Researchers Find that Stem Cells May Prove Useful for Blood Transfusions

On September 1, 2011, researchers announced that they may have discovered what may become a new option for blood transfusions. Appearing in this months issue of the journal Blood, found here, the study findings detail how researchers were able to take cultured red blood cells (cRBC) derived from a patients stem cells and re-infuse the cultured cells back into the patient.

According to the findings, the red blood cells survived approximately as long as native RBCs. Although researchers have previously had success culturing red blood cells from hematopoetic stem cells (HSCs), this study is the first showing that these blood cells can survive in the human body. While researchers caution that the findings are still preliminary, this process may change the way blood transfusions are administered in the future. Potentially serving as an alternative to traditional sources of transfusable blood in the coming years, research regarding the capabilities of HSCs has been ongoing.

As we previously reported, researchers have been studying the potential of HSCs in a variety of areas, such as tissue repair and in the treatment of blood disorders. However, because questions surround the regulation of stem cells and other tissues, progress has not been as fruitful as researchers once hoped. The U.S. Food and Drug Administration (FDA), the agency tasked with regulating these emerging areas, has been slow moving as compared to the rapid pace of innovation. While the FDA has regulations pertaining to human cells and tissues, the intricacies of these regulations have yet to be refined. For instance, the FDA currently regulates stem cells as human tissues, biologics, new drugs, etc., depending on a number of factors, including where the cells are derived from, how they are cultured, and the purpose they will be used for. Thus, compliance with applicable federal regulations can be tricky, and medical advancement may outreach the potential of the current regulatory scheme.    

While scientific advances in this area are continually being made, Fuerst Ittleman will continue to monitor the progress and development of HSC research and other stem cell-related issues.

For more information, contact us at contact@fidjlaw.com.

USDA Warns Public of Organic Certification Fraud

On August 30, 2011, the U.S. Department of Agriculture (USDA) issued a press release notifying the public that a fraudulent organic certificate had been disseminated. The press release, found here, discusses how the certificate was brought to the Agencys attention when an accredited organic certifier, whose name falsely appeared on the certificate, notified the USDAs National Organic Program (NOP). According to the USDA, no products bearing the fraudulent certification were sold in the United States.

As we previously reported, the USDAs NOP sets forth several requirements that foods and other products must meet before being designated “organic.” This includes periodic inspections and the implementation of an organic production and handling plan to ensure the goods are fit for organic designation. Without this designation, products may not bear the widely-recognized organic seal. USDA regulations provide for hefty fines for the fraudulent use of the organic certificate or label, which may be up to $11,000 per violation.

For more information about food labeling or USDAs National Organic Program, please contact us at contact@fidjlaw.com.

University of Miami Research Complex Paves Way for Biotech Companies in Miami

This September the University of Miamis Tissue Bank will be relocating to a new $11.5 million facility. Moving from its current building to what is envisioned as a multi-enterprise commercial complex, the tissue bank is expected to prompt research and other medical companies to consider Miami as the new hotspot for biotechnology ventures. With the first building in the complex already nearly two-thirds leased, it appears that the University of Miamis efforts are having some success in bringing companies (and jobs) to the area.

The new complex will serve as an incubator for biotechnology companies seeking to test the market in South Florida. This idea is not new for the State, as the Sid Martin Biotechnology Incubator, housed in Alachua County, has been attracting biotech companies to Florida since 1995. Considering the success of the Sid Martin Biotechnology Incubator, those involved in the University of Miamis new project are confident that Miami will soon serve as a focal point for start-up companies, as well as established biotechnology operations in the coming years.

While many biotechnology companies are currently concentrated in the Northeast region of the U.S., Florida has been experiencing rapid growth in this industry over the last decade. Partially due to efforts of the Florida legislature and BioFlorida, the states bioscience industry association, biotech companies are moving from the northeast and west coast of the U.S., in order to become part of this emerging market. For example, Scripps Research Institute, a biomedical research institute headquartered in California, opened its sprawling research facility, Scripps Florida in 2009. Located in Palm Beach County, the research facility moved to Florida in part due to efforts by the Florida legislature. Seeking to stimulate growth of the biotech industry within the State, legislators offered support for the project by way of a $310 million appropriation. Additionally, Palm Beach County provided various incentives aimed at bringing Scripps to the area, including funding for land and related start-up costs.
By seeking to establish Florida as a hub for the biotechnology industry, Scripps Florida is but one example of how the States incentives have lured companies to the state. For instance, one of the biggest advantages of “setting up shop” in Florida is its extremely favorable tax structure. There is no state income tax imposed on partnerships, limited partnerships, limited liability companies, limited liability partnerships, or subchapter S-corporations. Additionally, the state income tax imposed on C-corporations is only 5.5%. Also, as guaranteed by the Florida Constitution, employees of all of Florida based entities enjoy the absence of a state personal income tax.  
In addition to favorable income tax treatment, there is no sales tax on purchases of raw materials incorporated into a final product for resale, including non-reusable containers or packaging. Furthermore, Florida offers sales and use tax exemptions for numerous business processes such as:

  • Machinery and equipment used by a new or expanding Florida business to manufacture, produce or process tangible personal property for sale;
  • Labor, parts and materials used in repair of and incorporated into machinery and equipment;
  • Electricity used in the manufacturing process;
  • Certain boiler fuels (including natural gas) used in the manufacturing process;
  • Semiconductor, defense and space technology-based industry transactions involving manufacturing equipment;
  • Machinery and equipment used predominantly in research and development; and
  • research and development labor expenditures.

Despite all of the benefits built into the taxing scheme of Florida, there are additional incentives available to certain industries and businesses that achieve certain goals. For instance, the Qualified Target Industry Tax Refund Incentive (QTI) provides refunds on corporate income, sales, ad valorem, intangible personal property, insurance premium, and certain other taxes for businesses that create high wage jobs in targeted high value-added industries. Also, the Capital Investment Tax Credit is an annual credit that is provided for up to 20 years against the corporate income tax. It is specifically available for designated high-impact portions of the certain sectors, including clean energy, biomedical technology, financial services, information technology, silicon technology, transportation equipment manufacturing, or be a corporate headquarters facility. 
Florida also provides a negotiated grant under the High Impact Performance Incentive to pre-approved applicants in certain high-impact sectors designated by the Governor’s Office of Tourism, Trade and Economic Development (OTTED). In order to participate in the program, the project must:

  • operate within designated high-impact portions of the following sectors– clean energy, corporate headquarters, financial services, life sciences, semiconductors, and transportation equipment manufacturing;
  • create at least 50 new full-time equivalent jobs (if a R&D facility, create at least 25 new full-time equivalent jobs) in Florida in a three-year period; and
  • make a cumulative investment in the state of at least $50 million (if a R&D facility, make a cumulative investment of at least $25 million) in a three-year period.

The biotech market fits perfectly within the purview of Floridas numerous incentives aimed at bringing industry to the state. Coupled with the states advantageous tax structure, this provides a favorable environment for these industries to make the shift to Florida.  

For more information regarding biotechnology issues or any information regarding starting a business in Florida, please contact us at contact@fidjlaw.com.

FDA Publishes Draft Guidance for Evaluation and Labeling of Scored Tablets

On September 1, 2011, the U.S. Food and Drug Administration (FDA) released draft guidance for tablet scoring, see FDA Guidance for Industry Tablet Scoring: Nomenclature, Labeling, and Data for Evaluation. This draft guidance provides recommendations regarding “guidelines to follow, data to provide, and criteria to meet and detail in an application to approve a scored tablet,” as well as nomenclature and labeling for approved scored tablets. This draft guidance applies only to sponsors of new drug applications (NDAs) and abbreviated new drug applications (ANDAs). These guidelines are optional for currently marketed drug products.

The FDA published this draft guidance in recognition of the need for consistent scoring between a generic drug product and its reference listed drug (RLD). Insurance companies and physician sometimes recommend that patients score drug tablets to allow patients to adjust a drug dose or as a cost-saving measure. This practice, however, carries possible safety issues. The FDAs concerns with splitting a tablet include “variations in the tablet content, weight, disintegration, or dissolution,” which may affect the concentration of a drug in a split tablet and its rate of absorption. The new draft guidance aims to achieve consistency and ensure the quality of NDA and ANDA scored tablet products.

            In furtherance of those goals, the FDAs draft guidance recommends criteria by which scored tablets can be evaluated and labeled by:

  • Providing a harmonized approach to chemistry, manufacturing, and controls reviews of scored tables;
  • Ensuring consistency in nomenclature  and labeling; and
  • Providing information through product labeling or other means to healthcare professionals.

The FDA has outlined eight main guidelines and criteria by which a scored tablets characteristics will be evaluated during the review process:

  • The dosage amount meant to be achieved after splitting the tablet should not be below 84 the minimum therapeutic dose indicated on the approved labeling.
  • The scored dosage form should be safe to handle and not pose risk of unintended drug 87 exposure (e.g., teratogenic, chemotherapeutic, hormones).
  • Modified release products for which the control of drug release can be compromised 90 by tablet splitting (e.g., tablets controlled by an osmotic pump system or an exterior 91 film coat) should not have a scoring feature.
  • The split tablet, when stored in standard high-density polyethylene pharmacy bottles 94 and caps (no seal), should meet established stability requirements for a period of 90 95 days at 25º C, plus or minus 2º C/60 percent Relative Humidity (RH), plus or minus 5 96 percent RH.
  • The split tablet portions should meet the same finished-product testing requirements 99 as for a whole-tablet product with equivalent strength. A risk assessment should be 100 provided to justify the tests and criteria for product with the proposed functional 101 score. The resulting data should be provided to the Agency for evaluation. The 102 assessment should be undertaken on both tablets that are split nonmechanically (by 103 hand) and tablets that are split mechanically (with a tablet splitter). Any 104 recommended dissolution test data must be generated on a minimum of 12 individual 105 split tablet portions.
  • The scored tablet should be tested using the indicated patient population to ensure patients can split the tablet correctly, as labeled.
  • Scoring configuration of generic drug products should be the same as the RLD
  • New study data on tablet splitability should be provided during the postapproval period for an product changes at level 2 and Level 3 as defined in the Agencys Scale-up and Post-Approval changes (SUPAC) guidances.

In addition, the FDA will require new products that meet the above criteria to be labeled as having a functional score. The use of functional score is intended to indicate to healthcare professionals that the product has been evaluated against the FDAs newly established criteria. These product labels should reflect the following:

  • “Dosage Forms and Strength” section of the Highlights
  • “Dosage Forms and Strength” section of the Full Prescribing Information
  • “How Supplied” section of the full prescribing information

The FDA will require newly approved products to include this information in the patient package insert or medication guide. Those products that do not meet the criteria set forth in the FDAs new draft guidance, should not make reference to scoring or indicate a scoring feature in its product labeling.

Fuerst Ittleman will continue to monitor developments in the FDAs regulation of medical drugs. For more information, please contact us at contact@fidjlaw.com.

11th Circuit Overturns Sanctions Levied Against Federal Prosecutors

On August 29, 2011, the United States Court of Appeals for the Eleventh Circuit, in a divided decision, overturned a $602,000 sanction and public reprimand of federal prosecutors for prosecutorial misconduct. The 11th Circuit held that the district court abused its discretion when it “imposed sanctions against the United States for a prosecution that was objectively reasonable.” The Circuit Court also held that Judge Gold (of the United States District Court for the Southern District of Florida in Miami) violated the due process rights of the two lead federal prosecutors when he issued public reprimands without notice of charges and an opportunity to be heard. Additionally, the Courts opinion may have reshaped the bounds of prosecutorial conduct sanctionable under the Hyde Amendment. A copy of the 11th Circuits opinion can be read here.

The sanctions and reprimand were ordered by Judge Gold in 2009 for actions federal prosecutors took in the case of United States v. Ali Shaygan. Dr. Shaygan was a pain-management doctor who was indicted on 23 counts of distribution of controlled substance outside the scope of his medical practice in violation of 21 U.S.C. § 841(a)(1). However, Dr. Shaygan filed a motion to suppress statements made after his arrest because D.E.A. agents continued questioning after Dr. Shaygan invoked his right to counsel. In reaction to the motion to suppress, lead federal prosecutor Sean Cronin warned defense attorneys that “pursing the motion to suppress would result in a Ëœseismic shift” in the case against Shaygan. Id. at 7.

Following the prosecutors “seismic shift” comments, the government filed a superseding indictment of 141 counts. Prosecutors also began a collateral investigation into Dr. Shaygans defense team for witness tampering. During its investigation, federal prosecutors enlisted Dr. Shaygans former patients as confidential informants and authorized them to tape phone conversations with the defense attorneys. However, prosecutors failed to comply with internal policy of the U.S. Attorneys Office because they did not receive authorization for the investigation or the recordings from the United States Attorney. Additionally, the prosecutors failed to turn over discovery related to witness tampering investigation.

Ultimately, the jury found Dr. Shaygan not guilty on all counts. However, following the trial, Judge Gold ordered the federal prosecutors trying the case, Mr. Cronin and Ms. Andrea Hoffman, to appear for a sanctions hearing. As a result, Judge Gold ordered the United States to pay $601,795.88 in attorneys fees to the defense and publicly reprimanded both attorneys.

The basis for Judge Golds award of attorneys fees was the Hyde Amendment. The Hyde Amendment, which was passed as part of the Appropriations Act of 1998, permits the court, in a criminal case, to award to the defendant, if he is the prevailing party, reasonable attorneys fees where the court finds the position of the United States was “vexatious, frivolous, or in bad faith.” Judge Gold found that the prosecutors acted in bad faith following the motion to suppress when they filed the superseding indictment, launched the witness tampering investigation, and violated discovery rules by failing to disclose the information of the investigation to the defense.

In reversing Judge Golds Order, the 11th Circuit held that the District Court applied an incorrect legal standard for awarding fees under the Hyde Amendment. The 11th Circuit found that subjectively motivated ill-will of an individual prosecutor “alone cannot support a sanction against the United States under the Hyde Amendment.” Id. at 28. Instead, bad faith is viewed under an objective standard. As such, as long as a prosecutor had an “objective reasonable basis” in law, i.e. not frivolous, and fact, i.e. not vexatious, an award of attorneys fees under the Hyde Amendment is improper. Id. at 30-32. The Court stated: “A rule that would allow a determination of bad faith whenever a prosecutor uses harsh words, such as Ëœseismic shift, and harbors some ill-will toward the defense would chill the ardor of prosecutors and prevent them from prosecuting with earnestness and vigor. The Hyde Amendment was not intended to do that.” Id. at 37.

The 11th Circuit also disagreed with Judge Golds reasoning that discovery violations alone can support an award for attorneys fees under the Hyde Amendment. Rather, the decision of whether the position of the United States is sanctionable should be based on the case as a whole. Id. at 41. The Court also held that the District Court denied the prosecutors due process when publically reprimanding them: “Due process requires that the attorney (or party) be given fair notice that his conduct may warrant sanctions and the reasons why.”

Judge Edmondson of the Eleventh Circuit dissented from the Courts majority opinion regarding its interpretation of whether the award for attorneys fees was appropriate under the Hyde Amendment. Judge Edmondson wrote that the phrase “or bad faith” in the Hyde Amendment “covers, and was intended to cover, prosecutorial positions beyond those positions that are baseless or exceed constitutional constraints: the limit that [the majority] imposes.” Id. at 49. According to Judge Edmondson, the Hyde Amendment encompasses not only instances where prosecutors lack a reasonable basis in law and fact, but also situations where prosecutors pursue objectively reasonable prosecutions motivated by ill-will. “The idea that litigation can be conducted in a manner that is both proper in form and, at the same time, wrongful “ because of the bad ulterior motive for which the litigation is used “ is no innovative idea in the law. . . . I have little doubt that a crafty lawyer can act with improper motive and, at the same time, appear to stay technically within the outside borders of the law.” Id. at 52 n. 5.

The Miami Herald has reported that Dr. Shaygans defense attorneys will seek a rehearing before the 11th Circuit en banc. The Miami Heralds article can be read here.

This decision raises interesting issues involving the bounds of sanctionable prosecutorial conduct in criminal investigations. Fuerst Ittleman will continue to monitor the progress of these issues in this case. For more information, contact us at contact@fidjlaw.com.

Del Monte Prepares for Suit Against Oregon

On August 29, 2011, Del Monte began taking steps to sue the State of Oregons Public Health Authority (PHA) and one of its senior officials. After suing the FDA last week, the company filed a notice to sue letter, alerting the State that it will be pursuing legal action in relation to allegations of tainted cantaloupes. According to Del Monte, Oregons PHA and its officials had insufficient evidence to link Del Monte cantaloupes to an outbreak of Salmonella Panama.

We previously reported on Del Montes suit challenging an import alert issued by U.S. Food and Drug Administration (FDA). According to Del Monte, the FDA placed an Import Alert on all cantaloupes being imported from Guatemala because of the possible link to a salmonella outbreak earlier this year. As alleged by Del Monte, the Import Alert was unlawful because the Agency had insufficient evidence that the cantaloupes imported from Guatamala were contaminated. While Del Montes arguments against the State of Oregon are expected to be similar to those made against the FDA, the notice to sue letter is just the first step in what could become a long legal battle concerning the allegedly tainted fruit.

For more information on FDA enforcement measures or import compliance, please contact us at contact@fidjlaw.com.

FDA Issues Import Alert for Papayas from Mexico

On August 25, 2011, the U.S. Food and Drug Administration (FDA) issued an Import Alert aimed at stopping the introduction of contaminated papaya from entering the country. As announced here, the FDA and its Mexican counterparts have been closely monitoring the salmonella contamination that has been linked to papaya grown in Mexico.

Found here, the Import Alert details the actions that importers must take in order to bring papayas into the country. Specifically, in order to successfully import papayas, importers must provide documentation from an accredited laboratory, showing that each shipment of fruits is not contaminated. As we previously reported on a similar import alert last week, these requirements are frequently imposed by the FDA to prevent shipments from entering the country without proof of their safety. By requiring heightened scrutiny when goods are offered for import, Import Alerts prevent goods from entering the country unless all required documentation is supplied by the importer. Thus, it is important to be aware of relevant FDA import alerts before offering goods for importation, as well as any necessary steps that must be taken to verify compliance with federal law.

For more information on FDA enforcement measures or import compliance, please contact us at contact@fidjlaw.com.

Violation of FDA Regulations Prompts Seizure by U.S. Marshals

On August 25, 2011, U.S. Marshals seized various seafood products from a manufacturing facility in California. Prompting the seizure, the U.S. Food and Drug Administration (FDA) requested the marshals take action against Meiko Food Co. after finding the companys operations were not compliant with the federal Food, Drug, and Cosmetic Act (FDCA) and accompanying FDA regulations.

As discussed here, the FDA sought action against the seafood manufacturer because of continued non-compliance, despite repeated FDA warnings. In particular, the FDA found that Meikos seafood products were adulterated because the company failed to have a Hazard Analysis Critical Control Point (HACCP) plan in place. A HACCP plan is one of many preventative controls that the FDA requires manufacturers to have in place in order to ensure health risks are being monitored and reduce food borne illness outbreaks.

As found in an FDA Warning Letter to Meiko late last year, the FDA had previously cited the company for its failure to have a HACCP plan. Thus, the seafood manufacturers continued failure to address FDAs warnings led the Agency to step up its enforcement actions against the company. Had the seafood manufacturer taken the necessary steps called for by the warning letter, it may have avoided further FDA action.

Because the FDA typically issues warning letters before taking any serious action against non-compliant parties, it is important to take warning letters seriously and take any necessary corrective measures in order to avoid further enforcement action.

For more information on FDA enforcement measures or other compliance issues, please contact us at contact@fidjlaw.com.

OFAC Announces Settlement With JPMorgan Chase Bank N.A. For Multiple Violations

On August 25, 2011, the Office of Foreign Assets Control (“OFAC”) of the United States Department of the Treasury announced that it had reached a settlement with JPMorgan Chase Bank, N.A. for alleged violations of multiple sanctions programs related to doing business with Cuba, Iran, Sudan, and Liberia as well as sanctions programs designed to prohibit the support of terrorism and the proliferation of weapons of mass destruction. As part of the settlement agreement, JPMorgan has agreed to remit $88,300,000 to OFAC. The settlement is the largest ever paid by a U.S. financial institution for sanctions violations. A copy of OFACs press release can be read here.

Of the numerous violations alleged to have been committed by JPMorgan, OFAC determined that three were “egregious.” The egregious violations included violations of the Cuban Assets Control Regulations, the Weapons of Mass Destruction Proliferators Sanctions Regulations, and the Reporting, Procedures, and Penalties Regulations. The Cuban Assets Control Regulations (“CACR”) generally prohibits U.S. banking institutions from accepting transfers of credits and funds of a Cuban nationals Cuban assets. See 31 C.F.R. § 515.201. (More information about the CACR can be found on OFACs website here.) OFAC alleged that between December 12, 2005 and March 31, 2006, JPMorgan processed 1,711 wire transfers of approximately $178.5 million for Cuban nationals in violation of the CACR. Additionally, OFAC alleged that JPMorgan was alerted by another financial institution of possible violations as early November 2005. OFAC alleged that JPMorgan investigated, found that the transfers were in fact in violation of the CACR and failed to self-report the violations to OFAC and take steps to prevent violations from recurring.

OFAC also alleged violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations (“WMD Sanctions”). Under the WMD Sanctions program, all property and interests in property of persons and businesses who have been identified by regulation, that are in the United States, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. See 31 C.F.R. § 544.201. According to OFAC, JPMorgan violated the WMD Sanctions when it made a loan of $3 million to a bank that then used the borrowed funds to issue a line of credit to purchase a vessel affiliated with the Islamic Republic of Iran Shipping Lines, which is subject to WMD Sanctions and therefore blocked. OFAC found this violation to be egregious because, despite voluntarily self disclosing to OFAC, JPMorgan withheld its self-disclosure for over 3 months from the time it learned of the violation and received repayment of the loan after its self-disclosure without OFAC authorization.

The final “egregious” violation was a violation of the Reporting Procedures and Penalties Regulations (“RPPR”). The RPPR, found at 31 C.F.R. Part 501, establishes the standard reporting and recordkeeping requirements, as well as the procedures governing transactions pursuant to the various economic sanctions programs operated by OFAC. OFAC alleged that between November 8, 2010 and March 1, 2011, JPMorgan failed to produce numerous documents in its possession in response to an OFAC administrative subpoena and repeatedly asserted that no such documents were in its possession. However, OFAC investigations, which included communications with third-party financial institutions, revealed multiple responsive documents that were still in JPMorgans possession that had not been turned over. As a result of OFACs investigation, JPMorgan subsequently produced more than 20 additional responsive documents. Similar to its CACR violation, JPMorgan did not self disclose the violation to OFAC.

In determining that JPMorgans violations were egregious, OFAC determined as follows: “JPMorgan is a very large, commercially sophisticated financial institution, and [its] managers and supervisors acted with knowledge of the conduct constituting the apparent violations and recklessly failed to exercise a minimal degree of caution or care with respect to [its] U.S. sanctions obligations.”

The JPMorgan settlement provides an illustrative example of the multiple complex sanctions schemes with which financial institutions must comply. If you have questions pertaining to the numerous OFAC sanctions programs, or for questions on how to ensure that your business maintains regulatory compliance at both the state and federal levels please contact us at contact@fidjlaw.com.

Del Monte Brings Suit Challenging FDA Import Alert

On August 22, 2011, Del Monte Fresh Produce N.A., Inc. (Del Monte) brought suit against the U.S. Food and Drug Administration (FDA), seeking to invalidate an import alert the agency placed on cantaloupes imported from Guatemala. The challenged Import Alert, found here, was issued after the FDA concluded that cantaloupes being imported from Guatemala were the source of a Salmonella Panama outbreak that left several people ill. In its complaint, Del Monte alleges the FDA had insufficient evidence that Del Montes cantaloupes were the source of this outbreak.

Under the Food, Drug and Cosmetic Act (FDCA), the FDA has the authority to inspect various types of goods being offered for import into the United States. While routine inspections may provide a basis for imported goods to be detained and even refused entry into the country, an import alert, like the one challenged by Del Monte, can cause goods to be detained without having to undergo any inspection at all.

Because import alerts can prevent shipments from entering the country without an allegation that the specific goods are unsafe, it is not uncommon for companies to challenge the bases for these alerts. For example, we previously reported on a case brought by Seagate, in which we successfully challenged the legality of an import alert. As in the case of Del Monte, FDA detained a series of Seagates shipments without alleging that the specific products were contaminated. In that case the FDA released the detained products soon after we filed suit. In this case, however, it is unclear how the FDA will proceed.

For more information on FDA enforcement measures or import compliance, please contact us at contact@fidjlaw.com.