The primary legislation governing the authorisation, marketing, sale and supply of pharmaceutical products by the US Food and Drug Administration (FDA) is the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”), which has been amended many times throughout the years to reflect increasing FDA mandates for the regulation of pharmaceutical products. The Public Health Service Act (the “PHS Act”) is the specific authority used to approve or license biologic (including biosimilar) products.

The primary FDA regulations governing drugs and biologics are found in Chapter 21 of the Code of Federal Regulations. Controlled substances, such as opioids, are also scheduled and subject to quotas and distribution controls under the Controlled Substances Act administered by the Drug Enforcement Administration (DEA).

A drug is defined as:

• an article recognised in the US Pharmacopoeia, the Homeopathic Pharmacopoeia of the United States, or the National Formulary;
• an article intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease;
• an article (other than food) intended to affect the structure or any function of the body; and
• an article intended for use as a component of a drug but not as a device (or a component, part or accessory of a device).

A biologic is defined under the PHS Act as “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component (or derivative), allergenic product, protein (or analogous product), or arsphenamine or derivative of arsphenamine (or any other trivalent organic arsenic compound) applicable to the prevention, treatment or cure of a disease or condition of human beings”. Notably, a protein is any alpha amino acid polymer with a specific, defined sequence that is greater than 40 amino acids in size. Biological products also fall within the drug definition and are generally covered by most of the same laws and regulations; however, differences exist in the regulatory approach.

Medical devices are also regulated by the FDA under the FD&C Act and – although subject to similar intent standards – such products are primarily intended to act via mechanical rather than chemical or biological modes of action. Medical devices are classified by risk and may be:

• exempt from FDA review;
• subject to a “510(k)” pre-market notification process if they show substantial equivalence to a “predicate” device;
• subject to down-classification via the de novo submission process; or
• eligible for full approval via a pre-market approval application (PMA).

Although the FDA has traditionally been given significant independence as an agency, and the Commissioner is confirmed by the Senate, the FDA is part of the Department of Health and Human Services (HHS).

The government agencies touching on pricing and reimbursement vary, depending upon the payer programme, and include the Centers for Medicare & Medicaid Services (CMS) (also part of the HHS), the Veterans Health Administration, and state Medicaid agencies. In addition, the HHS Office of Inspector General oversees laws governing fraud and abuse in the sale of biomedical products and healthcare services. The Federal Trade Commission (FTC), an independent agency, regulates the advertising of non-prescription drugs and non-restricted medical devices.

Although the default status for drug approvals is technically OTC (ie, non-prescription), most initial drug approvals specify that new drug products are subject to prescription drug controls. Prescription drugs must be labelled as such and are subject to physician prescribing, pharmacy dispensing, and substitution controls under state law.

However, it is possible to seek an initial FDA approval for the sale of a drug product OTC or to seek to “switch” a prescription product to OTC status by demonstrating that the condition can be self-diagnosed and treated in accordance with labelling. Moreover, throughout the decades, the FDA has also developed OTC monographs that permit the marketing – without approval – of certain OTC drugs that meet the specific terms (eg, ingredients, dosing, and directions for use) for that class of drug and associated labelling under the relevant monograph. Such drugs remain subject to establishment registration, listing, labelling and current Good Manufacturing Practice (cGMP) requirements. Recent legislation liberalised the processes for amending OTC monographs and this could help reinvigorate OTC product development in the US.

Additionally, the FDA has issued a proposed rule that – if finalised – would permit OTC drugs with an “additional condition for non-prescription use” (ACNU). The purpose of this is to increase options for the development and marketing of safe and effective non-prescription drug products via the use of tools (such as digital apps) that support patient self-diagnosis and treatment.

Medical devices may also be assigned to non-restricted (including OTC) or restricted status, depending on their classification and the FDA’s determination as to appropriate status under clearance and approval processes.

For drugs and biologics, unless subject to specific exemptions, an investigational new drug (IND) application must be submitted to obtain FDA clearance prior to engaging in clinical research. Such submissions typically include extensive pre-clinical data, information on chemistry, manufacturing and controls, prior human data, and the proposed protocol(s). The FDA has 30 days either to allow the clinical study to proceed or to impose a clinical hold until outstanding issues are resolved.

Similar rules apply to medical device research and, depending upon the risk posed by the device, a device study may require the submission of an investigational device exemption (IDE) prior to initiating clinical research. Non-significant risk device studies may be conducted with just Institutional Review Board (IRB)/Ethics Committee approval. The FDA maintains an array of good clinical practice regulations governing clinical research, including study sponsor, IRB, and investigator responsibilities.

As noted, in addition to obtaining clearance to proceed with clinical research by filing an IND or IDE application (as appropriate), virtually all studies must be reviewed by one or more IRBs prior to initiation. FDA regulations specify the requirements applicable to the composition and activities of IRBs.

The US National Institutes of Health maintains a database at clinicaltrials.gov, where most controlled, interventional clinical investigations – other than Phase I clinical investigations – of drugs or biologic products subject to FDA regulation must be registered and study results must be posted. Although there is no general requirement to publish clinical trial data in journals, the industry has pledged to seek such publications wherever possible, as matter of practicality.

Online tools may be used as long as they comply with applicable requirements – for example, privacy, data security, auditability, informed consent and other good clinical practice requirements, as well as establishing lawful status if such tools incorporate certain regulated medical device functionalities. Particular requirements apply to recruiting subjects for clinical studies, whether online or otherwise.

The personal data resulting from clinical trials is considered protected. However, as long as any transfer of resulting data to a third party or an affiliate is consistent with contractual obligations, informed consent, and privacy protections, transfers are permitted. In certain scenarios the sponsor and the FDA will have access to such information (including patient-identifiable information) in order to conduct and analyse the data from the study properly and ensure that subjects are protected.

A database containing personal or sensitive data may be subject both to contractual and statutory protections obliging maintenance of data security and privacy.

Such determinations are typically made by assessing the primary mode of action of the product and whether it works by chemical, biological, mechanical or other means. If the product combines chemical, biological and/or mechanical modalities, a Request for Designation may be submitted to determine how the FDA believes the product should be regulated.

Drug products are approved via New Drug Applications (NDAs). Additional indications, dosage forms, etc, may be added via NDA supplements. Biologic products are approved in a virtually identical process via Biologics License Applications (BLAs). The standard for approval is “substantial evidence” of safety and effectiveness (technically, “safety, purity and potency” for biologics), resulting from at least one – and typically several – adequate and well-controlled clinical studies. The typical drug or biologic review process takes ten months after initial acceptance for filing (a 60-day period); however, a priority review of six months is given to certain drugs and biologics intended to treat serious or life-threatening conditions.

Substantial user fees – USD4,048,695 in Fiscal Year 2024  for an NDA or BLA containing clinical data – are required to facilitate a review of applications.

There is no mandatory re-authorisation process for approved products. However, the FD&C Act and FDA regulations include processes for the withdrawal or revocation of an approval based upon a significant safety or effectiveness issue or non-compliance with approval requirements. These processes can be expedited in certain scenarios, such as an applicant’s failure to confirm the efficacy of an accelerated approval product in a post-market study, or where there is an imminent hazard. In general, a marketing authorisation may not be revoked merely because the product has not been placed on the market ‒ although a failure to market an orphan drug could result in a loss of orphan exclusivity.

As noted, the pathways for approval of drugs consist of:

• the submission of an NDA (including a 505(b)(2) NDA relying on data for which the applicant does not have a right of reference); and
• the Abbreviated New Drug Application (ANDA) for generic products, which demonstrates equivalence to a reference listed drug.

A biologic is licensed via the submission of a BLA; however, that process is largely the equivalent of an NDA submission. A biosimilar application demonstrates that, based on the totality of the evidence, the biosimilar is either “highly similar” to ‒ or interchangeable with ‒ a reference biologic.

The FDA is authorised to require paediatric studies of drugs or biologics when other approaches are insufficient to ensure that the products are safe and effective for use in children. The agency may also issue a written request for paediatric research and, if the sponsor fulfils the data request, it may obtain six months of paediatric exclusivity.

As noted, changes to an existing marketing authorisation may be obtained through supplements or amendments to existing applications. As regards medical devices, the submission of additional 510(k) submissions can result in the clearance of significant changes to previously cleared device products. A PMA may also be supplemented or amended. In many cases, the transfer of a clearance or approval without manufacturing site or significant product changes requires only fairly simple notifications to the FDA.

The FDA maintains regulations permitting expanded access to investigational products. Such expanded access to INDs and IDEs may relate to an individual patient (often called a “compassionate use”) or may allow broader use by patients not eligible for controlled clinical trials, depending upon the seriousness of the disease and the availability of alternative treatments. Sponsors of such INDs may not charge patients for the investigational drug without specific authorisation from the FDA permitting cost recovery only.

In addition, the 2018 “Right to Try” Act permits certain eligible terminally ill patients to have broad access to eligible investigational drugs in certain circumstances when manufacturers are willing to supply. To date, most companies have shown a reluctance to permit their products to be used via this pathway in lieu of the more traditional IND pathway.

There is also a very limited Humanitarian Device Exemption (HDE) pathway for approval of a Humanitarian Use Device (HUD) intended to benefit patients in the treatment or diagnosis of a disease or condition that affects ‒ or is manifested in ‒ not more than 8,000 individuals in the USA per year.

Every drug, biologic or device product is subject to ongoing requirements relating to establishment registration, product listing, compliance with cGMPs/quality systems, track-and-trace requirements, and safety/adverse event reporting regulations. In certain cases, the FDA may require closer, ongoing oversight of a drug or biologic under a Risk Evaluation and Mitigation Strategy (REMS) or may mandate post-market studies or trials.

While the FDA does release approval letters and – after review for redaction of confidential and trade-secret information – summary review and approval documents, it does not currently publish “complete response letters” that reject an application under review. Available information on approved products may be obtained via the FDA’s Drugs@FDA website. Often, extensive information about pending applications is released in the form of briefing papers and presentations used at FDA Advisory Committee meetings. The FDA does not reveal the existence of pending INDs or IDEs unless the sponsor has publicly acknowledged the filings.

Third parties may submit requests for information under the Freedom of Information Act (FOIA); however, there are a variety of exceptions from disclosure, as well as a major FDA backlog of requests. Most importantly, the FDA has an obligation under the FOIA to refrain from publication of trade secrets or confidential commercial or financial information. Sponsors/applicants are afforded an opportunity to review potential releases of information and request confidential treatment under those FOIA exceptions.

The Drug Supply Chain Security Act (DSCSA) mandated a system to identify and trace certain prescription drugs as they are distributed in the USA. The aim is to enhance the FDA’s ability to:

• help protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated or otherwise harmful; and
• improve detection and removal of potentially dangerous drugs from the drug supply chain.

Under this framework, drug manufacturers have a responsibility to rapidly report “suspect” and “illegitimate” products.

A Unique Device Identification System has been implemented for medical devices. This identification system serves various purposes, including:

• providing a standardised identifier that will allow manufacturers, distributors and healthcare facilities to manage medical device recalls more effectively; and
• providing a foundation for a more secure distribution chain to help address counterfeiting and diversion.

The FDA’s Office of Criminal Investigation (OCI) has primary responsibility for policing drug and medical device counterfeiting and diversion. At times, companies will approach the OCI and other law enforcement bodies to seek an investigation and enforcement action.

The FDA and Customs and Border Protection work together to identify and detain counterfeit medical products. It is possible to work with those agencies to seek enhanced surveillance with regard to the potential importation of such products. The FDA has extensive powers to stop products at the border if they are suspected of being adulterated or misbranded.

In addition, companies may file actions seeking an investigation under Section 337 of the Tariff Act with regard to unfair acts in the importation of articles. However, such actions may fail if positioned as an attempt to enforce the FD&C Act privately.

In general, manufacturing plants are not subject to a separate authorisation from the related product approvals ‒ although they must be registered with the FDA (and the products produced at the facility must be listed as associated with the establishment). Moreover, in most cases, the FDA will conduct a pre-approval inspection of the facility before approving a drug or device. Such establishments are also subject to both routine (typically every two years) and for-cause (eg, in response to a product defect and recall) inspections.

In general, wholesale activities are subject to licensure requirements at the state level and registration as distributors at the federal level. The requirements and length of such licences vary by state.

The FDA may inspect any facility holding drugs for shipments ‒ although state inspection activities and fees vary greatly. Significant additional requirements administered by the DEA and states apply to wholesale trade in controlled substances.

The authorisation to trade in pharmaceuticals varies greatly by state; however, most pharmaceutical distributors must hold a state licence. Such requirements often do not apply to entities that are not physically handling drug products.

Drugs may be either prescription ‒ ie, as defined under state law, generally subject to prescription by a designated healthcare practitioner and dispensing by a licensed pharmacist ‒ or OTC (permitting sale without intervention by a healthcare practitioner or pharmacist). Certain products (eg, pseudoephedrine) must be kept behind the pharmacy counter, owing to specific statutory requirements. The FDA has issued a proposal that could expand direct availability of drug products via, for example, use of mobile apps as well as kiosks in pharmacies that permit education and diagnostic screening.

The FD&C Act and general import and export administration laws govern the import/export of pharmaceuticals and medical devices. Typically, imported medicines and medical devices must be subject to an approval or clearance (if applicable) in the USA. Only the original manufacturer of a drug may re-import a drug product back into the USA, subject to limited programmes ‒ aimed at demonstrating how the importation of certain drugs can be accomplished in an attempt to reduce prices ‒ that may nor may not proceed in the coming years. The importation of even an identical drug produced at a facility that is not inspected in the course of the US approval would be considered unlawful. Limited exceptions are permitted for individuals to engage in personal, physical importation of foreign products for their own use, if based upon a prescription from a healthcare professional and a lack of alternatives in the USA.

Note that a developing potential exception to these rules is the FDA’s decision to authorise Florida’s drug importation programme from Canada for a period of two years pursuant to a 2020 final rule establishing this pathway, with the goal of lowering drug prices in the USA. Additional steps must be implemented before such importation occurs, and the products at issue have yet to be disclosed. Moreover, the success of this pathway is highly uncertain, given that Health Canada has made clear in a statement that it will take “all necessary action to safeguard the drug supply and ensure Canadians have access to the prescription drugs they need” and arguing that “bulk importation will not provide an effective solution to the problem of high drug prices in the US[A]”.

At the border, the primary regulators are the FDA (administering the FD&C Act for potential violations) and US Customs and Border Protection (administering the broad array of US laws governing customs matters). Other agencies ‒ for example, the Department of Commerce and the Department of Agriculture ‒ may have responsibilities as well, depending on the nature of the imported article.

Importers of record may be designated by the manufacturer or distributor and they have specific responsibilities. A US importer of record (ie, the owner, purchaser, or licensed customs broker designated by the owner, purchaser or consignee) files entry documents for the goods with the port director at the goods’ port of entry. It is the importer of record’s responsibility to arrange for the examination and release of the goods. Initial importers may also be responsible for meeting registration and listing requirements. US Customs and Border Protection requires the importer of record to file an importation bond that is typically equal to at least three times the invoice value of the goods.

In order to be lawfully imported, a drug or medical device must be either:

• cleared or approved (and the product properly listed in association with a registered establishment); or
• the subject of an active IND or IDE.

Exceptions are made for importation of a very limited amount of a product for personal use. The FDA will also work with potential importers in certain situations (eg, compassionate use or short supply) to expedite the satisfaction of regulatory requirements.

Upon entry into the USA, declarations and information must utilise the Customs Harmonised Tariff Schedule codes according to the Harmonized Tariff Schedule of the US (HTSUS) and FDA product codes. Such declarations are subject to specific regulations issued by US Customs and Border Protection and the FDA. A failure to classify a product properly may result in an improper payment of Customs duties and, consequently, associated penalties.

The USA is a member of the WTO and has free trade agreements in effect with 20 countries. Some are bilateral agreements, but others are multilateral in nature. The USA is also party to Trade and Investment Framework Agreements that provide frameworks for governments to discuss and resolve trade and investment issues at an early stage, as well as bilateral investment treaties that help protect private investment, develop market-oriented policies in partner countries, and promote US exports. Additionally, the FDA is party to various Memoranda of Understanding and mutual recognition agreements aimed at facilitating global discussions and risk assessments with regard to, for example, inspections.

Until recently, the USA had little in the way of pricing limitations on pharmaceutical products and medical devices. Therefore, in most cases, the manufacturer of a product sets the initial price and adjusts prices (including rebates and other price concessions) over time in response to market conditions. However, in a major shift, the Inflation Reduction Act 2022 (IRA) incorporated provisions to lower prescription drug costs for those covered by Medicare and reduce drug spending by the federal government. Among others, the IRA includes the following provisions.

• The federal government has already begun to negotiate 2026 pricing for certain drugs. This will establish a “maximum fair price” for certain drugs covered under Medicare Part B and Part D with the highest total spending (excluding specific categories of drug). Under this Drug Price Negotiation Programme, the number of drugs subject to price negotiation include ten Part D drugs for 2026, another 15 Part D drugs for 2027, another 15 Part D and Part B drugs for 2028, and another 20 Part D and Part B drugs for 2029 and later years. The drugs will be chosen from the 50 drugs with the highest total Medicare Part D spending and the 50 drugs with the highest total Medicare Part B spending. A prohibitive excise tax will be levied on drug companies that do not comply with the negotiation process.
• Drug companies are now required to pay rebates to Medicare if prices rise faster than inflation for drugs used by Medicare beneficiaries.
• Out-of-pocket spending will be capped for Medicare Part D enrollees and other Part D benefit design changes will be made as of 2024.
• Monthly cost sharing for insulin is now limited to USD35 for people with Medicare.

Various aspects of the IRA have been quite controversial, including provisions that disadvantage certain orphan drugs as well as small molecules relative to biologics. The IRA drug pricing provisions are currently being challenged in multiple lawsuits under a wide variety of theories.

There are also other federal laws that cap pharmaceutical prices for certain purchasers or require minimum rebate levels in the following ways.

• Subject to ongoing litigation over the scope and terms of the programme, manufacturers sell their outpatient drugs to “covered entities” (typically, certain clinics and hospitals believed to serve safety-net functions) at or below a statutorily set ceiling price under the 340B Drug Pricing Programme.
• Manufacturers must sell brand name drugs to four federal agencies (the Department of Veterans’ Affairs, the Department of Defence, the Public Health Service, and the Coast Guard) at or below a “federal ceiling price” determined by a statutory formula.
• Manufacturers must pay a rebate set by a statutory formula on each unit of their outpatient drugs paid for by the Medicaid programme. This is not literally a “price control” programme because it only controls the rebate paid to Medicaid after the drug has been dispensed or administered. As such, the price that Medicaid pays upfront to the dispensing pharmacy or to a physician’s office or clinic that administers a drug is not affected by the Medicaid rebate programme.

In the USA, companies typically set their prices based on a wide range of factors, and the price level of a pharmaceutical product or medical device does not depend on the prices for the same product in other countries. Although reference-pricing schemes have previously been proposed in the USA, the provisions of the IRA described in 7.1 Price Control for Pharmaceuticals and Medical Devices are currently the primary vehicle for industry/government price negotiations under US law.

The largest healthcare programme in the USA today is the Medicare programme, which provides healthcare coverage for people who are 65 and older, are disabled (for two years or more), or have end-stage renal disease. Medicare accounts for roughly 20% of US health spending. Most pharmaceutical products are eligible for some form of Medicare coverage, either through:

• Part B (Medicare’s traditional outpatient benefit, which covers a small but important set of drugs, including physician-administered drugs);
• Part D (the Medicare drug benefit, which has provided broad coverage for pharmacy-dispensed oral drugs since 2006); or
• Part A (Medicare’s inpatient benefit, which covers drugs provided as part of covered inpatient hospital stays and in certain other inpatient settings).

The second-largest healthcare programme today – accounting for roughly 17% of US health spending – is the Medicaid programme, which is a joint federal–state programme providing coverage for certain low-income individuals (with the specific eligibility criteria varying by state). Medicaid is run chiefly by states, with federal government oversight, and state Medicaid programmes generally provide broad coverage for prescription drugs. Medicaid programmes have sometimes imposed coverage restrictions on high-cost drugs that arguably conflict with their statutory obligations.

The process and evidence that US payors use to make decisions about pharmaceuticals and medical device coverage varies widely by payor (and is not always entirely transparent). These variations can include:

• the criteria considered appropriate for evaluation (eg, whether a product’s cost or cost-effectiveness is taken into account in coverage decisions);
• the scientific rigour of the evidence considered and the weight placed on the types of evidence considered;
• the decision-making body and the processes for making coverage decisions; and
• the legal standards that apply to the coverage decision-making process and the resulting package of covered products and services.

Many organisations are engaged in developing value-assessment tools of various sorts, and the Centers for Medicare and Medicaid Services is experimenting with outcome-based models, such as a developing Medicaid Cell and Gene Therapy Access Model. Essentially, these tools are designed to help payors, healthcare providers, and patients assess outcomes of competing pharmaceuticals on a systematic basis and thereby reach conclusions about their value in a more systematic and rigorous way than is currently usual.

Pharmacists are paid for dispensing prescriptions by the patient’s insurer (assuming the patient is insured and the product is covered) and the patient. The circumstances in which pharmacists may dispense a substitute for the prescribed product without obtaining the prescriber’s authorisation are governed by state law. State laws on this issue can vary but, in general, they permit pharmacists to substitute a product approved by the FDA as a generic equivalent for the prescribed product (unless the prescription specifically states “dispense as written” or a similar phrase indicating no substitution).

During the past several years, the standards for permitting pharmacists to substitute a “biosimilar” product for a prescribed biological product have been a topic of considerable debate. The provisions of these laws vary but often only permit biosimilar pharmacy-level substitution if:

• the substituted product has been designated as “interchangeable” with the prescribed biological product by the FDA;
• the prescriber and the patient are both notified of the substitution; and
• the pharmacist maintains records of the substitution.

The FDA has been very active in providing guidance in this area and has carved out defined categories of apps and platforms from regulation. The FDA has issued several guidance documents designed to “encourage innovation” and “bring efficiency and modernisation” to the agency’s regulation of digital health products. The guidance documents address, in part, the important changes made by Section 3060 of the 21st Century Cures Act (the “Cures Act”) to the medical device provisions of the FD&C Act – whereby five distinct categories of software or health products were espressly excluded from the definition of medical device. The FDA’s extensive guidance documents in this area include guidance on Clinical and Patient Decision Support software, regulation of software as a medical device (SaMD), and general wellness products – establishing common principles for regulators to use in evaluating the safety, effectiveness and performance of SaMD. The FDA also has an action plan concerning the regulation of SaMD incorporating AI and machine learning.

The FDA does not regulate the practice of medicine and generally defers to the states in order to determine what is a valid physician–patient relationship and prescription. Telemedicine expanded enormously in the USA during the pandemic, with more and more physician consultations now being provided online via chat-based or video examinations. The regulation of these activities varies by state and such laws govern issues including the corporate practice of medicine, minimum rules for a genuine patient relationship, cross-border prescribing and lab orders, privacy, and payments and referrals to telemedicine physicians. The availability of electronic prescribing also varies by state; nonetheless, states generally permit online dispensing of approved drugs and medical device products pursuant to valid prescriptions.

Medicinal and medical device products may usually be promoted online, on company websites, and via social media. However, such media present special challenges when ensuring that the promotion is fairly balanced, truthful and non-misleading, as well as transparent with regard to the company’s involvement, and adequately provides safety information.

The FDA has developed several guidance documents in this area for the purpose of informing companies about when the agency considers user-generated information on a company’s web page or social media to be promotional (largely based on the level of control over the site and placement of information) and how to convey information properly in a character-limited social media environment. Additional rules apply to online marketing practices – for example, the FDA and FTC requirements pertaining to endorsements and testimonials by paid “influencers” in online promotion.

Electronic prescribing of drug products is governed by state laws and Board of Pharmacy rules. Most states do permit some form of electronic prescribing, even though the specific rules (such as those for specifying use of the brand-name drug) vary by state. Special rules may apply to interstate prescribing, particularly with regard to controlled substances, and licensure in multiple states may be required where reciprocity in licensure recognition is not provided.

Online sales of prescription drug and device products are permitted if there is otherwise a valid prescription for the product and the pharmacy is duly licensed in the states to which the products are shipped. Special rules apply to certain controlled substances. To the extent that prescribing of the drug or device also occurs online, the prescriber must satisfy state requirements pertaining to valid physician–patient relationships and telemedicine-based prescribing. Special rules apply to controlled substances sales. Online sales of drugs into the USA from ex-US pharmacies, whether or not pursuant to a valid prescription, are generally prohibited. As regards controlled substances, the DEA is currently evaluating rules – which have been temporarily extended through 2024 – permitting flexibilities in the prescription of such products via telemedicine.

In addition to the previously mentioned FDA rules regarding digital tools that convey health records and images, there are many other aspects involved in the regulation of electronic health records in the USA. Specifically, the HHS Office of the National Co-ordinator (ONC) for Health Information Technology is responsible for implementing statutory provisions related to advancing inter-operability, clarifying the Health Insurance Portability and Accountability Act (HIPAA) privacy rules, prohibiting information-blocking, and enhancing the usability, accessibility, privacy and security of health IT.

The Health Information Technology for Economic and Clinical Health (HITECH) Act 2009 provided the HHS with the authority to establish programmes in order to improve healthcare quality, safety and efficiency through the promotion of health IT, including electronic health records and private and secure electronic health information exchange.

The statutory framework for US patent law is mainly set out in United States Code (USC) Title 35. The Leahy-Smith America Invents Act (AIA) effected sweeping changes to US patent law. One of the most significant of these changes was to bring the USA largely into compliance with the rest of the world with regard to prior art determinations. Prior to the AIA, the USA was considered a “first inventor” jurisdiction (ie, the first person to invent the invention was entitled to the patent). Following the AIA, the USA is a “first inventor to file” jurisdiction that uses the “first to file” methodology employed virtually everywhere else in the world.

As explained in further detail later, in the USA, patent protection and certain regulatory exclusivities may share certain traits but they are distinct. The Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act, amended the FD&C Act and affected the government’s regulation of generic drugs. Hatch-Waxman provides for brand product exclusivities, as well as 180-day exclusivity to companies that are the “first to file” an ANDA against branded drug patent holders. This regulatory exclusivity is in addition to the patent term of patents claiming the branded drug and a statutory 30-month stay of approval permitted in the event of patient litigation.

Similarly, the Biologics Price Competition and Innovation Act 2009 (BPCIA) amended the PHS Act to create an abbreviated licensure pathway for biological products that are demonstrated to be “biosimilar” to or “interchangeable” with an FDA-licensed biological product.

To be patentable under US law, an invention must be:

• patentable subject matter;
• novel; and
• not obvious.

Patentable subject matter includes “any new and useful process, machine, manufacture, or composition of matter” (35 USC Section 101). Novelty requires that the invention has not previously been “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention” (35 USC Section 102). Finally, an invention must not be obvious – ie, it cannot be the case that “the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains” (35 USC Section 103).

In addition to these requirements, a patent must “contain a written description of the invention – and of the manner and process of making and using it – in such full, clear, concise and exact terms as to enable any person skilled in the art to which it pertains (or with which it is most nearly connected) to make and use the same” and “set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention” (35 USC Section 112).

There are no requirements specific to pharmaceutical products or medical devices. Nevertheless, various claim-drafting structures and statutory requirements are commonly at issue in cases involving pharmaceuticals or medical devices.

In the wake of two 2012 Supreme Court decisions regarding what constitutes patentable subject matter, companies have sought to distinguish their inventions from laws of nature and unpatentable phenomena through narrower claim drafting. As of the beginning of 2024, method-of-treatment claims involving treatment steps are patent-eligible even if they also recite diagnostic steps. Nonetheless, method-of-diagnostic claims remain patent-ineligible, while certain method-of-preparation claims have been held patent-eligible.

Patent protection is available for new uses of known compounds, processes, manufactures, etc, that satisfy the general requirements for patentability (including novelty and non-obviousness). As noted in 9.1 Laws Applicable to Patents for Pharmaceutical and Medical Devices, claims may be directed to “methods of treatment”.

A new dosage regime may be patentable if it satisfies the requirements for patentability; however, such claims are often subject to obviousness challenges. A claim could be directed to a method of treating a patient suffering from new disease X by administering an effective amount of known compound Y to the patient. A claim could also be directed to a method of treating a selected patient with disease X by administering compound Y at dose Z to the patient, whereby the selected patient has tested positive for a biomarker.

Direct or indirect infringers (as well as inducers of infringement) may be sued – although induced infringement can be found only when one “party” performs every step of a patent.

35 USC Sections 154 and 156 address certain adjustments and extensions of patent term, with Section 156 being particularly applicable to drugs and biologics. Certain medical devices may also be eligible for patent-term extension; however, such devices must be reviewed and approved via PMA. The FDA assists the United States Patent and Trademark Office (USPTO) in determining a product’s eligibility for patent-term restoration and provides information to the USPTO regarding a product’s regulatory review period. The USPTO is responsible for determining the period of extension, subject to statutory requirements.

A third party may file a due diligence petition challenging the FDA’s regulatory review period determination by alleging that an applicant for patent-term restoration did not act with due diligence in seeking FDA approval of the product during the regulatory review period.

Infringement may occur if the defendant has made, used, sold, offered to sell, or imported an infringing invention or its equivalent. A generic applicant may file an ANDA, which allows that applicant to rely on the safety and efficacy studies supplied by the brand name manufacturer if the generic manufacturer shows that its generic product contains the same active ingredient as – and is bio-equivalent to – the brand-name drug listed in the Approved Drug Products with Therapeutic Equivalence Evaluations publication, commonly known as the “Orange Book”.

In doing so, the generic applicant must make one of four certifications with regard to any patents associated with the drug. The fourth is that the “patent is invalid or will not be infringed by the manufacture, use or sale of the new drug for which the application is submitted” (21 USC Section 355(j)(2)(A)(vii)). Such a “Paragraph IV” certification is deemed a constructive act of infringement and the patent holder then has 45 days to file an infringement lawsuit against the ANDA applicant. If such a lawsuit is filed, the FDA generally may not grant final approval of the ANDA for 30 months after the filing date or until the ANDA filer prevails in litigation. If patent validity and infringement remain unresolved after the 30-month stay, the FDA may approve the ANDA.

The BPCIA provides a conceptually similar (albeit procedurally very different) framework – according to which, the filing of a biosimilar application by an applicant is an artificial act of infringement giving rise to a statutorily prescribed process that governs subsequent patent-infringement litigation and biosimilar regulatory approval. A BLA sponsor is required to provide certain patent information regarding the reference product to the FDA within 30 days of such information being provided to the biosimilar applicant as a part of the “patent dance”. The FDA must then include this patent information when it updates the Purple Book every 30 days. There is no equivalent statute and regime for medical devices.

As regards patent infringement, the threat of infringement can form the basis of a declaratory judgment action, which can examine the validity of patents and whether the action constitutes infringement. As this action is brought by the alleged infringer, the alleged infringer is able to select the venue for the case, which can have great strategic value in US patent litigation. However, given that many patent owners desire to avoid a declaratory judgment action, notice letters and cease-and-desist letters are not as commonly used as in the past, and patent-litigation suits are often filed before the alleged infringer has the chance to claim that the threat of infringement exists.

Under 35 USC Section 271(e)(1), it is not an act of infringement to make, use, sell, or offer to sell within the USA or import into the USA a patented invention “solely for uses reasonably related to the development and submission of information under a federal law that regulates the manufacture, use or sale of drugs or veterinary biological products”. In Merck KGaA v Integra Lifesciences I Ltd, the US Supreme Court held that the statute exempts from infringement all uses of compounds that are reasonably related to submission of information to the government under any law regulating the manufacture, use or distribution of drugs.

This safe harbour continues to be narrowed in recent district court decisions. In an early 2022 decision, the District Court of Delaware excluded the use of patented host cells to produce gene therapy product from safe-harbour protection, after it reasoned that the patented host cells are merely tools used in the preparation of the product to be approved.

Compulsory licences are available only in very specific situations and generally not under patent law. By way of an example, the US National Institutes of Health may – under certain circumstances – threaten to issue a compulsory licence if a licensee has failed to take effective steps to pursue the government-licensed invention or in certain scenarios involving public health need. It has never done so, however. A draft proposal was issued by the National Institute of Standards and Technology in December 2023 allowing such rights to be exercised to curb drug prices.

Typically, the patent owner brings the suit alleging patent infringement. Depending on the wording of the licence agreement, an exclusive licensee may also have standing to enforce the licensed patent. Remedies may include a temporary or permanent injunction, destruction of infringing articles, the award of damages (including the infringer’s profits) and, in certain limited circumstances, attorney’s fees.

Patent litigation is much like other civil litigation in the federal district courts in the USA (including a very high settlement rate). First, the plaintiff files a complaint alleging infringement of one or more US patents. Then, the plaintiff serves the complaint on the defendant, who typically answers by alleging non-infringement and asserting defences such as patent invalidity and other equitable defences. Common invalidity defences include invalidity based on ineligible patentable subject matter, combination of prior art references, and double patenting. The defendant may also assert a counterclaim, such as a declaratory judgment of non-infringement. The defendant may also file a motion to dismiss for improper venue. A case management conference regarding scheduling, among other matters, is required. Certain district courts may have local patent rules that set forth additional requirements. Next, fact and expert discovery are conducted, which typically includes depositions, document requests, interrogatories, expert reports and the like. Often, a claim construction hearing (also known as a Markman hearing) occurs, in which the parties ask the court to interpret certain terms of claims in the patent(s) at issue. The parties also typically file various motions, such as a summary judgment motion of patent invalidity.

If the case proceeds, pre-trial briefing and then trial (by judge or jury) and post-trial practice occur. A jury may render an opinion as to whether the patent is invalid. An appeal may be taken to the Federal Circuit and then to the Supreme Court if the Supreme Court grants a petition for certiorari.

In addition to raising invalidity as a defence in court, a potential infringer (or any third party) can challenge the validity of a patent in proceedings before the Patent Trial and Appeal Board (PTAB). A “post-grant review” permits a person who is not the owner of a patent to challenge a patent’s validity on any ground that could be raised under Section 282(b)(2) or (3) no later than nine months after the date of the grant of the patent (35 USC Section 321). An “inter partes review” (IPR) may be requested by a person who is not the owner of a patent nine months after the grant of the patent or the termination of a post-grant review (whichever is later), if one has been instituted (35 USC Section 311(a), (c)). However, an IPR may not be filed more than one year after the complainant has been served with a complaint alleging infringement. The validity of a patent subject to an IPR can only be challenged on a ground that could be raised under Sections 102 or 103 – and only on the basis of prior art consisting of patents or printed publications (35 USC Section 311(b)).

In SAS Institute Inc v Iancu (SAS), the Supreme Court did away with the PTAB’s prior practice of “partial institutions” of IPR challenges. Going forward, the PTAB must decide the validity of all challenged claims when it institutes review of a patent. In light of SAS, the Federal Circuit held in California Institute of Technology v Broadcom Ltd that an infringer is barred under Section 315(e) from challenging the invalidity of a patent in a civil action on all grounds that reasonably could have been asserted against the claims in its previously filed IPR petition.

As previously described in 9.4 Pharmaceutical or Medical Device Patent Infringement, an ANDA filer must make one of four certifications with regard to any patents associated with the drug. It is possible that, after making a Paragraph IV certification, the patent holder may elect not to file an infringement lawsuit. If the patent holder does not bring suit, the FDA may approve the ANDA.

An ANDA filer may not file a declaratory judgment suit during the 45-day period in which the patent holder may elect to bring a suit. If the patent holder files suit against the generic applicant within the 45-day period, the generic may file a declaratory judgment counterclaim, as long as an actual case or controversy continues to exist. A generic drug-maker may be able to request correction or delisting of a patent claim from the Orange Book as part of a counterclaim or non-infringement declaratory judgment action. An ANDA filer and the patent holder may also reach a licensing or other agreement – although such “reverse payment” settlements can be subject to antitrust scrutiny.

The phrase “clearing the way” is not a term of art in US patent law; however, a generic drug manufacturer may launch “at risk” if patent validity and infringement remain unresolved after the 30-month stay and the FDA approves its ANDA. In such cases, the generic may be liable for damages if the patent(s)-in-suit are ultimately held to be valid and infringed.

An NDA includes patent information for listing in the FDA Orange Book and the FDA considers patent listing part of the approval process for brand drug applications. Although not directly involved in the listing process, in November 2023, the FTC issued letters to ten brand pharmaceutical companies regarding improper listing of patents directed to certain drug-device combination products, emphasising the NDA holder’s responsibility to ensure proper Orange Book listing. As a result, several companies have delisted certain patents flagged by the FTC. If a patent that covers the drug exists and is listed, marketing approval will not be granted to a generic until the patent has expired or is found to be invalid or not infringed.

Trade mark and trade dress owners can sue manufacturers and sellers of counterfeit pharmaceuticals and medical devices for infringement. Additionally, a general exclusion order can be sought in the International Trade Commission (ITC), which can help to combat counterfeits that are being imported into the USA. Under the general exclusion order, any such infringing articles would be seized at the border by US Customs and Border Protection.

The possession, trafficking and purchasing of counterfeit pharmaceuticals and medical devices can also be criminally actionable at the federal or state level.

Other than general trade mark requirements, the controls on trade marks are usually regulatory in nature. By way of an example, trade marks that could be deemed claims must not be false or misleading (ie, may not misbrand the product). In the case of prescription drugs, the trade-marked brand name – known as the “proprietary name” – is subject to approval by the FDA as part of the drug and biologic approval process. This is done to ensure that it does not misbrand the product or create a risk of medical errors.

Trade dress protection is available for colour and shape (including pill shape). A “US adopted name” (USAN), which is a non-proprietary name reviewed by the World Health Organization, is necessary in order to market a pharmaceutical in the USA. The USPTO reviews and registers federal trade marks (pursuant to the Lanham Act). In doing so, the USPTO considers the likelihood of confusion with other marks and whether the mark is:

• distinctive;
• a surname;
• a likeness;
• geographically descriptive of the origin of the goods;
• disparaging or offensive;
• a foreign term that translates to a descriptive or generic term; or
• purely ornamental.

The US Trademark Trial and Appeal Board (TTAB) hears petitions related to the status of trade marks (including their cancellation). The TTAB may cancel a mark if it finds that:

• a registrant was using the mark to misrepresent the source of the corresponding goods; or
• differences with prior marks do not offset the likelihood of confusion.

The FDA has authority under the FD&C Act to determine whether a pharmaceutical is “misbranded” – ie, “its labelling is false or misleading” (21 USC Section 352(a)). This can be due to the proprietary name of the product, which the FDA must approve as part of the drug application.

The Lanham Act and the Tariff Act may provide a basis to bring claims in a federal district court against parallel importers for damages and injunctive relief. Any resulting injunction would be enforced through the federal courts rather than through the Customs and Border Patrol. Sometimes, the district court action is stayed pending the outcome of an ITC proceeding.

Parallel importation may violate Section 337 of the Tariff Act, which grants the ITC jurisdiction to investigate claims of trade mark infringement. The ITC cannot award damages but can issue exclusion orders that are enforced by the Customs and Border Patrol. The ITC can bar the importation of items that infringe US trade marks, copyrights or patents.

The Customs and Border Patrol works with the FDA to prevent parallel import. Trade mark owners typically contact the FDA and then the FDA contacts the Customs and Border Patrol.

Trade dress protection is available for colour, shape (including pill shape) and packaging that identifies the source of the product and otherwise distinguishes the product but is not purely functional or likely to be confused with the trade dress of another product.

For drugs, under the previously described Hatch-Waxman Act, there is a period of data exclusivity of five years from the date of approval for new chemical entities. There is also a period of data exclusivity of three years from the date of approval for supplemental applications incorporating clinical studies sponsored by the applicant that are essential to the approval. The first approved biologic may be subject to 12 years of exclusivity; however, subsequent supplemental applications for the product will not accrue additional exclusivity without clinically meaningful structural changes to the product. Such periods can run irrespective of – but concurrent with – any patent term associated with the drug or treatment using the drug.

Other exclusivities are available for:

• designated orphan drugs for rare diseases (seven years of market exclusivity);
• designated Qualified Infectious Disease Products (five years of additive exclusivity);
• first generic applicants filing a patent certification (180 days); and
• satisfying paediatric study requests (six months of additive exclusivity).

There is no true exclusivity framework for medical devices, and 510(k)-cleared devices may be designated as predicate devices immediately upon clearance. However, subsequent applicants for a Class III device generally may not rely on data in PMA-approved medical device products.

During the pandemic emergency, the FDA relaxed various regulatory requirements relating to COVID-19 countermeasures, as well as FDA-regulated products generally. Many of these policies were intended to provide some flexibility, given the limitations of virtual interactions and similar constraints. The US government is now winding down COVID-19 emergency measures and product authorisations, and has issued guidance on the disposition of products authorised for emergency use during the pandemic. In addition, the HHS has issued a fact sheet providing a “roadmap” for transitioning from the COVID-19 public health emergency.

Under the HHS roadmap for transitioning from COVID-19, certain FDA pandemic-related guidance documents have been withdrawn and others temporarily extended. The FDA is addressing which policies are no longer needed and which should be continued (with any appropriate changes) to further facilitate clinical research without undue risk.

The FDA utilised existing powers to permit unapproved medical products or approved medical products for unapproved uses to be manufactured and distributed under specific conditions and labelling during the period of a declared pandemic or other health emergency. The FDA issued hundreds of such Emergency Use Authorisations for pandemic-related therapeutics, devices, diagnostics and vaccines, and is now winding down such authorisations and overseeing the disposition of products authorised during the emergency (see 11.1 Special Regulation for Commercialisation or Distribution of Medicines and Medical Devices).

The FDA does not provide separate certifications for manufacturing, but rather inspects facilities both prior to product approval/licensure and then on a periodic or for-cause basis (see 4.1 Requirement for Authorisation for Manufacturing Plants of Pharmaceutical and Medical Devices). The FDA faced considerable difficulties in accomplishing inspections during the COVID-19 emergency and had been relying largely on record reviews and other measures where inspections were deemed too risky in light of the pandemic. This resulted in delays in approval of products and supplements in certain cases.

The FDA has been working to catch up on this backlog of inspections, supplementing these efforts with certain tools that proved useful during the pandemic. In particular, the FDA recently issued a revised draft guidance on remote regulatory assessments that permit certain inspections to be conducted entirely remotely without FDA staff being present.

Although certain emergency measures were initially taken with regard to the export of protective equipment and vaccines, the Biden Administration modified those policies to focus on ensuring an adequate US supply of vaccines and diagnostics, with a selective use of the Defence Production Act (DPA), which put the US government at the “front of the line” as a customer. Since the end of the pandemic emergency, the legislative and regulatory debate has shifted to more general pandemic preparedness and ensuring a more secure and domestic supply chain for products that are needed during an emergency.

There was extensive relaxation of limitations on virtual and telemedicine interactions during the pandemic, as well as policies fostering the use of digital devices to address public health needs during the pandemic. As noted, this has had a significant impact on innovation in clinical trial conduct, use of digital health tools, and telemedicine (among other areas), and many such regulatory innovations are being retained in the post-pandemic setting, with appropriate modifications.

Under the Bayh-Dole Act, the US government has very limited “march-in” rights with regard to IP licensed from the government. To date, despite some controversies concerning the use of government IP (as well as pressures due to COVID-19 and product pricing generally), this authority has not been utilised despite multiple petitions for march-ins with regard to specific drugs.

However, the Biden Administration’s National Institute of Standards and Technology (NIST) recently proposed a new framework for march-in decisions under Bayh-Dole that would directly consider pricing as a factor. The proposal has been widely criticised as undermining the goals of the statute and introducing extra-statutory criteria into these decisions.

The 2005 Public Readiness and Emergency Preparedness (PREP) Act, which has been invoked in a declaration in the case of COVID-19, provides immunity for the manufacture, testing, development, distribution, administration and use of specific covered countermeasures against threats such as COVID-19. Individuals who suffer injuries from the administration or use of products covered by the PREP Act’s immunity provisions may seek redress from the Countermeasures Injury Compensation Program (CICP), which is administered by the Health Resources and Services Administration.

Immunity protections are broad and contrary state and local laws and rulings are widely pre-empted. In practice, the only time a manufacturer of a COVID-19 countermeasure would not benefit from PREP Act immunity would be if a suit were brought in the US District Court for the District of Columbia by a plaintiff who has:

• suffered a serious injury or death;
• rejected a payment from the fund; and
• demonstrated by clear and convincing evidence that the manufacturer engaged in “wilful misconduct” (as defined in the statute).

With the end of the public health emergency, the HHS has amended its PREP Act declaration to continue to apply protections until 31 December 2024 to:

• any activities related to a federal agreement for administration of medical countermeasures or vaccines, treatments and tests procured by the federal government;
• the manufacturing, distribution, administration and use of licensed COVID-19 vaccines, approved or cleared in vitro diagnostics and other devices, National Institute for Occupational Safety and Health-approved respiratory protection devices, and all products under Emergency Use Authorisation, regardless of any federal agreement or emergency declaration; and
• authorise pharmacists to continue to administer COVID-19 and seasonal influenza vaccines to individuals aged three and above and to order and administer COVID-19 tests in accordance with an FDA licence, approval, or authorisation.

Existing provisions were used and new ones introduced to allow the requisition or conversion of manufacturing resources owing to COVID-19. The DPA is the primary source of Presidential powers to expedite and expand the supply of materials and services from the US industrial base, including for certain emergency preparedness activities and the protection or restoration of critical infrastructure. These authorities have been invoked with regard to certain diagnostic devices, personal protection equipment, and vaccine production capacity in the USA. In other cases, the US government has funded the development of additional production capacity, such as for vaccine vials.

Under the DPA, the government can impose “rated” or “priority orders” – pursuant to which, the President may compel companies to accept and prioritise contracts for supplies critical to national defence. These orders also flow down the recipient’s supply chain, such that subcontractors or suppliers must also prioritise the rated order over competing obligations. The government can also impose “allocation orders” to compel industry, on a proportional basis, to allocate resources – for example, by reserving manufacturing capability or supplies in anticipation of a rated order or by allocating manufacturing capability to a particular purpose. Failure to comply with a DPA order carries a criminal penalty.

Post-pandemic, the Biden Administration’s focus is on using authorities to restore the manufacturing of essential medicines in the USA and mitigate supply chain issues and drug shortages.

As noted throughout 11. COVID-19 and Life Sciences, the US government has used a wide variety of public procurement and funding strategies for needed medical countermeasures during the pandemic. Many of these have been unprecedented and based upon emergency authorities, and some are being further considered and retained post-pandemic.