The Alcohol and Tobacco Tax and Trade Bureau (TTB) released today its final rule that amends TTB standard of identity regulations for distilled spirits to expressly list Pisco as a type of brandy. Under the Federal Alcohol Administration Act, TTB prescribes requirements for the packaging, marking, branding, labeling, and quality of alcoholic beverages. Pursuant to this authority, TTB has established standards of identity for twelve different classes of distilled spirits. 27 C.F.R. § 5.22. Within each class, TTB prescribes additional standards of identity for various sub-categories or “types” of spirits.
In order to clarify the status of Pisco and conform existing regulations to international agreements limiting the geographical origin of Pisco, the final rule adds Pisco as a type of brandy under TTB regulations. While the TTB has consistently considered Pisco to be a brandy, the new rule makes that classification explicit and newly restricts the geographical origin of Pisco to products manufactured in Peru or Chile. As such, the final rule simultaneously revokes any Certificate of Label Approval (COLA) granted for products labeled as Pisco that are not from Peru or Chile.
The final rule is available here.
The use of mobile apps for health purposes has created new questions for users, developers, and regulators regarding the balance between convenience, expanded health care, and public safety. The line between apps that are useful tools for accessing health information and those that are considered medical devices can be unclear but is very important for developers and marketers of these products.
On April 24, 2013, associate Kristi L. Wolff will present a Thompson Interactive webinar, “There’s an App for That: Regulating Mobile Medical Devices” regarding these issues. Ms. Wolff will discuss the regulatory status surrounding health-related and medical device mobile applications, or MMAs. The presentation will cover topics including FDA’s position regarding MMAs as explained in the draft guidance, the recent Congressional hearings on the issue, FTC’s enforcement and recent statements regarding health-related mobile applications, and design considerations key to application development, such as privacy. Participants will also have the chance to ask questions during the live Q&A portion of the webinar.
To register, please click here.
The U.S. Department of Agriculture (“USDA”) issued a Final Rule on April 1, 2013, which adds eight new product categories, and one new subcategory, to the USDA’s BioPreferred federal procurement program. The BioPreferred Program is intended to promote federal procurement of “biobased products” (i.e., commercial or industrial products (other than food or feed) that are composed in whole, or in significant part, of biological products, renewable agricultural materials, or forestry materials). A product will be considered a “biobased product” for procurement preference if the product fits within a designated product category and contains at least the minimum biobased content established for the designated category.
The eight new product categories are:
- Aircraft and boat cleaners (minimum biobased content of at least 48% for aircraft cleaners; and 38% for boat cleaners)
- Automotive care products (minimum biobased content of at least 75%)
- Engine crankcase oil (minimum biobased content of at least 27%)
- Gasoline fuel additives (minimum biobased content of at least 92%)
- Metal cleaners and corrosion removers (minimum biobased content of at least 71% for corrosion removers; 75% for stainless steel cleaners; and 56% for other metal cleaners)
- Microbial cleaning products (minimum biobased content of at least 45% for drain maintenance products; 44% for wastewater maintenance products; and 50% for general cleaners)
- Paint removers (minimum biobased content of at least 41%)
- Water turbine bearing oils (minimum biobased content of at least 46%)
In addition, USDA has added an additional subcategory (Countertops) to an existing product category (Composite panels). Under the regulations, countertops must have a minimum biobased content of at least 89%) to qualify under the Program.
Procuring agencies must give procurement preferences to qualifying products under each of the above categories, and agency procurement specifications must require the use of biobased products in each of the above categories, by no later than April 1, 2014.
On April 10, 2013, the U.S. Food and Drug Administration (“FDA”) announced a proposal that could increase the cost of doing business for the food and cosmetic industry. In its budget request for fiscal year 2014, the FDA has proposed two new user fee programs for food companies to help pay for implementation of the food safety measures mandated by the Food Safety Modernization Act (“FSMA”). In addition, a user fee program has also been proposed for cosmetic manufacturers to support FDA cosmetic safety and other FDA cosmetic responsibilities. The FDA would need to obtain Congressional authorization for the new user fee programs in the form of new legislation before they could be implemented.
The new user fees would consist of a food facility registration and inspection fee, as well as a food importer fee. The facility registration and inspection fee is separate from the re-inspection fee that is already in place. Small food importers would be exempt from the importer fee and there would be a maximum charge for large importers. In addition, the cosmetics user fee would consist of a registration fee for both domestic and foreign manufacturers.
According to the FDA, the food importer fee would generate an estimated $166 million for the agency in 2014, while the facility fee would generate an estimated $59 million. Revenues from these fees would account for 20 percent of FDA’s total food program budget and also fund 85 percent of the $295 million the agency said it needs to support FSMA next year. The FDA indicated that most of the revenue from these two fees will support the activities to improve the food import process and increase the effectiveness of facility inspections. The cosmetics user fee is projected to generate $19 million for the agency in 2014.
Additional fees have also been proposed by FDA in its 2014 budget. For example, the agency has proposed additional fees on plastic and machinery substances that come into contact with food, international couriers, and follow-up inspections of medical establishments.
The new fees are likely to face strong opposition by the food and cosmetic industry and obtaining approval by Congress will also be a challenge.
The Food and Drug Administration (FDA) published a draft guidance for industry titled “Purchasing Reef Fish Species Associated With the Hazard of Ciguatera Fish Poisoning “ (CFP). Through the draft guidance, the FDA is adding Pterois volitans and Pterois miles, two species of lionfish, to the list of fish that may carry hazardous levels of ciguatoxins.
CFP is associated with consumption of toxin-contaminated subtropical and tropical reef fish. In addition to the species of lion fish mentioned in the draft guidance, reef fish associated with CFP include: barracuda (Sphyraenidae), amberjack (Seriola), grouper (Family: Serranidae), snapper (Family: Lutjanidae), po’ou (Chelinus spp.), jack (Family: Carangidae), travelly (Caranx spp.), wrasse (Family: Labridae), surgeon fish (Family: Acanthuridae), moray eel (Family: Muraenidae), roi (Cephalopholis spp.), and parrot fish (Family: Scaridae).
Under the Fish and Fishery Products Hazards and Controls Guidance, the FDA recommends that primary seafood processors who purchase fish directly from fishermen obtain information about harvest locations to determine the potential for ciguatoxic fish based on knowledge of the regions where ciguatera occurs. In the draft guidance, the FDA recommends that primary seafood processors avoid purchasing fish species associated with causing CFP from established or emerging areas linked with CFP.
Comments on the draft guidance are due May 26, 2013.
The House Subcommittee on Oversight and Investigations concluded a three-day series of hearings regarding medical device mobile applications (“MMAs”) on Thursday morning. Our posts regarding the first two hearings are here and here. The focus of day three was to hear testimony from key FDA and DHHS officials who have responsibilities relating to MMAs and other health information technologies (“HIT”).
The subcommittee heard testimony from just two witnesses, Ms. Christy Foreman, Director, Office of Device Evaluation, Center for Devices and Radiological Health (CDRH) at the Food and Drug Administration (“FDA”), and Dr. Farzad Mostashari, National Coordinator, Health Information Technology, U.S. Department of Health and Human Services.
The witnesses addressed questions raised in the two previous days’ hearings regarding FDA’s role in regulating HIT and MMAs. Some of the key points were as follows:
• Ms. Foreman testified that FDA has prioritized the MMA guidance and intends to issue final guidance by the end of this fiscal year. She reminded the Subcommittee that FDA’s CDRH has been regulating medical device software for decades and MMAs for more than 10 years. She indicated that FDA reviewed its first premarket notification for an MMA in 1997.
• Ms. Foreman also stated that FDA does not intend to regulate smart phones or tablets themselves as medical devices simply because they are used to operate MMAs. Rather, she said that the finalized guidance would set forth a risk-based approach whereby she anticipates that those MMAs (not the actual smartphone or tablet) that perform the same function as a medical device that is currently marketed would have to go through the premarket approval process. She anticipates that this will affect MMAs that fall into the Class II category most directly because Class I devices do not require premarket approvals and she is not aware of any MMAs to date that would be considered Class III devices.
• Ms. Foreman also responded to questioning concerning whether FDA’s current premarket approval process is slowing the pace of MMA innovation. She stated that the current average review time for 510(k) notifications for MMAs is 67 days, far less than the 90 days the agency is allowed by law. She also noted that keeping pace with technology is a constant challenge for FDA and one that the agency is prepared to meet with regard to MMAs.
• Dr. Mostashari spoke more broadly about DHHS programs to expand the use of HIT and electronic health records (“EHR”) technologies in the healthcare setting. He stated that the overwhelming evidence is that healthcare efficiency, quality, and safety is improved by access to better data, which HIT and EHR provide. He acknowledged certain obstacles to the current status of EHR implementation but cited recent statistics that indicate that even at current levels of implementation, these systems are providing benefits to patients and providers.
Ms. Foreman’s comments in particular should have provided some level of comfort relative to the agency’s intentions and a timeframe by which they can expect final guidance. Ms. Foreman explained that because she is not a tax expert and FDA is not a taxing authority, she was not able to answer definitively whether or not MMAs would be subject to the 2.3% excise tax. Many subcommittee members indicated throughout the three days of hearings that they believe that the retail exemption to the excise tax would apply at least to those MMAs marketed to consumers.
For further discussion on this important topic, please join us for a webinar on April 24 at 1:00 Eastern. Go to @ThompsonWebinar for more information.
The Health Subcommittee of the House of Representatives Energy and Commerce Committee held a second day of hearings regarding medical device mobile applications (“MMAs”) on Wednesday. Our post regarding the first day of hearings can be found here. The focus of day two was “Health Information Technologies: How Innovation Benefits Patients.”
The subcommittee heard from five witnesses. Unlike the first day of hearings, which focused mainly on MMAs, day two discussion involved broader questions of health information technology (“HIT”) such as the rate of adoption of electronic health records (“EHR”) and other types of software used in medical facilities. The witnesses’ main points were as follows:
• The widespread adoption of EHR and other HIT platforms is encouraging and has already provided benefits in terms of communications between healthcare facilities, providers, and patients; improved patient safety; and reduced medical error rates. Broader adoption of MMAs are just a part of this expansion of healthcare.
• Despite this widespread expansion, the panelists acknowledged that the current HIT systems are not perfect and that meaningful federal leadership is needed. The witnesses called on FDA to finalize the draft guidance to MMA developers issued in July 2011. They also advocated for a nimble, risk-based system of regulation that accounts for stakeholder input and provides clarity for all HIT, not just MMAs. The witnesses expressed concern that FDA is already failing to keep up with regulations relative to MMAs and HIT more broadly.
The subcommittee on Oversight and Investigations held day 3 of hearings on Thursday. Stay tuned for our post on the final hearing on this topic!
The Communications and Technology subcommittee of the House of Representatives Energy and Commerce Committee held its first day of a three-day series of hearings regarding medical device mobile applications (“MMAs”) on Tuesday. The topic of Tuesday’s hearing was “Health Information Technologies: Harnessing Wireless Innovation.” Subcommittee chairman Walden (R-OR) set the stage for the hearing by discussing the rapid expansion of the MMA industry, which is reported to be a $25 billion per year industry. In the face of this rapid expansion, Chairman Walden expressed concern that lack of clarity regarding FDA’s intent to regulate MMAs and the mobile devices on which they operate may stifle innovation. He also expressed concern regarding the potential applicability of the 2.3% medical device excise tax included as part of the Affordable Care Act. Responding to this concern, Rep. Waxman (D – CA) stated that he believes that the retail exemption to the excise tax clearly applies in this instance, a position echoed by the witnesses and that patient safety must be balanced with support for innovation.
The panel heard testimony from six industry representatives. The main points made by the panelist generally were the following:
- The Expanded Care Opportunity of MMAs: The U.S. is experiencing increasing rates of chronic disease, many of which are costly and preventable. Mobile technology has become ubiquitous in American life, with 223 million mobile subscriptions in the U.S. This technology provides opportunities to expand health care access to the population more broadly, particularly to under-serviced areas.
- Lack of Regulatory Clarity Stifles Innovation: MMA innovation is hindered by lack of regulatory clarity. FDA released their draft guidance for MMA developers in mid-2011 but has not finalized it. While FDA is the best regulator in this area, the current lack of clarity has left many potential marketers on the sidelines because they are not able to accept the potential regulatory risk of enforcement. The witnesses consistently called on FDA to finalize the draft guidance and provide a consistent, flexible regulatory regime for MMAs. Further, for start-up companies, this lack of regulatory clarity may make it more difficult to obtain venture capital or other funding. More developed companies may seek to offshore their employees and MMAs, potentially introducing them in other countries first where there are lower barriers to entry and less risk.
- The Excise Tax Does Not Apply to MMAs: The witnesses consistently agreed that Congress did not intend to include MMAs in the types of medical devices subject to the 2.3% excise tax on medical devices per the Affordable Care Act. Dr. Dagi, a neurosurgeon, professor and businessman, stated that the tax is already showing regressive and repressive effects on the medical device industry. He explained that the excise tax is a tax on revenue, not on profits. Small MMA companies may not generate either revenue or profit, however. To tax them before they are tax flow positive would stifle a growing industry, he explained. Dr. George Ford, an economist, agreed that taxing MMAs is effectively a “virtue tax” because, in contrast to a “sin tax,” it taxes things that are actually good for people.
Stay tuned for our post on tomorrow’s hearing, titled “Health Information Technologies: How Innovation Benefits Patients.”
The House of Representatives Committee on Energy and Commerce (the “Committee”) is set to hold a three-day series of hearings next week regarding regulation of medical device mobile applications. The hearings follow a March 1, 2013 letter from the Committee to Food and Drug Administration (“FDA”) Commissioner Dr. Margaret Hamburg. In the letter, the Committee acknowledges the growth of the health-related and medical device mobile application market and how such products are regulated. The Committee also expresses concern that, in the face of this growing industry, FDA’s current guidance and outstanding questions regarding the tax implications of these products create a lack of clarity for industry that could stifle innovation.
Under the Food, Drug and Cosmetic Act (“FDCA”), the FDA has authority to regulate medical devices. In mid-2011, the agency issued draft guidance on how medical device mobile applications would be regulated. The Committee expresses concern that FDA has received many public comments on the topic but has not held any public workshops or finalized its draft guidance.
The Committee requests that Dr. Hamburg provide written responses to questions regarding the following topics:
- FDA’s timeline for finalizing the draft guidance
- FDA analysis regarding the effect of the medical device excise tax on smartphones
- Whether use of a mobile device will be a factor when FDA chooses to regulate a particular product as a mobile device
- The number of mobile medical applications for which marketers have sought FDA approval before entering the market and the after-market experience regarding these applications
Food and Drug Law Access will be paying close attention to the upcoming hearings and posting further analysis. In addition, please mark your calendar for a webinar that we are presenting on the topic of medical device mobile applications on April 24 at 1:00 Eastern. Stay tuned – details to follow!
The United States Department of Agriculture (USDA) has published a proposed rule to amend the mandatory country of origin labeling (COOL) provisions for muscle cut covered commodities (beef, including veal, lamb, chicken, goat, and pork; ground beef, ground lamb, ground chicken, ground goat, ground pork; wild and farm-raised fish and shellfish). The proposed rule would require the country of origin designation for muscle cuts of covered commodities to include location information for each production step of birth, raising, and slaughter. The proposed rule would also eliminate the allowance for any commingling of muscle cut covered commodities of different origins.
The purpose of the proposed rule is to bring the COOL requirements into compliance with U.S. international trade obligations, in response to a ruling by the World Trade Organization (WTO) Appellate Body that the current COOL requirements violate the WTO Agreement on Technical Barriers to Trade.
Comments on the proposed rule must be submitted by April 12, 2013.