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HHS INSPECTOR GENERAL ENFORCEMENT AUTHORITY FOR FD&C ACT VIOLATIONS

Executive Summary

HHS INSPECTOR GENERAL ENFORCEMENT AUTHORITY FOR FD&C ACT VIOLATIONS is needed this year, House Energy & Commerce/Oversight Subcommittee Counsel Reid Stuntz maintained at a first-day session of a June 14-15 Food & Drug Law Institute meeting. Previewing an oversight hearing scheduled for June 20, Stuntz explained why the subcommittee believes that the HHS Inspector General authority issue warrants prompt corrective action in "emergency" legislation. "As you are going to find out at the hearing next Wednesday," Stuntz said, "there are cases that are being dropped, cases that are being screwed up and cases" that should be brought are being left unprosecuted. "There are big chunks of the FD&C Act that are not being enforced," he asserted, because although the Justice Department tells HHS its criminal investigators will prosecute FD&C Act violations, it is testifying in Congress that it does not "even have eeough FBI resources [to enforce] the savings and loan scandal." When asked why the legislation (HR 4810) is directed only to the generic drug industry in its approach to enhancing FDA enforcement powers, Stuntz distinguished problems in the generic and brandname drug industries. Although the subcommittee has learned of a few brandname companies that are plagued by problems with good manufacturing practice (GMP) regulations, Stuntz said it has seen the "breadth" of fraud and corruption only in the generic industry. "Some very real GMP problems" were found at Lilly and Abbott, Stuntz said, adding: "you could call them gross manufacturing practices." However, the problems at those firms did not indicate that "a corruption and fraud investigation" was warranted, he maintained. "What distinguished the generic drug investigation is the breadth of the problem," which suggested that FDA's "streamlined [ANDA review] procedures are not sufficient" and that the "entrepreneurial nature" of the generic industry contributed to the problem. The subcommittee counsel explained that the corruption generally was not found in larger generic firms with "sophisticated corporate controls" but in smaller, newer companies without the same checks and meaningful signoff procedures. Nonetheless, he reiterated, "we do have some plans for" future oversight activity involving the brandname drug industry. Furthermore, the subcommittee believes the generic-only approach sends "a positive message" to the public about the generic industry, Stuntz continued. "We've had several generic drug firms tell us they want legislation targeted at generic drugs because...they are out there fighting [Pharmaceutical Manufacturers Association] attacks" on their products, "and they want to go back to the American people and say we have tighter standards, we have tougher laws" than the brandname drug industry. Lawyers who have represented PMA, the Generic Pharmaceutical Industry Association and the National Association of Pharmaceutical Manufacturers all criticized the debarment provisions of HR 4810. GPIA's Washington lawyer Jess Stribling (King & Spaulding) contended that debarment, product withdrawal and approval suspension provisions are meant to be public protection but not punitive measures. For example, Stribling said, debarment appears in many agency statutes to induce previously untrustworthy companies or individuals to "take whatever corrective action is necessary to restore integrity" and to protect the public "until rehabilitation occurs." NAPM's New York lawyer James Rubin (Bass & Ullman) contended that the bill's debarment provisions should distinguish between individual and company violations. A company "can more easily rehabilitate itself by getting rid of the wrongdoers and getting a new corporate management and new corporate philosophy," Rubin said. "I can understand the need for punishment" of an individual convicted of felonious violations of the FD&C Act, "and rehabilitation may not be as much in order" for the individual as it is for "the company for which that individual worked."

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