FDA and potential new rules for labeling of generic drugs

By: Travis Sales, Kevin Jacobs & Amir Halevy
REPRINTED FROM
OCTOBER 7, 2013 WWW.PHARMACOMPLIANCEMONITOR.COM
FDA and Potential New Rules for Labeling of Generic Drugs
For the nearly 30 years since the Hatch-Waxman Amendments created the Abbreviated New Drug Application
(ANDA) pathway to expedite generic drug approval, the Food and Drug Administration (FDA) has created rules to
ensure that the labeling for a generic drug is the same as the labeling for the reference listed drug, commonly referred
to as “the duty of sameness.” As part of this rulemaking, the FDA has held that the Changes Being Effected (CBE) rules
that allow sponsors of approved New Drug Application (NDA) drugs to unilaterally change labels to strengthen
warnings are not available to ANDA holders. The FDA, however, has announced that it will soon publish a Notice of
Proposed Rulemaking entitled “Supplemental Applications Proposing Labeling Changes for Approved Drugs and
Biological Products.” According to a July 2013 notice published on the Office of Management and Budget website, the
proposed revisions “would create parity between NDA holders and ANDA holders with respect to submission of CBE
labeling supplements.” While the details of the proposed revisions remain uncertain, what is clear is that the proposed
rules may significantly impact the duties, and potential liabilities, of generic drug manufacturers. Given that generic
drugs now account for approximately 80 percent of the U.S. prescription drug market, these changes in turn may have
significant administrative and economic effects on the entire healthcare system.
BACKGROUND
The proposed changes follow three recent and much debated United States Supreme Court decisions addressing the
liability of drug makers for label warnings (i) Wyeth v. Levine; (ii) Pliva v. Mensing; and (iii) Mutual Pharmaceuticals v.
Bartlett. Wyeth involved a personal injury case alleging failure to warn about a toxicity of phenergan. Wyeth argued
that federal law, in the form of FDA regulations, preempted state law because it was impossible for Wyeth to comply
with both state created warning requirements and the FDA rules regarding drug approval and labeling. The Supreme
Court rejected Wyeth’s argument because the Court found that as an NDA holder, FDA’s CBE regulations “permitted
Wyeth to unilaterally strengthen its warning.”
Two years later, in Pliva v. Mensing, the Supreme Court faced the similar issue of whether federal law preempted state
law for personal injury cases regarding a duty to warn on drug labels for generic drugs. Pliva was the holder of an
ANDA for its generic metoclopramide. FDA had stated that the CBE process was not available to ANDA holders
because of the “duty of sameness” which was the foundation for ANDAs. The Supreme Court thus came to the
opposite conclusion of Wyeth v. Levine, holding that manufacturers of ANDA drugs were prevented from unilaterally
changing drug labels and thus could not be held liable under state failure to warn laws.
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Finally, in 2013, the Supreme Court in Mutual Pharmaceuticals v. Bartlett similarly held that state law design defect claims
regarding an ANDA drug that turn on the adequacy of the warnings on the approved label are preempted by federal law
because ANDA holders cannot unilaterally change the drug label.
As a result of these decisions, manufacturers of NDA drugs, currently approximately 20% of the U.S. market, could be
held liable for failure to warn claims, whereas manufacturers of ANDA drugs, currently 80% of the U.S. market, are
immune provided they complied with the duty of sameness. The Supreme Court in Pliva noted that “We recognize that
from the perspective of Mensing and Demahy, finding preemption here but not in Wyeth makes little sense. Had Mensing
and Demahy taken Reglan, the brand-name drug prescribed by their doctors, Wyeth would control and their lawsuits
would not be preempted.” The Court also noted that: “As always, Congress and the FDA retain the authority to change
the law and regulations if they so desire.” Congress has not acted. But, by announcing that it plans to propose new rules
to “create parity” between NDA and ANDA holders with respect to the CBE process, the FDA—without Congressional
action—has announced its intention to change the regulations affecting the duty to warn for generic drug manufacturers.
FDA AUTHORITY
A key threshold legal question will be whether the FDA has the authority to unilaterally change the current CBE rules to
allow ANDA holders to utilize the CBE process, thus effectively making generic drugs subject to the Supreme Court’s
Wyeth analysis and subject to state law claims for failure to warn. In 2006, FDA waded into the preemption debate by
including a preamble to regulations governing prescription drug labels that stated that the FDA approved label created
“both a ‘floor’ and a ‘ceiling’” and thus an FDA approved label “preempts conflicting or contrary State law.” The
Supreme Court in the Wyeth decision, highlighting the difference between a federal agency’s interpretations of its
regulations and an agency’s interpretation of the interplay between federal and state law, rejected FDA’s interpretation
that an FDA approved label preempted a state law claim.
Proponents of the FDA’s proposed rule changes will likely argue that the proposed rules are part of FDA’s rule making
authority because FDA is interpreting its own rules rather than attempting to interpret federal law regarding NDAs and
ANDAs. Hatch-Waxman is silent as to an ANDA drug utilizing a CBE. Moreover, there are provisions under current
law that require the ANDA holder to utilize many of the same FDA adverse drug reaction reporting mechanisms that are
required of the NDA holder. Proponents will also likely argue that while Hatch-Waxman requires that the initial generic
label must be the “same” as the branded drug, once approved, “sameness” is no longer required because FDA is allowed to
withdraw the approval of an ANDA drug if its label “is no longer consistent with” the label of the reference drug. Finally,
proponents can cite to dicta in the Pliva decision including the Supreme Court’s deferring “to the FDA’s interpretation of
its CBE and generic labeling regulations,” as well the Court’s noting it was “possible that the Manufacturers could have
convinced the FDA to reinterpret its regulations in a manner that would have opened the CBE process to them.”
Opponents of the proposed rules will likely argue that the goal of Hatch-Waxman was to allow lower cost generics to
more readily enter the market by eliminating unnecessary duplication of research and administrative costs and that the
fundamental foundation of Hatch-Waxman was that generics were the same as branded drugs in all regards. Additionally,
opponents can point to the fact that FDA has previously interpreted the “no longer consistent” language as also creating a
duty of sameness in an ANDA label and that the proposed new rules are contrary to nearly 30 years of FDA guidance and
rule making on the subject. Opponents will argue that the new rules are beyond FDA authority, as they are inconsistent
with and/or conflict with the underlying law and premise of generic drugs. If the proposed rules are challenged, the
courts will make the ultimate determination of the limits of FDA authority.
FDA and Potential New Rules for Labeling of Generic Drugs
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FDA and Potential New Rules for Labeling of Generic Drugs
PRACTICAL IMPLICATIONS
If the FDA proceeds with the proposed rule changes, and they are upheld, applying the CBE process to ANDA holders
will likely result in new administrative burdens, new liability risks for failure to warn claims, and increased costs for the
manufacturers of generic drugs. These new costs will include increased regulatory compliance costs of surveillance and
reporting as well as costs for litigation expenses and potential liability awards. Moreover, these costs will almost
certainly be passed to the consumer, including the Federal government as the largest single payor for generic drugs
through the Medicare and Medicaid programs, in the form of higher drug prices.
The proposed new CBE rules would also create significant practical difficulties because of the interplay between an
ANDA holder proposing a CBE to its label and the effect on the labels of other identical generics as well as the branded
drug. The current requirement for identical labels means that there is only one label for a physician or patient to review
in the PDR and only one set of warnings to consider. Moreover, the “sameness” of the labels reinforces to both the
prescriber and the consumer that the branded drug and the generic drug are equivalently safe and effective. FDA has
previously confirmed that current “sameness” requirement is important “to minimize any confusion among healthcare
professionals and consumers as well as to preclude a basis for lack of confidence in the equivalency of generic versus
brand name products.” FDA may have to consider other rule modifications to harmonize the “sameness” requirement
with new generic CBE requirements.
Regardless of the details of FDA’s soon to be announced proposed rules, any new rules that “create parity between NDA
holders and ANDA holders with respect to submission of CBE labeling supplements,” would have a potentially dramatic
effect on the generic drug market. Given the importance of generic drugs, such new rules will likely significantly alter
the legal and medical landscape of the entire health industry.
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Copyright © 2013 | Pharmaceutical Compliance Monitor | www.PharmaComplianceMonitor.com | Special Report ID: 131001
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ABOUT THE AUTHORS
Travis Sales
Travis Sales is a Houston-based partner in the litigation practice at Baker Botts. Travis has extensive
experience with products liability, energy, commercial and insurance matters, and has previously served
as President of the Houston Bar Association (2008-2009) and as a Director of the State Bar of Texas. In
his trial practice, Travis has represented a wide range of clients, including pharmaceutical companies,
energy and chemical companies, and defendants in nationwide and state consumer class actions. He
currently represents pharmaceutical companies in product liability actions, including several mass tort
actions and multi-district litigations.
For his full bio, please visit http://www.bakerbotts.com/travis-j-sales/.
Kevin Jacobs
Kevin Jacobs is a Houston-based partner in the litigation practice at Baker Botts. Kevin’s trial practice
focuses on commercial disputes and arbitrations, as well as internal and governmental investigations, for
clients in the chemical, energy and life sciences industries. He has tried twelve lawsuits/arbitrations to
decision, including nine jury trials. Following graduation from law school, Mr. Jacobs served as a law
clerk to the Honorable Will Garwood of the United States Court of Appeals for the Fifth Circuit.
For his full bio, please visit http://www.bakerbotts.com/kevin-t-jacobs/.