We’ve been waiting quite a while for the FDA to modernize its positions on the truthful off-label communications by regulated manufacturers.  Under current First Amendment practice, the FDA’s positions are quite likely unconstitutional as both speaker- and topic-based restrictions on the truthful communication of scientific information.  However, the best we’ve seen from the Agency to date was a “statement,” issued last June, that truthful off-label communications to third-party payers (or “payors,” if you’d rather) would henceforth be OK.  Further details were available in an FDA guidance issued at the same time.  We blogged about that statement here.

The June 2018 guidance, however, did not go beyond TPPs.  Id. at 22.  We editorialized at the time:

We fail to see how any constitutionally valid distinction can exist between providing the identical information, with identical disclaimers and limitations, to one “sophisticated” audience (third-party payors) while prohibiting that information’s distribution to another “sophisticated” audience – that being medical doctors that directly prescribe these drugs and devices. . . .  Thus, we believe that, as a practical matter, the OLP Guidance effectively dooms any First Amendment defensibility of an FDA ban on the same truthful information being distributed, in the same fashion, to the rest of the medical community. . . .  After all, just as third-party payers are sophisticated professionals . . ., so are the doctors directly involved in treating [their] patients.

Then, nothing.  Over the last eight months we’ve seen no detectable movement through either FDA guidance documents or, the pending process – a reassessment of which was announced two years ago (see our post here) – to amend the FDA’s archaic “intended use” regulations.

We’re not surprised that a lot of other people are tired of the FDA’s foot-dragging.  Among other things, the FDA stated in that guidance we mentioned above that it would be deferring to “existing current good research practices for substantiation developed by authoritative bodies.”  Guidance at 10.

One of those “authoritative bodies” is the Advanced Medical Technology Association (“AdvaMed,” for short), which describes itself as “a trade association that leads the effort to advance medical technology in order to achieve healthier lives and healthier economies around the world.  AdvaMed’s membership has reached over 400 members and more than 80 employees with a global presence.”  One of the things AdvaMed has done is to create a code of ethics for medical device manufacturers.  The last AdvaMed code was issued about a decade ago and was in need of updating.  So AdvaMed has prepared a new ethics code that’s due to become effective on January, 1, 2020.  The entire code is methodically discussed in a Reed Smith client alert, but for present purposes we’re interested section 10, entitled “Communicating for the Safe & Effective Use of Medical Technology.”

Full disclosure, as stated in the client alert: “Reed Smith was honored to serve as outside counsel to AdvaMed in connection with drafting the original, current, and revised versions of the AdvaMed Code.”

Section X of the new AdvaMed Code starts with a specific description of off-label use, so it’s obvious to all what the code is discussing:

Health Care Professionals may use a product for any use that they determine is in the best medical interests of their patients.  This includes uses that are contained in the Medical Technology’s labeling or otherwise consistent with such labeling, but it could also include uses that are not approved or cleared (i.e. “off-label” uses).  As recognized under U.S. law and by the FDA, off-label use of these Medical Technologies can be an important part of medical practice and may even constitute a medically recognized standard of care.

2020 AdvaMed Code at 29 (emphasis added).  One “key concept” that this section of the new AdvaMed code emphasizes is that “[a]ccess to truthful and non-misleading information relating to Medical Technologies is critical to a Health Care Professional’s ability to exercise his or her medical judgment, to provide high-quality care, and to safely use available Medical Technology.”  Id. (emphasis added).

Thus, AdvaMed has stopped waiting for the FDA and is taking the position that direct off-label communications between medical device manufacturers and the physicians (and other health care professionals) that use their products is 100% ethical if done in a truthful, transparent, and non-misleading fashion:

Industry appropriate communications of such information can include, among other activities:

  • Proper dissemination of peer-reviewed scientific and medical journal articles, reference texts, and clinical practice guidelines;

  • Presentations at educational and medical meetings regarding clinical trial results or research and development data for an investigational use (taking care that no claims are made regarding safety and effectiveness); and

  • Discussions with consultants and Health Care Professionals to obtain advice or feedback relating to topics such as unmet patient needs, product research and development, and the like.

Id.  AdvaMed’s ethical guidelines for such communications (which the FDA would call “promotion”) are about what one would expect a company with good marketing practices to employ generally – authorization, truth, and disclaimers:

  • Company responses that contain information regarding unapproved or uncleared uses should be provided by authorized personnel.

  • Company communications must be truthful and nonmisleading.

  • Information related to unapproved or uncleared uses should be identified as such.

Id. at 30.

Thus AdvaMed – one of the “authoritative bodies” to which the FDA has stated it would be deferring – has stepped up to the plate and declared that truthful manufacturer communication of off-label information to physicians and other health care practitioners is both ethical and desirable.  “Companies are encouraged to develop policies and controls that apply the principles above.”  Id.

FDA, the ball is in your court.  Either take command or lose control.  Industry is not going to wait forever for the Agency to bring its regulation of truthful commercial speech into the Twenty-First Century.

Moreover, from a litigation standpoint, the AdvaMed Code is what we call an “industry standard” (at least when it goes into effect in 2020), and in almost every jurisdiction in the country, compliance with industry standards is admissible evidence in product liability cases.  “[I]ndustry standards promulgated by trade associations” are “acceptable” as evidence in strict product liability cases.  Kim v. Toyota Motor Corp., 424 P.3d 290, 299 (Cal. 2018).  “[T]rade associations consist of manufacturers and other businesses whose conduct comprises the industry custom and practice.”  Id.  Accord, e.g., Adams v. Genie Industries, Inc., 929 N.E.2d 380, 385 (N.Y. 2010) (“weight” of an “industry standard for” the product “was up to the jury”); Mikolajczyk v. Ford Motor Co., 901 N.E.2d 329, 335 (Ill. 2008) (“conform[ance] with . . . guidelines provided by an authoritative voluntary association” held relevant to proving a “unreasonably dangerous” defect); Wash. Rev. Code §7.72.050(1) (“[e]vidence of custom in the product seller’s industry . . . may be considered by the trier of fact”).  So now, when plaintiffs start bleating about “off-label promotion” being such a horrible thing, we have evidence to point to that – provided it’s done correctly and in compliance with a company’s internal guidelines – such activity is recognized as proper and ethical.

Oh, yes, and Happy Valentine’s Day to everyone at the FDA.  Among other things, they keep the nation’s chocolate supply safe.

We all know the phrase “the elephant in the room.” There are some things that do not get mentioned that are so obviously relevant that silence about them, or willful ignorance of them, can be humorous or frustrating. Based on our not-so-extensive research, we see that the origin of the fairly widespread use of this phrase is disputed, possibly dating to Russian fable that was referenced in a Russian novel. Not being terribly invested in the issue, we did not go to the original sources to try to understand the facts. We also are not going to detail all of our prior discussion on why the First Amendment cannot be ignored in evaluating claims of liability based on alleged off-label promotion of approved/cleared drugs and devices. Because of the First Amendment, activities “promoting” an off-label use are not automatically wrongful, like they were once construed to be. Truthful statements are protected commercial speech. False and misleading statements are not. Whether in a criminal case brought by FDA, a False Claims Act case where the United States has intervened, a consumer fraud class, a third-party payor case, a product liability case, or something else, we would think that a presiding court would be wise to go beyond the label “off-label promotion” and see if the liability is supposed to be based on truthful statements or false statements.

The First Circuit decision in In re Celexa and Lexapro Marketing and Sales Practices Litigation, — F.3d –, 2019 WL 364019 (1st Cir. Jan. 30, 2019), does not mention the First Amendment. It makes no attempt to distinguish between purportedly culpable conduct that involved statements that were truthful versus those that were false. Versions of the word “truthful” are missing, “false” only appears in discussing cases under the False Claims Act, and “misleading” appears once. Back when the First Circuit issued its lousy trilogy of Neurontin decisions, before Amarin had played out and FDA effectively acknowledged truthful off-label promotion was lawful, we might have expected such inattention to this distinction. It is hard to justify it now, however. It is also hard to justify how the decision glossed over the underlying facts.

The district court issued a number of decisions before the appeal, including the denial of class certification we discussed here and the granting of summary judgment we discussed here. Only two of the plaintiffs from below perfected their appeal and the appellate decision did a little picking and choosing of what it addressed. We will do the same and focus on the summary judgment part, which was reversed. (The class certification denial was upheld because the class claims were time-barred. If you want to read about American Pipe tolling and how unsealing a FCA complaint where the U.S. had intervened can start the RICO clock, then check out 2019 WL 364019, **8-10.) The remaining plaintiffs sought recovery under RICO and Minnesota state consumer fraud and unfair trade practice statutes, although only RICO is analyzed. The first plaintiff is described by the First Circuit as having “purchased Celexa and Lexapro for her young son from February 2003 through March 2010 on the recommendation of her son’s neurologist.” Id. at *3. We know from the decision below that these were prescriptions to treat autism from age 8 through 15 and that the treating physician testified that the drugs were effective in the boy’s case. The second plaintiff was a union health fund that included pediatric use of Celexa and Lexapro on its formulary, but had paid for a small portion of pediatric claims for all indications submitted for Celexa from 1999 to 2004 (16/72, 22%) and for Lexapro from 2002 to 2015 (31/234, 13%). Id. at *2 & n. 8-9. Each sought reimbursement—an unknown amount for the first plaintiff and about $26,000 for the second—and RICO penalties for paying for these prescriptions under the theory that defendants had promoted the use of Celexa and Lexapro for depression in patients under 18 and that payment for these drugs constituted an economic injury because they allegedly were not proven to be effective for depression in patients under 18.

If you are following along, then you might see some issues here and why we pointed out that not going to the original sources to get the facts can hamper an analysis. In the manner of a lazy orator, we will pose some of these issues as questions we will not answer. What sort of economic injury exists when you get the product you paid for at the price you intended to pay? For a third-party payor that negotiates the prices it pays and obviously decided whether to pay on a claim-by-claim basis—choosing not to do so 78-87% of the time—how can there be an economic injury and how could it be analyzed except on a claim-by-claim basis? How can the use of a drug for autism, effective per the doctors who kept prescribing it, be based on whether the drug was effective for depression in any age population? Why would cases involving such low amounts of purported actual damages get pursued so aggressively? Given that every off-label prescription here was written by a doctor who knew it was off-label and had the right to write the prescription anyway, how can there be liability? The court did not provide clear answers to most of these questions either.

Operating under the Neurontin framework, the court started with the premise that all promotion (undefined) for off-label uses was wrongful and proceeded to characterize the record as “strongly suggest[ing] that Forest engaged in a comprehensive off-label marketing scheme from 1998 through 2009 aimed at fraudulently inducing doctors to write pediatric prescriptions of Celexa and Lexapro when Forest had insufficient reason to think that these drugs were effective for the treatment of depression in children and adolescents.” Id. at *2. More specifically, the defendant was alleged to have promoted the use of both drugs for pediatric depression in various ways and to have concealed “negative clinical studies concerning Celexa’s efficacy and safety.” Id. Again, none of the allegations seemed limited to false and misleading statements or focused on the impact on the particular prescriptions—for autism and more general pediatric use—for which plaintiffs claimed injury. In addition to recounting that the manufacturer pled guilty to criminal FCA charges on off-label promotion and settlement of related civil FCA claims—before the First Amendment shift—the court noted some relevant FDA history. “In 2009, the FDA approved Lexapro for the treatment of depression in adolescents (i.e., individuals of ages twelve through seventeen).” Id. at *1. FDA also determined that one of the pivotal studies that it considered in approving Lexapro as safe and effective for depression in adolescents also applied to use of Celexa for pediatric depression. Id. at *4. Plaintiffs offered various criticisms of this and other studies, which the court generally credited as supporting that the drugs were ineffective for pediatric depression. It failed to note something the district court had noted when it granted summary judgment: FDA had and considered all the study evidence that plaintiffs claimed showed the opposite of what FDA found. That makes it really hard to prove their case without inviting the jury to conclude that FDA got it wrong.

Preemption, you say. RICO is a federal statute, so the Supremacy Clause does not apply. Whether the Minnesota statutes would be preempted was not examined. What was examined, without labeling it primary jurisdiction, was whether “the FDA’s various pronouncements or actions close the door on any effort to convince a jury that either Celexa or Lexapro was ineffective.” Id. We do not think that was the right question to ask, but the court got the wrong answer anyway. In concluding that the plaintiffs were free to invite the jury to second-guess the FDA’s conclusion that Lexapro was effective for pediatric depression (and related conclusions), the court missed the big picture. The court found its ruling in D’Agostino, which affirmed the dismissal of a FCA case predicated on fraud-on-the-FDA, did not apply because the manufacturer “could not have pleaded on FDA approval” when it allegedly promoted off-label use. Id. at *5. We do not see what reliance has to do with allowing second-guessing of FDA. The court also found its ruling in an earlier appeal from the same litigation, which held that a consumer claim based on an approved label and no new safety information was preempted, did not apply because, well, it was about preemption.

From there, the court’s reasoning escapes us—although we do appreciate the nod toward the relevance of FDA evidence to state law claims:

The common law has long recognized that agency approval of this type is relevant in tort suits. See Restatement (Third) of Torts: Prod. Liab. § 4 (Am. Law Inst. 1998) (“[C]ompliance with an applicable product safety statute … is properly considered in [a product defect case].”). But the common law also recognizes that such evidence is not always preclusive. Id. (“[S]uch compliance does not preclude as a matter of law a finding of product defect.”). And while there are strong reasons for treating such evidence as preclusive when the challenged sales are made in reliance on agency approval, those same reasons cut the other way when the sales are made without approval, and certainly when made unlawfully, as we must assume they were here.

Id. at *5. Consistent with such fuzzy reasoning, it was not unexpected that the court would find that the evidence of lack of efficacy that plaintiffs had was enough to raise a question of fact.

The leap from a dispute about efficacy in general to economic injury for the plaintiffs was not really explored. Nor was how the individual plaintiff—the mother of autistic child—could prove causation. How the union health fund could prove causation was addressed and we will not dwell too much on it here. Suffice it to say evidence tending to say promotion increased prescriptions in general was seen as more probative than evidence about what the fund actually did in connection with the less than fifty prescriptions it reimbursed. Talk about ignoring the elephant in the room.

 

It is now 2019, but we are still finding bits of leftover 2018 business on our desk and in our emails. Towards the end of last year, we encountered an avalanche of good rulings from the Southern District of Indiana in the Cook IVC filters litigation. Here is one we found hidden in the toe of our Christmas stocking: In re Cook Medical, Inc., IVC Filters Marketing, Sales Practices and Product Liability Litigation, 2018 WL 6617375 (S.D. Ind. Dec. 18, 2018). It is nice enough; it is not as if we are going to drive to the mall and return it. But there are some parts to it that we don’t love so much. Those parts are like ugly socks that we deposit in the bottom of a drawer and hope never to see again.

The plaintiff moved in limine to preclude evidence of 510(k) clearance of the medical device. The primary basis for such preclusion was Federal Rule of Evidence 402 – lack of relevance because the 510(k) process does not provide a reasonable assurance of the device’s safety and efficacy. That’s the argument, anyway. Prior to the pelvic mesh litigation, that argument was a sure loser. But, sadly, a couple of the pelvic mesh courts have swallowed this bogus argument hook, line and stinker. (Then again, we know of at least one recent non-mesh decision that rejected the no-510(k) argument, and we were so pleased that we deemed that decision one of the ten best of last year.)

As we have shown in a previous walk-through of this issue, the exclusion of 510(k) clearance is based on an over- or misreading of the SCOTUS Lohr decision, where the High Court contrasted the less rigorous 510(k) process with the Pre-Market Approval process. Lohr included loose language about how 510(k) clearance was limited to substantial equivalence with a predicate, rather than an independent demonstration of safety and efficacy. But SCOTUS itself subsequently reeled in that loose language in Buckman, recognizing that substantial equivalence was, in fact, a way of establishing safety. Moreover, the FDA itself subsequently tinkered with the 510(k) process and its characterization of it so as to make clear that 510(k) clearance is about safety. It is not as if the FDA would clear products it does not believe are safe. So where are we, or where should we be, when it comes to 510(k) clearance? Such clearance might not be enough to preempt a state law tort, but it is still relevant to legitimate defenses and should, therefore, be admissible.

Where does the S.D. Indiana Cook decision fit on the spectrum? It is probably more to the good (pro-defense) side, but not quite as far as we would like. The fact of FDA 510(k) clearance comes in. That’s good. At least the jury will not be under the misimpression that the company unleashed a product on the populace willy-nilly, with no governmental oversight. But … well there’s a big but. (We knew a fellow defense hack who never missed an opportunity to use that phrase in diet drug litigation to get a cheap laugh).

Interestingly, the S.D. Indiana analysis turned on an interpretation of Georgia’s risk utility test for design defect cases, and Georgia law was also at issue in one of the very bad mesh decisions in this area (that we will not and, for reasons of our existing litigation entanglements, cannot name.) Georgia law incorporates the concept of ‘reasonableness,’ i.e., whether the manufacturer acted reasonably in choosing a particular product design. FDA clearance is relevant to such reasonableness. The S.D. Indiana court held that both the plaintiff and the defendant, through appropriate expert testimony, “will be permitted to tell the jury about the role of the FDA in its oversight of medical device manufacturers, the regulatory clearance process for devices like IVC filters, and [Cook’s] participation in the 510(k) process and its compliance (or lack thereof) with the process.”

What do we think of this ruling? It is both good and bad. It is good (and absolutely correct) that clearance comes in. But it is bad, because it seems to welcome plaintiff ‘expert’ testimony that instructs the jury on the law. Why should an expert be able to tell the jury that the company did not comply with the FDA process? Isn’t the fact of clearance itself proof that there was compliance? Is the plaintiff arguing that the FDA erred when it cleared product? Shouldn’t that be up to the FDA? Given the extensive publicity accompanying any mass tort litigation, wouldn’t the FDA have corrected its error, if there really was error? Or is the plaintiff arguing that the FDA cleared the product only because the company hid data and hoodwinked the FDA? If we are not squarely in Buckman-land, are we not at least Buckman-adjacent? Don’t the selfsame policies of deferring to the FDA apply? In other words, isn’t plaintiff’s anti-clearance position preempted?

Thus there is a part of the S.D. Indiana’s ruling that reeks to our (admittedly oversensitive) noses. The defendant is not permitted to present evidence or argument that the FDA’s 510(k) clearance of the device constitutes a finding by the FDA that the device is safe and effective. As set forth above, that ruling is factually incorrect. By contrast, the plaintiff “may present evidence that the FDA clearance process only requires substantial equivalence to a predicate device, that 501(k) regulations are not safety regulations, that Plaintiff’s filter placement was “off label,” and the like.” Wrong, wrong, and whatever “the like” means, we’re sure that’s wrong, too. The 510(k) process does, indeed, address safety. The notion is that relying on a predicate device that was already approved or cleared is a good proxy for safety. There is plenty of regulatory history showing that by devising the 510(k) process, the FDA was not waving bye-bye to the value of safety. Meanwhile, we will all be treated to a blow-hard plaintiff regulatory expert who will take us on a tour of FDA regulations and company documents to tell a tale of a bad company and an overmatched federal government. Some fun. This expert testimony amounts to a preview of the plaintiff’s closing argument. It is so gruesome that we have heard some defense lawyers say that they would just as soon omit the regulatory story altogether. But that’s defeatism. The right result would be for the fact of 510(k) clearance to come in, and then full-stop. There is no need for expert interpretation or interpolation. So for all the trial judges out there who complain that drug and device trials go on too long, here’s an answer: shut down the expert testimony that purports to teach the jury about the regulatory process “and the like.” Always beware of “the like.” And be on guard against “etc.” and “whatnot” as well.

But let’s get back to the good bits of the S.D. Indiana Cook decision. The defendant will be allowed to offer evidence that the device was never recalled by the FDA, that the FDA never observed any violation of the company’s quality system during its inspection between 2000 and 2014, and that the FDA never took any enforcement action against the company. This evidence is relevant to the defense that the design and development decisions were reasonable and that the product is safe. At least this court had some sense of balance.

The S.D. Indiana decision also dealt with the defendant’s effort to use an expert biomedical engineer to talk about the low rate of complaints. She worked at the FDA for over twenty years in various positions and currently serves as a consultant to companies seeking to obtain FDA approval or clearance of medical devices. The expert cited evidence that the device had a fracture rate of 0.066% and perforation rate of 0.153%. The defense expert calculated the occurrence rate by dividing the total number of complaints received by the company (numerator) by the product’s total sales (the denominator).

The plaintiff challenged this expert testimony because “there is no way to know whether these numbers are accurate. Some patients/hospitals may not report adverse events, and some IVC filters may have been sold to hospitals but not used in patients.” The company responded that it did not intend to offer the complaint/occurrence rates as the actual complication rates for the product. With that limitation, the Cook court held that the defense expert’s testimony was admissible.

We opposed the FDA’s ill-advised 2013 proposal to revamp the process for changing generic drug labeling from the outset.  We had legal objections – that an FDA regulation could not alter the statutory “sameness” requirement imposed on generic labeling.  We had practical objections – that the change was a sop to the plaintiffs’ bar, intended primarily to reduce generic preemption in civil litigation, rather than to pursue any legitimate FDA objective.  And we had procedural objections – that FDA had secretly colluded with the plaintiffs’ bar in coming up with the proposal.

We were hardly the only ones to object, and the proposal was repeatedly deferred.  Once the proposal was postponed until after the 2016 election, we pronounced it dead.  Either the Ds would win, and approach the preemption issue directly by changing the makeup of the Supreme Court (Mensing/Bartlett were 5-4 decisions), or the Rs would win and the FDA would stop carrying water for the plaintiffs’ bar.

The latter happened, with [fill in the blank] consequences for the country and the world, but with predictable consequences for the FDA’s generic labeling proposal.  After a reasonable interval, the FDA formally put an end to the lingering 2013 proposal last week.  Here is the bottom line, from a December 13 statement posted on the FDA’s website:

In November 2013, the FDA proposed a rule . . ., which, if finalized, would have allowed generic drug makers to independently – meaning, without prior FDA review and approval – update and promptly distribute new safety information in drug labels. This is something that currently only branded drug makers can do.

This rule, if implemented, would have allowed generic manufacturers to independently update their drug labels with new information. We heard from manufacturers that they believed this change would have imposed on them significant new . . . liabilities. We heard arguments that the proposed rule could impose new costs on generic manufacturers that might have raised the price of generic drugs. . . . And, among other challenges, the new policy would have resulted in labels for the same drug that varied between different generic manufacturers, for some period of time. This could have led to consumer and provider confusion.

Today, the FDA is withdrawing this proposed rule. . . .

Dick Tracy signing off!  The bottom line is that, after five years, nothing has changed, particularly the scope of and basis for generic preemption.  Nor will there be any change to the FDA’s requirement of agency preapproval to changes to the “highlights” section of branded drug labeling – another potential source of preemption in civil litigation (this isn’t mentioned in the FDA statement, but is discussed in the accompanying Federal Register notice).

This agency coup de grâce is accompanied by the usual regulatory word salad about “ensur[ing] that generic companies continue to engage in an appropriate level of post-market safety surveillance” and “hurdles that – if the rule was implemented – could compromise public health.”  The FDA admitted:

[A]dditional or different warnings [could] temporarily appear in generic drug labeling compared to the brand drug – depending on the availability of information to various manufacturers and the timing of updates.  Such differences, even if temporary, could undermine confidence in generic drugs and their therapeutic equivalence.  We understand that the proposed rule may have also led to confusing, conflicting generic labels that were crowded with redundant safety information. Individual generic manufacturers might have added additional and at times superfluous information to their individual labels to avoid the risk of liability for failure to warn.

This, of course, is a problem hardly limited to generic drugs.  Competing branded drugs have all of these issues, too, which is one reason that the FDA frequently imposes class-wide labeling. There’s a solution for it – called “Expedited Agency Review” (“EAR”) – that would involve the FDA at an earlier stage in all labeling changes to ensure that this kind of chaos from occurring.  EAR was proposed as an alternative to the 2013 proposal, but is not mentioned in the FDA’s statement, probably because it would require “additional resources and help from Congress.”

The FDA’s statement does contain a useful clarification of the responsibility for labeling changes, after a branded “reference listed drug” is withdrawn from the market:

If the brand drug manufacturer has voluntarily withdrawn their marketing application, generics that reference the brand medicine can still be approved and marketed.  But the brand drug manufacturer is no longer responsible for making any necessary label updates that generic applicants can follow.

See also Federal Register Notice.  We add emphasis to this statement, since today is also the first anniversary of T.H. v. Novartis Pharmaceuticals Corp., 407 P.3d 18 (Cal. 2017), a case in which the California Supreme Court failed to recognize this basic fact.

More information on the withdrawal of the FDA’s 2013 generic labeling proposal is available at 83 Fed. Reg. 64299 (FDA Dec. 14, 2018)

The FDA has recently released a proposed rule “to establish requirements for the medical device De Novo classification process” provided in 21 U.S.C. §360c(f)(2).  FDA, “Medical Device De Novo Classification Process,” 83 Fed. Reg. 63127 (Dec. 7, 2018).  This de novo classification option is a relatively recent addition to the FDCA (via the 1997 FDA Modernization Act), and provides:

(ii) In lieu of submitting a report under section 360(k) [a/k/a/ §510(k)] . . ., if a person determines there is no legally marketed device upon which to base a determination of substantial equivalence . . ., a person may submit a request under this clause for the Secretary to classify the device.

(iii) Upon receipt of a request . . ., the Secretary shall classify the device subject to the request under the criteria set forth in subparagraphs (A) through (C) of subsection (a)(1) [meaning Class I, Class II, or Class III] within 120 days.

(iv). . . .

(v) The person submitting the request for classification under this subparagraph may recommend to the Secretary a classification for the device and shall, if recommending classification in class II, include in the request an initial draft proposal for applicable special controls, as described in subsection (a)(1)(B), that are necessary, in conjunction with general controls, to provide reasonable assurance of safety and effectiveness and a description of how the special controls provide such assurance. Any such request shall describe the device and provide detailed information and reasons for the recommended classification.

360c(f)(2)(ii-v) (emphasis added).  The emphasized statutory language establishes the standard to which these “de novo” devices are held: “reasonable assurance of safety and effectiveness.”  That’s important to preemption because of what Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), had to say over twenty years ago:  “provid[ing] the FDA with a ‘reasonable assurance’ that the device is both safe and effective[,] [d]espite its relatively innocuous phrasing . . ., is a rigorous one.  Manufacturers must submit detailed information regarding the safety and efficacy of their devices, which the FDA then reviews.”  Id. at 477.

Famously, Lohr also declared that the 510(k) substantial equivalence process “[t]he 510(k) process is focused on equivalence, not safety.”  Id. at 493 (emphasis original).  That is certainly cannot the case with de novo devices, since by definition there is no equivalence determination to be made.  Indeed, the FDA “may decline to undertake a classification request submitted under clause (ii) if [it] identifies a legally marketed device that could provide a reasonable basis for review of substantial equivalence.”  21 U.S.C. §§360c(f)(2)(iv).

We’ve expounded at great length in our “Lohr Has Two Shadows” post about how Lohr had been an anachronism ever since it was decided because Congress toughened up the original 510(k) process that Lohr addressed with the Safe Medical Devices Act of 1990.  The SMDA imposed the same “reasonable assurance of safety and effectiveness” standard on substantial equivalence determinations that Lohr had praised as “rigorous in Lohr.  See 21 U.S.C. §§360c(a)(1)(B), 360c(f)(1)(A)(v).

Nevertheless, since Lohr, the judiciary has engaged in a conspiracy to ignore the SMDA and treat all 510(k) medical devices as if they were evaluated under minimalistic standard that the Supreme Court addressed in 1996.  With de novo devices, it’s going to be a lot harder for judges to continue sticking their heads in the sand and chanting “Lohr, Lohr, Lohr” every time a non-PMA device is at issue.

The FDA’s proposed rule makes clear that the de novo process is essentially the SMDA’s “special controls” regime without the fig leaf of substantial equivalence:

The De Novo classification process provides a pathway to ensure the most appropriate classification of a device consistent with the protection of the public health and the statutory scheme for device regulation. This pathway is intended to limit unnecessary expenditure of FDA and industry resources that may occur if devices for which general controls or general and special controls provide a reasonable assurance of safety and effectiveness are subject to a PMA due to a lack of a predicate.

83 Fed. Reg. at 63129 (emphasis added).  No longer can the SMDA standard for clearance of Class II devices be dismissed as involving “equivalence, not safety.”  It’s the same “rigorous” standard that Lohr equated with PMA – only extended to other classes of devices, in particular:

For any class II recommendation, the De Novo request must also provide an initial draft of proposed special controls along with a description of how the special controls provide reasonable assurance of safety and effectiveness.

Id. at 63130.

The proposed regulations firmly establish that de novo devices are to be evaluated for “safety and effectiveness,” not equivalence, in practically every aspect of their FDA review:

  • “If the submitter recommends that the device be classified as class II, FDA proposes that the recommendation must include a draft proposal for applicable special controls, and a description of how those special controls provide reasonable assurance of safety and effectiveness of the device.”  Id. at 63133.
  • “FDA proposes that the De Novo request include reference to any published standard relevant to the safety or effectiveness of the device.”  Id.
  • “For a clinical investigation involving human subjects, FDA proposes to require that a discussion of . . . safety and effectiveness data, adverse reactions and complications, patient discontinuation, patient complaints, device failures . . . and replacements. . . . FDA would use the summary of investigations in assessing safety and effectiveness of the device.”  Id.
  • Valid scientific evidence is evidence . . . from which it can fairly and responsibly be concluded by qualified experts that there is reasonable assurance of the safety and effectiveness of a device under its conditions of use.”  Id. at 63133-34.
  • “The proposed benefit and risk considerations section would expressly require that, “pursuant to the determination of safety and effectiveness section of the regulations, a discussion be included demonstrating that . . . the probable benefit to health from use of the device outweighs any probable injury or illness from such use (i.e., a discussion demonstrating the safety and effectiveness of the device) when the device is used according to its labeling.”  Id. at 63134.
  • “Any safety and effectiveness data to assist FDA in assessing whether the clinical investigation supports that a reasonable assurance of safety and effectiveness exists. FDA would assess reasonable assurance of safety and effectiveness by evaluating the valid scientific evidence submitted to support the De Novo request. FDA would review the data to assess whether the data supports the claims made in the indications for use and demonstrates that the probable benefits of the device outweigh the probable risks.”  Id.
  • “Discussion of data on any adverse reactions to the use of the device . . . or complications related to the use of the device. . . . Frequency data and severity data are particularly useful in safety and effectiveness determinations. FDA would review the rates of complications in clinical investigations in assessing the safety and effectiveness of the device.”  Id.
  • “FDA would need all discontinuation data in order to determine the safety and effectiveness of the device.” Id.
  • “Trends in complaints may point to possible risks posed by the device. FDA would review such trend analyses in assessing the safety and effectiveness of the device.”  Id. at 63135.
  • “In analyzing failures, factors such as location, user application, and repeat component failures may apply. FDA would review such analyses in assessing the safety and effectiveness of the device.”  Id.
  • “Statistical analysis of the results from each clinical investigation. The statistical analysis should specify and discuss all effects. FDA would review such analyses in assessing the safety and effectiveness of the device.”  Id.
  • Any “contraindication, precaution, warning, or other limiting statement relevant to the use of the device. . . . This includes information regarding any special care to be exercised by a practitioner or patient for the safe and effective use of the device.”  Id.
  • “[I]f a De Novo request relies primarily on data from a single investigator at one investigation site, the De Novo request must include a justification showing why these data and other information are sufficient to demonstrate the safety and effectiveness of the device.”  Id.
  • “FDA further proposes to require that a De Novo request include a discussion of the clinical significance of the results, pursuant to the determination of safety and effectiveness.”  Id.
  • “FDA proposes to require that the De Novo request include any other identification, discussion, and analysis of any other data, information, or report relevant to the safety and effectiveness of the device.”  Id.
  • “FDA proposes that the De Novo request must include other information that is necessary for FDA to determine whether general controls or general and special controls provide a reasonable assurance of safety and effectiveness of the device. Examples would include marketing experience outside the United States, medical device reporting (MDR) data . . ., and patient preference information.”  Id. at 63136.
  • “FDA proposes to require the De Novo requester to update its pending De Novo request with new safety and effectiveness information . . . as such information becomes available.”  Id.
  • “FDA proposes that FDA would be able to inspect relevant facilities prior to granting or declining a De Novo request. Such an inspection is intended to assist FDA in determining whether a reasonable assurance of safety and effectiveness can be provided by general or general and special controls.”  Id. at 63137.

Emphasis added in all cases.  Once all of these safety/effectiveness requirements are complied with, the FDA would issue an “administrative order” granting the request and specifying the de novo device’s classification.  Id.  By such orders “FDA would determine the safety and effectiveness of the device using the criteria specified in the determination of safety and effectiveness section of the regulations.”  Id. (citing 21 C.F.R. §§860.289(d), 860.7).

Given the proposed regulations’ emphasis on determinations of device “safety and effectiveness” throughout, as well as its reliance on “special controls” customized to each de novo request, we think that de novo devices should be protected by preemption under Lohr and Riegel v. Medtronic, Inc., 552 U.S. 312 (2008).  We have here device-specific requirements intended “to provide reasonable assurance of safety and effectiveness” of these devices

Oddly, there is no explicit discussion – or even mention – of “preemption” in the FDA’s proposed rule.  So that nobody ends up buying a pig in a poke, we advise that industry-side comments to this proposal should request the FDA to specify explicitly that it believes the de novo process provides preemptive protection under 21 U.S.C. §360k(a), for all products that the FDA concludes have “reasonable assurance of safety and effectiveness” under 21 U.S.C. §360c(f)(2), and in accordance with Lohr‘s analysis .  While, in the past, FDA opinions on preemption haven’t always been helpful, or even intelligible, this time it might be.

This post comes from the Cozen O’Connor side of the blog.

 

Today’s story is about a class action, one in which the defendant was sued for labeling its product “No Sugar Added” even though everyone involved, including the plaintiff, understood from the very start that no sugar had been added to the defendant’s product. You can probably already see where this is going.

The named plaintiff in Perez v. The Kroger Co. 2018 WL 4735701 (C.D.C. Sept. 28, 2018), alleged that the defendant, The Kroger Company, improperly labeled its 100% Apple Juice product as No Sugar Added. She hoped to represent a class that would seek financial damages for this alleged misrepresentation under California’s familiar Unfair Competition (“UCL”), False Advertising (“FAL”) and Consumer Legal Remedies (“CLRA”) laws. And she based her claims on an FDA regulation that prohibited food manufacturers from labeling a product as No Sugar Added unless, among other things, the food that the product was intended to resemble, or for which it was a substitute, “normally contains added sugar.” According to plaintiff, sugar is not normally added to apple juice (presumably because apple juice already has enough), so Kroger’s 100% apple juice product was mislabeled as No Sugar Added.

Now, as unsettling as the prospect might be of allowing a product with no sugar added to remain on the market labeled No Sugar Added, plaintiff’s claims nonetheless failed. In fact, plaintiff’s claims did not survive a motion to dismiss. Why? On this blog you should already know that answer about 40% of the time—preemption.

The Nutrition Labeling and Education Act (“NLEA”), an amendment to the FDCA, contains an express preemption clause. It is a strong one. It prohibits any state from enforcing a food labeling requirement—through, say, class action claims under the UCL, FAL and CLRA—that is “not identical to” FDA labeling regulations. Id. at *3. And plaintiff’s interpretation of the FDA’s labeling regulation was not the same as the FDA’s interpretation. The FDA interpreted it much less narrowly.

Plaintiff claimed that, under the FDA regulation, Kroger could use a No Sugar Added label only if sugar is normally added to the specific product that Kroger’s 100% apple juice product was intended to “resemble” or “substitute”—i.e., apple juice. The FDA, on the other hand, expressed a different view in a letter responding to a public interest group of some sort. According to the FDA, the comparison product need not have “the same name or the same juice content.” In the case of Kroger’s 100% apple juice product, this meant that it could be considered a “substitute” for a broader range of products than proposed by plaintiff, including “juice with added sugar, fruit-flavored soft drinks sweetened with sugar, or other sugar-sweetened beverages.” Id. at *6-7.

The district court had to decide whether to accept this FDA interpretation. To do this, the court had to determine whether, under Auer v. Robbins, 519 U.S. 452, 461–62, (1997), the FDA’s interpretation was “plainly erroneous or inconsistent with the regulation.” The court held that it was not. Rather, it found the FDA’s interpretation to be the result of a fair and considered judgment. The court gave the FDA’s interpretation deference and, accordingly, held that plaintiff’s claims were preempted. Id. at *6-7.

Interestingly, plaintiff argued that the court should not defer to the FDA’s interpretation because the FDA had staked out “nothing more than a convenient litigating position.” Id. at *6. That argument, if anything, backfired. The district court was not aware of any litigation actually involving the FDA in which its interpretation of this regulation was at issue. Rather, the FDA stated its interpretation of the regulation in response to the letter from the public advocacy group.

On the other hand, the district court noted that plaintiff’s counsel had, in fact, brought similar claims that were dismissed by other courts. With this history in mind, the court admonished plaintiff’s “counsel to tread carefully in continuing to bring these particular claims.” Id. at *7.

Gather round brothers and sisters, and hear the word of the Texas Court of Appeals. Today’s sermon addresses the intersection of religion and regulation.  Take out your hymnal, and turn to Hawkins v. State, 2018 Tex. App. LEXIS 7863 (Texas Ct. App., 14th Dist. Sept. 27, 2018).  Consider the case of Mr. Hawkins, hereinafter referred to as “the defendant,” but who self-identified as a bishop of the Genesis II Church of Health and Healing.  A primary teaching of said church was the amazing curative power of “MMS,” which variously stands for Miracle Mineral Solution, Master Mineral Solution, or  Miracle Mineral Supplement. (We think of MMS as an abbreviation either for the more prosaic Multimedia Messaging Service or the sillier Make Me Smile.  But who are we to depart from church doctrine?).  MMS is a sodium chloride product typically used as a disinfectant.  It is an industrial bleaching agent.  The defendant held monthly seminars and taught his flock how to mix and consumer MMS.  And what bounty shall this marvelous MMS elixir deliver?  Why, nothing less than a cure for cancer, HIV, heart disease, autism, and Ebola.  So sayeth the defendant.

 

The state of Texas heard this preaching and, lo, announced that it was Bad.  The state filed an action under the Deceptive Trade Practices Act (DTPA). The main prayer for relief was to enjoin the defendant and his followers to refrain from promoting MMS.  Justice in Texas was swift.  The state’s prayer was answered.  The MMS folly was put asunder.  The injunction was issued.  Thusly were poor innocents spared the fate of dousing their innards with bleach and tumbling into the fiery pit of disease and despair.

 

But the defendant gnashed his teeth against this ruling, and filed an appeal.  Alas, his teeth must still be gnashing, because the Court of Appeals decreed that the trial court’s ruling was Right and Good.

 

As a preliminary matter, the trial court quickly disposed of a raft of frivolous arguments, such as that the court had no jurisdiction over a sovereign church, that the government lawyers were unauthorized to practice law, that a church cannot be a dba, and that there was no contract between church and state.  For anyone who clerked and had to attend to tax objector appeals, this litany of beefs will seem familiar.  Sometimes the hardest part for a court or opponent is first to figure out exactly what the argument is, then restate it cogently, then bash it with solid precedent (which is much preferable to the jawbone of an ass, though we have occasionally encountered or even employed that weapon, too, in our almost two score of legal practice).

 

The actual substantive argument by the defendant is the most interesting: that “no one has the right to prevent a church or its believers from teaching its belief and offering its sacraments if the sacraments do not consist of controlled or illegal substances.”  Ah, at last we arrive at the type of lofty issue we might have encountered in Con Law class.  But the religious freedom claim here is framed exceedingly weakly.  The state brought the DTPA action on the grounds that the defendant had engaged in false, misleading, and deceptive ads and practices by promising benefits of MMS that it in fact lacks, by failing to disclose the utter lack of scientific research supporting such claims, and, worst, by failing to disclose the health risks of MMS.  Religious freedom is not a freedom to poison fellow citizens.  That much is clear.   We’d also say that religious freedom is not a freedom to lie to one’s fellow citizens, but even with the passing of Christopher Hitchens we’d expect some debate on that proposition.  But more to the point, religious freedom does not call off neutral application of the state’s police powers.

 

Whereupon the Hawkins court consulted a Higher Authority – the federal Food and Drug Administration.  In 2010, the FDA issued a safety alert about MMS, warning that it was an industrial bleach used for stripping textiles, and that consumption of MMS could lead to nausea, vomiting, diarrhea, and severe hydration.  At least one person suffered a life-threatening reaction after drinking MMS.  That’s the FDA warning against physical harm, not taking sides in some religious schism.

 

What’s the church’s position? According to at least some MMS labels, reactions such as nausea and vomiting were “evidence that MMS is working.”  Indeed, MMS seems to work in mysterious ways.  Some of the most damning evidence resides on the defendant’s website.  Those who adhered to the ways of MMS would know how to fix 95% of mankind’s maladies.  The church claimed to be “superior to health insurance.”  (Okay, our mind might be open about that one.). Learn about MMS, and you can call yourself a Reverend.  Dispense MMS to 50 unlucky people, and you can call yourself Doctor.

 

But the defendant probably should not call himself Lawyer.  For all of his arguments fell on deaf ears.  Hawkins was not a case of religious discrimination.  The police power of the state had not been exercised arbitrarily or capriciously.  Render unto Caesar, etc.  Little wonder that the appellate court wasted little ink in affirming the trial court’s ruling and offering an easy Amen.

 

Recently Rudy Giuliani was broiled for saying that the truth isn’t the truth.  Denying a tautology won’t typically earn one high marks for logic.  Add in the callback to Pontius Pilate’s “What is truth” question, and it sounds like bad epistemology in service of bad morality.  But we’re not here to talk politics.  Nor are we here to try to answer Pilate’s question.  Maybe the Drug and Device Law Daughter, who is just starting her second year at Harvard Divinity School, can field such questions.  We cannot.

As a former prosecutor of mail frauds and wire frauds and as a current defender of companies accused of consumer fraud, the question we have faced is usually more along the lines of “what is a lie.” It is not merely the opposite side of the street, though it surely is in the same neighborhood.  Liars are everywhere.  They overstate their income when applying for a loan.  They understate their income when reporting to the IRS.  They use sucker lists to lure retirees into investing in nonexistent oil wells.   They loot companies via creative accounting.  They tell us our table will be ready in “just a few minutes.”  They tell us our flight is “On Time.”  They check the box saying they have read and they accept the terms and conditions.  They pretend not to want the last slice of pizza.

What makes something a lie that leads to liability?    Even putting aside the difficult issue of discerning a defendant’s intention to prevaricate, how does the law tackle claims that someone did wrong by uttering something at odds with the truth?  The police are not the truth police, and civic dockets could not bear the strain if every lie led to a lawsuit.  So the law has introduced concepts of materiality and detrimental reliance.  A lie is actionable only if it made a difference. It had to have fooled someone who is not a fool.  It had to have caused harm.

One summer, between our junior and senior years in college, we worked in the New Jersey legislature.  It was the summer of the FBI’s Abscam investigation (see American Hustle).  A couple of politicians, including a U.S. Senator, six members of the House of Representatives, a New Jersey State Senator, and the Mayor of Camden, did perp walks on their way to corruption convictions.   But the legislators and staffers we worked with were a competent and honorable group.  One of them focused on consumer fraud matters.  He told us that anytime a state investigator wanted to ring up some citations, all that was required was a visit to a nearby supermarket.  Weigh some packaged meat, compare to the stated weight, and – voila! – there would almost certainly be a discrepancy.  Evaporation and the passage of time produced a lie.   Thankfully, a rule of reason prevailed.   Nobody was really deceived or hurt.   Let’s be grownups about this.   There are plenty of real frauds to pursue.  It wasn’t cynicism; it was realism, aided by a set of reasonable priorities.

Years later, we found ourselves in Southern California.   It’s hard to say why it’s so, but it quickly became clear to us that folks on the west coast were a lot less tolerant of puffery or even the slightest deviation from their idea of truth and purity.  Is it a state of innocence?  Does life under perpetually sunny skies foster a heightened sense of entitlement?  Look at the lawsuits alleging that a company incorrectly called its product organic or natural.  They are not all filed in California, but it seems that most of them are.  Even so, most of those lawsuits don’t get much traction in the courts, because a regulatory agency had made a determination  of what could and could not be put on a product label.  In such cases, courts don’t need to engage in science, or semantics, or epistemology.  It turns out that sometimes Pontius Pilate’s question is preempted.

Today’s case originated in Southern California: Welk v. Nutraceutical Corp., 2018 U.S. Dist. LEXIS 135595, 2018 WL 3818033 (S.D. Cal. Aug. 10, 2018).  The plaintiff had purchased liquid vitamin B12 and complained that the packaging overstated its contents.  The claim centered on test results from a “reputable supplement analysis center located in California” showing that, once opened, the liquid vitamin B12 “undergoes degradation at an unknown rate.”  After only 11 days, a sample of the product weakened from 255 ug/ml to 213 ug/ml.  The plaintiff contended that the amount of B12 eventually “becomes negligible and ineffective.” Thus, the bottle’s label was “untrue, false, and misleading.”  The complaint included various actions for misrepresentation, and did so on behalf of a purported class of consumers.

Tell the truth: this claim does not exist unless it is a class action, right?  And what does that tell you?

Stepping back for a moment, doesn’t this claim remind you of the statement on cereal boxes about how the contents may have settled? When you are a child, this statement might possibly have arrived as unpleasant news.  Open a box of Cap’n Crunch, and one is greeted by almost as much air as nuggets of cavity-inducing goodness. But as adults, we read this statement with calm resignation.  Perhaps that is because we, too, our bodies and our minds, have settled over time.

The defendant in Welk moved to dismiss the claim for various reasons.  The best of those reasons was that the claim was preempted by the Food, Drug, and Cosmetic Act, as amended by the Nutrition Labeling and Education Act.  There is an express preemption provision barring state law food labeling requirements that are “Not identical” to federal regulations.  The FDA regulates the labeling of the “quantitative amount” of nutrient supplements such as vitamin B12, and decrees application of a specific testing methodology.  The defendant’s labeling complied with the FDA’s labeling and testing methodology.

How does the plaintiff endeavor to evade preemption?  The plaintiff argued that the defendant improperly failed to disclose the fact of degradation.  But that assertion of degradation rests upon a testing methodology that is certainly not “identical” to the one mandated by the FDA.  Accordingly, the court, in a very short, very to-the-point decision, held that the plaintiff’s misrepresentation claims were preempted and must be dismissed.  Was the vitamin label a lie?  Not really.  As with many of the cases we encounter, the alleged lie was one of omission.  Tell me more, says the plaintiff.  One can always think of more.   How to decide?  There’s a scientific test.  Who decides?  The FDA.

We cannot count ourselves surprised by the result in Welk.  It is consistent with several others we have seen in food and nutraceautical cases.   But we do count ourselves as envious.  Most of our cases involve drugs and medical devices.  (No surprise there; take a look at the title of this blog.  Please don’t accuse us of false advertising because today’s case involves neither a drug or device.  We’re about to tie it together, okay?  Okay.  Here goes.). The preemption language for medical devices is there, but it’s been unduly watered down by a couple of courts.  The logic for preemption of drug labeling is there, but it, too, was overly cabined in some regrettable judicial decisions that are starting to collapse from their contradictions. (Many of those decisions indulged in a presumption against preemption – a presumption that has since been discredited.) Imagine if food preemption rules applied to all the products regulated by the FDA. Think of the logic, consistency, clarity, and efficiency.  We could use a little more of that in the DDL world.

That is no lie.

We confess – when we first considered the spate of eye drop class actions a few years ago, we had trouble taking them seriously.  It was tough to get excited about penny-ante allegations that the size of eye drops warranted the attention of federal courts, or warranted class action status.  We were not alone in that assessment.  See Eike v. Allergan, Inc., 850 F.3d 315 (7th Cir. 2017) (discussed here).

But the judicial skepticism engendered by pathetically weak and blatantly lawyer-driven litigation can produce collateral benefits – like favorable preemption decisions.  We hailed the first of those, Thompson v. Allergan USA, Inc., 993 F. Supp.2d 1007 (E.D. Mo. 2014), in our “Mensing – It’s Not Just About Generics Anymore” post over four years ago.  Thompson held that the plaintiffs’ attacks on the size of the eye drops was a challenge to the FDA-approved dose of that product.  Dosage alterations, however, were “major changes” that required FDA pre-approval.  The need for such pre-approval, however, barred the claim under the impossibility preemption rationale of Mutual Pharmaceutical Co. v. Bartlett, 570 U.S. 472 (2013), and PLIVA, Inc. v. Mensing, 564 U.S. 604 (2011).

We also considered Thompson as proof that we hadn’t been “baying at the moon” in our 2013 “‘Major’ Drug Labeling Changes That Require FDA Prior Approval” post, where we listed a bunch of drug-related changes that the FDA considered “major” and argued that they should all be preemptive under the Mensing/Bartlett rationale.

Thompson didn’t go any further, but a Massachusetts district court reached essentially the same result in Gustavsen v. Alcon Laboratories, Inc., 272 F. Supp.3d 241 (D. Mass. 2017):

FDA regulations, as interpreted by the FDA, now prevent defendants from changing the “size and/or shape of a container for a sterile drug product” unless and until the FDA determines that its benefits outweigh any harms.  The decision whether such a change should be made is, therefore, reserved for FDA, and the Supremacy Clause prohibits judges and juries from displacing or second-guessing the FDA based on the laws of Massachusetts or other states.

Id. at 255-56 (citation to same FDA guidance cited in our 2013 post omitted).  Oddly, Thompson was not cited in Gustavsen.  We blogged about that decision here.

A few days ago, the First Circuit affirmed, in Gustavsen v. Alcon Laboratories, Inc., ___ F.3d ___, No. 17-2066, 2018 WL 4057381 (1st Cir. Aug. 27, 2018), and that decision is a preemption home run.  Gustavsen decided a “single question” – “Can manufacturers of prescription eye drops change the medication’s bottle so as to alter the amount of medication dispensed into the eye without first getting the FDA’s approval?”  The answer to that question being “no,” “state law claims challenging the manufacturers’ refusal to make this change are preempted.”  Id. at *1.

The major dispute in Gustavsen wasn’t the law.  Even plaintiffs appeared to concede that preemption flowed from a “prior agency approval” requirement under Mensing/Bartlett:

The principles of federal preemption that control our disposal of this appeal are not in dispute.  If a private party (such as the manufacturers here) cannot comply with state law without first obtaining the approval of a federal regulatory agency, then the application of that law to that private party is preempted.  Conversely, a private party’s ability to do without prior agency approval that which state law requires defeats a preemption defense even if the federal regulatory agency retains authority to reject the changes, unless the defendant establishes by clear evidence that the agency would, in fact, reject the changes.

Id. (citations and quotation marks omitted).

The disputed question was whether a tort-required change to the dispenser of a drug (here, eye drops) that had the effect of reducing the size of the drop – and thus the dosage of the drug in that drop – required FDA prior approval.  The pertinent FDA regulation, 21 C.F.R. §314.70 (another part of which, (c)(6)(iii), is Levine’s notorious  “CBE regulation”),

divid[es] changes into three categories: major, moderate, and minor changes.  The classification of the manufacturer’s anticipated alteration into one of these three categories dictates the manufacturer’s ability to unilaterally implement its change.  Major changes require approval from the FDA prior to implementation, while moderate and minor changes do not.

Gustavsen, 2018 WL 4057381, at *5 (emphasis added).

Controlling case law is clear − and plaintiffs here concede − that if the change they contend state law requires qualifies as “major,” then federal law preempts plaintiffs’ cause of action because defendants cannot lawfully make such a change without prior FDA approval.

Id.  That’s the key.  Gustavsen’s main takeaway is its holding that “if the change [plaintiffs] contend state law requires qualifies as “major,” then federal law preempts plaintiffs’ cause of action.”  Id. (emphasis added).  That’s precisely what we first argued back in 2013:  that where certain “changes are considered sufficiently ‘major’ that they require FDA prior approval . . . those sorts . . . [of] changes should be preempted” by Mensing/Bartlett.

Much of the remaining preemption discussion in Gustavsen was to reject plaintiff-side pettifoggery.  The First Circuit ruled that §314.70(b) was properly read to include subsection (b)(1)’s “broad category of qualifying changes” as “major” – including “sections (b)(2)(i) through (viii).”  2018 WL 4057381, at *6.  Rejecting plaintiffs’ attempt to parse the regulation in a cramped fashion, Gustavsen “conclude[d] that, if a change fits under any of the categories listed in section (b)(2), that change necessarily constitutes a ‘major’ change requiring FDA pre-approval.”   Id. (emphasis added).  One of those categories, §314.70(b)(2)(vi), was a “comfortable” fit for the plaintiffs’ dosage claims, thus mandating preemption.  Gustavsen, 2018 WL 4057381, at *7.  Like the district court, the First Circuit in Gustavsen relied upon, inter alia, the same FDA guidance that we did back in 2013.  Id. at *8.

Finally, the First Circuit rejected each of the plaintiffs’ three “retorts.”  First, “[w]e do not share plaintiffs’ reading of the preamble” to the Federal Register notice that finalized §314.70, id., and “[i]n any event, it is well-established that a regulatory preamble is incapable of altering regulatory text’s plain meaning.”  Id. (citation omitted).  Second, the dosage was not “one drop” of any size.  Id. at *9.  Third, allegations that the FDA had, in practice, not always enforced the pre-approval requirement as to eye drops did not trump the regulation itself, since “the regulatory actions to which plaintiffs point” were “made by mid-level FDA scientists, or even a single ‘reviewer,’” and thus did not “reflect” the FDA’s “fair and considered judgment.”  Id.

We think Gustavsen is a big deal, since its logic extends far beyond the rather trivial allegations ginned up by the class action lawyers who have pursued the eye drop litigation.  There are a lot of potential drug-related changes that the FDA considers “major” under the regulation and guidance documents relied upon in Gustavsen.  These include “changes in the qualitative or quantitative formulation of the drug product, including inactive ingredients, or in the specifications provided in the approved NDA.”  §314.70(b)(2)(i) (emphasis added).  In other words, as we concluded when we first discussed Thompson, “We hasten to add that the same argument preempts all design defect claims against FDA-approved products since all design changes require pre-approval.”  Plaintiffs also frequently assail defendants for not more thoroughly testing their products.  Well, “major” changes also include “[c]hanges requiring completion of studies” and “[c]hanges to a drug product under an NDA that is subject to a validity assessment because of significant questions regarding the integrity of the data.”  Id. §(b)(2)(ii) and (viii).  A number of label changes, including to “highlights” and to “medication guides” are also “major.”  Id. §(b)(v)(B-C).

The Gustavsen rationale – “major” change = FDA pre-approval = preemption − should also apply to medical devices, since modifications to devices follow a similar regulatory framework:

(a) . . . [E]ach person who is required to register his establishment . . . must submit a premarket notification submission to the Food and Drug Administration . . . days before he proposes to begin the introduction or delivery . . . of a device intended for human use which meets any of the following criteria:

*          *          *          *

(3) The device is one that the person currently has in commercial distribution or is reintroducing into commercial distribution, but that is about to be significantly changed or modified in design, components, method of manufacture, or intended use.  The following constitute significant changes or modifications that require a premarket notification:

(i) A change or modification in the device that could significantly affect the safety or effectiveness of the device, e.g., a significant change or modification in design, material, chemical composition, energy source, or manufacturing process.

(ii) A major change or modification in the intended use of the device.

21 C.F.R. §807.81(a) (emphasis added).

Finally, the Gustavsen rationale – being a basis for implied preemption – is not necessarily limited to the FDCA.  To the extent that other products are subject to federal pre-approval, they, too, may have a preemption defense available.  We don’t claim to be experts in such products, but one example that comes to mind is aviation, where FDCA “conflict preemption principles” have already been applied in at least one case.  See Sikkelee v. Precision Airmotive Corp., 822 F.3d 680, 702-03 (3d Cir. 2016).

Sometimes bad litigation can make very good law.

Antitrust was our favorite course in law school.  That law school was located in the south side of Chicago, city of big shoulders and bigger minds (Posner, Easterbrook, et al.) who weren’t shy about subjecting antitrust law to flinty-eyed analysis.  It was exciting.  It was logical.  It focused on real world results.  Earlier Chicago School antitrust pioneers included Aaron Director, Ronald Coase, and Robert Bork.  You have probably heard of that last fellow.  His nomination to SCOTUS descended into a partisan circus resulting in his rejection, which was due as much to his beard and his lip-smacking over the SCOTUS case inventory “intellectual feast” as to his actual qualifications for the office.  His nomination also resulted in a new verb used for clobbering SCOTUS nominees: to “Bork” someone, especially someone who has a substantial written record.

 

We would hate to be Borked.

 

Applied correctly (i.e., Chicago-ly), antitrust law looks at how things really work and what really makes sense.  It is, in short, quite different from drug and device product liability law, where the realities of science, medical practice, and warnings are submerged in fanciful morality tales.  So it is with some exhilaration that we take this brief summer vacation away from Fosamax, Bausch, and the latest insane talc verdict to consider an antitrust case, Washington County Heath Care Auth., Inc. v. Baxter Int’l Inc., 2018 U.S. Dist. LEXIS 112064 (N.D. Ill. July 5, 2018).  That case is of interest to us because it turns on the real world realities of regulation and recalls.  Spoiler alert:  FDA regulation is extensive and voluntary recalls are not easy. (Nobody on the blog had anything to do with the case.  The opinions herein are wholly/only ours, not the parties’ or their lawyers’.)  

 

In Washington County Health Care Authority, the plaintiffs claimed that  the two largest producers of intravenous saline products violated the Sherman Antitrust Act by colluding to increase prices by initiating a series of bogus voluntary recalls that depleted the saline inventories of health care facilities throughout the nation.  The defendants filed a motion to dismiss, arguing that this theory is implausible.  They cited Twombly.  We on this blog often cite Twombly, but now we are reminded that Twombly was an antitrust case.  The defendants won their motion to dismiss, because the plaintiff’s theory that the defendants maneuvered their way into voluntary recalls was implausible.   Substitute the word “nutty” for “implausible” and you’d be a little closer to the truth.

 

Why was the plaintiffs’ theory nutty?  At different times, the two defendants issued voluntary recalls of IV saline due to leaks and the presence of particulate matter.  So, as an initial matter, you’ve got to believe that manufacturers would intentionally make up a story that their products were defective.  Who does that?  (As a DDL defense hack, we feel the Washington County Health Care Authority case pulling us through the looking-glass.  We’re used to hearing plaintiffs gripe that our clients should have recalled their products.  Can you spell damned-if-you-do-damned-if-you-don’t?) Further, to make out an antitrust case, there must be evidence that the two manufacturers agreed on this plan.  Was there any actual evidence of this agreement?  There was not.  The plaintiffs identified “parallel behaviors,” but those behaviors “are no more probative of an agreement than of independent self interested conduct.”  Moreover, the behaviors weren’t all that parallel. First, the timing was not quite consistent.  Second, one manufacturer recalled eight times as much product as the other.  Why would one conspirator confer such a benefit on its rival? 

 

There is another problem with the antitrust complaint.  Agreement or no agreement, the complaint contained no allegations suggesting that the reasons the manufacturers provided for the recalls were false.  The complaint did not say there weren’t leaks or there weren’t particulates.  Rather, the complaint characterized the defects as “inconsequential” or “technical,” thus permitting the defendants to engage in the recalls “without significant business or reputational risks.”  That contention is facially implausible, but it is also undercut by the FDA’s classification of the recalls as Class I or II, which are the two most serious recall designations.  A Class I recall occurs when “there is a reasonable probability that the use of, or exposure to, a volatile product will cause serious and adverse health consequences or death.”  21 C.F.R. § 7.3(m)(1).  A Class II recall “is a situation in which use of or exposure to, a violative product may cause temporary or medically reversible adverse health consequences or where  the probability of serious health consequences is remote.”  No rational manufacturer would willingly walk into those categories.  

 

Even more basically, and no matter what category is implicated, voluntary recalls “impose high upfront costs and invite FDA scrutiny of the very instrument of the unlawful agreement.”  FDA considers a removal of a product from the market to be a voluntary recall if it “regards the product as involving a violation that is subject to legal action e.g., seizure.” 21 C.F.R. § 7.46(a).  Thus, the court concluded that a complaint “premised on a theory that the defendants intentionally manufactured a public health crisis by orchestrating  bogus product recalls that would, despite the public health crisis and rigorous regulatory oversight of product recalls, escape the FDA’s attention, lacks facial plausibility.”   And then there is a consideration of the practicalities of recalls.  “Product recalls are expensive and draw attention from regulators, especially in the pharmaceutical industry.”  The recalling company must submit a detailed recall strategy for evaluation by the FDA, must actually implement recall notifications, and must vigilantly monitor the recall and provide periodic updates to the FDA (tracking the number of purchasers notified of the recall and their responses, among other things).  21 C.F.R. § 7.42; 21 C.F.R. § 7.53. None of that is cheap or easy. 

 

Finally, it is hard to say that the non-agreement to cook up an expensive, self-inflicted reputational wound succeeded in raising prices.  The complaint acknowledged that in response to the saline solution shortage, the FDA permitted saline to be imported from foreign manufacturers – “another fact that illustrates the implausibility of the plaintiffs’ theory that the defendants colluded in a manner that convinced their regulator to allow imports from foreign competitors.” 

 

Hurray for the Windy City, where smart professors and smart judges are happy to blow away frail antitrust fables.  Now if only those winds could also clear the terrain of silly drug and device cases.