FDA Warning Letters to Sprout Growers Highlight Complicated Legal Issues Associated with Warning Letters and Guidance Documents

Since 1996, there have been at least 30 reported outbreaks of foodborne illness associated with different types of raw and lightly cooked sprouts caused mostly by Salmonella and E. coli. In 1999, in response to numerous outbreaks and the potential for microbial contaminations, the U.S. Food and Drug Administration (“FDA“) issued two guidance documents,  “Reducing Microbial Food Safety Hazards for Sprouted Seeds” and “Sampling and Microbial Testing of Spent Irrigation Water During Sprout Production,” to assist all parties involved in the production of sprouts to reduce the risk of sprouts spreading foodborne illnesses.

For several years following the issuance of the guidance documents, the FDA reported that foodborne illnesses associated with sprouts appeared to diminish. However, in light of continuing outbreaks, the FDA strongly encouraged firms in the industry to review their operations to reduce microbial food safety hazards for sprouted seeds in accordance with the guidance documents.

Since 1999, the FDA has issued over 80 Warning Letters to firms involved in the production of sprouts. The majority of the Warning Letters state that the sprouts are adulterated within the meaning of Section 402(a)(4) of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. § 342(a)(4)] because they have been prepared, packed, or held under insanitary conditions whereby they may have been contaminated with filth or rendered injurious to health. Please see our previous reports here and here, discussing whether, and if so how, the recipients of these Warning Letters may respond or challenge the Warning Letters in court in light of the United States Supreme Courts recent ruling in Sackett v. EPA.

In addition to the alleged violations, the Warning Letters state that the “proper handling and controls for sprout manufacturing can be found in [the 1999 guidance documents].” Therefore, the guidance documents are closely examined by industry because they provide important insight as to how FDA will act in terms of enforcement. However, FDA guidance documents describe the Agencys current thinking on a regulatory issue, and do not have the force or effect of law.

Because the FDA continues to heavily rely on the voluntary guidelines for enforcement action, the International Sprout Growers Association (“ISGA“), on behalf of the sprout industry, has urged the FDA to update the outdated guidance documents. The ISGA stated that there are numerous new methods for sprout sanitation that are not outlined in the guidance documents. For example, in the E. coli strain found in sprouts at Jimmy Johns restaurants earlier this year would not have been identified by microbiological tests currently recommended under the guidance. Please see our previous report discussing E. coli testing for more information.

Pursuant to Section 105 of the Food Safety and Modernization Act to provide standards for produce safety, on February 28, 2012, the FDA announced the creation of the Sprouts Safety Alliance (“SSA”) in cooperation with the Illinois Institute of Technologys Institute for Food Safety and Health. The SSA is supposed to help sprout producers in identifying and implementing best practices in the safe production of sprouts. The FDA was expected to issue a proposed rule during early 2012 that would establish science-based standards for the production and harvesting of sprouts and other certain produce. However, the FDA has yet to announce the proposed rule as required under Section 105.

For more information, you can contact an attorney by calling us at 305.350.5690 or by emailing us at contact@fidjlaw.com.

FDA Releases CPG for Labeling and Marketing of Therapeutic Animal Foods

On September 10, 2012, the U.S. Food and Drug Administration (FDA) released a draft compliance policy guide (“CPG”) entitled “Labeling and Marketing of Nutritional Products Intended for Use to Diagnose, Cure, Mitigate, Treat or Prevent Disease in Dogs and Cats.”  Therapeutic animal food products are products that, based on the product’s labeling and indications for use, meet the statutory definition of an animal drug under the Federal Food, Drug, and Cosmetic Act (“FDCA”). Pursuant to 21 U.S.C. 321(g)(1)(B), a product that is labeled as intended to diagnose, cure, mitigate, treat, or prevent diseases is a drug. Further, a product that is labeled as intended to provide nutrients in support of an animal’s daily nutrient needs also satisfies the definition of a drug under 21 U.S.C. 321(f). This proposed CPG outlines how the FDA intends to enforce its regulatory authority over the labeling and marketing practices of manufacturers of animal food products that meet these definitions.

Animal food products that purport to diagnose, cure, mitigate, treat, or prevent disease have been available on the U.S. market for over fifty years, but were generally only sold through, and used under the direction of,  licensed veterinarians. The FDA, however, has noticed a recent rise in the sale of therapeutic animal food products directly from manufacturers to consumers. This uptick in marketing and sales toward consumers sparked FDA concern about whether product labeling adequately informs consumers about the effectiveness and safety of products for pet consumption. As a result, the FDA has released this CPG to address continued concerns over the sale and use of unapproved therapeutic animal foods that are not used under the direction of veterinarians.

In this CPG, the FDA takes a stricter stance on how foods that bear health claims should be regulated. Specifically, the FDA takes the position that in order to market these therapeutic animal food products in compliance with federal regulations, manufacturers must obtain animal drug approval from the FDA. This process would require FDA approval indicating that the product is safe for use, only includes food additives that are generally recognized as safe (“GRAS”), and in compliance with requirements for facility registration, listing, and current good manufacturing practices.

According to this CPG, the FDA does not generally intend to recommend or initiate regulatory actions against dog and cat food products that are labeled as drugs when all the following factors are present:

  1. The product is made available to the public only through licensed veterinarians or through retail or internet sales to individuals purchasing the product under the directions of a veterinarian.
  2. The product is not marketed as an alternative to approved new animal drugs.
  3. The manufacturer is registered under section 415 of the FDCA.
  4. The product’s labeling complies with all food labeling requirements for such products.
  5. The product does not include indications for a disease claim (e.g., obesity, renal failure) on the label.
  6. Distribution of labeling and promotional materials with any disease claims for the product is limited to that it is provided only to veterinary professionals.
  7. Electronic resources for the dissemination of labeling information and promotional materials are secured so that they are available only to veterinary professionals.
  8. The product contains only ingredients that are GRAS ingredients, approved food additives, or feed ingredients defined in the 2012 Official Publication of the Association of American Feed Control Officials.
  9. The label and labeling of the product is not false and misleading in other respects.

The release of this CPG puts manufacturers of animal food products on notice that the FDA will closely scrutinize product labeling, particularly any claims that give the impression that a product purports to diagnose, cure, treat, or prevent diseases in animals. The FDA, however, will continue to take into consideration other factors in determining whether to take regulatory enforcement action. Specifically, the FDA has narrowed its enforcement attention to prioritize products that:

  1. Are marketed as alternatives to approved new animal drugs
  2. Contain unapproved food additives, unless the use of that unapproved food additive conforms to uses as listed in the 2012 Official Publication of the Association of American Feed Control Officials
  3. Include words or vignettes on the label of the product(s) that explicitly or implicitly indicate diseases for which the product is to be used.
  4. Are made directly available to the public circumventing the role of a licensed veterinarian for provision of directions for use, supervision of treatment and evaluation of the treatment outcome.

The FDA’s decision to develop and release a CPG on the regulation of therapeutic animal food products is an interesting one. Historically, the FDA has regulated pet foods similarly to human foods. In this CPG, the FDA’s description of therapeutic animal foods sounds rather similar to the language the FDA uses to describe human medical foods under section 21 U.S.C. 360ee(b)(3). The FDA defines a medical food as “a food which is formulated to be consumed under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.” In the regulations for medical foods, the FDA species further criteria for meeting the statutory definition of a medical food. The FDA has not outlined similar criteria for animal foods. Even though there are distinct similarities in the FDA’s descriptions of therapeutic pet foods and human medical foods, the FDA has yet to specifically clarify what constitutes a therapeutic pet food product, how it interprets the meaning of use “under the direction of licensed veterinarians,” or whether the sale of these products is restricted to licensed veterinarians.

Despite the lack of clarity regarding the definition of a therapeutic drug product, manufacturers should not take this CPG lightly. The information proposed in this CPG suggests that the FDA intends to strictly enforce animal drug approval requirements for these animal food products and also plans to considerably tighten its oversight on pet food labeling claims. Because the use of health claims on product labeling would require manufacturers to undergo the drug approval process, manufacturers should take extra caution when developing claims about a product’s safety and efficacy in affecting the body or treating health conditions.

Overall, this proposal could have a significant impact on the cost of bringing therapeutic animal food products to market. The heightened threat of enforcement action could result in significant costs associated with filing applications for new drug approval, testing, re-formulation, and/or re-labeling. Moreover, the animal drug approval pathway would likely extend the timeline required for a product to become compliant with applicable regulations and eligible for distribution and sale.

The FDA is currently seeking public comment on this proposed draft compliance policy guide (Docket No. FDA-2012-D-0755). To ensure that comments are considered before the FDA begins work on the final draft, all comments should be submitted prior to November 9, 2012. Fuerst Ittleman David & Joseph will continue to monitor the FDA’s enforcement of this Compliance Policy Guide for therapeutic pet foods. For more information, please contact us at contact@fidjlaw.com

CBP Expands its Simplified Entry Program

If you have ever attempted to import merchandise into the United States you are probably aware that there are numerous rules, regulations, forms, and guidelines which must be compiled with and submitted prior to the entry of your goods. For even the most seasoned importer, the task of properly assembling this information for US Customs & Border Protection (“CBP” or “Customs”) can seem confusing and overwhelming. Recognizing these difficulties, Customs has formulated the Trade Transformation Initiative. This initiative focuses on driving down trade costs and promoting trade efficiency. The intended result is a more streamlined and efficient means for importers and brokers to expedite the clearance and review process of their trade goods.

On November 9, 2011, CBP announced the commencement of the initial phase of its Simplified Entry Pilot Program (“SEP Program” or “Program”). Serving as one of CBPs integral trade transformation initiatives, the Program was created to streamline the entry process, enhance cargo security, and reduce transaction costs for trade. This Program offers a direct response to the industrys call for more predictability in the importation process. Under the Programs framework, importers produce an entry data set with 12 required elements and 3 optional elements as opposed to the 27 currently required on the CBP 3461 entry form. Carriers will be required to submit manifest/ ACAS security filings, and importers will submit the SEP Program data set. All of this data will be included in the newly developed commercial trade processing system called the Automated Commercial Environment (“ACE”).

Filing well in advance allows CBP to run all targeting earlier and ensure that transport is not delayed for issues that can be resolved pre-shipment. While in route, CBP can indicate whether the goods are cleared for release or if additional data is required. Because of this, filers can resolve many issues before departure or in transit which results in a more efficient trade transaction. On June 4, 2012 CBP announced that it had received its first Simplified Entry filings at the three pilot ports located in Indianapolis, Chicago, and Atlanta. 9 brokers selected by CBP are currently participating in the Program which is available for Air Mode of Transportation exclusively.

On August 14, 2012, CBP announced its plans to further expand the SEP Program for Air Mode of Transportation.  Utilizing a regional expansion approach, the Program has already expanded to include the port of Seattle with San Francisco, Oakland, and Los Angeles to follow soon after. In Mid-September expansion will continue into the south and southeast with the inclusion of Dallas/Ft. Worth, Houston, and Miami followed by northeastern expansion into Newark, New York, and Boston.

CBP plans to further develop the Simplified Entry Pilot program to eventually include functionalities such as the Participating Government Agency Message Set, the Simplified Entry transaction set, Single Transaction Bonds, automatic cancellations and deletions, the Document Image System, and Remote Location Filing. CBP will run the Air Mode Transportation SEP Program until approximately December 31, 2013 and will continue to further develop the Programs functionality until Cargo Release is fully available in the ACE.

The attorneys in the Customs, Import and Trade Law practice group at Fuerst Ittleman David & Joseph, PL will continue to keep abreast of the developments in the Simplified Entry Program. If you are a broker and have any trade concerns or legal issues stemming from the use or implementation of the new Simplified Entry Program, feel free to contact us at 305-350-5690 or contact@fidjlaw.com.

Time is Money: CBP Proposes New Mitigation Guidelines for Liquidated Damages Response Petitions

For importers and brokers, there may be several aspects of US Customs & Border Protections (“CBP” or “Customs”) policies that are obscure. One of those areas is liquidated damages provisions and their proposed consequences. Under CBPs most recent proposal, importers who fail to respond to liquidated damages claims in a timely manner will face possible fines and consequences far beyond what is currently in place. As any shrewd business person will note, it is important to keep operating costs low and to avoid any extra bills whenever possible. This holds the same for importers and brokers whose job is to quickly and efficiently get merchandise from point A to point B. Brokers and importers must be attentive to deadlines and time requirements just as much as any other business, but even more so because of the nature of their profession.

If the newly proposed changes to the Liquidated Damages Mitigation Guidelines (as will be discussed below) are put into place, filing timely may be the difference between a few hundred and a few thousand dollars in extra bills. But lets not get too far ahead of ourselves, lets first get a clear understanding of what exactly a Liquidated Damage is, where it comes from, and why it is so crucial for importers to “timely” respond to Liquidated Damages claims made by Customs.

Background & Current Mitigation Guidelines for Untimely Liquidated Damage Response Petitions

Before we address the consequences of untimely responding to a liquidated damages claim, we need to first understand how they occur. Liquidated damages arise out of customs bonds. A customs bond is typically filed by the importer of record, warehouseman, or other custodian of merchandise. It is effectively an agreement between an importer and surety that ensures compliance with all of Customs obligations with respect to entry, storage, and transport of goods.   In the event that an importer breaches one of these obligations, this bond functions as security for liquidated damages claims issued by the CBPs Office of Fines, Penalties, and Forfeitures.

In the event that a liquidated damages claim is issued, CBP affords importers the opportunity to challenge the claim by submitting a petition pursuant to 19 C.F.R. § 172.3(b). Under this regulation, a petition must be filed within 60 days from the date of mailing to the bond principal the notice of claim for liquidated damages or penalty secured by a bond. Historically, CBP has been lenient with respect to accepting late petitions.

CBPs most current Mitigation Guidelines: Fines, Penalties, Forfeitures, and Liquidated Damages provide instruction on how CBP determines settlement amounts for late petitions. CBP begins by calculating the mitigation amount as if a timely petition was submitted. This is called the “base amount.” CBP then takes 1% of the base amount and multiplies that by the amount of days the petition was late. This amount is then be added to the original base amount with a minimum additional value to be no less than $400.

Now that we have established what Liquidated Damages are, how they arise, and the current calculation for untimely filing, let us now turn our attention to the newly proposed changes to Customs Mitigation Guidelines.

CBPs Proposed Changes to Mitigation Guidelines for Late Petitions

In an informal document made available to members of the trade industry, CBP has claimed that the current mitigation guidelines have not effectively reduced or deterred the number of late petition filings by importers. Furthermore, in recent discussions between CBP the International Trade Surety Association (“ITSA”) and Customs Surety Executive Committee (“CSEC”), CBP explained its intent to significantly alter the calculation scheme for mitigation on untimely liquidated damage responses by importers.

Under the proposed calculation, CBP will take 1% of the full original assessment amount and multiply that by the amount of days the petition was late. This amount will then be added to the base amount. It is also reported that petitions later than 180 days late will not be accepted at all and the full original assessment amounts will be paid.

This proposed change in CBPs Mitigation Guidelines is significant and can result in final mitigation amounts being tens of thousands of dollars more than they would otherwise be under the current scheme. Importers are advised to be aware of the proposed changes and to make sure to submit liquidated damages response petitions timely.

If you need assistance filing a response petition to Customs or want more information on the developments in CBPs Mitigation Guidelines contact the Customs, Import and Trade Law practice group at Fuerst Ittleman David & Joseph, PL at 305-350-5690 or contact@fidjlaw.com.

CBP Changes Regulations for Suspected Counterfeit Merchandise

In an effort to combat the importation of counterfeit goods into the United States, US Customs & Border Protection (“CBP” or “Customs”) has significantly increased the number of seizures of suspected counterfeit merchandise. Between 2010 and 2011, Customs seized nearly 25,000 shipments with a domestic value of approximately 200$ Million and retail values exceeding 1.1$ Trillion. These seizures accounted for just under a 25% increase for the fiscal year 2011. Customs is making a statement, and is taking significant steps to ensure that counterfeits are not getting into the United States market place. The downside of these efforts is that with the increased volume of seizures, it is becoming more difficult for Customs to differentiate between good faith importers and those who knowingly import counterfeits.

Products such as electronics, pharmaceuticals, and footwear are at the top of CBPs watch list and good faith importers of these goods are getting caught in the crossfire. Counterfeit or not, the chances of import cargo being detained or seized is much higher, and importers are forced to wait out what could be months of administrative proceedings to have their cargo released. Worst of all, until recently, there has been virtually no recourse for importers who want to dispute these claims expeditiously. Fortunately, Customs has recognized this problem and implemented new seizure and detention policies in response.

On April 24, 2012, Customs issued an interim rule entitled Disclosure of Information for Certain Intellectual Property rights Enforced at the Border. This regulation amends 19 C.F.R. § 133.21 which outlines CBPs regulations regarding the seizure and detention of suspected counterfeit imports.

In its interim rule, Customs established an entirely new notification and response procedure between itself and importers suspected of importing counterfeits. This new procedure is designed to benefit importers because the previous version of the regulation was silent as to how importers could respond to allegations of suspected forfeiture and provided little immediate recourse for upstanding importers who have been wrongfully accused of counterfeit importation.

Under the new regulations, CBP is given a maximum of thirty days to detain suspected counterfeit goods after which the goods will be excluded from entry or delivery pursuant to 19 U.S.C. § 1514(a)(4). This period can be extended up to an additional thirty days if the importer can display good cause. Under the old regulatory framework, CBP effectively had the power to detain importers items indefinitely and offered no remedy for importers to dispute the seizure of their goods.

Pursuant to the amended regulation in 19 C.F.R. § 133.21(b), CBP is also now required to notify an importer, in writing, that his goods are being detained within 5 days of the detention. The importer will then be afforded seven days to respond to CBP and offer evidence of the merchandises authenticity. Prior to the amendment, Customs had no formal requirement to notify importers of its intentions to seize their merchandise. In fact, CBP was only required to notify the trademark owner.

Section (b) creates a twofold benefit. First, it affords honest importers an opportunity to quickly dispute claims and have merchandise released without waiting (for what could have previously taken up to 60 days) to have the authenticity of there merchandise verified. Under the new regulation good faith importers could potentially have their shipments released in a fraction of the time if they can sufficiently and quickly gather evidence of the seized goods authenticity.

Secondly, this section requires CBP to become more efficient in its verification and disposition of alleged counterfeit goods. Under the auspices of the previous regulation, CBP had full discretion to take as much time as it felt necessary to complete the forfeiture proceeding. This is no longer the case. Customs must now be much more efficient with its procedure and have matters resolved within 30 days, barring any good cause extensions.

Aside from the previously mentioned changes, 19 C.F.R. § 133.21 is effectively the same with respect to Customs dealings with the actual trademark owner. CBP is still required to notify the trademark owner about information regarding the seized shipment (i.e. port of entry, quantity, description of merchandise, product samples, etc) within thirty days. The regulation also continues to afford trademark owners the discretion to provide written consent to have the goods disposed or entered into the US (after obliteration of counterfeit trademarks).

The effect of this updated regulation seems to be positive on all fronts: It puts all involved parties on notice, affords importers the opportunity to dispute and resolve claims quickly, and continues to enforce and protect the trademarks of companies who may be damaged from counterfeit goods in the domestic marketplace.

If you are an importer and have been notified that your cargo has been detained, do not hesitate to contact an attorney in our Customs practice to assist you in responding to CBP.

Class Action Lawsuits Allege Deceptive “Natural” Labeling Claims

As we previously reported here and here, there has been a noticeable increase in the number of lawsuits filed by consumers aiming to challenge “natural” advertising and labeling claims for dietary supplements and food products over the past year. Most recently, on July 26, 2012, a class action lawsuit was filed in the U.S. District Court for the Northern District of California alleging that General Mills, Inc. (“GM”) deceived consumers by marketing its Nature Valley granola bars as natural “when they are not wholly natural.” The complaint alleges GM deceptively uses the term “natural” to describe products containing ingredients that have been fundamentally altered from their natural state.

GM is the maker of Nature Valley food products including granola bars and other snack food items. According to the complaint, GM’s advertising and labeling Nature Valley products as “natural” violates several California consumer protection laws, including the California Legal Remedies Act, the Unfair Competition Law, and the False Advertising Law, because the products contain non-natural, highly processed ingredients such as high fructose corn syrup (“HFCS”), high maltose corn syrup (“HMCS”), maltodextrin, and rice maltodextrin.

Detailed in our previous report, many consumers feel they are being deceived by “natural” marketing claims and have urged the U.S. Food and Drug Administration (“FDA”) to adopt a formal definition for the term “natural.” In 1991, the FDA solicited comments on a potential rule regarding the definition. However, the FDA ultimately declined to adopt a formal definition. Currently, the FDA’s policy states that it considers “natural” to mean “merely that nothing artificial or synthetic (including colors regardless of source) is included, or has been added to, the product that would not normally be there.” 58 F.R. 2302. The informal policy regarding the use of the term “natural” does not carry the force of law. However, the FDA has sent Warning Letters to companies whose products claim to be “natural” yet contain ingredients the Agency regards to be synthetic which caused the product to be deemed to be misbranded pursuant to 21 U.S.C. 343(a)(1).

The uncertainty over the meaning of the term “natural” has brought a wave of recent class action lawsuits. Other products that have also faced consumer class action lawsuits for the use of “natural” claims on advertising and labeling include: ConAgra‘s Wesson Oils, Skinnygirl Margaritas, Kellogg’s Kashi, Tropicana’s not-from-concentrate orange juice, Frito Lay’s Tostitos and SunChips, Snapple beverages, and Ben & Jerry’s ice cream.

The plaintiffs’ attorneys in these cases argue that the “all natural” claim at issue is false and misleading because the product contains unnaturally processed, synthetic substances, or, in the case of Kashi, that the cereal contains genetically modified ingredients. While some products may technically be in compliance with FDA’s policy statement, they are not insulated against private actions because there is a lack of formal FDA or other government definition for “natural” claims. See, e.g., Holk v. Snapple Beverage Corp., 575 F.3d 329 (3rd. Cir. 2009). Without an FDA or other government definition, the plaintiffs’ attorneys can bring these suits and the food manufacturers must prove the claims are not false or misleading. Id. A formal FDA definition of “natural” could set a definitive standard for “natural” and eliminate these lawsuits. Id. For more information regarding what food manufacturers should know about “natural” claims, see please our previous report here.

A formal FDA definition of natural would not only benefit food companies, but it would also provide consumers with a clearer understanding and less confusion. For more information about the regulation of food advertising and labeling claims, please contact us at contact@fidjlaw.com or (305) 350-5690.

Federal Appeals Court Affirms Collateral Consequences of Park Doctrine

On July 27, 2012, the United States Court of Appeals for the D.C. Circuit in Freidman v. Sebelius upheld the U.S. Department of Health and Human Services (“HHS“) determination to exclude three former Purdue Pharma executives from participating in federal healthcare programs after they pled guilty to misdemeanor misbranding violations under the Federal Food, Drug, and Cosmetic Act (“FDCA”) based on the Park Doctrine. The Freidman case is an example of the potential collateral consequences of Park Doctrine prosecutions.

The Park Doctrine, also known as the “Responsible Corporate Officer Doctrine” (“RCO”), allows corporate officials to be convicted of misdemeanors based entirely on his or her position and responsibility in a corporation. Notably, the Governments burden to support a misdemeanor conviction under Park is relatively low. The Government must only show that the violation occurred and that the alleged person to be the responsible corporate official occupied a position of responsibility where the official could have prevented or corrected the violation. There is no requirement that a person had any criminal intent or acted personally in any wrongdoing, or for that matter, was even aware of a violation. We have previously blogged about the recent use of the Park Doctrine by the U.S. Food and Drug Administration (“FDA“), here and here.

Background

As we previously reported, in 2007, Purdue Pharma L.P. and Purdue Frederick Company, Inc. (hereinafter “Purdue”) pled guilty to one felony count of misbranding in violation of 21 U.S.C. § 331(a) for knowingly and intentionally marketing OxyContin, a schedule II controlled substance, as less addictive, and less subject to abuse and diversion, and less likely to cause tolerance and withdrawal than other pain medications. Additionally, three Purdue executives pled guilty to one count of misdemeanor misbranding in violation of 21 U.S.C. § 331(a) and for their admitted failure to prevent Purdues fraudulent marketing of OxyContin under the Park Doctrine. At sentencing, the three executives were sentenced to probation and disgorged millions of dollars of income.

However, soon after the executives entered their guilty pleas, HHS excluded them from any participation in federal health care programs for 12 years because their convictions were based on fraud and the unlawful manufacture of a controlled substance. As a consequence of this exclusion, the corporate officers will be unable to engage any in business which participates in federal health care programs such as Medicare and Medicaid. HHSs decision was upheld by the U.S. District Court for the District of Columbia.

Appeals Court Decision

On appeal to the United States District Court of Appeals for the D.C. Circuit, the executives argued that (1) their misdemeanor misbranding convictions did not rise to the level of "relating to fraud" as to warrant the penalty of exclusion under 42 U.S.C. § 1320a-7(b)(1), and (2) the length of their exclusions was not supported by substantial evidence and thus was arbitrary and capricious.

In its decision, available here, the Court of Appeals held that HHS has the authority to exclude individuals convicted of a misdemeanor if the conduct underlying the conviction is related to fraud, even if the individual is an executive that had no knowledge of the underlying fraudulent conduct based on the Park Doctrine. However, the Court of Appeals also found that the 12 year exclusion of the Purdue executives was arbitrary and capricious because HHS failed to justify the unprecedented length of the exclusion as required by the Administrative Procedure Act. The Appeals Court therefore remanded the case to the District Court with instructions to remand the matter on to HHS for further consideration of the length of the exclusions.

Significantly, the exclusions in Friedman, even if reduced, constitute a severe penalty for executives facing a misdemeanor prosecution under the Park Doctrine. As we previously reported, the FDA has expressly stated that it will seek to increase the amount of Park Doctrine criminal prosecutions of corporate executives whose companies commit FDCA violations.

The FDA and white collar criminal defense lawyers at Fuerst Ittleman are experienced in handling even the most complex cases where clients are facing allegations of criminal actions. Fuerst Ittleman attorneys have represented clients in a variety of FDA-related criminal investigations and prosecutions including violations of the FDCA under 21 U.S.C. §§ 331 and 333 as well as prosecutions of corporate officials under the Park Doctrine. For more information regarding Fuerst Ittlemans white collar criminal defense practice, contact an attorney today at contact@fidjlaw.com

FDA Clears Ingestible Medical Device through De Novo Review Process

On May 1, 2012, the U.S. Food and Drug Administration (“FDA”) cleared the Proteus Digital Health, Inc. (“Proteus”) ingestible sensor for marketing as a Class II medical device through the de novo review process. The ingestible sensor is part of digital health feedback system that will relay information to a patient’s healthcare professional from a microchip embedded in pills to monitor a patient’s response to treatment.

The Proteus ingestible sensor can be integrated into medications such as inert pills or other pharmaceutical products. Once the digested sensor reaches the stomach fluid, it communicates a unique signal to a patch worn on the skin that marks the precise time the medication was taken. The patch also collects physiologic and behavioral information, including heart rate, body position and activity. The patch then relays the information to the patient’s healthcare professional through a mobile phone application. As a result, the ingestible sensor allows healthcare professionals to ensure that patients are taking medications as prescribed while receiving feedback on patients’ physical response to treatment.

Currently, the FDA has only cleared the ingestible sensor based on studies establishing its safety and effectiveness when implanted into placebo pills. However, Proteus hopes to have the device cleared for use with drugs in the near future.

Notably, the ingestible sensor device was cleared for marketing by the FDA through de novo review because it is the first device to monitor medication adherence. The de novo review process is available for novel low- and moderate-risk devices that have been found to be not substantially equivalent (“NSE”) to existing predicate devices as a result of a 510(k) submission. Pursuant to Section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the submitter of a 510(k) may, within 30 days of receipt of an NSE determination for that 510(k), submit a de novo petition requesting the FDA to make a risk-based classification determination for the device under Section 513(a)(1) of the FDCA. If the FDA grants the de novo petition, the device is reclassified from Class III into Class I or Class II. Alternatively, if the petition is denied, the device remains in Class III and may not be marketed until approved by the FDA through submission of a Premarket Approval Application (“PMA”). As a result of the ingestible sensor’s clearance and reclassification as a Class II medical device by the FDA through do novo review, industry may now use the ingestible sensor as a predicate device for future 510(k) submissions.

The FDA’s review of medical devices is complex. Fuerst Ittleman has extensive experience successfully navigating medical devices through FDA review. For more information on FDA’s review of medical devices, please contact us at contact@fidjlaw.com.

FDA Targets Gastric Band Surgery Advertisements

In late 2011, the U.S. Food and Drug Administration (“FDA“) launched an initiative targeting marketers of gastric band surgery following the death of five patients. The FDA is concerned that gastric band advertisements glamorize the surgical procedure without communicating any of the risks. Many of these advertisements feature slender men and women claiming to have lost massive amounts of weight and gained control of their lives solely as a result of undergoing gastric band surgery.

Gastric banding is a surgical procedure intended to reduce the size of the stomach for weight loss by placing a silicone band around the upper portion of the stomach to create a small pouch.  As of todays date, the FDA has approved two gastric banding devices, the Lap-Band by Allergan, Inc. and the Realize Adjustable Gastric Band by Ethicon Endo-Surgery, Inc.

Pursuant to the Federal Food, Drug and Cosmetic Act (“FDCA”), product advertising for certain medical devices, such as gastric bands, must contain relevant warnings and information regarding precautions, side effects, and contraindications. Advertisements that do not contain all of the required information are considered misleading. As a result of misleading advertisements, the medical device will be deemed to be misbranded. 

On December 13, 2011, the FDA issued Warning Letters for misleading gastric band advertisements and misbranded gastric band devices to eight surgical centers and one marketing firm. On June 25, 2012, the FDA issued another Warning Letter to a doctor for Lap-Band advertisements which misbrand the device pursuant to Sections 502(q), 502(r), and 201(n) of the FDCA. The Warning Letters stated that the advertisements failed to reveal material facts, including relevant risk information regarding the use of the gastric band, age and other qualifying requirements for the procedure, and the need for ongoing modification of eating habits, as provided in the approved gastric band device labeling.

FDA Warning Letters notify the recipient and the public that the FDA believes that a particular firm has violated federal law. Thus, given the bad publicity that these letters generate, it is advantageous for firms to correct possible violations even before the FDA issues Warning Letters. The recipients of Warning Letters have 15 days to address the misbranding issues contained in the Warning Letter and to develop specific corrective actions. Failure to do so may put the recipient in jeopardy of facing product seizures or formal legal action by the FDA. Although some courts have previously ruled that Warning Letters are not immediately challengeable in federal court, the United States Supreme Courts recent ruling in Sackett v. EPA (which we discussed here) may have created a sea change in that jurisprudence. We will follow this issue closely, both for our clients and this blog. 

For more information, you can contact an attorney by calling us at 305.350.5690 or by emailing us at contact@fidjlaw.com.

FDA Issues Draft Guidance for Medical Device Pre-Submission Program

On July 13, 2012, the U.S. Food and Drug Administration (“FDA“) issued a Draft Guidance document entitled “Medical Devices: The Pre-Submission Program and Meetings with FDA Staff” (“the Guidance”). The Guidance outlines the Agencys recommendations and procedures for medical device manufacturers and researchers who want early feedback and advice before submitting product- or research-specific applications. When final, the Guidance will supersede the 1999 guidance entitled “Pre-IDE Program: Issues and Answers – Blue Book Memo D99-1.” 

The Guidance expands on the pre-Investigational Device Exemption (“pre-IDE”) program and will now be referred to as the Pre-Submission (“Pre-Sub”) program. The pre-IDE program allows applicants to obtain feedback on a product during the investigational stage and prior to the formal application process. The Pre-Sub program broadens the pre-IDE program to include Premarket Approval (PMA), Humanitarian Device Exemption (HDE), Premarket Notification (510(k)), and de novo submissions.

The FDA states that the Pre-Sub program will provide more timely regulatory actions and innovative new devices for patients through improved submissions. The Guidance advises applicants how to improve their pre-market submissions by:

  • describing when device developers might benefit from early FDA feedback;
  • describing pre-submissions package content necessary for optimal FDA feedback: and
  • explaining how to best engage FDA in informal meetings to discuss the most efficient path with a new technology or  planned regulatory submission 

The FDA cautions that the Pre-Sub program is not an alternative to traditional approval and clearance processes. Instead, the Pre-Sub program is intended to help industry identify regulatory requirements early in the device development process to facilitate earlier, more transparent, and more predictable interactions with the FDA. The Guidance stresses that the Pre-Sub program is designed to answer specific questions an applicant may have during product development.

The Pre-Sub program is part of the FDAs effort to strengthen its image regarding the safety of medical device products after facing criticism regarding the 510(k) program. Last year, the Institute of Medicine (“IOM”) released a report which assessed the overarching structure of the 510(k) process and its ability to sufficiently monitor and oversee the safety and efficacy of medical devices on the market. Overall, the IOM identified substantial problems with the FDAs 510(k) process and suggested the FDA integrate a premarket and post-market regulatory framework that provides for reasonable assurance of safety and effectiveness throughout the device life cycle. Please see our previous report for more information regarding the IOM report.

The medical device industry has also criticized the FDAs medical device review process. For years industry has complained about slow FDA review. The Pre-Sub program is expected to improve review times due to improved submission quality from applicants. The FDA states that the Pre-Sub program will provide industry with enhanced predictability and transparency during the medical device review process.   

However, the FDA notes that its ability to hold timely meetings is contingent upon its resources, which are often strained. The FDA estimates that it will receive approximately 2,544 pre-submission meeting requests annually. Each meeting request is estimated to involve 137 hours of work per applicant. Thus, the extent of the effect of the Pre-Sub program on review times remains to be seen.

Anyone can submit comments on the Guidance at any time. However, in order to ensure that the FDA considers comments on this Guidance when developing the final guidance, electronic or written comments should be submitted by October 11, 2012. Electronic comments should be submitted here. Written comments should be submitted to the Division of Dockets Management, (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Room 1061, Rockville, MD 20852.

The FDAs review of medical devices is complex. Fuerst Ittleman has extensive experience successfully navigating medical devices through FDA review. For more information on FDAs review of medical devices, please contact us at contact@fidjlaw.com.