Medical Device Daily Washington Editor

FDA's user fee schedule makes allowances for small businesses, but a drug company has recently filed suit over the agency's refusal to grant the company a small business waiver from the standard fee for a new drug application (NDA). According to an Aug. 5 entry at the web site for the FDA law blog operated by the DC law firm of Hyman, Phelps and McNamara (Washington), FDA refused the waiver because the applicant's CEO was associated with two entities that are now out of business.

The implication of the agency's stand for drugmakers is that an executive who has worked for a company that has filed an NDA cannot work for a start-up company without ruining its chances to get a fee waiver on the fledgling company's first NDA. Whether the ruling applies to device makers regarding past affiliations is not clear, but a recent guidance on the device user fee rules mention affiliates in determinations of the PMA fee waiver.

According to the blog entry, the CEO of Winston Pharmaceuticals (Vernon Hills, Illinois), Joel Bernstein, MD, is formerly associated with two other now-defunct drugmakers, GenDerm and Northbrook Testing. FDA's decision hinges on the fact that while Winston employs fewer than 500, the small business exemption applies only to the first NDA a company or its affiliates files, and according to the blog entry, the agency stated that it sees "no requirement in the definition of an affiliate that all relevant parties be in existence at the same time."

FDA's view is that inasmuch as the statute "includes no temporal limitation," Winston's interpretation would give firms license to "obtain a waiver fee for its first human drug application, dissolve the company, establish a new company that is essentially a duplicate of the first, and obtain a fee waiver for it's next NDA," the blog states. This is potentially a limitlessly repeatable cycle, the agency is said to have declared.

According to a July 29 summary of the filing of the suit in the U.S. District Court for northeastern Illinois, the issue hinges in part on the question of whether the term "affiliate" is defined by the ability of one entity to control the other, or for a third entity to control the applicant and another entity that had previously filed for a small business waiver. However, the document notes that Northbrook, in which Bernstein was the majority shareholder and president, went out of business in 1984. GenDerm ceased to exist in 1997 and according to court documents, Bernstein "did not have control or have the ability to control GenDerm" at the time of its sale. Bernstein incorporated Winston in 1998 and he and his immediate family are said to control 60% of the company's stock.

Among the exhibits filed by the company for the court case is the company's Dec. 9, 2008 response to FDA's refusal to issue the waiver, which includes a statement that a consultation with a number of attorneys led them all to express "the unequivocal opinion that Winston is not an affiliate" of the other two companies. The attorneys in question, a list that includes Peter Barton Hutt of Covington and Burling (Washington) also opined unanimously that a non-affiliation determination would hold "under any definition ... they have ever seen."

As stated before, the question of whether the affiliation issue will affect seekers of waivers for first PMAs is uncertain, but an Aug. 3 document published by FDA on device user fees contains a passage which states: "you should count prior premarket applications made by your affiliates when determining whether a premarket application is your first.' If you or any affiliate previously submitted a premarket application, your application does not qualify for the fee waiver, and you must pay the fee that would otherwise apply."

Medical Device Daily was unsuccessful in attempts to obtain comment from Hyman Phelps and Winston.

FDA to hasten disbarment of CIs

Drug and device makers need not feel singled out in the announcement last week by FDA commissioner Margaret Hamburg, MD, that enforcement is ramping up (Medical Device Daily, Aug. 7, 2009). Among the announcements made last week by FDA is one that points the finger at clinical investigators (CIs), putting them on alert that the agency will pull their clinical trial privileges faster than in previous years.

Although the statement offers no details, it informs the public that the agency's "procedures for debarment and disqualification have been enhanced to better protect participants in clinical studies and for ensuring the safety and effectiveness of the medical products marketed to the American public." The statement also notes that FDA's actions are somewhat prompted by developments on Capitol Hill.

"Some members of Congress have expressed concern that the FDA has not adequately used its debarment and disqualification authorities," the statement indicates, adding that some members of Congress are of the view that even when "these authorities are invoked, the agency is slow to remove such individuals from the drug or device development process." Unnamed members of the House Energy and Commerce Committee "have asked the Government Accountability Office to examine the FDA's debarment and disqualification procedures."

FDA's publication of NIDPOE (Notice of Initiation of Disqualification Proceedings and Opportunity to Explain) letters serves the same function for CIs as the warning letter does to drug and device makers. The announcement provides a link to the page listing NIDPOE letters as well as to a page that lists CIs whose privileges have been suspended or revoked.

Norris Alderson, FDA's associate commissioner for science, said in the statement that the agency "views any deviation from its high standards for developing or marketing drugs and devices as a potential threat to patient safety and public health," remarking further that FDA "will take strong action against anyone who chooses to ignore or flout the legal requirements for the products we regulate."

Mark McCarty, 703-268-5690; mark.mccarty@ahcmedia.com