New Physician Gift and Disclosure Reporting Rules that Drug and Medical Device Manufacturers Should Know

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Drug and medical device manufacturers need to be aware and comply with state and federal gift disclosure rules because a failure to comply, even if inadvertent, could mean hefty monetary penalties.

Several states have adopted compliance and disclosure requirements for gifts and other value transfers to physicians by drug and medical device manufacturers. Some states have gone so far as to impose “gift bans,” providing narrow exceptions for permissible physician payments. For example, Vermont previously had a “gift ban” and on May 27, 2010 enacted new legislation, which amended the existing legislation related to physician relationships with medical device and drug manufacturers. Vermont is not alone. Minnesota and Massachusetts also have “gift ban” laws and several other states have proposed or have similar pending “gift ban” legislation. Some states, such as Colorado and Connecticut, have their own payment and gift disclosure laws.

In addition to the different state laws, drug and device manufacturers should be aware of a provision of the federal Patient Protection and Affordable Care Act (“PPACA”), which provides for transparency reports of industry payments to physicians to be publicly disclosed. This provision, Section 6002 of the PPACA is also known as the Physician Payment Sunshine Provision because it is based on the previously proposed, but never enacted, Physician Payment Sunshine Act. The PPACA requires that drug and medical device manufacturers report payments made to physicians to the Secretary of the Department of Health and Human Services (“Secretary”), but also requires the Secretary, in turn, provide these required payment disclosure reports to the public through an “Internet website” that is “searchable and in a format that is clear and understandable.”

The contents of the payment disclosure reports is contained in Section 6002 of the PPACA, which requires drug and medical device manufacturers to report in “electronic form” to the Secretary the following:

  • name,
  • business address,
  • physician specialty, if applicable,
  • National Provider Identifier,
  • the amount of the payment or transfer of value,
  • a description of the form of payment or other transfer of value (i.e. cash, in-kind items or services, stock, etc.), and
  • a description of the nature of the payment or other transfer of value (i.e. consulting fees, gift, food, travel, entertainment, etc.).

The PPACA defines “payment or other transfer of value” very broadly to mean “a transfer of anything of value.” However, the following payments or transfers of value are exempt from disclosure:

  • Payments or transfer of anything of value made indirectly to a physician through a third party, where the manufacturer is unaware of the identity of the physician;
  • Payments less than $10, unless the total amount paid to a physician during a calendar year exceeds $100;
  • Product samples that are not intended to be sold and are intended for patient use;
  • Educational materials that directly benefit patients or are intended for patient use;
  • The loan of a medical device for a short-term trial period that does not exceed 90 days;
  • Items or services provided under a contractual warranty, including the replacement of a medical device, where the terms of the warranty are set forth in the purchase or lease agreement for the medical device;
  • A transfer of anything of value to a physician when the physician is a patient and not acting in a professional capacity;
  • Discounts and rebates;
  • In-kind items used for charity; and
  • A dividend or other profit distribution from ownership or investment interest in, a publicly traded security or mutual fund.

While the PPACA requires information to be made public, it treats payments to physicians assisting in the research and development of new drugs and devices differently. The Secretary will not publish payment information on the website until after the earlier of the following: (1) the date the U.S. Food and Drug Administration approves or clears the drug, device, biological, or medical supply or (2) four years after the date of the payment to the doctor.

Drug and device manufacturers may face significant penalties for noncompliance with the reporting requirements, even if inadvertent. Under the PPACA, a manufacturer that fails to submit the required information in a timely manner “shall be subject to a civil money penalty of not less than $1,000, but not more than $10,000.” If a manufacturer “knowingly fails” to submit the required information in a timely manner, the manufacturer “shall be subject to a civil money penalty of not less than $10,000, but not more than $100,000” for each payment not reported.

Many in the industry had hopes that the federal PPACA would preempt the various state laws on this subject. However, the PPACAs preemption clause does not preempt any state statute or regulation that requires disclosure or reporting of information that is “not of the type required to be disclosed or reported” under the PPACA. It only preempts those state laws that are similar or weaker. As a result, drug and device manufacturers will not only have to comply with the federal reporting and disclosure requirements imposed under the PPACA, but also with the various and additional requirements of the States.

Drug and device manufacturers have time to prepare for the new federal disclosure requirements while also complying with the state laws. Under the PPACA, the Secretary is required to establish regulations and procedures for the submission of the payment information by October 1, 2011. Drug and device manufacturers must begin collecting and recording payment information on January 1, 2012 and the first disclosure of payments to physicians made during the preceding year must be submitted to the Secretary on or about March 31, 2013.

For more information on the payment disclosure and reporting requirements under the PPACA and the various state statutes and regulations, please contact us at contact@fidjlaw.com or (305) 350-5690.

DC Circuit Court Allows “Rivals” in Research who are Competing for Federal Grants to Challenge Agency Actions that Benefit Their Opposition

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On June 25, 2010, the United States Court of Appeals for the District of Columbia Circuit issued an opinion holding that two doctors who were applying to the National Institute of Health (NIH) for funding of projects involving human adult stem cells (hASCs) had standing to challenge newly promulgated guidelines of the NIH permitting the funding of human embryonic stem cell research (hESC).

The National Institute of Health (NIH) has provided funding for hASCs for about 50 years; however, research of hESCs has only been done since 1998. Both plaintiffs, Dr. James Sherley and Dr. Theresa Deisher, conduct research on hASCs and have never conducted research on hESCs. The NIH did not provide any funding for hESCs research until 2001, when President Bush authorized some funding subject to the limitation that only hESCs derived from then-extent stem cells could be used.  In Executive Order 13,505, President Obama expanded hESCs research and directed the Secretary of Health and Human Services, through the Director of NIH to “support and conduct responsible scientifically worthy human stem cell research, including human embryonic stem cell research, to the extent permitted by law” and to “issue new NIH guidance on such research that is consistent with this order.  These Guidelines permitted the NIH to fund more projects involving hESCs.

Plaintiffs, Dr. Sherley and Dr. Deisher, along with Christian Adoption Groups opposed to hESC research, filed a lawsuit in the United States District Court for the District of Columbia, requesting an injunction to block federal funding of hESCs research and a declaration stating the NIH Guidelines are invalid. The plaintiffs argued in their complaint that the NIH did not promulgate the Guidelines in accordance with law, specifically the “Dickey-Wicker Amendment”, which has been a provision of the Omnibus Appropriations Act for over a decade.  The pertinent part of the Act is Section 509:

(a) None of the funds made available in this Act may be used for–
(1) the creation of a human embryo or embryos for research purposes; or
(2) research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero under 45 CFR 46.204(b) and section 498(b) of the Public Health Service Act ( 42 U.S.C. 289g(b)).

The United States District Court for the District of Columbia dismissed the complaint, holding the plaintiffs did not have standing to challenge the NIH Guidelines.  Drs. Sherley and Deisher argued they had standing under the competitive standing doctrine, as “the new guidelines will result in increased competition for limited federal funding and will injure their ability to successfully compete for NIH stem cell research funds.” The District Court rejected this argument, finding Drs. Sherley and Deisher were “not participants in strictly regulated economic markets, but are applicants for research grants, where unlike an economic market, an increase in competition for funding does not mean that all other applicants are harmed.” The District Court further described the competitive process to receive NIH funding, and stated that even if the regulations did not exist, the doctors were not assured of receiving funding for adult stem cell research.  It also emphasized in its opinion that only about 22 percent of applications to NIH actually received funding.  The District Court found that the Guidelines neither prevented nor hindered either doctors opportunity to compete for funding. Their respective proposals would still receive funding if they survived the two-tier review process that all applications undergo.

The United States Court of Appeals for the District of Columbia reversed, noting in its opinion that it could see “no reason a person competing for a government benefit should not be able to assert competitor standing when the Government takes a step that benefits his rival and therefore injures him economically.”

The specific rivalry between the hASC research and hESC research is acknowledged by the NIH on its website under the “Frequently Asked Questions”:

Question: Why not use adult stem cells instead of using human embryonic stem cells in research?
Answer: Human embryonic stem cells are thought to have much greater developmental potential than adult stem cells. This means that embryonic stem cells may be pluripotent”that is, able to give rise to cells found in all tissues of the embryo except for germ cells rather than being merely multipotent”restricted to specific subpopulations of cell types, as adult stem cells are thought to be.

The Court of Appeals found there was “no doubt that the Guidelines will elicit an increase in the number of grant applications involving hESCs.” It also noted that the Guidelines “intensified the competition for a fixed share of money” and will force the plaintiffs to “invest more time and resources to craft a successful grant application.”  The injury in fact to researchers of hASCs applying for NIH grants was more “imminent” and “traceable to the challenged guidelines” than the injury to all researchers applying for NIH grants because hESCs and hASCs could often be used as substitutes for each other. The Court of Appeals acknowledged that the actual loss of funding by researchers of hASCs could not be determined, but the substantial possibility of the imminent injury was sufficient for purposes of the competitor standing doctrine.

The holding of the Court of Appeals is narrow. It merely has the effect of permitting obvious rivals in an area of research to have standing to bring suit when a government action eases their oppositions entry into the competition for federal grants. Whether the new NIH guidelines are in conflict with the Dickey-Wicker Amendment, and are thus unenforceable, are still questions to be decided by the District Court on remand.

If you have any questions pertaining to new NIH guidelines, or the application process for receiving NIH grants, contact Fuerst Ittleman PL at contact@fidjlaw.com.

Safe Cosmetics Act of 2010: New Bill Would Increase Cosmetics Regulations

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The U.S. Food and Drug Administrations (FDA) current regulation of cosmetics is relatively lax compared to the way the Agency regulates drugs, biologics, medical devices, and other FDA-regulated industries.  However, that all may change if the Safe Cosmetics Act of 2010 becomes law. 

The bill (H.R. 5786), introduced this week, would alter the regulatory scheme of cosmetics in the U.S. to more closely reflect the way that FDA regulates the other industries under its purview.  The Safe Cosmetics Act of 2010 would maintain the current Food, Drug, and Cosmetic Act sections 601-603 concerning adulterated and misbranded cosmetics but would add a new subchapter that would include, among other provisions:

  • A requirement that domestic and foreign establishments that manufacture, package, or distribute cosmetics to register FDA annually; 
  • Establishments would be required to provide FDA with specific information about their products and provide FDA with a description of the establishments activities and gross receipts.  Manufacturers would have to supply FDA with contact information for each of its ingredient suppliers;
  • A requirement that FDA establish a “schedule of feesto provide for oversight and enforcement” of the new cosmetics regulation.  Such fees would only be assessed to companies with gross receipts or sales of more than $1 million;
  • The requirement that all cosmetics labels, both for retail sales and professional use, “bear a declaration of the name of each ingredient in such cosmetic in descending order of predominance;”
  • A requirement that cosmetics manufacturers and distributors submit to FDA all information about “the physical, chemical, and toxicological properties of single or multiple chemicals listed on the cosmetic labels.”  The information to be submitted would include function and uses, tests of cosmetics, and exposure and fate information;
  • A prohibition on companies from manufacturing, importing, distributing, or marketing a cosmetic or cosmetic ingredient if the company has not provided FDA with the information required under the regulations.  Also, the bill contains a prohibition on companies from manufacturing, importing, distributing, or marketing if the companys product contains any non-permitted ingredients;
  • A mandate that adverse health effects associated with the use of a cosmetic be reported;
  • The requirement that responsible parties notify FDA if a marketed cosmetic is adulterated or misbranded is a way that the use of or exposure to the cosmetic (or any ingredient or component of the cosmetic) would likely cause serious health consequences or death.  FDA may request a voluntary recall of the affected products, issue a cease and desist order to stop the company from distributing, and/or require a recall or issue an emergency recall order;
  • A requirement that FDA issue regulations that includes lists of ingredients the FDA classifies as “prohibited ingredients,” “restricted ingredients,” or “safe without limits” for use in cosmetics.  These regulations must be issued within two years of enactment of the Safe Cosmetics Act of 2010.
  • A requirement that FDA develop a “priority assessment list of not less than 300 ingredients” that cannot be included on the three lists mentioned above “because of a lack of authoritative information on the safety of the ingredient.”  FDA must determine the safety of these ingredients.
  • A requirement that FDA publish a list of “alternative testing methods” that do not involve using animals to test chemical substances; and
  • FDA authorization to require cosmetics containing “nano-scale” materials be labeled as such.

Currently, cosmetic establishments do not have to register with FDA.  Additionally, there is no regulation requiring that a cosmetic ingredient be approved by, or listed with, FDA prior to use.  The FDA, under 21 C.F.R. parts 710 and 720, has established the voluntary cosmetic registration program which allow firms to voluntarily register their facilities and list their products and ingredients.  FDA does regulate color additives more strictly with some requiring certification prior to use.  FDA regulations also prohibit or restrict certain ingredients for cosmetic use.  However, the provisions of the Safe Cosmetics Act of 2010 would greatly alter the current structure of the regulation and allow the FDA a much more invasive approach to the regulation of cosmetic firms. 

Rep. Jan Schakowsky (D-IL), with Reps. Ed Markey (D-MA) and Tammy Baldwin (D-WI), introduced the bill just five days after the Personal Care Products Counsel (PCPC) announced that the organization had sent a letter to health policy leaders in Congress calling for changes in FDA regulations.  Many of the PCPC proposals are included in the Safe Cosmetics Act of 2010. 

The provisions of this new bill could significantly transform the way that the cosmetic industry does business.  Heightened scrutiny and regulation by the FDA would lead to greater cost for cosmetics manufacturers, distributors, and importers. 

For more information on FDA regulation of the cosmetic industry or how this new bill could affect your business, please contact us at contact@fidjlaw.com.

Indoor Tanning Industry under FDA and IRS Scrutiny

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Indoor tanning has drawn the attention of both the Internal Revenue Service (IRS) and the U.S. Food and Drug Administration (FDA) recently. Both administrative bodies are taking action that will have effects on the indoor tanning industry.

IRS Announces New Tax on Indoor Tanning

The IRS has announced new regulations administering a 10-percent excise tax on indoor tanning that became effective on July 1, just in time for the summer vacation season. (The IRS announcement is available here.) Indoor tanning salons will collect the new tax when a customer pays for tanning services. The tanning salon then pays that tax to the federal government on a quarterly basis.

Phototherapy services that are performed by a licensed medical professional are exempt from this excise tax. Additionally, some physical fitness facilities that offer tanning as a supplementary service to members without charging a separate fee are exempt.

There are some record-keeping aspects of this new tax and tanning salon owners need to be aware of the new regulations and IRS guidance when conducting business.

FDA Warns of Tanning Health Risks

The FDA has issued a Consumer Health Information publication titled Indoor Tanning: The Risks of Ultraviolet Rays warning of the dangers posed by devices such as sunlamps and tanning beds. FDA scientists are cautioning consumers that a tan is the skins reaction to exposure to UV rays and that this damage will lead to prematurely aged skin and could possibly result in skin cancer.

The FDA regulates radiation-emitting products, including sunlamps and products that contain sunlamps, like tanning beds, tanning booths, and portable home units. The FDA has taken UV-exposure studies conducted by FDA officials and the National Cancer Institute (NCI) under review and is considering whether it is necessary to change the performance standards for sunlamp products.

In March of this year, the FDA held an advisory committee meeting seeking independent, professional expertise and advise on regulatory issues related to tanning devices. At this public meeting, the agency heard many suggestions from health professionals, scientists, tanning industry representatives, and consumers. The FDA is now considering revising some requirements for tanning beds including strengthening the warning labels to make consumers more aware of the risks the sunlamps present.

Tanning salons use lamps that emit both UV-A and UV-B radiation, both of which damage the skin and cause skin cancer. The FDA lists premature aging, immune suppression, eye damage, and allergic reaction as additional risks posed by tanning. Moreover, the FDA has noted that sunlamps could be more dangerous than the sun because the sunlamps can be used at the same high intensity every day of the year, unlike the suns intensity which can vary depending on the time of day and the season.

The FDA has expressed particular concern about children and teenagers exposed to UV rays particularly because teenage girls and young women make up a large number of tanning salon customers.

For more information on how FDA medical device regulations or the new IRS excise tax could affect your business, please contact us at contact@fidjlaw.com.

Qualified Health Claim Approval May become easier for Dietary Supplement Marketers

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On May 27, 2010, the United States District Court of the District of Columbia granted a summary judgment in the matter of Alliance for Natural Health US v. Sebelius, suggesting that a qualified health claim is free speech protected under the First Amendment. Sparked by the FDAs denial of a petition to approve qualified health claims, The Alliance for Natural Health (“ANH”) along with prominent dietary supplement activists, Durk Pearson and Sandy Shaw sought to invalidate the FDAs denial of the qualified health claims and permanently preclude the FDA from preventing dietary supplement marketers from placing qualified health claims on dietary supplement labels.

The ANH petitioned the FDA with ten qualified health claims touting a reduction in cancer risk from selenium. The FDA rendered a decision completely rejecting two of the ten claims, calling them misleading for a failure to state the type of cancer risk associated with the benefits of selenium supplementation. The FDA further denied seven other claims that delineated site-specific cancers citing a lack of scientific evidence. The last claim dealt with a reduction in the risk of prostate cancer. Given the scientific evidence, the FDA, deemed the prostate claim to be false and misleading but did not discard it. Instead, in an uncharacteristic move, the FDA proposed a redrafted version of the prostate claim, which the ANH deemed pointless and the Court, ironically, found to be false and misleading.

The Court, relying on the FDAs own Guidance for Industry: Evidence-Based Review System for the Scientific Evaluation of Health Claims and prior case law, declared that the FDA had violated the First Amendment when it chose to suppress the qualified health claims rather than find a less restrictive means such as a short, succinct disclaimer. While the Court did not grant the permanent injunction ANH had requested, it did send the petition back to the FDA for re-review.

Unless reversed on appeal, this decision will make it almost impossible for the FDA to deny a qualified health claim that accurately reflects the scientific evidence; it would conflict with supplement marketers rights to free speech. This could pave an easy path for dietary supplement labels to bear appropriately disclaimed qualified health claims on selenium or presumably any other dietary supplement.

Miami-Based Trade is Booming (So is Enforcement)

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WorldCity, a Miami, Florida, media company focused on the impact of global trade “ and a strategic partner of Fuerst Ittleman “ reported on June 16, 2010 that import and export trade through South Florida ports is showing double-digit growth in 2010. From the Ports of Key West north to Palm Beach County, exports rose by more than 14% and imports surged by more than 26% through April.

This resurgence in trade is welcome relief following 2009, which saw record drops in trade activity in the Miami District. Tony Ojeda, executive director of Miami-Dade’s International Trade Consortium commented in a Miami Herald article, “I think 2009 didn’t exist. It was a terrible year for all of us. But this year, there’s a feeling of optimism.”

While many trade exports pin most of the trade growth on the revival of moribund Latin American economies, trade through the Miami Customs District with other countries such as the Bahamas, China and Switzerland are on pace to set new records in 2010. Moreover, the overall Latin American economy did not suffer as much as that of the United States and Europe in the recession which began in 2008.

Adding fuel to the resurgence in local trade is a significant increase in commerce between China and Latin America “ trade which very often transits the ports of the Miami area. Ojeda pointed out that Taiwan is planning to bring a 40-member delegation to South Florida later this summer. “They are very interested in establishing a foothold here in Miami to serve as their gateway to Latin America,” he told the Miami Herald.

Trade Enforcement is Increasing as Well

Yet hand-in-hand with this resurgence in trade is a surge in enforcement by U.S. Customs and Border Protection (CBP) and the other federal agencies which monitor imports and exports such as the U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA).

CBP recently announced the seizure of almost $220 million counterfeit goods “ in April 2010 alone “ as part of a focused enforcement effort against intellectual property rights violations. Compare this number with fiscal year 2009, in which CBP seized a total of $260 million in counterfeit merchandise.

Similar enforcement initiatives by Investigative and Enforcement Services, an arm of USDAs Animal and Plant Health Inspection Service, have resulted in increased fines and penalties for importers introducing invasive species and not conforming to phytosanitary requirements. The FDA has also jumped on the enforcement bandwagon targeting importers of food products and medical devices for increased scrutiny.

For guidance on how your import/export business, or related business, can take advantage of the surging trade economy while maintaining strong regulatory compliance, contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.

New Healthcare Program Gives $1B in Tax Credits and Grants for Small Pharmaceutical and Medical Device Firms

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A major escalation in revenue for pharmaceutical and medical device manufacturers, both large and small, will be the inevitable consequence of the increased number of insured Americans as a result of the recently enacted healthcare legislation. Approximately 30 million more Americans will have access to health insurance as a result of the developing overhaul of the public and private healthcare systems in the United States.

Small businesses in the pharmaceutical or medical device industries, and those small companies wishing to break into these industries, should pay attention to certain the new Therapeutic Discovery Project Program (the “Program”) provided for in the Patient Protection and Affordable Care Act (the “Act”), signed into law by President Obama on March 23, 2010. The program is geared toward promoting the development of new therapeutics by small businesses. Here we outline two of the Acts provisions aimed at encouraging the development and growth of small pharmaceutical and medical device companies that are operating in the development of new therapies.

Small Business Tax Credit to Encourage Development of New Therapies

Under the Act, the government is providing a Qualifying Therapeutic Discovery Project Credit. This is a tax credit available to companies with 250 or fewer employees. The credit is designed to encourage the research and development of new therapies in the pharmaceutical and medical device industries. The tax credit is available for an amount equal to 50% of “qualified investments” made in the years 2009 and 2010. There is a maximum credit of $5 million per firm available with $1 billion available in total. “Qualified investments” are costs directly related to conducting a “qualifying therapeutic discovery project” that are incurred during the taxable year.

“Qualifying therapeutic discovery projects” include three different categories of pharmaceutical or medical device endeavors:

1. Projects designed to treat or prevent diseases through conducting pre-clinical or clinical studies and research protocols;
2. Projects that intend to diagnose diseases or conditions or to develop diagnostic procedures to assist doctors and patients in making therapy decisions; and
3. Projects with the purpose of creating or developing a product or technology to further the delivery of therapeutics.
This credit is geared toward projects that show potential to produce new therapies, address unmet medical needs, reduce the long-term growth of healthcare costs, and advance the goal of curing cancer within the next 30 years. This tax credits allocation will also factor the projects potential to create and sustain jobs in the United States.

Small businesses that have engaged in any of these categories of projects in the tax year 2009 or plan to operate projects of this nature in 2010 are eligible for consideration for this tax credit.

The Internal Revenue Service (IRS) released guidance (more information available here) on May 24, 2010 outlining the process by which firms can apply to have their research projects certified as eligible for this credit. Small businesses interested in taking advantage of this tax credit must submit an application to the Secretary of Health and Human Services (the “Secretary”) for consideration. The Secretary, when determining which businesses will receive the credit, will consider projects that show potential to develop new therapies in areas of medicine where there are unmet needs, projects that are seeking to develop treatment and prevention methods for chronic or severe diseases, and those operations that intend to advance the goal of discovering a cure for cancer. The Secretary will also take into consideration the projects potential for creating jobs and advancing the United States competitiveness in the biological and medical sciences.

Small business owners and operators who have interest in taking advantage of this credit should speak with their tax attorneys as the $1 billion allocated for this tax credit could be utilized rather quickly given the high cost of drug and device research and development. Firms may begin submitting applications for certification beginning June 21, 2010 and applications must be postmarked no later than July 21, 2010.

Research and Development Grant Program

The Cures Acceleration Network (“CAN”) is a program to be implemented by the Act and administered by the National Institute of Health (“NIH”). (More information from the National Cancer Institute here.) The purpose of CAN will be to award grants and contracts to eligible entities. This program is especially relevant to start-up firms that are not yet profitable. These grants are not includable in the taxpayers gross income.

These awards will be for the promotion and acceleration of the development of “high need curesthrough the development of medical products and behavioral therapies.” A “high need cure” is a drug, device, or biologic that “is a priority to diagnose, mitigate, prevent, or treat harm from any disease or condition; and for which the incentives of the commercial market are unlikely to result in its adequate or timely development.” Whether or not a drug, device, or biologic is a high need cure is determined by NIH.

CANs functions will include supporting advances in research, awarding grants to eligible entities to promote the advancement of high need cures, reduce obstacles that often come between laboratory discoveries and clinical trials for new therapies, and facilitate review in the United States Food and Drug Administration (“FDA”) for high need cures. CAN will communicate and coordinate with FDA to help expedite development by ensuring strict adherence to FDA regulations and requirements during protocols and clinical trials.

Entities eligible for a CAN award include any public or private entity, including biotechnology companies, pharmaceutical companies, disease advocacy organizations, medical centers, and research institutions.

The award program supported by CAN includes three different types of awards, described as follows:

1. The Cures Acceleration Partnership Award is available for up to $15 million dollar per project per year with the possibility for renewal after the first year. Under this award, there is a condition that the entity receiving the award must contribute one dollar for every three dollars awarded by the government;
2. The Cures Acceleration Grant Award is also an award of for up to $15 million per project per year with the possibility of subsequent funding after the initial year; and
3. The Cures Acceleration Flexible Research Award is an award that is available at the discretion of the Director of NIH based on the Directors determination that a project is in furtherance of the goals and objectives of the provision.

Companies or organizations interested in obtaining a grant must submit an application describing, in detail, the project, a timeframe for completion, and a description of the protocols to be utilized, among other information. The protocols must, of course, comply with FDAs standards and regulations at all times.

CAN has been allocated $500 million dollars for the remainder of the year 2010 which, given the cost of pre-clinical and clinical studies, could be used very quickly. These grants and awards will be awarded on a competitive basis, therefore, businesses wishing to compete for them need to act decisively and submit complete, structured application materials expeditiously.

Conclusion

With the passage of this new legislation, small companies doing business in the pharmaceutical and medical device industries have opportunity and incentive to move forward with research and development of new drug products, therapies, and medical devices. The Patient Protection and Affordable Care Act represents revolutionary change in the United States healthcare system and, combined with the escalation of Americans with access to health insurance, the potential for increased revenue for pharmaceutical and medical device manufacturers is boundless.

The inclusion of the tax credit provision for the encouragement of new therapies and the awards for research and development of life saving cures presents an excellent opportunity for small businesses to make advancements in pharmaceutical and medical device development which will profit the businesses themselves, the industries, and society as a whole. Operators and owners of small pharmaceutical and medical device companies should look into taking advantage of these credits and awards in their pursuit of new and innovative therapeutics.

For more information on how these tax credits and/or grants could help your business, please contact us at contact@fidjlaw.com.

What Chain Restaurants and Vending Machine Operators Need to Know About New Federal Law Requiring Nutritional Disclosure on Menu and Menu-Boards

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New legislation is changing the way chain restaurants and vending machine operators do business. On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”). The PPACA includes a provision that requires certain chain restaurants and vending machine operators to disclose some nutritional information on the foods and beverages they market and sell. This nutrition disclosure provision, Section 4205 of the PPACA, amends the Federal Food Drug and Cosmetic Act (“FDCA”) by specifically inserting a new subclause (H) into Section 403(q)(5) of the FDCA.

Nutritional Disclosure Requirements

Chain Restaurants:

The nutritional disclosure requirements apply to restaurants and similar retail food establishments that is part of a chain with 20 or more locations doing business under the same name and offering substantially the same menu. These chain restaurants must disclose in a “clear and conspicuous manner” the following required nutritional information on menus and menu boards, including drive-through menus:

¢ The number of calories contained in the standard menu item as usually prepared and offered for sale. The calorie disclosure statement must be adjacent to the name of the standard menu item and clearly associated with the standard menu item.

¢ A suggested daily caloric intake statement posted prominently on the menu, menu board, including drive-through menus, that is designed to enable the public to understand the context and significance of the calorie information posted on the menus and menu boards.

In addition, the menu or menu board must inform consumers that the above required calorie count and suggested daily caloric intake statement, as well as the nutritional information normally found on the Nutrition Facts Panel on packaged food is available in written form on the restaurants premises.

Vending Machines:

A vending machine operator who owns or operates 20 or more vending machines must comply with the applicable nutritional disclosure requirements. The law requires that if the vending machine does not provide visible nutritional information, such as the Nutrition Facts Panel, before purchasing, then the vending machine operator shall provide a sign in close proximity to each article of food or the selection button that includes a clear and conspicuous statement disclosing the number of calories contained in the food or beverage.

Self-Service Food and Food on Display:
The nutritional disclosure provision requires that food sold at a salad bar, buffet line, and cafeteria line, as well as self-service beverages or food that is on display and is visible to customers must place a sign next to each food offered that lists calories per displayed food item or per serving.

Exceptions:

The nutritional disclosure requirements do not apply to the following:

¢ Items that are not listed on a menu or menu board (such as condiments);
¢ Daily specials;
¢ Temporary menu items appearing on the menu for less than 60 days per calendar year;
¢ Custom orders; or
¢ Such other food that is part of a customary market test appearing on the menu for less than 90 days.

Reasonable Basis for Nutrient Content

Restaurants are given some flexibility in determining the calorie count information included on their menus, menu boards, and written information. The restaurant must have a “reasonable basis” for the nutrient content disclosures, including nutrient databases, laboratory analysis, and other reasonable means. This flexibility protects the restaurants from the unavoidable variation found any given serving.

Menu Variability and Combination Meals

The Secretary of the Department of Health and Human Services (HHS), through the U.S. Food and Drug Administration (FDA), shall determine how nutrient content for standard menu items that come in different flavors, varieties, or combinations, but that are listed as a single menu item (for example, pizza, ice cream, soft drinks, and doughnuts) are to be disclosed and labeled.

Regulatory Power to Expand Disclosure Requirements

The law provides that the federal regulators may expand the nutrient disclosure requirements to include additional nutrients if doing so would assist consumers in maintaining healthy dietary practices.

Federal Preemption

Many states and local governments have already adopted their own nutritional disclosure laws. This federal nutritional disclosure law preempts state and local menu-labeling requirements that are not identical to the federal menu-labeling requirements. Note, however, that the federal law does not preempt state and local requirements for food labels that provide a warning concerning the safety of the food or food component.

Voluntary Compliance

Restaurants and vending machine operators who are exempt from these requirements may elect to voluntarily provide the nutritional data. Those who wish to voluntarily comply with the program may register with the FDA and meet the program requirements. The Secretary of HHS is required to publish within 120 days of enactment the terms by which restaurants and vending machine operators may voluntarily provide nutritional information.

Compliance Date

Chain restaurants and vending machine operators that are subject to the new law are not required to comply with the requirements until the Secretary of HHS finalizes and implements the regulations. The law requires the Secretary of HHS to publish proposed regulations within one year of the laws enactment date of March 23, 2010. Therefore, while the new law takes effect immediately, retailers do not have to take mandatory action until the rules are further clarified.

Fuerst Ittleman will continue to monitor the Secretary of HHS and the FDA for proposed rulemaking concerning this new law. If you are an owner or operator of a restaurant, vending machine, self-service food restaurant, gas station franchise, or large food distributor who services 20 or more corporate or school cafeterias with the same food products, please contact us at (305) 350-5690 or contact@fidjlaw.com to determine how this new federal law may impact your business.

ANN TAYLOR ESCAPES FTC ENFORCEMENT ACTION

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On December 1, 2009, the Federal Trade Commissions New Endorsement Guides took effect.  One of the requirements in the endorsement and testimonials guide states that a blogger must disclose any material connection or remuneration received in connection with their review of a product or service.  If such disclosure is omitted the advertiser may be liable for any deceptive or misleading claims made in the blog.

In late January, only weeks after the FTCs New Endorsement Guides went into effect, the retailer of womens apparel, Ann Taylor LOFT, hosted a fashion show to preview the chains summer 2010 collection.  As is customary at these events, the attendees received special gifts.  Furthermore, to stir up excitement the attendees were told that if they blogged about the show they would be entered into a drawing for a gift card.  Sure enough, a few blogs appeared on the web, several of which did not disclose the bloggers “gift card incentive.”  Ann Taylor had placed signs around the event advising all would-be bloggers to disclose the “gift card” incentive in blogs reviewing the fashion show.  However, some bloggers did not see the sign and posted reviews without revealing the gift incentive.  The FTC took notice and launched the first public investigation into “compensated bloggers” since the guides took effect.

After the investigation, the FTC decided to forgo an enforcement action in which it would have sought a monetary penalty from Ann Taylor.  In the April 20th closing letter the FTCs Associate Director, Mary Engle, explained that the FTC was withholding enforcement because  “the January 26, 2010 preview was the first (and, to date, only) such preview event.”  Second, the number of overall bloggers at the event was small with an even smaller subset failing to disclose the gifts.  Third, Ann Taylor “adopted a written policy in February 2010 stating   [Ann Taylor] will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog.”  While the letter closes the door on the investigation it stands as a warning to advertisers to be vigilant over how the blog-o-sphere reports on their products and services.

FDA Seeks Comment on Draft Guidance for Industry, Third Parties and FDA Staff; Medical Device ISO 13485:2003 Voluntary Audit Report Submission Program

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This week, United States Food and Drug Administration announced that a new draft guidance, “Medical Device ISO 13485:2003 Voluntary Audit Report Submission Program,” is available for public review and comment.  This new FDA program allows for a medical device manufacturer whose facility is inspected and audited by any of the Global Harmonization Task Force (GHTF) approved systems, like the Canadian Medical Devices Conformity Assessment System or European Union Notified Body, to voluntarily submit the results of that audit to the FDA.  The FDA will then utilize the results of that audit in its risk-based analysis of whether it can remove the firm from its work plan for the next year.  In other words, the FDA will use the audit conducted by the other accredited body to make decisions about which firms it will inspect during the upcoming year.  The Agency will base its decisions on the probability of risk reported in the audit and the type of device manufactured by the firm.  This is a way in which a compliant device manufacturer already audited through another recognized system may avoid an inspection by FDA.  The program benefits FDA, as well, as the program allows the Agency to use its resources to focus on auditing firms that require more oversight.

The International Organization for Standardization (ISO) is a group with representatives from various national standards organizations that promulgates worldwide proprietary industrial and commercial standards.  The medical device ISO 13485:2003 provides quality management system requirements for medical device manufacturers and distributors.  Under this ISO, a firm must demonstrate that it can produce medical devices and related services that are consistently compliant with the regulatory requirements set forth by ISO. The FDA, through the new draft guidance, will use the medical device ISO 13485:2003 to leverage audits performed by other GHTF regulators to assist the Agency in setting risk-based inspectional priorities.

The FDA is utilizing inspections and audits conducted by third parties and other regulators with increasing frequency.  The Agency is employing reliable reports from other regulatory bodies to establish a more efficient work plan.  Under the Medical Device User Fee Modernization Act of 2002 (MDUFMA), the FDA is authorized to train and accredit third parties to perform inspections of eligible establishments that manufacture Class II or Class III devices.  This voluntary program is known as the Accredited Persons AP for Inspections program.  While all firms remain subject to inspection by FDA, eligible manufacturers have the option of requesting inspection by an AP.  Additionally, in 2006, the FDA and Health Canada (HC) announced a pilot multi-purpose audit program (PMAP) allowing qualified accredited persons and auditing organizations under the AP for Inspections program and HCs equivalent program, the Third Party Auditing Organizations, to perform a single inspection that both FDA and HC can use.  The purpose of this pilot program is to evaluate the effectiveness of performing one third party inspection of a medical device firms quality system that would meet the regulatory requirements of both countries.  The pilot PMAP and FDAs new draft guidance evidence the Agencys movement toward recognizing the necessity of comity between international regulatory bodies regarding medical device firm inspections and audits.

Fuerst Ittleman, PL is experienced in handling the compliance matters of medical device manufacturers and distributors.  We also assist pharmaceutical and biotechnology firms with regulatory compliance and import/export requirements.  Please feel free to contact us at contact@fidjlaw.com to discover how we can help your company with medical device manufacture, inspections, importation/exportation, and distribution.

See 75 FR 28257.