Facebook Changes Its Policy Regarding Pharmaceutical Companies’ Public Comment Walls

On August 15, 2011, Facebook changed its policy regarding public comments on the Walls of pharmaceutical companies Facebook pages. In the past, Facebook granted pharmaceutical companies the privilege of disabling comment Walls on their company pages, which prevented the public from posting or viewing comments. The new policy, however, no longer allows companies to hide public comments. This change applies to pharmaceutical company pages and company-sponsored pages that are geared toward a specific disease or patient community. The new Facebook policy, however, does not apply to any pages dedicated to a specific prescription product.

Many pharmaceutical companies did not join the Facebook community until the social-networking site granted them the special privilege of disabling comment Walls. This change in Facebooks policy has raised concerns among pharmaceutical companies because it permits the public to make comments that may not be favorable to drug makers. Under the new policy, the public can comment about adverse side effects, promote off-label uses, or make inappropriate statements about pharmaceutical products. Companies fear that comments about adverse reactions or negative experiences could inevitably force them to file adverse event reports with the U.S. Food and Drug Administration (FDA). For these reasons, pharmaceutical companies are worried that Facebooks new Wall policy will attract unwanted attention from government regulators.

Facebooks new Wall policy has received a mixed response from pharmaceutical companies. Concerns over risks associated with an open Wall and the possible added expense of policing their own Facebook pages has led some drug companies to completely shut down their pages. For example, AstraZeneca, the producer of a major antidepressant, Seroquel, shut down a page dedicated to depression. Some companies have announced new public commenting guidelines, while others have expressed intent to increase monitoring of their company pages.

Fuerst Ittleman will continue to monitor issues facing the pharmaceutical industry. For more information, please contact us at contact@fidjlaw.com.

Five Tobacco Companies File Suit Challenging FDA’s New Warnings Rule

On August 16, 2011, five tobacco companies filed a complaint against the U.S. Food and Drug Administration (FDA) in the U.S. District Court for the District of Columbia challenging the Agency’s rule requiring new textual and graphic warning labels on cigarette packaging and advertisements. As we reported here earlier this year, the FDA issued a final rule pursuant to the Family Smoking Prevention and Tobacco Control Act (the “Act”) that requires each cigarette package and advertisement to bear one of nine new textual warning statements and an accompanying graphic image (see FDA’s approved images here).  The final rule explained that the requirements for the new textual and graphic warning labels would go into effect 15 months after the FDA’s issuance of a final rule.

The five tobacco companies (R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, Commonwealth Brands, Inc., Liggett Group LLC, and Santa Fe Natural Tobacco Company, Inc.) seek a declaratory judgment that the FDA’s final rule violates the First Amendment and Administrative Procedure Act (APA), and declarative and injunctive relief that the new textual and graphic warnings will not become effective until 15 months after FDA issues regulations “that are permissible under the United States Constitution and federal laws.”

The Plaintiffs allege that the FDA’s final rule regarding textual and graphic warnings requires them “to become a mouthpiece for the Government’s emotionally-charged anti-smoking message.” The Petitioners argue that the requirement to essentially advocate against the purchase of their own lawful products “is precisely the type of compelled speech that the First Amendment prohibits” because the Government cannot compel corporations to “use their private property as a ‘mobile billboard’ for the State’s ideological message.” The Plaintiffs also contend that the FDA’s warnings are unjustified and unduly burdensome, as they do not further any compelling governmental purpose and are “unlikely to have any material impact on consumer understanding of smoking risks, consumer intentions regarding smoking, or actual consumer smoking decisions.” The FDA’s final rule, according to the Plaintiffs, “violates the First Amendment under any standard of review.”

In addition, the Plaintiffs argue that the FDA acted arbitrarily and capriciously “by attempting to justify the Ruleon grounds that were illogical, contradictory, and without support in the regulatory record, and by employing different standards of analysis to comments supporting the Rule than to comments opposing the rule.”  As a result, the Plaintiffs allege that the FDA’s final rule “contravenes core requirements” of the APA.

Lastly, the Plaintiffs assert that the FDA has not issued a legally valid rule and, therefore, the 15-month effective date for the new textual and graphic warnings cannot come into effect until the FDA complies accordingly. The Plaintiffs contend that Congress’s single implementation date for the new warnings and related requirements “demonstrates an intent that manufacturers not be subjected to multiple, costly overhauls of their packaging and advertising.” Further, the Plaintiffs state that to avoid an invalidation of the Rule, the Act must be read to “tie the effective dates of all cigarette packaging and advertising changes to the ‘issuance’ of regulations by FDA.” In furtherance of that goal, the Plaintiffs request the court to grant declaratory and injunctive relief that the Act not become effective until 15 months after the FDA issues a rule that is permissible under the U.S. Constitution and federal law.
Fuerst Ittleman will continue to monitor the progress of this lawsuit and the FDA’s regulation of tobacco products and advertising. For more information, please contact us at contact@fidjlaw.com. 

IRS Issues Guidance on Annual Fee Imposed on Branded Prescription Drugs

On August 15, 2011, the U.S. Department of Treasury and Internal Revenue Service (IRS) issued temporary regulations (T.D. 9544) and proposed regulations (REG-112805-10) regarding the annual fee imposed on certain branded prescription drugs. The prescription drug fee was enacted by section 9008(a) of Patient Protection and Affordable Care Act (PPACA). The $2.5 billion excise tax is an aggregate annual fee imposed on branded prescription drug manufacturers and importers with gross receipts over $5 million from sales to specified government programs. Please see our previous report here for more information regarding the prescription drug fee and the PPACA.

The temporary and proposed regulations describe the rules and actions of the prescription drug fee to be taken before the annual September 30th due date. The regulations are generally consistent with previous IRS guidance documents regarding the prescription drug fee. The regulations provide guidance regarding:

  • A general overview of the fee rules
  • An explanation of terms used in implementing the fee
  • A description of the information requested from covered entities and provided by specified government programs
  • A description of how the fee and subsequent adjustments are calculated
  • Rules relating to the notice of preliminary fee calculation, dispute resolution process, and notification of final fee calculation
  • An explanation of how to pay the fee, how the fee is treated for tax purposes, and how to make refund claims

See the official release of the documents in the August 18th Federal Register here and here. The Department of Treasury and the IRS are seeking public comment until November 16, 2011. The attorneys at Fuerst Ittleman, PL are knowledgeable in both tax and food and drug law. If you have questions regarding the prescription drug excise tax, please contact us at contact@fidjlaw.com.

Arizona Naturopathic Doctor Pleads Guilty to Selling Stem Cells

On August 18, 2011, Fredda Branyon, a naturopathic physician in Arizona, entered into a plea agreement with the U.S. Attorneys Office in Houston, Texas regarding charges of illegally selling stem cells. In late July, prosecutors filed charges against Ms. Branyon for allegedly selling stem cells in violation various federal law. In the charging document, the government alleged that Branyon, the operator of a clinic in Scottsdale, engaged in a conspiracy whereby she caused the stem cells to be introduced into interstate commerce in violation of the federal Food, Drug, and Cosmetic Act (FDCA). Additionally, Branyon was charged with ten counts of mail fraud, one for each shipment of stem cells from her clinic in Arizona into the State of Texas. Violations of the FDCA are punishable by up to 3 years imprisonment while violations of the mail fraud statute are punishable by up to 20 years imprisonment. According to the plea agreement, Branyon pled guilty to just one charge of violating the FDCA. The rest of the charges will be dismissed at her sentencing hearing. The plea agreement can be reviewed by clicking here.

As discussed in the plea agreement, Branyon had been purchasing umbilical cord tissue (from which the cells were derived) from a birthing facility, where new mothers donated their cord blood for research purposes. After purchasing the donated tissue, Branyon recruited the services of a medical school professor, who then obtained the cells from the cord blood. Having in her possession viable stem cells, Branyon then entered into an arrangement with a Texas medical clinic to supply it with stem cells. While the arrangement on its face stated that the cells were “for research purposes only,” the plea agreement states that Branyon knew the cells were to be used to treat patients. In addition to the sale of the cells, the plea agreement emphasizes that Branyon had been operating various websites whereby she had advertised these stem cells for the treatment of certain diseases, including amyotrophic lateral sclerosis (ALS) and multiple sclerosis (MS).

Branyon, according to the plea agreement, also agreed to cooperate with the government against others involved with violations of the law.

Under the FDCA and U.S. Food and Drug Administration (FDA) regulations, it is against federal law to cause an unapproved new drug to be shipped into interstate commerce. The FDA has recently asserted that stem cells that are removed from the body for medical treatment of a patient are a new “drug”.  Fuerst Ittleman has attorneys with great experience in representing medical professionals and others involved in the use of human stem cells for the medical treatment of a variety of physical ailments. The regulation of stem cells and their usage is an evolving area of the law in which Fuerst Ittleman is deeply involved and constantly monitoring.

FDA Denies Requests for Reconsideration

Stemming from the recent crackdown on unapproved cough and cold drugs, the U.S. Food and Drug Administration (FDA) recently denied two citizen petitions for reconsideration of the Agencys action. Submitted by the pharmaceutical companies ECR Pharmaceuticals (ECR) and Laser Pharmaceuticals, LLC (Laser), the requests sought review of the FDAs decision to rid the market of these products without permitting the companies the opportunities for hearing and asked the Agency to stay future enforcement action, allowing their products to remain on the market until the issues were resolved. In what ultimately resulted in a dismissal based on procedural grounds, the FDA reaffirmed both its hard-line stance against these over-the-counter (OTC) unapproved medicines as well as the narrow grounds on which the Agency will allow an administrative appeal of its actions.

As we previously reported, the FDA announced early this year that it was going to begin taking action against manufacturers of unapproved cough and cold products that were formerly part of its DESI program. Beginning in the 1980s, the several unapproved drugs were temporarily exempted from FDAs standard approval process through this program because of the drugs similarities to other approved prescription drugs and OTC drugs. Under this program, the FDA allowed these products to be marketed and sold until final DESI determinations were made. Until early this year, when FDA announced it was ending the exempt status of these drugs, many of these drugs remained on the market.

Seeking to prevent future enforcement action against them, ECR and Laser sought hearings from the FDA concerning the safety and effectiveness of the companies respective OTC drugs. Having denied the requests, the companies then each sought reconsideration of FDAs decision to abruptly end their exempt statuses under the DESI program.

Ultimately, the FDA denied both petitions on procedural grounds, citing to the Agencys regulations as limiting the scope of administrative reconsideration to certain specified matters. Referring to its regulations in its denials, the FDA noted that “[t]he Agencys regulation on reconsideration at 21 CFR 10.33 provides that a person may request reconsideration of FDA decisions on certain types of petitions formally submitted to the Agency.”

Provided in this regulation are the matters that may be subject to administrative reconsideration. Under 21 CFR 10.25, the types of actions amenable to administrative reconsideration are listed and include: new drug applications, color additive petitions, etc. Additionally, these actions include citizens petitions requesting that the FDA issue, amend, or revoke a regulation, as well as refraining from taking any other form of action. While the text of the regulation does not provide an exhaustive list of the types of action that may be the subject of administrative reconsideration, these recent denials have made it clear that the FDA is interpreting the availability of this form of review very narrowly.

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

USDA Proposes Mandatory Livestock Tracking System

On August 9, 2011, the U.S. Department of Agricultures (USDA) Animal and Plant Health Inspection Service (APHIS) issued a proposed rule to establish a mandatory livestock tracking system in order to improve the traceability of U.S. livestock. The proposed rule would require farmers and ranchers to affix unique identification numbers to animals transported interstate. The rule seeks to establish an effective, transparent animal disease traceability system without additional burden on farmers and ranchers. The tracking system would allow federal officials to quickly isolate diseased animals in the event of an outbreak.

In 2004, the USDA began developing a framework for animal disease traceability through the implementation of the National Animal Identification System (NAIS). NAIS is a voluntary registration system established to trace the source of an animal disease within 48 hours. However, in 2009, the USDA estimated that only 36 percent of farmers and ranchers participated in the NAIS. In order to improve traceability, APHIS launched a series of efforts to assess the acceptance of an animal disease traceability system which lead to the development of the proposed rule.   

The proposed rule requires that livestock moved interstate be officially identified and accompanied by an interstate certificate of veterinary inspection or other documentation, such as owner-shipper statements or brand certificates, unless exempt. Official forms of identification include tattoos, metal eartags, or brands with certain exceptions. The proposed rule also allows for States and tribes to develop alternative forms of identification. Livestock subject to the identification requirements include cattle, bison, sheep, goats, swine, horses, captive cervids, and poultry.

The USDA is confident that the new system will be able to trace the source of an animal disease within a few days of an outbreak. Advocates say the implementation of the new mandatory system would be a significant improvement compared to USDA bovine tuberculosis investigations averaging 150-days to trace the source of an outbreak.  

The USDA is currently seeking public comment on the proposed rule for a mandatory livestock tracking system. The deadline for submission is November 9, 2011. Fuerst Ittleman will continue to monitor the development of the USDA APHISs new proposed rule. For more information, please contact us at contact@fidjlaw.com.

Johnson & Johnson Seeks Settlement in for Allegations of Off-Label Promotion of Risperdal

In 2004, the U.S. Department of Justice (DOJ) Office of the Inspector General (OIG) began investigating Janssen Pharmaceutica Inc. (Janssen), a subsidiary of Johnson & Johnson (J&J), concerning the marketing practices for Risperdal, an antipsychotic prescription drug. Janssen allegedly promoted Risperdal for unapproved off-label uses, a misdemeanor criminal offense. Pursuant to the Federal Food, Drug, and Cosmetic Act (FD&C Act) manufacturers are prohibited from directly marketing a drug for a use other than the U.S. Food and Drug Administration (FDA) approved indication. 21 U.S.C. §§301-97. The FDA approved Risperdal for the treatment of schizophrenia in adults and adolescents. Allegations suggest that Janssen also promoted Risperdal for the treatment of dementia and anxiety disorders. See our previous report here for more information regarding misdemeanor criminal charges resulting from off-label promotion.

On August, 9, 2011, in a quarterly report filed with the Securities and Exchange Commission (SEC), J&J announced efforts to resolve the criminal penalties related to Risperdal marketing. J&J stated that an agreement had been reached with the DOJ regarding the key issues; however, the settlement has yet to be finalized. J&J adjusted its financial statements for the second quarter of 2011 to reflect the financial component of the proposed criminal settlement. 

In addition, J&J announced the settlement of a tolling agreement with approximately 40 states. The tolling agreement allows for the delay of the statute of limitations in order to provide J&J an opportunity negotiate civil claims with states before a state is forced to file a complaint to preserve their rights. J&J states litigation is likely if negotiated resolutions cannot be reached in regards to the civil litigation relating to the allegations of off-label promotion of Risperdal. Pursuant to the False Claims Act, companies who knowingly represent a false approval are subject to civil penalties. 31 U.S.C. § 3729. 

J&J claims that the resolution of the criminal and civil matters is not expected to have a material adverse effect on the Companys financial position, although the resolution in any reporting period could have a material impact on the Companys results of operations and cash flows for that period.

For more information regarding the drug approval process or for any questions regarding how your company can maintain regulatory compliance, please contact us at contact@fidjlaw.com.

FDA Giving the Opportunity to Comment on Possible Changes to the 510(k) Process

On August 12, 2011, the U.S. Food and Drug Administration (FDA) announced its plans to hold a public meeting, where it will elicit comments from the public concerning the proposed changes to its 510(k) process. The meeting, which will be held next month, will focus primarily on the recommendations proposed in the recent report by the Institute of Medicine (IOM).

Currently, the 510(k) process is the means by which most medical devices are cleared by the FDA in order to be brought to market. While this process has remained relatively unchanged over the last three decades, there has been much attention over the past year of reforming it. As we previously reported, the plans to overhaul the system have been in the works since 2009. However, efforts to revamp the process have gained momentum only recently.

As we recently reported, IOM released its proposed recommendations on updating the 510(k) system. Found here, the report contains a number of changes that IOM suggests could help FDA ensure that medical devices are safer for the public. Because the IOM report suggests significant changes to the 510(k) process, including a total abandonment of the way the process currently operates, FDA is seeking public comment concerning these recommendations.

Fuerst Ittleman will continue to monitor the developments and changes to 510(k) premarket notification process. For more information, please contact us at contact@fidjlaw.com.

FDA Announces Public Workshop for Medical Apps

On August 12, 2011, the U.S. Food and Drug Administration (FDA) announced its plans to hold a public workshop concerning its newly proposed regulation of mobile medical applications (“apps”). The meeting, which is scheduled for September 12, will focus on the emerging phenomenon of medical apps, defined as those applications used to diagnose or treat conditions.

As we previously reported, the FDA has recently been focusing in on medical apps inasmuch as they are transforming mobile devices into medical devices that are regulated by the Agency. Having issued its draft guidance last month, found here, the FDA is holding this workshop in an effort to gain further feedback from the public. The FDAs proposed oversight of these apps will be through the application of the same regulatory scheme that applies to traditional medical devices, and the workshop will provide the public with a forum to present the FDA with its concerns before the Agency finalizes its position on this new area of medical device regulation.

Fuerst Ittleman will continue to monitor the progress of the FDAs regulation of mobile medical apps. For more information, please contact us at contact@fidjlaw.com.

Two Telecommunications Executives Convicted by Miami Jury on all Counts for their Involvement in Scheme to Bribe Officials at State-Owned Telecommunications Company in Haiti

On August 5, 2011, Joel Esquenazi and Carlos Rodriguez, former executives of Terra Telecommunications Corporation (Terra), were convicted by a federal jury on all counts for their roles in a scheme to pay bribes to Haitian government officials at Telecommunications DHaiti S.A.M. (Haiti Teleco).

Esquenazi, the former president of Terra, and Rodriguez, the former executive vice president of Terra, were convicted of one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and wire fraud; seven counts of FCPA violations; one count of money laundering conspiracy; and 12 counts of money laundering. Terra had a series of contract with Haiti Teleco, the the sole provider of land line telephone service in Haiti, that allowed the companys customers to place telephone calls to Haiti.

The Foreign Corrupt Practices Act makes it a federal crime for U.S. persons or companies, along with their subsidiaries and agents, to bribe officials of foreign countries in return for some business advantage. The conspiracy to commit violations of the FCPA and wire fraud count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the grater of $100,000 or twice the value gained or lost. The conspiracy to commit money laundering count and the money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of property involved in the transaction.

According to prosecutors, the defendants participated in a scheme to commit foreign bribery and money laundering from November 2001 through March 2005. The telecommunications company paid more than $890,000 to shell companies to be used for bribes to Haiti Teleco officials. To conceal the bribe payments, the defendants used the shell companies to receive and forward the payments. The defendants also created false records claiming that the payments were for “consulting services,” which were never performed.

The purpose of the bribes was to obtain various business advantages from the Haitian officials for Terra, including the issuance of preferred telecommunications rates, reductions in the number of minutes for which payment was owed, and the continuance of Terras telecommunications connection with Haiti.

Sentencing for both defendants was scheduled for October 13, 2011. Esquenazi was remanded into federal custody immediately after the verdict, while Rodriguez remains free on bond.

The verdict is significant because most FCPA prosecutions are resolved prior to trial via plea agreements or deferred prosecution agreements with the government. The government is emphasizing prosecutions of the FCPA against individuals, not just corporations for the deterrent effect of prison sentences on other potential violators. Most FCPA prosecutions are conducted by a team of prosecutors and agents based in Washington dedicated to that task.

Lawyers at Fuerst Ittleman are experienced in representing individuals and corporations facing scrutiny from the government regarding foreign bribery and money laundering allegations. We also conduct internal investigations of businesses to determine whether those businesses are in compliance with the FCPA and money laundering laws when conducting their international business.