FDA’s Transparency Initiative: Its Reach, Its Risks, and the Pressing Need for Procedural Safeguards

Kelley Drye Client Advisory

Particularly in light of expanded reporting requirements and efforts to increase agency surveillance of health information, the Food and Drug Administration’s (FDA’s) Transparency Initiative and the lack of corresponding procedural safeguards raise real risks for a wide range of companies. Companies should urge FDA to adopt clear procedural safeguards, before FDA takes action to further implement the Transparency Initiative, by submitting comments to Docket No. FDA-2009-N-0247 (“Transparency Task Force; Public Meeting”) by August 7, 2009.

The FDA Transparency Initiative – A Project in Motion

A recent initiative to increase the transparency of FDA activities through the creation of a Transparency Task Force is moving quickly at the agency and, in light of several other initiatives designed to expand reporting requirements and increase surveillance, the initiative is likely to have substantial implications for all businesses with products regulated by FDA. The task force was convened in response to a memorandum issued by President Obama in January 2009, pledging to take appropriate action, consistent with law and policy, to disclose information to the public rapidly, and in a form that is easily accessible and user friendly.”[1] On June 24, 2009 – only three weeks after FDA’s initial announcement of the launch of the Transparency Initiative – the agency held a public meeting to discuss its activities with respect to the initiative and the corresponding Transparency Task Force.

The June 24, 2009 public meeting featured approximately thirty-five speakers and panelists, including patients, consumers, regulated industry, advocacy groups, scientists, physicians, and others who all shared their suggestions about improving transparency at the agency.[2] Although the testimony and comments addressed the various benefits of increased transparency and acknowledged the importance of maintaining confidentiality of proprietary and trade secret information, none addressed the pressing need for procedural safeguards to ensure that information obtained by FDA is held, managed, and evaluated in accordance with governing constitutional and administrative law standards. As discussed below, the need for procedural safeguards in connection with the Transparency Initiative is further amplified by the current regulatory trend toward increased reporting and surveillance at FDA.

More than Just a Task Force: Transparency in the Context of Increased Reporting and Surveillance

The implications of FDA’s Transparency Initiative are far broader than just the activities of the Task Force. Recent amendments to the FFDCA providing for new or expanded reporting requirements for dietary supplements, nonprescription drugs, and foods[3] -- as well as a broad-based initiative to increase proactive governmental surveillance of health information[4] -- combine to dramatically expand the scope of information likely to become accessible to the public through the Transparency Initiative.

Increased Reporting: Adverse Event Reporting for Dietary Supplements and Nonprescription Drugs and the Reportable Food Registry

The Dietary Supplement and Nonprescription Drug Consumer Protection Act of 2006 (“DSNDCPA”) amended the FFDCA to set forth mandatory reporting requirements for serious adverse events” associated with use of dietary supplements and nonprescription drugs.[5] Under the DSNDCPA, a serious adverse event is one that results in death, a life-threatening experience, inpatient hospitalization, a persistent or significant disability or incapacity, a congenital anomaly or birth defect, or an event that requires, based on reasonable medical judgment, a medical or surgical intervention to prevent such an outcome.[6] Manufacturers, packers, and distributors of dietary supplements and nonprescription drugs are required to submit to FDA MedWatch reports for all serious adverse events associated with the use of their products. Further, voluntary adverse event reports regarding nonprescription drugs or dietary supplements may be submitted by consumers, health care providers, or any other entity not subject to mandatory reporting.

The Reportable Food Registry, which implements Section 417 of the Federal Food Drug & Cosmetic Act (“FFDCA”) adopted under the Food and Drug Administration Amendments Act of 2007 (“FDAAA”), further demonstrates the overall regulatory trend toward increased reporting obligations. The Reportable Food Registry is designed to collect and link reports about incidences of food adulteration. The Registry will be implemented by September 8, 2009 as part of FDA’s MedWatchPlus Portal, the agency’s new electronic system for collecting, submitting, and processing adverse event reports and other safety information for all FDA-regulated products.

In June 2009, FDA announced the availability of its draft document, Guidance for Industry: Questions and Answers Regarding the Reportable Food Registry as Established by the Food and Drug Administration Amendments Act of 2007,”[7] which explains that a responsible party” must use the electronic portal to submit a report to FDA within 24 hours whenever it determines that an article of food is a reportable food.” A responsible party” is defined as a person required to submit a food facility registration under Section 415 of the FFDCA – i.e., the owner, operator, or agent in charge of a domestic or foreign facility that manufactures, processes, packs, or holds food for consumption in the United States except as a retailer or a restaurant. In addition, federal, state, and local public health officials may submit instances of reportable food through the portal. A reportable food” is an article of food, other than infant formula or a dietary supplement product, for which there is a reasonable probability that the use of or exposure to such article of food will cause serious adverse health consequences or death to humans or animals.” The draft guidance explains that FDA also may require follow-up action after submission of a report to notify other entities in the food supply chain about the adulteration and to investigate the cause of the adulteration.

Increased Surveillance: The Sentinel Initiative

In addition to expanded reporting requirements, a new plan to heighten governmental surveillance of health information through a system that would allow FDA to proactively search for adverse event information from outside sources also intensifies the potential impact of the agency’s Transparency Initiative. In May 2008, FDA announced the launch of the Sentinel Initiative to develop and implement a system intended to enable FDA to query a broad array of information to identify possible post-market adverse events.”[8] The national, electronic system, called the Sentinel System, is designed to enable FDA to gather information about medical products by running targeted queries of electronic health records maintained by governmental and private entities, including patient registry data, insurance claims data, and other large healthcare information data sources.

The Sentinel Initiative implements Section 905 of the Food and Drug Administration Amendments Act (“FDAAA”), mandating that the agency establish an active surveillance system for monitoring drugs using electronic data from healthcare information holders. Specifically, Section 905 directs FDA to develop methods to obtain access to disparate data sources and to validate methods for the establishment of a postmarket risk identification and analyses system” to link and analyze safety data from multiple sources.[9] FDA has stated that it intends to develop and implement the Sentinel System in stages, eventually using it to monitor all FDA-regulated products in the market.[10] Products currently covered by FDA’s MedWatch reporting system (and therefore most likely to be directly affected by the new surveillance system) include prescription and nonprescription drugs, dietary supplements, biologics, and human cell and tissue products.[11]

The information that will be made available through the Sentinel System is being acquired primarily as a result of a series of contracts awarded by FDA to entities charged with exploring a variety of topics to inform the development of the new system. In addition, several pilot projects already are underway, designed to answer some of the many technical and policy-related questions and challenges posed by the system. In June, FDA announced the availability of grant funds to support an independent entity’s work to organize conferences and meetings with stakeholders and experts to explore the methodological, data development, technical, and communication issues related to active medical product surveillance.[12] The grant recipient is expected to synthesize, summarize, and communicate findings from the meetings to a broad range of individuals who will use the information to further develop the surveillance system.

Although FDA has acknowledged that the Sentinel Initiative presents various privacy and proprietary information concerns and has stated that the surveillance system is not expected to collect and maintain individualized records or medical data, just as in the reporting context, the agency has not addressed the need for procedural safeguards to ensure that information obtained through the system is handled in accordance with applicable legal standards. The lack of attention given to the need for procedural safeguards is particularly disconcerting given FDA’s statement in the Sentinel Initiative - Questions and Answers” that confirmed findings” will be communicated to the public through one of the various methods currently available to the agency, such as changing a product’s labeling, issuing alerts to health care professionals, or issuing a press release.”[13]

Risks of Moving Forward Without Procedural Safeguards

While the Transparency Initiative and the related reporting requirements and surveillance system noted above are intended to advance public health interests, no procedures have yet been established to ensure that FDA does not use unverified safety reports as a basis for issuing unjustified public warnings about a product or for disclosing other information likely to lead to product recalls, class action and other forms of mass tort litigation, or other costly and undesirable activity. In particular, procedural safeguards are necessary to ensure that all FDA actions taken in response to such reports are based on competent and reliable scientific evidence and are carried out in a manner that complies with the legal standards and procedures governing agency action. Such safeguards also are needed to protect the public from harms associated with unjustified public warnings and product recalls attributable to unverified reports of alleged safety issues. In the absence of procedural safeguards to ensure that information is held, managed, or evaluated by the agency in accordance with governing constitutional and administrative law standards, FDA could use information submitted to the agency through MedWatch or obtained through surveillance efforts to the detriment of responsible food, drug, cosmetic, or other companies without the companies’ knowledge or any verification.

The need for procedural safeguards in this context presents concerns that are not merely theoretical in nature. As the Federal Trade Commission (FTC) has recognized in the context of FDA policies governing patent listings in the Orange Book, as well as related procedures for the approval of bioequivalent generic drugs, the absence of safeguards and appropriate oversight can lead to competitor gaming” of the regulatory system that promotes outcomes not contemplated by FDA. Firms have strong incentives to exploit opportunities created by carelessly conceived regulatory processes to raise competitors’ costs and deter new entry. The FTC also has warned that complete transparency is not always in consumers’ best interest. Instead, the potential benefits of transparency must be weighed against the danger of facilitating forward-looking collusion, particularly in highly concentrated industries.

What Businesses Should Do – Comment By August 7, 2009

FDA is soliciting comments and input on the Transparency Task Force regarding, among other issues, what specific information FDA should provide about agency operations, activities, processes, and decision-making including enforcement actions, product approvals, and recalls. In addition, FDA has asked what information should remain confidential in order to promote key internal and external policy goals (such as preserving patient privacy) and how FDA should explain the importance of such confidentiality. Companies with products regulated by FDA and concerned with the lack of procedural safeguards surrounding the agency’s Transparency Initiative and related reporting and surveillance activities may want to submit comments urging FDA to delay implementation of any such initiatives until adequate procedural safeguards have been established. Interested parties must submit comments to Docket No. FDA-2009-N-0247 (“Transparency Task Force; Public Meeting”) by August 7, 2009.

Kelley Drye & Warren LLP

Kelley Drye’s team of Food and Drug lawyers strives to integrate our clients’ business strategies with FDA compliance and to help resolve regulatory enforcement matters when they arise. Working side-by-side with business development and marketing professionals, we provide comprehensive regulatory counseling and assist in developing products, labels, and promotional materials that achieve our clients’ goals without running afoul of regulatory requirements. With close knowledge of FDA’s enforcement priorities and deep experience with the FTC’s regulation of advertising, our team can provide comprehensive legal advice with an eye towards giving clients a competitive edge.

[1]See 74 Fed. Reg. 26712 and June 24, 2009 client advisory titled Increasing Transparency & The Reportable Food Registry”

[2]FDA has stated that it plans to hold another public meeting to discuss the Transparency Task Force during Fall 2009 (date TBA). More information on the Transparency Initiative, including a list of questions posed by FDA to interested parties in advance of the June 24, 2009 public meeting, is available on FDA’s official Transparency Blog, located at http://​fda​trans​paren​cy​blog​.fda​.gov.

[3]See FFDCA §§ 401, 760-761.

[4]See FDA Sentinel Initiative website at http://​www​.fda​.gov/​S​a​f​e​t​y​/​F​D​A​s​S​e​n​t​i​n​e​l​I​n​i​t​i​a​t​i​v​e​/​d​e​f​a​u​l​t.htm.

[5]See Pub. L. No. 109–462, 120 Stat. 3469 (2006). Adverse event reporting and recordkeeping requirements already were already in effect for prescription drugs. See Postmarketing reporting of adverse drug experiences,” 21 C.F.R. § 314.80.

[6]See FD&C Act § 761(a)(3), (b)(1) (21 U.S.C. § 379aa-1(a)(3), (b)(1)).

<[7]See 74 Fed. Reg. 27803.

[8]See Press Release, New Efforts to Help Improve Medical Products for Patient Safety and Quality of Medical Care,” May 22, 2008.

[9]See FDAAA § 905(a)(3)(B)(i)-(ii).

[10]Other provisions of the FDAAA also call for increased reporting, surveillance, and related activity. For example, Title VIII requires greater FDA involvement in ensuring that clinical trials information is provided to the National Institutes of Health (NIH) at ClinicalTrials​.gov.; Title IX provides FDA with additional requirements, authorities, and resources with regard to both pre- and post-market drug safety; and Title X requires new reporting of adverse events related to food and new regulations for pet food labeling, ingredients, and processing standards.

[11]See list of product categories subject to mandatory reporting on FDA MedWatch site, http://​www​.fda​.gov/​S​a​f​e​t​y​/​M​e​d​W​a​t​c​h​/​H​o​w​T​o​R​e​p​o​r​t​/​d​e​f​a​u​l​t.htm.

[12]See 74 Fed. Reg. 30097 (June 24, 2009). Prior contracts granted under the Sentinel Initiative include projects involving:

  • Evaluation of Existing Methods for Safety Signal Identification for the Sentinel Initiative
  • Engagement of Patients, Consumers, and Healthcare Professionals in the Sentinel Initiative
  • Evaluation of Potential Data Sources for a National Network of Orthopedic Device Implant Registries
  • Defining and Evaluating Possible Database Models to Implement the Sentinel Initiative
  • Developing a Governance and Operations Structure for the Sentinel Initiative
  • Evaluation of Timeliness of Medical Update for Surveillance in Health Care Databases

[13]The Sentinel Initiative – Questions and Answers”