These are my notes from class meeting 7 of Harvard Law School’s Food and Drug Law course, led by Prof. Peter Barton Hutt on January 11, 2017. Reading for today’s class meeting is pp. 751-775 and 834-957 of Food and Drug Law 4th Ed..

This class continues lecture 6’s introduction to new drug development, covering expedited development programs, expanded access, and post-approval issues. We then proceed into labeling and advertising.

Expedited programs

FDA has five different programs to help expedite development of drugs for serious (either life-threatening or severely debilitating), usually rare conditions, summarized in this table:

program how to qualify what the sponsor gets when to apply
Accelerated Approval Drug must affect a surrogate endpoint (biomarker or short-term clinical outcome) deemed “reasonably likely” to predict long-term clinical benefit. Earlier marketing approval based on the surrogate endpoint, with an obligation to then confirm long-term clinical benefit in a post-marketing study. NDA
Fast Track† Drug must address unmet medical need for serious condition and must have promising preliminary (usually preclinical) data. Earlier and more frequent meetings with FDA, and rolling review (sections of the NDA can be submitted and reviewed as they are completed, rather than all at once). with IND or anytime thereafter
Breakthrough Therapy Drug must address a serious condition and have preliminary clinical evidence of a “substantial improvement” over existing therapies. Increased opportunities for meetings with FDA and guidance on clinical trial design; rolling review. end of Phase II
Priority Review Drug offers “significant improvement” over existing therapies. NDA is reviewed in 6 months or fewer NDA
Orphan Drug First-in-class drug intended for treatment of a condition affecting <200,000 people in the United States. $2M NDA user fee waived; eligibility to apply for orphan drug grants; 50% tax credit on drug development costs; FDA assistance with clinical protocols; 7 years market exclusivity (see discussion below). pre-IND or anytime thereafter

Credits: Margaret Orseth contributed to compiling this table.

†The above table describes current usage of the term “fast track”; note that in the 1990s this term was used to refer to what we now call Accelerated Approval.

The 7 years of market exclusivity for products granted Orphan Drug designation originally applied only to unpatentable drugs, in other words, it created a financial incentive to develop drugs where there had been none. In 1985, Congress expanded it to apply even to patentable drugs, but it was unclear what exactly market exclusivity meant in this case. The courts soon decided in Genentech, Inc. v. Bowen (1987) that market exclusivity only means FDA will not approve other NDAs for the exact same molecular structure. After the discovery of prion transmission through cadaveric human growth hormone prescribed for short stature, nascent biotech companies rushed to win approval for bacterially expressed recombinant hGH. In 1985, Genentech won orphan drug designation for the first-ever approved recombinant hGH product, dubbed Protropin, but a year later, FDA also approved Lilly’s version, called Humatrope. Genentech sued, claiming this violated the orphan drug status it had been given. The D.C. District Court held that the two drugs were different, because Genentech’s verison retained an N-terminal methionine, whereas Lilly’s did not.

Expanded Access

The term expanded access will be used here to generally refer to various mechanisms by which a drug under IND, not yet approved, can be used for treatment of patients outside of a research or clinical trial concept. (This term is defined and used by FDA, whereas other terms such as compassionate use, which are used informally, are not officially defined by FDA.)

The IND mechanism was intended solely to allow a drug to be distributed to clinical trial sites. FDA regulations since 1963 have clarified that this means drugs under IND should never be sold, only given for free, and only in the context of a trial to gather data ultimately for an NDA submission. While these regulations remained in place for many years, FDA in practice did not enforce them for diseases with no alternative therapy, effectively allowing expanded access. In response to pressure over HIV/AIDS, FDA finally began to amend its regulations in the 1980s, and FDAMA in 1997 finally codified specific expanded access categories. The most recent Guidance is Expanded Access to Investigational Drugs for Treatment Use, from June 2016.

FDA has set out three basic criteria, all of which must be met for expanded access to be allowed through a mechanism called a Treatment IND:

  1. The patient must have a severe or life-threatening condition with no viable alternative therapy.
  2. The risks to the patient must be reasonable, and justified in light of potential benefit.
  3. Giving the drug to the patient must not interfere with clinical trials to support an NDA.

Provided that those criteria are met, FDA then stratifies types of expanded access provisions by patient population size — individual, intermediate size, or widespread use — as well as by rationale (emergency or non-emergency). These expanded access uses must all be submitted either as separate INDs or as protocols amended onto an existing IND. Emergency expanded access uses are sometimes exempt from IRB review and occasionally even from informed consent.

Under former rules, manufacturers could charge a cost recovery price for expanded access drugs under a Treatment IND, with cost recovery defined to include overhead costs such as the R&D resources devoted to developing the drug. This made expanded access a reasonable economic proposition for drug companies. Since 2009, however, FDA allows drug makers to charge for drugs distributed under expanded access, but only to cover the costs of manufacture and shipping — not overhead or R&D expenses. In practice, this means that it is not economically beneficial, and perhaps not even feasible, for drug makers to engage in expanded access programs [Rossen 2009]. Some hoped that expedited programs such as the Orphan Drug program would make Treatment INDs unnecessary, but in practice, there is still often intense patient interest in receiving drugs during the IND stage.

During the HIV/AIDS epidemic there was a lot of pressure on FDA and apparently expanded access was granted for many drugs, even for widespread use. FDA also allowed expanded access use of anthrax vaccines for U.S. soldiers after September 11th.

Note that open label extensions of clinical trials during an IND phase (as happened, for instance, with eteplirsen) are usually done under a clinical trial IND since safety data for the NDA are still being gathered, and thus are not considered to be expanded access.

Informally, FDA can also allow expanded access by choosing not to take enforcement measures. This was what it did for many years with buyers’ clubs for unapproved HIV/AIDS drugs. In 1988, FDA Commissioner Frank Young explained that FDA normally only enforces against commercial entities promoting drugs on the basis of false or unproven claims. It doesn’t go after private citizens taking unproven drugs and it doesn’t go after doctors prescribing off-label, and consistent with this, it didn’t go after buyers’ clubs.

Post-approval issues

All newly approved drugs are expected to have some degree of post-approval monitoring. Companies with newly approved NDAs are expected to report adverse events that are “both serious and unexpected” to FDA within 15 days. They are also expected to collect data on non-serious and/or expected adverse events and report these to FDA each quarter for the first 3 years post-NDA and on an annual basis thereafter.

Risk Evaluation and Mitigation Strategies (REMS) is a particularly vigorous post-approval monitoring program created by FDAAA in 2007. It allows that there are certain drugs that can be safe and effective but need to be carefully monitored to make sure they are used correctly. If it appears a REMS may be necessary, FDA and the drug maker will negotiate the details of the plan, which may include one or more of the following:

  1. special training for physicians who prescribe the drug
  2. monitoring for patients on the drug
  3. enrollment of patients on the drug into a registry
  4. special certification for pharmacies that dispense the drug
  5. dispensing of the drug only in special settings, such as in a hospital
  6. use limited to patients with certain laboratory test results or other evidence of “safe use conditions”

As one example, thalidomide has a vigorous REMS incorporating most of the above elements: patients, doctors, and pharmacies all need to enroll in a special program in order to receive, prescribe, or dispense the drug respectively. Women who take thalidomide need to have a negative pregnancy test and sign an agreement to use two forms of birth control while on the drug.

Post-approval changes in labeling or manufacturing process need to be registered with FDA, often through a supplemental NDA (SNDA).

Since the 1960s, FDA has sometimes informally negotiated with sponsors to issue NDAs conditional on the carrying out of further studies post-approval. These were usually clinical studies but occasionally pre-clinical. Sponsors often agreed to studies that were not really feasible, and a study by the Office of the Inspector General found that FDA did little to track or enforce these commitments. FDAAA in 2007 formally gave FDA authority to require such additional, “Phase IV” trials to be conducted after award of an NDA, and established that failure to conduct promised trials will be considered a “misbranding” violation. Even still, there are questions about how post-approval studies can be carried out, given that approval means the drug is available to patients outside of the context of a trial. When the Accelerated Approval program was first put forth in 1992, some of the comments and discussion (see p. 63) raised the concern that randomization of patients in a post-approval setting would be both unethical and infeasible when the drug is available outside of a trial. One solution is to use a dose control or active control instead of placebo control. In its recent Accelerated Approval of eteplirsen, FDA mandated that Sarepta conduct a post-approval randomized trial with two arms: the approved dose (30 mg/kg/week) and 7-fold higher dose (30 mg/kg/day).

When safety or efficacy concerns arise (or just for business reasons), a drug may be withdrawn from the market after approval. Most withdrawals are voluntary by the manufacturer, but FDA has occasionally forced an involuntary withdrawal, for example for Lutrexin, see Weinberger v. Hynson, Westcott & Dunning, Inc. (1973). Some withdrawn drugs come back to the market later with revised labeling (Parnate) while others never come back (Vioxx). In the case of Vioxx, an FDA committee voted to allow Vioxx to potentially come back for a limited population, but Merck opted not to revive it.


FDA requires all prescription drugs to have a package insert for doctors, called the “prescribing information” or “physician labeling.” This is long and has a large number of mandatory sections covering topics from indications, contra-indications, doses, warnings, interactions, and a summary of the clinical data that supported approval.

For some prescription drugs, FDA also requires a patient package insert. Oral contraceptives were the first example of this. The rules for this have been changed many times over the years; currently FDA only requires patient package inserts in cases where it is believed that labeling for patients will either prevent serious health risks or will improve efficacy because adherence to instructions is very important.


For prescription drugs, FDA regulates both labeling and advertising. For over-the-counter drugs, FDA regulates labeling, but the Federal Trade Commission regulates advertising.

Much of pharmaceutical advertising is targeted at physicians. There are various mechanisms to try to keep pharma companies from using money to influence doctors to prescribe their drug. The federal Anti-Kickback Statute makes it illegal for companies to pay off doctors to prescribe a drug reimbursed by Medicare or Medicaid; the Physician Payment Sunshine Act (part of the Affordable Care Act of 2010) requires companies to report to HHS all the money they’ve paid in various forms to doctors or academic medical centers. Non-governmental organizations also play a role, for example, the American Medical Association has published rules on gifts to physicians from industry [McMurray 1991].

There was little direct-to-consumer advertising prior to the 1970s. In Virginia State Pharmacy Board v. Virginia Citizens Consumer Council (1976), the Supreme Court for the first time ruled that the First Amendment protects commercial speech. The case upheld the right of manufacturers to advertise about prices of drugs, but did not reach the issue of whether they could also advertise about safety or efficacy. For several years, manufacturers complied with this, but by 1983, claims about safety and efficacy started appearing, and FDA responded by asking drug makers to obey a voluntary moratorium on direct-to-consumer advertising. In 1985 FDA called off the moratorium, acknowledging that drug companies could advertise about safety and efficacy, though FDA would continue to regulate whether such claims made in ads were correct and consistent with data submitted to FDA. Direct-to-consumer advertising exploded after 1985 and is highly prevalent today. As noted in lecture 6, FDA has a poor track record with First Amendment cases, and it is still not clear where the boundaries of FDA authority over advertising would ultimately be drawn if it ever went to the Supreme Court.

NewCo, Part II

This is the second in a series of three episodes of a narrative about a fictional biotech startup company, NewCo, developing a new drug.

The lead scientist of the company reports that identification and synthesis of the active principle will take, at bare minimum, two years. Therefore, for at least two years the company will have to do all its studies with the whole plant extract. It can submit an IND based on the plant extract, and later conduct a bridging study to show that the isolated or synthetic compound behaves equivalently to the whole extract.

FDA recognizes that Good Manufacturing Practices (GMP) are a continuum: companies start out doing the best job they can, and only as manufacturing is underway can various issues emerge and be resolved. It’s impossible to be in full compliance with GMP at the moment of IND submission or Phase I. A product can be out of compliance with GMP and still go into Phase I; FDA’s expectation is that GMP requirements will be fully met by the time of a pivotal trial such as Phase III.

The company is beginning to embark on animal studies, including several categories: acute toxicity (does it kill rapidly), subchronic toxicity (usually over 60 or 90 days), reproductive toxicity (teratogenicity), and lifetime toxicity and carcinogenicity (two years). It will most likely do this through a contract research organization that has an excellent track record with FDA. There have been occasional scandals where a CRO was found to have engaged in fraud, adn these incidents are hugely detrimental to the drug company that hired the CRO, therefore choosing the right CRO is of paramount importance. Most of the major scandals have been with overseas CROs, so Prof. Hutt says a conservative approach is to work with U.S.-based CROs.

Products that prove teratogenic can still make it to market — after all, thalidomide is now an approved drug subject to the Risk Evaluation and Mitigation Strategies (REMS) — but FDA demands to know whether a product is teratogenic so that this can be included in the labeling.

As for the two-year lifetime tox and carcogenicity studies, you could debate whether these are really necessary given that this plant extract is an imaging agent to be used very occasionally, rather than chronically. In cases like this, the best approach is to talk to FDA. A mantra in drug development is that you never outbluff FDA, and if there is bad news to be had, you want to hear it at the earliest possible moment. In early meetings with FDA, even pre-IND, the company should fully lay out all its concerns and fears so that FDA can respond and provide guidance. Prof. Hutt lays out his two rules for engaging with FDA:

  1. Ask FDA what it wants
  2. Do it

The plant extract in question was discovered and characterized in an academic lab at University of Buffalo. The University is enthusaistic about licensing the technology to NewCo in exchange for royalties, but the company still needs to budget about $50,000 for legal fees to hammer out the details.

NewCo needs to form Scientific Advisory Board (SAB) — there is no regulation requiring it, but almost all startups have one. Typical size is ~7 members. They have two roles: 1) to actually advise on the science, and 2) to heighten the company’s credibility when it goes back to venture capitalists to raise more money. On both counts, NewCo wants to include “Key Opinion Leaders” in a relevant field, and such prestigious scientists will need to be paid for their time, probably $10,000 each per year just to meet remotely, let alone convening an in-person meeting of the SAB. NewCo has the choice of whether to pay them on an hourly consulting basis or to offer them stock options. The scientists are likely to want stock options, but Prof. Hutt would counsel NewCo not to offer stock options, because it makes the scientists be, or at least appear, much more financially conflicted than merely paying them does. Whereas hourly consulting fees are paid regardless of outcome, stock options are only worth anything if the company succeeds, so SAB members would have an incentive to skew the truth in order to help the company win funding or win approval. And this won’t be a secret, as any time one of these SAB members gives a talk or writes a journal article, they’ll have to disclose the conflict of interest.

Contrast agents just need to be present in the body and do not need to have any pharmacological action in the body, so they nominally fit the statutory “not dependent upon being metabolized” definition of medical devices. FDA, however, has decided to regulate them as drugs. It at one point grandfathered in existing contrast agents as devices but regulated new applications as drugs, but the courts ruled that it was “arbitrary and capricious” to treat equivalent substances so differently, so thenceforth FDA treated all contrast agents as drugs. In Europe, however, the EMA treats contrast agents as devices, and in fact a “CE mark” for a contrast agent is among the easiest type of approval to obtain in Europe. NewCo therefore decides to retain a European regulatory expert to help pave the way for a regulatory submission to EMA two years from now if everything goes well. (Note that there are only a few discrepancies this stark between different regulatory agencies — one other example is that sunscreen is a drug in the United States and a cosmetic in Europe).

When it gets to the clinical stage, NewCo has three options:

  1. Hire a contract research organization such as Quintiles to run the trials entirely.
  2. Run the trials in-house. This would mean hiring a Chief Medical Officer (CMO) to oversee all the trials, and a team of Clinical Research Associates (CRAs), typically recent college graduates, to go out to clinical trial sites and monitor the trial investigators to make sure they are keeping all the records they are supposed to keep. Physicians often have trouble complying with all the clinical trial requirements, and CRAs basically look over their shoulder to make sure every box is checked. This is necessary because if some records are incomplete, FDA will raise questions about whether the data are even real.
  3. Run the trials through a single physician-investigator who is in charge of everything. This can be preferable in early stage trials because FDA may be more forgiving of individual investigators than of big corporate operations.

The next question is where (in what country) to do the Phase I trial. Phase I trials typically cost $30,000 to $50,000 per patient in the United States. Even moving to Australia can cut costs by about half, in part because Australia requires only IRB review, not agency review, of investigational drugs and clinical trials — there is no equivalent of an IND application in Australia whatsoever. (Sometimes FDA employees will even issue a clinical hold on an IND while suggesting that the sponsor do the trials in Australia instead). Drug companies find Australia particularly appealing because it offers these cost savings while still being English-speaking, having a very strong track record with clinical trials, and having physicians with training equivalent to American training — indeed, many of the clinical trial physicians in Australia were trained in the U.S. Running outsourced clinical trials is a major industry in Australia. As a final added benefit, Australia shares some regulatory framework with the E.U., and it might be possible to get a CE Mark for the E.U. based on a Phase I trial in Australia, plus a few other bells and whistles. Based on these considerations, NewCo decides to run its trial in Australia.

NewCo’s next choice is what type of Phase I trial to design. Either way, the primary goal is safety, but you have the option to also look for a signal. A Phase IA approach would be to recruit healthy volunteers, do a bowel prep and administer the drug in ascending doses, solely check its safety. A Phase IB approach is to recruit people who actually need a colonoscopy, and actually do a virtual colonoscopy on them in the course of the trial. It may not be controlled, and you couldn’t do statistics on it, but you’d at least have enough data to get some signal, some inkling as to how good the virtual colonoscopy images are. Therefore in addition to safety data that you can submit to regulators, you get preliminary efficacy data that can help you in designing further trials. In either Phase IA or IB, you have the option of whether to give the drug to all participants, or to have a control arm. Having a control arm obviously costs extra. NewCo eventually decides on a Phase IB with a single arm, no control. Still, there are several other trial design issues NewCo must decide on, including the number of participants, recruitment criteria (for instance age range, how to handle risk of pregnancy if any women of child-bearing age are included), and what rating scale or outcome measure it will use to evaluate the clarity of the virtual colonoscopy images.

The phone rings: preliminary data are in from the preclinical toxicology studies. No toxicity has been observed at any dose, which is great, but the female animals treated with the plant extract gave birth to larger litters, on average 2 pups larger. NewCo discusses this with FDA, which acknowledges that many variables are monitored in these preclinical studies and so it is not unusual to see an anomalous result like this that may not reflect a real signal, but FDA also utters the magic words: “this is a review issue”. Those words mean that this issue is not dead, but rather must continue to be reviewed and discussed in future interactions with FDA, which will eventually have to decide whether this is A) nothing, B) an issue potentially stalling approval, or C) an issue to be disclosed in labeling.

to be continued tomorrow…