Key Takeaways

• In June of this year, FDA announced a proposed rule that would permit approval for nonprescription drug products with an Additional Condition for Nonprescription Use—a category of nonprescription drugs where FDA determines that labeling alone is insufficient to ensure safe use by consumers without supervision by a healthcare professional.
• The proposed rule would establish requirements for certain drugs to be sold over the counter with additional requirements to ensure appropriate self-selection and/or use by consumers.
• For drug manufacturers and retailers, this proposed rule offers an interesting avenue to bring drugs to market but may raise additional product liability concerns.
• The proposed rule is available for comment until October 26, 2022.

Introduction

At the end of June 2022, FDA announced the availability of the proposed rule Nonprescription Drug Product with an Additional Condition for Nonprescription Use (“ACNU”). If finalized, the proposed rule will create a category of drugs that would be approved for sale over the counter (“OTC”) with additional conditions to be submitted to and approved by FDA. The additional conditions are intended to allow consumers to appropriately select these drugs for use, or appropriately use the drugs, or both.¹

Below we provide an overview of the current pharmaceutical drug market, explain how the proposed rule changes the OTC landscape, and discuss the impact this new rule may have on product liability for drug manufacturers and retailers if it is finalized.

Current State of the Pharmaceutical Drug Market

Under the current system, drugs can be approved by FDA as either prescription or nonprescription drugs. A drug must be dispensed by a prescription if it is not safe for use except under the supervision of a healthcare practitioner licensed by law to administer such drug according to the Federal Food, Drug, and Cosmetic Act (“FDCA”).² If a drug product does not meet the criteria for prescription-only dispensing, it may be marketed as a nonprescription OTC drug.

There are two regulatory pathways to bring OTC drugs to market in the United States. Nonprescription drugs can be approved via the New Drug Application (“NDA”) process, for branded drugs, or the Abbreviated New Drug Application (“ANDA”) process, for generic drugs, under Section 505 of the FDCA.³ Alternatively, nonprescription drugs can be marketed via the “Over-the Counter Drug Review Process” under Section 505G of the FDCA, which allows a nonprescription drug to be marketed without an approved NDA or ANDA if it meets the requirements of Section 505G, including with respect to active ingredients, uses, dose, routes of administration, labeling, and testing, that are generally recognized as safe and effective (“GRASE”), and in conformity with a final monograph.⁴

Most OTC drugs are intended to provide temporary relief of minor symptoms or self-diagnosable, self-limited conditions and diseases, rather than chronic diseases.⁵ In addition, OTC drug products are limited to drugs that can be labeled with sufficient information to enable consumers to appropriately self-select and use the product safely and effectively without the supervision of a healthcare practitioner.⁶ In contrast, prescription drugs must be prescribed by a licensed healthcare practitioner and are intended to be used only by the specific person to whom they are prescribed.⁷

FDA has seriously considered revising the categories of pharmaceutical drugs available for at least the last decade. In 2012, FDA held a public hearing to seek input on a new process by which FDA would approve drugs for nonprescription use with certain conditions that would normally require a prescription.⁸ Throughout 2012 and 2013, FDA participated in a series of expert workshops convened by the Brookings Institution to seek feedback on practical considerations for this new process, and participants included stakeholders from both the public and private sectors.⁹ And in 2018, FDA issued a draft guidance document entitled, “Innovative Approaches for Nonprescription Drug Products,” which described two innovative approaches for applicants to consider in cases where the product’s container labeling alone was not sufficient to ensure that a drug product could be used safely and effectively in a nonprescription setting: (1) the development of additional labeling, and (2) the implementation of additional conditions so that consumers could self-select and use the product.¹⁰ This guidance became the model for FDA’s proposed new rule.

FDA’s Proposed Rule Would Allow for Approval of Over-the-Counter Drugs with Additional Conditions

FDA’s proposed rule was issued at the end of June 2022 and only applies to OTC drugs approved under NDAs or ANDAs. The rule provides additional application requirements, labeling requirements, and post-marketing reporting requirements for drugs seeking to be sold over the counter with an ACNU.¹¹ The rule is intended to broaden the types of drug products that FDA could approve as nonprescription.

For example, under the proposed rule, FDA would be able to approve a drug to treat a chronic condition (e.g., high blood pressure or diabetes) that currently does not have a nonprescription treatment.¹² Examples of ACNUs include (a) administration of a required self-selection questionnaire for consumers using a mobile phone, a pharmacy kiosk, or an automated telephone response system, or (b) a requirement that consumers view text or images in a video that describes how to appropriately use the drug and then respond to questions to confirm their understanding.¹³

Application Requirements

An NDA or ANDA for a product with a proposed ACNU must describe the ACNU, including the additional conditions which will need to be fulfilled, labeling associated with the ACNU, and criteria by which a consumer can fulfill the ACNU.¹⁴ The NDA or ANDA will also need to include adequate data or information to support the ACNU, including data or information that demonstrates the necessity and effectiveness of the ACNU to ensure appropriate self-selection or appropriate actual use, or both.¹⁵

The proposed rule does not require a nonprescription drug product with an ACNU to be first marketed as a prescription product. However, where there is already an approved prescription drug product, an applicant must submit a separate application for a nonprescription drug product with an ACNU, rather than a supplement to an approved prescription application, thereby leaving the existing prescription drug on the market. This requirement is intended to ensure continued availability of the prescription drug product and thereby provide flexibility in how to obtain the drug. For example, a drug product may be available OTC with an ACNU through a pharmacy kiosk, but patients who are not located near a pharmacy with a kiosk may find prescriptions to be a more accessible option.¹⁶

In the past, FDA has interpreted the FDCA to allow simultaneous marketing of drug products with the same active ingredient as both prescription and OTC, but only if there is some meaningful difference between the prescription and OTC products (e.g., different indication, strength, route of administration, dosage form, or patient population). The proposed rule clarifies that an ACNU itself would constitute a meaningful difference between prescription and OTC products containing the same active ingredient, such that both products could be simultaneously marketed even if they do not have other meaningful differences.¹⁷

Labeling Requirements

FDA’s proposed rule includes labeling requirements for nonprescription drugs with an ACNU. In order to be approved for an ACNU, the label of the drug (i.e., any written, printed, or graphic matter upon the immediate container of the product) must include the following statements: (1) “To check if this drug is safe for you, go to [insert where or how consumers can find information about the ACNU; for example, applicant’s website, applicant’s phone number, or specific retail location] and [insert action to be taken by consumer]. Do not take this drug without completing this step,”¹⁸ and (2) “You must complete an extra step to see if this drug is safe for you before you use it. Do not take this drug without completing this step.” The first statement must appear as the first direction under the heading “Directions” on the label.¹⁹ The second statement must appear on the principal display panel and the surface that the consumer is most likely to view when seeking information about the drug (i.e., the front of the bottle, blister card surface, etc.).²⁰ The second statement must also appear in boldface and black type, with a yellow banner background.²¹

Post-Marketing Reporting Requirements

Post-marketing reporting requirements are also included in the proposed rule. Applicants with an approved ACNU must report to FDA, via the FDA Adverse Event Reporting System (“FAERS”), information concerning any failure in the implementation of an ACNU. Any event that results from a deviation in an applicant’s implementation of the ACNU that may cause or lead to inappropriate medication use or consumer harm, such as a consumer gaining access to the drug product without fulfilling the necessary conditions of the ACNU, would constitute a failure in implementation of an ACNU.²² The report to FAERS must be submitted whether or not the failure in the implementation of the ACNU is associated with an adverse event.²³ The report must include an identifiable reporter, the drug product name, and a description of the failure in implementation of the ACNU.

Implications for Drug Manufacturers and Retailers

FDA’s proposed rule may provide drug manufacturers with new opportunities to aid a broader base of consumers. At the same time, the new rule may pose product liability risks for ACNU manufacturers and retailers.

Application of Traditional Defenses to ACNU Product Liability Claims

Product defect claims traditionally brought against OTC manufacturers and retailers—such as failure to warn, design defect, and manufacturing defect claims—will still be available to plaintiffs who used ACNU drugs. However, if the proposed rule takes effect, plaintiffs may seek to bring claims under new theories. For example, plaintiffs may contest whether an OTC product without an ACNU should have had an ACNU; whether an ACNU was adequate to allow appropriate self-selection and appropriate use; whether manufacturers and retailers adequately advised initial purchasers and others who used the drug of the ACNU; and whether implementation of the ACNU failed and whether any such failures were properly reported to FDA.²⁴ For manufacturers and retailers faced with such novel theories of liability, many traditional product liability defenses may still apply, but they may need to adapt to the realities of ACNU approval and use.

Manufacturers and retailers often point to FDA approval in defense of product liability claims. In our experience, FDA approval is relevant to, but not a silver bullet against, such claims. Under the Restatement (Third) of Torts, Products Liability, which is followed in many jurisdictions, “a product’s compliance with an applicable product safety statute or administrative regulation is properly considered in determining whether the product is defective with respect to the risks sought to be reduced by the statute or regulation, but such compliance does not preclude as a matter of law a finding of product defect.”²⁵ In the “overwhelming majority” of states, compliance with FDA standards is relevant but inconclusive to the determination of liability. ²⁶ In practice, however, evidence of FDA approval is sometimes limited or excluded entirely at product liability trials based on arguments by plaintiffs that any relevance of FDA approval is substantially outweighed by risks of juror confusion and other prejudice to plaintiffs. Even when such evidence is admitted at trial, jurors sometimes still find in favor of plaintiffs.

Preemption is another common defense asserted in pharmaceutical product liability litigation, particularly by generic manufacturers. Failure-to-warn and design defect claims as to FDA-approved generic drugs are regularly found by courts to be preempted.²⁷ A similar rationale may apply to claims that a generic ACNU should have deviated by labeling or design from how FDA approved a branded ACNU, including the specific labeling requirements that FDA is requiring to advise consumers of ACNUs. Furthermore, because FDA’s rule would arguably dictate the exact language that must be used on labels for generic and branded ACNUs, even branded ACNU manufacturers may consider whether they have more viable preemption arguments than for non-ACNU products.

As with other OTC drugs, the learned intermediary doctrine is unlikely to apply to ACNU drugs sold OTC. The learned intermediary doctrine has been adopted in most states and requires manufacturers of prescription drugs to warn doctors of the risks associated with a product rather than directly warning patients. Doctors, in turn, present the warnings to their patients. Courts have already considered how the learned intermediary doctrine applies in other situations that involve patient choice regarding pharmaceuticals, including with birth control pills.²⁸ With respect to FDA’s proposed rule, ACNU drug products will be available OTC, and most likely without the assistance of a health care provider, potentially making the learned intermediary doctrine inapplicable as it has been found to be with other OTC drugs.²⁹ As with other OTC drugs, ACNU manufacturers will need to consider a mechanism for providing adequate warnings to patients without the assistance of a learned intermediary, such as by including those warnings in product labeling or as part of the ACNU itself.

Considerations for Minimizing Litigation Risks

As they develop proposed ACNUs, product manufacturers would be well advised to consider the future litigation implications of the ACNUs they devise and to find ways to minimize litigation risks. Compliance with FDA rules and regulations is advisable, as with any other pharmaceutical drug.

In addition, for ACNU drugs specifically, empowering patients to demonstrate their need for the drug may strengthen a manufacturer’s defense in a case where a plaintiff experienced an alleged adverse event after taking the drug. For example, if using a self-selection questionnaire, manufacturers could consider requiring patients to attest to the accuracy of their answers in a questionnaire; this might aid in the defense of a claim brought by a patient who failed to provide accurate information in connection with the ACNU. Likewise, manufacturers could consider whether requiring patients to submit proof such as a test result that they need a particular medication as part of the ACNU might help provide a defense in cases alleging that a screening ACNU was defective.

As written, FDA is proposing that applicants maintain records of all failures in implementations of an ACNU and associated adverse events for ten years to enable FDA to assess compliance with reporting requirements.³⁰ ACNU applicants should weigh the advantages and disadvantages of retaining ACNU questionnaire responses more broadly for reference in potential litigation down the road, and if so, the form in which those responses are maintained due to privacy concerns related to sensitive medical information.

With its vast experience defending and consulting for pharmaceutical drug manufacturers and retailers, Dechert is well positioned to help applicants navigate FDA’s proposed new rule, including in the development of ACNUs, evaluation of product liability risk from the use of ACNUs, and in any subsequent litigation surrounding ACNUs. We look forward to assisting our clients in handling these novel issues.

Footnotes

1. U.S. Food & Drug Admin., The FDA Announces Proposed Rule: Nonprescription Drug Product with an Additional Condition for Nonprescription Use (June 27, 2022), https://www.fda.gov/drugs/over-counter-otc-nonprescription-drugs/fda-announces-proposed-rule-nonprescription-drug-product-additional-condition-nonprescription-use.
2. 21 U.S.C.A. § 353 (West); 21 CFR § 314.
3. U.S. Food & Drug Admin., OTC Drug Review Process | OTC Drug Monographs (June 28, 2022), https://www.fda.gov/drugs/otc-drug-review-process-otc-drug-monographs [hereinafter OTC Drug Review Process]; Nonprescription Drug Product With an Additional Condition for Nonprescription Use, 87 Fed. Reg. 38313, 16 (proposed June 26, 2022) (to be codified at 21 C.F.R. 201, 21 C.F.R. 314) [hereinafter ACNU Proposed Rule].
4. OTC Drug Review Process, supra note 3; ACNU Proposed Rule at 38316; Final Administrative Orders for Over-the-Counter Monographs; Availability Notice, 86 Fed. Reg. 52474, 74-75 (Sept. 21, 2021).
5. ACNU Proposed Rule at 38315.
6. Id. at 38315-16.
7. U.S. Food & Drug Admin, Prescription Drugs and Over-the-Counter (OTC) Drugs: Questions and Answers (Nov. 13, 2017), https://www.fda.gov/drugs/frequently-asked-questions-popular-topics/prescription-drugs-and-over-counter-otc-drugs-questions-and-answers.
8. ACNU Proposed Rule at 38317.
9. Id.
10. Id.; U.S. Food & Drug Admin. Innovative Approaches for Nonprescription Drug Products (July 2018), https://www.fda.gov/media/114328/download.
11. ACNU Proposed Rule at 38314.
12. Id. at 38316.
13. Id. at 38318.
14. Id. at 38320.
15. Id. at 38319.
16. Id.
17. Id. at 38322.
18. Id. at 38324.
19. Id.
20. Id. at 38323-24.
21. Id.
22. Id. at 38322.
23. Id.
24. Id.
25. Restatement (Third) of Torts: Product Liability § 4 (2022).
26. Id.
27. PLIVA Inc. v. Mensing, 564 U.S. 604 (2011); Mutual Pharm. Co. v. Bartlett, 570 U.S. 472 (2013).
28. See Perez v. Wyeth Labs. Inc., 734 A.2d 1245, 1254-57 (N.J. 1999) (discussing how various circuits conflicted in their interpretation on the learned intermediary’s application to birth control products and pharmaceuticals with consumer-directed advertising and patient choice).
29. See Hunte v. Abbott Lab., Inc., 569 F. Supp. 3d 115, 122 (D. Conn. 2021) (“In general, courts have applied the [learned intermediary doctrine] in cases involving prescription products and have not applied the LID in cases involving non-prescription products that are available over the counter …. [the Court is] aware of no court that has held that the medical use of a non-prescription product can bring that product within the [learned intermediary doctrine]’s scope.”); Brown v. Johnson & Johnson, 65 F. Supp. 3d 717, 721 (E.D. Pa. 2014) (“Defendants had no duty to inform physicians, however, because Children’s Motrin is an over-the-counter drug.”).
30. ACNU Proposed Rule at 38323.