Introduction to Biologics and Biosimilars Law and Regulation

Violations, Enforcement, and International Issues

Jim Johnson, Partner, Sidley Austin LLPOctober 7, 2021

FDA Enforcement Starts with the Prohibited Acts

• The Federal Food, Drug, and Cosmetic Act (FDCA) identifies numerous “prohibited acts” relating to drugs. 21 USC 331.

• The prohibited acts are the cornerstone of FDA’s statutory regime to “protect the consumer by applying the [FDCA] to articles from the moment of introduction (or delivery for introduction) into interstate commerce all the way to the moment of their delivery to the ultimate consumer.” United States v. Sullivan, 332 U.S. 689, 696 (1948).

• It is the doing or causing of one of the prohibited acts that can trigger a federal civil or criminal case under the FDCA

• Based on an underlying finding that a drug is adulterated, misbranded, or unapproved

• Strict Liability – No requirement for FDA to prove intent to commit prohibited act.

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Consequences of Noncompliance

• Form FDA 483• Regulatory Meetings• Untitled Letters• Warning Letters• Recalls• Voluntary Shutdown • Import Refusal/Import Alert• Withholds for Pending Applications

• Withdraw Approved Applications

• Administrative Detention/Seizures

• Injunctions/Consent Decree/Disgorgement

• Criminal Prosecution/Park Doctrine

• Whistleblowers/False Claims Act

• Press Release

Other Consequences• Commercial/contractual lawsuits

– Watson Laboratories. Inc. v. Rhone-Poulenc Rorer, Inc., 178 F.Supp 1099 (C.D.Cal. 2001) (FDA shutdown of drug manufacturing facility led to breach of contract)

• Product liability lawsuits– Chinese API manufacturer facing multiple lawsuits over allegedly tainted

product in Missouri, New Jersey, Illinois and New York, with allegations including gross negligence, fraudulent concealment, breach of contract, and unjust enrichment

• Investor/shareholder lawsuits– In Re Abbott Laboratories Shareholders Litigation, 2002 WL 1225183 (7th Cir.)

• Government contract issues

Seizure

• FDA has authority to seize, and seek the condemnation of, violative products. 21 USC 334.

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Injunction• FDA can also seek an injunction to force a company and individuals

to cease a particular action and/or to take a particular action. 21 USC 332.

• To prevail in an injunction, the government need not introduce evidence of a defective product.

• Instead, the government establishes its case by showing a deviation from the FDA requirements and a history of violative behavior.6

Injunction• An injunction may be the action of choice under the following

circumstances:

– there is a current and definite health hazard or gross consumer deception and seizure is impractical;

– there are significant amounts of product held by a person and a recall has been refused or would be inadequate to protect the public; or

– there are longstanding violations that have not produced a health hazard or fraud, but that have gone uncorrected through voluntary measures.

– An enforcement tool when multiple facilities at issue.

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Consent Decree

• Settles a Seizure or Injunction Proceeding

• A consent decree is entered by a court and is subject to ongoing supervision by the court.

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Key Consent Decree Provisions• Named corporate and individual defendants• The immediate shutdown of manufacturing at one or

more facilities• Significant third-party oversight/FDA approval before

resuming operations• Forward-looking shutdown authority• Forward-looking permanent injunction provisions• Liquidated damages and/or disgorgement of profits

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Criminal Prosecution

• The government has the authority to criminally prosecute a company and individuals when a company distributes violative drug product. 21 USC 333(a).– Strict liability misdemeanor.

– Intent for felony; or second offense.

• United States v. Park, 421 U.S. 658 (1975)– Responsible Corporate Officer can be held criminally liable.

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False Claims Act• GSK (2010)

– $750 million in payments for a felony FDCA plea and for False Claims Act civil penalties.

– DOJ investigation into violations of the FDCA based upon alleged failures to comply with GMP at GSK’s manufacturing facility in Cidra, Puerto Rico (Cidra), • A plant with a history of regulatory actions prior to the 2010 settlement.

– DOJ’s investigation was related to a qui tam action – a former GSK Global Quality Assurance auditor.

– The government pursued criminal charges against GSK for GMPviolations even in the absence of any evidence that the violative products harmed patients.

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False Claims Act• Ranbaxy (2013)

– $500 million in payments for a felony FDCA plea and for False Claims Act civil penalties.

– DOJ investigation into violations of the FDCA based upon alleged failures to comply with GMP at manufacturing facilities in India.• Plants had a history of regulatory actions prior to the 2013

settlement.

– DOJ’s investigation was related to a qui tam action – a former Ranbaxy executive.

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Key Players in FDA Enforcement• District Offices/Office of Regulatory Affairs (ORA)• Investigations Branch (IB)• Compliance Branch (CB)• ORA Office of Enforcement (OE)• Centers’ Office of Compliance• Office of Criminal Investigations (OCI)• Office of the Chief Counsel (OCC)• Department of Justice (DOJ)/U.S. Attorney’s Office

Evidence of Product Defect Not Required

• A violation does not require evidence that a product does not conform to its specifications, or any evidence of injuries from its use to be legally sufficient.– United States v. Bel-Mar Laboratories, Inc., 284 F. Supp. 875,

881-883 (E.D.N.Y. 1968)• A drug manufactured in violation of GMP is adulterated “regardless of

whether the drug is actually shown to be deficient in some respect”.

– United States v. 789 Cases of Latex Surgeons' Gloves, 799 F. Supp. 1275, 1286 (D.P.R. 1992)• “A device that was not manufactured in compliance with GMP is

adulterated, even if the device does not contain any actual defects.”

Correction of Issue Not Always a Defense• United States v. Richlyn Laboratories, Inc., 827 F.Supp 1145 (E.D.Pa. 1992)

– Preliminary injunction for GMP violations is appropriate despite improvements made where firm has a history of GMP violations and of promising and attempting to comply only upon receipt of FDA warnings and under threat of further legal action by FDA.

• United States v. Richlyn Laboratories, Inc., 822 F.Supp 268 (E.D.Pa. 1993)– Permanent injunction appropriate even though GMP regulations did not specify exact

conditions which would be acceptable to FDA investigator.

• United States v. Medwick Laboratories, Inc., 416 F.Supp 832 (N.D.Ill. E.D. 1976) – Not even complete cessation of alleged GMP violations will, of itself, afford ground for denying

injunctive relief.

But, FDA Must Prove Violations• United States v. Barr Laboratories, Inc., 812 F.Supp. 458 (D.N.J. 1993)

– Detailed probe into specific GMP requirements and whether firm was in or out of compliance.

• United States v. Bioclinical Systems, Ind., et al., 666 F.Supp. 82 (D.MD. 1987) – Finding that a sterility assurance level of 0.1% was not GMP in the tissue

culture media industry just because FDA said it was. Court determined that the requirement had to be in the GMP regulations or that FDA had to support it with adequate expert testimony at trial showing that it was in fact GMP in the tissue culture media industry (which FDA had failed to do). Court found it was not economically feasible to attain such level and denied government’s motion for an injunction.

But, FDA Must Prove Violations, Continued

• United States v. Utah Medical Inc., 404 F.Supp. 2d 1315 (D. Utah Oct. 21, 2005) – Denying a motion for preliminary injunction finding that government had not

met its burden of showing that firm was not in compliance with the device quality system regulations (QSR) and that the defendants were, in fact, in compliance with the QSR.

• United States v. Laerdal Manufacturing Corp., 853 F.Supp. 1219 (D.Or. 1994) – Finding that government had not met its burden in showing that GMP

violations required court to order defendant to cease manufacturing and distribution of defibrillators.

GMP Regulations—Not Specific and General

• Conceptual and sometimes difficult to pin down. Descriptive rather than prescriptive. General rather than specific. Regulates the manner of accomplishing something. For example:– Personnel shall have education, training, and experience to enable them to perform their

assigned functions.

– Each lot of components, drug product containers, and closures shall be sampled, tested, or examined as appropriate.

– Laboratory controls shall include the establishment of scientifically sound and appropriate specifications, standards, sampling plans, and test procedures to assure that drug products conform to appropriate standards of identity, strength, quality, and purity.

– Manufacturing and control processes shall be validated.

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Costs and Benefits of the Flexible Approach

• Flexibility allows manufacturer to comply with regulatory framework established by GMP in context of its particular products and manufacturing process.

• Flexibility allows regulations to keep pace with technological advances in manufacturing processes.

• Downside is the trade-off in clarity and specifics of what the regulations require. Therein lies potential conflict.

• Traditional GMP requirements not a perfect fit for some innovative, personalized products.

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Good Tissue Practice (GTP) versus Good Manufacturing Practice (GMP)

• 21 CFR Part 1271 Subpart D– Sets forth the requirements for the recovery, processing, storing, labeling, packaging, and

distribution of HCT/Ps– Focused on preventing the introduction, transmission, or spread of communicable diseases

• 21 CFR Parts 210 and 211, and 600-680– For therapeutic products that meet the definition of drug under the FDCA, they must comply

with 21 CFR Parts 210-211 and 600-680– GMP for Blood and Blood Components: 21 CFR Part 606– The regulations supplement the drug GMP regulations, and are promulgated under authority

of both the FDCA and the Public Health Service Act. See 21 CFR 210.2 and 211.1(b)

Nonclinical Research: Good Laboratory Practices (GLP)

• Nonclinical laboratory studies provide information on drug dosing and toxicity– In vitro or in vivo experiments of test articles in test systems under

laboratory conditions to determine their safety (21 CFR 58.3)

• Under 21 CFR Part 58, FDA requires researchers to use good laboratory practices for certain nonclinical laboratory studies with regard to:– Study conduct, personnel, facilities, equipment, written protocols,

operating procedures, and study reports

• FDA conducts inspections of facilities to ensure compliance with GLP

FDA’s GMP Requirements for Investigational Products

• More rigorous GMP requirements as you move from phase 1 to phase 2 to phase 3– Intended to assure that the characteristics and performance of the clinical

batches will be replicated consistently in the commercial batches

• Investigational new drugs used in phase 1 clinical trials are exempt from 21 CFR Part 211 pursuant to 21 CFR 210.2(c)– But exemption “does not apply to an investigational drug for use in a phase 1

study once the investigational drug has been made available for use by or for the sponsor in a phase 2 or phase 3 study . . . or the drug has been lawfully marketed”

• GMP requirements for phase 1 investigational new drugs established by regulatory guidance– Guidance for Industry—CGMP for Phase 1 Investigational Drugs (July 2008)

FDA’s GMP Requirements for Phase 1 INDs

• Establish the appropriate manufacturing environment:– A comprehensive and systematic evaluation of the

manufacturing setting (i.e., product environment, equipment, process, personnel, materials) to identify potential hazards

– Appropriate actions prior to and during manufacturing to eliminate or mitigate potential hazards to safeguard the quality of the phase 1 investigational drug

• Especially important for laboratory facilities that are not expressly or solely designed for the manufacture of drugs

Phase 1 GMP Requirements for CMOs

• If a sponsor or manufacturer initiates a contract with another party to perform part or all of the phase 1 investigational drug manufacturing, the sponsor or manufacturer and contractor are both responsible for assuring that the phase 1 investigational drug is manufactured in compliance with GMP

• Quality agreement in place• Oversight of CMO required—CMO is extension of

manufacturer

FDA’s GMP Requirements for Phase 1 INDs—Special Situations

• Multi product facilities– Generally, only one product manufactured in an area at a time– Same area may be used for multiple purposes where manufacturer has established

appropriate controls to prevent contamination, cross-contamination, and mix-ups—e.g., cleaning procedures, product/component segregation

• Biological and biotech products– Appropriate equipment qualification and controls in production needed to assure safety

related functions (e.g., viral clearance, virus/toxin attenuation, pasteurization) will perform as intended

– Additional controls should be accompanied by written justifications

• Sterile products– Appropriate controls for aseptic processing to ensure a sterile phase 1 investigational drug

CMC Information for Gene Therapy INDs

• Draft Guidance for Industry CMC Information for Human Gene Therapy Investigational New Drug Applications (INDs) (July 2018)– “Understanding and defining product characteristics that are relevant

to the clinical performance of the gene therapy may be challenging, particularly during early states of product development. Therefore, we recommend that you evaluate a number of product characteristics during early clinical development to help you identify and understand the CQAs [critical quality attributes] of your product. . . . This is especially important for sponsors of gene therapy products who are pursuing expedited product development programs.”

Accelerated Clinical/Approval Phases• Priority Review frequently granted in the U.S.• Accelerated clinical development—from Phase I directly to Phase III• Submission of BLA = readiness for commercial manufacturing

– Analytical methods– Manufacturing process– Facility and equipment– Personnel

• Clinical/Approval Phases can move fast—CMC/GMP can lag behind• Good Documentation Practice and Data Management essential

– Subject to pre-approval inspection/application integrity review– Bridging from development to clinical to commercial process/product

Challenges of Scaling Up• Supply chain can be a significant obstacle for scaling up• Short turnaround time for manufacturing

– High-degree of coordination between several parties– No room for error

• Shortages of critical raw materials• Understanding obligations regarding up-stream and down-stream

partners• Variability in product; but specifications set prior to scale up• Variability in patients (healthy donor vs unhealthy donor)

Challenges of Scaling Up• Underdeveloped Quality Systems

– Gaps in process validation are exacerbated during scale-up– Paper-based quality systems

• Adequate QA and QC staffing• Enough qualified operators

– High-pressure

• Communication with FDA when facing challenges• Who owns product?• To release or not release when a manufacturing deviation or out-of-

specification result occurs?– For personalized medicine, may only get one chance at making the product

FDA Foreign Inspections• FDA's authority to inspect foreign facilities and review records does not

come from FDA’s primary inspection authority, 21 USC 374, but from the agency’s ability to exercise enforcement over imported products, 21 USC 381, and commitments made by the sponsors of applications

• Therefore, during foreign inspections, FDA generally concentrates on records pertaining to products that are to be imported into the U.S. or on products that are seeking U.S. approval– But FDA investigators do also look to non-U.S. product to find GMP violations

• 21 USC 351(j): Prohibition against delaying, limiting, or refusing inspection– Refusal is per se adulteration of drugs

• 21 USC 311: Extraterritorial jurisdiction

FDA’s International Focus• Establishment of FDA Foreign offices• Increased inspections

– Pre-Approval Inspections and Surveillance/Compliance Inspections

• Dedicated cadre of foreign investigators• Global collaboration and mutual recognition• Focus on Supply Chain Integrity• Now more resources are being devoted to foreign inspections• than domestic• More finished drug product being manufactured in China; significant cell

and gene• FDA’s Focus on China and India

FDA’s International Focus

FDA’s Inspections in China have Increased Significantly

• 2007 – 14 Inspections

• 2012 – 51 Inspections

• 2016 – 165 Inspections

• 2017 – 156 Inspections

• 2018 – 125 Inspections