The U.S. Food and Drug Administration (“FDA”) is strongly encouraging cannabis producers to share information regarding their clinical studies with the FDA, so it, in turn, can better understand the effects of chronic use of cannabis. This will then help the FDA develop sound science-based policies and regulations relating to cannabis and cannabis derived products. But cannabis producers also understandably want to protect their trade secret information in this rapidly growing industry. The FDA’s DMF process may be the solution where everybody can win.

First a bit of background. The 2018 Agricultural Improvement Act, better known as the “2018 Farm Bill”, turned the cannabis world on its head by pulling hemp out of the definition of a controlled substance under the Controlled Substances Act (“CSA”). Instead, the 2018 Farm Bill broadly defines “hemp” as “cannabis derived material” that contains no more than 0.3% THC on a dry weight basis. In practice, this meant that hemp and hemp-derived products, such as CBD, were no longer banned from use and consumption under the CSA. These changes have opened doors for producers of cannabis-derived material to begin marketing and selling products, and has forced the FDA to become far more active in the cannabis space in order to regulate these newly-legalized products. However, the FDA has identified one glaring issue—a dearth of data regarding the effects of cannabis. In fact, gathering data is the FDA’s single greatest priority in the cannabis space.

While stakeholders in the cannabis industry may want to help develop this data, they also have concerns about sharing their proprietary information with external researchers. Picture the following scenario:

Ms. A, owner of Herbs ‘R Us, has developed a new and proprietary method of extracting CBD from industrial hemp. Ms. A is contacted by a clinical researcher, Dr. B, who would like to use her unique CBD product in a clinical study at a prestigious university hospital. The study would evaluate the effects of CBD on patients suffering from depression. Ms. A recognizes that this is a fantastic opportunity for her product and her business, but does not want to share her valuable trade secret information with Dr. B for purposes of the study. What can she do?

Enter the “Drug Master Files” (DMFs). DMFs are submissions to the FDA used to provide confidential, detailed information about the facilities, processes, or articles used in the manufacturing, processing, packaging and storing of human drug products. This information can be used to support Investigational New Drug (IND) applications without the owner of the trade secret (the “DMF Holder”) needing to disclose its propriety information to the clinical sponsor of the IND. Under the DMF process, the DMF Holder would obtain a pre-assigned number from the FDA, collect all of its information, and submit the DMF. The submitted information is shared with no one except the FDA (and Confidential Commercial Information and Trade Secrets included in the DMF cannot be disclosed in response to a FOIA Request). For purposes of IND applications and New Drug Applications (NDAs), the DMF process is also free of charge.

The FDA conducts its review of a DMF in two stages: first, upon receipt of the DMF, the FDA conducts an administrative overview of the file to confirm that all of the required information has been submitted—essentially making sure that the DMF Holder has ‘checked all of the boxes.’ Assuming the DMF passes the administrative check, the FDA confirms acceptance with the DMF Holder.

Second, the FDA must complete a technical review of the DMF. In connection with IND applications, this process is not initiated until the clinical researcher or sponsor of an IND references the applicable DMF in its application. In addition, the FDA will not review a DMF until the DMF Holder sends the Agency a Letter of Authorization (LOA) that authorizes the FDA to conduct its technical review of the contents of the DMF. The DMF Holder should also send a copy of the LOA to the IND sponsor or researcher, who will submit a copy of the DMF Holder’s LOA to support the IND process. Once FDA receives (1) an IND which references the DMF, and (2) an LOA authorizing technical review of the DMF, the FDA will then begin its technical review of the DMF.

It is important to note that after its technical review, the FDA will not accept or reject a DMF—it will simply deem it to be “Adequate” or “Inadequate.” Assuming a DMF is deemed adequate, the FDA has effectively served as the ‘middle man’ in the process—receiving necessary information regarding the product from the DMF Holder, and the methodology of clinical trials from the IND applicant. With this information, FDA can conduct a review and grant approval for a clinical trial without the researcher ever learning about the DMF Holder’s proprietary information.

If the FDA determines that a DMF is Inadequate, it will provide the DMF Holder with a list of deficiencies. The FDA would also inform the clinical researcher or sponsor who has referenced the DMF that the DMF has been deemed inadequate to support the clinical trial. It would not, however, reveal any contents of the DMF. The researcher or sponsor would only be able to learn why a DMF was deemed inadequate from the DMF Holder.

The FDA hopes that the DMF process will lead to more clinical trials on cannabis derived materials by alleviating stakeholder concerns about sharing their propriety information in support of clinical trials. This will help develop a body of scientific research that the FDA needs in order to create an appropriate regulatory framework for cannabis products. And the end result is the trade secret holder remains in control of its confidential information.