The Court of Appeals for the Second Circuit ruled Monday that Pfizer’s program to make its drug tafamidis more affordable violated the federal Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7(b)(2)(B).

The drug is currently the only drug approved by the United States to treat transthyretin amyloid cardiomyopathy, a rare and progressive heart condition, and costs about $225,000 per year. Because the condition primarily affects older Americans, most patients are covered by Medicare. However, patients are still responsible for a co-pay of about $13,000 per year. Pfizer’s proposed program would have directly covered a patient’s co-pay if they met certain criteria.

Pfizer initially consulted HHS for an advisory opinion. The Department determined that Pfizer’s proposal would violate the AKS, which prohibits “knowingly and willfully” offering or paying any “remuneration” to “induce” an individual to purchase a federally reimbursable healthcare product. Pfizer brought suit in the United States District Court for the Southern District of New York under the Administrative Procedure Act, challenging the agency’s interpretation of the AKS. The court granted summary judgment for the government, rejecting Pfizer’s argument which would require an element of “corrupt” intent to impose liability under the statute. The Court of Appeals for the 2nd Circuit affirmed the district court judgment.

The FDA will seek external review of its Food Safety and Tobacco offices, Commissioner Robert Califf announced Tuesday. The announcement is most likely a reaction to scrutiny over the handling of certain tobacco and food matters – specifically its regulation of e-cigarettes and infant formula.

Califf did not cite specific concerns, but stated that “the agency has confronted a series of challenges that have tested our regulatory frameworks and stressed the agency’s operations,” which prompted him to take a closer look at business operations.

The relevant offices will continue their work during the evaluation, including inspection activities, enforcement actions, and application review.

The Reagan-Udall foundation, an independent 501(c)(3) organization created by Congress to modernize FDA programs and regulations, will be working with an external group of experts on the evaluation and report its findings to FDA within 60 business days of initiation.

On July 6, FDA announced the availability of a final guidance for industry entitled “Hazard Analysis and Risk-Based Preventative Controls for Food for Animals.” The guidance is intended to help animal food facilities comply with the hazard analysis and risk-based preventative controls under Current Good Manufacturing Practices (CGMPs).

Animal food facilities currently must comply with the CGMPs found in 21 CFR § 507 unless an exemption applies. The recently issued guidance is intended to help animal food facilities develop a food safety plan in accordance with those regulations. Specifically, the guidance will assist industry:

  • Identify the biological, chemical, and physical agents that are reasonably foreseeable hazards in manufacturing, processing, packing and holding of animal food;
  • Understand the components of a food safety plan and the importance of those components;
  • Conduct a hazard analysis;
  • Identify preventative controls and understand how to apply controls;
  • Implement preventative control management components (i.e., monitoring and corrective actions); and
  • Understand and implement a food safety plan and maintain records associated with the plan.

FDA’s user fee programs for prescription and generic drugs, medical devices, and biosimilars must be reauthorized by September 30, 2022. On June 8, 2022, the House passed its version of the Food and Drug Amendments of 2022, and on June 14, 2022, the Senate HELP Committee marked up the similarly situated Food and Drug Administration Safety and Landmark Advancements Act of 2022 (FDASLA). Both bills increase the base fees for user fees; notably the medical device user fee reauthorization adds the potential for fee increases if FDA meets certain performance goals.

Similarities

Congress typically utilizes the must-pass legislation as a vehicle to include additional FDA-related items. For instance, both bills include reforms to FDA’s Accelerated Approval Program – an increasingly scrutinized program which allows for the early approval of a new drug based on a predicted clinical benefit, as opposed to demonstrating an actual clinical benefit. Both House and Senate versions also require sponsors to begin post-approval trials before bringing the product to market and aim to streamline the process for FDA to remove products from the market that fail to ultimately show a benefit.

Both bills also contain generic drug competition riders, including a proposal to require the FDA to issue explanations on its determinations as to whether a generic drug product is the same as an existing product and letting FDA approve a generic drug even if a brand name drug’s labeling changes during the review process.

Differences

The House bill includes provisions to improve diversity in clinical trials and to address limitations in FDA’s facility inspection authority. The Senate version includes provisions aimed at increasing dietary supplement and cosmetic regulation.

FDA today issued MDOs to JUUL Labs for all products currently marketed in the Untied States. In citing the rational for the Orders, FDA stated that the “applications lacked sufficient evidence regarding the toxicological profile of the products to demonstrate that marketing of the products would be appropriate for the protection of the public health (APPH).” What exactly constitutes APPH has not been determined.

All new tobacco products on the market without a premarket authorization are considered to be marketed unlawfully and subject to enforcement action. FDA previously stated that products for which no application is pending, for instance those that received a MDO, are among the Agency’s highest enforcement priorities.

FDA’s efforts to ensure that infant formula – often the sole source of nutrition for infants – is safe have typically exceeded the Agency’s approach to traditional food products. For instance, the Food and Drug Administration (“FDA” or “Agency”) has a policy of annually inspecting formula manufacturers, while traditional food facilities are inspected once every 3-5 years.

Because of safety concerns, FDA has historically approved only a few formulas for import. The United States imports only about 2 percent of baby formula a year – the rest is made domestically. Imported infant formula that has incorrect labeling or does not contain the FDA required nutrients may end up being placed on an FDA import alert or “red list” and can be detained without physical examination or seized.

FDA’s import authority doesn’t always result in a protection of public health, however, and instead can impose arbitrary requirements on legitimate products that can further compound supply shortages and adversely affect the public welfare. Furthermore, seizure authority is placed in the hands of local field officers who may incorrectly apply certain controls.

In response to the infant formula shortage, if the Agency is willing to waive some of the requirements that apply to foreign manufactured infant formula on a case-by-case basis, one has to ask if certain Agency requirements were necessary (or appropriately applied) in the first place. It seems that the Agency is realizing this – and is loosening restrictions on imports of formula manufactured abroad that may not have meet prior federal requirements but are still perfectly nutritious and safe for infants.

Key Notes:

  • The Ninth Circuit found that delta-8 THC products are federally legal under the plain meaning of the definition of “hemp” set by the 2018 Farm Bill, making it the first circuit to find such products lawful.
  • The Ninth Circuit affirmed a preliminary injunction in favor of the trademark holder on a delta-8 THC product, finding that because the products were federally legal, they constituted “lawful use” in commerce for trademark purposes.
  • Relying on the plain language of the statute, the Ninth Circuit rejected arguments that delta-8 THC was synthetic and illegal under DEA’s interpretation, or that substances legalized under the 2018 Farm Bill had to be for industrial use and not human consumption.

The U.S. Court of Appeals for the Ninth Circuit has weighed in on the legal gray area that hemp-derived delta-8 THC has inhabited since the 2018 Agriculture Improvement Act (“2018 Farm Bill”) legalized hemp nationwide. The court’s conclusion is likely to inspire cautious optimism across the hemp and hemp-products industry, and contrasts with the increasing number of states that are prohibiting or regulating delta-8 THC products at the state level.

On May 19, 2022, a three-judge panel upheld a preliminary injunction issued by the United States District Court for the Central District of California against Boyd Street Distro, LLC, which stands accused of infringing AK Futures’ trademark on “Cake”-branded delta-8 THC vapor products. On appeal, Boyd Street Distro, LLC argued that AK Futures did not have a protectable trademark for its “Cake” products because delta-8 THC is illegal under federal law.

Affirming the grant of the preliminary injunction, the Ninth Circuit held that the delta-8 THC in AK Futures’ vapor products “fit comfortably within the statutory definition of ‘hemp.’” The Ninth Circuit reasoned that the plain meaning of the 2018 Farm Bill’s definition of “hemp” only required that there be less than 0.3% delta-9 THC, and that this “seemingly extends to downstream products and substances, so long as their delta-9 THC concentration does not exceed the statutory threshold” and are a derivative or extract of hemp. Because AK Futures attested that its products were hemp-derived and contained less than 0.3% delta-9 THC, the Ninth Circuit found that they were lawful and that the preliminary injunction was merited. The court noted that its decision was “necessarily tentative given the nature of preliminary relief.” In other words, “it is entirely possible that AK Futures may ultimately fail to show that its products stay within the acceptable delta-9 THC limitations,” but for now AK Futures’ declaration was sufficient to obtain an injunction.

In reaching this conclusion, the Ninth Circuit notably rejected two common arguments, raised by Boyd, against hemp-derived delta-8 THC’s legal status. The first argument was that according to the DEA, delta-8 remains a schedule I substance because its method of manufacture is “synthetically-derived.” The court explained that while the Farm Bill’s definition of hemp is broad, it is “unambiguous and precludes a distinction based on manufacturing method.” In other words, any contrary agency language is overridden by clear statutory text. The court noted that a recent DEA letter clarified that “synthetic” delta-8 THC is produced “from non-cannabis materials,” indicating that the court and the DEA agree that “the source of the product—not the method of manufacture—is the dispositive factor for ascertaining whether a product is synthetic.” Put simply, regardless of its method of manufacture, if delta-8 THC is derived from the Cannabis sativa L. plant, it is not synthetic.

The court also rejected Boyd’s argument that the substances legalized by the Farm Bill must be for an industrial purpose rather than for human consumption. In response, the court simply refused to recognize a distinction that Congress did not write into the Farm Bill. The court explained that “[r]egardless of the wisdom of legalizing delta-8 THC products, [it would] not substitute its own policy judgment for that of Congress. If Boyd Street is correct, and Congress inadvertently created a loophole legalizing vaping products containing delta-8 THC, then it is for Congress to fix its mistake.”

While this case offers an encouraging glimpse into a potentially brighter future for hemp-derived delta-8 THC products, it is important to note that this is just one Circuit’s interpretation. Other courts may disagree, and individual states may still prohibit the sale or possession of delta-8 THC products, and other hemp-derived products, within their borders. Therefore, unless Congress says differently, businesses selling hemp-derived delta-8 THC products should continue to abide by individual state rules. Thompson Hine LLP is available to assist vapor businesses with their compliance needs.

Households worldwide are consuming less meat. The United Nations Food and Agriculture Organization reports a steady decline in the consumption of beef products over the past 60 years. In the United States, sales of meat products at grocery stores dropped twelve percent in the past year. Industry is taking note, as evidenced by more readily available plant-based options in supermarkets, restaurants, and fast-food chains. McDonald’s recently introduced the McPlantTM, a plant-based burger, and even prominent meat producers, such as Tyson Foods, have introduced their own plant-based lines. Continuing to explore innovation in a once meat-driven society, companies such as Tyson have also invested in startup businesses focused on producing cultured meat from animal cells.

One report has projected that the global cell-cultured meat market could reach $140 billion in the next decade, or about 10% of the global meat industry. While there were just a handful of cell-cultured meat startups in 2016, there currently are at least 70 worldwide. Additionally, there are approximately 40 life science companies selling cell lines and hardware that producers need to manufacture lab-grown meat.

In simple terms, cell-cultured, or cultivated, meat is a food derived from animal cell cultures that have been harvested and grown in a lab. The process begins by removing a small amount of tissue from an animal, a process that does not permanently harm the animal. The tissue is then cut to reveal cells, which are extracted and placed in a culture containing nutrients and other factors to assist with cell multiplication. The cells then convert into primitive muscle fibers, which grow on a lattice known as “scaffolding,” and eventually bulk up to form more robust muscle. Producers must then add food coloring, adipose cells, vitamins, and minerals to improve both the taste and appearance of the end product.

Cell-cultured meat proponents tout ethical, environmental, and safety advantages over traditional meat production. Specifically, there is no slaughter involved, production uses fewer resources such as water and land, there is potentially less air pollution, and the product is grown in a lab, a controlled environment that yields less potential for contamination. Skeptics claim that the additives needed to make the meat palatable negate the health advantages, and that the resources saved really do not amount to much. In fact, some reports have shown that the large-scale production of lab-grown meat could generate even greater concentrations of carbon dioxide over time.

The Singapore Food Agency became the first regulatory body to approve the sale of cell-cultured meat – chicken nuggets from the company Eat Just – through a “novel food” petition. On April 22, 2021, Eat Just teamed up with Asia’s leading food delivery service to launch the world’s first home delivery of cell-cultured meat products. With almost no agricultural land or animals, Singapore is a natural fit for this technology and its use could lead to the island becoming a recognized meat producer.

There currently are no approved cultivated meat companies in the United States, but products are expected to appear as early as 2023. Companies are working to both scale up their processes and make the food product produced competitively priced. Tyson Foods has invested in two cultured-meat startups, Upside Foods (formerly Memphis Meats) and Future Meat Technologies. It also launched Tyson New Ventures LLC, a venture capital arm of the corporation tasked with gathering ideas from entrepreneurs to help the company meet its sustainability goals.

To address the inevitable coming to market of these products, the U.S. Food and Drug Administration (FDA) and U.S. Department of Agriculture (USDA) have joined forces to regulate the industry. On March 7, 2019, USDA and FDA announced a formal agreement to jointly oversee the production of cultivated meat products. The agreement dictates that FDA will oversee the collection and growth of the cells – the production materials and processes and the manufacturing controls – using existing rules and regulations, including facility registration, Current Good Manufacturing Practices, and any other requirements applicable to substances that will become food (or components of food). USDA will oversee the cell harvest and the processing, packaging, and labeling of products.

Collaboration between FDA and USDA is not new and makes perfect sense to address the regulation of cell-cultured meat. Specifically, shared jurisdiction, appropriately divided, will help streamline regulatory responsibilities and utilize government resources and expertise more efficiently. The agreement also ensures a checks-and-balances approach, with each agency having an opportunity to utilize its knowledge in its respective area to spot growth potential and identify and target risks.

However, in the upcoming months USDA and FDA will likely face many questions as they develop their regulatory framework. Specifically, the very definition of “meat” traditionally accepted by the two bodies could come into question. Currently, USDA defines meat as the flesh of animals (including fish and birds) used as food that can be part of a healthful diet. FDA’s definition is similar, and its regulations define meat as part of the muscle of any cattle, sheep, swine, or goats. Do cell-cultured meat products fit within this definition? Additionally, what will be the application or approval process for these products and how long will approval take? Will manufacturers of cell lines or component materials be regulated the same way as end-product producers? How will the food products ultimately be labeled – will it be consistent with traditional meat products or will the labels need to identify the food as cultivated? And finally, will the standards developed apply across the board to meat, poultry, and seafood products?

FDA and USDA are encouraging producers to meet with government officials early in the process as part of a premarket consultation. The hope is that the meetings will be mutually beneficial as firms make procedural decisions and the agencies draw on feedback and results obtained to implement oversight policies.

On the FDA side, the Generally Recognized as Safe (GRAS) process may be used to approve and oversee the manufacture of cell-cultured meat. The GRAS notification process in the United States is less onerous than some approval processes abroad in that premarket approval is not required. Specifically, it is a voluntary process created to give companies a quick way to gain approval of their products. A food manufacturer can currently convene a “GRAS panel” of experts to determine if a product is GRAS. The panel can make an independent determination that the product is GRAS, or they can submit a notification to FDA with a summary of the substance, conditions of use, and basis for GRAS determination (scientific or common use). FDA will occasionally consult with USDA if the notice includes meat or poultry products.

On September 2, 2021, USDA issued an advanced notice of proposed rulemaking to solicit comments regarding the labeling of cell-cultured meat products. Importantly, USDA stated its commitment to hear from industry representatives and consider their comments when developing labeling regulations. USDA does not intend to issue any additional food safety regulations for the cultivated meat industry.

Ultimately, cell-cultured meat products will soon be available in the United States. It’s refreshing to see not only governmental bodies partnering together but also committing to work with industry to introduce high-quality, novel products to market.

This article was first published on Westlaw Today on March 24, 2022.