Pharmaspective

FDA May Change Regulations to Allow Generics to Change their Product Warnings

By Frank Fazio and Genevieve Spires

@frankfaziopls    @gmspires

A single footnote in a brief filed by the Department of Justice has garnered a lot of attention this week, and understandably so.  The footnotes states: “This office has been informed that FDA is considering a regulatory change that would allow generic manufacturers, like brand-name manufacturers, to change their labeling in appropriate circumstances. If such a regulatory change is adopted, it could eliminate preemption of failure-to-warn claims against generic-drug manufacturers.”

The background of this statement is complex, but briefly, the United States Supreme Court ruled last year that plaintiffs claiming injuries as a result of their use of generic drugs may not sue generic manufacturers for their failure to warn of an alleged drug-related danger.  In deciding this, the Court found that these claims are preempted – and therefore barred – by federal law, largely because generic manufacturers are not permitted to make changes to their product labels under the current regulatory scheme (even in cases where they think stronger warnings are needed).

Under current FDA regulations, generic manufacturers cannot unilaterally update their product labeling.  Only brand-name manufacturers have the ability to update warnings on product labeling and must get FDA approval to make those changes.  Generic manufacturers are required to adopt the warnings of their  brand-name counterpart.

Any change in regulations to allow generics to change their labels will undoubtedly reopen the litigation floodgates and result in a slew of failure to warn cases being brought against generic drug manufacturers.   Likewise, such a rule can result in inconsistencies in warning information on the same drug which can certainly result in increased liabilities for those companies who fall behind in regard to labeling updates adopted by competitors.  And while we do not know the source of the information referenced in the DOJ brief, we will definitely stay tuned to see if Congress takes steps to alter the generic drug label regulatory scheme.

Second Circuit: Truthful Off-label Promotion of Prescription Drugs is Protected by the First Amendment

By Laura C. Conway

On December 3, 2012, the United States Court of Appeals for the Second Circuit ruled that a pharmaceutical sales representative could not be convicted for truthful off-label promotional statements made to physicians about a drug that had been approved by the FDA for other uses.  United States v. Caronia, 09-5006-cr  (2d Cir. Dec. 3, 2012). 

 

Caronia was a sales representative who promoted Xyrem, a drug that was approved for two specific uses and carried a “black box warning.”  Caronia detailed physicians who might prescribe the product and helped establish a speakers program where the drug was discussed.   During the course of a government investigation, Cardonia was recorded promoting the drug for unapproved uses, including unapproved indications and unapproved subpopulations.  The government did not allege that the statements at issue were untruthful or misleading. 

 

Caronia was convicted in the trial court for conspiracy to introduce or deliver misbranded drugs into interstate commerce, in violation of the Food, Drug and Cosmetic Act (FDCA).  The Second Circuit vacated this conviction.  The government, according to the court, incorrectly argued that off-label promotion alone constitutes “misbranding.”  The court found that the FDCA does not expressly prohibit the promotion of drugs for off-label use, but noted that promotional statements could constitute proof of an intent to use a drug in a manner that the FDA had not approved and was inconsistent with the label, which would be actionable under the FDCA. 

 

The court concluded that the government prosecuted Caronia not for his intent to sell misbranded drugs based on his statements regarding the drug’s off-label uses, which does not implicate the First Amendment, but rather for the act alone of making statements about off-label uses for the drug, which does implicate the First Amendment.  The court held that the First Amendment protects this type of commercial speech and that the government could not overcome the heightened scrutiny applicable to such commercial speech.  The court looked to the United States Supreme Court’s recent decision, Sorrell v. IMS Health, in which the Court held that “[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment."  131 S. Ct. 2653, 2659 (2011).   

 

In reaching its decision, the Second Circuit reasoned that the statements were truthful; the FDCA does not expressly prohibit the promotion of drugs for off-label use; physicians are permitted to prescribe the drug for unapproved uses, and persons other than pharmaceutical companies and their sales representatives may advise physicians of off-label uses of drugs that the FDA had approved for other uses.  The court interpreted the misbranding provisions of the FDCA as “not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs” and concluded that “the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.” 

 

The court noted that its decision was limited to FDA-approved drugs for which off-labels uses are permitted and that the FDA is authorized to regulate prescription drug marketing.  In addition, the court made clear that off-label promotion that is false or misleading is not protected by the First Amendment. 

 

            One of the three judges on the panel dissented from the decision and issued a lengthy opinion arguing that Caronia’s conviction should have been upheld.  In this dissent, the court disagreed with the majority’s interpretation of the government’s position and contended that Caronia was prosecuted because his speech revealed an intent to sell the drug for a use that was inconsistent with the drug’s label, not for the speech itself.  As such, the court noted, the First Amendment did not apply and did not protect Caronia’s statements.  Even if the First Amendment did apply, the dissent stated, the FDCA’s misbranding provision precludes promotion of off-label uses and passes constitutional muster.  The dissent argued that the majority opinion serves as a disincentive to pharmaceutical manufacturers to go through the premarket drug approval process and undercuts the purpose of the FDCA and the FDA to ensure the safety and efficacy of drugs before they are marketed.    

 

The Caronia decision is not binding on trial courts outside of the Second Circuit and likely is not the last word on this subject.  We anticipate a request for further review by the full panel of the Second Circuit or review by the United States Supreme Court.  Until the United States Supreme Court reviews the decision, off-label promotion is subject to prosecution outside of the Second Circuit.  In addition, both in and out of the Second Circuit, off-label promotion by sales representatives remains potentially actionable because, among other things, the government could argue that it is evidence of an intent to sell a misbranded drug.

Full Text of Decision: United States v. Caronia, 09-5006-cr  (2d Cir. Dec. 3, 2012)

Maryland Device Manufacturer Licensing – Form Over Substance

“The way to get started is to quit talking and begin doing.” - Walt Disney

 There are certain fundamental truths within state regulatory frameworks.  One such truth is that some statutes or regulatory requirements are inexplicable.  These requirements leave you scratching your head muttering to yourself “what were they thinking?”  The answer to that rhetorical question is that sometimes they weren’t thinking.  State legislative bodies make mistakes.  A statute or regulation generally makes sense to those who sponsor and support it.  It often isn’t until companies attempt to comply that the error or omission comes to light.

 It is my humble opinion that the Maryland legislature has made an honest error that will have a profound impact on the device industry.  Maryland has two different applications for distribution licenses.  As authorized by state law, FDA licensed manufacturers can use the abbreviated form.  Wholesalers, on the other hand, are required to use the long form which adds the extra requirements of fingerprinting, the posting of a surety bond or other form of security, and depending on the state of residence, obtaining certification from the National Association of Boards of Pharmacy ("NABP") as a Verified Accredited Wholesale Distributor (“VAWD”), a lengthy and costly process.

 So where is the error you ask?  A device manufacturer, unlike a drug manufacturer,  must file the long form application, post surety and may be required to obtain VAWD certification before they can be properly licensed to distribute prescription medical devices into the State of Maryland.  How can this be?  I believe that it is merely an oversight by the drafters of the Maryland statute.  The Maryland Statute provides that “the information and qualification requirements for obtaining a permit under this subtitle, beyond that required by federal law, do not apply to a manufacturer who distributes its own prescription drugs.”  Md. Code Ann., tit. 10, subtit. 34, 22 § 12-6c-03.   As prescription devices are a separately defined term, the State Board of Pharmacy has determined that it can apply the relaxed requirements only to prescription drug manufacturers and not to prescription device manufacturers.

 There is no legitimate legislative or public policy purpose in holding an FDA registered device manufacturer to a higher standard than the manufacturer of prescription drugs.  As the state licensing laws are in place to ensure the integrity of the drug supply and prevent diversion and abuse, less stringent requirements are often imposed on device manufacturers.

 When confronted with such an apparent injustice there are two paths you can follow.  The first is to begrudgingly comply and lament the injustice that has befallen you.  The second is to try to right the wrong.  If you have a governmental affairs department, call them.  If you are a member of AdvaMed, call them.  If you work with outside lobbyists, call them.  If you have access to none of those resources, then call the Maryland Governor’s office.  The fix is simple.  The addition of three simple words “or prescription devices” will bring the statute in line with its obvious intent.  Take action.

Frank Fazio

Democrats Set Sights on Medical Device Safety Regulation

“Forewarned, forearmed; to be prepared is half the victory.” - Miguel de Cervantes

Ink-like clouds suffused over our nation’s capitol as a murder of crows converges upon fresh carrion. As the atramentous nebulae congealed over the Hill, the icy, soul-sucking breath of regulators chilled the device industry like Harry Potter’s tormenting dementors. Yes, my friends, Congress is coming and it has medical devices locked in the cross-hairs.

There is no subtlety as the portents blaze like neon along a moonless desert highway. In 2011 there were four congressional subcommittee hearings on the FDA’s regulation of medical devices. Unsatisfied with their colleagues on the other side of the aisle, Democrats, led by Henry Waxman (D-CA) as ranking member of the Committee on Energy and Commerce (“ the Committee”), have been advocating increased regulation of medical devices. In an October 12, 2011 letter to Fred Upton (R-MI), Chairman of the Committee, Joseph Pitts (R-PA), Chairman of the Subcommittee on Health, and Cliff Stearns (R-FL), Chairman of the Subcommittee on Oversight and Investigation, Waxman and colleagues Frank Pallone (D-NJ), Diana DeGette (D-CO) and John Dingell (D-MI) urged the Committee to hold hearings on device safety in conjunction with the impending reauthorization of the medical device user fee program. The letter detailed safety concerns with brain stents and metal-on-metal hip implants. Waxman et al. contended that the hearings held in 2011 focused on delays in approval and overregulation while ignoring serious health concerns. You can read the full text at http://democrats.energycommerce.house.gov/index.php?q=news/energy-and-commerce-democratic-leadership-calls-for-further-examination-of-fda-medical-device-r

A second letter was sent on January 20, 2012 by Waxman, DeGette, and Dingell renewing their prior request for hearings. This communication detailed concerns over the “Lap Band” gastric band and urogynecologic surgical mesh. The authors concluded by requesting the Committee hold hearings to determine “whether FDA device regulation has been ineffective in protecting the public from dangerous medical devices” and urging the Committee to obtain documents in regard to the Lap Band and surgical mesh. Waxman again tied this review into the reauthorization of the Medical Device User Fee Act noting that “we [Congress] need to understand the safety of devices on the market, the tactics device manufacturers and others use to market these devices, and the extent to which these tactics may increase risks.” Full text of letter at http://democrats.energycommerce.house.gov/index.php?q=news/democratic-committee-leaders-call-on-committee-republicans-to-hold-hearings-on-dangerous-medica

If you remain doubtful that Democrats are setting up device safety as an election year issue, then you likely missed President Obama’s State of the Union Address. Buried deep in the President’s remarks, it inconspicuously passed in a heartbeat. But it was there and worthy of repeating:

“We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them, and buyers who knew they couldn’t afford them. That’s why we need smart regulations to prevent irresponsible behavior. Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don’t destroy the free market. They make the free market work better.” President Barack Obama’s third state of the union address to Congress, January 24, 2012.

It was there. Just four days after Representative Waxman’s second letter to the Committee, the President slipped device safety regulation into the State of the Union. There can be no doubt that democrats are setting this up for an election year showdown. Although the President’s remarks are couched in terms of safety, Waxman specifically tied safety into marketing tactics. There is certainly evidence that impending regulation will not simply address safety in the approval process but will further impose stricter regulatory oversight of device marketing.

You have been forewarned. In the immortal words of Rubeus Hagrid, “It's changing out there. ... There's a storm coming, Harry. And we all best be ready when she does.”

Happy New Year! The FDA provides guidance on responding to “public” unsolicited requests for off-label information.

By: Frank Fazio

While the pharmaceutical and device industries are enjoying the Holiday break, the Food and Drug Administration (“FDA”) released a draft guidance for comment that will soon be published in the Federal Register.  The document, entitled “Responding to Unsolicited Requests for Off-Label Information About Prescription Drugs and Medical Devices” (“Guidance”) provides much needed insight into FDA’s current thinking about those pesky “public” requests posted on web sites or in social media.

 The Guidance applies to unsolicited requests for information about unapproved uses of prescription drugs and biological products.  It also applies to medical devices marketed for a specific use without  product approval or clearance.  In regard to such devices, the FDA notes that a request for off-label information would include any use for which approval or clearance would be required.

 Through the use of various examples, the Guidance attempts to establish the boundary between solicited and unsolicited requests for off-label information.   Making that determination has always been the first step in deciding whether a response is appropriate.  The FDA concedes that internet and social media have provided new outlets whereby companies might be confronted with an unsolicited request for off-label information.  The Guidance classifies such requests as either non-public or public.  Non-public requests are those that are privately directed to the firm and are not visible to the public at large.  We all know what to do with those requests, although the Guidance reiterates and reaffirms the standard principles.  More interesting are the public requests.  The FDA defines these as “an unsolicited request in a public forum, whether directed to a firm specifically, or to a forum at large.”  The FDA notes that such requests can occur on company sponsored sites as well as on sites run by third-parties.  The FDA recognizes that it is in the interest of the public to permit the company to respond to such requests rather than relying on speculation and the misinformation that might be provided by other lay people on a thread.

 So how can the company respond in a compliant manner?  The FDA has determined that a response to a public request, whether on a company or third-party site, should be answered in a private manner.  The FDA cited concerns about the dissemination  of information to other individuals who did not make the unsolicited request as well as the enduring nature of a posted response.  The Guidance notes that a firm’s public response to a public request should clearly convey that the question pertains to an off-label use along with specific contact information for the medical or scientific personnel (e-mail, phone, etc.), so that the individual can follow up for additional information.  The individual providing such information must clearly disclose their involvement with the firm, and the response may not be promotional in any regard.  The public response should also include a direct link to the FDA approved labeling, but may not include links to any other information (e.g. firm or product websites, third-party websites, or other promotional materials).  Likewise, the URL for the labeling should not itself be promotional in any way.  By way of example, the Guidance notes that www.bestcancercure.com would not be an appropriate URL for the product label.  If the individual that made the public request then contacts the medical or scientific personnel, the request is then treated as any other non-public request.    

 The Guidance is well thought out and makes sense.  It permits firms to provide appropriate information in response to public requests without fear that such responses will lead to claims of off-label promotion.  The full text can be found at http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM285145

Happy New Year!

A Holiday Present from CMS: Proposed Regulations Implementing Sunshine

More than 2 months after the October 1, 2011 deadline, the Centers for Medicare and Medicaid Services (CMS) has finally released the proposed rule that would implement the “Transparency Reports and Reporting of Physician Ownership or Investment Interests” section of the Patient Protection and Affordable Care Act (often referred to as the “Sunshine Act”).   The proposed rule would require manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to report  payments or other transfers of value made to physicians and teaching hospitals.  It would also require manufacturers and group purchasing organizations (GPOs) to disclose physician ownership or investment interests.  Although the proposed rule is not scheduled to be published in the Federal Register until Monday, CMS issued a notice of proposed rulemaking yesterday and actually made available the unpublished rule.

So, what are the implications on timing for data collection and reporting?  In a lengthy preamble accompanying the draft rule, CMS is proposing that manufacturers and GPOs would not be required  to begin collecting data for federal disclosure on January 1, 2012, but that they will be able to wait until the final regulations are issued sometime in 2012.  As a result, manufacturers and GPOs would submit a disclosure report for only part of 2012 on March 31, 2013.  CMS will then aggregate these submissions and provide physicians and teaching hospitals 45 days to review the information before it is made publicly available by September 30, 2013.  Applicable manufacturers and other interested parties will have until 5 pm Eastern Standard Time on February 17, 2012, to submit their comments on the proposed rule electronically; by regular, express or overnight mail; or by hand or courier. 

Many in industry have been working frantically to meet the January 1, 2012 deadline to begin data collection, and perhaps some companies will forge ahead as planned and begin collecting, and perhaps voluntarily reporting their spend as of January 1.   For others, the proposed delay  may be a welcome reprieve and an opportunity to prepare for compliance, now with the added benefit of the proposed rule.  Either way, Happy Holidays! 

The Supreme Court to Determine Whether Pharmaceutical Sales Representatives are Entitled to Overtime Pay

By: Sandra González

    Since our previous post, Should Sales Representatives Be Entitled to Overtime Pay?, we have continued to track the circuit split between the Second and Ninth Circuits on the issue of whether pharmaceutical sales representatives are entitled to overtime-pay.  The United States Court of Appeals for the Second Circuit found that sales representatives were not exempt from the Fair Labor Standards Act (“FLSA”) overtime-pay requirements, thus, they were entitled to overtime-pay.  In re Novartis Wage and Hour Litigation, 611 F.3d 141 (2d Cir. 2010).  However, the United States Court of Appeals for the Ninth Circuit ruled that pharmaceutical sales representatives are not entitled to overtime pay under FLSA.  Christopher v. SmithKlineBeecham Corp., 635 F.3d 383 (9th Cir. 2011).  Notably, two weeks after the Ninth Circuit decided Christopher, the Supreme Court denied review of the Second Circuit’s decision.  The Court’s denial of certiorari left many wondering about the repercussions that the circuit split would have on the industry.  Last month, PhRMA filed an amicus brief with the Supreme Court in which the organization requested review of the Ninth Circuit’s decision.  In that brief, PhRMA stated that “[u]ntil this circuit split is resolved, PhRMA members are exposed both to potentially staggering retrospective liability and to uncertainty over whether they must undertake major restructuring that would have significant consequences for the industry and its employees[.]”

On November 28, 2011, the Supreme Court agreed to review the Ninth Circuit’s case.  Upon review, the Supreme Court will examine two issues:  (1) whether deference is owed to the Secretary of the U.S. Department of Labor’s interpretation of the FLSA’s outside sales exemption and related regulations; and (2) whether the FLSA’s outside sales exemption applies to pharmaceutical sales representatives. 

Regarding  the first issue, the Department of Labor (“Department”) sided with the sales representatives in Christopher, stating that the outside sales exemption in the FLSA does not apply to pharmaceutical sales representatives.  Furthermore, in its brief to the Supreme Court, the Department stated that the Ninth Circuit’s opinion undermines “several decisions of the Supreme Court . . . instructing courts to defer to an agency’s interpretation of its own regulation unless ‘that interpretation is plainly erroneous or inconsistent with the regulation[.]’”  The Department argues that by denying deference to the Secretary’s interpretation, the Ninth Circuit has wrongfully expanded the definition of the outside sales exemption. 

The second issue will turn on the Supreme Court’s classification of the activities that pharmaceutical sales representatives engage in as “promotional” or as “making sales.”  If the Supreme Court rules that pharmaceutical sales representatives engage in promotional activities and do not “make sales,” the FLSA outside sales exemption would no longer apply and, absent application of another exemption, such as the administrative exemption, pharmaceutical companies would face multi-billion dollar repercussions. 

The Supreme Court will likely decide the issue in June of 2012.  Until then, we are left with a number of questions:  Why did the Supreme Court deny review of the Second Circuit’s decision, but grant review of the Ninth Circuit’s ruling?  Does the Supreme Court agree with the Second Circuit’s ruling?  If so, what are the implications for pharmaceutical companies?  Should companies start rethinking the industry’s current selling model and their current organizational structures? 

Supreme Court to Hear Cases on Health Care Reform Law

 

On November 14th, 2011, the Supreme Court announced in an order that it will hear arguments on three cases from the 11^th Circuit challenging the constitutionality of the Patient Protection and Affordable Care Act (“ACA”): National Federation of Independent Business v. Kathleen Sebelius, Secretary of Health and Human Services, et al.; Florida v. Department of Health and Human Services; and Department of Health and Human Services v. Florida.  The Court’s decision to hear these cases over the other health care appeals cases may be due to the involvement of more than half of the states and the inclusion of the most prominent legal questions raised about the legislation. 

 The Court will hear arguments on the following legal questions: 1) the constitutionality of the mandate that all Americans buy health insurance, 2) whether the insurance mandate, if deemed unconstitutional, is severable from ACA, allowing the remainder of the law to survive, 3) the legality of the expansion of Medicaid due to the potential coercive impact on states and whether such action exceeds Congress’s spending clause power, and 4) whether or not the Court has jurisdiction to hear this case in the absence of taxes being assessed and paid .

 The Obama administration has expressed its confidence in the survival of the health care reform law.  It is reported that Health and Human Services Secretary Kathleen Sebelius has stated, "We're very pleased that they have indeed decided to take the case…We're confident that the law is constitutional, will be upheld as constitutional."

 In the National Federation of Independant Business case before the Court, the 11^th Circuit found the individual mandate unconstitutional, but overturned the lower court’s decision and held that the individual mandate was severable from the remainder of the health care law.  For the life science industry, the issue of severability is of primary interest.  In the event the insurance mandate is determined to be unconstitutional and, secondarily, the mandate non-severable, it is a possibility that the entire healthcare law, including the sunshine provisions, might not survive.  We do not believe, however, that this is the expected outcome. 

 Come January 1^st, 2012, the life sciences industry will face requirements to begin capturing reportable data to comply with the Physician Payment Sunshine Act.  While the Centers for Medicare and Medicaid Services (“CMS”) submitted the draft regulations to the Office of Management and Budget for review on November 17^th, the life sciences industry still awaits an opportunity to view the draft regulations and the issuance of final regulations.  Yet, it does appear that CMS is making progress toward the release of final regulations.  Further, in the unlikely event that Court finds the individual mandate unconstitutional and  non- severable, does anyone believe that Senators Grassley and Kohl will give up the battle for transparency and disclosure? 

CMS Called to Task for Missing October 1st Deadline

  October 1^st came and went with no word from the Centers for Medicare and Medicaid Services (“CMS”) regarding the long awaited Federal Physician Payments Sunshine Act (“Sunshine Act”) regulations.  While many in the life sciences industry would have been shocked if CMS issued the regulations by the October 1^st statutory deadline, U.S. Senators Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.) were quick to make their “severe disappointment” in CMS publicly known.  On October 3^rd, Senators Grassley and Kohl, as authors and sponsors of the Sunshine Act, issued a joint letter to CMS (with Senator Grassley posting the same on his website) publicly shaming CMS for missing its deadline and pushing CMS to provide answers for its delay.

 The Senators’ letter stressed the importance of providing the regulated community with guidance and adequate time to comply with the disclosure requirements of the Sunshine Act.  The letter cited the burden and increased costs that may be incurred by life science companies due to the delay in issuing the required regulations, particularly smaller companies that may be awaiting guidance before developing and implementing disclosure policies and processes.  The Senators drew attention to the seeming lack of consultation with the regulated community and consumer advocates in advance of preparing the pending Sunshine Act regulations.  Potential impacts to the general public were also raised, however, the  industry impact was their primary focus.

 CMS advised the Senators on September 23^rd that it had provided the proposed regulations to the Office of Management and Budget (“OMB”) for review.  Aside from harshly shaming CMS, the Senators demanded answers to the following by Friday, October 14^th:

•  What is the timeline for implementing the Sunshine Act?
• When did CMS originally send the proposed rule to the OMB?  When did CMS conduct any subsequent follow-up with OMB and for what?
• Why did CMS fail to meet the statutory deadline?
• What is the anticipated release date for the preliminary regulations? How long will the regulations be open for comment? What is the time line for issuing final regulations?

 Will the Senators’ letter shame CMS into action? Should we expect CMS to issue regulations by the end of the year? What percentage of the life sciences industry has not yet begun planning for the federal disclosure requirements?  Will CMS’ eventual issuance of regulations motivate the last industry hold outs to develop and implement procedures to comply with the Sunshine Act?  We will all eagerly await the CMS response and what action, if any, is taken by the Senators or Congress.

Stealth Drugs; The Necessity of Drug Distribution Permits for Devices.

 
It is generally known that a prescription drug manufacturer must obtain state licenses in order to legally distribute product.  The number of licenses required varies depending upon the method of distribution - a facility that physically ships product requires licenses in more jurisdictions than a manufacturer that uses a third-party logistics provider (“3PL”) to ship its products.  But what about devices?  What device companies are beginning to realize is that they too have licensing requirements in numerous states.  The state statutes and regulations do not, however, always make this clear and several jurisdictions have stealth requirements for device manufacturers that can elude even a well trained eye. 

Kentucky is one such stealth device jurisdiction.  A cursory reading of the Kentucky statute would give device manufacturers reason for celebration – “A wholesale distributor shall be licensed by the board under this section prior to engaging in the wholesale distribution of prescription drugs in the Commonwealth.”  Clearly the device company can skip over Kentucky and move on to the next state.  Or can it?  Let’s turn next to the definition of “wholesale distributor.”  Surely this will provide some additional assurances.  Kentucky defines a wholesale distributor as “an entity engaged in the wholesale distribution of prescription drugs.”  “Even better” you might think.  Surely the term “prescription drug” is clear and unambiguous.  Everyone knows that a device is not a drug.

Let’s check and see where that leads us.  The definition of drug includes “Articles, other than food, intended to affect the structure or function of the body of man or other animals.”  Looking further, we do not see the familiar language that it excludes devices.  The breadth of this definition might raise some concern for a device company.  But wait, the wholesaler licensing requirements specifically pertain to prescription drugs.  Under Kentucky law a “prescription drug” is any “drug” required by federal law to be labeled “Caution, federal law prohibits dispensing without a prescription.”  It also includes any “drug” required to be labeled “Rx Only” or “Rx” or which is “to be dispensed only pursuant to a prescription drug order or is restricted to use by practitioners.”

Looking back at a prescription device, it is an “article intended to affect the structure or function of the body of man” and it is labeled either Rx Only or is restricted to dispensing pursuant to prescription to use by a practitioner, right?  The Kentucky Board of Pharmacy has, in fact, interpreted the above provisions in determining that a device manufacturer or distributor does require a license notwithstanding the fact that the word “device” is not used in any of the applicable statutes or regulations that support that determination. 

Other states have similar requirements.  A device manufacturer  or distributor that ships its own product requires just under 20 state licenses whereas a device manufacturer that utilizes a 3PL requires just under 15 state licenses.  As prosecutors and regulators turn their attention to the device industry, state licensing is just one of many areas that device companies may need to address.