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Regulatory Affairs : Apr 15, 2009 (Vol. 29, No. 8)

Spotlight on the FDA

Outsourcing Clinicals; Medical Journal Articles; and Contract Manufacturing Liability Issues
  • Bruce Mackler

In today’s financing environment, the absence of early clinical data presents a high barrier to obtaining funding. Investors often say “show me the clinical data that show that the drug is safe and works and I will show you my money.”

As a result, biopharma companies have moved into early non-U.S. clinical trials that have lower safety data burdens. These studies are being conducted in less wealthy (a.k.a., developing) countries, where Phase I trials can be more rapid and less costly. This strategy has been promoted by CROs established in these countries.

Non-U.S. studies must be reported to FDA when an investigational product starts the IND process. Companies usually emphasize the first-in-man safety aspects to FDA and tout the proof of concept to venture capitalists. The strategy is to use such data to move into Phase II.

FDA is growing increasingly skeptical of the quality and adequacy of the local governmental oversight of these studies; thus, the regulatory value of these non-U.S. studies with FDA may be diminishing, particularly for Phase III studies. 

FDA reportedly is beginning to educate and train governmental regulators in other countries to better analyze protocol design and monitor clinical trials. Biopharma companies seeking to start such studies will be faced with new challenges and higher local regulatory requirements.

For instance, drug companies are asking if they can test their new drugs in India before they are demonstrated to be safe in the company’s home country. Patient advocates argue that individuals often enter trials because they have no medical insurance and no other option to receive advanced medical care. Although this concern is increasingly expressed in developing countries, these nations are reluctant to cut off the clinical trial dollars and medical access.

Biopharma firms planning early non-U.S. clinical trials need to anticipate the evolving FDA concerns, and act to increase the acceptability of such studies by improving the quality control of these trials and the adequacy of informed consent disclosure of study risks. These companies should also advance the local standards of medical care to make the data more relevant to U.S. standards.

In planning non-U.S. studies, companies need to be aware that cost and regulatory burdens will be increasing and trials may be slower than anticipated. But, compared to getting a first-in-man new drug into a Phase I through FDA in the current regulatory environment, it may still be faster to go offshore to generate early data. 

A regulatory constraint frequently overlooked by early-stage companies when planning to go offshore is the investigational new drug export restrictions, which mandate that companies will need to manufacture their Phase I drug under cGMP offshore, which is an added expense and also involves the transfer of technical know-how.

EMEA concerns about the acceptance of clinical data from trials conducted in developing world countries, particularly pivotal study data, expressed in their EMEA strategy paper (December 5, 2008) parallel the concerns expressed by FDA.  Approximately one-third of the patients in pivotal studies submitted in MMAs were recruited in developing countries. EMEA will seek better verification through inspections of the GCP and informed consent compliance of these studies.

Companies contemplating foreign (non-EMEA and U.S.) clinical studies would wise to increase the level of monitoring and auditing oversights for such studies during Phase II to verify compliance before starting Phase III pivotal studies at such sites. One strategy is the potential sharing of independent audit reports to demonstrate adequate GCP and informed consent compliance with regulatory authorities when after submitting MMAs/NDAs. Also, based on public statements by Indian clinical study experts, companies may have to bring GCP and ethical standards up to western levels through training at clinical sites, which is another hidden expense in assessing the cost effectiveness of such trials.

Given some ethical concerns about U.S. for-profit institutional review boards (IRBs), look for the FDA to also increase domestic inspections of IRBs after the recent General Accounting Office (GAO) report.  The GAO ran a sting operation and submitted sham trial protocols to a for-profit IRB requested by several congressmen, which exposed a 99.97% approval rate, with the approvals being unanimous.  Patient groups have recently voiced concern about the weakness of the IRB system and FDA’s oversight, a perception that results in less U.S. patients interested in U.S. clinical trials. Another major concern is the lack of transparency in terms of which IRB has oversight responsibility of a given clinical trial. Do not be surprised if Congress tries to address this in the future.

It is likely that the cost and investment of both domestic and nonwestern clinical studies will grow particularly for Phase II and III studies, but the flexibilities for early first-in-man Phase I studies will still be attractive in developing countries. This will remain a critical opportunity for start-up and early-stage biopharma companies to get early clinical data, now a prerequisite for VC funding.

What FDA Giveth, It Also Taketh Away

FDA recently announced a “Guidance for Industry on Good Reprint Practices for the Distribution of Medical Journal Articles and Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices” (January 2009). The document outlines permissible journal articles and the Agency’s recommendations for distribution; thus, FDA appears to giveth.

FDA statements about authors’ financial interest in the product or manufacturer, the publications that meet FDA journal quality, and information that does not “pose a significant health risk, if relied upon,” raise the bar considerably. Authors now have to seek publication in journals with independent, expert editorial boards that are sensitive to conflicts-of-interest and have high-quality peer review.

This raises the conundrum of whether articles not meeting these requirements will in the future be acceptable to FDA to support 505(b)(2) NDA submissions or to support BLAs. What should a company do if a study shows excellent safety and effectiveness in an article previously published in a medical journal that does not meet these editorial standards? It appears that FDA is establishing surreptitiously a new standard for the publication of clinical studies of both off-label and label uses.  Conversely, can publishers of scientific/clinical journals that meet the requirements now claim that they are in compliance with FDA publication standards in terms of the potential clinical utility of their published articles?

There is another implied FDA standard regarding the viability of off-label publications in terms of whether the protocol design and resultant clinical data is capable of showing that the use of the off-label product “…do[es] not pose a significant health risk, if relied upon,….”  Many academic medicine studies may focus on a small aspect of the potential utility of an off-label drug as applied to a new disease area. Must editorial staff and peer reviewers now evaluate these FDA criteria when reviewing an article for publication? Alas, I can now see the disclaimer that journal publishers may now add to their front pages  – “Publication of this article in our journal does not imply any expressed or implied endorsement of the alleged clinical benefit(s) from off-label use of this product, which this article discusses, Use At Your Own Risk.”

In February, two former sales officials of a device company pleaded guilty to a felony misbranding charge that they had promoted unauthorized or off-label use of a medical device; they now face up to three years in prison and a $250,000 fine; thus, FDA taketh.

FDA is also investigating whether the company knew the products were being promoted for off-label use. These guilty pleas should impact the way companies control distribution of publications on unapproved uses and how sales and marketing personnel follow up on distribution of such material. Companies are advised to develop standard operating procedures and training for sales personnel to make sure that they are complying with the new guidance.

These days, many start-up companies are focusing on a narrower clinical indication to expedite product development within tight financial constraints. The rationale is that the narrower clinical indication will be augmented in the marketplace by off-label use. 

This practice is also popular with larger companies that are expanding their usually broad clinical indication. This strategy is now at risk with substantial liability exposure if the company fails to generate sufficiently broad preclinical and clinical safety data to demonstrate that the potential off-label use “…[does] not pose a significant health risk, if relied upon.” I am sure this higher FDA standard will not be lost on plaintiff product liability attorneys.

Companies Liable For CMOs’ Work

Biopharma and device companies frequently outsource their product manufacturing to a CMO, relying on their established quality systems and personnel to meet regulatory guidelines. 

Recently, FDA claimed in a Form FD 483 Notice of Observations given at the end of a cGMP inspection that a company that held an FDA approval for a product did not create a quality plan outlining specific requirements for its contract manufacturer. FDA expects the company to now actively audit and verify the effectiveness of its quality plan and to correct past deviations/failures while preventing new ones at its CMO.

FDA will be increasingly prone to hold companies liable for “failure to sufficiently evaluate and select potential contractors, suppliers, and consultants on the ability to meet specific requirements.” 

As an arbitrator in contract disputes between manufacturers and CMOs, I am acutely aware that such involvement has tremendous legal consequences under the terms of the agreement between the two parties, especially when a batch fails to meet specifications. In addition, it is a potential legal quagmire when a manufacturing problem arises and the company works with the CMO to analyze and make changes in the process or quality testing to address the problem and the problem continues.

The underlying legal question that now faces companies and their CMOs is, who has ultimate liability, both under the FDA statutes and under contract law?

Editor's Note

This month GEN introduces an extremely important and pertinent regular column for our subscribers. "Spotlight on the FDA" will provide our readers with a concise analysis of FDA initiatives and activities and how they will directly impact your R&D and biomanufacturing operations on a global scale.

Bruce F. Mackler, Ph.D., J.D., a senior advisor in FDA matters and FDA due diligence issues for financial/investment groups and companies, will serve as the main columnist. He has over 27 years of hands-on regulatory and legal experience working with the FDA on traditional and biotech-derived products.

Author’s Bio

Bruce F. Mackler’s, Ph.D., J.D. (bmackler@brucemackler.net), has 28 years of FDA legal and regulatory experience in biomedical products. As an FDA adviser, he assists financial groups like venture funds that are performing due diligence on biomedical opportunities prior to making an initial investment. He consults on integrated FDA, technical, and business issues by assessing portfolio companies and conducts approval risk analyses for analysts and investors.

His business acumen stems from working in sales/manufacturing in a family business, owning several bioservice businesses, holding management roles like interim COO and regulatory affairs vp in various start-up companies, and being a university/NIH researcher for 15 years.

Dr. Mackler has a Ph.D. from the University of Oregon Medical School (1970) in the area of immunology/microbiology and has authored more than 100 published scientific papers and abstracts. He has written/edited the Life Science Due Diligence and Regulatory Newsletter and the TVM-Capital Regulatory Bulletin.

He also advises early- and late-stage biomedical companies, serves on several boards of directors and scientific advisory boards of biomedical companies, and is an active investor. His areas of expertise include FDA regulatory approval strategies, pre-INDs/IDEs, 510ks, PMAs/ NDAs/BLAs, manufacturing/QA/QC, and how to effectively interact with FDA. 

Dr. Mackler co-founded the Association of Biotechnology Companies (ABC) with six small biotech firms and helped it grow to over 250 members. ABC later merged to form the Biotechnology Industry Organization (BIO).