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FDA CRIMINAL INVESTIGATIONS TO BE HANDLED BY JUSTICE DEPT. AS OF JAN. 29, CASES AT HHS IG WILL BE TURNED OVER; REP. DINGELL OPPOSES REDELEGATION

Executive Summary

New criminal investigations and criminal cases currently at the HHS Inspector General's Office involving FDA drug and device approvals will be referred to the Justice Department Office of Consumer Litigation beginning Jan. 29 under a redelegation of enforcement authority announced recently by HHS Secretary Sullivan. In a Jan. 3 internal HHS memo on the redelegation, HHS Assistant Inspector General for Investigations Larry Morey explained: "Effective Jan. 29 1990, new cases involving the drug and device approval process will be referred directly to the [Justice Department] Office of Consumer Litigation (Civil Division) for determination as to how these investigations will proceed." In officially delegating the IG with authority over FD&C Act felony investigations last summer, Sullivan had allowed for cases to bypass a layer of bureaucracy in the Justice Department Consumer Litigation Office. The IG is able to send cases directly to U.S. district attorneys for enforcement. With the announcement, Sullivan officially rescinds his decision of last July to transfer the enforcement authority to the HHS Inspector General ("The Pink Sheet" Aug. 7, p. 8). The IG began backing off heavy involvement in FDA day-to-day authority in the fall ("The Pink Sheet" Oct. 9, T&G-1), so Sullivan may have been announcing what was already a fait accompli. On Oct. 2, HHS IG Richard Kusserow issued a memo restrictively defining the IG's authority in matters relating to FDA. In speeches at the Food & Drug Law Institute's annual education conference in December, Kusserow and new FDA Chief Counsel Margaret Porter played down the issue of enforcement authority. Both characterized the respective enforcement roles of the IG and FDA's General Counsel's Office as "unchanged" ("The Pink Sheet" Dec. 18, p. 8). The IG has traditionally had a role in FDA cases involving fraud although the scope of the IG's authority in that area has been the subject of some debate. Sullivan's official delegation of authority to the IG last summer came after the IG had been requested by the U.S. Attorney in Baltimore to assist in the investigation of fraud by Vitarine. Reportedly, FDA Commissioner Young also asked the IG to assist in the investigation. The request sparked a debate within FDA and Justice as to the extent of the IG's authority and is understood to be the reason behind FDA Chief Counsel Thomas Scarlett's resignation last summer. Under the redelegation, the onus of responsibility for investigating possible criminal violations reverts back to FDA, which then forwards potential cases to the Justice Department's Office of Consumer Litigation. That office decides whether to refer cases to a U.S. Attorney for enforcement action. Cases currently "logged in and under supervision" of a U.S. district attorney will "continue to completion," Morey explained. But "any investigation pursuant to the delegation not under" the direction of a district attorney "will be forwarded to the Office of Consumer Litigation." Among the cases known to be under investigation by the IG involve the generic drug firms Vitarine, Bolar and Par/Quad and the medical device firm, Aequitron. * Sullivan announced his decision within HHS and to FDA in a Dec. 28 memo. He explained that FDA criminal enforcement authority would be returned to its previous state because the crisis within FDA's generic drug program had been resolved and because he is convinced the Justice Department will vigorously pursue cases of wrongdoing. "I believe that the emergency is over, the confidence of the public in our generic drug market has been restored, and the reason for the delegation to the Inspector General has passed," Sullivan said. Addressing concerns that the Justice Department may have too many other pressing cases to devote appropriate resources and attention to abuses within FDA, Sullivan added that Justice "has assured us that it will continue to afford these cases the highest priority, both in the investigative and prosecutorial areas." Rep. Dingell (D-Mich.) is unhappy that the IG criminal investigators have essentially been recalled from FDA and opposed the decision in a Jan. 3 letter to Sullivan. In addition to generic drug investigations, the IG had previously been empowered to monitor prescription drug marketing, counterfeiting, the sale of illegal anabolic steroids and drug diversion. "Your action is most regrettable," Dingell said. The Commerce/Oversight Subcommittee chairman contended that the redelegation of authority: "1) contradicts the July recommendations of your [HHS] General Counsel, Inspector General, and then-FDA Commissioner Young; 2) it reverses action you thought appropriate and necessary in July; 3) it emasculates the only effective enforcement group looking into violations of the FDA's laws and regulations; 4) it undermines the FDA's ability to defend itself from fraud and false statements by regulated firms; it elevates 'turf battles' over the fight against counterfeit and illegal drugs; and 6) it marks an abrupt retreat from your department's efforts to attack the root causes of the generic drug scandal and prevent future attacks." Dingell requested that the staff of the Commerce/Oversight Subcommittee be briefed on the basis for the secretary's decision and also requested, by Jan. 10, "all documents" relating to the delegation of authority made in July and "efforts to modify or rescind that delegation" as well as a "list of contacts" at HHS, FDA, the White House, the Office of Management and Budget and Justice relating to the redelegation. In addition, Dingell is seeking a list of cases of investigations by the IG that are affected by the decision, the amount of resources spent and still needed for each case and "evidence of [the Justice Department's] ability and willingness to provide these resources." HHS General Counsel Michael Astrue discussed the decision with Dingell's staff on Jan. 4. Sullivan's delegation of authority to the IG last summer reportedly sparked a turf battle with the Justice Department and the Secretary is said to have been pressured into rescinding it by the White House. Assistant IG Morey noted in his memo that Justice "has indicated that further clarification of inherent [Inspector General] authority to conduct fraud cases in regulatory agencies must come from Congress." Sen. Glenn's (D-Ohio) Governmental Affairs Committee held a hearing Oct. 3 at which HHS Inspector General Kusserow said that legislation is needed to clarify the investigative authority of the IG ("The Pink Sheet" Oct. 9, T&G-2).

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