Will the Government Expect FDA-Regulated Companies to Make Restitution and Self Report to the Government Each Time a Company Commits an FDC Act Violation?

By John R. Fleder –

We earlier reported that the United States Sentencing Commission issued an interesting Federal Register notice on January 21, 2010.  We reported that the Commission has proposed to amend the Sentencing Guidelines to require companies to make restitution to identifiable victims, and take other remedial steps including self reporting the violation to the government, as soon as the company learns that it has engaged in criminal conduct.  Of course, any “prohibited act” violation of the FDC Act could be deemed to be criminal conduct under the Park doctrine.  For companies regulated by FDA, this would presumably mean that they would be expected to undertake those actions as soon as they learn through their own audits, and/or receiving an FDA Form 483 that establishes in the company’s view, that a violation of the FDC Act has occurred.  In other words, the Commission would be setting forth the federal government’s position that companies should undertake these actions whether or not they are ever prosecuted or convicted for violating the FDC Act.

On March 17, 2010, Hyman, Phelps & McNamara, P.C. submitted a letter to the Sentencing Commission setting forth our firm’s concerns about this proposed amendment.  The Commission’s January Notice states that comments can be submitted to the Commission on or before March 22, 2010.