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• Draft guidance originally issued July 2013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:
•
•
•
•
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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
Cathy.Burgess@Alston.com
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
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•
•
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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:
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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
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•
•
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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.