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Executive Summary

The Generic Drug Enforcement Act's provision allowing FDA to require generic firms to suspend the marketing of products without clear evidence of fraud is the "most powerful authority" in the recently enacted legislation, House Energy & Commerce/Health subcommittee counsel William Schultz suggested at a July 16 Food & Drug Law Institute seminar on the new law. "The suspension authority is, I think, the most powerful authority in this bill," Schultz said. "It's an authority that got the least attention in the context of its significance." He added: "I think it is going to be very interesting to see how the FDA uses this" new power. The suspension provision in the law allows FDA to suspend the marketing of a generic company's products if FDA can demonstrate to an administrative law judge that the company has shown a "pattern or practice of making false statements to the agency regarding two or more drugs," or if the company has committed "flagrant and repeated" GMP or GLP violations during a two-year period involving one or more generic drugs. Schultz pointed out that the intention of the provision was to provide FDA with the ability to take products off the market quickly when the agency knows that a company is being investigated for criminal wrong-doing, but does not know exactly which products may be implicated in the misconduct. He noted that, under the FD&C statutes, FDA "can always withdraw the approvals one by one after a full hearing through a lengthy process" if the agency knows that there are problems with specific products. The suspension section, he explained, was designed to deal with the situation where FDA does not "have any confidence either in all the drugs of a company or in a particular identifiable category of drugs" due to "a pattern of conduct [by the company] involving two or more drugs or...very serious violations of GMPs that the company refuses to correct." The suspension authority included in the new law "allows FDA to suspend a whole class of drugs or a company's entire supply of drugs" after granting the opportunity for a full hearing before the administrative law judge. King & Spalding attorney Eugene Pfeifer noted that FDA is already making greater use of warning letters and injunctions in dealing with GMP violations. However, he predicted, "when the agency wakes up to the authority that it possesses in this statute, it may very well determine that it doesn't make as much sense to go to federal district court as it does to initiate a proceeding whereby you grant yourself an injunction against a company that you regard as reluctant to conform to contemporary standards for [current] GMP compliance." FDA Policy Development Staff Director David Adams called the suspension provision "a significant new authority" that will be used by the agency as an "extraordinary remedy." Adams predicted that the suspension authority "is not necessarily going to be useful in each and every instance" due to "substantive and procedural requirements that are involved before the agency can actually make good on these provisions, including a hearing on disputed issues of material fact and judicial review." While the suspension authority "may well prove to be a very useful mechanism," he said, "it is not always going to provide immediate protection." Instead, FDA will continue to rely on seizures, injunctions, recalls and "jawboning companies," Adams suggested. FDA Regulatory Affairs Division Director Albert Rothschild reported that the agency's Center for Drug Evaluation and Research has established an internal task force to help implement the new act. The task force, chaired by Rothschild, includes members from the general counsel's office, veterinary medicine, the office of regulatory affairs, CDER, the Office of Generic Drugs, the division of manufacturing and product quality, and the division of scientific investigations. The task force first met on June 23 and another meeting is scheduled for "later this month," Rothschild said. FDA's first activity toward implementing the legislation, Rothschild said, has been to require, as of June 1, a certification statement in all drug applications that no individuals debarred from FDA activities have been involved in the development of the application. FDA is currently preparing a letter to industry that will explain the certification requirement. FDA expects to mail the letter to pharmaceutical companies during the week of July 20. The next priority of the CDER task force, Rothschild said, is preparing procedures for processing mandatory debarments for individuals. He pointed out that since 1987 -- the time frame covered by the act -- 29 individuals have been convicted of crimes related to the generic drug investigations and another four clinical investigators have been convicted for fraud relating to clinical studies. The debarment legislation's mandatory debarment provision for individuals, Rothschild noted, may also be extended to individuals convicted under the Prescription Drug Marketing Act. "Logically, since the act requires the agency to act within a certain time period -- five years -- we will need to move first to debar those individuals convicted for the most egregious crimes described in the act whose convictions are approaching the five year limit," Rothschild explained. "In all likelihood, we will form an ad hoc debarment committee for each individual to be debarred [consisting] of personnel from the field, from enforcement related staff, from headquarters, from the appropriate program -- either the office of generic drugs or office of drug evaluation, from general counsel and from regulatory affairs." The act's provision for mandatory debarment of corporations is not retroactive and no companies have been convicted since the bill was signed into law in May. However, Rothschild noted, the act contains a provision for the permissive debarment of firms that have been convicted of a felony in the last five years. FDA's second highest priority, he said, is to develop internal guidelines "relating to the agency's decisionmaking and procedures for permissive debarment." Adams predicted that "the agency will use these new tools and mechanisms as a complement to its existing authority." The new authorities included in the Generic Drug Enforcement Act, he added, are "not something that will replace the previously existing regulatory tools and mechanisms" at FDA. The temporary denial of approval provision, Adams indicated, will replace the agency's defunct "alert list," while providing procedural protections to industry. The provision gives FDA some protection if, in the future, the agency's fraud policy is successfully challenged in court. At a July 13-14 FDLI meeting on FDA regulation of biologicals, Washington lawyer Richard Morey (Kleinfeld Kaplan & Becker) questioned whether FDA had statutory authority to withhold a company's approvals under the fraud policy when the firm owns a plant that is unrelated to the pending product but receives an adverse inspection. Noting that Barr Labs challenged the legality of FDA's alert list ("The Pink Sheet" May 4, p. 9), Morey said: "The legal issues raised by the alert list live on because the fraud policy raises very similar legal issues." Morey contended that "there is no statutory provision allowing the agency [under the fraud policy] to defer substantive review of an otherwise approvable application because it appears to meet the agency's rather vague criteria for conducting a validity assessment of the application." In addition, he contended that the need for the fraud policy's approval delay provision is undercut by the enactment of the debarment law this year. Morey said the "official death" of the alert list, which followed one month after the legal challenge by Barr, occurred in a May 21 memorandum from FDA Manufacturing and Product Quality Division Director Paul Vogel. The memo states that the alert list was "no longer needed because of the intensified preapproval inspection program and the related compliance inspection tracking system, which enables [FDA] to quickly identify prior acceptable evaluations called into question by new information." The memo adds that the last alert list issued April 15 and expired May 1. On the other hand, Vogel said his division "will continue to provide compliance evaluations in response to establishment evaluation requests (EERs) submitted by the reviewing divisions."

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