FDA May Increase Misdemeanor Prosecutions Against Responsible Corporate OfficialsMarch 4, 2010
By Kurt R. Karst –
Earlier today, FDA sent a letter to Senator Charles Grassley (R-IA) indicating that the Agency may very well be poised to increase prosecution of company officials. According to the letter, which includes several recommendations based on a committee the Agency formed (comprised of senior FDA leadership) to examine opportunities and develop recommendations to enhance coordination and strategic alignment between FDA’s Office of Criminal Investigations (“OCI”) and other Agency components, the committee recommended to “increase the appropriate use of misdemeanor prosecutions, a valuable enforcement tool, to hold responsible corporate officials accountable.” In addition, FDA notes that “[c]riteria now have been developed for consideration in selection of misdemeanor prosecution cases and will be incorporated into the revised policies and procedures that cover appropriate use of misdemeanor prosecutions.”
As we previously reported (here and here), the government believes that persons can be convicted under the FDC Act misdemeanor provisions without any showing that a person intended to violate the law or even knew about the violation. Under this theory, which is often referred to as the “responsible corporate officer” principle and was derived from the 1975 U.S. Supreme Court case of United States v. Park, executives who do not prevent violations of the FDC Act may be held strictly liable for those violations.
Other committee recommendations described in the FDA letter include:
“improve procedures for information-sharing between OCI and other Agency components with the goal of enhanced alignment of criminal/regulatory priorities and activities;”
“that FDA strengthen the mechanisms that are used to ensure that senior leaders share information and coordinate strategic priorities to align criminal enforcement and regulatory activities;” and
“that the Agency enhance its debarment and disqualification procedures.”
FDA issued the letter in response to a March 4, 2010 Government Accountability Office (“GAO”) report, titled “Food and Drug Administration: Improved Monitoring and Development of Performance Measures Needed to Strengthen Oversight of Criminal and Misconduct Investigations,” in which the GAO raised concerns about OCI oversight and the lack of performance measures to assess OCI’s success. Sen. Grassley requested the report after concerns were raised about OCI, and an OCI component, the Office of Internal Affairs (“OIA”). Specifically, concerns about OCI’s/OIA’s “procedures for conducting and coordinating investigations,” and that “these offices are operating without adequate oversight or accountability, and that OCI’s funding and staffing for criminal investigations have grown significantly despite limited federal resources to fund other FDA activities.” FDA established OCI in 1991, after the generic drug scandal, to conduct and coordinate criminal investigations for the Agency. OIA was established in 1995 after a congressional subcommittee recommended that FDA establish an internal affairs office.
The GAO report concludes that:
Although OCI and OIA have policies that govern how they conduct investigations, FDA’s oversight of these investigations has been limited. FDA has established a process to ensure compliance with OCI’s policies, but it does not routinely carry out this process as only about 30 percent of the OCI field office assessments have been completed. OIA’s process to ensure compliance depends on its manager rather than an external reviewer, that is, someone who is not directly involved in ongoing investigations. Without a review process and consistent implementation, FDA management cannot have reasonable assurance that OCI and OIA investigative policies and procedures are routinely followed and that deficiencies are promptly resolved when identified. This is particularly important because OCI does work that is different from much of the rest of FDA.
FDA management cannot determine whether OCI’s criminal investigative program is achieving its goals—a key element of accountability—because OCI has not developed performance measures. Because FDA managers have somewhat different perspectives on how best to assess the performance of OCI’s criminal investigative program, it is unclear how OCI and other FDA managers with oversight responsibility can strategically manage OCI’s criminal investigative program to ensure that it is operating successfully. Assessing program results is especially important given that OCI appears to operate more autonomously than other units within FDA’s regulatory office.
The GAO report also includes three recommendations:
To ensure OCI’s compliance with investigative policies, instruct the Commissioner of FDA to have regular assessments of OCI’s field offices conducted in accordance with its existing policy.
To ensure OIA’s compliance with investigative policies, instruct the Commissioner of FDA to establish a review procedure for the assessment of OIA’s compliance with its investigative policies.
To assess whether OCI’s criminal investigative program is achieving its desired results, instruct the Commissioner of FDA to establish performance measures and assess program results against them.