FDA Sued Over Failure to Issue Export Certificate

March 13, 2014

By Dara Katcher Levy

We have long been waiting for a company to sue FDA for failing to issue an export certificate.  Unfortunately, we may need to wait a bit longer for a case that will resolve the standards for when FDA must issue an export certificate.  Today, one can argue that FDA is “allowing” companies to sell products in the U.S. when FDA is unreasonably prohibiting the same products from being shipped outside the U.S.

As background, export certificates, while not mandated by the Federal Food, Drug, and Cosmetic Act (“FDC Act”), have become a practical requirement for many companies seeking to market their U.S.-manufactured products globally.  Foreign customers and importing countries generally require that these FDA-issued certificates accompany the import of a regulated product, and some countries rely on certain types of export certificates before issuing their own product approvals/registrations.  Under the FDC Act Section 801(e)(4), exporters may request, and if criteria are met FDA is required, to issue an export certificate within 20 days of a request. 

There are several types of export certificates (see here and here) that exporters may request – those that certify a product may be legally marketed in the U.S. as well as those that simply certify a product may be legally exported from the U.S.  A typical reason FDA may refuse to issue the first type of export certificate for a drug or device is FDA’s concern over whether the company is manufacturing the product in conformance with current good manufacturing practices (“cGMPs”) or FDA’s quality system regulations (“QSRs”).  In fact, FDA often refuses to issue these certificates if the company has received a Warning Letter relating to those regulations.  We are aware that in such circumstances, FDA has refused to issue an export certificate until the Warning Letter “close-out” process has been completed. As we have previously blogged, this close-out process can take many months and it is unclear whether the delay is due to industry failure to correct serious regulatory problems or whether FDA is unwilling to conduct prompt follow-up to confirm corrections.  FDA’s failure to timely issue a Warning Letter “close-out” in many instances may lead to its failure to issue an export certificate – even where the company may already be in substantial compliance.  When FDA fails to issue an export certificate, it can effectively destroy a company’s ability to market its U.S. manufactured product outside the U.S. although there may be no impact on the company’s sales in the U.S. market, because FDA has not taken enforcement action to block the domestic sales of relevant product.

We were eager to read Pharmaceutical Innovations, Inc. (“PI”)’s complaint seeking declaratory judgment and injunctive relief to compel the FDA to issue a Certificate to Foreign Government (“CFG”), a type of export certificate that certifies a product may be legally marketed in the U.S.  PI manufactures and markets ultrasound gel, which is regulated by FDA as a medical device.  As we read the complaint, and reviewed FDA’s website, we were curious as to PI’s assertion that FDA has not taken any action to restrain PI from distributing its devices in interstate commerce.  FDA’s website shows that, in addition to a Warning Letter relating to QSR violations, certain lots of PI’s products are the subject of an open Class I recall, and that Deputy U.S. Marshals, at FDA’s request, had seized certain lots of PI’s product in April 2012.  This action was undertaken less than one month before FDA’s denial of PI’s request for a CFG in May 2012.  In addition, the July 2011 Warning Letter to PI advises, “Requests for Certificates to Foreign Governments will not be granted until the violations related to the subject devices have been corrected.”  According to FDA’s website, the PI Warning Letter has not, to date, been subject to “close-out.”

PI maintains that it is currently manufacturing and distributing its products in the U.S. with no action from FDA to restrain the manufacture or distribution of these products.  PI also maintains that it has “responded fully and completely to the warning letter as well as to subsequent FDA inspectional observations and has repeatedly expressed its desire to meet with FDA officials to address the issues raised therein.”  PI further alleges that FDA has not responded to numerous written communications and verbal requests to FDA representatives for a meeting.  It is unclear whether FDA still has concerns about the quality of PI’s product, or whether FDA resources are hampering its ability to issue a Warning Letter “close out.”  If the issue is the latter, FDA’s inability to timely issue a Warning Letter “close out” is unreasonably (and unfairly) harming the company’s ability to obtain a CFG.  If the former, one could argue that FDA’s failure to take further action against products in domestic commerce could be viewed as FDA “allowing” the company to distribute products that FDA would otherwise view as adulterated or misbranded.

We are anxious to see whether PI will be successful in its suit.  If not, we will wait to see whether, if the facts were different, a lawsuit filed by another company without a Warning Letter “close-out” could be successful in requiring FDA to issue an export certificate.

Categories: Import/Export