Legal Implications of a Deregulated FDA Posted on May 10, 2017 by Larry Bodine President Trump, who has stated that 75% to 80% of all governmental regulations are unnecessary. This article is reprinted from the Spring 2017 issue of The Trial Lawyer, which can be read online here. By Joseph DiNardo, Esq. and Erin Delaney, Esq. There is much uncertainty throughout the pharmaceutical industry as a new U.S. Food and Drug Administration (FDA) Commissioner is chosen and steps are taken to deregulate government agencies. President Donald Trump has stated one of his goals is to speed up the drug approval process to lower drug prices, promote competition, benefit small start-ups and bring innovative new treatments to market faster. However, many industry leaders are concerned that dramatically speeding up the current approval process could put patients at risk. This, in turn, could subject manufacturers to costly litigations. CEO of Pfizer favors deregulation The high cost of obtaining approval for a new drug, estimated at $2.6 billion, has been blamed for hindering pharmaceutical start-ups from entering the market. As a result, certain pharmaceutical executives, like the CEO of Pfizer Inc., have publicly favored deregulation, claiming it will help create more competition and lower drug prices. Others in the pharmaceutical industry disagree, opining that current FDA rules and regulations provide a level playing field for both small and large companies. Lowering the bar for drug approvals, they contend, would allow the wealthiest pharmaceutical companies to inundate the market with countless new drugs and associated advertising, eclipsing any potential advances of smaller companies. President Trump, who has stated that 75% to 80% of all governmental regulations are unnecessary, issued an executive order on January 30, 2017, aimed at significantly reducing them. The order requires all executive government agencies identify at least two regulations to be repealed for each newly-proposed regulation. FDA may not be affected While not immune to the executive order, the FDA, which regulates food, drugs, medical devices, blood donations, vaccines, biologic products, animal and veterinary products, cosmetics and tobacco products, may not be markedly affected by it. Many FDA regulations deal with process and merely codify or interpret the law. Accordingly, even if certain agency regulations were repealed, congressional mandates, including statutory safety and efficacy standards under the Food, Drug and Cosmetic Act (FDCA), would not change. Further, a number of regulations are no longer applicable and could be repealed without consequence. Arguably, some existing regulations could even increase protection and transparency for the public if rescinded. It is not the executive order that has the industry buzzing, however, but rather the potential actions of the new FDA commissioner under the Trump administration, who is likely to share the President’s goal of streamlining the FDA’s drug approval process to decrease the amount of time it takes for new drugs and medical devices to get to market. In an attempt to restructure and quicken the process, the commissioner may choose to institute various levels of approvals, focusing on biomarkers and short-term surrogate endpoints. Although legislation is in place that requires substantial evidence of a drug’s efficacy prior to it being sold in the marketplace, some suggest if the new commissioner were so inclined, the commissioner need only to interpret existing regulations loosely to weaken the efficacy standard. 12 years from lab to patient Under the current system, it takes a new drug, on average, 12 years to make it from a research lab to the patient. The FDA’s role is minimal throughout the preclinical research stage, which can take one to six years, but increases if the drug is successful and the FDA approves the commencement of human trials. Phase one allows researchers to test the drug for the first time in a small group of healthy volunteers, identifying side effects and basic product characteristics, adjusting dosages and evaluating safety. Phase two involves evaluating Phase two involves evaluating efficacy and short-term side effects for different dosages within a larger randomized or controlled group of people, often measuring biomarkers or laboratory results rather than clinical outcomes. Phase three, a large clinical trial, uses a group of people more similar to those to whom the product would be marketed to determine a risk/benefit ratio. Each phase takes about one to two-and-a-half years. Ninety percent of the drugs and biologics that proceed through clinical trials fail, whether it’s due to safety or efficacy. If a drug completes phase three of the trials, the manufacturer will file a New Drug Application with the FDA, getting a response, on average, in about 12 months for standard review and eight months for priority review. Nevertheless, according to 2016 data, the majority of new drugs are approved through an expedited approval process. The approval process has also already been shortened for certain drugs and medical devices by the 21st Century Cures Act, which was signed by President Barack Obama last year. Safety and efficacy Some experts argue that safety and efficacy go hand-in-hand; side effects that would never be approved for an over-the-counter drug may be approved for a drug that treats a life-threatening illness if it were proven to be an effective treatment. The type, nature, length and size of clinical trials are already becoming increasingly flexible, allowing deviations from the typical structure on a case-by-case basis in consideration of factors such as whether the condition is widespread, rare, chronic, short-term or life-threatening, the frequency of the symptoms, and the toxicity of the drug on test subjects. For instance, the FDA may approve orphan drugs, which treat diseases that typically affect less than 200,000 people, based on only one positive clinical trial and/or on surrogate endpoints, while mass-market drugs typically require two to three trials to prove safety and efficacy. In doing so, the FDA provides patients access to a drug, often where there was a previously unmet medical need, while the company continues to study its clinical benefits. Even so, the FDA maintains that “a randomized, controlled, clinical trial… of a size and duration that reflect the product and target condition remains the gold standard for determining whether there is an acceptable benefit/ risk profile for drugs and biologics.” A neurologist at the Mayo Clinic told Business Insider he commends the idea of speeding up the development of new treatments, but worries that in doing so patients could be exposed to “costly, ineffective and potentially dangerous drugs.” Likewise, the CEO of Ovid Therapeutics Inc., a pharmaceutical company that develops drugs for rare diseases, told Reuters, “any change at the FDA that allows drugs to be tried out on patients without clinical evidence is a damaging approach.” In a January 2017 FDA evaluation of 22 case studies with divergent results, early clinical studies were promising. Should the commissioner decide to base approval on initial safety reports or on surrogate endpoints, these drugs could have been approved. However, “[p]hase 3 studies did not confirm phase 2 findings of effectiveness in 14 cases, safety in 1 case, and both safety and effectiveness in 7 cases… In two cases, the phase 3 studies showed that the experimental product increased the frequency of the problem it intended to prevent.” The side effects of these drugs in phase three trials ranged from mere uselessness to serious adverse events, including death. Testing requirement Further, removing the requirement of extensive clinical testing could mean that courts will see more lawsuits and multidistrict litigations similar to those currently filed against 3M involving its Bair Hugger Forced Air Warming device. In that litigation, it is alleged that the company knew of the threat of contaminants due to the device, and the risk of infection, but failed to warn of the risk. The plaintiffs further allege that 3M continued to market its product as safe for use during surgeries and attempted to “conceal and discredit peer-reviewed scientific studies that undermined their ability to market the Bair Hugger.” Notably, the FDA approved the Bair Hugger device for use in 1987 under Section 510(k) of the FDCA, which is an expedited process that allows for less clinical testing if a substantially similar device is already on the market. It is also unclear how rules and regulations that promote a quicker approval process will affect the doctrine of federal preemption. Just like Bayer Corp. has done with some success in suits alleging injuries sustained from the implantation of Essure Permanent Birth Control, a manufacturer’s defense often rests on the fact that the FDA approved the drug or device’s design, manufacturing method, labels, warnings and instructions for use prior to its release into the market. This defense has held up in the past, especially for devices approved in the premarket approval process, based on the FDCA’s statutory requirements for safety and effectiveness, with defendants arguing the FDA subjected their product to the “highest level of scrutiny that exists in the federal regulatory system.” If the statutory requirements for a new drug’s approval are weakened, this defense may prove futile for pharmaceutical companies in future litigations to the advantage of plaintiffs. 40 MDLs Congruently, there are currently 40 multidistrict litigations pending with the Judicial Panel on Multidistrict Litigation in which plaintiffs allege the defendants engaged in false and misleading marketing and sales practices, including those for Vioxx, Tylenol, Celexa, Lipitor, Avandia and Plavix, to name a few. Allowing a pharmaceutical company to advertise a drug for potentially ineffective uses without proper testing could open the floodgates of similar litigation should the drug fail to work, or worse, cause fatalities, while costing patients hundreds of thousands of dollars per year. For example, Sarepta Therapeutic’s orphan drug, Exondys 51, which the FDA approved for use in September 2016 based on surrogate endpoints, runs patients about $300,000 per year with little to no insurance coverage, but it has not yet been proven effective. Industry heads such as the CEO of Alnylam Pharma and the head of research and development at Merck and Co Inc. have also expressed concern about how a manufacturer must be able to show insurers and physicians alike through a risk/benefit profile that their drug has value, rather than leaving them to make such a determination on their own. Further, even if deregulation lowers costs to pharmaceutical companies, there have been no assurances that these reduced costs will be passed on to patients. A first-to-market advantage will not do pharmaceutical companies much good if the product is too expensive for patients to afford and insurance companies are not willing to cover the cost. If current pre-market clinical requirements are reduced, it could arguably endanger patients, who are often the most vulnerable. It may also make it more difficult for pharmaceutical companies to differentiate effective products from new, less effective — or ineffective — treatments flooding an easy-to-enter market. On the other hand, greater flexibility could allow for innovative new products to enter the market faster and reach those waiting on new therapies or a cure. Until the right balance has been struck, the industry may be in for a bumpy, litigation-filled ride.