Keeping pace with the ever-changing life sciences industry, Morrison Foerster stays on top of the trends and political, legal, and economic drivers to support striking the balance between innovative discovery and purposeful business planning to assure our clients continued success. MoFo Life Sciences shares timely legal and business insights and in-depth analyses on trends and the complex technologies at the heart of the global pharmaceutical, biotechnology, diagnostics, medical devices, digital health, and AgTech fields.Learn more about our <a href="https://www.mofo.com/capabilities/life-sciences-healthcare" target="_self">Life Sciences practice</a>.<h2 dir="ltr">ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants. She represents clients ranging from large international pharmaceutical companies to midsized companies, startups, and universities.Meghan has filed numerous Patent Term Extension applications to secure additional term for her clients’ patents, which cover FDA-approved products. In addition, Meghan has extensive experience addressing complex obviousness-double patenting and subject matter eligibility issues impacting her clients’ patent portfolios. Meghan also represents clients in both investor-side and target-side due diligence, in deals from seed funding to initial public offerings.Prior to law school, Meghan attended graduate school at the University of California, Los Angeles, where she received a Ph.D. in biological chemistry based on her work on protein-protein and protein-DNA interactions at a molecular level. Meghan is the author of several scientific publications and has presented her research at international conferences.Meghan received her J.D. from the University of Southern California Law School and spent a year as a visiting student at Santa Clara University, where she focused on intellectual property.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants.

Meghan Poon

Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in life sciences, digital, and high-tech industries.His subjects of focus include research and development collaborations, complex licensing agreements, and other technology transactions, as well as know-how protection strategies, and employee invention law. He also has substantial experience in litigating patents, trademarks, and other intellectual property assets, often in a multijurisdictional context. In addition, Wolfgang and his team frequently clear trademarks and ad campaigns and prosecute trademark applications.Wolfgang is co-editor of our <a href="https://lifesciences.mofo.com/" dir="ltr" target="_blank">MoFo Life Sciences Blog</a>.Wolfgang is a partner of Morrison Foerster based in our German office in Berlin.<h4 dir="ltr">Representative Transactional Matters</h4><ul dir="ltr"><li>U.S.-based BioTech fund on various research collaborations and other transactions with German start-ups or research institutions.</li><li>Negotiate multimillion-euro strategic partnership between two AgTech leaders concerning the development and commercialization of pest-resistant transgenic traits.</li><li>Craft global multi-million collaboration regarding AI-powered robotic MaaS.</li><li>UK-based digital health company on product roll-out of RPM applications in Germany; coordinate international expansion.</li><li>Advise numerous German start-ups on their U.S. expansion.</li><li>Draft diverse global patent and know-how license agreements in the areas of AgTech and life sciences—including gene licensing and licensing of genome editing technologies (e.g., CRISPR)—and medical devices; draft correlating supply and distribution agreements.</li><li>Structure IP rights in connection with joint ventures and other M&A transactions, including the carve-out of a patent-heavy semiconductor business comprising nine jurisdictions into a German–U.S. joint venture.</li><li dir="ltr">Advise on government-funded, multi-partner R&D projects and/or R&D projects with academic institutions, as well as on employee invention law.</li></ul><h4 dir="ltr">Representative Contentious IP Matters</h4><ul dir="ltr"><li>Lead counsel in an international dispute between software companies on rights and obligations following termination of a multi-million licensing and distribution arrangement; coordinate local counsel.</li><li>Defend Japanese chip manufacturer in high-profile SEP-litigation; advise on global settlement arrangement.</li><li>Represent leading internet retailer in patent infringement and concurrent invalidity proceedings in the context of a multijurisdictional dispute concerning touch-screen technology.</li><li>Represent diverse pharmaceutical and life sciences companies in national and cross-border patent infringement proceedings and other technology-related disputes, including preliminary injunctions as well as pre‑trial discovery and inspection proceedings, concerning, inter alia, drug-coating technologies, toner cartridges, medicinal gases, transgenic plants, and vaccines.</li><li dir="ltr">Conduct trademark, copyright, and false advertising litigation, including, most notably, a high-profile trademark litigation for a German bank, and a nine-country cross-border trademark litigation involving a famous pharmaceutical brand.</li></ul>

Dr. Wolfgang Schönig berät Mandanten zum Schutz des geistigen Eigentums sowohl in streitigen als auch nichtstreitigen Angelegenheiten, mit einem besonderen Fokus auf die IP-rechtliche Beratung von Unternehmen aus den Bereichen Life Sciences, Digitalwirtschaft und High-Tech.Zu seinen Beratungsschwerpunkten gehören Forschungs- und Entwicklungskooperationen, komplexe Lizenzvertragsgestaltungen und andereTechnologie-Transaktionen, sowie Know-how-Schutz-Strategien und das Arbeitnehmererfinderrecht. Er verfügt zudem über umfangreiche Prozesserfahrung zur Durchsetzung von Patenten, Marken- und anderen IP-Rechten, häufig auch in einem grenzüberschreitenden Kontext. Darüber hinaus bewertet Dr. Wolfgang Schönig zusammen mit seinem Team regelmäßig die Rechtskonformität von Werbekampagnen, prüft die Verfügbarkeit von Marken und entwickelt entsprechende Anmeldestrategien.Dr. Wolfgang Schönig ist Co-Editor des Life Sciences Blogs von Morrison Foerster.Er hat seinen Doktortitel an der Heinrich-Heine-Universität Düsseldorf und seinen LL.M. an der Fordham School of Law in New York erworben, jeweils mit Schwerpunkt im gewerblichen Rechtsschutz. Seinen MBA-Abschluss erhielt er von der European University in Barcelona.Dr. Wolfgang Schönig ist Partner des deutschen Büros von Morrison Foerster in Berlin.<h4 dir="ltr">Repräsentative Transaktionen</h4><ul><li dir="ltr">BioTech-Fonds mit Sitz in den USA bei verschiedenen Forschungskooperationen und anderen Transaktionen mit deutschen Start-ups oder Forschungseinrichtungen</li><li dir="ltr">Verhandlung einer hochvolumigen strategischen Partnerschaft zwischen zwei Technologieführern im Bereich Crop Science betreffend der Entwicklung und Kommerzialisierung von bestimmten Resistenzen</li><li dir="ltr">Gestaltung einer globalen Multi-Millionen-Zusammenarbeit für KI-gestützte Roboter</li><li dir="ltr">Ein in Großbritannien ansässiges Unternehmen für digitale Gesundheit bei der Markteinführung von RPM-Anwendungen in Deutschland; Koordination der internationalen Expansion</li><li dir="ltr">Beratung zahlreicher deutscher Start-ups bei deren US-Expansion</li><li dir="ltr">Strukturierung und Verhandlung diverser Patent- und Know-How-Lizenzen in den Bereichen Ag Tech und Life Sciences – einschließlich Fragen zu genome editing wie CRISPR-Medizingeräte, sowie Gestaltung von Softwarelizenzverträgen und Erstellung korrespondierender Liefer- und Vertriebsvereinbarungen</li><li dir="ltr">Strukturierung von IP-Rechten im Zusammenhang mit Joint Ventures und anderen M&A-Transaktionen, darunter die Koordination eines neun Länder umfassenden IP Carve-Outs im Rahmen eines Halbleiter-JVs</li><li dir="ltr">Beratung zu staatlich geförderten Multi-Partner F&E-Projekten und/oder F&E-Projekten mit akademischen Einrichtungen sowie zum Arbeitnehmererfindungsrecht</li></ul><h4 dir="ltr">Repräsentative IP-Streitigkeiten</h4><ul><li dir="ltr">Lead Counsel in einem internationalen Rechtsstreit zwischen Softwareunternehmen über Rechte und Pflichten nach Beendigung einer millionenschweren Lizenz- und Vertriebsvereinbarung; Koordinierung der lokalen Anwälte</li><li dir="ltr">Verteidigung eines japanischen Chipherstellers in einem prominenten Streitfall bezüglich Standardessentieller Patente (SEP); Beratung zu einer globalen Vergleichsregelung</li><li dir="ltr">Verteidigung einer führenden Internetplattform gegen Ansprüche eines Patenttrolls wegen vermeintlicher Verletzung von Patent bezüglich Touchscreen-Technologie sowie korrespondierende US-Streitigkeiten</li><li dir="ltr">Vertretung von Pharma- und Life Science-Unternehmen in nationalen und grenzüberschreitenden Patentverletzungsverfahren und anderen technologiebezogenen Streitigkeiten, einschließlich einstweiliger Verfügungsverfahren und vorprozessualer Beweissicherungs- und Besichtigungsverfahren, unter anderem in Bezug auf Arzneimittelbeschichtungstechnologien, Tonerkartuschen, medizinische Gase, transgene Pflanzen und Impfstoffe</li></ul>

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Wolfgang Schönig is a partner of Morrison Foerster (International) LLP based in our German office in Berlin. His practice specialty is advising on IP aspects relative to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. Wolfgang is specialized in research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig focuses his practice on IP aspects relative to transactions in the digital, telecoms, high tech, life sciences, and pharmaceuticals industry, as well as legal representation in IP disputes.

Wolfgang Schönig advises clients on IP aspects relating to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. His additional focus areas include research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig

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Last week, the U.S. Food and Drug Administration (FDA) published its new guidance on the <a href="https://www.fda.gov/media/139638/download" target="_blank" dir="ltr">Development and Licensure of Vaccines to Prevent COVID-19</a> (the “Guidance”). FDA provided a preview of a new COVID-19 vaccines guidance back in <a href="https://www.fda.gov/regulatory-information/search-fda-guidance-documents/emergency-use-authorization-vaccines-prevent-covid-19" target="_blank">March 2023</a>, when it announced that the current policy on Emergency Use Authorizations (EUAs) for COVID-19 vaccines would expire on November 7, 2023, unless superseded by another policy before that date. While the Guidance does not indicate that it replaces the previous EUA guidance, it is significant because FDA does clearly state that, “At this time, the goal of new vaccine development programs to prevent COVID-19 should be to pursue traditional approval[.]”The Guidance provides extensive recommendations on how to conduct pre-clinical and clinical studies and what FDA expects from sponsors regarding the data to support their Biologics License Application (BLA) submissions. Some of the noteworthy aspects of the Guidance include the following:<ul><li dir="ltr">The Guidance suggests that because the immunogenicity of COVID-19 is still not well understood, developers should focus on vaccine efficacy in their trials.</li><li>FDA recommends late phase trials with thousands of participants and at least six months of monitoring.</li><li>FDA also takes important steps in the Guidance to address health inequities related to vaccine trials and the effects of COVID-19, noting that the agency “strongly encourages” enrollment of racial and ethnic minorities. FDA also encourages vaccine developers to include pregnant women in trials.</li><li>FDA encourages sponsors to consider more innovative clinical trial designs that may speed up the development process, such as adaptive trials and seamless trials.</li><li>To facilitate the ability to make comparisons across vaccines, FDA recommends the standardization of efficacy endpoints across trials.</li><li>Screening trial participants and evaluating the efficacy of trials will require high quality in vitro diagnostic testing to accurately detect infection. However, the Guidance merely states that the testing should be “sensitive and accurate” and “validated before use in pivotal clinical trials” without further specifying a standard or regulatory status of the testing to be used.  </li><li>The Guidance also provides that accelerated approval may be appropriate for a vaccine that can more fully protect against COVID-19, but FDA will require a better understanding of COVID-19 immunology.</li></ul>Overall, it appears that FDA is taking steps to ensure that some of the criticisms of the government’s response to COVID-19 are addressed, for example, by encouraging diverse trials in acknowledgment of the health inequities of those populations who have been most affected by COVID-19. FDA also continues to recognize the need for public transparency regarding the standards of vaccine approval and the importance of establishing rigorous standards for the approval of COVID-19 vaccines. However, it seems that other criticisms, such as the concern among many in the public that the vaccines do not prevent diseases, will remain unaddressed for now. Until the immunology of COVID-19 is better understood, we will likely continue to see members of public skeptical of future vaccines because they do not prevent infection.As an administrative law matter, it is noteworthy that FDA issued the Guidance without prior comment, invoking the provisions of FDA’s statutes and regulations that say a guidance can be immediately implemented without public comment when a public comment period is not feasible or appropriate. Most of FDA’s COVID-19 guidance publications have been immediately issued without the opportunity for public comment, given the exigencies of the COVID-19 pandemic. However, with the Public Health Emergency no longer in place, it is unclear what FDA’s basis was for immediate publication of the Guidance, and FDA did not provide any explanation.

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Brigid is a food, drug, and medical device lawyer who counsels life sciences companies on a wide range of U.S. Food & Drug Administration pre- and post-market regulatory issues.

Brigid DeCoursey Bondoc

Brigid is a food, drug, and medical device lawyer who counsels life sciences companies on a wide range of U.S. Food & Drug Administration pre- and post-market regulatory issues.

Brigid Bondoc

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Last week, the U.S. Food and Drug Administration (FDA) published its new guidance on the Development and Licensure of Vaccines to Prevent COVID-19 (the “Guidance”). FDA provided a preview of a new COVID-19 vaccines guidance back in March 2023, when it announced that the current policy on Emergency Use Authorizations (EUAs) for COVID-19 vaccines would expire on November 7, 2023, unless superseded by another policy before that date.

New FDA Guidance on COVID-19 Vaccines

On September 19, FDA released a highly anticipated new draft guidance for industry titled <a href="https://www.fda.gov/regulatory-information/search-fda-guidance-documents/demonstrating-substantial-evidence-effectiveness-based-one-adequate-and-well-controlled-clinical" target="_blank" dir="ltr">Demonstrating Substantial Evidence of Effectiveness Based on One Adequate and Well-Controlled Clinical Investigation and Confirmatory Evidence</a>. The draft guidance expands on Section 115 of the Food and Drug Administration Modernization Act (FDAMA), as well as corresponding <a href="https://www.fda.gov/regulatory-information/search-fda-guidance-documents/providing-clinical-evidence-effectiveness-human-drug-and-biological-products" target="_blank">1998</a> and <a href="https://www.fda.gov/regulatory-information/search-fda-guidance-documents/demonstrating-substantial-evidence-effectiveness-human-drug-and-biological-products" target="_blank">2019</a> guidance documents, which focused on demonstrating substantial evidence of effectiveness outside of the traditional two-study requirement.The 2019 draft guidance provided several examples of situations when confirmatory evidence may be acceptable but did not provide much detail to be helpful to sponsors. This new draft guidance provides more examples and additional clarification on how the substantial evidence of effectiveness requirement can be met with one adequate and well-controlled clinical investigation and additional confirmatory evidence. The draft guidance does not address related topics such as demonstrating safety or demonstrating substantial evidence of effectiveness with a single, multicenter study.FDA offers several general principles that sponsors should adhere to if they intend to demonstrate substantial evidence of effectiveness with a single adequate and well-controlled clinical investigation and confirmatory evidence. Like the earlier guidance, this draft guidance highlights that the quantity of confirmatory evidence required to demonstrate substantial evidence of effectiveness may vary depending on the clinical investigation. Adequate and well-controlled clinical investigations that are particularly strong may require less confirmatory evidence compared to a clinical investigation that is less compelling. Additionally, sponsors should have “scientific support” for their plan to demonstrate substantial evidence of effectiveness, including taking into account relevant “clinical context” factors. FDA also recommends that sponsors engage with the agency as soon as possible if they intend to use confirmatory evidence to demonstrate substantial evidence of effectiveness.The draft guidance offers several examples of when certain types of confirmatory evidence could be appropriate for demonstrating substantial evidence of effectiveness:<ul><li>Related Indication. According to the draft guidance, clinical evidence from a drug’s use in a related indication can serve as confirmatory evidence in some instances. The two indications must be sufficiently similar for the evidence from a related indication to serve as confirmatory evidence. Additionally, the drug’s mechanism of action in each indication should be similar.</li><li>Mechanistic or Pharmacodynamic Evidence. Another category of evidence that the draft guidance indicates could serve as confirmatory is mechanistic or pharmacodynamic evidence. Use of this type of evidence requires extensive understanding of both the underlying disease and the drug’s mechanism of action with respect to the disease. The draft guidance states that this type of evidence may be collected in vitro or by measuring a clinical endpoint.</li><li>Animal Studies. The draft guidance also identifies certain instances in which animal studies may serve as confirmatory evidence. In order for animal data to qualify as confirmatory evidence, the disease state in the animal model must be well understood and sufficiently similar to the human disease state. Additionally, the drug’s mechanism of action between the animal model and humans should be similar. Given that animal studies are often conducted in the preclinical stage, FDA recommends consulting with the agency before those studies are conducted if the sponsor intends to use data from animal models as confirmatory evidence.</li><li>Drugs in the Same Pharmacological Class. Clinical evidence from drugs that are in the same pharmacological class as the drug being developed can serve as confirmatory evidence, provided that the drugs have the same mechanism of action. The draft guidance states that using data from drugs in the same pharmacological class as confirmatory evidence is more appropriate when the pharmacological class is large and has an established, uniform effect.</li><li>Natural History. The draft guidance also highlights instances in which natural history evidence may successfully act as confirmatory evidence. The primary instance in which natural history evidence may prove useful is demonstrating that the control group is an accurate representation of the typical disease course. To do so, there should be no overlap in the natural history data and the control data.</li><li>Real World Evidence (RWE). Of particular interest to industry is the draft guidance on when real world data (RWD) and evidence can be used as confirmatory evidence. The draft guidance clarifies that RWD and RWE can be used as confirmatory evidence in two contexts: when seeking approval of a new indication for a previously approved drug and when completing post-study requirements. This has generated some concern that FDA may be limiting the instances in which RWD and RWE can serve as confirmatory evidence, including barring it from serving as confirmatory evidence for a first-time drug approval. Furthermore, the agency will look to factors such as the rigor of study design and statistical analysis to determine if the RWD meets the requisite standards for generating RWE.</li><li>Expanded Use of an Investigational Drug. The final example of confirmatory evidence that the draft guidance provides is evidence from the expanded use of an investigational drug. The draft guidance points out that rarely will expand access protocols generate the requisite information for the data to be used for research. However, in the instances where expanded access data is reliable and complete, it can serve as confirmatory evidence for the results of an adequate and well-controlled clinical investigation.</li></ul>The examples of confirmatory evidence listed in the new draft guidance on demonstrating substantial evidence of effectiveness are not exhaustive. However, these examples indicate the types of confirmatory evidence that may be accepted by FDA and highlight the factors that the agency looks to when determining whether data can serve as confirmatory evidence. This provides a roadmap for industry as to when sponsors may be able to demonstrate substantial evidence of effectiveness outside of the traditional two-clinical-investigation model.Lauren Limbach, a law clerk in our Boston office, contributed to the drafting of this post.

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On September 19, FDA released a highly anticipated new draft guidance for industry titled Demonstrating Substantial Evidence of Effectiveness Based on One Adequate and Well-Controlled Clinical Investigation and Confirmatory Evidence. The draft guidance expands on Section 115 of the Food and Drug Administration Modernization Act (FDAMA), as well as corresponding 1998 and 2019 guidance documents, which focused on demonstrating substantial evidence of effectiveness outside of the traditional two-study requirement.

FDA Issues New Draft Guidance on Demonstrating Substantial Evidence of Effectiveness with One Clinical Investigation and Confirmatory Evidence

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On June 30, 2023, the Centers for Medicare and Medicaid Services (CMS) released its much-anticipated final guidance (“Final Guidance”) for the Medicare Drug Price Negotiation Program (“Negotiation Program”) through the Inflation Reduction Act (IRA).[1]  The Negotiation Program is an unprecedented program intended to lower the cost of healthcare for millions of Americans by requiring that manufacturers of the top ten highest cost prescription drugs covered by Medicare engage in a negotiation process to determine a “maximum fair price” (MFP).  

Medicare Drug Price Negotiation Program Final Guidance

Brigid Bondoc and Wendy Chow authored an article for HealthTech about what the recent growth of generative artificial intelligence (AI) tools means for providers and patients.“In the absence of a clear legal and ethical framework that promotes the complete scope of the benefits of generative AI across the healthcare ecosystem, the full potential of the technology cannot be attained,” the authors wrote.They added: “AI healthcare applications today are cautiously serving in the administrative and supportive roles of the delivery system. But the true potential lies in the shift of technological tools from assistive to primary instruments of medical care. To integrate those tools into the healthcare environment, there must be a framework that addresses hard ethical and legal questions. Who will be practicing medicine: the doctor or the machine? What role should governments play in ensuring safety, impartiality and accountability?”Read the <a href="https://healthtechmagazine.net/article/2023/07/5-questions-generative-ai-in-healthcare-perfcon" target="_blank">full article</a>.

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Patenting Artificial Intelligence in the U.S. – Considerations for AI Companies

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“In the absence of a clear legal and ethical framework that promotes the complete scope of the benefits of generative AI across the healthcare ecosystem, the full potential of the technology cannot be attained,” the authors wrote.

5 Questions About Generative AI in Healthcare

In recent months, six different lawsuits have been filed challenging the Inflation Reduction Act (IRA)’s Drug Price Negotiation Program (the “Program”), with a flurry of activity likely in the coming months before the Program’s first deadlines. Below we analyze the latest developments in the cases and compare the lawsuits.The ProgramAs we previously <a href="https://lifesciences.mofo.com/topics/cms-reveals-new-details-on-medicare-drug-price-negotiation-program#_ftn2">covered</a>, the drug price negotiation requirements were enacted as part of the IRA, which authorizes the Centers for Medicare and Medicaid Services (CMS) to engage in price negotiations with drug manufacturers for certain high-cost, single-source Medicare Part B or Part D drugs. CMS will select the 10 and 15 highest-ranked Part D drugs for rolling out negotiated prices in 2026 and 2027, respectively. To ensure compliance with the negotiation process, the IRA applies an excise tax on each sale of the drug during a period of non-compliance, including drugs sold to purchasers other than Medicare and Medicaid.Some of the Program’s first, major deadlines are fast approaching. CMS recently <a href="https://www.cms.gov/newsroom/press-releases/cms-releases-revised-guidance-historic-medicare-drug-price-negotiation-program" target="_blank">confirmed</a> that by September 1, 2023, the agency will publish a list of 10 Medicare Part D drugs for negotiation. By October 1, 2023, manufacturers of the selected drugs must sign an agreement with CMS to conduct negotiations.The LawsuitsCurrently, six complaints have been filed against the U.S. Department of Health and Human Services (HHS), which oversees CMS. The primary plaintiff and location of each suit are listed below:<ol><li>Merck & Co., Inc. (Merck): Filed June 6, 2023, in Washington, D.C.<a href="https://www.courtlistener.com/docket/67478203/1/merck-co-inc-v-becerra/" target="_blank"> Merck v. Becerra et al., D.D.C., No. 1:23-cv-01615</a></li><li>U.S. Chamber of Commerce (Chamber): Filed June 9, 2023, in Columbus, OH<a href="https://www.uschamber.com/assets/documents/Complaint-Dayton-Area-Chamber-of-Commerce-v.-Becerra-S.D.-Ohio.pdf" target="_blank"> Dayton Area Chamber of Com. et al. v. Becerra et al., S.D. Ohio, No. 3:23-cv-00156</a></li><li>Bristol Myers Squibb (Bristol): Filed June 16, 2023, in Trenton, NJ<a href="https://www.courtlistener.com/docket/67508656/1/bristol-myers-squibb-company-v-becerra/" target="_blank"> Bristol Myers Squibb Co. v. Becerra et al., D.N.J., No. 3:23-cv-03335</a></li><li>Pharma. Research and Manufacturers of America (PhRMA): Filed June 21, 2023, in Austin, TX<a href="https://www.courtlistener.com/docket/67515442/1/1/national-infusion-center-association-v-xavier-becerra/" target="_blank"> Nat’l Infusion Ctr. Ass’n v. Becerra et al., W.D. Tex., No: 23-cv-00707</a></li><li>Astellas Pharma (Astellas): Filed July 14, 2023, in Chicago, IL<a href="https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/07/Astellas_20230714_COMPLAINT.pdf" target="_blank"> Astellas Pharma US, Inc., v. Dep’t of Health and Hum. Services et al., N.D. Ill., No: 23-cv-04578</a></li><li>Johnson & Johnson (J&J): Filed July 18, 2023, in Trenton, NJ Janssen Pharmaceuticals, Inc. v. Becerra et al., D.N.J., No: 23-cv-03818</li></ol>Factual AllegationsTwo factual allegations are most common among the plaintiffs: 1) that drug price negotiation will not provide a genuine opportunity to negotiate, and 2) that the excise taxes operate as a coercive penalty.The Chamber complaint argues that there is no genuine opportunity to negotiate by pointing out that there is no judicial or administrative review of prices, government offers are capped via statute and have no minimum, and materials used in the negotiation are limited. The Chamber complaint also preempts the government’s likely counter, that manufacturers could voluntarily withdraw from Medicare and Medicaid to avoid the Program altogether. The Chamber points out that Medicare and Medicaid programs dominate the market, respectively accounting for 21% and 17% of <a href="https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet#:~:text=Historical%20NHE,%202021:&amp;text=Medicare%20spending%20grew%208.4%25%20to,28%20percent%20of%20total%20NHE." target="_blank">national health spending</a>. Therefore, manufacturers cannot afford to withdraw drugs from those programs to avoid the price setting.The Merck complaint provides an example supporting the argument that enormous excise taxes constitute a penalty. Merck states that excise taxes escalate daily from 186% to 1900% of a drug’s daily revenues, and estimates that refusal to negotiate for even just the one drug cited in their complaint would incur tens of millions of dollars in penalties on the first day. The penalties would purportedly escalate to hundreds of millions of dollars per day thereafter.Legal ArgumentsThe legal arguments detailing why the Program is unconstitutional are varied, but overlap across complaints. The most common argument is that the Program violates the First Amendment by forcing companies to state that they “agree voluntarily” to the government’s offer. Across all the complaints, seven legal arguments in total challenge the constitutionality of the Program. A summary of each argument and the associated litigants are below.<ol><li>Fifth Amendment – Unlawful Taking: Under the Program, the government is taking products and giving them to third parties through arbitrary, forced sales. Plaintiffs: Merck, Bristol, Astellas, and J&J</li><li>Fifth Amendment – Due Process: There is no procedural or legal recourse under the Program, prices are prejudiced against manufacturers, and negotiations are concealed from the public. Thus, there is significant risk of “erroneous depravation” under Supreme Court legal standards. Plaintiffs: Chamber, PhRMA, and Astellas</li><li>First Amendment – Compelled Speech: The Program forces companies to publicly state that they voluntarily “agree” to a price, when it is actually a forced negotiation. Plaintiffs: Merck, Chamber, Bristol, Astellas, and J&J</li><li>Eighth Amendment – Excessive Fines: The “excise taxes” imposed by the Program are not taxes intended to discourage the use of a product, but rather are penalties intended to punish manufacturers for refusing to agree to negotiate or agree to the maximum fair price. Plaintiffs: Chamber and PhRMA</li><li>Const. Article 1 – Separation of Powers: The Program violates constitutional nondelegation principles through Congress’s impermissible delegation of broad, unconstrained authority to HHS to set prices without any meaningful constraints. Plaintiffs: Chamber and PhRMA</li><li>Const. Article 1 – Enumerated Powers: Congress does not have the power to authorize the Program’s excise tax because it operates as a penalty. Plaintiffs: Chamber</li><li>First and Fifth Amendment – Unconstitutional Condition: The government cannot condition participation in Medicare and Medicaid upon compliance with the Program and subsequent relinquishment of its constitutional speech and property rights. Litigant: J&J</li></ol>Recent MotionsOn July 11, 2023, Merck filed a <a href="https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/06/Merck_20230711_MOTION-for-Summary-Judgment.pdf" target="_blank">motion for summary judgment</a> seeking declaratory and injunctive relief, reasserting allegations that the Program “is tantamount to extortion” and further expounding arguments that the Program violates the Fifth Amendment as an illegal taking and the First Amendment as compelled speech. The motion also more fully develops a response to the government’s argument that participating in Medicare and Medicaid is voluntary. Specifically, it argues that the Program is not analogous to receipt of federal funds with “conditions,” especially since a manufacturer cannot realistically terminate participation in Medicare or Medicaid in time to avoid potential excise taxes. Merck points out that it would have needed to give CMS notice by January 31, 2022, in order to properly extricate its products before the upcoming October 1, 2023, deadline.On July 12, 2023, the Chamber filed a <a href="https://aboutblaw.com/9f5" target="_blank">motion for a preliminary injunction</a>, asking the court to enjoin HHS from implementing the Program. The Chamber’s motion focuses on the Due Process argument, stating that when the government sets prices, it must afford parties procedural safeguards to ensure just and reasonable prices and a fair return on investment, as directly addressed by Sixth Circuit precedent. The Chamber finally asserts that manufacturers will be irreparably harmed by costs associated with compliance and disclosure, separate from the even greater costs associated with government-mandated prices.Key Takeaways<ul><li>Litigation challenging the Program will likely grow more active as CMS deadlines approach in the Fall, with resultant court decisions potentially impacting the pharmaceutical and healthcare industry more broadly.</li><li>The courts’ decisions will inform the legal strategy of other litigants seeking to challenge the Program, and likely indicate which arguments present the most viable challenge.</li><li>Unless a court is willing to take action before October, the first phase of the Program will go into effect, and affected manufacturers will need to collect necessary data for submission to CMS.</li><li>With lawsuits filed in five district courts in five circuits, plaintiffs are clearly trying to diversify their chances for an injunction. It remains to be seen whether this strategy will increase the likelihood that the Supreme Court will take the case and whether the Supreme Court would decide in favor of the pharmaceutical industry.</li></ul>The Morrison Foerster team will continue to monitor this litigation for developments and is actively advising clients on how it may impact their business.

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Joe Palmore co-chairs Morrison Foerster’s Appellate and Supreme Court practice. Chambers USA describes him as “an outstanding oral advocate,” who is “calm, focused, effective and doesn’t back down,” and has “complete command of the facts.” Joe “writes great briefs” (Chambers USA), with one client recounting that “the Court mirrored the language he thoughtfully chose in its ultimate order” (Legal 500).

Joseph R. Palmore

Joseph R. Palmore is co-chair of the firm's Appellate and Supreme Court Practice Group and Managing Partner for the Washington, D.C. office. Before joining Morrison Foerster, Joe was an Assistant to the Solicitor General at the United States Department of Justice and the Deputy General Counsel of the Federal Communications Commission (FCC).

Joseph Palmore

In recent months, six different lawsuits have been filed challenging the Inflation Reduction Act (IRA)’s Drug Price Negotiation Program (the “Program”), with a flurry of activity likely in the coming months before the Program’s first deadlines. Below we analyze the latest developments in the cases and compare the lawsuits.

Legal Battles Continue Over Inflation Reduction Act’s Drug Price Negotiation Measures

Morrison Foerster sponsored and spoke at the Association of Corporate Counsel’s 2023 Life Sciences Conference on May 11, 2023, on the topic of “Artificial Intelligence in Life Sciences: The Evolving Legal and Regulatory Landscape.” Eric Elting of TransPerfect Legal Solutions reported on the discussion. This article originally appeared on JDSupra and is reprinted with permission.In the last ten years, more data and greater computing power have led to a boom in AI-related patent applications, with life and medical sciences emerging as a top application field. In 2021, more than 100 applications submitted to the US Food and Drug Administration contained artificial intelligence and machine learning (AI/ML) components.According to Brigid Bondoc, Partner at Morrison Foerster in Washington, DC, the FDA shares an industry optimism that "AI/ML can help bring safe, effective, and high-quality treatments to patients faster," to quote Patrizia Cavazzoni, M.D., the director of the Center for Drug Evaluation and Research (CDER) at the FDA.How the agency evaluates and manages emerging AI/ML technologies in drug and biologic applications were addressed in the panel "Artificial Intelligence in Life Sciences: The Evolving Legal and Regulatory Landscape," presented by Morrison Foerster (MoFo), on May 11, 2023, at the Association for Corporate Counsel (ACC) live CLE event "2023 Life Sciences Conference: Future-Ready Resilience: Preparing to Face Challenges in the Uncertain Future."The panel, consisting of Bondoc; Anna Yuan, Senior Associate at MoFo; Wendy Chow, counsel to MoFo; and Lauren Wu, Head of Privacy, Sr. Dir. of Legal for Regulatory and Compliance, US Privacy Officer, and Global DPO at Evidation Health, discussed the evolving FDA policies and regulation on AI, data privacy implications, and protecting AI technology in life sciences.FDA RegulatoryBondoc presented the big picture on the FDA's AI regulation, where the agency actively monitors AI/ML software in medical devices and clinical developments. The agency may expand coverage into FDA-regulated activities, such as automation and learning of medical devices, diagnostic and therapeutic development efficiency, regulatory assessment, and post-market surveillance.The 21st Century Cures Act excludes five types of software from the FDA's medical device definition and regulation, including administrative support software, wellness, and electronic patient records. Still, the act allows the FDA to "claw back any exception if it identifies risks associated with the software as a medical device," said Wu. With AI technologies, wellness, and electronic records, "the waters get muddier," commented Wu—for example, what to do with a pedometer that monitors sleep and blood pressure. It may become more than a wellness device and move into the regulated medical device space.The FDA appears flexible and careful in developing an AI/ML regulation framework, offsetting the need to facilitate innovation while protecting public health. For example, Bondoc pointed to the agency's drafted guidance on Predetermined Change Control Plans (PCCP) for AI/ML-enabled device software functions, attempting to address a significant issue facing emerging technology.Historically, changes to a cleared or approved medical device that could significantly affect the safety or effectiveness of the device required submitting a premarket notification 510(k). Yet, the notification program is "fundamentally at odds with the use of AI/ML in medical devices that facilitate continual improvements and modifications to the device based on data gathered while in use," said Bondoc. The FDA aims to develop a regulatory approach tailored to AI/ML-enabled devices, allowing for safe and rapid modifications in response to new data while ensuring safety and effectiveness.The FDA sees ethical, privacy, and security issues using AI/ML in drug development. The agency is also concerned with the lack of transparency in algorithms that can lead to amplification errors or preexisting biases. "Although recognizing the problem, the potential regulatory solutions have yet to be provided," said Bondoc. Still, the agency aims to prevent algorithmic discrimination and advance the use of AI/ML techniques. It recently released a discussion paper, "Using Artificial Intelligence and Machine Learning in the Development of Drug and Biological Products." And to further address issues of AI in drug manufacturing, the FDA released “Artificial Intelligence in Drug Manufacturing.”Protecting AI Technology in Life SciencesYuan confirmed an eight-fold increase in AI patents from 2017 to 2020, citing WIPO Technology Trends 2019: Artificial Intelligence and Mondaq, and observed a shift in the types of things patented. In the past, patents were more theoretical, such as novel AI algorithms for speech recognition. Nowadays, there are more patents on concrete, practical applications of machine learning in drug discovery and medical diagnostics.Patent applications include novel, practical applications of AI algorithms, drugs developed by AI, and computer hardware configurations and optimizations to facilitate AI training and inference processes. The patents fall into two buckets: one, the application of known AI to specific fields and sectors, and two, new AI models and algorithms. Yuan said the first is generally a higher value in patenting with broader and more detectable claims vis-à-vis the second with narrow and mathematically oriented claims.Privacy and AIThe use of AI/ML in life sciences involves data from individuals, even protected health information (PHI). At some point, whether it is the process's training input, inference, or output, the data use may run afoul of state privacy laws, implicate new legislation regulating AI and automated decision-making, or trigger federal law, including the Health Insurance Portability and Accountability Act (HIPAA) or the Federal Trade Commission Act prohibiting unfair and deceptive practices, such as the sale and use of racially biased programs.Chow also detailed the states with comprehensive privacy laws, including California, Virginia, and Tennessee, with numerous state laws pending in Connecticut, Indiana, Iowa, Montana, and Washington. State legislatures complement privacy laws with laws regulating AI and automated decision-making, such as the New York AI Bias Law. Still, Wu put privacy legislation into context: "It's not necessarily the driver for AI; it's a stakeholder."

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Of Counsel

Anna Yuan’s practice focuses on patent prosecution, IP due diligence, post-grant proceedings, and IP litigation support. 

Anna Yuan

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Morrison Foerster sponsored and spoke at the Association of Corporate Counsel’s 2023 Life Sciences Conference on May 11, 2023, on the topic of “Artificial Intelligence in Life Sciences: The Evolving Legal and Regulatory Landscape.” Eric Elting of TransPerfect Legal Solutions reported on the discussion. This article originally appeared on JDSupra and is reprinted with permission.

The Legal and Regulatory Landscape Evolving with AI in Life Sciences

On Wednesday, May 10, 2023, the Food and Drug Administration (FDA) <a href="https://www.federalregister.gov/public-inspection/2023-09985/using-artificial-intelligence-and-machine-learning-in-the-development-of-drug-and-biological" target="_blank">announced</a> the publication of a new discussion paper titled “<a href="https://www.fda.gov/media/167973/download" target="_blank">Using Artificial Intelligence and Machine Learning in the Development of Drug and Biological Products</a>.” The discussion paper aims to facilitate a discussion with stakeholders on the use of artificial intelligence and machine learning (AI/ML) in drug development, including the development of medical devices intended for use with drugs. The discussion paper covers three main topics: the landscape of current and potential uses of AI/ML; considerations for the use of AI/ML; and next steps and stakeholder engagement.Here are five key takeaways:1. FDA Acknowledges that AI/ML Applications Exist for Each Stage of Drug Development. AI/ML may have applications for use in all stages of drug development, from drug discovery to pharmaceutical manufacturing. AI/ML has been applied to real‑world data (RWD) and data from digital health technologies (DHTs) to support drug development.  The first section of the discussion paper summarizes the different ways in which AI/ML can be used in drug discovery, clinical and nonclinical research, postmarketing surveillance, and advanced pharmaceutical manufacturing. 2. FDA Is Growing Its Own Experience with AI/ML for Drug Development. In recent years, the FDA has seen a growth in drug and biological product submissions that reference AI/ML. In response, FDA has taken a number of actions, including establishment of the CDER AI Steering Committee, the Innovative Science and Technology Approaches for New Drugs (ISTAND) Pilot Program, and the Model‑Informed Drug Development (MIDD) Pilot Program. For postmarket safety surveillance, the CDER Sentinel System, CBER Biologics Effectiveness and Safety (BEST) system, and CDRH National Evaluation System for health Technology (NEST) efforts, are exploring AI/ML approaches to improve existing systems.3. FDA Understands Development of Standards and Practices for Use of AI/ML Is Critical. The U.S. government and international community have expressed an increased commitment to facilitating AI innovation and adoption. Regulators and standards organizations have developed and issued standards to facilitate the advancement of ethical AI. For example, in August 2019, the National Institute for Standards and Technology (NIST) released the “U.S. Leadership in AI: A Plan for Federal Engagement in Developing Technical Standards and Related Tools.” In addition, in October 2021, the FDA, Health Canada, and the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) jointly published 10 guiding principles to inform the development of Good Machine Learning Practices (GMLP) for medical devices using AI/ML.4. FDA Has Identified Key Questions on AI/ML in Drug Development. The FDA aims to initiate a discussion with stakeholders on the following three key areas and provides specific questions to solicit feedback.Human-Led Governance, Accountability, and Transparency<ul><li>In what specific use cases or applications of AI/ML in drug development are there the greatest need for additional regulatory clarity?</li><li>In your experience, what are the main barriers and facilitators of transparency with AI/ML used during the drug development process (and in what context)?</li><li>How are pre-specification activities managed, and changes captured and monitored, to ensure the safe and effective use of AI/ML in drug development?</li></ul>Quality, Reliability, and Representativeness of Data<ul><li>What additional data considerations exist for AI/ML in the drug development process?</li><li>What are some of the key practices utilized by stakeholders to help ensure data privacy and security?</li><li>What processes are developers using for bias identification and management?</li></ul>Model Development, Performance, Monitoring, and Validation<ul><li>What practices and documentation are being used to inform and record data source selection and inclusion or exclusion criteria?</li><li>In what context of use are stakeholders addressing explainability, and how have you balanced considerations of performance and explainability?</li><li>What are some examples of current tools, processes, approaches, and best practices being used by stakeholders for: selecting model types and algorithms for a given use, determining when to use specific approaches for validating models and measuring performance in a given context, evaluating transparency and explainability, and increasing model transparency, etc.?</li></ul>5. FDA Wants Your Feedback. The FDA is soliciting feedback on the opportunities and challenges in using AI/ML in drug and medical device development. The FDA includes a series of questions for feedback in the discussion paper, and a workshop with stakeholders is planned to provide an opportunity for further engagement. <a href="https://www.regulations.gov/docket/FDA-2023-N-0743" target="_blank">Comments must be submitted by August 9, 2023 (Docket No. FDA-2023-N-0743). </a>

FDA on Use of AI/ML in Drug Development: Five Key Takeaways

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FDA on Use of AI/ML in Drug Development: Five Key Takeaways

Recent Digital Health-Related FDA Announcements

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On Wednesday, May 10, 2023, the Food and Drug Administration (FDA) announced the publication of a new discussion paper titled “Using Artificial Intelligence and Machine Learning in the Development of Drug and Biological Products.

On April 13, 2023, the Federal Trade Commission (FTC) sent approximately 670 <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Substantiaton-NPO.pdf" target="_blank">notices of penalty offenses</a> to various companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements, and functional foods, placing them on notice that they could incur significant civil penalties if they fail to adequately substantiate product claims. The <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Sample-cover-letter-substantiaton.pdf" target="_blank">cover letters</a> suggest that the recipients consult FTC staff’s recently issued <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Health-Products-Compliance-Guidance.pdf" target="_blank">Health Products Compliance Guidance</a>. The letter to the recipient companies also provides a copy of a <a href="https://www.ftc.gov/system/files/attachments/penalty-offenses-concerning-endorsements/notice-penalty_offenses-endorsements.pdf" target="_blank">previously approved notice of penalty offenses</a> regarding the use of endorsement and testimonials. Notices of penalty offenses allow the agency to seek civil penalties up to $50,120 per violation against companies that engage in conduct they know has been found unlawful in a previous FTC administrative order. The FTC warned that it will not hesitate to use its authority to target violators with large civil penalties. Companies receiving this warning from the FTC include companies that sell cosmetics, personal care products, food, drugs, devices, and dietary supplements.The FTC requires that companies substantiate product claims with reliable evidence. The Notice of Penalty Offenses Concerning Substantiation of Product Claims stated that the following acts or practices in the advertising and promotion of products are deceptive or unfair and unlawful under Section 5(a)(1) of the Federal Trade Commission Act:<ul><li>Making an objective product claim without having a reasonable basis at the time the claim is made consisting of competent and reliable evidence;</li><li>Making a claim regarding the health benefits or safety of a product without having as substantiation competent and reliable scientific evidence that has been conducted and evaluated in an objective manner by qualified persons, and that is generally accepted in the profession;</li><li>Representing expressly or implicitly that a product is effective in the cure, mitigation, or treatment of any serious disease (e.g., heart disease, cancer, arthritis, erectile dysfunction) without having and relying on at least one human clinical trial that (1) is randomized, (2) is well controlled, (3) is double-blinded (unless demonstrated that blinding cannot be effectively implemented given the nature of the intervention), (4) is conducted by persons qualified by training and experience to conduct such studies, (5) measures disease end points or validated surrogate markers, and (6) yields statistically significant result;</li><li>Misrepresenting the level of type of substantiation for a claim; and</li><li>Representing that a product claim has been scientifically or clinically proven unless, at the time of representation, the advertiser possesses and relies upon evidence sufficient to satisfy the relevant scientific community of the claim’s truth.</li></ul>The initial distribution of the notice is limited to those companies making health claims or those likely to make health claims considering their product types. However, the FTC stressed that the notice is not limited to health claims and will apply to any entity making claims about the efficacy or performance of its products. While it does not suggest a company has engaged in deceptive or unfair conduct, inclusion on the list demonstrates at the very least that the FTC is aware of the company and the company’s products.Morrison Foerster’s regulatory and class action litigation teams work seamlessly to advise clients on compliance and product claims. Please contact the authors if you have questions.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy mat

Claudia Vetesi

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class actions.

Claudia M. Vetesi

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FTC Issues Notice of Penalty Offenses on Substantiation of Product Claims

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On April 13, 2023, the Federal Trade Commission (FTC) sent approximately 670 notices of penalty offenses to various companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements, and functional foods, placing them on notice that they could incur significant civil penalties if they fail to adequately substantiate product claims. 

FTC Issues Notice of Penalty Offenses on Substantiation of Product Claims