Tag Archives: Food Drug and Cosmetic Act

Home / Posts tagged "Food Drug and Cosmetic Act"

BU Law Class Takes On the Food Drug and Cosmetic Act

It wasn’t the first time, and it won’t be the last.

 

Sometimes during the semester of BU Law’s Health Care Fraud and Abuse seminar led by Whistleblower Law Collaborative Attorney Bob Thomas, news stories or case announcements surface at just the right time.  So it was this week — twice.

 

First, the U.S. Department of Justice announced last week the criminal plea of drug wholesaler AmerisourceBergen to charges of intentional misbranding of five oncology drugs that the company had manipulated and repackaged, putting patient health and safety at risk.  (See criminal information and plea.)  Then, just a few days later, the Washington Post and CBS News teamed up on a 60 Minutes Broadcast that exposed a deeply troubling effort by drug companies and distributors to strip the Drug Enforcement Administration of its powers to regulate the illegal distribution of opiates, despite an epidemic of opiate abuse in this country that is killing tens of thousands of Americans every year.

 

So it is not difficult to emphasize to students the relevance of the materials they are reading and analyzing.

 

The Food Drug and Cosmetic Act is a broad statute empowering the federal government (specifically the Food and Drug Administration) to regulate industry’s manufacturing and distribution of food and drugs.  Of particular relevance to the course on Health Care Fraud and Abuse are the concepts of 1) off-label marketing of drugs, 2) misbranding of drugs, 3) adulteration of drugs, and 4) compliance with Current Good Manufacturing Processes (“cGMP”) standards.

 

The statute provides a range of remedies for the agency to employ against industry misbehavior or mistakes.  There are criminal penalties for knowing misconduct, misdemeanor criminal liability for corporate executives who “should have known” and/or been able to stop misconduct, civil liability for damages and/or injunctive relief, as well as a range of administrative remedies, including inspection and recall powers.

 

Importantly, the statute can be used in combination with the False Claims Act to give the agency the power, in conjunction with the Department of Justice, to sue the drug companies for treble damages.  The seminar studied the case of U.S. rel. Eckhard v. Glaxo, a case from Puerto Rico and highlighted in a 60 Minutes expose, in which Glaxo failed to correct serious manufacturing deficiencies despite the repeated efforts of an employee-turned-whistleblower and despite the alarming list of “adverse patient events” from product mix-ups.  This was the first major case of FDCA manufacturing problems being combined with a False Claims Act theory of liability — the theory being that the government (e.g., Medicare, Medicaid) paid for things that were not what they purported to be and were therefore false claims.  This theory of liability has been followed many times since then, including last week’s AmeriSourceBergen plea, which dealt with oncology drug misbranding on a truly massive scale.  (Although this was a criminal plea under the Food Drug and Cosmetic Act, AmeriSourceBergen is also subject to civil False Claims Act suits relating to the same facts, according to its public statements, but those suits have not yet settled or been litigated.)

 

What these cases show, among other things, is how extraordinarily powerful the drug industry is in dealing with the federal agencies and with Congress, how the regulating agencies are often outgunned at every level in their efforts to police misconduct, and the essential role played by whistleblowers in the government’s attempt to protect the public and recoup its own financial losses due to this misconduct.

 

Next week Whistleblower Law Collaborative Attorney David Lieberman will help the students in the course unpack the often mystifying rules around the Stark Laws, another tool in the government’s anti-fraud toolbox.

OxyContin Marketing: Peddling Opiates for Profit

 

This fall, whistleblower attorney Bob Thomas has again been teaching as an adjunct professor at BU Law School, offering a course on Health Care Fraud and Abuse.  As the title suggests, the course is about the many ways in which the government health care reimbursement systems such as Medicare and Medicaid are gamed by fraudsters, and what’s being done about it.

 

One of the more interesting aspects of teaching a course in this area of the law is the dynamic nature of the subject matter.  Each year the syllabus must be updated because of amendments to laws like the False Claims Act or regulations under statutes like the Food Drug and Cosmetic Act (dealing with misbranding and off-label marketing, among other things), and case law interpreting new issues being litigated (such as the Supreme Court’s recent Escobar opinion).   The course also shows students why it’s important to read the news and to pay attention to the many ways the content of the course intersects with real life issues in front of us.

 

This week was a perfect example.  What would normally have the potential to be a fairly dry topic (“Remedies:  exclusion and debarment, and corporate integrity agreements”) evolved into something directly connected to an evolving news story.

 

As a case study on corporate officers being excluded from the Medicare and Medicaid programs after pleading guilty under the “responsible corporate officer doctrine,” students were asked to read the 2010 Friedman case from the district court in D.C., in which Judge Huvelle upheld lengthy periods of exclusions for three high ranking officers of Purdue Pharmaceuticals, Inc.  The Purdue settlement in 2007 was a blockbuster at the time:  $634 million in civil damages and criminal fines, criminal pleas by a subsidiary and three corporate officers, tens of millions in personal fines against the officers, and a corporate integrity agreement imposed against the company.  Why?  Because the company irresponsibly (and criminally) marketed its highly addictive painkiller OxyContin as safe and non-addictive, and as a reliable substitute for other non-addictive painkillers.  This behavior is credited by many observers as a key driver of our current opioid epidemic.  The investigation of the company started in 2001 and lasted several years, covering the marketing schemes going all the way back to the 1990’s.

 

Well right on cue, just as the class was evaluating the many aspects of this “global” (civil, criminal, and administrative) settlement, Purdue Pharmaceuticals was right back in the news.  First, the always provocative but usually spot-on John Oliver took the company to task for ignoring patient safety and for fueling the opioid epidemic.  Then, this morning on the front page of the Boston Globe, another article appeared about Purdue and its marketing of OxyContin, showing how the company manipulated pharmacy benefit managers (“PBMs”) to remove limitations on physicians’ prescription-writing abilities for the drug.  This latter scheme was not part of the government’s 2007 prosecution of the company, but may be the subject of future lawsuits, according to the article.  With a huge public health crisis in the works and a flourishing black market for its addictive painkiller, it seems Purdue just couldn’t say no to schemes to get its product into as many hands as possible.  With sales rep bonuses as high as five times their base salary, the message was clear:  Sell, Sell, Sell.  Lost in that emphasis was the horrible toll this would take on patients, some of whom would injure themselves intentionally to be able to obtain further prescriptions of OxyContin.

 

For the BU students, it was a perfect example of one of the recurring themes of the course:  Do any of these remedies really slow down fraudsters?  If not, what should we be doing differently?

Health Care Fraud and Abuse Seminar Wraps Up

After 13 lively sessions and a take home exam, the seminar taught by whistleblower attorney Bob Thomas has finished, with nine 3rd year students and one 2nd year student from BU School of Law showing real sophistication in this complex field.

 

The course, which is part of BU’s Health Law Program, is structured in two parts.  The first covers the main substantive areas of health care fraud enforcement:  The False Claims Act, the Anti-Kickback Act, The Food Drug & Cosmetic Act, Stark, and the Exclusion & Debarment remedies.  The second part of the course is practice-oriented, with the students hearing from prosecutors, defense attorneys, compliance officers, and whistleblowers and their attorneys, in presentations relating to actual cases they were involved in.

 

Similarly, the take home exam questions are based upon fact patterns that come up in the cases handled or evaluated by the Whistleblower Law Collaborative.  If you think you’re as smart as a law student, take a look at the questions they answered quite masterfully.  Several of the exams submitted were as good or better than any we could imagine an experienced practitioner writing  — a gratifying thing for a “professor” to see, given the multiple demands on the students’ time.

 

This is the sixth time that Bob Thomas has taught the course.  Given all the changes in the law in this dynamic field, he intends to keep offering the course indefinitely in future years, as long as student interest remains as high as it has been so far.

Health Care Fraud & Abuse takes look at FDCA

This past week, students in the Boston University School of Law Health Care Fraud and Abuse seminar learned about the Food Drug & Cosmetic Act, and the creative ways in which prosecutors and whistleblower attorneys have paired misbranding, adulteration, and manufacturing irregularities to liability under the False Claims Act.  The now infamous Cidra case in Puerto Rico, in which Glaxo Smith Klein paid $750 million in fines, damages, and penalties, served as the case study.

 

This  week, the focus turns to “Remedies,” by which we mean some of legal tools at the government’s disposal as it evaluates the seriousness of corporate misconduct in particular settings.  How and when are companies and/or officers “excluded” from future participation in government health insurance programs such as Medicare and Medicaid?  How do the exclusion remedies impact settlement and plea negotiations between the government and companies?

 

Students were given the following assignment for next week:

You work at a law firm as a young partner and a client in the health industry emails you a question:  “Hey sorry to bother you with this, but I need  some help understanding something I just read.  I was following the Purdue case (oxycontin) and saw some reference to the ‘responsible corporate officer’ doctrine.  They said something about ‘strict liability’ which sounds pretty scary to me.  I thought that in order to get in serious legal trouble, someone had to intend to do something bad.  Unless I’m mis-reading this, it seems to suggest that you can get in trouble for something that you didn’t even know about or were directly involved in.  And it’s a criminal case!”

 

“How on earth can the government try to send someone to jail for something that he didn’t know about?  I don’t get it; is this really the law?  Is there no limitation on this?”
“Related question is to what extent does/would this apply to corporate boards of directors?  It seems to me that if this doctrine means that you can go to jail for being generally responsible for but not directly involved in a bad course of conduct, then corporate directors would theoretically have some risk.  Do we need to advise our boards of this?”

 
“Thanks for whatever guidance you can provide.”

 

The application of the Responsible Corporate Officer doctrine remains an area of fascination, although high level corporate managers might find other ways of describing it.  While this theory of criminal liability — which exposes individuals for “strict” liability for criminal misdemeanors under the Food Drug & Cosmetic Act — stands as a powerful symbol of law enforcement’s reach, the reality is that the government is quite sparing in its use of this tool.

 
Wary of slaying the goose that laid the golden egg, the government has been (some would say thankfully) judicious in choosing when to hold corporate officers criminally liable for conduct that they were “responsible for” even without direct participation.  With the judiciary standing as a clear check on prosecutorial over-reach, aggressive use of the theory could trigger a judicial backlash, with judges finding ways to limit the doctrine in cases where it would “shock the judicial conscience.”

 
One can imagine the poisoned-pen of Justice Scalia, for example, slicing this doctrine down to size if given the right opportunity.  So the government’s answer has been to use the doctrine selectively, with cases involving very bad facts, leaving little room for judicial outrage.

 
So the quizzical inquiries from alarmed corporate officials are mostly overwrought.  In fact, the government leaves this option off the table most of the time.