly shows a drug's ingredients and warnings, and makes it easier for consumers to understand information about a drug's benefits and risks, as well as its proper use.

Specific labelling requirements. Certain drugs have specific labelling requirements, and all relevant regulations must be consulted concerning these drugs (21 CFR §§ 201.300-327).

Other conditions

In most circumstances, the label must be in English (21 CFR §201.15(c)(1)).

 

Product liability

19. Outline the key regulators and their powers in relation to medicinal product liability.

The information in this section was written by Shook, Hardy & Bacon LLP, and has a law stated date of 1 May 2014.

The FDA is the key regulator of medicinal product liability. The FDA regulates the approval of drugs and medical devices as well as their labelling and marketing. Companies may also be subject to regulation by state agencies and by lawsuits brought under state laws. State statutes, regulations, and lawsuits are pre-empted where inconsistent with federal law. See also Questions 1, 2, 16, 20, 22, and 23.

 
20. Are there any mandatory requirements relating to medicinal product safety?

During clinical trials, sponsors must report adverse events and classify them as minor or serious, unexpected or expected, and study-related, possibly study-related, or not study-related (see 21 C.F.R § 312.64). The FDA also requires companies to develop procedures for the surveillance, receipt, evaluation, and reporting of post-marketing adverse drug experiences to the FDA before new drug approval. After approval, manufacturers must report adverse events quarterly for the first three years and annually thereafter (see 21 C.F.R. §§ 314.80- 81 and 600.80). The amount of time permitted for reporting adverse events generally depends on the seriousness of the risk and whether it was expected. Manufacturers must issue field alert reports to the FDA within three working days if it receives information concerning (21 C.F.R. § 314.81(b)(1)):

  • Any incident causing a product or its labelling to be mistaken for, or applied to, another article.

  • Any bacteriological contamination or significant change in the drug product.

  • Information on failure of a distributed product to meet specifications.

Similarly, the Medical Device Reporting (MDR) regulation requires reporting of device-related adverse events and problems to the FDA (see 21 C.F.R. § 803). Manufacturers are required to report to the FDA when they learn that one of their devices may have caused or contributed to a death or serious injury. In addition, manufacturers must report to the FDA when they become aware of malfunctions in their device that would likely cause or contribute to a death or serious injury if the malfunction were to occur.

FDA imposes numerous other requirements related to product safety. See also Questions 8, 9, 10, and 16.

 
21. Outline the key areas of law applicable to medicinal product liability, including key legislation and recent case law.

Legal provisions

The information in this section was written by Shook, Hardy & Bacon LLP, and has a law stated date of 1 May 2014.

Actions against drug manufacturers for producing or marketing a product with either a defective design or inadequate warning primarily lie in tort (negligence or strict liability) and breach of warranty claims (quasi-contractual in nature).

Substantive test

The tort law applicable in product liability cases involving drugs varies from jurisdiction to jurisdiction throughout the US. There is no federal tort law, while the law of each state often differs. Restatement (Third) of Torts (Restatement (Third)), drafted by the American Law Institute (ALI), provides the basis for product liability law in many jurisdictions. The Restatement (Third) establishes separate tests for manufacturing defects, design defects and warning defects. Strict liability applies only to manufacturing defects.

Under the Restatement (Third), design defect claims require a foreseeable risk of harm posed by the product that could have been reduced or avoided by the adoption of a reasonable alternative design. Design defect liability for prescription drugs and medical devices is limited (see § 6, Restatement (Third) of Torts). A design defect exists only if the risk of harm from the drug or device is so great when compared with the therapeutic benefits that doctors would not prescribe the drug for any class of patients.

Drug and medical device manufacturer liability is essentially limited to defects in manufacturing and failure to warn. The risks about which manufacturers must warn are foreseeable risks (Restatement (Third) of Torts: Products Liability § 6(d)( 1) (1998)). Unlike fiduciary consumer products, only licensed physicians can prescribe drugs and medical devices. Accordingly, a manufacturer's duty is to warn the physician, who is referred to in case law as "the learned intermediary". A breach of warranty is a form of liability, which is limited by the contractual concepts of disclaimer and notice. Warranty theories are governed by the Uniform Commercial Code (UCC), which has been adopted in some form by each state.

The UCC recognises various warranties, including:

  • Express warranty.

  • Implied warranty of merchantability.

  • Implied warranty of fitness for a particular purpose.

 
22. Who is potentially liable for defective medicinal products?

The information in this section was written by Shook, Hardy & Bacon LLP, and has a law stated date of 1 May 2014.

The pharmaceutical manufacturer is usually liable in civil actions, but all parties involved in the business of selling or distributing a product may be subject to liability for harm caused by a defect in that product. A claimant can also sue its physician for medical malpractice.

 
23. What defences are available to product liability claims?

Defences

The information in this section was written by Shook, Hardy & Bacon LLP, and has a law stated date of 1 May 2014.

As with product liability claims, defences are a matter of state law and, therefore, vary from jurisdiction to jurisdiction. Available defences may include:

Statutes of limitation. For personal injury claims, statutes of limitation can range from one year to six years. Many states employ the discovery rule (see Question 23) to determine when the statute of limitations begins to run.

Statutes of repose. This requires a claimant to bring a claim within a certain period of time after the product is manufactured or sold. While statutes of repose are usually longer than statutes of limitation, they are not subject to the discovery rule and represent an absolute bar to a product liability claim.

The learned intermediary doctrine. This doctrine provides that a prescription drug manufacturer discharges its duty by adequately warning the claimant's prescribing physician (the manufacturer has no duty to warn the consumer directly). The physician, therefore, acts as the learned intermediary between the patient and the manufacturer.

Intervening/superseding cause. If a claimant's injury is caused by the intervening conduct of another and such conduct is also a superseding cause, a defendant may avoid liability in most jurisdictions. An intervening act is a superseding cause when a manufacturer could not reasonably be expected to protect against it and includes such things as criminal acts, use of the product in an unforeseeable manner, alteration of the product, negligent use of the product, and failure to properly maintain the product.

Contributory negligence/comparative fault. According to the theory of contributory negligence, a claimant is barred from recovery if his own negligence caused or contributed to his injury. Most jurisdictions, however, have abandoned contributory negligence in favour of comparative fault. Under comparative fault, a claimant's recovery is reduced if his own negligence (or fault) contributed to his injury.

Assumption of the risk. In some jurisdictions, a claimant can also be barred from recovery if he is aware of a product defect and the accompanying dangers, but proceeds to use the product anyway. Therefore, this defence is based on what the claimant actually knew and not what a reasonable person would know.

State of the art. If a manufacturer can establish that a product was manufactured according to the scientific and technical achievement in the relevant field (the state of the art), such evidence can be used to show the manufacturer acted with due care in providing its warnings to the learned intermediary.

Pre-emption. When governmental statutes, rules, and regulations control certain aspects of product safety, some jurisdictions have held that product liability claims imposing different or additional requirements on manufacturers are pre-empted. This attempts to prevent manufacturers from being forced to comply with different and conflicting standards. The pre-emptive effect of a statute or regulation can be expressly stated or implied from the comprehensive nature of the enactment. The US Supreme Court addressed pre-emption in the medical device context in Riegel v Medtronic, 552 U.S. 312 (2008).

In Riegel, the US Supreme Court held that tort claims against manufacturers were pre-empted if the device was approved by the FDA through the pre-market approval (PMA) process. The ruling in Riegel set the stage for Wyeth v Levine (555 U.S. 555 (2009)), which presented the issue of pre-emption in the context of prescription drugs.

In Levine, the Supreme Court held that federal law did not pre-empt the claimant's claims based on the facts of the case. The Supreme Court found that while federal law requires the FDA to approve all prescription drug labels, the changes being effected (CBE) regulation permits certain pre-approval changes to strengthen a drug's warnings. Without clear evidence that the FDA would not have approved a specific label change, the Court concluded that it was not impossible for Wyeth to comply with both the federal and state requirements.

While the Supreme Court rejected the application of pre-emption to the facts of Levine, its analysis recognised that there could be situations where it is impossible for a drug manufacturer to comply with both state law warning duties and FDA approval requirements.

Despite not completely precluding pre-emption, the Levine decision has had a considerable influence on subsequent FDA pre-emption cases. Most lower courts have applied the reasoning in Levine and concluded that failure to warn claims against drug manufacturers are normally not pre-empted.

In 2011, the Supreme Court held that state law failure-to-warn claims against generic drug manufacturers are pre-empted by federal law (PLIVA, Inc. v. Mensing (131 S.Ct. 2567 (2011)). The Court found that the FDA required generic drug labelling to always be the same as the name-brand medication, therefore the CBE regulation only allowed generic manufacturers to change a label to match the brand-name label. It also ruled that the generic manufacturers could not have unilaterally issued "Dear Doctor" letters that provided additional warnings. Ultimately, the Court concluded that the generic drug manufacturers could not comply with their state-law duty by unilaterally changing their label or issuing "Dear Doctor" letters without violating federal law. The Court distinguished Levine on the basis that brand-name drug manufacturers can take unilateral action to change their labels under the CBE regulation, while generic drug manufacturers cannot. In 2013, in Mutual Pharmaceutical Co. v. Bartlett, 133 S.Ct. 2466 (2013), the Supreme Court extended the reasoning of Mensing to design-defect claims, noting that the design of generic manufacturers' products is subject to the same ''sameness'' requirement as generic warnings.

 
24. How can a product liability claim be brought?

Limitation periods

The information in this section was written by Shook, Hardy & Bacon LLP, and has a law stated date of 1 May 2014.

The limitation period varies from state to state and can range from one year to six years. The time generally begins to run from the date of injury. It can be extended where the claimant had no reason to know of his injury or that the drug may have caused it (the discovery rule).

Although state laws vary, there is a general four-year limitation period on actions for breach of contract arising out of the sale of goods (UCC 2-725(1)). This period begins to run when delivery is tendered (UCC 2-725(2)). The discovery of a latent defect some time after delivery would not affect the limitation period.

Class actions

Class actions are permitted for product liability claims in both state and federal courts. They are commonly filed in the product liability context because of the ease with which each individual can assert a claim for personal injury and the potential that exists for large damage awards. Claimants in product liability cases can also file class actions seeking damages for medical monitoring, as well as seeking drug refunds or disgorgement of profits, alleging deceptive trade practices for drugs withdrawn from the market.

Still, courts routinely deny class certification in cases involving prescription medications, where individual issues predominate. See, for example, In re Prempro, 230 F.R.D. 555, 571 (W.D. Ark. 2005), In re Fosamax Prods. Liab. Litig., 248 F.R.D. 389, 396 (S.D.N.Y. 2008), In re Yasmin and Yaz ( Drospirenone) Mktg., 275 F.R.D. 270 (S.D. Ill. 2011), In re Vioxx Prods. Liab. Litig., 2012 WL 2061883, at *5 (E.D. La. June 6, 2012) , and In re Celexa and Lexapro Marketing and Sales Practices Litig., 291 F.R.D. 13, at 15–21 (D. Mass. 2013).

The following prerequisites must be established before a class action is certified in federal courts (Rule 23(a), Federal Rules of Civil Procedure):

  • The class is so numerous that joinder of all members is impracticable.

  • There are questions of law or fact common to the class.

  • The claims or defences of the representative parties are typical of the claims or defences of the class.

  • The representative parties fairly and adequately protect the interests of the class.

Once these prerequisites are established, a class action may be maintained as long as it meets one of the requirements set out in Rule 23(b), such as prosecuting separate actions by or against individual class members would create a risk of inconsistent adjudications that would establish incompatible standards of conduct for those opposing the class.

While state court rules may differ, class action requirements in many states parallel those set out in the Federal Rules. While class actions are commonly used in product liability cases, courts still refuse to certify classes that do not meet the requirements for a class action.

The Class Action Fairness Act (CAFA) governs US class actions. CAFA contains two primary components, both of which are intended to reform class action practice as it currently stands. The first component expands federal jurisdiction over interstate class actions, allowing claimants to file certain class actions in federal court and defendants to remove certain class actions to federal court. CAFA expands federal jurisdiction over any class action in which:

  • There are at least 100 class members.

  • The aggregate amount in issue exceeds US$5 million.

  • Any member of a claimant class is one of the following:

    • a citizen of a US state different from any defendant;

    • a foreign state, or a citizen or subject of a foreign state, and any defendant is a citizen of a US state;

    • a citizen of a US state, and any defendant is a foreign state or a citizen of a foreign state.

In addition to class actions, multi-district litigation (MDL) provides a method for consolidating multiple product liability claims filed in different federal court jurisdictions by allowing these cases to be transferred to one district court for consolidated pre-trial proceedings (see 28 USC § 1407). Many states' laws also provide for consolidation of related cases pending in their courts. Federal and state cases cannot be formally consolidated, but state and federal court judges hearing related cases often co-ordinate.

Foreign claimants

Foreign claimants can bring claims in the US depending on whether jurisdiction and venue are proper. Manufacturers can be sued in any state where its products are distributed, as the manufacturer, is therefore, subject to the product liability laws of that state. While many states have adopted "long-arm statutes" that govern personal jurisdiction over defendants in their courts, the exercise of jurisdiction cannot violate due process. The US Supreme Court has developed the following two-part test to determine if the requirements of due process are met:

  • The defendant must have sufficient contacts with the forum.

  • The exercise of personal jurisdiction must be reasonable.

Courts can invoke the common-law doctrine of forum non conveniens to decline to adjudicate a case when the defendant or the judicial system would be inconvenienced, even though jurisdiction and venue are proper.

 
25. What remedies are available to the claimant? Are punitive damages allowed for product liability claims?

The information in this section was written by Shook, Hardy & Bacon LLP, and has a law stated date of 1 May 2014.

Various remedies, including monetary damages and equitable remedies, are available to a claimant in a product liability claim.

Most jurisdictions allow for recovery of punitive damages for product liability claims. Accordingly, punitive damages are often claimed in civil litigation. To recover punitive damages, a claimant must typically prove, by clear and convincing evidence, that a defendant acted wilfully, wantonly or with malice. Many jurisdictions also require that actual damages be awarded as a prerequisite to an award of punitive damages. The frequency and size of punitive damage awards have grown in recent years. Predicting whether punitive damages will be awarded in a particular case, along with the size of any punitive damage award, has proven difficult in light of inconsistent outcomes.

The US Supreme Court struck down a punitive damages award that was 145 times the amount of the compensatory damages award, on the ground that such an award was an arbitrary deprivation of property in violation of the defendant's constitutional right to due process (State Farm Mut. Auto. Ins. Co. v Campbell, 538 U.S. 408 (2003)). The court noted that any award ten times the amount of compensatory damages or larger is likely to be unconstitutional on due process grounds.

Since the Supreme Court's decision in State Farm, more than 1,000 cases have referred to it, resulting in varied interpretations of its ratio guideline. In some cases, courts circumvent the single-digit ratio guideline or interpret the ratio guideline as a suggestion rather than a requirement. See, for example:

  • Mathias v Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. Oct. 21, 2003) (interpreting State Farm's ratio guideline as a suggestion rather than a rule).

  • Santamaria v Dallas Indep. School Dist., 2007 WL 1073850 (N.D. Tex. April 10, 2007) (upholding a 100:1 ratio in a case involving nominal damages).

  • Ariz. Dep' t of Law, Civil Rights Div. v. ASARCO, LLC, 798 F. Supp. 2d 1023, 1047–50 (D. Ariz. Jul. 13, 2011) (upholding punitive damages of US$868,750 where compensatory damages were a nominal US$1, and stating that ratios in excess of single digits are not necessarily unconstitutional where only nominal compensatory damages are awarded).

Varied interpretations of State Farm have resulted in inconsistent punitive damage awards. To limit inconsistent punitive damages, many states have enacted some measure of punitive damage reform.

 

Reform

26. Are there proposals for reform and when are they likely to come into force?

In March 2010, after significant debate, two pieces of healthcare reform legislation were enacted comprising the Patient Protection and Affordable Care Act (Public Law 111-148), which was amended by the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152). This legislation provides for a number of reforms between 2010 and 2019, and several key provisions that were implemented by 2014. Some of the many provisions of the healthcare reform legislation include:

  • Mandating that everyone buys health insurance, with subsidies for the poor and exceptions for those in limited other circumstances. If an individual does not buy health insurance, a tax penalty is imposed on that individual.

  • Expanding Medicaid coverage and eligibility.

  • Establishing health insurance exchanges.

  • Increasing and expanding the Medicaid drug rebate.

  • Implementing an annual fee for drug manufacturers.

  • Providing incentives for employers to provide healthcare benefits. Specifically, employers with more than 50 employees must provide health insurance for their employees or pay a fine.

  • Prohibiting insurers from denying insurance coverage due to pre-existing conditions.

On 28 June 2012, the US Supreme Court upheld the constitutionality of most of the Patient Protection and Affordable Care Act in National Federation of Independent Businesses v. Sebelius, 125 S. Ct. 2566 (2012).

Every five years, the FDA's user fee acts must be reauthorised. The current user fee acts (for example, Prescription Drug User Fee Act and Medical Device User Fee Amendments) sunsets on 30 September 2017 and must be reauthorised. Each of the previous PDUFA reauthorisations has included additional legislation (for example, the Food and Drug Safety and Innovation Act and Food and Drug Administration Act). The US House of Representatives has already passed the 21st Century Cures Act (H.R. 6), and the US Senate has been working on similar legislation. It is expected that new legislation will help modernise and personalise healthcare, encourage greater innovation, support research, and streamline the system.

 

Online resources

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Contributor profiles

Alexander J Varond, Associate

Hyman, Phelps & McNamara, P.C.

T +202 724 459
F +202 737 93291
E avarond@hpm.com
W www.hpm.com
www.fdalawblog.net

Professional qualifications. Admitted to practise law in California and the District of Columbia.

Areas of practice. Food and drug; drug development; Hatch-Waxman; medical devices; regulatory due diligence; advertising and promotion; enforcement.

Non-professional qualifications. B.S., Biomedical Engineering and Management Science (double major), University of California, San Diego; Juris Doctor, George Washington University Law School

Recent transactions

  • Advised on matters involving product development, regulatory compliance, and submission strategies.
  • Prepared clients for meetings with FDA and Advisory Committee meetings.
  • Prepared requests for orphan drug designation, breakthrough therapy designation, and priority review vouchers.
  • Counselled clients on Hatch-Waxman patent and exclusivity matters.
  • Drafted citizen petitions requesting specific FDA actions.
  • Provided guidance on compliance, including labelling, advertising and promotion, QSR, MDR, establishment registration, product listing, and device modifications.
  • Drafted and reviewed 510(k)s, PMAs, de novo petitions, and related submissions.

Professional associations/memberships.

  • Food and Drug Law Institute (Member of Drugs and Biologics Committee).

  • Drug Information Association.

  • Asian Pacific American Bar Association.

Publications.

  • Sasinowski, F.J. & Varond, A.J., FDA's Flexibility in Subpart H Approvals: Assessing Quantum of Effectiveness Evidence, 71 Food and Drug Law Journal (forthcoming).

  • Varond, A.J. et al., Commercialisation of Healthcare (Oct. 2015).

  • Varond, A.J., Chapter 3-7 Orphan Drugs, Bringing Your Pharmaceutical Drug to Market (1 May 2015).

James E Valentine, Associate

Hyman, Phelps & McNamara, P.C.

T +202 724 1745
F +202 737 9329
E jvalentine@hpm.com
W www.hpm.com
www.fdalawblog.net

Professional qualifications. Admitted to practise law in the District of Columbia and Maryland.

Areas of practice. Food and drug; drug development; clinical trials; regulatory due diligence.

Non-professional qualifications

  • BA in Interdisciplinary Studies, University of Maryland, Baltimore County.

  • Master of Health Science, Johns Hopkins Bloomberg School of Public Health.

  • Juris Doctor, University of Maryland Carey School of Law.

  • FDA Outstanding Service Award, 2010.

  • FDA Commissioner's Special Citation, 2012.

  • CDER Team Excellence Award, 2013.

  • FDA Group Recognition Award, 2011, 2012, 2013, 2014.

Recent transactions

  • Provided strategic advice on matters involving product development and marketing approval, including clinical trial design, expedited programmes, and incentives programmes.
  • Counselled clients on submission strategies, as well as prepared for meetings with FDA and Advisory Committee meetings.
  • Prepared requests for orphan drug designation, breakthrough therapy designation, and priority review vouchers.
  • Provided guidance on engaging patients and patient groups during development, with a focus on patient interactions with FDA.
  • Provided counsel on clinical trials operations and compliance matters, including informed consent, reporting adverse events, and registration and results reporting.
  • Assisted with responses to BIMO inspection reports, warning letters, and clinical investigator disqualification proceedings.
  • Conducted FDA regulatory due diligence related to financings, mergers and acquisitions, and licensing deals involving pharmaceutical and biotechnology companies.

Professional associations/memberships.

  • Clinical Trials Transformation Initiative (CTTI) Patient Groups and Clinical Trials.

  • DIA (the Drug Information Association).

  • Food and Drug Law Institute.

Publications

  • Valentine, J.E., Room for Flexibility in FDA's "Gold Standard" of Drug Approval, Public Health Law Blog (July 16, 2015).

  • Valentine, J.E. & Clissold, D., Chapter 3-1 FDA Regulatory Scheme, Bringing Your Pharmaceutical Drug to Market (May 1, 2015).

  • Sasinowski, F.J., Panico, E.B., & Valentine, J.E., Quantum of Effectiveness Evidence in FDA's Approval of Orphan Drugs: Update, July 2010 to June 2014, 49 Therapeutic Innovation & Regulatory Science 680 (September 2015).


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