Today, led by Chief Justice John Roberts, the Supreme Court upheld the constitutionality of the Affordable Care Act in almost all respects. While upholding the controversial individual mandate to purchase health insurance, the Court did alter one important aspect of the law, however, in that it limited the government’s ability to withhold all Medicaid funds from a state contingent on the states’ acceptance of the significant Medicaid expansion called for under the Act. Under the Court’s ruling, a state must be allowed to opt out of the Medicaid expansion without threatening the state’s current Medicaid coverage and federal funding. The text of the decision can be found here.
On February 9, 2012, FDA issued its long-awaited draft guidance on biosimilar product development. The agency issued a suite of three guidance documents that collectively address scientific considerations and quality considerations in demonstrating biosimilarity to a reference product and offer a Q&A on the Biologics Price Competition and Innovation Act of 2009 (BCPIA). The scientific considerations document emphasizes a risk-based approach based on the totality of the evidence and recommends a “stepwise” approach to developing biosimilars. The quality considerations document, applicable to reference protein products, gives an overview of analytical factors to consider in assessing the biosimilarity of a therapeutic protein product. The third, as its name indicates, is meant to answer common questions. The documents area meant to help industry in developing generic equivalents to brand-name biologic drugs and have been anticipated since BCPIA was enacted as part of health care reform in March 2010. FDA has also updated its Biosimilars web page to include the draft guidance document and a February 15theducational webinar and presentation slides where the agency provided participants with an overview of the law, the FDA’s progress in implementation, and updates on next steps.
The Internal Revenue Service (IRS) published a Notice of Proposed Rulemaking (NPRM) on February 7, 2012, that provides guidance on how it will tax certain medical devices under the 2.3 percent excise tax provided for in the Affordable Care Act (ACA). Comments on the NRPM are due by May 7, 2012. A public hearing on the NPRM is scheduled for May 16, 2012.
The proposed regulations will affect manufacturers, producers, or importers who sell taxable medical devices after December 31, 2012. The NPRM defines “taxable medical devices” as those that generally meet the definition under the Federal Food, Drug, & Cosmetic Act (FFDCA) and are used in humans. Under the ACA, veterinary devices and those sold for export or further manufacture are automatically excluded. In response to industry concerns that this definition was too broad, the IRS guidance clarifies that all devices required to be listed by FDA are considered “taxable medical devices” and are subject to the excise tax unless the device falls within an exemption. Medical devices that are not required to be listed because they fall under an IDE or are for research purposes only also fall outside of the definition of “taxable medical devices,” because they are not subject to FDA listing requirements.
Significantly, the “retail exemption” exempts devices such as eyeglasses, contact lenses, and hearing aids that the general public typically purchases for individual use. The NPRM outlines the criteria that IRS will use when determining whether a medical device is typically purchased by the general public for individual use, which include how readily consumers who are not medical professionals can purchase the product and whether the product is primarily used in a medical institution or office or by medical professionals. The NPRM additionally contains a safe harbor provision for many over-the-counter products that would otherwise be considered “taxable medical devices.”
The tax has been controversial from the beginning and industry has been steady and strong in vocalizing its opposition, primarily complaining that the tax will hamper innovation that is already stifled by slow and inconsistent regulation of medical devices. In response to industry backlash, several lawmakers have introduced legislation to repeal the tax.
In the August 4 New England Journal of Medicine (NEJM), four high-level FDA officials authored an article that outlines FDA’s progress in developing the biosimilars approval standards, which FDA expects to issue later this year under the Biologics Price Competition and Innovation Act (BPCIA), which was passed as a part of the larger health care reform bill. In “Developing the Nation’s Biosimilars Program,” Dr. Steven Kozlowski (Director, Office of Biotechnology Products), Dr. Janet Woodcock (Director, Center for Drug Evaluation and Research), Dr. Karen Midthun (Director, Center for Biologics Evaluation and Research) and Dr. Rachel Behrman Sherman (Associate Director for Medical Policy) highlight that an entirely new framework will be required for evaluating biosimilars, one that requires much more data and analysis than the approval process for traditional generic drugs.
The article indicates that FDA is evaluating the biosimilars guidelines adopted by the European Medicines Agency (EMA) in 2005 and 2010, and that FDA will most likely adopt EMA’s product-specific approach, which creates different standards for different product categories. Additionally, FDA may allow “fingerprint” technology—which allows biosimilar drugs to be more easily compared to the reference biologic product—to substitute for full-scale clinical trials in some cases, depending on whether the mechanism of the biologic drug is well characterized. A Patent Docs article provides a more detailed summary of the NEJM article.
Section 4205 of the Patient Protection and Affordable Care Act of 2010 (PPACA) requires chain restaurants and vending machine operators with 20 or more locations or machines to provide calorie and other nutrition information to consumers. Although FDA’s statutory deadline to publish the proposed rules was March 23, 2011 (within one year of PPACA’s enactment), the rules, entitled Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments and Food Labeling; Calorie Labeling of Articles of Food in Vending Machines were published in the April 6, 2011 Federal Register and the public is invited to submit comments by July 5, 2011.
Congress’ failure to specify what kind of “exclusivity” applies to biologics has led to a heated debate between biologic drug innovators and generic drug makers and insurers, with bipartisan groups of lawmakers on both sides.
The Biologics Price Competition and Innovation Act of 2009 (BPCIA), enacted as a part of the of Patient Protection and Affordable Care Act (PPACA), provides for 12 years of exclusivity for biologic drug products, but fails to specify whether this exclusivity applies to data or marketing. Data exclusivity is the period of time after FDA approves a new drug before a competitor can rely on data submitted in the original approval process for its own filing. Market exclusivity is the period of time after FDA approves a new drug before a competitor can begin marketing a generic version of the drug.