FDA Year in Review: A Shifting Regulatory Landscape

Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP

The FDA actions that dominated 2019 demonstrated a shifting regulatory landscape for certain product types, such as e-cigarettes, foods and supplements containing cannabidiol (CBD), and digital health / machine learning enabled medical devices. FDA continued to take action to lower drug prices by focusing on approvals of competitive biosimilars and generic drugs, and FDA enforcement actions signaled the Agency’s ongoing interest in ensuring GMP compliance overseas.

1. Tobacco: E-Cigarettes Top Public Health, Enforcement Priority

E-cigarettes dominated the headlines throughout 2019. On December 31, 2019, the Trump Administration announced that it would remove most flavors of e-cigarettes from the US market. Two days later, FDA published a modified enforcement policy on flavored pod and cartridge-based e-cigarettes. Under the policy, companies that do not stop the manufacture, distribution and sale of flavored e-cigarettes (other than tobacco and menthol flavors) within 30 days risk FDA enforcement action.

FDA announced a shift in its compliance policy in March 2019 in response to the growing appeal of e-cigarettes to youth. Under the March 2019 policy, FDA put manufacturers and retailers of flavored ENDS on notice that they may be subject to FDA enforcement for selling flavored products without premarket authorization. FDA also tightened the deadline for companies selling non-flavored ENDS products to submit premarket tobacco product applications (PMTAs). The January 2020 policy further tightens the deadline to May 12, 2020 for all ENDS products.

The January 2020 policy is in part a reaction to the outbreak of lung injuries in teens and young adults associated with the use of e-cigarettes and vaping products.

Regulating e-cigarettes and other electronic nicotine delivery systems (ENDS) has been a priority for FDA since assuming authority over these products in 2016. FDA’s primary focus at the time, however, was curbing the use of combustible tobacco products, such as traditional cigarettes. FDA recognized that nicotine—a highly addictive substance—is most harmful when delivered through smoke particles in combustible cigarettes. The agency viewed non-combustible ENDS as a less harmful alternative to traditional cigarettes. Market data in 2018, however, showed an “epidemic-level rise” in youth use of e-cigarettes, and in 2019, the FDA (under then-Commissioner Gottlieb) developed a laser-like enforcement focus on e-cigarettes.

Based on the new policy, we can expect escalated enforcement in 2020 against companies manufacturing and selling unauthorized e-cigarettes. We also may see FDA take a stance on its authority over non-tobacco e-cigarettes, given the open questions regarding the substances causing the reported lung injuries (e.g., tetrahydrocannabinol (THC), vitamin E acetate).

2. Food and Supplements: CBD Was All the Buzz, FDA Stymied by Lack of Data

In 2019, hemp-derived products, including those containing cannabidiol (CBD), moved from the fringe to the mainstream, from state-licensed dispensaries to traditional brick-and-mortar retailers. And yet, the FDA’s position has been clear — it is illegal to sell human food, pet food, dietary supplements and unapproved drugs that contain CBD.

As previously reported, on May 31, 2019, FDA held a public hearing on cannabis and cannabis-derived compounds, and drew a wide audience of participants, with strong views on how the FDA should (or should not) regulate the controversial plant. The hearing focused on the use of CBD in food and dietary supplements, which accounts for a large part of the market growth. (CBD is not prohibited in cosmetics; unlike foods and dietary supplements, cosmetic ingredients do not undergo safety review prior to commercial use.)

FDA has stated that it does not intend to exercise enforcement discretion with respect to companies distributing and marketing CBD products, yet it has garnered criticism for not aggressively pursuing online retailers of CBD gummies and edibles. Despite the Agency’s stated safety concerns, FDA has issued warning letters only to companies making egregious therapeutic claims, such as those claiming to cure cancer, rheumatoid arthritis, or Alzheimer’s Disease. Companies not making health claims have largely been left unscathed.

The explosion of CBD-infused edibles and beverages in the marketplace, coupled with conflicting, lenient, or nonexistent state laws on the sale of hemp-CBD products, puts pressure on the FDA to act quickly. FDA currently is hamstringed, however, because industry has not provided the Agency with robust safety data to support CBD’s widespread use.

In the near term, we can expect FDA to collect and review scientific data on the safety of cannabis and cannabis-derived compounds. It may issue a limited policy of enforcement discretion to satisfy certain stakeholders (including Congress), but a long-term solution very likely will not happen in 2020.

3. Digital Health: CDRH Adapts to Innovation in Artificial Intelligence

The Center for Devices and Radiological Health (CDRH) continues to show that it can adapt its policies to accommodate innovative digital health technology. In April of 2019, FDA released a discussion paper, Proposed Regulatory Framework for Modifications to Artificial Intelligence/Machine Learning (AI/ML) – Based Software as a Medical Device (SaMD), which proposed a novel regulatory framework for artificial intelligence (AI)-based medical devices.

In its discussion paper, FDA recognized that its current approach to the regulation of medical devices―which is based on devices that are static in nature with planned, discrete changes―is ill-suited for AI algorithms. For example, under the current framework, changes in an AI algorithm due to real-world use, depending on the significance or risk posed to patients of that modification, could trigger premarket review by FDA. The consequence would be that whenever the algorithm learns or adapts (which ideally it would with every use), the manufacturer would have to ask FDA to clear (or approve) the algorithm change. That scenario is unworkable—both for the manufacturer and for FDA.

FDA’s approach proposes a framework that considers the adaptive nature of AI and machine-learning (ML) based technologies, and proposed a streamlined approach that would lessen regulatory burden on industry. At the heart of the framework, and the most unique aspect of the approach, is the option for manufacturers to submit a plan of predetermined modifications during the initial premarket review of an AI or ML device.

Although AI is not a topic on FDA’s list of expected guidance documents in 2020, we expect CDRH will continue to work with industry to adopt its policies to encourage innovation in the AI space. We also expect CDRH to leverage its pre-certification program to work with innovative AI companies in 2020.

4. Biologics and Pharmaceuticals: FDA Supports Administration’s Efforts to Drive Down Drug Prices

One key goal of the Trump Administration has been to lower drug prices. FDA can affect drug pricing indirectly by increasing its approvals of biosimilar and generic drug product applications. In 2019 alone, FDA approved 10 biosimilar applications. By comparison, FDA has approved a total of 25 biosimilar products in the past ten years. A biosimilar product is one that is highly similar to, and has no clinically meaningful differences from, a FDA-approved biologic product.

Similarly, the Center for Drug Evaluation and Research (CDER) made a record number of generic drug approvals in 2019. In 2020, we can expect the Agency to continue to increase its approvals of biosimilar and generic drug products in an effort to meet the Administration’s goal of lowering drug prices.

In another move to combat high drug prices, in late December 2019, the U.S. Department of Health and Human Services and the FDA issued a notice of proposed rulemaking that, if finalized, would permit the importation of certain cheaper prescription drugs from Canada. The proposed rule would permit importation under specific conditions that ensure the importation poses no additional risk to the public’s health. The Canadian government has pushed back against importation proposals, warning that the drug supply for Canada’s residents cannot fulfill the demands of the U.S. market. We can expect to see legal challenges to the proposed drug importation rule in 2020, and potentially aggressive pursuit of the rule (or a similar one) by the administration.

5. Pharmaceuticals: Manufacturing Insights from FDA’s Annual Report on Drug Quality

The Office of Pharmaceutical Quality (OPQ) within CDER published its “Report on the Sate of Pharmaceutical Quality” in mid-May 2019. The yearly report reviews the quality of drug products during FY 2018, as measured by recall and product defect information, site inspections of manufacturers, and other post market data. As previously reported here, the report provides a few insights that companies may want to consider when working with, or acquiring, contract manufacturers:

  • The US and EU Outperform Asian Countries. Of the inspections of FDA registered facilities, the inspection score for sites in the US and the EU are—on average—higher than the average scores for sites in China and India.
  • The Majority of Drug Inspections Occur Outside of the US. FDA notes that the majority of inspections occurred outside of the US in FY2018. FDA conducts inspections using a risk-based approach, so this trend makes sense, given the lower average inspection scores of facilities in Asia.
  • There is a Significant Increase in Outsourcing. Outsourcing continues to affect the global supply chain, including a notable increase in outsourcing of packaging and labeling operations.
  • A Small Number of Manufacturing Sites Account for a Large Number of Drug Products. Three sites in the US account for almost 10% of all products listed with the US FDA. A similar trend is seen in Asia, where a few facilities in China and India account for more than 10% of all products listed in that region.
  • Sites Making “Non-Application” Products Consistently Underperform. When looking at data across geographies, FDA notes that sites manufacturing “non-application” products, including OTC products, homeopathic, and unapproved drugs, “consistently underperform” sites that make application products (e.g., NDAs, ANDAs).

6. Manufacturing and GMP: Data Integrity at Prescription and OTC Facilities

The integrity of data submitted to FDA, and data that support product release and common quality system activities, like cleaning validation and batch production, remains a top priority for FDA. In 2019, FDA issued multiple Warning Letters citing data integrity violations to companies manufacturing both prescription and over-the-counter drugs. Products manufactured at facilities with data integrity missteps may be deemed adulterated and denied entry at the US border.

In recent years, FDA has focused additional resources to uncover lapses in data integrity, particularly in overseas facilities. FDA’s concern lies not only in blatant data manipulation and record deletion, but with system access control to key manufacturing and laboratory equipment, such as high performance liquid chromatography (HPLC) machines. For example, FDA would expect chemists to have appropriate access rights to HPLCs, including the inability to delete data generated on the machine. Laboratory managers, on the other hand, may have elevated access rights.

In 2020, FDA likely will continue to take a hard look at data integrity controls during inspections of domestic and overseas facilities. Companies that generate data to support an NDA, ANDA, or BLA—or other submission to the agency—in particular should be vigilant in ensuring the accuracy and reliability of any and all data supporting their product applications and other submissions.

7. Digital Health: Cybersecurity, a Growing Threat

A growing threat for manufacturers of consumer products, including medical devices that are connected to the internet (or to other equipment connected to the internet), is cybersecurity. In 2019, FDA helped expose existing vulnerabilities in devices with outdated system software. Companies that distribute devices with outdated embedded software leave patients potentially exposed to the risk of an outsider accessing their device, or personal information in their device.

In 2020, we may see companies face more cyber threats or attacks from hackers or other outside parties. While FDA can request companies to implement certain procedures and safeguards prior to product launch, or request field action for devices already on the market, companies should be responding to the latest tactics used by the market disrupters (i.e., hackers) and implementing technology, where possible, to prevent security breaches.

8. Food: Changes to the Nutrition Facts Label – Added Sugars, Serving Sizes

Starting January 1, 2020, large food companies will have to comply with the Nutrition Facts and Supplement Facts Label and Serving Size final rule. Manufacturers with less than $10 million in annual food sales receive an extra year to comply – until January 1, 2021. The changes reflect FDA’s efforts to provide consumers with information that reflects updated scientific information, new nutrition and public health research, and dietary recommendations from expert groups.

The general look of the label remains the same, but changes will be noticeable to the consumer. For example, FDA now requires a declaration for “Added sugars.” FDA has stated that excess consumption of added sugars makes it difficult to meet nutrient needs within daily suggested calorie limits, and healthy dietary patterns, characterized in part by lower amounts of sugary foods and beverages, are associated with a reduced risk of cardiovascular disease. Also, reference serving sizes have increased, as have the type size of words such as “Calories” on the label.

Other significant changes include:

  • Vitamin D and potassium are now be required on the label. Calcium and iron will continue to be required; vitamins A and C will no longer be required, but may be included on a voluntary basis.
  • Serving sizes have increased. By law, serving sizes must be based on amounts of foods and beverages that people are actually eating, not what they should be eating.
  • For certain products that are larger than a single serving, but that could be consumed in one sitting or multiple sittings, manufacturers will have to provide “dual column” labels to indicate the amount of calories and nutrients on both a “per serving” and “per package” basis.
  • While continuing to require “Total Fat,” “Saturated Fat,” and “Trans Fat” on the label, “Calories from Fat” is being removed.
  • Daily values for nutrients like sodium, dietary fiber and vitamin D are being updated based on new scientific evidence.
  • The daily value footnote has been updated to state: “*The % Daily Value tells you how much a nutrient in a serving of food contributes to a daily diet. 2,000 calories a day is used for general nutrition advice.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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