COMPLIANCE PROBLEMS CAN NO LONGER BE CORRECTED WITH VOLUNTARY AGREEMENTS

COMPLIANCE PROBLEMS CAN NO LONGER BE CORRECTED WITH VOLUNTARY AGREEMENTS with FDA, the agency's Deputy Chief Counsel for Litigation Eric Blumberg told a July 23 meeting of the Food & Drug Law Institute in Washington, D.C. Voluntary agreements are "no longer on the table," Blumberg declared. Blumberg explained that FDA has made an "internal decision" that voluntary agreements will no longer be used as a mechanism to allow companies to bring their plants into compliance with current good manufacturing practices after receiving observations of widespread serious violations from an FDA inspection. FDA's policy of no longer accepting voluntary agreements is reflected in the recent spate of consent decrees signed by companies with FDA. For example, FDA is expected to reach a consent agreement with Warner-Lambert, which has been struggling with compliance problems since 1991 at its Puerto Rico facilities and more recently at its U.S. plants ("The Tan Sheet" July 12, p. 16). Warner-Lambert had attempted to correct its compliance violations in Puerto Rico without a complete shutdown of those facilities. Within the last few months, FDA has sought consent decrees with KV Pharmaceutical, Halsey Drug and Biopharmaceutics as a way of compelling companies to bring their facilities into compliance. Blumberg indicated that FDA will move swiftly to take action against companies that fail to respond adequately to warning letter and FD-483 reports of inspectional findings. "You should regard a warning letter or an FD-483, if there are significant violations in there, as a shot across the bow," Blumberg said. "Failure to respond promptly and completely is going to be viewed by the agency as evidence of a failure to take those findings seriously," he emphasized. For example, KV's solid-dose prescription and OTC products were seized at the request of FDA in April after the agency determined that the firm had failed to adequately address observations of GMP violations made over the course of a year and in a January warning letter ("The Tan Sheet" April 26, p. 15). In FDA's last fiscal year (ended Sept. 30, 1992), the agency issued approximately 3,000 warning letters to firms across the entire spectrum of FDA regulated industry, the deputy chief counsel noted. FDA also filed 185 seizure actions during that period, 25 of which were mass seizures. In addition to FDA's insistence on consent decrees, the Justice Department, acting on behalf of the agency, appears to be exacting fines more frequently from companies for fraudulent activity associated with manufacturing activities. Halsey Drug agreed to pay $ 2.5 mil. after the company pled guilty to five counts relating to the addition of unapproved ingredients to drug products and falsification of records. Five former Halsey execs have been indicted in connection with the charges. Biopharmaceutics agreed to pay $ 350,000 to settle a Justice Department investigation into false statements made in three ANDA filings. At the FDLI meeting, Washington, D.C. attorney John Fleder (Olsson, Frank and Weeda) noted that "the sentencing statutes that provide for fines for corporations allow the court to impose a fine up to twice the gain that a company or a person realized from his or its illegal conduct and also twice the loss that other people suffered as a result of the criminal conduct." He added that "if we are talking . . . about a major company, the amount of fine that could be imposed by a court is potentially huge." FDA's Blumberg warned companies to be vigilant regarding violations at their firms because they and their employees need not have acted intentionally to be charged with criminal violations under the FD&C Act. "Your company and your individuals who have a responsible relationship to the violation can be held criminally liable as a misdemeanor up to one year in jail even if they did not intend to break the law, even though they were not negligent." He said that "means if you are in a position to prevent or correct the violation, and fail to do so, you may be held criminally liable."