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Summary

The US market has seen a recent surge in cannabidiol (CBD) use and sales, despite many of these marketed CBD products being unregulated and untested for most of the claimed indications.

In response to the increased sales and use of CBD, the Food & Drug Administration (FDA) has issued warning letters to those companies making unfounded claims about the therapeutic benefits of CBD, including those claiming CBD treats COVID-19.

Legality as a Therapeutic

The FDA was established to regulate, among other things, the safety and efficacy of drugs sold in interstate commerce whereas the Drug Enforcement Agency (DEA) enforces laws governing controlled substances. Until December 2018, Cannabis and all Cannabis-derived compounds were Schedule I controlled substances under federal law, meaning there were no accepted medical uses, consumption posed a high potential for abuse, and sale or possession was a federal offense. And while some states have legalized Cannabis in recent years, interstate commerce and possession of Cannabis remain prohibited as a federal matter.

In December 2018, Congress ratified the Agriculture Improvement Act of 2018 (colloquially known as the Farm Bill), which included the Hemp Farming Act of 2018. It created a novel defined term hemp (Cannabis containing less than 0.3% THC by dry weight) in federal statute and excepted it from the definition of marijuana (called “marihuana” in the US Code). Hemp and hemp-derived products were thus de-scheduled from the DEA controlled substances list. As a result, CBD—a hemp-derived product—was likewise “carved-out.” With this change, CBD—if produced from a plant with less than 0.3% THC—was no longer subject to DEA’s oversight. This left the FDA as the main administrative agency regulating CBD products. For an already-emerging direct-to-consumer (DTC) CBD market, sales jumped almost 60% from 2018 to 2019.

Significantly, months before the Farm Bill legalized hemp and hemp-derived compounds including CBD, the FDA approved a naturally sourced CBD drug product to treat epileptic seizures in children living with Dravet Syndrome and Lennox-Gastaut Syndrome. FDA approval of this product adds regulatory complexity to an already growing CBD-DTC market.

Hurdles to Inclusion in Food and Dietary Supplements

Given that the CBD active moiety is FDA approved as a therapeutic drug, federal law prohibits its introduction into interstate commerce when included in dietary supplements or food. As a regulatory matter, FDA-approved drugs can be neither dietary supplements nor food products. Furthermore, CBD is neither generally recognized as safe (GRAS), as required by the Food Additives Amendment of 1958 to be considered a legal food additive, nor acknowledged as a new dietary ingredient (NDI) through the NDI Notification process, as required by the Dietary Supplement Health and Education Act of 1994.

Our recent research revealed that many companies claim therapeutic benefits for their CBD-DTC products despite not having the adequate data required by the FDA to do so. The table below describes the burden of proof necessary to introduce each of the different kinds of products subject to FDA regulation into interstate commerce. Drugs require substantial data to demonstrate efficacy. Making these claims without this information is in violation of the Food, Drug, and Cosmetic Act: namely, misbranding and marketing an unapproved new drug in interstate commerce. Exercising its regulatory authority, the FDA has issued numerous warning letters to companies ascribing medicinal benefits to their CBD-DTC products, including 15 such companies in November 2019.

Data Required Pathway Statute
Food GRAS Food Additive 21 USC 321(s)
21 USC 331(ll)
21 USC 348(a)
Dietary Supplements Food ingredients or safe when used as labeled NDI 21 USC 321(ff)
21 USC 342(f)
21 USC 350b
OTC Drugs Generally recognized as safe and effective (GRASE) Rx to OTC
OTC Monograph Process
21 USC 360fff(3) (GRASE)
21 USC 355h (CARES Act)
21 CFR 330
Prescription Drugs Substantial evidence of safety and efficacy New Drug Application / Biologics License Application 21 USC 321(g)(1)
21 USC 355(b)
42 USC 262

Recently, some companies have taken to promoting CBD as treating, mitigating, or protecting against SARS-CoV-2 without substantial evidence. The FDA has warned 7 such companies as of May 15, 2020. Given the severity of the pandemic, the FDA has required warning letter recipients to reply with a corrective plan within 48 hours of receiving a warning letter, rather than the typical 15 working days usually required. Last month the Federal Trade Commission, in coordination with the FDA, filed suit against one of the warned companies. This appears to apply not just to CBD purveyors but indeed to companies selling any product claimed to treat, mitigate, or prevent COVID-19 without substantial evidence and FDA approval.

Safety Concerns and Lack of Public Standards

The FDA has been consistent in recognizing CBD’s existing and potential clinical merit, while expressing legitimate concerns about safety for use by the general public, particularly with respect to cumulative exposure. The agency remains reluctant to create an exception for CBD to be included in foods or dietary supplements without additional evidence of safety. Notice-and-comment rulemaking typically takes 3–5 years from conception to a final rule.

Additional concerns exist on whether a CBD-DTC product’s label is accurate: is any or the right amount of CBD present in the product, or could a product be contaminated (e.g., containing pesticides or other cannabinoids)? Trade associations are offering third-party auditing and seals of approval to growers and manufacturers, but setting a public standard through an official compendium like the United States Pharmacopeia would go a long way to formalizing what CBD is—and indeed must be—if contained in a product sold to the public at large.

CARES Act Provision Illuminates Another Pathway Through OTC Monograph Reform

For a product to be designated OTC, a sponsor would have to demonstrate that the product is GRASE when used as labeled for a specific indication. The less-cumbersome administrative order process and potential exclusivity period will likely spur further research studies into safety and therapeutic efficacy for numerous drug products, CBD being no exception. As part of the March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (CARES), Sections 3851-56 (OTC Drug Review) and 3861-62 (User Fees) provide for long-awaited reform to the original 1972 procedure to bring OTC drugs to market. Among other things, the CARES Act provisions establish for new products:

  • An administrative order process to obtain an OTC designation, replacing the previous notice-and-comment rulemaking process
  • A user fee program like those for prescription drugs and biologics, generic drugs, biosimilars, and medical devices
  • An 18-month exclusivity period for certain new OTC drug products
  • Increased funding expected to triple the FDA’s OTC work capacity over the next 5 years

The FDA is currently implementing the changes prescribed by the CARES Act provisions and updating the FDA website to reflect those changes.

While the FDA is not presently considering CBD as an ingredient for OTC review, that could change with a generalizable safety profile and broad efficacy, as CBD is currently suggested for anxiety or chronic pain, for example. As with other drug products, OTC monograph reform could change the landscape for CBD. Yet, as with other drug products, this option is dependent on solid, conclusive data—and the FDA has reservations about CBD’s safety with the information available to the agency to date. Overcoming exclusivity and intellectual property hurdles remain other challenges.

Conclusion

Stakeholders should take note of the myriad regulatory issues and emerging developments at play regarding CBD. Any sponsor of a CBD-containing product faces substantial legal liability by promoting and marketing a product across state lines, and further if they make health claims that have not been submitted to the FDA for review and approval. Meanwhile, consumers should remain extremely cautious of any products making claims that seem too good to be true—because they probably are. As such, consumers risk purchasing products of questionable quality (e.g., do they even contain CBD?) that may represent a risk to their health. Meanwhile for legitimate product sponsors, there is the risk of being associated with public skepticism resulting from the actions of questionable manufacturers, while also incurring substantial liabilities when the FDA uses their enforcement discretion to issue warning letters that require corrective action within days of receipt. Developing a comprehensive strategy to navigate those issues is paramount to ensuring success of any product life cycle.

Avalere helps sponsors of all types of medicinal products understand the opportunities and liabilities of marketing and promotion practices and advises on how best to manage regulatory risk. This enhances regulatory predictability and fosters good corporate governance practices in the interests of companies as well as their customers.

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