Device Firms: What You Should Know About The 21st Century Cures Act

By Mason Weeda

Last month, legislation that would affect, among other things, FDA’s regulation of medical devices and the manufacturers of such devices took a considerable step forward when it was introduced and then unanimously approved by the House Energy and Commerce Committee by a vote of 51-0 on May 21.  Known as the 21st Century Cures Act (“Act”), the stated aim of the legislation is to modernize and personalize health care, encourage innovation, support research, and streamline the U.S. health care system to promote the delivery of better and faster “cures” to more patients.

In support of this goal, the Act would change the review of medical devices determined to be “breakthrough,” establish a third-party option for the inspection of medical device manufacturers, make changes to certain Humanitarian Device Exemption (“HDE“) requirements, institutionalize FDA’s ongoing efforts regarding the regulation of medical software applications, and loosen some clinical investigation requirements.  Significantly, the legislation also indicates an ongoing Congressional interest in the restrictions FDA has placed on the dissemination of truthful and nonmisleading off-label information.

Breakthrough Device Pathway

The Act would support faster “cures” by creating a “priority review” pathway for those devices that meet the definition of a “breakthrough device.”  These “breakthrough devices” include those that “represent breakthrough technologies… for which no approved alternative exist,” offer “significant advantages over existing approved or cleared alternative,” and are “otherwise in the best interest of patients.”

Upon a sponsor’s request, FDA would determine whether a device meets the “breakthrough device” designation using specified criteria.  If a device receives such designation, it would be eligible for expedited review by a team of staff that will interact with the device sponsor.  During this process, the Act would require FDA to “take steps to ensure that the design of clinical trials is as efficient as practicable, such as through adoption of shorter or smaller clinical trials, application of surrogate endpoints and use of adaptive trial designs and Bayesian statistics.”  Likewise, the agency would also be required to “facilitate … expedited and efficient development and review of the device through utilization of postmarket data collection.” Although these are laudable goals, the Act does not impose any specific timelines in which an “expedited review” must be completed or otherwise quantify how much existing review times will be reduced.

Third-Party Inspections of Device Manufacturers

The Act also contains provisions that could allow FDA to conserve its inspectional assets and speed up approval of modified versions of existing devices by allowing for the use of third party inspectors to conduct the necessary establishment inspections.  The theory being that creating a “quick” method to inspect facilities in these circumstances would promote the earlier availability of improved “cures.”

Under the provisions of the Act titled “Medical Device Regulatory Process Improvements,” Congress would require FDA to establish a “third-party quality system assessment” program, where accredited third parties would inspect manufacturers for compliance with the Quality System Regulation (“QSR”) (21 C.F.R. Part 820).  However, use of such third-party inspections would be limited only to QSR inspections necessary as the result of submissions involving “device related changes” and would not be available in other types of establishment inspections.

Changes to Humanitarian Device Exemptions

This section of the Act would double the number of patients that must suffer from a disease in order for FDA to consider it a “rare disease.”    Presently, the HDE pathway is intended to incentivize and encourage the development of devices to treat “rare” diseases or conditions affecting small patient populations when the device manufacturer`s research and development costs would otherwise exceed its market returns.  It does so by significantly reducing the clinical data that would be necessary for the manufacturer to generate to support the efficacy of the device that would otherwise be required by FDA in a traditional marketing application. To qualify for an HDE, the disease or condition must presently affect fewer than 4,000 individuals in the United States per year. The Act seeks to encourage additional development making “cures” more widely available by increasing this number to 8,000 individuals.

Medical Software

In an apparent effort to “modernize” the technology involved in health care, the Act would create a definition of “health software,” which generally would not be regulated unless it:

  • is intended for use to analyze information to provide patient-specific recommended options; or
  • FDA determines that it poses a significant risk to patient safety.

This provision continues to allow FDA some flexibility as to how it may regulate software.  The Act also would require the agency to review existing regulations and guidance regarding software, including the classification of software, standards of verification and validation, review of software, and quality system for software, among others.

Clinical Trials

The Act would also make it easier for sponsors conducting clinical investigations by requiring the Department of Health and Human Services (“HHS”) to harmonize its requirements applicable to clinical investigations with FDA’s own requirements. This supports the Act’s goals by significantly reducing the regulatory burden imposed on sponsors who must presently ensure that their clinical investigations meet the often duplicitous requirements imposed by both HHS and FDA controls.  The Act also would make it easier for sponsors to meet Institutional Review Board (“IRB”) requirements by allowing the use of non-local IRBs to review medical device trials, including Investigational Device Exemptions (“IDE”) and HDEs. Permitting the use of non-local IRBs support the Act’s goal of “quicker cures” by eliminating the “log jam” and delays sometimes associated with the use (and overuse) of local IRBs by giving sponsors additional options that are potentially faster than the traditional ones.


Lastly, and without limitation, the Act’s section on “Facilitating Responsible Communication of Scientific and Medical Developments,” provides that FDA “shall, within 18 months, issue draft guidance on facilitating the responsible dissemination of truthful and non-misleading scientific and medical information not included in the approved labeling of drugs and devices.”  This provision appears to be in response to the Coronia Case (U.S. v. Caronia, 703 F.3d 149 (2d Cir. 2012)), which holds that representatives of pharmaceutical manufacturers have a right under the First Amendment to make truthful statements regarding their products, even if such statements indirectly promote drugs for uses not approved by FDA.  The Act does not provide further direction on this topic, but Congress is clearly nudging FDA to update its position on off-label promotion which may affect medical device manufacturers.

It may be an uphill battle for Congress to agree on all topics involved in the 308 pages of 21st Century Cures Act.  However, as reported by the House Energy and Commerce Committee Press Releases, the bill appears to have support from industry and consumer groups, which may help bring Congress together.

FDA’s Draft Guidance On DSCSA Preemption Misses The Mark

By Tish Pahl

In a flurry of end-of-year activity, FDA recently issued a Draft Guidance on the express preemption provisions in §585 of the FDC Act, added last year by the Drug Supply Chain Security Act (or DSCSA). FDA, the pharmaceutical supply chain, and other stakeholders have been working very hard to implement the DSCSA as quickly as possible. In the Draft Guidance, FDA aims to advise industry, States, and local governments on the effect of §585(a) upon State drug product tracing requirements, and the effect of §585(b) upon State wholesale drug distributor and third-party logistics provider (3PL) licensing standards and requirements. Unfortunately, the Draft Guidance falls short of this goal.

FDA’s analysis of §585(a) is limited to repeating the statutory language which, although technically correct, is not especially useful to helping States understand the full extent of the DSCSA’s preemption of their product traceability requirements. Section 585(b) is far more problematic, as FDA erroneously concludes that §585(b)(1) only establishes a minimum set of standards for wholesale distributor and 3PL licensure that States may exceed. In fact, §585(b)(1) precludes States from implementing licensure requirements that enlarge what the DSCSA requires.

Congress Intended to Bring National Uniformity to Licensure

The Draft Guidance ignores Congress’ clearly expressed intent to establish uniform, national licensure standards for wholesalers and 3PLs, with a well-defined floor under and ceiling upon State regulation. Sections 583 and 584 are both entitled “National Standards” for wholesale distributors and 3PLs respectively. Section 585 is entitled “National Uniform Policy.” To “ensur[e] uniformity,” States must meet the standards FDA establishes. See §503(e)(1)(B); §583(b). According to the House Energy & Commerce Committee fact sheet on the DSCSA, “[t]he bill would … [c]reate floor and ceiling licensure standards for wholesale distributors and 3PLs while preserving state authority for licensure issuance and fee collection.” Members of Congress clearly and repeatedly stated that they intended for the DSCSA to replace the patchwork of multiple and conflicting State laws with a uniform national standard for licensure. (See statements in the Congressional Record by Congressman Bob Latta (R-OH) here and Senator John Isakson (R-GA) here).

Congress achieved this national uniformity in §585(b)(1) by using well-known and frequently interpreted statutory language.

What Does §585(b) Say?

Section 585(b)(1) provides that no State or political subdivision may establish or continue any standards, requirements, or regulations “with respect to” wholesale prescription drug distributor or 3PL licensure that “are inconsistent with, less stringent than, directly related to, or covered by” the DSCSA’s standards and requirements. FDA states that this phrase means simply that State licensure standards must not “fall below the minimum standards established by federal law.” See, e.g., Draft Guidance at lines 135, 148-49 (wholesale distributors); line 183 (3PL). This is in error as the language of §585(b) establishes both a minimum floor and a maximum set of standards for wholesale distributor and 3PL licensure that States may not exceed.

What Does §585(b) Mean?

“With respect to”

Section 585(b)(1) provides that State standards, requirements, and regulations “with respect to” wholesale distributor and 3PL licensure are preempted. “With respect to” means that the DSCSA preempts State requirements that “concern” wholesale distributor or 3PL licensure. See Dan’s City Used Cars, Inc. v. Pelkey, 133 S.Ct. 1769, 1778 (2013).

“Inconsistent with” and “Less stringent than”

Section 585(b)(1) preempts any State standards, requirements, or regulations with respect to licensure that “are inconsistent with, less stringent than, directly related to, or covered by” the DSCSA’s standards and requirements. The phrases “inconsistent with” and “less stringent than” are interpreted as setting a minimum “floor” that State licensure requirements must meet. Jones v. Rath Packing Co., 430 U.S. 519, 540 (1977). Congress, however, added two additional phrases, “directly related to” and “covered by,” and these provisions significantly expand the scope of the State laws displaced by §585(b)(1).

“Directly related to” and “Covered by”

The phrase “related to” is broadly preemptive. A State law “relates to” a federal requirement, and so is preempted, if it makes “reference to” or has a “connection with” the federal requirement. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 (1983). As the DSCSA preempts only State requirements “directly related to” DSCSA requirements, courts would likely turn to ordinary definitions of the modifier “directly.” See, e.g., CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664-65 (1993). In Black’s Law and Webster’s, “directly” means, among other things, in a “straightforward” or “direct manner.”

A phrase similar to the DSCSA’s “covered by” is also broadly preemptive. The Supreme Court has interpreted the Federal Railroad Safety Act (FRSA), which provided that a federal requirement “covering the subject matter” of a State requirement preempted that State requirement if the federal requirement “comprised,” included,” or “embraced” the State requirement, or if the State requirement was “substantially subsumed by” the federal requirement. Easterwood, 507 U.S. at 664-65. The “covering” language “must be read both “establishing a ceiling” and “precluding additional state regulation.” Id. at 674. Where a federal statute employs “covering the subject matter” preemption language, the federal interest in “consistency and uniformity” means that a State “cannot enlarge or enhance” its requirements “to impose burdens more onerous than those of the federal requirements on matters addressed by the federal regulations.” Drake v. Laboratory Corp. of America Holdings, 488 F.3d 48, 65 (2d Cir. 2006) (interpreting similar “covering” preemption under the Federal Aviation Act).

What Does §585(b)(1) Preempt?

Based upon the foregoing, the Draft Guidance clearly does not reflect the full preemptive scope of §585(b)(1). The DSCSA sets both minimum and maximum limits upon State licensure requirements. Any State requirement that is comprised, included, embraced, or substantially subsumed in, the DSCSA is preempted. Any State requirement that is substantial enough to impede national uniformity or that imposes burdens more onerous than what the DSCSA imposes is also preempted.

And so, for example, States could not continue to require third-party accreditation, such as VAWD, as a condition of licensure as this would impose a burden upon a wholesale distributor more onerous than the DSCSA-required mandatory physical inspection after submission of an initial application under §583(b)(6)). Further, wholesale distributors and 3PLs would be held to DSCSA inspectional standards alone; during inspections States could not impose requirements and burdens beyond what the DSCSA mandates. Similarly, a State could not mandate a longer period of time for maintenance of distribution records as these are “directly related” to the DSCSA-mandated maintenance of records of distributions under §583(b)(2).

When coupled with the savings clauses also in §585, the section may be read as permitting States to continue to regulate in areas that are tangential to and not concerned with licensure, such as assessment of fees for licensure, the scheduling of controlled substances, and the conduct of prescription drug monitoring programs.

The Draft Guidance’s assertion that §585(b)(1) establishes only minimum standards is simply incorrect. Congress employed well-known, well-litigated, well-understood terms in the DSCSA to ensure national, uniform licensure of wholesale distributors and 3PLs. The comment period on the Draft Guidance closed last week, with one comment already raising the same concerns presented here; as more comments are posted to the docket, others are likely to concur. We hope that FDA will carefully consider Congress’ clearly expressed intent, the language it used to express that intent, and the decades of case law interpreting the language Congress carefully selected, and correct the Draft Guidance as soon as possible so that it accurately reflects the DSCSA’s full displacement of State licensure laws.

GMO Hearing

By Peter B. Matz

Yesterday, the House Energy and Commerce Subcommittee on Health held a hearing to examine FDA’s role in the regulation of genetically engineered foods (commonly, but inaccurately, referred to as “genetically modified organisms” or “GMOs”).  Congressman Mike Pompeo’s (R-KS) Safe and Affordable Food Act (H.R. 4432), which would preempt state GMO labeling laws and require labeling only if a food product were deemed unsafe or materially different by the FDA, was also a major focus of the hearing.  While the bill will die at the end of this Congress, it is expected to be reintroduced in the 114th Congress.  Following are a few key takeaways:

  • There was general consensus among Committee Members from both parties that a federal GMO labeling standard applied nationwide would be more sensible than state-by-state regulations.
  • When Rep. Pompeo asked the second panel, which included two GMO labeling advocates, to answer with a yes or no whether they agreed GE foods are as safe as their conventional counterparts, all four witnesses answered, “yes.”
  • Several Members, on a bipartisan basis, expressed concern that a mandatory label disclosing the inclusion of GE ingredients which present no health or safety risk could be inherently misleading.  For example, Full Committee Ranking Member Henry Waxman (CA) argued that a label could unintentionally appear to imply that the foods are somehow less safe than conventional varieties.
  • Michael Landa, FDA’s Director of the Center for Food Safety and Applied Nutrition, discussed the consultation process in which FDA reviews GMO foods before they go to market.  While it is technically voluntary, he explained that biotechnology companies comply with it because they know farmers will not buy GM seeds unless FDA has given the manufacturer a “no questions letter,” because they would never want to risk growing a product that FDA could later deem unsafe.
  • While the two GMO labeling proponents argued that consumers have a right to know what is in their food to be able to make informed decisions, University of California-Davis’ Dr. Alison Van Eenennaam asserted this issue is not about consumers’ right to know what is in their food, but rather how the food was produced.  “There is no science-based reason to single out foods derived from and feed crops that were developed using the GE breeding method for mandatory process-based labeling,” she stated.  Her written testimony is a powerful endorsement of agricultural biotechnology rebutting the concept of and need for mandatory GMO labeling.
  • In his opening statement, Chairman Joe Pitts (PA) quoted President Obama, who said “advances in the genetic engineering of plants have provided enormous benefits to American farmers” and that “investment in enhanced biotechnology is an essential component of the solution to some of our planet’s most pressing agricultural problems.”

The witness list, written testimony and archived webcast of the hearing can be found here.

Anticipating Committee Changes in the 114th Congress

By Roger R. Szemraj

Every new Congress brings changes in committee membership and sometimes in committee leadership.  The 114th Congress will follow this pattern, and will bring very significant changes as a result of the new Republican majority in the Senate.   Republicans will have more seats on every Senate Committee, and Democrats fewer.  Newly elected Senate and House members will not have their committee assignments for several weeks, and subcommittee assignments are not likely to be fully known until January.  And given that there are several vacancies on key committees like House Appropriations, House Education and the Workforce, and House Energy and Commerce, expect that returning members are likely to give up current assignments in order to move to these key committees.

In the meantime, following is a summary of what openings we know exist.

House Agriculture Committee:

Vance McCallister (LA) is the only Republican leaving the committee at this point.  There are four Democratic vacancies as a result of the departures of  Mike McIntyre (NC), Gloria Negrette Mcleod (CA), Pete Gallego (TX) and William Enyart (IL).  But more significantly, the Committee will have a new chairman given Chairman Frank Lucas’ announced intention to end his chairmanship.   Michael Conaway (TX) is expected to become the new chairman.

House Appropriations Committee:

There will be three significant departures by Republican members who currently chair subcommittees – Frank Wolf (VA) at Commerce, Justice, Science (CJS); Jack Kingston at Labor, Health and Human Services, Education(Labor-HHS), and Tom Latham (IA) at Transportation, Housing and Urban Development (THUD).  Robert Aderholt (AL), the current chairman of the Agricutlure, Rural Development, Food and Drug Administration Subcommittee is said to be thinking about taking the chair of the CJS subcommittee, opening up the chair of the Agriculture FDA Subcommittee to someone new.  Three Democrats are leaving – Jim Moran (VA), Ed Pastor (AZ), and Bill Owens (NY).

House Education and the Workforce:

With child nutrition programs like school lunch, school breakfast and the WIC program scheduled for reauthorization in 2015, this committee will be very busy.   There will be two Republican departures – Tom Petri (WI) and Howard McKeon (CA).  There will be five Democratic vacancies, the most significant of which is the departure of George Miller (CA) who has been a champion of these programs. Congressman Robert Scott (VA) is expected to be the new ranking Democrat on this committee.   Other Democratic departures include Carolyn McCarthy (NY), John Tierney (MA), Rush Holt (NJ), and Timothy Bishop (NY).

House Energy and Commerce:

The Energy and Commerce Committee has a very broad reach, including health, energy, food safety, technology, and the environment.  There will be many openings on this exclusive committee.  Six Republicans are  leaving the committee – Ralph Hall (TX), Lee Terry (NE), Mike Rogers (MI), Phil Gingrey (GA), Bill Cassidy (LA), and Cory Gardner (CO).  Six Democrats are departing – Henry Waxman (CA) who is currently the ranking Democrat on the Committee, John Dingell (MI) who is Chairman Emeritus, Jim Matheson (UT), John Barrow (GA), Donna M.C. Christensen (VI), Bruce Braley (IA).

House Natural Resources:

With the importance of energy, forestry, public lands, and Native Americans, the expected change in committee leadership with the departure of Chairman Doc Hastings (WA) is significant.  Five other Republicans are leaving the committee – Paul Broun (GA), Steve Southerland (FL), Jon Runyan (NJ), Vance McAllister (LA) and Steve Daines (MT).  Five Democrats are leaving – Rush Holt (NJ). Colleen Hanabusa (HI), Steven Horsford (NV), Carol Shea Porter (NH), and Joe Garcia (FL).

Senate Agriculture, Nutrition and Forestry:

With the change in majorities, it is expected that Senator Pat Roberts (KS) will become chairman.  There is still speculation regarding whether or not Senator Debbie Stabenow (MI), the current chair, will remain as the Ranking Democrat on the committee, or if that position may go to Senator Amy Klobuchar (MN).  Tom Harkin (IA) is the only Democrat not returning.  Two Republicans – Saxby Chambliss (GA) and Mike Johanns (NE) are leaving.   This committee will be responsible for child nutrition reauthorization in the 114th Congress.

Senate Appropriations:

Senator Thad Cochran (MS) is expected to become the new full committee chairman.  Senator Johanns (NE) is the only Republican leaving the committee.  Three Democrats will be leaving – Tom Harkin (IA), Tim Johnson (SD), and Mark Pryor (AR) who currently chairs the Agriculture-FDA Subcommittee.  Senator Roy Blunt (MO) is expected to become the new subcommittee chairman.  Two Democrats still do not know the outcomes of their elections.  Mary  Landrieu (LA) will be in a December runoff, while the election has not yet been called for Mark Begich in Alaska.

Senate Energy & Natural Resources:

Senator Lisa Murkowski (AK) is expected to become the new chair of the Energy and Natural Resources Committee.   Whether or not Mary Landrieu (LA) remains as the Ranking Democrat depends upon the outcome of her December runoff.  Two Democrats – Tim Johnson (SD) and Mark Udall (CO) will be leaving the committee.

Senate Health, Education, Labor and Pensions:

Senator Lamar Alexander (TN) could become the new chairman of the HELP Committee.  Two Democrats are leaving – Tom Harkin (IA) who is currently chairman, and Kay Hagan (NC).

Stay tuned for more developments.