Food and Drug Series
Senate Committee Questions FDA
On Disclosures for Citizen Petitions
A report by the Senate Finance Committee and a letter from two
committee members to the FDA may prompt the agency to add new financial disclosure requirements in connection with filing or commenting on a citizen petition. In the May 24 letter to Commissioner of Food
and Drugs Dr. Margaret A. Hamburg, Sen. Max Baucus, D-Mont., the
committee’s chairman, and Sen. Charles E. Grassley, R-Iowa, raised
questions about the financial relationships linking Sanofi-aventis
U.S. L.L.C. to two physicians’ groups that in 2009 lobbied on the
company’s behalf through the FDA’s citizen petition procedure. They
also asked the agency about its financial disclosure policies related to
citizen petitions. “If the FDA isn’t asking for disclosure of financial
relationships, it’s operating from an uninformed standpoint,” Grassley
said in a May 25 committee release. Page 2
SEC Whistleblower Rule May Spur
Increase in FCPA Investigations
A final rule approved May 25 by the Securities and Exchange
Commission (SEC) implementing the whistleblower provision of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the
financial reform statute signed into law in July 2010, provides the
framework for new financial incentives that may lead to increased
enforcement activity targeting U.S. drug and medical device manufacturers. The provision is likely to trigger an increase in investigations
into possible violations of the Foreign Corrupt Practices Act (FCPA),
which federal enforcement officials have signaled is the focus of inquiries into the business practices of U.S. medical product makers.
In November 2009 Assistant Attorney General Lanny A. Breuer announced that application of the FCPA to health care industries would
be “a focus of the [Department of Justice] Criminal Division in the
months and years ahead.” Page 4
Appeals Court Ruling Expands
Liability Under False Claims Act
A federal appeals court reversed a 2010 district court ruling dismissing a suit brought under the federal False Claims Act against a medical
device manufacturer. The ruling significantly expands the reach of drug
and device manufacturer liability under the statute, particularly where
the entity submitting an allegedly false claim is unaware of any underlying kickback payments or other improper conduct on the part of the
manufacturer (United States ex rel. Hutcheson v. Blackstone Medical,
Inc., No. 10-1505, 2011 WL 2150191 (1st Cir. June 1, 2011)). Page 5
July 2011 | Vol. 20, No. 5
Also In This Issue
CDER Compliance Unit Restructured as
‘Super Office’; Drug Security and Recalls
Office Added...................................................... 7
The compliance and enforcement arm of
the FDA Center for Drug Evaluation and
Research (CDER) has been reorganized,
elevating the CDER Office of Compliance
to “super office” status. CDER Director
Dr. Janet Woodcock announced the
reorganization in an all-hands memorandum
to CDER staff May 26.
$25 Million Settlement Resolves Allegations
Of Off-label Marketing of Bleeding Disorder
Treatment............................................................ 8
Novo Nordisk Settles Charges That It Paid
Pharmacists To Promote Insulin Products.......... 9
Supplement Companies, Principals Found
Guilty of Criminal Contempt for Violation of
Consent Decree................................................ 10
News Briefs
‘Bad Ad’ Program Boosts Reports From Health
Care Professionals.............................................11
CAPA Prominent in Device Warning Letter
Citations; Complaint File Failures Top List......11
Warning Letters Target Tobacco Claims.......... 12
FDA Launches Enforcement Web Portal......... 12
Updated Pages
• Information on enforcement provisions of the
FDA Food Safety Modernization Act effective
July 2011 added in Tab 100.
• Organizational chart for the restructured FDA
Center for Drug Evaluation and Research
Office of Compliance updated in Tab 200.
• Debarment Status of Individuals chart updated
in Tab 700.
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Senate Inquiry May Prompt Additional Financial
Disclosures for Citizen Petitions Filed With FDA
A report by the Senate Finance Committee and a
letter from two committee members to the FDA may
prompt the agency to add new financial disclosure requirements in connection with filing or commenting on a
citizen petition.
In the May 24 letter to Commissioner of Food and
Drugs Dr. Margaret A. Hamburg, Sen. Max Baucus, DMont., the committee’s chairman, and Sen. Charles E.
Grassley, R-Iowa, raised questions about the financial
relationships linking Sanofi-aventis U.S. L.L.C. to two
physicians’ groups that in 2009 lobbied on the company’s behalf through the FDA’s citizen petition procedure.
They also asked the agency about its financial disclosure
policies related to citizen petitions.
In releasing a committee staff report detailing the relationships, the senators called on the FDA to say whether it has considered requiring organizations submitting
letters to the agency under the citizen petition process to
disclose financial relationships they may have with entities that would be affected by the granting or denial of a
petition. If the agency has not considered such a requirement, the senators called for an explanation as to why
not. They also asked the FDA to disclose the steps the
agency has taken “to ensure the integrity and transparency of the citizen petition process.”
“If the FDA isn’t asking for disclosure of financial relationships, it’s operating from an uninformed standpoint,”
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Grassley said in a May 25 committee release. “The FDA
has a responsibility to conduct due diligence in this area in
order to make sure its reviews have credibility. Disclosure
here and elsewhere [of] drug company payments helps
to establish accountability when gathering input from
experts.”
‘Strategic Use’ of Third Parties
The report (S. Prt. 112-20, May 2011) details what the
committee staff called Sanofi’s “strategic use” of third
parties — including the two physicians’ groups, the Society of Hospital Medicine (SHM) and the North American Thrombosis Forum (NATF), as well as Dr. Victor
F. Tapson, a Duke University medical professor — in
a coordinated effort to delay the availability of generic
alternatives to the company’s blood-thinner medication
Lovenox, which is prescribed to prevent or treat thromboembolic disease and deep vein thrombosis.
In their letter to Hamburg, the senators said that
internal Sanofi documents “suggest that medical societies and doctors with financial ties to Sanofi served as
components of a coordinated public relations strategy to
use FDA’s citizen petition process” to block or delay the
generics from coming on the market.
According to the staff report, the committee requested
records from Sanofi following publication of a Wall
Street Journal article in June 2010 reporting that the two
groups and the professor submitted letters to the FDA in
support of Sanofi’s citizen petition calling for the agency
to delay approval of a generic version of Lovenox.
2003 Citizen Petition
Lovenox had received approval from the FDA in
March 1993. In February 2003 Sanofi submitted a citizen petition to the agency asking that it withhold approval of any generic version of Lovenox, saying that,
because the drug was “not fully characterized,” using
Sanofi’s manufacturing process was the only way to ensure that the medication would contain “all the pharmacologically active components (both known and yet to
be discovered)” of enoxaparin sodium, the drug’s active
ingredient.
The committee report said that Tapson wrote a May
2008 letter from the American College of Chest Physicians to then FDA Deputy Commissioner Dr. Janet
Woodcock urging the agency to “learn more of the findings and recommendations” of a recently concluded
See Sanofi, p. 3
2
July 2011 | FDA Enforcement Manual
Sanofi (continued from p. 2)
“scientific interchange roundtable” on low molecular
weight heparins such as Lovenox. Sanofi had paid
$190,000 to sponsor the roundtable. Tapson was paid
more than $260,000 by Sanofi for “speaker/consultant
services.”
In addition, according to the report, SHM argued in
an August 2008 letter to the FDA that “untested generic
substitution” for a low molecular weight heparin “is not
in our patients’ best interest.” The group received more
than $1.1 million from Sanofi over the two-year period
during which the letter was written — amounting to 8
percent of SHM’s total revenue during that time. The report said that Sanofi’s public relations staff “considered
this letter to be a ‘key accomplishment.’”
The society sent the letter despite speculation by the
group’s chief executive officer that SHM’s executive
committee “may feel this is not something that [the society] has the expertise or knowledge to say much about
…. That being said, when something is important to any
of our partners (like Sanofi) that we have a long-term
relationship with, we want to give any issue that is important to our partner careful consideration.”
Encouraging ‘Independent Communication’
A January 2009 Sanofi slide presentation identified
the “imminent threat to [Sanofi’s] Lovenox franchise”
posed by generic alternatives as a core issue faced by
the company. The slides also allegedly “show[ed] that
Sanofi sought to encourage ‘independent interaction with
regulatory authorities,’” specifically “independent communication with FDA by professional
organizations and prominent [key
opinion leaders]” regarding Lovenox.
In addition, after Sanofi officials met with NATF officials about
“Lovenox and [follow-on biologics]
strategies” in the spring of 2009,
Sanofi officials “wrote about the need
to ‘keep Vic and especially NATF on
task for the FDA communication,’”
the committee staff found. From 2007
through 2009, Sanofi payments of
more than $2 million “accounted for
81 percent of NATF’s total revenue,”
according to the report.
The committee staff also found that
corporate officials at Sanofi “coordinated their media strategy with NATF
and were sensitive to how Sanofi’s
close relationship with NATF was
perceived by the FDA and in the press.” On one occasion, officials decided not to quote an NATF-affiliated
scientist in a Sanofi press release dealing with the generic issue “because they were concerned about NATF
losing credibility with the FDA,” according to the report.
In addition, after a public relations firm hired by
Sanofi contacted a reporter to promote an advertisement
placed by NATF in the Wall Street Journal raising concerns about generic forms of Lovenox, Sanofi officials
expressed concerns “about how the press would perceive
Sanofi’s relationship with NATF.”
Sanofi Reaction
Reacting to the Senate Finance Committee report,
Sanofi noted that it had cooperated with the committee’s
inquiry and said it had “conducted itself in compliance
with existing FDA regulations governing the citizen petition process.”
The company said that the citizen petition and the
comments of outside experts “brought legitimate and
important patient safety facts and considerations to the
attention of FDA,” and it insisted that “NATF, SHM and
Dr. Tapson each made their own decisions to submit
comments to FDA.”
On July 23, 2010, the FDA denied Sanofi’s citizen
petition (except for Sanofi’s request that any approved
generic include a particular chemical structure that
Sanofi advocated in the petition). On the same date the
agency approved an abbreviated new drug application
(ANDA) filed by Sandoz Inc. for generic enoxaparin
sodium.
See Sanofi, p. 4
Editorial Advisory Board
Arthur N. Levine, Esq.
Editor-in-Chief
Retired Partner, Arnold & Porter L.L.P., Washington, D.C.
Raymond A. Bonner, Esq.
Sidley Austin L.L.P.
Washington, D.C.
Mark S. Brown, Esq.
King & Spalding L.L.P.
Washington, D.C.
Richard M. Cooper, Esq.
Williams & Connolly L.L.P.
Washington, D.C.
Douglas B. Farquhar, Esq.
Hyman, Phelps & McNamara P.C.
Washington, D.C.
Ellen J. Flannery, Esq.
Covington & Burling
Washington, D.C.
Elizabeth Toni Guarino, Esq.
Steven M. Kowal, Esq.
K&L Gates L.L.P.
Chicago, Ill.
Wayne L. Pines
President, Regulatory Services and Healthcare
APCO Worldwide Inc.
Washington, D.C.
Arvin P. Shroff, Ph.D.
President, Arvin Shroff Associates
New Market, Md.
Daniel E. Troy, Esq.
GlaxoSmithKline P.L.C.
Philadelphia, Pa.
Gary L. Yingling, Esq.
K&L Gates L.L.P.
Washington, D.C.
Attorney-at-Law
McLean, Va.
July 2011 | FDA Enforcement Manual
3
SEC Rule Implements Dodd-Frank Whistleblower
Provision; Increase in FCPA Investigations Likely
A final rule approved May 25 by the Securities and
Exchange Commission (SEC) implementing the whistleblower provision of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, the financial reform statute signed into law in July 2010, provides the framework
for new financial incentives that may lead to increased
enforcement activity targeting U.S. drug and medical
device manufacturers.
The provision is likely to trigger an increase in investigations into possible violations of the Foreign Corrupt
Practices Act (FCPA), which federal enforcement officials have signaled is the focus of inquiries into the business practices of U.S. medical product makers.
In November 2009 Assistant Attorney General Lanny
A. Breuer announced that application of the FCPA to
health care industries would be “a focus of the [Department of Justice (DOJ)] Criminal Division in the months
and years ahead” (see “Former Prosecutor Identifies Enforcement Trends, Offers Advice on Managing Criminal
Investigations,” May 2010, p. 5). In April 2011, Johnson
& Johnson announced a $70 million settlement — including a deferred prosecution agreement, a criminal
penalty and the disgorgement of profits — between the
company and DOJ and SEC officials related to alleged
FCPA violations in Europe and Iraq (see “Johnson &
Johnson Agrees to $70 Million Settlement Resolving
Four-year FCPA Investigation by DOJ, SEC,” May
2011, p. 2).
Whistleblower Award Requirements
Section 922 of the Dodd-Frank Act added Section
21F to the Securities Exchange Act of 1934 to authorize
the payment of awards to whistleblowers who voluntarily provide original information to the SEC about a violation of the securities laws that leads to the successful
enforcement of a federal court or administrative action
brought by the SEC that results in monetary sanctions
exceeding $1 million.
Under the final rule — published in the Federal
Register June 13 (76 Fed. Reg. 34300) — the SEC will
aggregate two or more smaller actions that arise “from
the same nucleus of operative facts” for the purposes of
meeting the $1 million threshold.
Under the statute, “original information” is information that is:
• derived from the independent knowledge or independent analysis of the whistleblower;
4
• not already known to the SEC from any other
sources, unless the whistleblower is the original
source of the information; and
• not exclusively derived from an allegation made
in a judicial or administrative hearing, audit or
investigation or from the news media, unless the
whistleblower is the source of the information.
The final rule adds a requirement that the information
be provided to the SEC after July 21, 2010, the date of
the enactment of the Dodd-Frank Act.
The rule generally considers information obtained
through a communication subject to the attorney-client
privilege not to be from a whistleblower’s independent
knowledge or analysis. “Compliance with the federal
securities laws is promoted when individuals, corporate
officers, and others consult with counsel about possible
violations, and the attorney-client privilege furthers such
consultation,” the SEC said in the preamble to the final
rule.
See SEC, p. 5
Sanofi (continued from p. 3)
Three days later, Sanofi filed suit in the U.S. District
Court for the District of Columbia in an effort to force
the FDA to withdraw its ANDA approval. In August
2010 the court denied Sanofi’s motion for a preliminary
injunction that would have stopped the generic form of
Lovenox from being marketed (Sanofi-Aventis U.S. LLC
v. FDA, 733 F. Supp. 2d 162 (D.D.C. 2010)).
A provision of the Food and Drug Administration
Amendments Act of 2007 (FDAAA) added a verification requirement for those submitting comments to the
FDA on a citizen petition that may affect the entry of
a generic onto the market (FDAAA §914(a), 21 U.S.C.
§355(q)(1)(I)). Under the provision, those who comment on such a citizen petition must disclosure the
identities of any persons or organizations from which
the commenter “received or expect[s] to receive payments, including cash and other forms of consideration,” to file the comment.
On June 8 the FDA announced the availability of final
guidance on the FDAAA provision (76 Fed. Reg. 33309).
The guidance states that the FDA interprets the verification provision and other requirements under FDAAA
§914 to apply only to citizen petitions filed on or after
Sept. 27, 2007, the date of FDAAA’s enactment.
July 2011 | FDA Enforcement Manual
1st Circuit Ruling Expands Scope of Liability for
Drug, Device Manufacturers Under False Claims Act
A federal appeals court reversed a 2010 district court
ruling dismissing a suit brought under the federal False
Claims Act (FCA) against a medical device manufacturer.
The ruling significantly expands the scope of drug and
device manufacturer liability under the FCA, particularly
where the entity submitting an allegedly false claim is
unaware of any underlying kickback payments or other
improper conduct on the part of the manufacturer (United
States ex rel. Hutcheson v. Blackstone Medical, Inc., No.
10-1505, 2011 WL 2150191 (1st Cir. June 1, 2011)).
In the suit, the qui tam relator — a former regional
manager for a manufacturer of devices used in spinal
surgeries — alleged that the manufacturer paid kickbacks to induce physicians to use its products and that
the company knew the kickbacks would cause physicians and hospitals to present claims for reimbursement
to Medicare that contained material misrepresentations.
The manufacturer sought to have the suit dismissed,
arguing that the relator had neither alleged that the claims
contained factual misstatements nor identified express
certifications or express conditions of payment set forth in
a statute or regulation that would disallow reimbursement
payments because of the alleged kickbacks. Even if the
claims were false or fraudulent, the manufacturer also argued, the claims were not materially false under the FCA
because the claims submitted by physicians and hospitals
were not influenced by any alleged kickbacks.
See FCA, p. 6
SEC (continued from p. 4)
Similarly, information is not considered derived from
independent knowledge or analysis if it is obtained because a person is employed by or associated with a public accounting firm, the information is obtained through
the performance of an engagement required of an independent public accountant under the federal securities
laws, and the information is related to a violation by the
engagement client or by the client’s directors, officers or
other employees.
Protection for Reporting ‘Possible’ Violations
The definition of “whistleblower” in the final rule
requires only that the individual report information that
“relates to a possible violation of the federal securities
laws (including any rules or regulations thereunder) that
has occurred, is ongoing, or is about to occur.” Moreover, there is no requirement that the information relate
to a “material” violation of the securities laws. The
whistleblower must be an individual; companies or other
entities do not qualify as whistleblowers.
For the statute’s anti-retaliation prohibitions to apply,
the whistleblower must:
• possess a reasonable belief that the information
provided relates to a possible securities law violation; and
• provide the information in the manner described in
the statute.
The anti-retaliation protections apply whether or not
the whistleblower satisfies the requirements, procedures
and conditions for an award.
Interplay with Internal Compliance Procedures
Significantly, the final rule does not require a whistleblower to report potential violations internally through a
company’s compliance reporting procedures. However,
the rule sets up several incentives for whistleblowers
to make use of such internal compliance procedures,
including an increase in the whistleblower’s reward for
voluntary participation in such procedures. In addition,
interference with internal compliance and reporting can
decrease the amount of a whistleblower’s award.
Also, when a whistleblower reports original information to the internal compliance and reporting system of a
company or other entity, and the entity then reports information to the SEC that leads to a successful enforcement
action, all the information reported by the company “will
be attributed to the whistleblower, which means that the
whistleblower will get credit — and potentially a greater
award — for any additional information generated by the
entity in its investigation,” according to the preamble.
Moreover, the final rule provides a 120-day “lookback period” during which the whistleblower can report
information to the SEC after first reporting it internally
“and still be treated as if he or she had reported to the
commission at the earlier reporting date.” This provision
may be important to satisfying the statute’s “original information” requirement.
To Find Out More
The final SEC whistleblower rule (effective Aug. 12)
is available online at http://www.gpo.gov/fdsys/pkg/FR2011-06-13/pdf/2011-13382.pdf.
July 2011 | FDA Enforcement Manual
5
FCA (continued from p. 5)
Agreeing with the manufacturer, the U.S. District
Court for the District of Massachusetts dismissed the
suit in March 2010, holding that the suit failed to state
a claim under the FCA (United States ex rel. Hutcheson
v. Blackstone Medical, Inc., 694 F. Supp. 2d 48 (2010)).
The district court held that claims submitted by hospitals
were not false or fraudulent because there was no express certification of compliance with the Anti-Kickback
Statute (AKS), and because the relevant statutes and
regulations did not expressly condition Medicare payment on compliance with the AKS.
The “purported limitations” on FCA liability
asserted by the manufacturer “do not
appear in the text of the FCA and are
inconsistent with our case law,” the appeals
court said.
The district court also held that claims submitted by
doctors were not materially false or fraudulent because
they sought reimbursement for the physicians’ services,
not for their use of the manufacturer’s devices. Because
the relator had not alleged that the kickbacks induced
doctors to submit claims for “medically unnecessary surgeries,” the lower court said, the misrepresentations had
not influenced the government’s payment decisions.
‘Purported’ Liability Limitations Rejected
The U.S. Court of Appeals for the 1st Circuit reversed.
“We reject the argument that, in the absence of an express
legal representation or factual misstatement, a claim can
only be false or fraudulent if it fails to comply with a precondition of payment expressly stated in a statute or regulation,” the appeals court said. The appeals court said that the
text of the FCA “does not exhibit an intent to limit liability
in this fashion.” The court dismissed the manufacturer’s
concern that failure to require violation of an express precondition for payment would run the risk of “federalization
of what have been private party tort actions.”
The 1st Circuit panel also rejected the argument that
a submitting entity’s representations about its legal compliance cannot incorporate an implied representation
concerning the behavior of non-submitting entities. The
“purported limitations” on FCA liability asserted by the
manufacturer “do not appear in the text of the FCA and
are inconsistent with our case law,” the appeals court said.
Even when the defendant in an FCA action is not the
entity that submitted the allegedly false claim, the appeals
6
panel said, the question is whether the defendant “knowingly caused the submission of either a false or fraudulent
claim or false records or statements to get such a claim
paid. The statute makes no distinction between how nonsubmitting and submitting entities may render the underlying claim or statements false or fraudulent.”
The appeals court found that specific documents related to Medicare reimbursement submitted by the hospitals and physicians — the Medicare Provider Agreement
and the Hospital Cost Report, both drafted by the Centers for Medicare and Medicaid Services — were “more
than specific enough” to make clear that the claims
submitted represented that any underlying transactions
had not involved third-party kickbacks prohibited by the
AKS. Thus, the court said, the relator’s allegations of
misrepresentation were sufficient to state a claim that the
hospital and physician claims for payment were false or
fraudulent.
Finally, the appeals court panel held that the alleged
hospital and physician misrepresentations satisfied the
FCA’s materiality requirement in that the allegations
were “sufficient to show, for purposes of this motion to
dismiss, that the kickbacks were capable of influencing
Medicare’s decision as to whether to pay the hospital
and physician claims.”
No Categorical Rules
The court stressed that it was not adopting “any categorical rules as to what counts as a materially false or
fraudulent claim under the FCA.” The court also said
that it was not “creating a rule that non-compliance with
a contractual condition is any more necessary to establish that a claim is false or fraudulent than non-compliance with an express statute or regulation, or an express
misrepresentation on a form submitted with payment.”
Although the United States chose not to intervene in
the case, the Department of Justice filed amicus briefs
with both the district court and the appeals court in support of the qui tam relator.
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July 2011 | FDA Enforcement Manual
CDER Compliance Unit Restructured as ‘Super
Office’; Drug Security and Recalls Office Added
The compliance and enforcement arm of the FDA
Center for Drug Evaluation and Research (CDER) has
been reorganized, elevating the CDER Office of Compliance (OC) to “super office” status. CDER Director Dr.
Janet Woodcock announced the reorganization in an allhands memorandum to CDER staff May 26.
Woodcock said that the reorganization “makes a great
deal of sense,” given the office’s “expanding role, size
and importance in achieving the agency’s mission of
safeguarding the U.S. drug supply.”
As a “super office,” CDER OC will house four
subordinate offices within its organizational structure,
Woodcock said. “While three of these new offices
are similar to currently existing divisions,” she said,
“one is entirely new”: the Office of Drug Security,
Integrity and Recalls (ODSIR), which she said is to be
“dedicated to addressing the challenges of globalization and an increasingly complex drug supply chain.”
Among the issues that ODSIR will handle are supply
chain security, counterfeit and diverted drugs, economically motivated adulteration, import operations
and drug recalls.
• organizational strategy, including strategic planning, organizational development and quality management systems.
Deborah M. Autor, who has headed OC for five years,
will serve as acting director of the new OC. FDA officials said that OC personnel whose positions are new or
changed as a result of the reorganization, including veteran OC staff, have been designated as “acting.”
Other “super offices” within CDER include the Office
of New Drugs, the Office of Surveillance and Epidemiology, the Office of Pharmaceutical Science, the Office
of Planning and Informatics, and the Office of Translational Sciences.
To Find Out More
An organizational chart reflecting the reorganization
of CDER OC, including the leadership of each office
and division, is included in this month’s updated pages
for Thompson Publishing Group’s FDA Enforcement
Manual.
OC’s other subordinate offices are:
• the Office of Manufacturing and Product Quality,
which will include divisions dealing with international drug quality; domestic drug quality; good
manufacturing practice assessment; and policy,
collaboration and data operations, including drug
surveillance;
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• the Office of Scientific Investigations, which will
include divisions focusing on bioequivalence and
good laboratory practice compliance; good clinical practice compliance; and safety compliance,
including human subject protection; and
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• the Office of Unapproved Drugs and Labeling
Compliance, which will include two divisions:
one dealing with prescription drugs (including
compounding and pharmacy practices), and one
dealing with nonprescription drugs and health
fraud.
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In addition, OC now will have “three office-wide
functions established in its Immediate Office, with counterparts in all sub-offices,” Woodcock said:
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• policy and communication; and
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July 2011 | FDA Enforcement Manual
7
$25 Million Settlement Resolves Allegations of
Off-label Marketing of Bleeding Disorder Treatment
A maker of a drug approved to treat bleeding episodes in patients suffering from certain rare bleeding
disorders agreed to pay $25 million to resolve allegations of off-label promotion of the drug. An underlying
federal False Claims Act (FCA) suit charged that the
alleged off-label marketing ignored clinical evidence
of risks associated with off-label uses (United States
ex rel. Black v. Novo Nordisk Inc., No. 1:08-cv-02900RDB (D. Md.)).
According to a June 10 announcement from the Department of Justice (DOJ), which intervened in the FCA
suit, Novo Nordisk Inc., the Princeton, N.J.-based U.S.
subsidiary of the Danish pharmaceutical manufacturer,
promoted the drug NovoSeven, also referred to as Factor
VIIa recombinant, for various off-label uses — including
use as a coagulatory agent for trauma patients; in general, cardiac and liver surgery; in liver transplants; and
for intracerebral hemorrhage.
The two qui tam relators in the civil suit filed under
the FCA are a former chief of anesthesia at the U.S.
Army Institute of Surgical Research at Brooke Army
Medical Center in San Antonio and a former medical
science liaison for Novo Nordisk. In their complaint,
filed in October 2008, the relators alleged that the drug’s
“inherently limited” market led Novo Nordisk to illegally promote Factor VIIa, which the FDA had approved
for use with hemophiliacs who have immunity to the
blood-clotting compounds found in more commonly
used hemophilia drugs, and for use to control bleeding
in surgery for patients with acquired hemophilia. The
drug is “unusually expensive … costing between $2,000
and $10,000 a vial,” the relators said; moreover, there
are only about 18,000 hemophiliacs in the United States,
and only a small percentage of them have immunity to
the compounds in the other drugs.
among civilian physicians in trauma units throughout the
country,” according to the lawsuit.
The company “also proffered kickbacks to military
and civilian physicians” to have them promote and
prescribe Factor VIIa off-label, providing positions on
advisory boards, speaking opportunities, unrestricted
educational grants, travel, “lavish” meals and honoraria,
the relators said.
Loren Jacobson, a partner with Waters & Kraus
L.L.P., which represented the qui tam relators, said that
the Army physician relator, who served as a reservist, “became uncomfortable with the frequency of the
drug’s use while serving in a combat hospital in Iraq
as an anesthesiologist.” Used widely in both Iraq and
Afghanistan, the drug was incorporated into the Army’s
clinical practice guidelines. The physician “was invited
to engage in research and was offered honoraria and
other kickbacks to persuade him to support off-label
use of NovoSeven,” according to a Waters & Kraus
release.
Clinical Trials Document Risks
The promotional plan, the relators also charged,
“ignored the risks involved with using Factor VIIa offlabel.” They cited studies documenting a risk of thromboembolic complications among patients using Factor
VIIa. Moreover, they said, “the studies also show that
the efficacy of Factor VIIa in saving lives is questionable: several studies reveal that although use of Factor
VIIa may help minimally reduce the amount of blood
transfusion needed in patients, it does not affect survivability.” The FCA complaint quoted a researcher’s characterization of the drug as “an unproven tool currently
used on blind faith.”
See Settlement, p. 9
Targeting Army Doctors
To promote the drug off-label for the control of bleeding in trauma patients, the relators charged, from 2005
until at least 2008 Novo Nordisk “funneled hundreds of
thousands of dollars in unrestricted grant monies to civilian and military physicians in order to encourage them
to speak and publish articles supporting the use of Factor
VIIa in trauma patients.” In particular, they alleged, the
company “targeted influential Army doctors” with monetary support to promote use of Factor VIIa in the treatment of battlefield injuries. “Novo Nordisk then pointed
to the Army’s use of the product in promoting it widely
8
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July 2011 | FDA Enforcement Manual
Settlement (continued from p. 8)
According to attorneys for the relators, the off-label
marketing campaign “not only subjected soldiers and
civilians to potentially deadly effects, but it also cost the
government millions in false reimbursement claims.”
The relators’ counsel said the in-hospital usage of NovoSeven grew from 125 cases in 2000 to 17,813 in 2008,
with global sales of the drug reaching more than $1.4
billion annually by 2010.
$3.5 Million for the Relators
The federal share of the settlement amount is more
than $21.4 million, of which the relators will receive
more than $3.5 million. State governments will share
the remaining nearly $3.6 million to recoup payments
for off-label uses of the drug paid by state Medicaid
programs.
Novo Nordisk also agreed to enter into a five-year
corporate integrity agreement with the Department of
Health and Human Services Office of Inspector General.
The agreement calls implementation of new reporting
and other procedures to add to the company’s “already
robust compliance program,” Novo Nordisk said.
The company denied any wrongdoing in the matter.
Corporate Vice President and U.S. General Counsel
Jim Shehan said that Novo Nordisk had cooperated
with the government since the beginning of the investigation, which the company disclosed in February 2010.
“With this settlement we avoid the distraction and
costs of a lengthy legal battle, which would not have
been in the best interest of the company or its stakeholders,” he said.
“Novo Nordisk does not recommend or promote the
off-label use of its medicines, and in fact works proactively with the FDA and other government agencies to
address safety concerns when physicians exercise their
professional judgment to use NovoSeven outside of its
approved indications,” the company said in a June 10
statement.
The company said the settlement “will not have any
impact on the financial outlook for the company.”
According to a spokesperson for relators’ counsel,
the settlement amount was “not as large as one would
expect” when compared with other recent settlements
in part because the alleged off-label promotion “mainly
occurred during a three-year period.” In addition, the
spokesperson said, much of the allegedly off-label use of
NovoSeven was covered by private insurance rather than
by Medicare and Medicaid.
Novo Nordisk Settles Charges That It Paid
Pharmacists To Promote Insulin Products
On the same day that they announced the settlement regarding the alleged off-label marketing of NovoSeven, the Department of Justice and Novo Nordisk Inc. announced that the company had settled allegations that its sales representatives in four states and the District of Columbia paid Rite Aid pharmacists to help promote four Novo Nordisk diabetes
drugs.
The activities by the pharmacists and sales representatives allegedly involved the identification of patients who were
candidates for use of the drugs, as well as communications with physicians, patients and other pharmacists to encourage or recommend the drugs’ use.
“As part of these activities,” according to the office of Loretta E. Lynch, U.S. Attorney for the Eastern District of New
York, “the pharmacists accessed, or allowed Novo Nordisk representatives to access, confidential patient information,”
which was used to conduct “marketing events” to help switch patients from competitor drugs to Novo Nordisk drugs.
The federal government and several states will share the $1.725 million paid by the company as part of the civil settlement agreement.
The investigation into the alleged pharmacist payments was sparked by the filing of a federal False Claims Act suit in
July 2005 by a former Novo Nordisk sales representative (United States ex rel. Pepper v. Novo Nordisk, No. 05-cv3505 (E.D.N.Y.)).
The company said it “is not admitting to any wrongdoing as part of agreeing to settle the matter.” In December 2005
Novo Nordisk was issued a subpoena for the production of documents related to U.S. marketing and promotional practices involving the company’s insulin products.
July 2011 | FDA Enforcement Manual
9
Supplement Companies, Principals Found Guilty of
Criminal Contempt for Violation of Consent Decree
A federal district court jury June 1 found two dietary
supplement manufacturers as well as their owner and managers guilty of several counts of criminal contempt of court
for violating a March 2010 consent decree of permanent
injunction that resolved a civil action filed on behalf of the
FDA alleging current good manufacturing practice (cGMP)
and labeling violations (United States v. Quality Formulation Laboratories, Inc., No. 10-cr-699-GEB (D.N.J.)).
Quality Formulation Laboratories Inc. and American
Sports Nutrition Inc., based in Paterson, N.J., manufactured and distributed food products and supplements,
including protein and other powder mixes. The FDA
conducted three inspections of the companies’ Paterson
plant beginning in 2007, each time presenting a Form
FDA 483 list of inspectional observations documenting
deviations from cGMP and labeling standards. In July
2007 the agency issued a Warning Letter to Mohamed S.
Desoky, president of Quality Formulation Laboratories
and chief executive officer of American Sports Nutrition,
concerning the alleged cGMP and labeling deviations.
Follow-up correspondence and inspections led the
FDA to conclude that the companies were “unwilling or
unable to take the necessary steps to prevent recurrence
of cGMP and labeling violations,” despite being “well
aware” of the violations, according to the agency.
cGMP, Labeling Issues
In July 2009, the Department of Justice (DOJ), acting
on behalf of the FDA, filed a complaint for permanent
injunction in the U.S. District Court for the District
of New Jersey against the two companies and Desoky
(United States v. Quality Formulation Laboratories, Inc.,
No. 09-cv-3211-JAG-ES (D.N.J.)).
The 19-page complaint alleged in detail that the companies had failed to follow cGMP standards by manufacturing and storing food under filthy conditions resulting
from rodent activity, as well as under conditions that
could cause major food allergens to enter into the companies’ products unintentionally. The government also
alleged that the companies failed to disclose the presence of milk and whey in the products on product labels,
and that the labels included a “low calorie” claim for a
product where the caloric intake per serving exceeded
the maximum calorie limit allowed for such a claim. In
addition, the complaint alleged, the companies’ failure
to maintain adequate sanitizing and cleaning operations
and to follow their own cleaning procedures — including updated procedures established in response to the
10
Warning Letter — may have led to cross-contamination
of product during the manufacturing process.
On March 16, 2010, the court entered a consent decree prohibiting the two companies and Desoky from
manufacturing, preparing, packing, labeling and distributing any food product at the Paterson plant or any other
location until they took measures approved by the FDA
to correct insanitary conditions and control allergens
at the manufacturing facility. The companies also were
required to review the labeling of their products to make
sure that it conformed to the agency’s requirements before resuming operations.
Alleged Violations Within Four Months
Less than four months later, on July 12, 2010, the government filed with the court a motion for an order to show
cause why the companies and Desoky should not be held
in criminal contempt. Despite entry of the consent decree,
the two companies and Desoky “violat[ed] the decree
almost immediately upon its entry by setting up operations at a separate location in Congers, N.Y., to which they
transported their employees and equipment,” according to
a DOJ statement. In addition, the government charged, the
defendants violated the consent decree by failing to notify
the FDA that the companies’ operations had been relocated.
Named as contemnor-defendants in an October 2010
government petition for an order to show cause were
Ahmad Desoky and Omar Desoky, sons of Mohamed
S. Desoky who served various management roles in the
companies’ operations and who had not been named as
defendants in the original civil case. The government
charged that the two sons had knowledge of the consent
decree and helped their father violate it, thereby making
them criminally liable for violating the decree as well.
According to the government’s second amended petition for an order to show cause, filed April 26 of this
year, “almost every weekday morning, the defendants
transported or caused the transport of their employees in
vans from the Paterson facility to the Congers facility so
that the employees could receive, pack, process, and ship
defendants’ products there.” When a search warrant was
executed at the Congers facility in May 2010, the government alleged, special agents from the FDA’s Office
of Criminal Investigations (OCI) “discovered over 50
pallets of [Quality Formulation Laboratories] products
ready to be shipped, constituting tens of thousands of
individual retail packages.”
July 2011 | FDA Enforcement Manual
See Contempt, p. 11
News Briefs
‘Bad Ad’ Program Boosts Reports From
Health Care Professionals
The FDA Center for Drug Evaluation and Research
(CDER) Bad Ad program, launched in May 2010 to encourage health care professionals to recognize and report
suspected untruthful or misleading drug promotion, has
been “successful in raising awareness” of such promotion practices, according to a report issued June 13.
Statistics for the first year of CDER’s Truthful Prescription Drug Advertising and Promotion effort show
that the Center’s Division of Drug Marketing, Advertising and Communications (DDMAC) received 328 reports of potentially untruthful or misleading promotions
through the program: 188 from health care professionals,
116 from consumers and 24 from representatives of regulated industry. The yearly average in the past was about
104 such reports, according to DDMAC.
The fact that 87 of the reports from health care professionals (46.3 percent) were identified by the division for
comprehensive review demonstrates “a relatively strong
level of knowledge in the medical community about what
constitutes misleading promotion,” the report said. More
than half (58.3 percent) of the industry submissions were
identified for comprehensive review by DDMAC. A much
smaller share (20.7 percent) of the consumer reports were
tagged for comprehensive review.
DDMAC noted that only 4 percent of the reports were
submitted anonymously. Critics of the program had expressed fears that anonymous reports could unjustly accuse some promotions of being misleading.
The agency said that, while the statistics are encouraging, it “does not view the total number of reports or
number of enforcement actions taken as the primary
measures for program success.” Instead, the FDA said,
the “most important measure of success” for the program is “the heightened sense of awareness of misleading promotion among [health care providers] throughout
the health care community and the likely useful deterrent
this awareness has on drug promoters who might run
afoul of regulation absent such messaging.”
DDMAC said it plans to expand the program through
the development of a Web-based continuing education program and additional efforts to reach medical,
pharmacy and nursing students and early career health
care professionals with information about the FDA’s
expectations for truthful and nonmisleading promotional
practices. DDMAC representatives also will appear at
various trade shows, including upcoming conferences of
physician assistants, nurse practitioners, family physicians, pediatricians, gastroenterologists and health system pharmacists.
CAPA Prominent in Device Warning Letter
Citations; Complaint File Failures Top List
Corrective and preventive action (CAPA), a major
subsystem under the quality system (QS) regulation, was
cited in 91 percent of Warning Letters issued by the FDA
to medical device firms for alleged QS regulation violations during calendar year 2010.
According to an FDA “Analysis of 2010 Warning Letter Cites,” CAPA was cited in 81 of 89 Warning Letters.
In all, CAPA was cited 186 separate times.
The leading CAPA citation was failure to establish and
maintain adequate complaint files, a violation of 21 C.F.R
§820.198. The violation was cited 78 times in 42 different
Warning Letters. Violations of the basic CAPA requirements under 21 C.F.R. §820.100 were cited 83 times in
30 Warning Letters. Failure to establish and maintain
procedures for handling nonconforming product, a component of the overall CAPA requirements under 21 C.F.R.
§820.90, was cited 25 times in 18 Warning Letters.
The Quality System Inspection Technique directs
FDA investigators to cover four major QS subsystems
during device facility inspections: management controls,
design controls, CAPA, and production and process
controls.
The fact that CAPA is the only subsystem that agency investigators cover during most facility inspections
See News Briefs, p. 12
Contempt (continued from p. 10)
In January 2011, the petition also alleged, OCI agents
learned that a Pennsylvania firm had ordered and received food product from the Paterson facility during
the previous three months, and was scheduled to pick up
an additional order from the facility. Acting undercover,
an OCI agent “posed as the driver of the Pennsylvania
firm’s truck assigned to the scheduled pickup and picked
up product” at the facility, observing one of the sons
loading the dietary supplement product onto the truck.
Following a two-day trial, the jury returned guilty verdicts on all 17 counts charged against the defendants and
contemnor-defendants. The court scheduled sentencing
for Sept. 7. On June 7 the defendants and contemnor-defendants filed motions for a new trial and for acquittal.
July 2011 | FDA Enforcement Manual
11
News Briefs (continued from p. 11)
FDA Launches Enforcement Web Portal
accounts in part for its frequent citation in Warning
Letters over the years. According to the FDA analysis,
CAPA has remained the leading QS subsystem cited in
Warning Letters since 2003.
To Find Out More
The analysis is available online at http://www.fda.
gov/downloads/AboutFDA/CentersOffices/CDRH/
CDRHTransparency/UCM256354.pdf.
Warning Letters Target Tobacco Claims
Nearly a dozen Warning Letters issued in mid-May
accused online retailers of illegally marketing tobacco
products with misleading or unsubstantiated claims or
descriptors indicating that the products can be used to
reduce the harm or risk of tobacco-related diseases.
The various claims involved the use of terms such as
“Light,” “Low,” “Mild,” “Less Toxic” and “Safer.” Under the Family Smoking Prevention and Tobacco Control Act of 2009, such claims are not permitted unless a
company has received an FDA order based on scientific
evidence allowing it to market a product with the claims.
As of May 25, the agency had issued no such order.
To Find Out More
The Warning Letters are accessible via the searchable
online Enforcement Database available to all FDA Enforcement Manual subscribers.
12
The FDA announced May 26 the launch of a Web
portal on the agency’s enforcement activities.
The portal includes a searchable database of inspection information, including the names and addresses of
inspected facilities, inspection dates, type of products involved and the final inspectional classification — no action indicated (NAI), voluntary action indicated (VAI) or
official action indicated (OAI). The portal also provides
“a summary of the most common inspectional observations of objectionable conditions or practices made during inspections,” the FDA said.
According to the agency, access to the information
available through the portal will give the public “more
information about company practices that may jeopardize public health, as well as about companies that have
had satisfactory FDA inspections.” Access to the information also “can be expected to create a greater incentive to bring practices into compliance with the law,” the
agency said.
The portal is part of the second phase of the FDA’s
Transparency Initiative, launched in June 2009.
To Find Out More
The Web portal is available online at http://www.fda.
gov/AboutFDA/Transparency/TransparencyInitiative/
ucm254426.htm. The inspections database is available
online at http://www.fda.gov/ICECI/EnforcementActions/ucm222557.htm.
July 2011 | FDA Enforcement Manual