Ropes & Gray’s new podcast series, Non-binding Guidance, highlights FDA regulatory developments and trends affecting the life sciences industry. In this inaugural episode, Ropes & Gray lawyers Al Cacozza, Sarah Blankstein and Joshua Oyster discuss how the FDA is currently regulating products containing cannabidiol, or CBD, and what to expect from FDA and Congress in the wake of FDA Commissioner Scott Gottlieb’s surprise resignation this month. The 2018 Farm Bill, signed into law last December, legalized hemp and its non-psychoactive ingredient CBD and distinguished both from marijuana, which is still considered by the federal government to be an illegal narcotic.  But the Farm Bill  left a cloud of uncertainty hanging over the emerging CBD industry because it expressly allowed FDA to continue unchanged its oversight and regulation of CBD products.  Tune in to this lively discussion of the repercussions of the Farm Bill, how the FDA and state agencies are responding, and what investors and other stakeholders should know.

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Transcript:

Kellie Combs: Hello, I’m Kellie Combs, a partner in the life sciences practice group at Ropes & Gray and based in our Washington, D.C. office. Welcome to Non-binding Guidance, a new podcast series from Ropes & Gray focused on current trends in the FDA regulatory space, as well as other important developments affecting the life sciences industry. On today’s inaugural episode, my colleagues will be discussing FDA regulatory issues associated with products containing cannabidiol, or “CBD,” a compound found in cannabis plants. I’ll turn it over now to my partner Al Cacozza to kick off the discussion.

Al Cacozza: Thank you, Kellie. And we are so pleased to be initiating this exciting new podcast series. I'm Al Cacozza, a life sciences partner based in our Washington, D.C. office. And today I’m joined by my colleagues Sarah Blankstein, who is out of our Boston office, and Josh Oyster, who is here in Washington with me. In this podcast, we're going to be discussing a topic that has garnered significant attention from consumers, researchers, investors, industry stakeholders and regulators alike in recent months—it’s the marketing of products containing cannabidiol, or CBD. Specifically, we are going to focus on how the FDA is going to regulate these products in the marketplace, how they are doing it currently and how hopefully, we will give you some ideas on how they might be doing it in the future.

Before we get started on the regulatory discussion, let me provide you with a quick background on why this topic has generated so much recent interest. CBD, like THC, is a compound contained in cannabis plants. The two most famous species of cannabis plants are hemp and marijuana, but unlike THC, CBD is not known to have psychoactive effects. Now in recent years, the market for CBD-containing products has exploded—it’s been found in body lotions, pain relief creams, dietary supplements and now also showing up in foods such as candies, snacks, drinks and even now pet foods. Fueling this trend has been a limited amount of evidence that CBD might treat pain, seizures, nausea, muscle spasms linked to multiple sclerosis and other conditions. Of course, there’s also been a healthy dose of not only celebrity hype, but a significant amount of discussion amongst social media influencers, so it’s really been a very popular topic on the internet and within social media. We are seeing lots of different uses and frankly sales in the area.

Last June, FDA approved the drug Epidiolex (the active ingredient of which is CBD) for the treatment of seizures associated with two rare forms of epilepsy based on the results of three pivotal, randomized, double-blind, placebo-controlled clinical trials. So clearly, that was a very standard prescription drug research regimen, and this is the first drug approved that contains CBD as an active ingredient. Then last December, President Trump signed the Agriculture Improvement Act of 2018 (commonly known as the Farm Bill). The Farm Bill created a regulatory framework for the federal legalization of the production of cannabis sativa (which is the hemp variation of the cannabis plant), including the “de-scheduling” of hemp and certain hemp derivatives under the Federal Controlled Substances Act (“CSA”). Prior to the 2018 Farm Bill, hemp and its derivatives had been considered Schedule 1 narcotics under the Controlled Substances Act, identical to marijuana. Now as a result of the Farm Bill, hemp has been decoupled from that and it carves out hemp and hemp derivatives (including CBD) that have a THC concentration of 0.3% or less from the definition of marijuana under the Controlled Substances Act.

Hemp legalization enjoyed wide-spread bipartisan support and has been touted by many as having the potential for creating new opportunities for investment—not only in hemp cultivation, but also in the manufacturing and distribution of hemp-derived products like CBD. In fact, there are many states, many of them previously focusing on tobacco that are now transferring a number of their agriculture crops to hemp production, including Kentucky, where Senator McConnell was one of the leading advocates for this Farm Bill. However, despite the provisions of the Farm Bill, many federal, state and local regulatory barriers remain in place and for investors and stakeholders looking to enter or expand current activities in this market, they need to understand and carefully navigate those existing regulations. Today, we are going to focus primarily on the FDA regulatory considerations for CBD and CBD products. The 2018 Farm Bill expressly, expressly carved out FDA and said the bill has no effect whatsoever on FDA’s jurisdiction and existing authority over products that contain CBD or hemp. And immediately after the Farm Bill’s enactment, or I think literally the day after its enactment, FDA Commissioner Scott Gottlieb issued a statement addressing the impact of the law with respect to FDA’s regulation of products containing CBD and other cannabis-derived compounds. Let me turn to you now Sarah and Josh—can you walk us through and tell us what are some of the key takeaways of Commissioner Gottlieb’s announcement?

Sarah Blankstein: Well, the clear message Commissioner Gottlieb had was this—the Farm Bill doesn’t change anything from an FDA regulatory perspective. FDA continues to regulate CBD as it always has, with its regulations turning on how the products are classified by FDA based on the intended uses of the products and their ingredients. So CBD in a cosmetic is going to be regulated as a cosmetic, CBD in animal drugs as animal drugs, in food as food. And CBD in a drug product is regulated as a drug, so it requires an investigational new drug application (or IND) to be in place to conduct clinical studies with CBD-containing drugs and FDA will have to approve that product prior to marketing based on a showing of substantial evidence of safety and effectiveness. What’s changed for CBD-drug products under the Farm Bill is really from a DEA perspective—if it’s no longer a controlled substance, then the DEA requirements around registration, recordkeeping, reporting and security for clinical trials are no longer in play. And, once the drug is approved, it’s no longer going to be scheduled.

Josh Oyster: Thanks Sarah. Another key takeaway from Commissioner Gottlieb’s statement is the FDA’s particular concern with the number of drug claims being made about products not approved by the FDA that contain CBD or other cannabis-derived compounds, and Commissioner Gottlieb indicated that this would be an FDA enforcement priority. Products that claim to treat or cure a disease or condition are by definition drugs and must be approved by FDA prior to marketing based on, as Sarah said, a showing of substantial evidence safety and effectiveness. Of course, dietary supplement products can make certain claims, but those have to be structure-function claims (such as improving digestion) and not disease claims (an example of which might be treating the symptoms of inflammatory bowel disease). Similarly, cosmetics may make certain claims to beautify and alter the appearance, but cosmetics are not permitted to make disease claims or structure-function claims. FDA’s focus on CBD-containing products making drug claims is borne out by looking at FDA warning letters, of which FDA has issued many to both food and supplement and cosmetics manufacturers since 2015, each focused on impermissible drug claims.

Sarah Blankstein: And there was another point Gottlieb focused on in his statement—one that is really critical for investors in this area. And that point is around the impact of the exclusionary clause introduced into the Food, Drug and Cosmetic Act (or FDCA) by DSHEA (the Dietary Supplement Health and Education Act of 1994).

Al Cacozza: Sarah, can you tell us what investors and stakeholders really should know about that exclusionary clause?

Sarah Blankstein: Sure, thanks Al. So, many of the CBD products we see on the market right now are foods and dietary supplements—there are over 750 brands out on the market right now. But as Commissioner Gottlieb pointed out in his December statement, and as embodied in several FDA warning letters for CBD products, the agency’s position is that CBD cannot be sold as a food additive or dietary supplement because of the exclusionary clause. And what the exclusionary clause does is it defines a supplement (and food additives) to not include an article if it’s approved as a new drug or is authorized for investigation as a new drug for which substantial clinical investigations have been conducted IF that article (so here CBD) was not previously marketed in a dietary supplement or food. If it was not previously marketed in a supplement or food, then FDA would need to issue a regulation specifically permitting its use in a supplement or food. So the issue for CBD-containing foods and supplements is the June 2018 approval of GW Pharma’s drug Epidiolex. According to FDA, substantial clinical investigations of CBD to support that approval were undertaken under an IND prior to CBD being marketed in a food or supplement. So, unless FDA issues a regulation to specifically permit the use of CBD in foods and supplements—something Commissioner Gottlieb indicated in his statement that the agency is “evaluating” currently—FDA believes that marketing foods and supplements with CBD right now is illegal and in violation on the exclusionary clause.

Al Cacozza: So Josh, given the FDA position that these products are illegal under the exclusionary clause, have we seen FDA taken any enforcement actions against CBD-containing foods and supplements?

Josh Oyster: That’s a good question, Al. As I mentioned briefly, FDA has issued warning letters in this space—those letters have been focused primarily on products making disease claims, such as claims to treat cancer and Alzheimer’s. And Commissioner Gottlieb reiterated in his December statement after the Farm Bill was passed that FDA’s enforcement focus is really on those types of products, the ones making disease claims. But that’s not to say that FDA could not start to take a more active role in enforcing against food and supplement products containing CBD, even absent disease claims on the basis of the exclusionary clause that Sarah described. And maybe now that there’s a drug on the market containing CBD, Epidiolex, there’s going to be more motivation on that front for FDA to keep these CBD-containing supplements off the market. There’s also a role for state regulation and we have seen some states and even some cities, such as Maine, Cincinnati and New York City, relying on FDA’s invocation of the exclusionary clause to say that CBD-containing foods and supplements can’t be on the market in their particular location.

Al Cacozza: Sarah and Josh, we’ve seen a lot of CBD cosmetics products on the market. What do you think FDA’s considerations are for products in this particular space that contain CBD?

Sarah Blankstein: Well, FDA hasn’t directly addressed the question of whether CBD could be marketed in a true cosmetic product without any disease claims. But there’s a different legal analysis at play for cosmetics than foods and dietary supplements. Most notably, there is no exclusionary clause for cosmetic ingredients, meaning that the clinical investigations of Epidiolex and FDA’s approval of Epidiolex are not relevant to the legality of CBD-containing cosmetics. And there’s no approval or notification required for cosmetic products and ingredients, though they must be safe for consumers under the labeled and customary conditions of use.

Josh Oyster: As mentioned, we’ve seen FDA issue several warning letters for CBD-containing cosmetics, such as topical lotions or creams, but those letters again focus primarily on the fact the products made disease claims and not necessarily on the fact that the products contained CBD specifically.

Sarah Blankstein: Al, where do you think we go from here? What lies ahead for the regulation of CBD products by FDA?

Al Cacozza: That is frankly the most interesting question, Sarah. In Commissioner Gottlieb’s December statement as we discussed, he announced that FDA intended to hold a public hearing to gather input on products containing cannabis-derived compounds and how FDA can make the legal pathways for these products more predictable and efficient. And again, in testimony before Congress in late February, Commissioner Gottlieb stated that he intended to convene that meeting, that public meeting, sometime in April.

Now a complicating factor is that on March 5, Commissioner Gottlieb announced his resignation, which we expect to take effect in early April. HHS Secretary Azar has already announced that Dr. Ned Sharpless, the current director of the National Cancer Institute, will assume the role of Acting Commissioner of FDA upon Gottlieb’s departure. And we do not know, nor have we heard a particular statement from Dr. Sharpless on his views related to CBD. Nonetheless, recently (a few days ago), Commissioner Gottlieb in what I guess would be considered maybe a valedictory interview with the Brookings Institution indicated that FDA is going to be establishing a very high-level working group to clarify the agency’s position on CBD. That working group, which is expected to be announced in a few days formally, will be chaired by Dr. Amy Abernethy (who is the FDA’s principal deputy commissioner for food and drugs) as well as Lowell Schiller (FDA’s acting associate commissioner for policy). Commissioner Gottlieb explained that the goal of the working group will be to come up with options to consider on how to allow CBD use in food and supplement products. In fact, Commissioner Gottlieb acknowledged that the current regulatory pathway to consider CBD as part of a food or a food supplement product would take a number of years and is frankly unprecedented in FDA’s regulatory scheme. So what he did acknowledge was that the fastest way to clarify the situation would be for legislative action. And he indicated that he thought that the high-level working group would be shooting for a goal of developing a package to present to Congress hopefully by the end of the summer where Congress could consider writing new legislation to give FDA authority to consider this issue under a more expedited basis. Nonetheless, the future is somewhat uncertain. Obviously the impact of Dr. Gottlieb’s departure and the work of this new working group remain to be seen, both with respect to whether the FDA takes a more aggressive or flexible regularly approach to cannabis-derived products and the speed at which FDA decides to pursue either potential regulatory or more likely legislative proposals. So in the meantime, as we have been discussing, numerous states and municipalities are also going to be actively involved in this area and whether or not they take an, again, aggressive stance or follow the current FDA policy of cracking down on CBD products as has been in the case in Maine, Ohio and New York City—we will have to wait and see. Obviously, we need to monitor the situation, but I think it’s fair to conclude that this is a very dynamic situation and we will have to see how the regulatory and legislative issues pan out.

Sarah and Josh I want to thank you both for joining me today and sharing your insights on this very topical discussion about CBD and FDA regulation.

Kellie Combs: Thanks for tuning in today to our new podcast Non-binding Guidance, brought to you by our FDA regulatory attorneys in the life sciences practice at Ropes & Gray. For more information about our practice, or other topics of interest to life sciences companies, please visit our FDA regulatory and life sciences practice pages at www.ropesgray.com. You can also subscribe to Non-binding Guidance and other RopesTalk podcasts in Ropes & Gray’s podcast newsroom on our website, or by searching for Ropes & Gray podcasts in iTunes or Google Play. Thanks again for listening.