FDA’s New Final Guidance on Drug Inspections Anne K. Walsh FDLI Enforcement, Compliance, and Litigation Conference December 8-9, 2014 Statutory Authority • FDCA Section 704. Inspection – (a) (1) For purposes of enforcement of this chapter, officers or employees duly designated by the Secretary, upon presenting appropriate credentials and a written notice to the owner, operator, or agent in charge, are authorized • (A) to enter, at reasonable times, any factory, warehouse, or establishment in which food, drugs, devices, or cosmetic are manufactured, processed, packed, or held, for introduction into interstate commerce or after such introduction, or to enter any vehicle being used to transport or hold such food, drugs, devices, or cosmetics in interstate commerce; and • (B) to inspect, at reasonable times and within reasonable limits and in a reasonable manner, such factory, warehouse, establishment, or vehicle and all pertinent equipment, finished and unfinished materials, containers, and labeling therein. 2 Related Violations • FDCA Section 301. Prohibited Acts – Refusal to permit access to or copying of certain required records – Failure to establish or maintain any record, or make certain required reports – Refusal to permit access to or verification or copying of any such required record – Refusal to permit required entry or inspection 3 Related Violations • Under FDASIA, a drug will be deemed adulterated if it has been manufactured, processed, packed, or held in any factory, warehouse, or establishment by an owner or operator who has delayed, denied, or limited an inspection, or has refused to permit entry or inspection. – It is a “prohibited act” to introduce an adulterated drug into interstate commerce. 21 USC 331(a). 4 Final Guidance • Draft guidance originally issued July 2013 – 12 comments submitted to the docket – Seeking more clarification on what is “reasonable” – Expressing concern about appealability of FDA’s view of delay • Final guidance issued on October 2014 – Provides examples of what constitutes delaying, denying, or limiting inspection, or refusing to permit entry or inspection. – Almost all are subject to FDA’s determination of what is a “reasonable explanation.” 5 Application to Other Products • On its face, the guidance is limited to drug inspections. – But the guidance is broadly drafted. • “This guidance therefore covers facilities subject to inspection under any of the authorities in section 704.” – FDCA 704 governs inspections of “food, drugs, devices, tobacco products, or cosmetics” facilities. 6 Photographs • FDA maintains its general rule that investigators are entitled to take photographs during an inspection. – Guidance describes use of photographs to document: • • • • • evidence of rodents or insect infestation; faulty construction or maintenance of equipment or facilities; product storage conditions; product labels and labeling; and visible contamination of raw materials or finished products. – Provides only one example of a “reasonable explanation” to block photos: • If camera flash will adversely affect product quality. 7 Photographs • No discussion of statutory authority to take photographs. – Several commenters submitted statements asking FDA to clarify how inspection authority extends to photographs. • Note that the Guidance does not require companies to allow videotaping. 8 Access to Employees • Guidance signals FDA’s view that the inspector can have full access to individuals and processes. – FDA views it unlawful if: • “appropriate personnel are not immediately available to accurately answer the FDA investigator’s questions” • a “facility sends staff home for the day and tells the FDA investigator that the facility is not producing any product” – Although companies need not schedule manufacturing for investigator’s convenience • a facility “orders the discontinuation of all manufacturing for the duration of the FDA inspection without a reasonable explanation” 9 Access to Employees – Statute does not mandate that: • Employees must continue working during inspection • Employees be made available when inspector requests • Employees must answer questions during an inspection – Even if FDA arrives when facility is manufacturing, a facility is not required to keep personnel present at the site beyond what is required to manufacture product. 10 Location of Records • Guidance appears to expand records to which FDA views it is entitled: – “Although FDA recognizes that facilities require a reasonable amount of time to produce records requested, especially if the records are maintained at a different site, a delay in producing records to FDA without reasonable explanation may be considered delaying the inspection.” • Statute permits FDA to inspect a drug facility, and “all things therein (including records, files, papers, processes, controls, and facilities).” 11 Industry Response • Should be prepared for “regulatory creep” • Establish and train on internal procedures governing inspectional issues – Who is authorized to speak to FDA investigators – Company’s position on taking photographs – Procedure for pulling documents from off-site 12 QUESTIONS? 13 FDLI Enforcement, Litigation and Compliance Conference Criminal and Civil Enforcement: Domestic and International Developments 2014 Warning Letter Update December 9, 2014 Cathy L. Burgess, Esq. Alston + Bird LLP Washington, D.C. (202) 239-3648 [email protected] Warning Letters • Issued for significant regulatory violations • Give firms the opportunity to take prompt and voluntary corrective action • Establish prior notice, but not a prerequisite to enforcement • Issued to responsible officials in positions of authority • FDA expectation that firms will take corrective action When Warning Letters Are Not Appropriate • • • • History of similar violations and warnings Intentional or flagrant violations Reasonable possibility of injury or death Violations of 18 U.S.C. 1001 2014 Warning Letters: Ex 1 • Sample weights for calculations were created after chromatographic runs. Sample weights were used to calculate related compounds and impurities used to support method validations submitted in applications for several products • Failure to have adequate procedures for use of computerized systems in QC lab – Computer users could delete data from analyses – The audit trail function for certain systems were disabled at time of inspection – Employees shared user names and passwords – No computer lock mechanisms to prevent unauthorized access • “The lack of reliability and accuracy of data generated by your firm is a serious CGMP deficiency that raises concern for all data generated by your firm” Warning Letter: Ex. 1 (continued) • FDA acknowledged that firm hired a data integrity expert to conduct comprehensive data integrity audit of lab • FDA set forth steps that data integrity consultant should undertake as part of evaluation to assist with overall CGMP compliance • FDA requested a list of all batches of products shipped to US market that were released based on missing, inaccurate or unreliable data Data Integrity Consultant: FDA Recommendations • Determine timeframe in which inaccurate data reporting occurred • Interview current/former employees to identify conduct, systems or procedures that might have resulted in/contributed to inaccurate data reporting • Determine whether additional facilities involved or affected by inaccurate data reporting • Determine extent of management involvement or awareness • Determine whether implicated managers still in position to influence data integrity • Audit report should include any discrepancies between data or info identified in approved applications and the actual results, methods or testing conditions submitted to FDA Requested Corrective Action Plan • Description of specific procedures, actions and controls to be implemented to ensure integrity of data in each application currently submitted and all future applications • Corrective action plan should cover not only methods validation but any other testing, such as stability or release tests that might have been used to support a drug application 2014 Warning Letters: Ex. 2 • Raw data missing from laboratory records: Did not identify samples tested (name, batch number, etc.) Excluded complete record of raw data generated during each test Excluded test method used Excluded records of all calculations performed Excluded test results Signatures were missing • “Unofficial” testing of samples, results discarded and results from additional tests reported as results of record • Data not consistently archived to central server • Discarded hard copy records found during inspection • Similar recommendations for comprehensive data integrity audit by data integrity consultant 2014 Warning Letters: Ex. 3 • • • • Failure to maintain complete data from all lab tests Lack of accurate raw lab data records Batch samples were retested into compliance QC lab failed to include complete data on QC testing sheets • Failing or atypical results were not included in official lab control records, not reported and not investigated • Similar recommendations by FDA for investigation and comprehensive audit by data integrity consultant 2014 Warning Letters: Ex. 4 • Failure to document manufacturing operations at the time they were performed; Missing entries with lines left blank (operators stated they would be filled in later) Falsification of CGMP records, such as signed batch records by individuals who had not actually performed the review Documentation errors not investigated and Quality Unit not notified • FDA requested a comprehensive investigation into data falsification practices and specific corrective actions to avoid falsification; • Recommended hiring third party auditor. 2014 Warning Letters: Ex. 5 • “Unofficial” inspection records with different data from official batch records. Unofficial records showed significantly more quality defects • Use of scratch paper to record critical manufacturing data. Scratch paper records did not always match data on official batch records • Activities that were not performed were recorded in batch records (e.g., in-process checks documented as performed but were not) • “We expect that you hire a third party auditor, with experience in detecting data integrity problems…” • Similar recommendations for investigation and comprehensive data integrity audit CDRH Recidivist WL Policy • Pattern of correcting violative conditions in response to WL long enough to pass a follow-up inspection • Recidivist WL requests a manufacturer to: • Retain a third party expert to conduct comprehensive QSR audits on a schedule outlined in the Warning Letter • Certification by the expert • Submission of the audit report to FDA • Submission of certification from CEO that he/she has personally reviewed the audit report and the firm has initiated or corrected all audit findings • If corrections will occur over time, include a timetable for implementation of corrections CDRH Recidivist WL Policy • Schedules, milestones, update reports and other activities should be established between FDA and the manufacturer • Follow-up inspection 3-6 months after certifying that all corrective actions have been completed • Satisfactory corrective actions no objection from District • Unsatisfactory corrective actions consider injunction or seizure • Any evidence of fraud refer to Office of Criminal Investigations • Note: No equivalent recidivist policy for any other center within FDA Standard CGMP Consent Decree Provisions • Defendants cannot manufacture drugs until FDA is satisfied of the firm’s compliance with CGMP requirements, which includes the retention of a third party CGMP Expert to: • Determine whether methods, controls and facilities are in conformity with CGMPs; • Conduct a comprehensive inspection; • Evaluate whether company has established and implemented a comprehensive written QA/QC program, stability program, quality assurance, and a written program to maintain the production, control and records to ensure the authenticity and reliability of all data in those records. • CGMP expert must certify that all inspections have been completed and all deviations have been corrected to ensure CGMP compliance Data Integrity Provisions in Ranbaxy • Within 30 days of entry of the decree, Ranbaxy was required to retain an independent Data Integrity Expert, qualified to conduct complete internal reviews and audits and to establish the integrity of the data contained in drug applications; • The Data Integrity Expert is required to: • Notify FDA of any disputes he/she has with the company regarding scope, conduct, findings or any other aspect of the internal review and audit; • Meet with FDA, upon request, without the Defendant present, to discuss internal reviews of the facilities and audits of the drug applications • Data Integrity Expert also required to review all affected drug applications to determine the reliability of the data contained in all such applications before FDA would resume or begin reviewing applications Points to Consider • Recent Warning Letters suggest an unfavorable trend regarding data integrity • FDA recommendations regarding investigation and comprehensive audit by data integrity consultants have been consistent in 2014 Warning Letters • FDA’s Recidivist Policy goes further than recent data integrity recommendations and are similar to consent decree provisions • Greater use of the Recidivist Policy could possibly result in fewer resources being expended by both FDA and industry, and serve as an alternative to more onerous consent decrees Import Detentions Without Physical Examination: How They Begin and How They End Daniel G. Jarcho McKenna Long & Aldridge LLP Detention Without Physical Examination (DWPE) • FDA prohibits importation of every shipment until the owner/consignee provides evidence that it is not violative • FDA imposes DWPE based on an “appearance” of a violation of the FFDCA • Statute (FFDCA) and FDA regulations do not mention DWPE • FDA gives no right to a hearing before DWPE is imposed • FDA has taken the position that imposition of DWPE cannot be challenged in court 31 DWPE is in Many Ways a Much Stronger Enforcement Tool Than a Domestic Seizure or Injunction • Burden of Proof is Shifted to Private Party • Restriction Comes First, Discussion Comes Later • For Imported Product, Nationwide Prohibition on Distribution in Interstate Commerce • FDA Claims There is No Judicial Review 32 Where Does FDA Claim to Get This Authority? 33 21 U.S.C. § 381(a) • Gives customs authority to collect samples of imports (now delegated to FDA) • Gives FDA authority to conduct an “examination” of import samples and decide whether it “appears from the examination of such samples or otherwise” that the import is subject to being “refused admission” into domestic commerce because it is, among other things, adulterated or misbranded 34 • FDA gives the owner/consignee the opportunity for an informal hearing before a “refusal” occurs (see 21 C.F.R. § 1.94(a)) • If the owner/consignee is successful, the product is admitted into domestic commerce, and if not, the product is refused 35 When FDA Imposes DWPE, it Dispenses With the Examination of Samples FDA Maintains That Based on Information it Has, it Knows That the Imported Products Appear to Be Violative Without Even Examining Them • Inspectional History • Premarket Clearance Issues • Public Safety Issues 36 FDA Typically Imposes DWPE By Listing a Particular Foreign Shipper, Manufacturer, Product and/or Country of Origin on an Import Alert The Import Alert Cites the Particular Violation Claimed (e.g., adulterated food (21 U.S.C. § 342(a)(1)) 37 How Do I Get Removed From an Import Alert? • 5 non-violative import entry rule (FDA Regulatory Procedures Manual Chapter 9-6) • Conditions Stated in the Import Alert Itself – Specific laboratory tests – Specific inspection results 38 Litigating Challenges to DWPE 39 • DWPE Can be Challenged Under the Administrative Procedure Act • Arbitrary and Capricious (or Otherwise Unlawful) Final Agency Action • FDA Has Not Been Successful Arguing That DWPE is Not Subject to Judicial Review. See, e.g., Smoking Everywhere, Inc. v. FDA, 680 F. Supp. 2d 62, 65-66, 68 n.7 (D.D.C. 2010) (DWPE was final agency action that the court enjoined), aff’d on the merits, 627 F.3d 891 (D.C. Cir. 2010) 40 Plymouth Direct, Inc. v. FDA, No. 14-cv-1848 (D.D.C. 2014) • FDA notified plaintiff that its knee brace was a Class I medical device, exempt from 510(k) clearance • Plaintiff developed a market, had millions of devices manufactured in China, and began importing 41 Plymouth Direct, Inc. v. FDA, No. 14-cv-1848 (D.D.C. 2014) (cont’d) • FDA changed position, notified plaintiff that its devices were not 510(k)-exempt and therefore were unapproved medical devices • FDA imposed DWPE with no way out short of starting at the beginning of 510(k) process • Company faced massive irreparable harm • Suit filed, DWPE lifted 42 Prosecution of RCOs for FDCA Felonies—Too Hard to Jail? • Eugene M. Thirolf, Consultant, former Director, Consumer Protection Branch, U.S. Department of Justice DOJ Fails to Prosecute Enough RCOs • Senator Grassley, new Judiciary Chair, and others criticize AG Holder and DOJ for failure to prosecute enough responsible corporate officials (RCOs) in large fraud cases. • “Questions remain about how effectively federal prosecutors can pursue company executives.” NY Times 9/29/2014 AG Holder’s Defense • “Buck still stops nowhere” when a corporation violates the law because “responsibility remains so diffuse, and top executives so insulated” that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.” http://www.justice.gov/opa/speech/attorneygeneral-holder-remarks-financial-fraudprosecutions-nyu-school-law 9/17/2014 AG Holder Touts PCA Convictions • On 9/19/2014, AG Holder, in an unusual step personally announces Peanut Corporation of America (PCA) convictions: “All Americans must be able to rely on the safety of the food they purchase. And any individual or company who puts the health of consumers at risk by criminally selling tainted food will be caught, prosecuted, and held accountable to the fullest extent of the law.” Topics for Discussion To answer the question of why RCOs are or are not prosecuted in FDCA cases, consider a short history of two prosecutions years apart of individuals for FDCA felonies resulting in deaths. Difficulties for government, corporations, and individuals in those felony prosecutions explain why prosecuting RCOs is essential yet so very challenging. Short History E-ferol A vitamin E injectable, E-ferol, is associated by CDC with the deaths of 38 infants. It was marketed, even though unapproved, to safely prevent blindness in premature infants. “Black hole” of unapproved drugs Short History PCA • CDC investigation identifies contaminated PCA peanut products causing nine deaths and 700 injuries. • National media coverage is heart-wrenching. • Congress demands that FDA and DOJ promptly investigate and prosecute all responsible for the contamination. FDA first moves to prevent further harm to the public health • In the first response, FDA investigated E-ferol and PCA product manufacture and distribution and demanded an immediate and total recall of the vials and peanut products. • FDA is called to task for allowing unapproved drugs and contaminated peanut products on the market. • Recall challenges Difficulties for Criminal Investigators • Regulatory actions come first and are preeminent. • Where to obtain sufficient government resources • Individuals and documents subpoenaed by Congress and class action plaintiffs • Prospect of significant fine and imprisonment result in retaining early-on excellent counsel with “unlimited” resources. Early Considerations • Does death or serious bodily injury automatically warrant criminal investigation? • What mens rea will justify not prosecuting for felonies? Cf. Jensen brothers contaminated cantaloupes • Is regulated company’s action/reaction to the crisis based on FDA’s regulatory posture? • Will regulated company be cooperating? • Will RCO be cooperating? Multiyear Investigations • Search warrants in PCA compared with FDA regulatory demands in E-ferol • Pressure on DOJ and FDA to reach prosecution decision before case is ready to try • FDA’s regulatory history • Proving the obvious with overwhelming evidence E-ferol Indictment and Trial • After a 3-year grand jury investigation, 25 felony counts charged against two corporations and their presidents • After 8-week trial, all are convicted of felonies. • Individuals serve prison terms of less than 1 year even though sentences are 9 and 8 years. • Corporations fined PCA Indictment and Trial • After a 4-year investigation, 76 felony counts charged against President, Broker, Operations Manager, and Office Manager of PCA • After 8-week trial, 75 witnesses, and hundreds of exhibits, on 9/19/2014, guilty verdicts against two former officials of PCA and one broker. • Sentencing date not yet set Mens Rea Is Hard to Prove • FDCA—commission of a prohibited act under 21 U.S.C. 331 with the intent to defraud or mislead, 21 U.S.C. 333(a)(2) • Standard mail and wire fraud charges— scheme or artifice to defraud • Why would a legitimate businessman or businesswoman do such a thing? Government Decisions • FDA • Commissioner’s Office • OCI • CFSAN • OCC • • • • • DOJ DAG, AAG CPB USAO FBI Hypothetical Sentencing Guideline Analysis • Fraud Guideline 2B1.1 • Base offense level 7 No role analysis • Loss amount greater than $7 million—add 20 • More than 200 victims—add 7 • Reckless risk of death or serious injury— add 2 • Level 36 calls for 188 to 235 months Takeaways • In the context of significant criticism of DOJ for not prosecuting RCOs, more RCOs will be prosecuted. • Prosecution communicates that defendants’ conduct was criminal and a felony • Without successful prosecution of RCOs in extreme cases, there may be no credible regulatory deterrent. • Fairness demands an individual be held accountable. International Prosecution? • When the individual and firm are outside the U.S., challenges may be beyond reach. • Ultimately, who would be extradited and where will the evidence come from? • Examples are few but noteworthy.