CHILTON FINANCIAL LTD CASE

Chilton Financial Ltd. Case

Chilton Financial Ltd. Case

Question 1

Chilton Finance Ltd is a medium sized international financial services organisation offering a wide range of financial services products via a number of different delivery channels.

The Chilton Finance Limited proposed interpretation that "primary mode of action" be determined based on "the level of contribution of each component," is not a concept found in applicable provisions of the FFDCA or FDA regulations, the respective legislative and regulatory histories of these provisions, FDA policy pronouncements, or past FDA practices, and in fact represents a fundamental departure from the Chilton Finance Limited's prior interpretation of this term. The starting point for understanding FDA's historical interpretation of "primary mode of action" begins with the statute itself, which directs the analysis to the composite product and not its components, by requiring the FDA to "determine the primary mode of action of the combination product." Consistent with this mandate, and from a decade of interpretation, two important guiding principles have emerged. First, it is clear from FDA's regular reaffirmations in policy pronouncements and precedents, that the Chilton Finance Limited looks to the product as a whole to assess the primary mode of action. Secondly, as described below, we know from both guidance and precedents, that the term "mode of action" has been interpreted not as "mechanism of action," but, rather, as primary intended function of the combined product. Consequently, until the May 15, 2002 Federal Register notice, industry was unaware that "primary mode of action" would be examined, based on a new and significantly different standard of "relative contribution of each component."

Both Intercenter Agreements and CBER cellular and tissue pronouncements, direct industry to look to the intended function of the combined product rather than its constituent parts. A principal important theme in the CDRH-CDER Intercenter Agreement, is that combination products that have primarily a structural, physical, or reconstruction purpose, should be regulated as devices. For example, the Agreement states that "[a]n implant, including an injectable material, placed in the body for primarily a structural purpose[,] even though such an implant may be absorbed or metabolized by the body after it has achieved its primary purpose[,] will be regulated as a device by CDRH." CBER also historically has employed this functional approach to interpreting primary mode of action." In CBER's proposed framework for regulation of cellular and tissue-based products, it states: "[t]issue-based products that are intended for diagnosis or therapeutic effect by physical action (including reconstruction or repair), and that contain synthetic or mechanical components, and achieve their primary mode of action by means other than metabolic or systemic action, are regulated as devices by CDRH." Likewise, in the CBER-CDRH Intercenter Agreement, in recognition of the structural/replacement function of cultured skin, the Agreement expressly acknowledges that "cultured skin will be regulated by CDRH under the Medical Device Authorities." Each of these policy statements, thus, refers to the structural, restorative, or replacement mode of action -- the primary intended function -- of the combined product, rather than to the ...