In August 2016, the Food and Drug Administration issued a final rule to update and clarify the agency’s drug registration and listing regulations. The rule made some fairly substantial changes even though the rule became effective last November, and drug companies may just now start to feel the impact of some of the rule’s requirements.
Of particular interest, starting with this year’s mandatory annual drug reporting period (which began October 1), FDA has implemented the requirement for registered drug companies to update or “certify” their current drug listings. Failure to comply not only would have implications for FDA regulatory compliance, but also could adversely affect reimbursement under both government and commercial plans and potentially lead to exposure under the False Claims Act.
Since 1962, the Food, Drug, and Cosmetic Act (FDCA) has required entities that manufacture, repack, or relabel drugs for sale in the US to register their manufacturing establishments within five days of beginning operations, and to renew their registration annually thereafter. In 1972, the FDCA was amended to require each registrant also to submit to FDA a list of the drugs it produces at its registered facilities. As part of the listing process, registrants must submit a variety of information about each listed drug, including, among other things, its unique National Drug Code number, current product labeling, and information about the drug’s marketing status (e.g., the approved application number, applicable over-the-counter monograph, etc.).
The legal obligation to register and list generally lies with the registrant, as the entity that actually manufactures, repackages, relabels, or salvages the drug (although listing responsibility may be assigned to a private label distributor in some circumstances.)
Although the FDCA and FDA’s implementing regulations have long required registrants to review and update their drug listing information every June and December, FDA’s earlier regulations did not provide much clarity about the types of changes that would necessitate an updated listing submission. Previously, listing was only required to be updated for new or discontinued products or when there was a “material change in any information previously submitted.” 21 C.F.R. § 207.30(a)(4) (2016). These earlier regulations also provided that “when no changes have occurred since the previously submitted list, no report is required.” 21 C.F.R. § 207.30(b) (2016).
According to FDA, the prior requirements led to many inaccuracies in the agency’s drug listing database. To ensure the accuracy of drug listing data, the new final rule not only requires registrants to review and update drug listing information every June and December, but if no changes have been made since the last review and update, the new section 207.57 requires registrants to certify that there have been no reportable changes. In finalizing the rule, FDA acknowledged that “requiring registrants to submit a twice-annual ‘no changes’ certification, on a product-by-product basis, for each of their listings would impose a substantial burden on registrants, particularly those that maintain hundreds or thousands of drug listings.” 81 Fed. Reg. at 60,195. The regulations therefore allow registrants to satisfy the listing update requirement for unchanged listings by making a single “no changes” certification during the annual reporting period, which started on October 1 and ends on December 31.
Any product listing for which there has been no listing or labeler code update will be considered inactive and removed from the NDC Directory. Presumably, FDA also will remove the listing from other publications that contain listing data, such as the NDC SPL Data Elements file and DailyMed, the computerized repository of drug labeling maintained by National Library of Medicine.
If a drug listing is deemed inactive by FDA, this could adversely affect the importation of foreign-made drugs. Further, it could jeopardize a product’s reimbursement/coverage under federal health care programs, as well as commercial payors that rely upon these drug listing files in determining coverage. For example, the Centers for Medicare and Medicaid (CMS) relies on the NSDE file to verify whether a drug is a “covered outpatient drug” for Medicaid purposes. States are required to cover all “covered outpatient drugs” under their state Medicaid plans in order to receive federal matching funds. CMS also relies on FDA’s NSDE file in making coverage determinations about prescription drug events under Medicare Part D and rejects any NDCs not listed on an NSDE file. Likewise, many commercial payors utilize the NDC Directory and other FDA databases in determining whether to cover drugs and making other decisions related to reimbursement.
Further, a registrant that incorrectly certifies no reportable changes when in fact changes were made, exposes itself to potential liability under the False Claims Act, because of the “false” certification, particularly if the false statement results in improper coverage or reimbursement of drugs under federal health care programs.
This new listing certification requirement is just one of the many changes made in this final rule.