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Food Drug and Cosmetic Act: BU Law

October 26, 2017

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.  Our discussion of the Food Drug and Cosmetic Act overlapped with two major news stories.

Major FDCA News

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

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.
  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.  These remedies include:

  • 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.
  • A range of administrative remedies, including inspection and recall powers.

Food Drug And Cosmetic Problems Give Rise to False Claims Act Liability

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 case represented the first time FDCA manufacturing problems led to False Claims Act liability.  Here, the government (e.g., Medicare, Medicaid) paid for falsely described items.  Therefore, these were false claims. Many cases have since relied on this theory of liability.  This includes last week’s AmeriSource Bergen 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, AmeriSource Bergen also faces civil False Claims Act suits relating to the same facts.

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.

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