BUS 590 O: Biotech and BUS 590 O: Biotech and Pharma LawPharma Law

Professor David BaumerProfessor David Baumer

Fall, 2006Fall, 2006

History of Drug RegulationHistory of Drug Regulation

• Drug regulation began in the U.S. because the consequences of the common law for the sale of goods were unacceptable– Common law at the time was based loosely on caveat

emptor, buyer beware• There was very little protection for consumers of mislabeled

or adulterated drugs• It was virtually impossible to determine whether drugs were

safe• Effectively, the only redress for victims of mislabeled or

adulterated drugs was to sue after the fact

Legal Definition of a DrugLegal Definition of a Drug

• The Food Drug and Cosmetic Act Section 201(g)(1) defines drugs by their intended use:– (A) articles intended for use in the diagnosis,

cure, mitigation, treatment, or prevention of disease, and

– (B) articles (other than food) intended to affect the structure or any function of the body of man or other animals

History of Drug RegulationHistory of Drug Regulation

• Common law remedies– CL Fraud—must prove intent

• Must prove that the def’s. drugs did the damage.

– Breach of express warranties– Negligence—failure to adequately test

• Failure to inspect the product

History of Drug RegulationHistory of Drug Regulation

• Drug regulation was propelled by numerous catastrophes – State laws were ineffective because of jurisdictional

limitations– First federal act was the Pure Food and Drugs Act

of 1906• Based on the power of the fed. govt. to regulate interstate

commerce• Outlawed interstate sales of mislabeled drugs

– Akin to outlawing fraudulent sales

• Also required dangerous drugs such as heroin and cocaine to be stated on drug labels

History of Drug RegulationHistory of Drug Regulation

• The 1906 legislation did not require pre-market testing, for safety or effectiveness– Again, violations of the 1906 Act generally

occurred when a person died unexpectedly after taking a drug

• Food and Drug Administration– Was created in 1927– It is now the oldest federal Admin. Agency

History of Drug RegulationHistory of Drug Regulation

• Major overhaul of drug regulation occurred in 1938 with the passage of the – Food, Drug, and Cosmetic Act

• New drugs had to obtain pre-market approval from the FDA

• Approval was based on safety• The Kefauver Amendment of 1962 required that

manufacturers prove both safety and efficacy – Since 1962 New Drug Approval (NDA) testing has

lengthened to as much as 5 to 10 years

History of Drug RegulationHistory of Drug Regulation

• Much of the recent legislation has been in response to perceived inefficiencies and deficiencies of the FD&CA– 1984 Hatch-Waxman Act (HWA)

• Created Abbreviated NDA’s (ANDA) to make it easier for generics to be marketed after patents expire

• Allowed for patent extensions potentially equal to the time necessary to obtain FDA approval

History of Drug RegulationHistory of Drug Regulation

• In 1988 Congress passed the Prescription Drug Marketing Act (PDMA) – Designed to regulate marketing practices of

pharmaceutical companies and distributors– Basic idea is that prescriptions should be based on

medical need, not pecuniary emoluments given to healthcare providers

• Banns sales, trades and purchases of samples by healthcare providers

• Mandates storage and accounting standards for drug samples

• Requires that drug wholesalers be licensed by the state • Many of the regulations authorized by the PDMA have not

been enacted by HHS

History of Drug RegulationHistory of Drug Regulation

• In 1997 Congress passed the Food and Drug Administration Act (FDAMA)– Accelerated approvals for new drugs that had

high potential for saving lives where there are no other alternatives

Drug RegulationDrug Regulation

• In 1990 Congress passed the Nutrition Labeling and Education Act (NLEA)– Regulates claims made on labels of food

manufacturers– The NLEA is triggered if the manufacturer either

• Makes nutritional claims about its products or • Makes use of food additives or • Fortifies a food product

– The NLEA regulates food labels– Regulates language used by food sellers, such as

“natural” “low fat” “jumbo”.

Drug RegulationDrug Regulation

• In 1994 the Dietary Supplement Health and Education Act (DSHEA) was enacted – Regulates food labels and health claims made

by sellers of dietary supplements– A dietary supplement is a product that

• Is intended to supplement the diet and bears or contains one or more ingredients:

– Vitamins, minerals, herbs, amino acids…or combinations of these ingredients,

– Is intended for ingestion in pill, tablet, or liquid form– Is labeled a dietary supplement

Drug RegulationDrug Regulation

• DSHEA regulates labels and health claims– It is illegal to sell a dietary supplement as

“curing cancer”– Appropriate health claims are authorized by

the FDA• Manufacturers must be able to substantiate the

health claims they make

– Dietary supplements must bear ingredient labeling

– Must provide nutritional labeling

Drug RegulationDrug Regulation

• Off-Label Prescriptions– FDA does not regulate the practice of

medicine– Companies gain FDA approval for drugs for

certain uses that generally appear on labels– Off-label prescriptions are legal, but

promotion of off-label use by pharma companies is not

Drug RegulationDrug Regulation

• Regulation of drug distribution is being challenged increasingly– Drug websites offer drugs and prescriptions

• Some patients prefer to deal with drug websites rather than their family doctor

• Prices are substantially lower at some drug websites based in Canada

– Given statewide licensing of doctors and pharmacists, we are witnessing a return of caveat emptor through these gray markets

Regulation of Drug DistributionRegulation of Drug Distribution

• Websites offer patients opportunities to make medication decisions– Online prescriptions are just part of the story

• Drug addicts no longer have to go to fringy areas of town to feed their habits

– The facilities (manufacturing, storage, and transportation) of drug websites are not inspected by the FDA

Regulation of Drug DistributionRegulation of Drug Distribution

• Note that state licensing requirements are so severe that few websites are legal– There are few websites that are legal under current

laws• To be VIPPS (Verified Internet Pharmacy Practice Sites) certi

fied, a pharmacy must comply with the licensing and inspection requirements of their state and each state to which they dispense pharmaceuticals. In addition, pharmacies displaying the VIPPS seal have demonstrated to NABP compliance with VIPPS criteria including patient rights to privacy, authentication and security of prescription orders, adherence to a recognized quality assurance policy, and provision of meaningful consultation between patients and pharmacists.

– To date 12 websites qualify under VIPPS

Other Aspects of Drug RegulationOther Aspects of Drug Regulation

• The Health Insurance Portability and Accountability Act (HIPAA) of 1996– Ensures that a person switching a job will not lose

their health insurance and– Provides for privacy of medical information

• Basic provision of the HIPAA Privacy Rule is that there shall be no non-consensual secondary use of medical information

– There are a number of exceptions but compared to the previous environment, which included various state laws, HIPAA is a large step forward for patient privacy

• HIPAA does not solve all the medical privacy issues– DNA, RFID reports of drug use

Product LiabilityProduct Liability

• Government regulation does not guarantee all drugs are safe– Further, FDA approval of drugs to does not

eliminate possible liability for dangerous or defective drugs

– There are a number of stages where sellers of drugs could be liable

– Unlike some areas of law, the FD&CA does not preempt state law

Product Liability LawProduct Liability Law

• Even though a drug is approved for sale to the public by the FDA and the drug is being sold for uses described on the label– The seller could still be liable– A jury could decide that

• The seller was negligent in investigating unknown side effects

– A company cannot totally rely on complying with the FD&CA as well as a shield from suit

– On the other hand, a company is clearly liable if there is a link between violation of law and the pl.’s injuries

Product LiabilityProduct Liability

• Possible areas of liability for sellers of FDA approved drugs:– Product design—apply Learned Hand test– Violations of law

• Concealing adverse information• Adulterated product

– False Advertising– Inadequate Warnings

• Not making sure that instructions and warnings are received by users