The U.S. Food and Drug Administration (FDA) has proposed to reverse its 25-year old interpretation of the eligibility criteria for drug products to receive New Chemical Entity (NCE) exclusivity under the federal Food, Drug and Cosmetic Act. Since at least 1988, FDA policy has held that to receive the statutory benefit of five years of NCE marketing exclusivity before a generic company can even submit an application for a competing version of a drug product, the original drug product must contain only novel active ingredients; a novel active ingredient combined with a previously approved active ingredient would not qualify for NCE exclusivity. In a new draft Guidance issued February 21, 2014, and a response to three related Citizen Petitions, the FDA announced its intention to reverse course by allowing fixed combination drug products to receive NCE exclusivity so long as at least one active ingredient has never previously been approved.

The FDA’s radical reinterpretation is based on public policy considerations—namely that the agency wants to further incentivize the already increasing development of new fixed-combination drug products—but at least three questions loom for the agency and any companies that may seek to challenge the new policy:

First, the statutory provisions governing NCE exclusivity may not provide the FDA with as much interpretive flexibility as it presumes.  The Agency claims the provisions are entirely ambiguous, and thus subject to change, yet it rejects certain arguments that tend to show that its new interpretation could lead to absurd results or nonsensical meaning of other provisions of the statute;

Second, implementing this change through the use of a non-binding Guidance, as opposed to notice-and-comment rulemaking, is a dubious type of procedural shortcut that has been criticized by stakeholders and commentators in other contexts. FDA attempts to justify this approach in its Petition response, yet it would leave in place a formal regulation that provides binding restrictions on the agency that are the opposite of the proposed Guidance; and

Third, the Guidance is a response to three Citizen Petitions requesting NCE exclusivity for recently approved combination drugs, and while the FDA has adopted the Petitioners’ arguments, it proposes to apply the new interpretation prospectively, so the Petitioners will not benefit from the rule change they themselves instigated. The Petitioners themselves may well seek judicial review of the denial of their requested relief.

The competitive implications of this proposed change in interpretation would be significant for those products that newly qualify for NCE exclusivity. It is unclear, however, how many products will be subject to the new interpretation, assuming it survives any potential legal challenges. The FDA cites 19 approved NDAs over the past 20 years for products that combined an NCE with a non-NCE active ingredient, and more than half of those have been approved in the past seven years. While the FDA assumes the new interpretation will spur an increase in similar products, it does not address the possibility that its new approach may open the door to creative drug development and marketing strategies of questionable clinical value.

The FDA's revised interpretation is based on redefining the term “drug” as it is used in the first (“eligibility”) portion of the statutory NCE provision, 21 U.S.C. 355(j)(5)(F)(ii). That provision allows NCE exclusivity where there is “an application … for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application….” The FDA has consistently read the term “drug” in that clause to mean a “drug product,” which makes sense because under the FDCA, a sponsor may only submit an application for a drug product— i.e., there is no such thing as a new drug application for a freestanding drug substance. Yet the FDA now proposes to interpret the term “drug” to mean “drug substance.”  Thus, the FDA’s interpretation will read the statute to refer to an NDA “for a drug substance, no active ingredient … of which has been approved in any other application….”  The FDA will have to provide more specific explanations of how a sponsor might seek approval of a “drug substance” detached from a drug product,  and how it is that a “drug substance” can itself contain an active ingredient, but not consist entirely of that active ingredient. These issues and other vexing questions are likely to arise in comments to the draft Guidance, and it will be interesting to see the FDA’s more expansive explanations and answers thereto.

The FDA does not specify when it will begin implementing this change. The FDA requests comments on the draft guidance within 60 days. The draft Guidance can be viewed here, and the consolidated petition response can be viewed here.