FDLI: Insights in Enforcement, Litigation & Compliance for Pharmaceutical and Medical Device Manufacturers
Last week, we were fortunate enough to attend the Food and Drug Law Institute’s (FDLI) Enforcement, Litigation & Compliance conference, hosted in Washington, DC. The two-day conference and agenda was packed with extremely informative topics, and included an astounding number of high-level government officials from the Food and Drug Administration (FDA), the Department of Health and Human Services (HHS) Office of the Inspector General (OIG), the Department of Justice (DOJ), and several other related offices.
Below is a summary of some of the panels we attended, quotes from participants, and some overall analysis and commentary. It should be noted that all participants from the government spoke on their own behalf and were not speaking on behalf of their respective agencies.
New Faces of Enforcement
The first panel of the conference included some of the top officials in food and drug law and healthcare enforcement. The panel, moderated by Eugene M. Thirolf, former Director of the DOJ Consumer Protection Branch, consisted of:
- Michael S. Blume, Director, Consumer Protection Branch, U.S. Department of Justice
- Gregory Demske, Chief Counsel to the Inspector General, HHS-OIG
- Joseph Rannazzisi, Deputy Assistant Administrator, Office of Diversion Control, U.S. Drug Enforcement Administration (DEA)
- John Roth, Director, Office of Criminal Investigation, FDA
Greg Demske spoke first, nothing that although OIG will not make any major changes to its enforcement priorities, there will be different approaches to the way OIG approaches cases. He mentioned the need for change given the continuously large settlements, questioning whether OIG and healthcare law enforcement is doing enough. Demske assured the audience that OIG will continue to work closely with industry to engage in a productive dialogue, promote voluntary compliance, and to identify best practices for compliance and fighting healthcare fraud and waste. He noted that OIG will hopefully continue to engage industry like it has in the past year, with more industry roundtables.
Demske did emphasize that OIG will “focus on individuals and the decisions they are making,” in reference to DOJ’s more recent focus on the Park doctrine, and OIG’s use of convictions under that doctrine to exclude individuals. In making this remark, he explained to the audience OIG’s exclusion authority, the differences between mandatory and permissive exclusion, and discussed the Synthes and Purdue Pharma cases. Demske also discussed the use of corporate integrity agreements (CIAs), and how OIG decides whether to waive exclusion in order for the company or entity to enter into a CIA. In referencing the Purdue case, he noted how the D.C. Circuit court denied the executives request for a hearing en banc (all judges of the court), leaving the executives with only the option of petitioning the Supreme Court for a writ of certiorari.
Finally, Demske discussed GlaxoSmithKline’s (GSK) recent CIA with OIG, and the new provisions addressing the “Patient First Program” and the “claw back” provisions for executive compensation and bonuses.
Joseph Rannazzisi gave the next presentation, which focused primarily on the tremendous public health concern our country is facing regarding opioids and other pain killers. His animated presentation gave useful data and insight into the tremendous extent of this problem and the harmful effects it is having on our healthcare system and as well as the costs. He gave an overview of how the DEA operates and its legal authority and jurisdiction under the Controlled Substances Act (CSA), and his agency’s work with DOJ, FBI, and other federal healthcare law enforcement. He also discussed several cases, including one in which individuals were driving from Massachusetts all the way to Florida to get opioids.
Next, John Roth gave a presentation on FDA’s Office of Criminal Investigations (OCI). He gave a broad overview of OCI’s mission and explained the nature of their work and gave some examples of recent actions and cases. OCI mainly deals with injunctions, seizures and criminal enforcement of the Food, Drug & Cosmetic Act. OCI works with DOJ and other law enforcement to protect the public health and has highly trained investigators help carry out its work. OCI works closely with the centers at FDA (e.g. CDER, CDRH) to get information about where its enforcement priorities should be and where to investigate.
OCI has recently handled the counterfeiting of Avastin. OCI is also responsible for investigating companies that may have committed clinical trial fraud or made misrepresentations to FDA in their product application or required post-market reporting.
Finally, Michael Blume discussed DOJ’s enforcement priorities and how his office handles cases. The Consumer Protection Branch (CPB) is involved in all cases involving the FDCA and is largely involved in many of the off-label promotion cases we have written about frequently. Blume noted that his office is working in an environment of limited resources, but nevertheless, uses data from various sources to help determine a proactive approach at purusing cases. He said that CPB is reaching out more aggressively to stakeholders in the industry and consumers, and looking for cases that will change the behavior of industry and have a larger impact on stakeholders, rather than just looking for only big money settlements.
Blume noted that his office is being more transparent about the facts of each case and the unlawful conduct that occurred so the office can send a message or signal to everyone else. In other words, those facts and unlawful conduct made public are a sign for companies to know that they may get a knock on their door if similar conduct occurs in their business. Finally, Blume also noted CPB’s look into requiring more compliance, despite OIG’s role. He noted that his office is working with OIG and having discussion about ways to hold companies responsible and the right factual circumstances to include enhanced penalties such as required compliance that is separate and additional to a CIA. Blume also noted that CPB is seeing more medical device cases, involving defects or failure to make required reporting, and that this may be a growth area for the office.
Compliance Central with FDA Center Compliance Directors
This panel included some of the top officials from all of FDA’s Centers, including drugs, devices, biologics, foods, tobacco and veterinary medicine. A good amount of discussion from CDER focused on the new authorities under the Food and Drug Administration Safety and Innovation Act (FDASIA) regarding the drug supply chain. Douglas Stearn discussed the new office in CDER that deals with drug supply chain issues and counterfeiting, and also discussing a new trend in enforcement letters from FDA dealing with current good manufacturing practices (cGMP) violations.
In response to a question about why FDA sent a cGMP warning letter directly to a CEO or senior level officials, Stearns noted that the agency did so because quality control is a corporate commitment that FDA believes needs to be taken seriously by senior management. He noted how quality control is now an aspect of the company that is integreated, and also a lot of outsourcing, so it is important that someone is held accountable.
The CDRH presentation also included a very interesting discussion of new programs the center is working on such as the Single Audit Program and the Case for Quality Initiative.
Advanced Applications Panel
This panel consisted of Jill Furman, Deputy Director of CPB, and two defense attorney’s who represent pharmaceutical companies and/or their executives. This panel was very informative in that it traced some of the steps the government goes through in deciding to bring a case for an alleged FDCA violation. First, Ms. Furman noted that a large number of cases that CPB handles come from qui tam relators or “whistleblowers.” Under the Qui Tam statute, the government must review each qui tam, however, the discretion and process for such review varies by office and agency, and there is not necessarily a statutory outline for what factors and considerations the government will look at.
Instead, Furman noted that CPB will look at whether there have been any regulatory actions against the alleged company or product by FDA or the specific center; whether there is a public health concern, whether there have been a large number of warning letters and several other factors. She also noted the importance of what a company did when it found out about the problem, where the response came from, the perspective of fixing the problem, and who was hurt. In general, she noted that the focus of CPB is the harm to patients/consumers affected by the product. She also discussed where the product fits in at the company, the regulatory and/or enforcement history of the company, any communications between the agency and the company about the product, and the pervasiveness of the conduct or actions.
Another important factor she mentioned was how the alleged conduct affects the regulatory or approval process or oversight of the agency. Consequently, she noted that her office decides on pursuing cases, issuing subpoenas, looking at documents, etc., when the basic fact and factors noted above, show that a likely result will be restitution that is worth the resources put into it. Nevertheless, she noted that cases brought to CPB require a lot of resources, sometimes 2-3 agents and 2-3 lawyers, which can sometimes be full-time—which has consequences because those government actors can’t pursue any other cases or work.
There was also a brief discussion about when DOJ Criminal decides to get involved in FDCA violation cases, although there was not really a clear process outlined. Mainly, it was noted that DOJ Criminal, CPB, FDA, and other enforcement agencies work together sharing information about a particular case and based on that work make a decision whether to pursue criminal charges. This raised concerns from the criminal defense attorneys because many companies and executives have a distrust about DOJ coming back after the civil case is resolved and bringing criminal cases. They expressed their preference of resolving cases “globally,” to avoid this problem.
Chris Mead, the attorney who represented Mark Hermelin, the former KV Pharmaceutical CEO who was excluded from federal health programs last year, discussed several aspects of the case and made a recommendation based on his experience. He said that CEO’s should not be more involved in clinical and quality decisions then they need to be. In the case of Hermelin, he was heavily involved in the decision making that led to the company using improper machines that resulted in the creating of adulterated products. This involvement was the primary conduct that led to his convictions and eventual exclusions. Because it appeared based on his role as CEO that these decisions were made out of greed and a total disregard for public health and patient safety, Mead said that other executives should take a hands-off approach in manufacturing and clinical decisions. Doing so may ensure that the company’s decisions are being made in an unbiased and impartial way that prioritizes public health and patient safety over profits.
Hot Topics and U.S. v. Caronia
The last panel of the first day included a healthy discussion of the recent 2nd Circuit Opinion in U.S. v. Caronia. The various panel members discussed their viewpoints and made predictions about the future of the case and its potential implications. Several interesting points were made.
First, one commentator noted that for many of the companies that are involved in off-label promotion cases, the company usually communicated with FDA about pursuing an off-label indication. Consequently, the panel noted that if FDA expressly denies a company’s claim about another use or the company submits additional data about pursing an off-label indication, with which FDA disputes, and then a company goes and promotes it off-label—Caronia makes it uncertain what the outcome would be if FDA prosecuted such conduct. It was noted, however, that under such facts, a company may be misleading or making false statements about its product given FDA’s rejection or dispute regarding the off-label use.
The panel also noted that given this opinion, the calculation and negotiation of damages with the government, particularly when false claims are involved, may be affected. For example, in calculating damages and false claims, the government typically tries to quantify the amount of prescriptions or the “market” for off-label use. In making this calculation, they may consider a certain percentage of doctors who were prescribing off-label without the effect of detailing or sales reps. With Caronia, now, as long as a sales rep’s speech was truthful and non-misleading, then the claims being submitted for them may no longer be “false.”
Later this week, we will have a second story on the FDLI conference, which will include summaries of several panels that discussed the Caronia decision, and we will have further analysis into the implications the case may have on off-label promotion.