FDA Using Accountability to Deter Illegal Marketing Activity

Using accountability as a tool to deter illegal activity like misbranding and promote corporate transparency was a resounding theme during a discussion last year held by the Food and Drug Law Institute (FDLI). The discussion, moderated by Alan R. Bennett, a Partner at Ropes & Gray LLP, was joined by Lauren R. Calia, a Senior Assistant Attorney General in the Office of the Attorney General for the Consumer Protection Division of the State of Maryland and Jill Furman, Assistant Director, Consumer Protection Branch, U.S. Department of Justice.   

The three government officials used recent cases to exemplify changes in 2011 enforcement laws and priorities. 

Calia discussed a 2011 $68.5 million multi-state consumer settlement with AstraZeneca for the improper promotion of the atypical antipsychotic drug, Seroquel. “The allegations included that the company promoted Seroquel for a variety of off-label purposes, including promotion for patient populations for which there was not an approved indication; failure to disclose that Seroquel was not approved for uses that representatives were promoting; misrepresenting the drug’s approved uses, safety and effectiveness; and, failure to disclose negative information contained in scientific studies concerning the safety and efficacy of Seroquel.” 

Highlighting the injunctive relief provisions of the settlement agreement, Calia emphasized the Court’s recognition of the States’ concern over the company’s lack of transparency and misleading behavior.  Calia explained that the order required the company to present information in the most fair and balanced way to the consumer.  Furman noted that “New trends [in enforcement violations] include: 

• Subverting FDA’s function in the drug or device approval process or during regulatory interaction;
• Misrepresenting significance of scientific studies;
• Safety concerns; and
• Increased judicial scrutiny of proposed settlements 

“It is important to look at the court’s reactions to previous settlements; there is a variation now across the country where we see new matters being brought in districts where matters were not brought before,” Furman explained.  The three driving trends and priorities for enforcement are: 

•      Accountability,
•      transparency and
•      consumer protection 

“From listening to this talk it is apparent to anyone that has practiced in this area that there is no longer one set of regulators at the FDA that you have to satisfy,” Bennett added, “…there is a whole separate group of people looking at what you do, what you say, and how you say it.” 

As the Food and Drug Administration moves ahead with aggressive new enforcement efforts, the costs of non-compliance are more significant than ever. FDA is stronger, with hundreds of new inspectors, a sharp increase in the number of Warning Letters issued, increased misdemeanor citations and greater personal liability.  The result is that the pharmaceutical industry is under fire, facing a growing emphasis on the supply chain and on clinical practices. 

“It is significant that Commissioner Hamburg’s first speech as Commissioner, two years ago, focused on enforcement,” noted Associate Commissioner for Regulatory Affairs Dara Corrigan in a presentation to FDLI last April.  As the new head of Office of Regulatory Affairs, Corrigan said she intends to do everything she can to insure that the FDA is strong and gets stronger.”  Corrigan noted that she organized ORA’s enforcement activities around four principles: 

1. strategic coherency,
2. vigilance,
3. responsiveness, and
4. transparency.  

Corrigan noted that ORA is “about to begin a new way to process enforcement cases that will shorten the review time, eliminate the sequential process within FDA, and not sacrifice the quality or objectivity of the review…There should be a significant decrease in lag between inspection and enforcement.” 

She pointed out that “another example of a way that we are trying to be more timely and responsive is our warning letter improvement process…We issued more warning letters in fiscal year 2010 than in the previous six fiscal years…There was a 42% increase in the number of warning letters issued last year than in 2009.” This year is currently outpacing the 2010 rate. 

In a major announcement intensifying FDA enforcement policies in 2009, Commissioner Hamburg noted that, “The FDA must be vigilant…strategic…quick…and visible.”  In the speech, Hamburg also asserted that: “Effective enforcement has many clear benefits to public health. It enables FDA to intercept unsafe or fraudulent products promptly… and prevent additional harm. By holding violators accountable, enforcement deters others who would put the public at risk or prey upon vulnerable consumers.  Visible and clearly explained enforcement actions inform members of the public about potential dangers.” 

Hamburg added that, “enforcement helps industry too – by maintaining a level playing field for safe products. Making sure that offenders are held legally accountable prevents companies from having to choose between doing the right thing and staying competitive.” 

Her message is “well-known [to] multinationals [that] have endured the dreaded “consent decree of permanent injunction”—which typically involves factory shutdowns until problems are fully remediated—as well as years of vigorous FDA oversight, monetary penalties, and significant intangible effects on brand credibility to healthcare providers, patients, and investors.” 

As a result, the FDLI article asserted that, “Companies can no longer afford to take a traditional compliance approach in this heightened regulatory environment.”  Instead, companies must take the front seat for compliance because “best-in-class compliance is an opportunity for market differentiation,” and “applying systems-based thinking and aligning compliant quality systems with key business processes—practicing the art of compliance—[leads to] even greater rewards are possible.”   

Legal Powers Building 

The fact that the Department of Justice (DOJ) acts as the FDA’s attorney gives the agency increased leverage; for example in December 2010 alone, the DOJ collected some $421 million from pharmaceutical manufacturers to settle False Claims Act cases. The agency’s legal powers continue to increase, with expanded authority to inspect foreign plants, empowering it to recall, destroy, or detain unsafe goods. 

For example, the FDA’s Beyond Our Borders program – which includes setting up overseas posts in China, India, the Middle East, Europe, and Latin America – is a multipronged approach to promote and verify compliance of imported food, cosmetics, and medical products with FDA requirements.  This includes: 

• more frequent FDA inspections,
• greater sharing and use of foreign competent authority inspection reports,
• use of third party certification, and
• increased capacity building with countries that have less developed regulatory systems to ensure product safety. 

While the program endorses Good Importer Practices and a Secure Supply Chain Program, the article noted that, “two recent Government Accountability Office (GAO) reports claim that there is an urgent need for still more foreign inspections, noting that in fiscal year 2009, drugs made in more than 100 countries were offered for entry into the United States.” 

GAO noted that while “FDA increased the number of foreign drug inspections done from fiscal year 2007 to 2009, [it] still conducts relatively fewer foreign than domestic drug inspections each year.  In fiscal year 2009, FDA conducted 424 foreign inspections, compared to 333 and 324 inspections conducted in fiscal years 2007 and 2008, respectively. Inspections on mainland China increased from 19 in FY 2007 to 36 in FY 2008 and 52 in FY 2009; the FDA had 920 Chinese establishments in its FY 2009 inventory. 

FDA Vision on Enforcement 

Under the FDA’s Vision on Enforcement to Support Public Health, launched on August 6, 2009, six steps were outlined to “hone the effectiveness and timeliness of the FDA’s regulatory and enforcement system:” 

1. Set post-inspection deadlines, with industry generally given no more than 15 days to respond to significant FDA-483 inspection findings before the agency issues a Warning Letter or takes other enforcement action.
2. Take responsible steps to streamline the Warning Letter process, by limiting review of Warning Letters by the Office of Chief Counsel to those presenting significant legal issues.
3. Work more closely with FDA’s regulatory partners, working to coordinate efforts to achieve rapid action.
4. Prioritize follow-up on Warning Letters and other enforcement actions, working quickly to assess and follow up on corrective action taken by industry after a Warning Letter is issued or major product recall occurs.
5. Be prepared to take immediate action in response to public health risks. Such actions may occur before a formal warning letter is issued.
6. Develop and implement a formal Warning Letter “close-out” process.” If the FDA can determine that a firm has fully corrected violations, the agency will issue an official “close-out” notice and post this information on the FDA Web site. 

The Challenge: Aligning Compliance and Business Performance 

In the past, the biopharma industry’s “reactive” approach to compliance “resulted in sub-optimal quality.”  Moreover, the separation of compliance and business processes into two “separate silos” by companies has been counterproductive, leading to “business and scientific processes that have been costly and laborious – and unsustainable.”    

Many compliance issues result from poor information flow, yielding high rates of complaints – every one of which must be investigated, using inadequate and sometimes archaic methods,”  and these “issues and potential pitfalls are exacerbated when working in emerging regions.” 

Accordingly, the authors noted that the huge volumes of quality data that businesses have and use must be converted “into actionable information.”  They recommended that industry achieve compliance through “consistent execution, using optimized business processes aligned with global regulatory requirements.”  They noted that companies must use “process-driven compliance,” which is composed of: 

• Process optimization– adjustment of core business and scientific processes to improve outcomes, reduce variance, and ensure consistent execution, and which is typically aimed at minimizing cost, maximizing throughput and/or efficiency, and increasing predictability; and
• Regulatory compliance –  involves adherence to regulatory bodies’ rules and requirements, and ensuring that processes, practices and products are developed and maintained in compliance with established guidance and regulations. 

They noted that, “Compliance can be achieved through consistent execution, requiring:” 

• Globally harmonized processes that optimize performance
• Regulatory requirements incorporated into process steps
• A Quality System aligned to operational performance, tightening the symbiotic relationship between Standard Operating Procedures (SOPs) and business activities
• A web-based tool to help ensure there is a sustainable framework for consistent execution and continuous improvement
• Pre-defined performance criteria that are actively managed. 

These approaches use quality to generate value, allowing companies to: 

• Quickly assess and prioritize regulatory risk exposure;
• Identify key vulnerabilities relative to FDA inspection focal points;
• Run effective audits and drills to enhance inspection readiness; and
• Establish sustainable compliance processes while minimizing the impact on their business.  

Using quality data appropriately yields reliably safe and effective products, effectively adding value to the business by avoiding the need to deal with complaints and recalls of defective products.

Ultimately, “as many firms have learned, the best time to take action is long before quality or enforcement actions occur.” Instead, companies must take “timely and proactive efforts to drive sustainable compliance to minimize the risk of quality problems or enforcement action.”