U.S. Sentencing Commission Adopts Amendments to Organizational Guidelines But Does Not Adopt Changes That Would Have Negatively Impacted Companies Regulated by FDA

By Peter M. Jaensch –

On Friday, April 30th, 2010, the U.S. Sentencing Commission sent Congress amendments to the federal Sentencing Guidelines applicable to organizations such as corporations.

On January 21, 2010, we reported on proposed changes to the federal Sentencing Guidelines.  The changes would have apparently required companies, upon detection of any criminal conduct, and prior to any legal determination of guilt, to make restitution to identifiable victims. 

As we noted then, the proposed amendments posed a grave concern for industries regulated by FDA, because the FDC Act imposes criminal liability even for unintentional violations. In February, HPM raised these concerns with the U.S. Sentencing Commission.

We are pleased to report that the Sentencing Commission took account of our concerns (and concerns raised by others). The adopted amendments contain very general language on this topic, and certainly not the draconian language proposed in January.  Assuming that Congress does not overturn the amendments adopted by the Commission, organizations will simply be expected to “take reasonable steps, as warranted under the circumstances, to remedy the harm resulting from the criminal conduct.”  We do not interpret this language to mandate every company regulated by FDA to make restitution each and every time the company learns that it has violated the FDC Act.  Needless to say, this is a welcome change that avoids unfairly burdening food,  drug, and medical device companies.