21 U.S.C. § 333(a)(2) INCLUDES, BUT IS NOT |
LIMITED TO, INTENT TO DEFRAUD OR MISLEAD
THE ULTIMATE CONSUMERS OF MISBRANDED DRUGS
INTENT TO DEFRAUD OR MISLEAD DIRECTED TOWARD THE FDA
SATISFIES THIS ELEMENT OF THE OFFENSE
Any person who commits one of the prohibited acts set forth in
U.S.C. § 331 has violated the Federal Food, Drug and Cosmetic
(FD&C Act). However, any person who commits such an act "with the
to defraud or mislead" is guilty of a felony and is subject,
21 U.S.C. § 333(b)(2), to punishment of up to three year's
imprisonment.[FN1] Counts Two, Three, Five, Six, Seven, Eight, and
(formerly Ten) of the Indictment in this case charge the Defendants
manufacturing and thereafter introducing into interstate commerce
specified misbranded and adulterated drugs - "with the intent to
and mislead" - in violation of 21 U.S.C. §§ 331(a) or
and 333(a)(2). Count Four and Count Ten (formerly Count Eleven)
that the defendants - "with the intent to defraud or mislead" -
to maintain accurate batch production records (Count Four) and
complaint records (Count Ten).
FN1. Pursuant to 18 U.S.C. § 3571, the maximum
fines for violations of the FD&C Act are $250,000. per count for
individuals and $500,000. per count for organizations.
FN2. 21 U.S.C. § 331(a) prohibits, inter
alia, introducing or delivering for introduction into
commerce any drug which is adulterated or misbranded. Under 21
§ 351(a) a drug is adulterated if it consists in any part of
filthy substance, or has been held under insanitary
whereby it may have been contaminated with filth or
methods used in its manufacture do not conform to or are not
administered in conformity with good manufacturing practices. Under
U.S.C. 352(a) a drug is misbranded if its labeling is false or
misleading in any particular. This definition of false or
includes, but is not limited to, the failure on the labeling to
material facts relating to the safety or efficacy of the drug. 21
A FRAUD DIRECTED AGAINST THE FDA SATISFIES THE MENS REA
REQUIREMENTS OF 21 U.S.C. § 333(a)(2)
The mens rea element of Section 333(a)(2) -
intent to defraud or mislead - can be established by evidence of
to defraud the customers of violative products. In addition,
seller of violative products acts "with the intent to defraud" as
defined by section 333(a)(2) if he or she takes affirmative steps
evade detection by, and thus mislead, regulatory authorities.
See, e.g., United States v. Andersen, 45 F.3d
220 (7th Cir. 1995)("The FDA represents the public, and a
attempt to mislead the FDA should be considered as clearly a fraud
are attempts to mislead customers or other individuals.");
States v. Arlen, 947 F.2d 139, 143 (5th Cir. 1991),
denied, 112 S.Ct. 1480 (1992); United States v.
933 F.2d 752, 755 (9th Cir. 1991); United States v.
F.2d 871, 874 (11th Cir.), cert. denied, 488 U.S. 924
(1988); see also United States v. Mitcheltree,
F.2d 1329, 1350-51 (10th Cir. 1991) (adopts the Bradshaw
concerning "intent to defraud or mislead" but adds a refinement
pertinent to misbranding offenses). Appellate courts have uniformly
that FD&C Act cases involving fraud on regulatory authorities are
properly sentenced as felonies under U.S.S.G. ڈF1.1.
Andersen, 45 F.3d at 220; Arlen, 947 F.2d at 143-44,
146-47; Cambra, 933 F.2d at 756.
The plain language of 21 U.S.C. § 333(a)(2) provides for
treatment for any person who violates a provision of 21 U.S.C.
"with the intent to defraud or mislead." The focus is upon the
violator's intent; there is no limitation with respect to whom the
violator's intent is directed. Thus, when a person manufactures or
distributes misbranded or adulterated drugs in violation of 21
§ 331(a) or 331(k) with intent to defraud or mislead either a
purchaser of the drugs or any other person or entity (including the
FDA), that person is subject to the punishment specified in §
Courts have held that schemes to circumvent the requirements
FD&C Act constitute schemes to defraud the FDA. United States v.
Bradshaw, 840 F.2d 871, 874 (11th Cir.) (expressly finding that
illicit steroid distribution scheme amounted to fraud against the
and state regulatory authorities), cert. denied, 109
Ct. 305 (1988); see also, e.g.,
United States, 265 U.S. 182, 188 (1924); Dennis v. United
States, 384 U.S. 855, 861 (1966) (holding that an agreement to
impair, obstruct or defeat the lawful function of the FDA
conspiracy to defraud an agency of the United States in violation
U.S.C. § 371). Fraud against the FDA alleged in this indictment
includes that the defendants interfered with the agency's
function and undermined the agency's important statutory
responsibilities by preventing legitimate inspection and by
and maintaining false records that were required to be maintained
the FD&C Act.
The starting point of statutory construction is the plain
of the statute itself. Greyhound Corp. v. M[t]. Hood Stages,
Inc., 437 U.S. 322, 330 (1978). If the language of the statute
clear, there is no need to look elsewhere. Packard Motor Car Co.
NLRB, 330 U.S. 485, 492 (1947)." Because the words of §
333(a)(2) are unambiguous, there is no basis for or need to look
those words for enlightenment as to the statute's meaning.
v. United States, 242 U.S. 470, 485 (1917) ("Where the language
plain and admits of no more than one meaning, the duty of
does not arise, and the rules which are to aid doubtful meanings
discussion.").Nonetheless, a review of judicial decisions
FD&C Act and a consideration of the purposes to be served by the
further support the conclusion that "intent to defraud or mislead"
governmental regulatory bodies, and not just the ultimate consumer
misbranded drugs, is punishable as a felony under §
Although, to the government's knowledge, prior to the
Bradshaw case in 1988, 840 F.2d 871, no written opinion
the "intent to defraud or mislead" provision of § 333(b) [now
codified as 21 U.S.C. § 333(a)(2)], the leading cases
the related provisions of the FDC Act, 21 U.S.C. § 333(a), all
concluded that the Act's enforcement provisions are to be liberally
construed to effectuate the purposes of the Act.
In United States v. Dotterweich, 320 U.S. 277 (1943),
Court was faced with the question of whether a corporate officer,
not just the corporation itself, could be subject to prosecution
conviction under § 333(a) for introducing misbranded and
drugs into interstate commerce in violation of 21 U.S.C. §
The Court of Appeals had reversed the conviction of the officer,
Dotterweich, relying on an exception to the criminal liability
provisions of the Act contained in 21 U.S.C. § 333(c), the
"guaranty clause," which insulates from criminal liability a person
introduces a violative product into interstate commerce in reliance
a guaranty, given by the original supplier of the product, that the
product is not adulterated or misbranded. 320 U.S. at 279-80. The
Supreme Court rejected the Court of Appeals construction of the
clause as "read[ing] an exception to an important provision
the public welfare with a liberality which more appropriately
to enforcement of the central purpose of the Act." Id.
(emphasis added). The Court said:
The guaranty clause cannot be read in isolation. The
and Drugs Act of 1906 was an exertion by Congress of its power to
impure and adulterated food and drugs out of the channels of
By the Act of 1938,[FN3] Congress extended the range of its control
illicit and noxious articles and stiffened the penalties for
disobedience. The purposes of this legislation thus touch phases of
lives and health of people which, in the circumstances of modern
industrialism, are largely beyond self-protection. Regard for these
purposes should infuse construction of the legislation if it is to
treated as a working instrument of government and not merely as a
collection of English words.
FN3. The Act of 1938, 52 Stat. 1040, 21 U.S.C.
301--392, as amended, is the present FDC Act.
Id. at 280. Based on this analysis of the Act's purposes,
Court reinstated Dotterweich's conviction.
In United States v. Sullivan, 332 U.S. 689, 692 (1948),
Supreme Court once again rejected an appellate court's "narrow
construction" of the FDC Act and upheld a conviction under the
misbranding provisions. The particular FD&C Act provision at issue
Sullivan was 21 U.S.C. § 331(k), which prohibited the
of any act with respect to a drug, "while such article is held for
after shipment in interstate commerce," that rendered the drug
misbranded. The Supreme Court rejected the appellate court's
construction that § 331(k) applied only to acts done by the
person to hold the drug after interstate shipment and not by
intrastate purchasers of the drug who also held it for
[T]he language used by Congress broadly and
prohibits misbranding articles held for sale after shipment in
interstate commerce, without regard to how long after the shipment
misbranding occurred, how many intrastate sales had intervened, or
had received the articles at the end of the interstate shipment.
Accordingly we find that the conduct of the respondent falls within
literal language of § 331(k).
Id. at 696.
The Sullivan Court found ample support for its decision
the purposes underlying the FDC Act:
Given the meaning that we have found the literal
§ 331(k) to have, it is thoroughly consistent with the general
and purposes of the Act. For the Act as a whole was designed
to protect consumers from dangerous products. This Court so
in United States v. Dotterweich .... Its purpose was to safeguard
consumer by applying the Act to articles from the moment of their
introduction into interstate commerce all the way to the moment of
delivery to the ultimate consumer.
More recently, in United States v. Park, 421 U.S. 658,
672-73 (1975), the Court reaffirmed the strict liability of
officers and agents, as enunciated in Dotterweich, for
misdemeanor violations of the FDC Act:
Congress has seen fit to enforce the accountability of
responsible corporate agents dealing with products which may affect
health of consumers by penal sanctions cast in rigorous terms, and
obligation of the courts is to give them effect so long as they do
violate the Constitution.
These cited cases are part of a large, uniform body of law
has consistently held that the FDC Act is to be liberally construed
effectuate its public health purposes.
The FDC Act protects consumers from adulterated and misbranded
drugs by, inter alia, authorizing agents of FDA to
and inspect the contents of any premises or vehicle in which drugs
held for or after introduction into interstate commerce to ensure
storing, handling, and dispensing of drugs. 21 U.S.C. § 374.
"Nothing is clearer than that the later legislation [the 1938 Act
adopting the criminal provisions of § 333] was designed to
and stiffen the penal net and not to narrow and loosen it."
States v. Dotterweich, 320 U.S. at 282.
Moreover, limiting the Act's felony provision only to cases
involving "intentional misconduct intended to deceive the ultimate
consumer" would render § 333(a)(2) a nullity with respect to
of the violations prohibited by 21 U.S.C. § 331. Section 331
prohibits not only violative activities that directly impact upon
consumers but also activities that would inhibit FDA from
regulatory mission. For example, § 331 prohibits refusal to
access to and copying of records of interstate drug shipments, the
failure to maintain records required under the Act such as drug
manufacturing and production records and records of adverse drug
reactions, refusal to permit entry or inspection of drug facilities
FDA, and the failure to register with FDA as a drug manufacturer.
U.S.C. §§ 331(e), (f), & (p).
Section 333(a)(2) applies by its terms to any person who
any provision of § 331 with intent to defraud or mislead. While
since such violations as those just listed do not directly affect
ultimate consumers of drugs (but rather affect FDA's ability
to regulate the drug industry and, thereby, to protect consumers),
nevertheless constitute felonies under the FD&C Act. Any
interpretation of § 333(a)(2) would read the statute out of
existence with respect to whole classes of violations. This would,
part, "render the statute useless, a result inconsistent with the
well-established principle of statutory construction requiring that
parts of an act be given effect, if at all possible." In re
752 F.2d 582, 586 (11th Cir. 1985); Weinberger v. Hynson,
and Dunning, Inc., 412 U.S. 609, 633 (1973) ("well-settled rule
statutory construction that all parts of a statute, if at all
are to be given effect" applied to FDC Act's "new drug"
Any contrary reading of the statute § 333(a)(2) would thus
in reality, a loose reading of the statute that would impose
limitations, for the benefit of violators, not present in the plain
words or the manifest purposes of the FD&C Act. In analogous
courts have declined to read such limitations into otherwise
statutory language. See Riggs v. United States, 280
750, 752 (5th Cir. 1960) (upholding conviction for passing
currency with intent to defraud even though recipient of currency
it was counterfeit; "'intent to defraud' required by 18 U.S.C.
472,[FN4] when, as here, such intent is not restricted by the terms
the indictment or by a bill of particulars to any specified person,
be an 'intent to defraud unknown third persons or the United States
itself"); Bachrack v. United States, 75 F.2d 824, 824-25
Cir. 1935) (statute prohibiting possession of counterfeit internal
revenue stamps "uses the comprehensive term 'with intent to
the very purpose of making it immaterial whether the offender
to defraud the government or some particular individual");
States v. Cattle King Packing Co., 793 F.2d 232, 237-38 (10th
cert. denied, 107 S. Ct. 573 (1986) (upholding convictions
violations of Federal Meat Inspection Act, with intent to
where defendants attempted to avoid inspection of spoiled meat by
FN3. The Federal Meat Inspection Act makes any
misdemeanor and, modeled on the FDC Act, provides for enhanced
punishment "if such violation involves intent to defraud." 21
FN4. 18 U.S.C. § 472 provides, in relevant part,
"[w]hoever, with intent to defraud, passes ... any falsely made,
counterfeited, or altered obligation or other security of the
States, shall be fined not more than $5,000 or imprisoned not more
fifteen years, or both."
There is simply no authority for any contrary interpretation
FRAUD ON THE CONSUMER
FIRM's [NOTE: name changed from original] manufacture of
and misbranded drugs for distribution to unknown consumers also
defrauded those ultimate consumers of those drugs. See
Bradshaw, 840 F.2d at 873-74 n. 4. In addition to being
of the FD&C Act's safeguards that are designed to prevent consumers
having drugs in their possession that may be unsafe or ineffective,
these individuals also received less than they bargained for.
did not know that drug products they purchased had passed the
established expiration date, were made from raw material that was
delivered to FIRM in punctured barrels, contained metal fragments,
desiccant and other extraneous matter, had been manufactured using
unapproved and undocumented manufacturing procedures and that the
quality control personal who tested these drugs had been instructed
to record failing test results. Had the ultimate consumers been
of these facts, those products would, of course, have been
Intent to defraud or mislead, as defined at 21 U.S.C. §
333(a)(2), can be established by demonstrating a fraud upon either
ultimate consumer of the product, or upon the FDA, or both. In this
the evidence demonstrates that the defendants attempted to defraud
mislead both the ultimate consumer and the FDA.
JAMES B. BURNS
United States Attorney
SUSAN E. COX
Assistance United States Attorney
219 South Dearborn Street
Chicago, Illinois 60604
LAWRENCE G. MCDADE
DEBORAH S. SMOLOVER
Office of Consumer Litigation
U.S. Department of Justice
P.O. Box 386
Washington, D.C. 10044
[cited in USAM 4-8.205]