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1、FDAC,1,FEDERAL CIVIL AND CRIMINAL LAWS,HOW THEY IMPACT BIOMEDICAL COMPANIESANDTHEIR EMPLOYEES,FDAC,2,Prepared By:,Michael A.Swit,Esq.Law Offices of Michael A.Swit539 Samuel Ct.,Suite 229Encinitas,CA 92024760-815-4762fax:760-454-FOR:SDRAN RAC Review CourseOct.23,2003,FDAC,3,INTRODUCTION,This outline
2、presents,in a“user friendly”format,how the civil and criminal laws of the federal(i.e.,the United States)government impact a biomedical company and its employees.It reviews the different types of violations that can occur,and the penalties and other collateral consequences of those violations.ORWHY“
3、CRIME”DOESNT PAY!,FDAC,4,THE FEDERAL FOOD,DRUG,and COSMETIC ACT(“FDCA”),The main law that applies to biomedical companies How the FDCA works:FDCA creates requirements you must meet If you dont meet the requirements,either by doing the wrong thing or failing to do the right thing,you commit a“prohibi
4、ted act”Any“person”that commits a“prohibited act”can be charged with a crime under the FDCA,FDAC,5,THE FDCA IS A“STRICT LIABILITY”CRIMINAL LAW,No intent or knowledge(of the crime or the act that=the crime)is needed for a person to be accused of a crime for violating the FDCA;instead If a violation o
5、f the FDCA occurs,and a person was in a position to prevent the violation,then the person may be charged with a crime U.S.v.Park-Supreme Court case(1975),FDAC,6,WHAT FDCA REQUIRES OF A REGULATED COMPANY and ITS EMPLOYEES:,Three basics:Make and sell products that are“approved,”“cleared”or otherwise l
6、awfully marketedDo NOT make or sell products that are“adulterated”Do NOT make or sell products that are“misbranded”,FDAC,7,VIOLATING FDCAsREQUIREMENTS MAY LEAD TO CRIMINAL CHARGES,GENERAL RULE#1:If you do anything involving the sale of an unapproved,misbranded or adulterated drug or device,you have
7、committed a Prohibited Act”under 301 of the FDCA GENERAL RULE#2:If you do a Prohibited Act,you can be charged with a crime under the FDCA,FDAC,8,EXAMPLES OF“PROHIBITED ACTS”UNDER FDCA 301,Selling an adulterated or misbranded drug in“interstate commerce”-i.e.,across state lines Receiving an adulterat
8、ed or misbranded drug after it was shipped Selling a drug requiring an NDA without having an effective approval,FDAC,9,“PROHIBITED ACTS”UNDER FDCA 301(contd),Refusing to permit FDA toinspect your plant Counterfeiting a drug,FDAC,10,FDAs THREE POWERS UNDER FDCA IF A PERSON DOES A“PROHIBITED ACT”,Crim
9、inal prosecution of individuals or companies Seizure of violative goods Injunction orders against persons or companies doing the prohibited acts,FDAC,11,SEIZUREFDCA 304,Civil Action in remOn“libel”of information in U.S.District CourtAffected person can file a“claim”and show why goods are OKAfter ent
10、ry of decree,can be:destroyed,sold(if OK)or reconditioned,FDAC,12,INJUNCTIONFDCA 302,Civil Action Against Person or CorporationCourt has authority to restrain violation AND,in certain circumstances,may order a recallDisgorgement&Abbott Labs&Scheringthe costs are rising now$500MMAn Injunction action
11、may lead to-or arise out of-consent orders,FDAC,13,Schering-Plough Consent Decree,May 2002,$500MM fine,subject to court approval,represents disgorgement of profits from adulterated productsResult of 13 FDA inspections at 4 facilities in NJ and PR since 1998Fine includes$471,500 payment to cover cost
12、s of past FDA inspections,FDAC,14,Schering-Plough Consent Decree,May 2002,125 Rx/OTC drugs made at these plants,representing 90%of S-Ps productsPermanent injunction requires procedures to assure cGMP compliance;suspended manufacturing of 73 productsIntensive internal audit required for 5 years,with
13、increased FDA inspection as well,FDAC,15,A FOURTH FDA“POWER”,“Force”a person to do a“Recall”Recalls are“voluntary”requests by a drug company to send back drugs that violate the lawDevices-FDA does have power to order a recall 518(e);rarely done-requires a finding that a device would cause“serious,ad
14、verse health consequences or death.”See 21 CFR Part 7-general info on recalls,FDAC,16,RECALLS-,BUT,FDA has ways to“make”you do a recallthreatens prosecution,injunction or seizurethreatens or actually spreads bad publicity about person who did the“prohibited act”FDCA 705,FDAC,17,FDAs Non-Judicial Enf
15、orcement Tools:,Warning LettersCivil Penalties(devices)“Notices of Violation”InspectionsApplication Integrity ProgramGeneric Drug Enforcement Act of 1992 Powers(e.g.,debarment)Publicity,FDAC,18,The“305”HearingFDCA 305,You dont want to get a“305 Notice”If you do,be happy-you get to argue your case be
16、fore FDA takes official criminal referralFairly informal processHas been successful in avoiding charges,FDAC,19,WARNING LETTERS,Procedure-see Regulatory Procedures Manual(RPM),Chapter 8May issue directly from district office Others require FDA HQ sign-offPublic documents(your competitors will read-a
17、nd circulate-them),FDAC,20,Notices of Violation,Most frequently used on the drug side;now require clearance via FDA Office of Chief Counsel(may change back)Not quite a warning letter,but should be taken seriously,FDAC,21,APPLICATION INTEGRITY PROGRAM(AIP),Spawned by the generic drug scandal56 Fed.Re
18、g.46191-Sept.10,1991See Compliance Policy Guide(CPG)7150.09(www.fda.gov/ora/ora_home_page.html)Triggers-“actions subverting FDA process”:Examples:Fraud in applications or other falsificationsBribery or gratuitiesProblem-“bars”you from approvals,FDAC,22,APPLICATION INTEGRITY PROGRAM(AIP)-cond,Correct
19、ive Action Plan-what you need to do if fall under AIP:Cooperate with FDA and other federal investigatorsIdentify all wrongdoers and remove them from authority,FDAC,23,APPLICATION INTEGRITY PROGRAM(AIP)-cond,Conduct an internal review with outside consultants to uncover all other wrongdoingWritten ac
20、tion plan:Procedures and controls to preclude in futureEthics programsFDA Verification-reinspection,FDAC,24,CRIMINAL PROSECUTIONFDCA 303,Process-FDA District Office-FDA Center OC-FDA GC-Justice Department(Ofc.Of CivilLitigation)-U.S.Attorney-Grand Jury(if felony sought)Indictment felonyInformation m
21、isdemeanor or for plea agreements,FDAC,25,THE PARK CASE:“Strict Liability in Action”,Question:Is it fair to charge a person with a crime if they did not know about a violation or did not intend to violate the law?Mr.Park-president of Acme Markets Acme had a warehouse in Baltimore,which FDA inspector
22、s found to be filthy-thus,Acme and Mr.Park were charged with adulterating food(also a prohibited act under 301 of FDCA),FDAC,26,THE PARK CASE(contd.),U.S.Supreme Court:If a person is in a position to stop a violation of the FDCA from occurring,but the violation happens anyway,then that person(whethe
23、r an individual such as Mr.Park or a company)can be charged with a crime under the FDCA,FDAC,27,THE PARK CASE(contd.),Reason:a person who voluntarily takes a job in an industry regulated by the FDCA has a higher duty-to protect the public health-thus is subject to the“strict liability”standard of FD
24、CA,FDAC,28,THE PARK CASE(contd.),Exception to Strict Liability:if it was“objectively impossible”for the responsible person(such as Mr.Park)to prevent the violation,then not a crime under FDCA“Objective Impossibility”may require,according to one court,that a person show that they exercised extraordin
25、ary care to prevent the violation,but it still happened,FDAC,29,IMPACT OF THE PARK CASE ON A DRUG or DEVICE COMPANY:,Company executives have a duty:to try to find violations of the law;and to prevent violations from occurring in the first place Company employees are basically“partners”with the execu
26、tives because,if you violate the FDCA,your boss could be charged with a crime,FDAC,30,OTHER FEDERAL CRIMES AND THE BIOMEDICAL INDUSTRY,False Statements-to make a statement(oral or written)tothe federalgovernment that isfalse-e.g.,falsedata submitted to FDA in an ANDA-you cant lie toUncle Sam.,FDAC,3
27、1,OTHER FEDERAL CRIMES AND THE BIOMEDICAL INDUSTRY,Conspiracy-happens when you plan with another person to do a crime and one of you takes one action(called an“overt act”)to carry out that planNOTE:it is still a crime even if you stop the plan before the crime happens if you or your co-conspirator d
28、id the one“overt act”,FDAC,32,OTHER FEDERAL CRIMES AND THE BIOMEDICAL INDUSTRY,Bribery-to givemoney or anythingelse of value inreturn for agovernment officialtaking come actionfor you,FDAC,33,OTHER FEDERAL CRIMES AND THE BIOMEDICAL INDUSTRY,Gratuity-same as bribery,but you dont ask the government of
29、ficial to do anything-still wrong because officials should be fair to all and money may influence them to favor you Perjury:lying while under oath,whether in court testimony or in a sworn affidavit,FDAC,34,OTHER FEDERAL CRIMES AND THE BIOMEDICAL INDUSTRY,Obstruction of justice:interfering with a gov
30、ernment officials lawful performanceof their duties-e.g.,not letting an FDA inspector into see a room they asks to see that they have a right to see,FDAC,35,OTHER FEDERAL CRIMES AND THE BIOMEDICAL INDUSTRY,Wire Fraud:to use a telephone,telegraph,or other form of electronic communication(e.g.,e-mail)
31、to do a crime Mail Fraud:to use the mails to do a crime Aiding and Abetting:occurs when you dont do the crime itself,but you help someone else do it,FDAC,36,CRIMINAL PENALTIES-or“Does Crime Pay?”,PRISON or JAIL:Felonies:up to five(5)years in prison for each violation Misdemeanors:up to one(1)year in
32、 jail for each violation,FDAC,37,CRIMINAL PENALTIES-or“Does Crime Pay?”,FINES:amountdepends on theperson(whether anindividual orcompany),the classof crime(felony v.misdemeanor),andif the crime resultedin a death,FDAC,38,CRIMINAL PENALTIES-or“Does Crime Pay?”,FINESIndividual:misdemeanor:$100,000 per
33、violationmisdemeanor resulting in death orfelony:$250,000 per violationCompany:misdemeanor:$100,000 per violationmisdemeanor resulting in death orfelony:$500,000 per violation,FDAC,39,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FORINDIVIDUALS IFCONVICTED:Lose right to vote Lose right to run for
34、public office Damage to reputation,FDAC,40,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FORINDIVIDUALS IFCONVICTED(contd):Can be deported if not a U.S.citizen Financial ruin-lose your job,FDAC,41,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FOR COMPANIES CAUSED BY CRIMINAL CONVICTIONS:Sharehol
35、ders sue the company,its officers and directors Other companies may sue the company(e.g.,Mylan Labs sued Par and others)Federal government may suspend or“debar”company from selling to government,FDAC,42,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FOR COMPANIES CAUSED BY CRIMINAL CONVICTIONS(cont
36、d):FDA may refuse to approve applications under AIPMay lose state licensesCustomers abandon youDecreased sales may force lay-offs of employees,FDAC,43,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FOR COMPANIES CAUSED BY CRIMINAL CONVICTIONS(contd):“Qui Tam”actions under the False Claims Act-e.g.,
37、Lifescan case-“whistle blower”cases-leading to civil damages and may also spawn a criminal prosecution,FDAC,44,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FOR COMPANIES CAUSED BY CRIMINAL CONVICTIONS(cond):Financing disappears-banks may refuse to lend moneyMay violate lending agreements,real est
38、ate mortgages or leasesA criminal investigation can cause greatdisruption to normal business activities,FDAC,45,CRIMINAL PENALTIES-or“Does Crime Pay?”,PROBLEMS FOR COMPANIES CAUSED BY CRIMINAL CONVICTIONS(cond):High cost in money of an investigation:lost salesstock price fallsattorneys fees and cost
39、scosts of complying with requests by government for documents,FDAC,46,FDA Activity,Enforcement Statistics Fiscal Year 2002Prosecution-0*Civil Money Penalty-1Seizures-13Consent Decrees of Permanent Injunctions(Filed)-15Convictions OCI 317Warning Letters 755FDA 483s Issued 7,180Recalls-5,025Inspection
40、s-18,572Import Refusals-32,654Asset Forfeitures(OCI)-$18,300,000Fines and Restitution(OCI)-$24,027,549*:Does not include Office of Criminal Investigations data.,FDAC,47,FDA Activity Prosecutions,FDAC,48,FDA Activity OCI,FDAC,49,FDA Activity Injunctions,FDAC,50,FDA Activity Seizures,FDAC,51,FDA Activ
41、ity Recalls(by Center),FDAC,52,FDA Activity Warning Letters(by Center),FDAC,53,FDA Activity Warning Letters(by Year),FDAC,54,FDA Activity Inspections,FDAC,55,FDA Activity Devices,FDAC,56,FDA Activity Devices,FDAC,57,FDA Activity Drugs,FDAC,58,FDA Activity Drugs,FDAC,59,FDA Activity Biologics,FDAC,60
42、,FDA Activity Biologics,FDAC,61,Source of FDA Statistics Slides,FDA-“The Enforcement Story”http:/www.fda.gov/ora/about/enf_story/default.htm,FDAC,62,Parting thoughts,These are pictures you do not want to see.in your newspaper.on your local news.on the Internet.or in FDA regulatory lawyers presentati
43、ons for years to come.,FDAC,63,Ex-Imclone CEO exits federal court after being charged with nine felony counts,FDAC,64,Ex-Imclone CEO exits federal court after entering guilty plea,FDAC,65,the next picture,Dr.Wakshal in prison garb?Pled guilty Oct.15,2002 to six counts,including:bank fraudsecurities
44、fraud,aka“insider trading”conspiracy to obstruct justice,and perjuryFaces:up to 65 years in prison;millions in fines,FDAC,66,THANKS:,To Monika Chas,formerly of Par Pharmaceuticals Regulatory Affairs Department,for drawing the illustrations in this outline.To Michelle Via,formerly of Par Pharmaceutic
45、als M.I.S.Department,for getting Monikas drawings imported into the software program so they could be printed,FDAC,67,The End,FDAC,68,Questions?,Call,e-mail,fax or write:Michael A.Swit,Esq.Law Offices of Michael A.Swit539 Samuel Ct.,Suite 229Encinitas,California 92024760-815-4762 760-454-2979(fax)ht
46、tp:/,FDAC,69,About the speaker.,Michael A.Swit has extensive experience in all aspects of FDA regulation with a particular emphasis on drugs and medical device regulation.In addition to his regulatory law experience,Mr.Swit also served for three and a half years as vice president and general counsel
47、 of Pharmaceutical Resources,Inc.(PRI)a prominent generic drug company and,thus,brings an industry and commercial perspective to his representation of FDA-regulated companies.While at PRI from 1990 to late 1993,Mr.Swit spearheaded the companys defense of multiple grand jury investigations,other fede
48、ral and state proceedings,and securities litigation stemming from the acts of prior management.Mr.Swit then served from 1994 to 1998 as CEO of Washington Business Information,Inc.(WBII)a premier publisher of FDA regulatory newsletters and other specialty information products for the FDA publishing c
49、ompany.Before starting FDAC,he was with Heller Ehrman from May 2001 to May 2003,and also twice in private practice with McKenna&Cuneo,from 1988 to 1990 and,most recently,from 1999 to 2001,first in that firms D.C.office and most recently,in its San Diego office.He first practiced FDA regulatory law w
50、ith the D.C.office of Burditt&Radzius from 1984 to 1988.Mr.Swit has taught and written on a wide variety of subjects relating to FDA law including,since 1989,co-directing a three-day intensive course on the generic drug approval process,serving on the Editorial Board of the Food&Drug Law Journal,and
