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CRIMINAL PROSECUTION OF MORE THAN 10 GENERIC DRUG FIRMS AND "DOZENS" OF REPS FOR FALSE FILINGS PREDICTED BY HOUSE OVERSIGHT  SUBCOMMITTEE STAFFER NELSON

Executive Summary

More than 10 generic drug manufacturers and "dozens" of industry officials may face criminal prosecution for charges related to submission of false information in ANDAs, House Oversight Subcommittee staff investigator David Nelson predicted at a Nov. 8 meeting of the Human Drugs & Biologics Subcommittee of the Edwards Advisory Committee on FDA. Addressing a first-day session of the FDA subcommittee's Nov. 8-9 meeting in La Jolla, Calif., Nelson said members of the congressional subcommittee "fully expect there will be dozens of individuals and 10 or more generic drug firms and their contractors...prosecuted by the U.S. attorney in Baltimore for the systematic filing of false information and false applications" regarding generic drugs. FDA is "pulling drugs right now from those firms," he added. The congressional aide asserted that "well over 100 generic applications have been shown to be tainted by fraud and false statements to date, and we have no doubt the list will continue to grow." Under the chairmanship of Rep. Dingell (D-Mich.), the Oversight Subcommittee is expanding its congressional investigation of the generic drug industry and plans to probe the following areas, Nelson told the meeting: testing laboratories, industry consultants, new drug evaluation and medical devices. However, Congress is likely to allow FDA and the industry a grace period to adjust to the newly enacted medical device legislation before further oversight hearings are scheduled. "Yet to go on the agenda are inquiries involving the consultants to the industry and possible generic-related improprieties in the new drug sector," he said. The subcommittee is also looking into "the capacity of FDA and the willingness of the secretary of HHS to conduct criminal investigations of any kind involving violations of the [FD&C] Act." Dingell is said to be concerned that the HHS Inspector General has yet to return its investigators to drug diversion law violations and other FDA enforcement efforts. Lawrence Horowitz, MD, who succeeded newly confirmed FDA Commissioner David Kessler, MD, as chairman of the FDA advisory subcommittee, pointed out to Nelson that concern about drug industry contract labs "is not an unfamiliar, new problem for the agency." Currently an investment banker with James D. Wolfensohn Inc., Horowitz was on the staff of Sen. Kennedy (D-Mass.) in the 1970s and was active in Senate investigations into contract labs. Nelson predicted that the 102nd Congress will enact an FDA enforcement bill. "Largely because the [Oversight] Subcommittee has witnessed such extensive agency failure and so much industry corruption, I would expect the 102nd Congress will be ready to pass reforms of the [FD&C] Act," the congressional aide said. A compromise debarment legislation would have been enacted in the recently completed Congress, Nelson added, but it was blocked at the eleventh hour by Sen. Metzenbaum (D-Ohio). "Unfortunately, misguided and venal interests prevented its passage," he said, noting that "a single senator was able to block the compromise bill in the waning days of the session." Subcommittee member Milan Puskar, president of Mylan Pharmaceuticals, whose complaints of uneven reviews of ANDAs by FDA led to the generic industry investigations, asked Nelson who wanted the bill killed. "Do you have any idea who may have helped the senator make up his mind to stop the bill?" Puskar asked. Nelson replied: "There were a lot of lawyers paid a lot of money and a lot of nonlawyers...I'm virtually certain that a key staff aide made the recommendation." Horowitz asked Nelson how FDA could develop a mechanism that "detects and prevents" the kind of corruption uncovered by the generic drug investigations. The congressional aide responded that legal sanctions must be severe enough that the risk of penalties discourage wrongdoing although the agency lacks sufficient resources to monitor the industry adequately. "When you have limited resources, our premise has been that you create penalties sufficiently draconian so that even a small risk of getting caught carries such consequences that firms will be deterred on that basis," Nelson said.

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