In sharp rebuke to Trump Administration, HHS notice ending Unapproved Drugs Initiative is withdrawn

Background on the UDI

To end the UDI program, HHS had announced last year that it was withdrawing FDA’s Compliance Policy Guide (CPG), “Marketed Unapproved Drugs – Compliance Policy Guide Sec. 440.100, Marketed New Drugs Without Approved NDAs or ANDAs,” as well as all “compliance manuals, website statements and other informal issuances” relating to the policy. Those documents describe how FDA intends to prioritize regulatory action under its existing enforcement authority regarding currently marketed unapproved new drugs, including that FDA generally intended to apply a risk-based approach. The CPG 440.100 guidance was part of FDA’s UDI, which adopts a risk-based approach for removing from the market unapproved new drugs, particularly those that pose serious risks to patients, with the goal of also preserving patient access to medically necessary drugs and encouraging manufacturers of unapproved new drugs to submit applications for their products.

The withdrawal notice touts how the UDI yielded 45 enforcement actions since 2006, which “have led to hundreds of potentially unsafe drugs being voluntarily removed from the market, including several drugs with significant safety concerns.” The withdrawal notice specifically cites how these compliance actions have spurred manufacturers to seek and obtain FDA approval of carbinoxamine and quinine sulfate drug products with proper labeling for safe and effective use. In addition, FDA takes that position that FDA-approval of drugs, including with regard to the chemistry and manufacturing, “helps ensure the drug is produced reliably and consistently.” The notice states that FDA approval “lowers the risk of quality problems,” which are one of the main cases of drug shortages.

Legal problems with the termination notice

The withdrawal notice states that HHS and FDA “did not find any evidence that HHS consulted with, otherwise involved, or even notified FDA” before issuing the termination notice for the UDI program. Moreover, the withdrawal notice says, HHS failed in the termination notice to properly interpret the statutory term “new drug,” deviating from longstanding FDA interpretation and applicable judicial precedent.

The termination notice erroneously suggested that drug substances (i.e., active ingredients) marketed prior to June 25, 1938, could be “grandfathered” under the statute, and therefore, are not “new drugs” subject to FDA’s new drug approval process. Rather, the withdrawal notice explains that based on longstanding FDA interpretation reflected in Supreme Court precedent, FDA has interpreted the word “drug” in “new drug” to refer to the entire drug product — not just the active ingredient. Therefore, FDA maintains that a drug product cannot be grandfathered if it differs in any respect from the pre-1938 version of the drug product. Accordingly, the withdrawal notice explains that CPG 440.100 correctly interprets the narrow scope of the grandfather clause for drug substances marketed prior to 1938.

The withdrawal notice also describes “other misstatements” in the termination notice, including that it erroneously described the UDI program and FDA’s CPG 440.100 guidance as a new policy that should have been adopted through notice-and-comment rulemaking. Instead, the UDI and CPG guidance merely describe FDA’s enforcement priorities under the agency’s existing legal authorities, which does not require notice-and-comment rulemaking, the withdrawal notice explains. As we had written last year, it was the November 2020 termination notice — not the CPG — that failed to follow proper administrative procedure in attempting to end the UDI program without complying with applicable good guidance practices. In addition, as we also pointed out last year, HHS authority under the Federal Food, Drug, and Cosmetic Act must be executed “through the [FDA] Commissioner”[1] not directly by HHS (except for certain authorities that are assigned to the Secretary for which delegation is expressly prohibited).

The withdrawal notice also rejects as “supported by flawed facts” the arguments in the termination notice that the UDI and CPG caused increased drug prices. In the withdrawal notice, FDA takes issue with HHS’s reliance in the termination notice on an observational study limited to only 26 drugs that was not adjusted for inflation. In addition, the withdrawal notice specifically rejects the argument that the UDI and CPG were responsible for price increases associated with the drug, DARAPRIM. The withdrawal notice explains that DARAPRIM’s price increase in 2015 was unrelated to the approval of this drug product, which had long been approved and previously available at a lower price.[2]

Status quo ante reestablished, RFI ended

In addition to stating that FDA will continue to exercise its risk-based approach toward prioritization of enforcement action for unapproved new drugs, the withdrawal notice ends the submission period for the request for information (RFI) portion of the termination notice, which had requested public input on four topics related to the statutory exemptions from the definition of “new drug,” as well as on which drugs should be “grandfathered” or Generally Recognized As Safe and Effective (GRASE). The withdrawal notice further states FDA’s intention to issue guidance to provide additional clarity on the agency’s enforcement authority over unapproved new drugs.

Notably, the withdrawal notice does not specifically address the “period of de facto market exclusivity” that was included in the 2011 update to the CPG, which has been alleged to have resulted in significant price increases for certain drug products and was, therefore, a primary argument underlying the termination notice. We anticipate that, in issuing clarifying guidance on how the agency intends to prioritize its enforcement resources for unapproved drugs, FDA will consider how it might address drug these pricing concerns, without unduly undermining the incentive to obtain FDA approval for drug products that have been historically marketed without such approval. For example, FDA’s draft guidance might consider a longer grace period for marketing an unapproved drug after a new drug obtains approval.

If you have any questions on this policy shift or FDA’s enforcement efforts over unapproved new drugs more generally, you may contact any of the authors of this alert or the Hogan Lovells attorney with whom you regularly work.

Authored by David Horowitz, Robert Church, and Jim Johnson