Alerts and Updates

FDA Issues Compliance Policy Guide That Provides Potential Business Advantage for Filing New Drug Application for Marketed, Unapproved Drug

September 30, 2011

Underlying the FDA's Compliance Policy Guide is a broad policy goal: to encourage manufacturers to become compliant without FDA enforcement action.

On September 19, 2011, the U.S. Food and Drug Administration (FDA) issued a Compliance Policy Guide (CPG) titled "Marketed Unapproved Drugs," which revises the FDA's 2006 CPG regarding the same topic. The FDA estimates that several thousand drug products are on the market illegally, without FDA approval. The CPG not only sets forth the FDA's current view on enforcement action related to these drugs, but also outlines potential incentives for manufacturers to voluntarily file a new drug application (NDA).

How are "unapproved" drugs on the market?

Unapproved drugs are on the market by virtue of the changes in legislation and approval requirements since the original Federal Food and Drugs Act was enacted in 1906. While the original legislation prevented the marketing of adulterated or misbranded products, it did not set forth a drug approval regime. FDA approval of drug products was first required in 1938 by the federal Food, Drug, and Cosmetic Act (the "FD&C Act"). However, FDA approval was not necessarily on a product-by-product basis. Once the FDA approved one product, another product that the FDA considered identical, related or similar (IRS) to the approved drug could also be legally marketed. Additionally, manufacturers marketed drugs that they considered to be generally recognized as safe (GRAS) based on their own assessment or an FDA opinion. In 1962, the FD&C Act was amended to require drugs to be proven both safe and effective. This new requirement, along with increasing public concern, resulted in various FDA actions to evaluate then-marketed, unapproved drugs.

What will the FDA's enforcement action entail for marketed unapproved drugs?

The FDA's approach to regulating unapproved drugs is twofold, as the FDA is constantly identifying illegally marketed products. Once those products are identified, the FDA will take action, which may include requesting voluntarily compliance; providing notice via the Federal Register; issuing a warning letter; or initiating a proceeding to seize or otherwise enjoin the marketing of the product. Due to the FDA's limited resources, its enforcement policy is primarily based on the risk associated with the product.

What main categories of "unapproved drugs" are priorities for the FDA?

The CPG sets forth several categories of marketed unapproved drugs that the FDA views as enforcement priorities. Consistent with the FDA's goal of ensuring that all products comply with the approval provisions of the FD&C Act—namely that all drug products demonstrate both safety and effectiveness—the FDA has stated that priority products will be:

  • Drugs with potential safety risks;
  • Drugs that lack evidence of effectiveness;
  • "Health Fraud Drugs," meaning drugs that have not been proven safe and effective for their promoted benefits;
  • Drugs that otherwise challenge the NDA or over-the-counter (OTC) review systems;
  • Drugs that otherwise violate the FD&C Act; and
  • Drugs that have been reformulated to avoid FDA action, but that remain noncompliant.

Regardless of these broad categories, the FDA has stated that products involved in Drug Efficacy Study Implementation (DESI) proceedings or OTC monograph proceedings are generally exempt from any enforcement action.

In addition, the FDA has indicated that it will evaluate products on a case-by-case basis to determine whether some period of continued marketing is warranted. In other words, the FDA has indicated that a "grace period" may exist, depending on the effects on the public; the difficulty in performing the necessary scientific studies on the product; the relative burden on the affected parties; the FDA’s resources; and other special circumstances.

Do incentives exist for companies to become compliant?

Underlying the FDA's CPG is a broad policy goal: to encourage manufacturers to become compliant without FDA enforcement action. The CPG indicates there is a special circumstance where the variable grace period described above can result in a de facto exclusivity period for the manufacturer who first complies with the FD&C Act. The FDA recognizes that a company may file an NDA for a product that other companies are marketing without approval. For such drugs, the FDA has indicated that it normally intends to allow for a one-year grace period before initiating any enforcement action against unapproved drugs that remain on the market. However, this one-year period is variable and will be decided on a case-by-case basis. If the grace period is shorter, according to the CPG, "the more likely it is that the first company to obtain approval will have a period of de facto market exclusivity before other products obtain approval." Depending on the product at issue, the FDA's guidance appears to provide economic and competitive incentives for voluntarily filing an NDA for an existing unapproved drug with other unapproved, direct competitors on the market.

For Further Information

If you have any questions concerning this Compliance Policy Guide, please contact Frederick R. Ball, Elese Hanson, any other member of the Pharmaceutical, Pharmacy & Food industry group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.