By Kurt R. Karst –      

Another week, another Petition for Writ of Certiorari filed with the U.S. Supreme Court on an issue involving the drug industry.  The latest petition comes from Caraco Pharmaceutical Laboratories, Ltd. (“Caraco”) and Sun Pharmaceutical Laboratories, Ltd. (“Sun”) and requests the Court’s review of an April 14, 2010 decision from the Federal Circuit in Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd., 601 F.3d 1359 (Fed. Cir. 2010), which addressed whether the patent delisting counterclaim provisions at FDC Act §505(j)(5)(C)(ii)(I), as added by the Medicare Modernization Act, may be used to correct or delete an Orange Book-listed Patent Use Code (“PUC”).

FDC Act §505(j)(5)(C)(ii)(I) states:

If an owner of the patent or the holder of the approved application under [FDC Act § 505(b)] for the drug that is claimed by the patent or a use of which is claimed by the patent brings a patent infringement action against the applicant, the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under [FDC Act § 505(b)] or (c) on the ground that the patent does not claim either – (aa) the drug for which the application was approved; or (bb) an approved method of using the drug.

As we previously reported (here, here, and here), in 2009, the U.S. District Court for the Eastern District of Michigan (Southern Division) ruled and issued an Order and Injunction requiring Novo Nordisk, Inc. (“Novo”) to change an Orange Book-listed PUC for a patent – U.S. Patent No. 6,677,358 (“the ’358 patent”) – on its drug product, PRANDIN (repaglinide) Tablets, as a result of Caraco’s FDC Act §505(j)(5)(C)(ii)(I) counterclaim.  Novo appealed and the Federal Circuit reversed and vacated the district court’s judgment in a 2-1 decision.  The Federal Circuit ruled that Caraco “does not have a statutory basis to assert a counterclaim requesting” a court to enter an order to replace Novo’s new PUC with the former PUC.  (See our previous posts for additional background on the case.)  First, the Federal Circuit ruled that “the Hatch-Waxman Act authorizes a counterclaim only if the listed patent does not claim any approved methods of using the listed drug.”  Second, “the terms of the counterclaim provision do not authorize an order compelling the patent holder to change its use code narrative,” just the patent number and expiration date of an Orange Book-listed patent.  Judge Dyk lodged a 28-page dissent arguing that “the majority’s crabbed view of the statute sanctions an unjustified manipulation of the Orange Book,” and that FDC Act §505(j)(5)(C)(ii)(I) should be available with respect to challenging PUCs, because “all Orange Book information is ‘patent information.’”

In May 2010, Caraco/Sun filed a Petition for Panel Rehearing and Rehearing en banc of the Federal Circuit’s panel decision.  The Federal Circuit denied that petition in a July 29, 2010 Order, but Judges Gajarsa and Dyk took the opportunity to lodge their complaints with the majority’s decision.  Among other things, Judges Gajarsa and Dyk believe that the majority’s opinion renders “section viii” labeling carve-out statements “a virtual nullity and leaves generic drug manufacturers without a remedy to challenge inaccurate Orange Book listings with respect to method of use patents.”

In their December 2010 Petition for Writ of Certiorari, Caraco/Sun “seek review of a splintered Federal Circuit decision raising issues of recurring importance under the Hatch-Waxman Act,” and ask the Court to address “[w]hether [FDC Act §505(j)(5)(C)(ii)(I)] applies where (1) there is ‘an approved method of using the drug’ that ‘the patent does not claim,’ and (2) the brand submits ‘patent information’ to the FDA that misstates the patent’s scope, requiring ‘correct[ion].’”  According to Caraco/Sun, the Federal Circuit’s decision is “[i]n conflict with this Court’s precedents and recent D.C. Circuit authority” (i.e., Teva Pharms. USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C. Cir. 2010), which is also at the heart of another Petition for Writ of Certiorari) and “effectively nullifies both a critical provision of the [FDC] Act and related FDA regulations – which Congress ratified in 2003 – without calling for the FDA’s views.”  Moreover, Caraco/Sun argue that:

By the majority’s lights, no counterclaim is available because (1) Novo’s patent claims one approved use, even though it “does not claim” two other “approved method[s] of use”; and (2) the counterclaim is effectively limited to “delet[ing]” wrongly-listed patents, when Congress also authorized “correct[ing]” patent information.   The majority reached this result by announcing that the phrase “an approved method of us[e]” really means “any approved method of us[e].”  But that rewriting of the [FDC] Act violated this Court’s precedents – not least because the word “any” appears elsewhere in the same provision.  Moreover, the majority read the term “patent information” as limited to “an erroneous patent number or expiration date” – i.e., to exclude “use codes” – invalidating the FDA’s contrary interpretation, which Congress ratified. [(internal citations omitted)]

Interest in the Caraco/Sun petition will likely run high and may generate several amicus briefs.  GPhA, Mylan, Teva, Apotex, Impax, the National Legislative Association on Prescription Drug Prices, and the Consumers Federation of America filed briefs in the Federal Circuit in support of Caraco/Sun’s rehearing petition. 

By Ricardo Carvajal - 

Although many of the Food Safety Modernization Act's ("FSMA's") major provisions have a delayed effective date (including the requirement to develop and implement a HACCP plan), some significant provisions will take immediate effect, including:  

• Stronger records access authority (FSMA § 101).  FDA gains authority under amended FDC Act § 414(a) to access and copy “all records relating to the manufacture, processing, packing, distribution, receipt, holding, or importation” of a food if FDA believes that there is a reasonable probability that the use of or exposure to the food will cause serious adverse health consequences or death to humans or animals.  The provision extends to any other food that FDA reasonably believes is likely to be affected in a similar manner.  FDA can access records that the agency needs to determine whether there is “a reasonable probability that the use of or exposure to the food will cause serious adverse health consequences or death to humans or animals.”  FDA’s access to records is contingent on “presentation of appropriate credentials and written notice.”

• Mandatory recall authority (FSMA § 206).  The FDA Commissioner gains authority to order a mandatory recall when the agency determines that there is a reasonable probability that a food other than infant formula is adulterated under FDC Act § 402 or misbranded under § 403(w), and that the use of or exposure to the food will cause serious adverse health consequences or death to humans or animals.  FDA must first give the responsible party an opportunity to conduct a voluntary recall.  If the responsible party refuses to do so, and the Commissioner issues an order, FDA must give the responsible party an opportunity for an informal hearing within two days of the order’s issuance. 

• Whistleblower protection (FSMA § 402).  An employee is protected from retaliation by an employer when that employee (1) provides an employer, the U.S. government, or a state attorney general with information relating to any violation of the FDC Act, (2) testifies or is about to testify in a proceeding concerning such a violation, (3) assists, participates, or is about to assist or participate in such a proceeding, or (4) objects to or refuses to participate in any activity, policy, practice, or assigned task that the employee reasonably believes to be a violation.  An employer found to have engaged in retaliation is liable for relief needed to make the employee whole, as well as costs and expenses related to the complaint. 

• Foreign facilities and refusal of inspection (FSMA § 306).  An imported food will be refused admission if it is from a foreign establishment to which a U.S. inspector is refused entry for the purpose of conducting an inspection.  Entry is deemed refused if the inspector isn’t granted access within 24 hours of requesting entry. 

 Affected firms would do well to review these particular provisions, modify their SOP’s as needed, and train their personnel accordingly.

By John A. Gilbert & Karla L. Palmer - 

The Drug Enforcement Administration announced earlier this week that it is holding a public meeting to discuss with interested persons procedures for the surrender of unwanted controlled substances by ultimate users and long term care facilities.  The public input will assist the DEA in the development of regulations to implement the Secure and Responsible Drug Disposal Act of 2010, which President Obama signed into law on October 12, 2010.  This Act will allow users to dispose of unwanted controlled substances by delivering them to an authorized entity, and will allow in certain instances long term care facilities to dispose of the unused controlled substances of their residents.  The notice further states that the DEA is currently drafting proposed regulations that will permit for the disposal of “unwanted controlled substances by those not registered with the DEA.”  

The meeting will be held on Wednesday, January 19th and Thursday, January 20, 2011, from 9:00 A.M. until 5:30 P.M. at the Mayflower Renaissance Hotel in Washington, D.C.  Check in for the meeting will begin at 8:00 A.M.  The meeting is open to all interested persons, including law enforcement, ultimate users (i.e., patients and members of their households), pharmacies, manufacturers, distributors, reverse distributors, or other third parties.  Those attending the meeting must register and provide attendee information via email (dea.diversion.policy@usdoj.gov) to the Liaison and Policy Section, Office of Diversion Control,  no later than January 12, 2011.  The DEA advises that space is limited and thus attendees are encouraged to register early.  

DEA is permitting requests for limited oral presentations during the meeting; space and time permitting.  Those wishing to make an oral presentation should indicate in an email by January 7, 2011, to dea.diversion.policy@usdoj.gov, containing a subject line “Disposal meeting: request to present.”  DEA will select speakers based on requests received, and will notify those selected prior to the meeting of approximate starting time, and amount of time available, for the such presentations.  More complete details about the registration, speaker and attendance procedures are set forth in the Federal Register notice announcing the meeting. 

In lieu of attending the open meeting, the DEA also invites interested persons to submit written comments concerning “the most safe and effective method of disposal of controlled substances consistent with the Controlled Substances Act and the Secure and Responsible Drug Disposal Act of 2010.”  Comments should be postmarked or received electronically by January 12, 2011.  The DEA states that it is seeking comments and oral presentations to address the following “specific concerns”:  

• The process of disposal of unwanted controlled substances could create new and unwanted avenues for diversion.  What is the safest manner, in your opinion, to dispose of unwanted controlled substances while preventing diversion?” 
• Please explain why you believe the solution you propose would protect the public health and safety and would curtail diversion. 
• Do you foresee any specific obstacles to the disposal of controlled substances in your community or geographical area? If so, what are they?
• How is the disposal of controlled substances affected by State and local laws and regulations?

Although the meeting will not be webcast, the meeting transcript will be available at the DEA diversion website. 

By Wes Siegner –

On December 20, 2010 FDA published a notice requesting comments on how the agency can address a “problem” that has existed since the 1960s, when the Federal Food, Drug, and Cosmetic Act ("FDC Act") was amended in to require premarket approval. 

The problem is simple.  Because the FDC Act requires approval of animal drugs for every different use for every different species, there is simply no market to justify the research, development and approval costs for most animal drugs.  Over 50%, and perhaps as many a 80%, of all animal drugs on the market are unapproved, estimates that we recently confirmed in a call with officials from FDA’s Center for Veterinary Medicine.

FDA and Congress have sought various ways to solve this problem with little or no effect, most recently in 2004 with the Minor Use and Minor Species Animal Health Act.  FDA’s Notice serves as a warning to veterinarians, animal owners and industry that FDA is again seeking ways to restrict the marketing of unapproved animal drugs.  This effort could make it impossible to obtain drugs that consumers and veterinarians know are useful, but that FDA wants to remove because of a lack of data to support FDA approval. 

Affected parties should, therefore, urge FDA to act cautiously and not remove products from the market unless there is a clear and identifiable safety issue.  Comments are due by February 18, 2011.

By Riëtte van Laack –

In a short, unpublished decision issued on December 10, 2010, the D.C. Circuit denied a petition filed by Daniel Chapter One and James Fejio (“DCO”) seeking review of an FTC cease and desist order.  The FTC Order, issued in 2009, concluded that DCO had made advertising claims that were not substantiated.

The Court’s decision concerns a lawsuit that began in 2008 as part of the FTC’s Operation False Cures,  which the FTC claims is a law enforcement program aimed at marketers of “phony cancer remedies.”  In September 2008, the FTC filed an administrative complaint against DCO alleging that DCO’s advertising that its products, Bioshark, 7 Herb Formula, GDU and BioMixx, prevent, treat, or cure cancer, inhibit tumors, or ameliorate the adverse effect of chemotherapy and radiation, was false and misleading.   In December 2009, the FTC’s Commissioners adopted the FTC’s Administrative Law Judge’s decision from August 2009, that DCO’s claims were not substantiated by scientific evidence.   

In the lawsuit that DCO subsequently filed against the FTC, DCO raised a number of issues, including that the FTC exceeded its statutory authority by requiring clinical trials with human subjects as substantiation.  Citing the FTC’s dietary supplement advertising guidance, the Court ruled that the FTC’s requirement for substantiation by competent and reliable scientific evidence, including clinical trials with human subjects, was not unreasonable.  The Court ruled that because DCO did not support its claims with competent and reliable evidence, including clinical trials with human subjects, DCO’s advertising was unlawful.

As expected, the U.S. House of Representatives passed the Food Safety Modernization Act (H.R. 2751) as passed by the Senate.  The bill now goes to the President, who is expected to sign it into law.  A copy of the bill is available here (scroll down to p. S10745).  Stay tuned for more information on the bill in the near future.

By Kurt R. Karst –

In a recent citizen petition submitted to FDA, Sandoz Inc. (“Sandoz”) requests from the Agency a written decision that Cobrek Pharmaceuticals, Inc. (“Cobrek”), the alleged “first applicant” for a generic version of HECTOROL (doxercalciferol) Injection, has forfeited 180-day exclusivity eligibility.  The Sandoz petition follows another citizen petition, submitted on behalf of Genzyme Corporation (“Genzyme”), concerning the Agency’s ability to approve Cobrek’s pending ANDA No. 90-040 for Doxercalciferol Injection.  Genzyme’s petition requested that FDA not approve Cobrek’s ANDA until the expiration of a second, superseding 30-month stay.  FDA granted the petition in October.  Although the Sandoz petition raises a different set of issues than the Genzyme petition, they arise from the same factual circumstances,  and FDA’s reasoning for granting Genzyme’s petition is relevant to Sandoz’s request. 

As we previously noted, FDA approved HECTOROL (2 mcg/mL, 2 mL) in April 2000 in an ampule presentation under NDA No. 21-027.  In December 2008, FDA approved an NDA supplement for HECTOROL for a new injectable formulation (and packaging configuration) in a vial presentation.  (The old ampule product is no longer being manufactured and in July 2010, FDA determined that the ampule presentation was not withdrawn from the market for safety or effectiveness reasons.)  There are currently three unexpired patents listed in the Orange Book for HECTOROL: U.S. Patent No. 5,602,116 (“the ‘116 patent”), a method-of-use patent, U.S. Patent No. 7,148,211 (“the ‘211 patent”), a formulation (drug product) patent, and U.S. Patent No. 6,903,083 (“the ‘083 patent”), a patent with drug product and drug substance claims, and for which a request for delisting has been submitted to FDA. 

Cobrek submitted ANDA No. 90-040 to FDA on October 13, 2007 (a Saturday) containing a Paragraph IV certification to the ‘116 and ‘083 patents.  According to FDA’s Paragraph IV Certification List, the first ANDA containing a Paragraph IV certification to an Orange Book-listed patent for HECTOROL, 2 mcg/mL, 2 mL ampules, was submitted to FDA on October 15, 2007 (a Monday), thus seemingly making Cobrek a first applicant eligible for 180-day exclusivity.  Genzyme timely asserted the ‘116 patent in infringement litigation and triggered a 30-month stay of approval on Cobrek’s ANDA.  The  ‘211 patent was not listed in the Orange Book for HECTOROL when Cobrek initially submitted its ANDA.  Rather, the ‘211 patent was added to the Orange Book after the December 2008 approval of HECTOROL in a vial presentation.

While Cobrek’s ANDA was under review, and after the new vial presentation approval, Cobrek amended its application to include a Paragraph IV certification to the ‘211 patent.  Genzyme did not sue Cobrek for patent infringement because the company “believed that Cobrek’s ampule formulation for which it was seeking approval at the time would not infringe the ‘211 patent claims.”

FDA eventually informed Cobrek that the Agency could not approve ANDA No. 90-040 because the ampule formulation was not quantitatively and qualitatively (“Q1/Q2”) the same as the new HECTOROL vial drug product.  Instead, FDA recommended that Cobrek reformulate to a Q1/Q2 formulation.  Cobrek reformulated its drug product and amended its application in 2009, but without new patent certifications.  FDA refused to accept the ANDA amendment without new certifications to both the ‘116 and ‘211 patents, but did give Cobrek the option to request whether the old HECTOROL formulation had been withdrawn for safety or effectiveness reasons and continue on without new certifications.  Cobrek decided not to take that path, but instead continued on with its reformulated drug product and in late November 2009 certified to the ‘116 and ‘211 patents.  Genzyme then sued Cobrek for infringement with respect to both patents, according to Sandoz, and FDA determined that a second, superseding 30-month stay applied.  (It is unclear whether Cobrek also submitted a new certification with respect to the ‘083 patent.)

Enter Sandoz, which has ANDAs pending at FDA for generic versions of both the ampule and vial presentations of HECTOROL . . . . and the approval of which FDA presumably could determine would be held up by any 180-day exclusivity associated with Cobrek’s ANDA No. 90-040.  Sandoz argues in its petition that:

Cobrek has forfeited its 180-day exclusivity rights for a generic version Hectorol® Injection for (at least) two independent reasons.  First, Cobrek has amended or withdrawn the Paragraph IV certifications that form the basis for its 180-day exclusivity rights, leading to forfeiture under condition (III).  Second and independently, Cobrek has failed to receive tentative approval within 30 months after submission of its ANDA, leading to forfeiture under condition (IV). 

The references to “(III)” and “(IV)” above are to FDC Act § 505(j)(5)(D)(i)(III) and (IV), which provide that a first applicant forfeits 180-day exclusivity eligibility under the following circumstances:

(III)  Amendment of certification.  The first applicant amends or withdraws the certification for all of the patents with respect to which that applicant submitted a certification qualifying the applicant for the 180-day exclusivity period.

(IV)  Failure to obtain tentative approval.  The first applicant fails to obtain tentative approval of the application within 30 months after the date on which the application is filed, unless the failure is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed.

With respect to FDC Act § 505(j)(5)(D)(i)(III), Sandoz argues that as a result of FDA’s regulation at 21 C.F.R. § 314.94(a)(12)(viii), which requires ANDA sponsors to maintain accurate patent certifications and to amend a certification if it is no longer accurate, and Cobrek’s “new” certifications to the ‘116 patent and the ‘083 patent (insofar as the ‘083 patent is relevant to 180-day exclusivity in this case), 180-day exclusivity has been forfeited.  According to Sandoz:

Under the plain language of § 314.94(a)(12)(viii), once a Paragraph IV certification that had provided a basis for 180-day exclusivity rights is “amended,” 180-day exclusivity rights for that applicant, based on that patent in that certification, no longer exists.  Even if the original Paragraph IV certification is amended to another Paragraph IV certification, the pending ANDA “will no longer considered to contain the prior [Paragraph IV] certification” (21 C.F.R. § 314.94(a)(12)(viii)) that provided the basis for the 180-day exclusivity.

In other words, according to Sandoz, the “new” Paragraph IV certification does not relate back to the original Paragraph IV certification that formed the basis for a claim to 180-day exclusivity; instead, it supplants the original certification and makes the original certification (and any related claim to 180-day exclusivity) a nullity.  It’s an interesting argument, and one that FDA has not yet, to our knowledge, publicly addressed. 

With respect to FDC Act § 505(j)(5)(D)(i)(IV), Sandoz argues that Cobrek failed to obtain tentative approval within 30 months of ANDA submission (i.e., about April 2010), and that “[n]othing indicates that there was ever any ‘change in or a review of the requirements for [ANDA] approval’ (21 U.S.C. § 355(j)(5)(D)(i)(IV) of a generic ampule version of Hectorol® Injection for which Cobrek submitted its original ANDA,” or for the vial version for which Cobrek is currently seeking ANDA approval.  “[I]f anything,” according to Sandoz, “Cobrek’s delay in receiving tentative approval is attributed to its voluntary decision to seek approval for a generic vial version of Hectorol® Injection” (emphasis in original).  The three precedents Sandoz identifies in its petition where FDA has identified the exception clause in FDC Act § 505(j)(5)(D)(i)(IV) (i.e., Metaxalone, Imiquimod, and Acarbose) do not provide “any support for the conclusion that an ANDA sponsor’s voluntary decision to reformulate its proposed ANDA product should excuse its failure to obtain tentative approval within 30 months” (emphasis in original), according to the company.  More recently, as noted in our 180-Day Exclusivity Tracker, FDA has applied the exception provision in FDC Act § 505(j)(5)(D)(i)(IV) to Zolpidem Tartrate, and to Levocetirizine Dihydrochloride, where FDA determined that “the labeling of the RLD changed after submission of the ANDA” and that “this change was the cause of [ANDA applicant] not obtaining tentative approval of the ANDA within 30 months after the date on which it was filed.”

Sandoz also argues that the Genzyme petition does not excuse Cobrek’s failure to obtain tentative approval, because the petition “has no bearing on Cobrek’s eligibility for tentative approval” (emphasis in original), and could affect only Cobrek’s eligibility for final ANDA approval.  By way of background, the 2007 FDA Amendments Act clarified FDC Act § 505(j)(5)(D)(i)(IV), such that if “approval of the [ANDA] was delayed because of a [citizen] petition, the 30-month period under such subsection is deemed to be extended by a period of time equal to the period beginning on the date on which the Secretary received the petition and ending on the date of final agency action on the petition (inclusive of such beginning and ending dates) . . . .” (FDC Act § 505(q)(1)(G)).   

By Alan M. Kirschenbaum –

Exclusion from Medicare and Medicaid is a potent weapon used by the government against program-related fraud, but it can be a double edged sword when wielded against drug and medical device companies.  Exclusion of a drug or device company means that the federal programs may not reimburse providers for any of the company’s products.  This would be a severe detriment to any drug or device company, but it is perhaps equally undesirable for the government, since the exclusion of just one large pharmaceutical company, for example, would deprive Medicare and Medicaid beneficiaries of a multitude of necessary drugs.  For this reason, where the HHS Office of the Inspector General ("OIG") has invoked exclusion against drug manufacturers that have pleaded guilty to antikickback law violations, which the OIG is required to do under the mandatory exclusion statute (42 U.S.C. § 1320a-7(a)) , the penalty has been imposed on a shell or defunct affiliate of the drug company, leaving Medicare and Medicaid free to cover the manufacturer’s drugs. 

During its brief existence, which ended last week, section 6502 of the Patient Protection and Affordable Care Act earned notoriety because it threatened to preclude this practice.  Section 6502 added to the Social Security Act a provision requiring, among other things, that State Medicaid agencies exclude from Medicaid any affiliate (or any individual or entity that owned, controlled, or managed an affiliate) of an entity excluded from a Federal health care program.  In other words, a drug or device manufacturer’s plea of guilty would necessarily subject the entire company, including all affiliates, to exclusion under Medicaid.  The provision would have severely constrained the Department of Justice’s ability to negotiate settlements that would impose appropriate penalties on drug and device manufacturer without harming Medicaid beneficiaries.  Fortunately, Congress relatively quickly saw the need for a fix.  Section 205(a) of the Medicare and Medicaid Extenders Act of 2010, which was signed into law last Wednesday, December 15, repealed the affiliate exclusion provision. 

By Jeffrey N. Wasserstein –

As our loyal blog readers know, we are great fans of social media, and follow these topics in earnest (here, here, and here).  We have just learned that the long-awaited FDA guidance that was promised to come out by year-end will be delayed until the first quarter of 2011 (hat tip: Eye On FDA).  While the pharmaceutical industry is clamoring for some clear guidelines (other than those that come from warning letters!), the dream will be deferred for at least a few months (at a minimum). 

By Jamie K. Wolszon –  

Hyman, Phelps & McNamara, P.C. Directors Douglas B. Farquhar and John R. Fleder presented a webinar on Monday December 20, 2010 for Thompson Interactive entitled: “Are Attorneys the FDA’s New Enforcement Target?”  The webinar slides can be found here.  The webinar discussed the November 9, 2010 six-count indictment of Lauren Stevens, former Vice President and Associate General Counsel for GlaxoSmithKline, for her alleged role in responding to FDA’s investigations into the company’s promotion of its anti-depressant drug Wellbutrin.  The charges, which include obstruction of justice and false statement offenses, could result in jail time.  We previously reported on the indictment.  

The webinar included discussion of two recent developments in the case that have yet to capture widespread attention.  The government filed a motion for a protective order that indicated that the investigation is ongoing.  “These charges are part of a broader, ongoing investigation.  The discovery relevant to the instant case thus contains information not only about this case, but also relates to the ongoing, underlying health care fraud investigation, including potential criminal activity by others,” the government revealed in the motion.  

In another recent development in the case, the government filed a motion on December 17, 2010 to preclude Ms. Stevens and her legal team from invoking the “advice of counsel” defense.  This defense can negate the wrongful intent element of crimes that require wrongful intent.  It generally applies if a lawyer provides legal advice that the defendant’s conduct was legal and the defendant relied in good faith on that advice, even if the legal advice was wrong, assuming that the defendant meets other criteria.    

The government claimed that the advice of counsel defense is not available for one of the obstruction of justice charges against Ms. Stevens.  With regard to the other two types of charges, the government claimed that Ms. Stevens cannot invoke the defense because (1) it claimed there is evidence that Ms. Stevens did not share all pertinent facts with the attorneys from the law firm that provided legal counsel; (2) Ms. Stevens knew that her representations to FDA were not true and it was not reasonable for her to rely on an attorney to knowingly make false statements; and (3) Ms. Stevens did not hire counsel to advise her personally, as the lawyers represented only the corporation.  

By JP Ellison –

In Dickens’ A Christmas Carol, the main character is visited by three ghosts who by scaring him with visions of his past, present and future, seek to change him.  On December 13, 2010, in the form of a U.S. District Court for the District of Columbia decision, three former Purdue executives received news about their future based on their past that is scary enough that many FDA- regulated companies and the executives who work for those companies, aka “responsible corporate officers (“RCOs”), may wish that someone–FDA, DOJ, the HHS OIG, or perhaps even Congress, will change the current enforcement environment by eliminating punitive actions that do not serve the public interest.

The decision at issue was the latest chapter in the ongoing saga of the government’s battle with Purdue and three of its former executives.  The court upheld a decision of HHS to permissively exclude three former executives from participation in Medicare, Medicaid and all other federal health care programs for twelve years.

What is scary for those regulated industry–and specifically those responsible corporate officers –is that the decision takes the already scary “Park Doctrine” even farther than previously thought possible.  The Supreme Court’s Park case, as we have been recently pointing out, imposes strict criminal misdemeanor liability on RCOs for FDA violations.  The small comfort of Park was that an RCO could not get prosecuted under the FDC Act for fraud absent “intent to defraud or mislead.”

Last Monday’s decision appears to allow just that under the distinct but increasingly related HHS OIG authority to exclude persons from participating in federal healthcare programs.  While the government and the three former executives agreed to misdemeanors as part of a global plea deal, the district court nevertheless upheld an HHS decision that their conviction was one “relating to fraud.”  Under the FDC Act it is well established that a misdemeanor is not a fraud conviction.  In fact, one’s intent to defraud or mislead can result in a felony under the Act.

Monday’s decision allows that not only do RCOs have Park liability for the FDC Act violations of their companies, but through the HHS exclusion authority, they may also be sanctioned for their company’s fraud conviction–without any evidence whatsoever against the RCO relating to fraud.

In Dickens, the main character awakens from his bad dreams and proceeds to right his prior wrongs.  For the three former Purdue executives, any wrongs to be righted would now need to come in an appeal to the D.C. Circuit.  For the rest of the regulated industry, one can only hope that the government wakes up and declares itself changed by its visions of how the current enforcement scheme affects RCOs.

By Ricardo Carvajal –

Capping a week-long flurry of legislative activity, the Senate reportedly passed the Food Safety Modernization Act by a voice vote Sunday night.  The legislation now returns to the House, where approval is likely.  Given that the President’s signature is certain, it now appears as if 2011 will be ushered in with major amendments to the food-related provisions of the Federal Food, Drug, and Cosmetic Act.  No, we won’t make analogies to sausage-making – folks who practice that art would take offense.

By Riëtte van Laack –

On December 15, 2010, FDA took several steps to increase its enforcement against products that are marketed as dietary supplements but contain analogs of, or the same active ingredients as, FDA-approved drugs, or other substances that do not qualify as dietary ingredients, e.g., synthetic steroids. 

In a letter to the Dietary Supplement Industry, followed by a call for the media, FDA stressed that the manufacture and marketing of these products is illegal and constitutes a criminal activity.  According to FDA, the “spiked” products pose a serious public health threat and have been associated with serious adverse events, including strokes, acute liver injury, kidney failure, and death.  Spiking appears to be more prevalent in products promoted for weight loss, sexual enhancements, and bodybuilding.  Since 2007, FDA has issued warning letters and initiated seizures and criminal prosecutions concerning approximately 300 products.  In addition, FDA has issued consumer alerts and a fact sheet on retailer and distributor responsibilities.  Although these enforcement efforts have been effective, the Agency has concluded that more needs to be done to protect the public health and is stepping up its efforts.

In its December 15, 2010 letter, FDA asks the industry for support in its efforts.  The allegedly illegal active ingredients do not ordinarily appear in a product by accident.  Somewhere in the production chain, a party intentionally incorporates an illegal ingredient.  However, under the law, any party in the chain of manufacturing and marketing a dietary supplement is responsible for ensuring that the product complies with the law and regulations.  Thus, accountability and liability are not limited to the party that adds the ingredient.  FDA recommends that those involved in the manufacturing and marketing of dietary supplements give special attention to products in the weight loss, sexual enhancement and body building categories.

FDA is reaching out to people who know the industry well and know about products that may be spiked.  FDA asks the industry to report any suspected "tainted" supplements or supplement ingredients and the manufacturers or distributors who market these products.  For this purpose, FDA has created an e-mail address taintedproducts@fda.hhs.gov.  Alternatively, for those who prefer to submit reports anonymously, there is the option of using the form “Report Suspected Criminal Activity” located at www.fda.gov/oci.

During the call for media, various trade associations, including the Council for Responsible Nutrition, Natural Products Association, United Natural Products Alliance, Consumer Healthcare Products Association and American Herbal Products Association, expressed their support of FDA’s actions.  The groups subsequently issued a press release.

Dr. Joshua Sharfstein, principal deputy commissioner of the FDA, will lead an online chat Monday at 1 p.m. about "tainted" products marketed as dietary supplements. Directions to join the chat are here.

By Ricardo Carvajal –

The massive spending bill to which food safety legislation was attached (and that also includes provisions on rare and neglected diseases) – the Fiscal Year 2011 Omnibus Appropriations Act – has been pronounced dead.  Although Congress may yet find another vehicle for food safety legislation, that prospect seems increasingly tenuous, and opponents are cautiously predicting victory.  The fate of the legislation in the next Congress is unpredictable.  

As we have previously noted, FDA isn’t sitting on its haunches pending the passage of food safety legislation that would give the agency clear authority to take certain measures it views as essential to modernization of the nation’s food safety system.  As it has done in the past, the agency can be expected to adapt its existing authorities to fulfill its objectives (e.g., GMP modernization).

Hyman, Phelps & McNamara, P.C.’s Ricardo Carvajal will be presenting "Food Safety: Unintended Components/Contaminants of Food" at the Food and Drug Law Institute's ("FDLI’s") January 24-25, 2011 conference, "Introduction to Food Law and Regulation: How the Government Regulates the Food Industry," which is part of FDLI’s Food Week 2011. The food safety session will address the adulteration provisions of the Federal Food, Drug, and Cosmetic Act, GMP’s, HACCP, low acid canned foods, control of microbial hazards in fresh produce, FDA’s retail food program, and the latest on the Reportable Food Registry.  Registration information is available here.