FDLI Publications: Food and Drug Law Journal 55-3

Volume 55 Issue 3

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> The Case for a Substantial Evidence Amendment to the Informal Rulemaking Provision
of the Federal Food, Drug, and Cosmetic Act
> Biotechnology and the Food Label: A Legal Perspective
> PBMs and a Medicare Prescription Drug Benefit
> Pharmaceutical Patent Settlements: The Antitrust Risks
> The International Harmonization of Human Tissue Regulation: Regulatory Control Over Human Tissue Use and Tissue Banking in Select Countries and the Current State of International Harmonization Efforts
> A Comparison of United States and Canadian Laws as They Affect Generic Pharmaceutical Market Entry
> Challenging the Viability of FDCA-Based Causes of Action in the Tort Context:
The Orthopedic Bone Screw Experience
> Defining "Least Burdensome Means" Under the Food and Drug Administration Modernization Act of 1997
> Access to Pharmaceuticals Under Medicaid Managed Care:
Federal Law Compiled and State Contracts Compared

The Case for a Substantial Evidence Amendment to the Informal Rulemaking Provision of the Federal Food, Drug, and Cosmetic Act
Author: Eve E. Bachrach
Issue: 55 Food and Drug Law Journal 293-300 (2000)

Through a series of historical accidents, the Food and Drug Administration (FDA) is one of the last remaining health and safety agencies whose binding substantive rules are not required to be supported by "substantial evidence." Most FDA rules are promulgated pursuant to the "informal rulemaking" provisions of section 701(a) of the Federal Food, Drug, and Cosmetic Act (FDCA), and are subject to the "arbitrary and capricious" standard of review. Thus, rules can be adopted with scant evidentiary basis, yet can withstand court challenge because of the deference to the expertise of the agency that this standard requires. Over the past twenty-five years, Congress has demanded improvements in rulemaking at a variety of agencies by making their rulemaking subject to the substantial evidence standard. The arbitrary and capricious standard is an historical relic. It is past time for Congress to make FDA rulemaking subject to the substantial evidence standard, particularly because the FDCA is a criminal statute and violations can result in vicarious criminal liability. FDA regulations not supported by substantial evidence should not be sanctioned based on the obsolete notion that uncritical deference is due an expert agency. FDA should be required to bring its expertise to bear by developing a rulemaking record that is supported by substantial evidence.

Biotechnology and the Food Label: A Legal Perspective
Author: Fred H. Degnan
Issue: 55 Food and Drug Law Journal 301-310 (2000)

Should the food label serve to communicate required information about whether food is the product of biotechnology or contains ingredients that are produced through biotechnology? Unlike most other regulatory authorities throughout the world, the Food and Drug Administration (FDA) has resisted the urgings of interested parties to require such information to appear on a full-scale basis. This position has been based on FDA's science-based conclusion that there is nothing inherently unsafe or mysterious about food biotechnology, and on the labeling policies and precedent FDA has developed over the years in invoking its statutory authority to require information to appear on the food label. At the heart of this policy and precedent is the notion that to be required to appear on the food label, information must be essential and material to ensure consumers the ability to choose food wisely.

PBMs and a Medicare Prescription Drug Benefit
Author: Joshua P. Cohen
Issue: 55 Food and Drug Law Journal 311-320 (2000)

Pharmacy benefit managers (PBMs) have become important players in the managed healthcare arena, as middlemen for health plan sponsors, drug manufacturers, and pharmacies. PBMs obtain pharmacy discounts and rebates from drug manufacturers that have helped to stem the rise in prescription drug prices. At the same time, PBMs implement drug utilization management and also are involved increasingly in disease management. This paper describes the evolution of PBMs and assesses the ways in which PBMs could facilitate the process of adding a Medicare prescription drug benefit.

Pharmaceutical Patent Settlements: The Antitrust Risks
Author: David A. Balto
Issue: 55 Food and Drug Law Journal 321-342 (2000)

Patent settlements between generic and innovator firms are increasingly receiving scrutiny by the Food and Drug Administration (FDA), the courts, and Congress. Some have called these settlements an effort by generic and innovator firms to "divide markets" or "split monopoly profits." Not surprisingly, the settlements have been attacked under the antitrust laws, and there have been calls for reform of the Hatch-Waxman Act provisions that create a greater incentive for these settlements. This article explains how these settlements should be analyzed under the antitrust laws and when competitive problems are posed. It also reviews recent Federal Trade Commission (FTC) enforcement actions and efforts by FDA to reform the exclusivity regulations that complicate the competitive impact of these settlements.

The International Harmonization of Human Tissue Regulation: Regulatory Control Over Human Tissue Use and Tissue Banking in Select Countries and the Current State of International Harmonization Efforts
Author: Barbara Indech
Issue: 55 Food and Drug Law Journal 343-372 (2000)

Human tissues play a critical role in modern medicine. Beyond immediate therapeutic uses, tissues (unlike organs) may be stored indefinitely in traceable and often coded form and later used for such purposes as biomedical research, among others. Both living donors and cadavers serve as sources of human tissue.

But whether procured from a living or deceased donor, subjected to sophisticated tissue engineering or used in transplantation in its unprocessed, basic form, multifaceted human tissue is no longer limited by national borders. In this era of globalization, the increasingly international scope of human tissue use presents new challenges in cross-border disease control. In response, the regulatory authorities of several industrialized countries, along with consumer and industry leaders in the biomedical field, are now developing a globally accepted set of standards governing human tissue use and tissue banking.

This article examines the ethical considerations associated with human tissue use, human tissue regulation in several countries, as well as regionally by the European Union, and the current multi-country effort toward international harmonization of human tissue use and tissue banking. The article concludes by highlighting a number of factors that should be considered in this endeavor.

A Comparison of United States and Canadian Laws as They Affect Generic
Pharmaceutical Market Entry
Author: Edward Hore
Issue: 55 Food and Drug Law Journal 373-388 (2000)

This article briefly compares U.S. and Canadian laws in light of the recent attention paid by political leaders in the United States to alleged differences between Canadian and U.S. drug prices. There are similarities as well as differences in the laws of Canada and the United States concerning market entry of generic drugs, although the generic market share, by prescriptions filled, is about the same in both countries. The article summarizes the similarities and differences, briefly introduces the relevant statutes, regulations, and case law, and provides some historical background. In conclusion, it notes that innovative drug manufacturers enjoy rates of return on equity far exceeding all other industry sectors, even net of research and development costs -- a remarkable financial performance due at least in part to the laws the article describes. The affordability of medicines will continue to be a lively political issue in both countries, particularly as their populations age.

Challenging the Viability of FDCA-Based Causes of Action in the Tort Context:
The Orthopedic Bone Screw Experience
Author: James M. Beck & John A. Valentine
Issue: 55 Food and Drug Law Journal 389-434 (2000)

More and more frequently, product liability and other tort actions against makers of FDA-regulated products allege causes of action implicating the Federal Food, Drug, and Cosmetic Act (FDCA), either directly, as "negligence per se," or as a claim that the manufacturer submitted a fraudulent submission to the Food and Drug Administration (FDA). The legal and factual underpinnings of such claims and the defenses to them are explored in this article using the facts of the In re Orthopedic Bone Screw Products Liability Litigation. The authors, who are veterans of this litigation, analyze many federal and common law legal propositions that have been developed and litigated during the more than six years that the uniquely FDCA-focused bone screw litigation has continued. Included is a preview of arguments that the Supreme Court will hear this coming term concerning preemption of "fraud on the FDA" tort claims in the Bone Screw appeal, Buckman Corp. v. Plaintiffs Legal Committee, that the Court recently accepted.

Defining "Least Burdensome Means" Under the Food and Drug Administration
Modernization Act of 1997
Author: John J. Smith & Anne M. Shyjan
Issue: 55 Food and Drug Law Journal 435-448 (2000)

Statutory law underlying the Food and Drug Administration's (FDA's) regulatory system recently underwent substantial change with the enactment of the Food and Drug Administration Modernization Act of 1997 (FDAMA). This legislation was designed to improve regulatory efficiency while ensuring that devices are safe and effective for their approved indication(s). To accomplish this goal, FDAMA requires that FDA employ the "least burdensome means" necessary when evaluating new devices for approval. The appropriate definition of this new regulatory term is currently a matter of debate between FDA and industry. By contributing its broad clinical and scientific experience, as well as its relatively neutral position in the debate, the medical community can assume a key role in resolving this issue. In doing so, physicians and other health providers can increase access to important new device technologies and ultimately improve patient care.

Access to Pharmaceuticals Under Medicaid Managed Care:
Federal Law Compiled and State Contracts Compared
Author: Emile L. Loza
Issue: 55 Food and Drug Law Journal 449-476 (2000)

Now that Medicaid has become such a large purchaser of pharmaceuticals in the U.S. market, there is a critical need for drug manufacturers, state Medicaid agencies, medical providers, and consumer advocates to better understand the law as it applies to Medicaid drug expenditures and access to pharmaceutical products under managed care—with the ultimate goal being to improve access to pharmaceutical products. By examining how the federal, state, and private entities interact and participate in drug programs under Medicaid managed care, this paper illuminates the multifaceted relationships between the Health Care Finance Administration, Food and Drug Administration, state Medicaid agencies, managed care organizations, and drug manufacturers. This paper also presents a compilation of federal law governing Medicaid managed care and drug products and compares it to state Medicaid managed care companies concerning pharmaceuticals. This comparison between federal and state laws reveals deviations that can affect the access of beneficiaries to pharmaceutical products. By examining how the federal, state, and private entities interact and participate in drug programs under Medicaid managed care, this paper illuminates the multifaceted relationships between the Health Care Finance Administration, Food and Drug Administration, state Medicaid agencies, managed care organizations, and drug manufacturers. This paper also presents a compilation of federal law governing Medicaid managed care and drug products and compares it to state Medicaid managed care companies concerning pharmaceuticals. This comparison between federal and state laws reveals deviations that can affect the access of beneficiaries to pharmaceutical products.