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The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), attempted to redress what was perceived to be a failing under prior la

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

w. In Chapter 11 Cases (especially larger cases), smaller “trade” creditors and smaller interests were often frozen out of the process and of quali

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ication for Committee membership, by the mere presence of huge bondholder representatives, pension funds, and the like. The intention, under earlie

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

law, was to create a Committee, generally of seven members, consisting of the largest unsecured creditors, with claims generally representative of

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

he types of debt extant in the case. This, of course, proved easier in theory than in practice, as large cases tended to be replete with public deb

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

, managed by institutional holders. The result, often, was that smaller trade creditors, or “mom and pop” businesses were simply not given a seat a

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

t the table, and were effectively not afforded the advantages of participation in the reorganization negotiation process.

Under prior law, a confli

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

t developed in the Courts as to whether the bankruptcy court had the power to direct the U.S. Trustee to increase Committee size so as to redress th

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

s imbalance of power. It is clear now under BAPCPA that it does, if the creditor seeking membership can satisfy a two-part test: The first part re

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

uires that the creditor be a “small business concern,” as that term is defined under the Small Business Act. The definition of that test is beyond

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

he scope of this article, and counsel should be consulted for additional detail. The second requirement, is that the creditor hold a claim or claim

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s which, in the aggregate, “in comparison to the annual gross revenue of that creditor, is disproportionately large.” The term “disproportionately

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

arge” is not defined, and will be left to judicial development. The term has been used in certain other bankruptcy contexts, but such use is, in th

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

judgment of this author, of dubious applicability.

It seems obvious, for example, that if 50% of the annual revenues of a “Small Business Concern”

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

is tied up in a bankruptcy case, the provision would apply, but as one goes further down the scale, the cases are likely to reach different results.

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

In any case, in those courts in which the Courts had the power to direct changes in Committee size and composition to provide for adequate represen

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

tation of types of debt, that discretion does not appear to have been taken away.

In summary, the question of whether “Mom and Pop” have been given

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

a “seat at the table” in large reorganization cases has yet to be tested by the application by the Courts of the new BAPCPA provisions, and only tim

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

will tell whether Committees will become “more representative” of types of debt in those situations. Any creditor representative who finds himself

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

or herself in a situation calling for legal analyis in this area is, or course, urged to consult competent counsel.

Warren R. Graham

Copyright 200

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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