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Executive Summary

HHS' legislative recommendations to provide FDA with punitive powers would permit the agency to suspend for two years all of a company's marketing approvals from the time the company committed a prohibited act to the time of the company's debarment or conviction. In addition, a provision in the proposal would tie punishment of a company to the length of time that a company retains an employee or representative who has committed a prohibited action. The proposal notes that if an officer or agent of a company is convicted or debarred for committing an act specified in the draft, FDA may suspend for two years all the company's marketing approvals obtained between the date of the first prohibited act and "the date on which the convicted [or debarred] person ceases to be an officer" or agent of the company. This provision could encourage companies to fire officers, employees, consultants or agents accused of prohibited acts as quickly as possible. The HHS legislative recommendations to enhance FDA enforcement authority are expected to be cleared by the Office of Management & Budget by mid-April and submitted to Rep. Dingell's (D-Mich.) House Energy & Commerce Committee. Dingell, who spearheaded congressional investigations into the issue, reportedly may defer introduction of his "emergency" FDA bill until he reviews the HHS recommendations ("The Pink Sheet" March 19, p. 3). The proposal specifies that grounds for conviction or debarment include committing "fraud" or submitting "false statements" in an effort to obtain marketing approval or "bribing or coercing...or otherwise improperly influencing" an FDA employee. The agency concluded it did not have such authority when in December it rejected a petition by Barr Laboratories. Submitted six months earlier, the petition urged FDA to withdraw ANDAs of four firms -- Par, Quad, Pharmaceutical Basics, and American Therapeutics -- whose employees were found to have bribed FDA officials. FDA's enhanced authority would be retroactive under the department's proposal. "The provisions of this section shall apply with respect to convictions and approvals of applications occurring prior to enactment," the draft states. Although an affected company would be able to request a hearing on an FDA decision to suspend its approvals, the suspension cannot be delayed pending the result of the hearing. "Suspension of approval of an application...shall not be stayed pending the outcome of a hearing," the draft states. While Dingell is drafting an "emergency" bill to focus for this year on the generic drug industry, the HHS proposal applies to all FDA-regulated products. The department's draft provides debarment and approval-suspension penalties for companies that defraud the FDA review system -- whether the marketing application is for NDAs, ANDAs, antibiotics, biological products, animal drugs, medical devices or color additives. Once an approval has been withdrawn, a company would have three ways to regain marketing authorization from FDA, according to the proposal. FDA can approve a new marketing application, which may be submitted "at any time after the date of suspension." Alternatively, after the two-year suspension period expires, the firm may request that FDA "withdraw the suspension of" the application's approval; however, the agency must determine that the application still meets approval requirements. Finally, the company may return a product to market if it can demonstrate to FDA's satisfaction that "neither the convicted or debarred person or entity, nor any officer" of HHS, "whom the convicted or debarred person or entity was found to have improperly influenced...had any involvement with or control over such application." The draft also stipulates that companies seeking reinstatement of withdrawn approvals must permit FDA employees "at all reasonable times to have access to, and to copy and verify, all records of the entity which the secretary may need to review to determine whether the convicted or debarred person or entity had any involvement or control over" the suspended application. The proposal provides two types of debarment, "mandatory" and "permissive." Mandatory debarment from the FDA approval process is the penalty for companies or persons convicted of a criminal offense "relating directly or indirectly to the development or approval...of any product subject to regulation by FDA," the proposal explains. Under permissive debarment, the draft bill would allow FDA to debar anyone convicted of a criminal offense relating to products or activities regulated by the agency; anyone convicted of "a felony of bribery, fraud, perjury, false statement, racketeering, blackmail, extortion, falsification or destruction of records or a similar felony offense"; or anyone convicted of obstructing "an investigation into or prosecution of any criminal offense." In addition, permissive debarment applies to anyone FDA "determines has bribed or attempted to bribe" an FDA employee; anyone FDA "determines has coerced or attempted to coerce" an FDAer into "interfering with" agency operations; anyone FDA determines has provided false information relating to an FDA-regulated product; anyone FDA "finds has knowingly failed to disclose" required information; and anyone FDA "finds has endangered the public health or safety through knowing violation" of the FD&C Act or agency regulations. The draft bill also contains a provision that would allow FDA to levy civil monetary penalties for the activities punishable by debarment and to provide a reward for whistleblowers. FDA "may award to any individual" (other than government employees) a reward for providing "information leading to the imposition of a civil money penalty." The maximum reward is the lesser of $100,000 or one-half the fine "imposed and collected." Companies or persons can be debarred for a minimum of three years, the proposal states. Debarment periods begin upon provision of "reasonable notice to the public and to the person debarred," as specified in regulations. After the minimum three-year period, a debarred person or entity "may apply...for termination of the debarment," the draft states. FDA may terminate a debarments "after the expiration of the minimum period" if there is no reason for continuing the debarment "and there are reasonable assurances that they types of actions which formed the basis for the original debarment have not recurred and will not recur." Except to the extent that it would abridge judicial rights of a person criminally prosecuted, HHS proposed to "make available to the public a list...of persons currently debarred." The list will be "updated no less than quarterly," the draft states, to notify companies that might otherwise contract with debarred persons. The draft stipulates that FDA will refuse "to accept, review or approve any application" by companies that are debarred or employ or contract with debarred persons. The proposal is described as an effort to enhance the power of HHS "to protect the integrity of the process of review and approval of products subject to regulation by the FDA, by authorizing the imposition of sanctions, including debarment, civil money penalties and suspension of product approvals for improper activities."



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