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FORMER FDAer CHANG SAYS FAVORITISM WAS "COMMON" IN GENERIC DRUG DIVISION; TESTIMONY AT MAY 10 OVERSIGHT HEARING ALLEGES LACK OF POLICIES, RECORDKEEPING

Executive Summary

"Favoritism and special handling" of ANDAs were "common" in FDA's Generic Drug Division, former division chemistry review Branch Chief Charles Chang maintained in a sworn affidavit submitted to the House Commerce/Oversight Subcommittee for its May 10 hearing on alleged improprieties in the ANDA review process. Chang testified that he "was involved in this as were many others, including the director of the division and the chief of the review support branch." Examples of the "special handling" of favored ANDAs included "numerous occasions when I was asked to take ANDAs out of turn or to approve them as soon as possible on an expedited basis," Chang wrote. Subcommittee Chairman Dingell (D-Mich.) explained at the hearing that an affidavit was submitted into the hearing record because "Chang's physical health does not permit his personal appearance today." Dingell added that the affidavit is "of necessity very general" to avoid references to "the alleged criminal activity which remains the business of the U.S. Attorney in Baltimore." The May 10 and 11 hearings (see related story) represent the first round in the subcommittee's plans for a series of hearings on the ANDA review process. At least two or three additional hearings are currently planned for the end of the summer. The U.S. Attorney on March 9 filed criminal informations that charge Chang with two counts of interstate travel in aid of racketeering. The information was filed in the Baltimore federal court. The filing of a criminal information rather than an indictment indicates that Chang has pleaded guilty. The document alleges that Chang had received a bribe in the form of "various pieces of furniture" and a computer and accessories that were purchased for him and shipped to him by American Therapeutics Inc., a generic drug firm based in Bohemia, N.Y. The criminal information adds that he traveled from Maryland to New York on the first leg of a free trip to Hong Kong in which he was accompanied by an official from American Therapeutics. Chang is the second FDA official to be named in a criminal information as a result of the investigation. Former Review Chemist David Brancato, who worked under Chang, was charged with receiving cash gratuities from Par and Quad. Chang and Brancato resigned from FDA in late April ("The Pink Sheet" May 1, T&G-1). In his affidavit, Chang testified that favoritism and special ANDA treatment often were "not necessarily the result of illegal behavior but reflected, in part, highly personal, arbitrary and often arrogant management." He said at other times, however, it was the result of "continuous pressure put on the division at all levels by the industry through lobbying, conducted by executives, lawyers, consultants, and occasionally through political channels inside and outside the FDA." Chang contended that he "sometimes tried to help some of the smaller companies" by assigning their ANDAs to faster FDA reviewers. The chemist explained that he intended to counter advantages enjoyed by larger firms. "I believed many of the larger and more sophisticated generic firms received special treatment, primarily through personal contacts within the division," he said. "When I sought to influence the order of approvals, I would assign ANDA jackets to the picky reviewers, while the smaller companies got the fast reviewers." Favoritism was manifest in "a variety of forms," Chang maintained. Examples included "expediting lab sample review, directing chemists to review applications out of turn, making the initial branch assignment or chemist assignment, providing access to information to certain consultants, or simply holding up applications by placing them in a desk drawer." The affidavit states that such practices occurred "in part because there were few rules, guidelines, or policies for ANDA review; and where they existed, they could and would be changed or ignored at whim. The degree of discretion went far beyond that needed to approve ANDAs efficiently." Another reason, he continued, is that "the management information system was poor during my tenure as supervisory chemist. For example, many times applications were simply lost for a while." In addition, he asserted that the division director, "from what I could see . . . had little if any supervision from his superiors." Chang said certain improvements in the ANDA review system "could easily be made." He recommended that FDA use a lottery system for assigning reviewers to ANDAs, establish written guidelines, procedures and standards; use a management information system that works; test and require "rigorous continuing education for review chemists, consumer safety officers and chemists"; and improve "management within and over the division." Chang's affidavit was corroborated at the Dingell hearing by the testimony of two officials from the Office of the HHS Inspector General. Assistant Inspector General for Investigations Larry Morey said in prepared testimony that the Generic Drug Division had "no internal procedures for reviewing and approving ANDAs." Morey also testified that there was no requirement that ANDA files include documents to record meetings and conversations with sponsors. Inspector General Investigator Linda Little said the division's practice was to "keep only a clean record" of ANDAs on file; working copies of chemistry and bioequivalence reviews were shredded once the applications were approved. Little added that the lack of memoranda and working copies hindered the investigation's search for evidence showing that different requirements were demanded of different companies. The IG investigator said that the shredding at the generic division is unique within HHS. Morey recommended that FDA and the HHS Inspector General work closely to train staff and to enforce federal laws regarding bribery and conflict of interest. He added that the agency should establish written policies and procedures, "document ANDAs with memoranda and notes of meetings" with industry representatives, "discourage chemist reviewers and others involved in the ANDA process from socializing" with industry reps, and secure ANDA files "so that they are available to only those with a need to see them." The Inspector General's investigation also addressed FDA officers' attendance at the National Association of Pharmaceutical Manufacturers annual meeting in Puerto Rico. Little testified that NAPM spent more than $ 21,000 from 1985 to 1988 to subsidize the attendance of FDAers' at the conventions. An NAPM-contracted travel agency would bill FDA employees the maximum government per diem amount only; the association would be billed and pay for all hotel and meal expenses above the per diem amount. Little noted that FDAers who took advantage of the arrangement included in addition to Chang (in alphabetical order) Shrikant Dighe, Nathaniel Geary, William Gilbertson, Charles Ise, Kent Johnson, Thomas Layloff, Jr., Mary Frances Lowe, Jack Meyer, Daniel Michels, James Morrison, John Norris, Frank Pelsor, Peter Rheinstein and Marvin Seife. "Some government officials even brought their spouses and children, usually at the expense of NAPM," Little said. "The two worst examples involved Mr. Chang and Peter Rheinstein . . . who took his wife and son [and] added about $ 4,000 to the NAPM tab over and above the per diem costs he paid." (PARAGRAPH)In a draft letter to Dingell, HHS Inspector General Richard Kusserow asserted that the NAPM subsidy of the FDAers' lodgings at the meetings "constitutes an illegal gratuity." Several agency officers cited told investigators they were unaware that their expenses were subsidized by NAPM, the letter notes; however, it continues, "it is impractical to believe" that the FDAers thought room and meals for them and their spouses would cost only $ 80-$ 100 per day in "a resort hotel at the height of the tourist season." On the other hand, the letter states, "there is no evidence to suggest" that any attendees were involved in "any wrongdoing insofar as the submission of false or otherwise misleading vouchers are concerned." NAPM's travel agency prepared hotel bills that, when presented to the FDAers checking out, gave no indication of charges beyond the allowable per diem amount. Further, the letter notes, "there was no dollar loss to the government, and there was no evidence that employees intended to mislead the government with respect to their travel claims." Rep. Wyden (D-Ore.) commented that it is "high time for FDA to clean house" in the Generic Drug Division. Rep. Waxman (D-Calif.), echoing statements by Chang and Morey, stressed that the investigation has not produced any evidence of the approval of unsafe or ineffective products. Consequently, the congressman said, it would be a "tragedy" if the investigation were to undermine the public's confidence in generic drugs.
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