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Deputy Assistant Attorney General Ethan P. Davis Delivers Remarks to the Food and Drug Law Institute Enforcement, Litigation, and Compliance Conference


Washington, DC
United States

      I.  Introduction

Thank you, Laura, for that kind introduction.  Good morning everyone.  It is an honor to be here today at the Enforcement, Litigation, and Compliance Conference with so many respected business leaders, lawyers, industry experts, and fellow government officials.


You are leaders in the industries represented here: in pharmaceutical products, medical devices, and food safety.  You make and distribute the life-improving — and often life-saving — products that benefit millions of Americans every day.  You are why the United States leads the world in life sciences innovation.


Earlier this summer, I had the honor to join the Department of Justice’s Civil Division as the Deputy Assistant Attorney General for the Consumer Protection Branch.  That’s a mouthful, I know.


The Consumer Protection Branch leads the Justice Department’s efforts to enforce statutes designed to protect the health, safety, and economic security of American consumers.  Although we are housed in the Civil Division, the majority of our work is criminal prosecutions.  We have about 100 attorneys, investigators, and other staff.  The team is brilliant, conscientious, and I am privileged to work with them.


We investigate and litigate criminal and civil violations of the Food, Drug, and Cosmetic Act.  That means we pursue drug, device, and food manufacturers who distribute adulterated or misbranded products, as well as fraudsters who sell fake cures or counterfeit products.


We also enforce the law against food and dietary supplement manufacturers who distribute products that pose health and safety risks to the American consumer.  So we investigate situations where companies are violating current good manufacturing practices.  We also get involved when companies manufacture products under insanitary conditions.


In addition, we represent FDA in civil defensive actions.  In the past year, we’ve been involved in litigation challenging FDA’s menu labeling rule.  We also defend FDA in Hatch-Waxman litigation, challenges to its orphan drug regime, and other regulatory actions.  


We cover a range of other areas, including tobacco, violations of the Consumer Product Safety Act, deceptive trade practices, telemarketing fraud, mass mailing fraud, and fraud related to consumer data.  And in addition to representing FDA, we also defend litigation challenging regulatory determinations and enforcement discretion by the Federal Trade Commission and the Consumer Product Safety Commission.


The FDA is one of our key partners. I work closely with the FDA’s Chief Counsel, Becky Wood, who you heard from yesterday morning, on a wide range of matters.  FDA regulated products account for about 20 cents of every dollar of annual spending by U.S. consumers.


Like you, we are concerned with ensuring that the medicines Americans take are safe and effective, that the food we eat won’t make us sick, and that the toys our children play with are not dangerous.


My wife and I have a nine month old son who has recently decided that everything is meant to be eaten.  That includes solid foods and milk, but also desks, storybooks, the rug, iPhones, and literally anything he can get his hands on.  We do our best to give him only the best and safest foods and medicines, but as I’ve quickly found out, I can’t protect him from everything.


That is exactly why our joint mission to ensure the safety of the food we eat and the medicines we take is so critical to each of us, and why the consequences of failure in this endeavor are severe: dangerous drugs, devices, and food can pose serious threats to health and to lives.  For companies, ensuring safety is also good business.  All of us want to be able to trust the products that we use to care for our families every day.


     II.  The Rule of Law

At the same time, we are ensuring that industry has the room to continue to innovate and the rule of law is a critical part of accomplishing this mission.  As our Deputy Attorney General has said, the term “rule of law” refers to the principle that the United States is governed by law and not by the arbitrary decisions of government officials.  The rule of law is about consistency and predictability.  It allows people and businesses to know in advance what rules will govern them; and it enables them to arrange their lives in reliance on the protections of the law.


At the Justice Department, we are renewing our commitment to these principles.  We are participating in the Administration’s effort to identify and roll back unnecessary regulations that hamper economic growth.  We have also adopted a new approach to guidance documents. 


In the past, the Department has published guidance documents, or letters to regulated parties, that effectively bind private businesses.  These documents are not the product of notice-and-comment-rulemaking.  And they often confuse companies about the extent and source of their legal obligations.  In short, these guidance documents are in tension with the rule of law. 


Last month, Attorney General Sessions ended this practice.  No more will the Department of Justice purport to create binding obligations through the issuance of guidance documents.    


The rule of law also figures in to how we exercise our enforcement discretion in the Consumer Protection Branch.  Seventy-five years ago, then-Attorney General Robert Jackson said that “one of the greatest difficulties of the position of prosecutor is that he must pick his cases, because no prosecutor can even investigate all of the cases in which he receives complaints.”  Jackson used the speed limit as an example: “no local police force could strictly enforce the traffic laws, or it would arrest half the population on any given morning.”  Jackson concluded by endorsing the philosophy to which we hold to today: “to select the cases . . . in which the offense is the most flagrant, the public harm the greatest, and the proof the most certain.”


Seventy-five years later, however, the federal statute books contain thousands of criminal offenses and thousands more laws that can form the basis of civil liability.  And that doesn’t count the hundreds of thousands of federal regulations — many inaccessible or incomprehensible — under which many more criminal and civil cases can be pursued.  How are people in the private sector supposed to know what type of conduct will trigger a government investigation?  If combined with arbitrary enforcement by law enforcement and prosecutors, the existence of so many laws located in so many places can undermine confidence in the rule of law as evenhanded, accessible, and just.  And when you all cannot predict what conduct will end up triggering an investigation by the Justice Department, our enforcement efforts operate to chill innovation.


The challenge for us as prosecutors, then, is to ensure that we exercise our enforcement discretion in a principled, predictable way that promotes rather than detracts from the rule of law.   


So when a new investigation or a potential indictment crosses my desk, I ask myself, and my team, a few questions: Is this a case where people got hurt, or where there was a clear threat of harm?  Is this a case where people got defrauded?  Is this a case where the target of the investigation acted knowingly or recklessly?  If the answer to those questions is “yes,” we will pursue the matter vigorously in the name of protecting the health, safety, and economic security of the American consumer. 


The point of this exercise is to weed out technical regulatory violations in order to focus our enforcement resources on practices that threaten consumer health or safety.  These considerations mirror the principles governing all Department of Justice enforcement actions, which require us to evaluate the nature and seriousness of an offense and the deterrent effect of an enforcement action. 


This approach is designed to promote the rule of law.  Using the Department of Justice’s resources to pursue one-off technical regulatory violations where no one was hurt or defrauded, and where there was no clear risk of consumer harm, does not promote consumer health, safety, or economic security.  It only forces companies to over-emphasize technical compliance issues — often involving rules that take a lot of effort to interpret — instead of focusing their resources on developing new, lifesaving medicines and devices.


     III.  Priorities in DOJ and CPB Enforcement  

With that basic framework in mind, I’d like to tell you about a few priorities in food and drug law that this Administration is committed to addressing.  These are opioids, dietary supplements, and compounding pharmacies.  Although most businesses that produce and distribute these products obey the law, the ones who don’t can sometimes pose immense and devastating risks to the American consumer.


There’s no way to overstate the tragic effect of opioids on American families; it is a national crisis.  One American dies every eight minutes from a drug overdose, including from heroin, fentanyl, and other opioid drugs.  In 2015, a thousand Americans died per week, and the numbers for 2016 are even higher.  What’s even scarier is the rate at which drug overdoses are increasing.  In 1968, 5,000 people died from drug overdoses.  In 1990, 8,000 died. But over the last twenty-five years, the rate has increased more than 500 percent.  In recent history, the number of deaths involving opioid drugs nearly tripled between 2002 and 2015 and continues to increase.  Today, drug overdose is the leading cause of death for Americans under 50.  These are not just numbers.  The victims are members of our communities, our neighbors, our friends and our family.  The opioid epidemic has no parallel in American history, and, as Attorney General Sessions has said, “this is not a sustainable trend nor an acceptable America.”


The epidemic has been driven in part by increasing misuse, abuse, and diversion of opioid prescription medications, which have become widely and easily available at the street level.  The federal government is committed to using all tools to help address this crisis.  The President has declared a “public health emergency,” which enables federal resources to be redirected to help fund treatment efforts for those addicted to opioids.  Treatment is important, but it is not enough.  Prevention is needed.  And the Department of Justice has been working diligently on prevention: by raising awareness, through drug take-back programs, and through creating a culture that rejects drug abuse. 


But treatment and cultural education are not enough, either.  The Department is deploying agents and prosecutors to enforce our laws, keep illegal drugs out of our country, decrease their availability, and reduce their purity and addictiveness.  In the past few months, the Department spearheaded the largest health care fraud takedown in history, arresting more than 50 doctors engaged in opioid-related crimes.  It has seized and taken down AlphaBay, a giant dark net marketplace that allegedly facilitated drug sales, and launched a new data analytics program to identify for investigation physicians whose prescriptions for opioids far exceed their peers.


In this effort, the Consumer Protection Branch’s role is to ensure that drug manufacturers are distributing their opioids in compliance with the law.  That means, among other things, enforcing the FDA’s opioid Risk Evaluation and Mitigation Strategies, otherwise known as REMS, that are designed to ensure that the benefits of these potentially dangerous drugs outweigh the risks.  These requirements are designed to ensure, among other things, that training is made available to health care providers who prescribe opioids to ensure they are trained in safe prescribing practices and aware of non-opioid pain management alternatives.  The REMS also obligate opioid manufacturers to take proactive steps to ensure that their products are dispensed and used safely and appropriately, including disclosing the risks, dosage, and proper patient types to potential prescribers and pharmacists. 


In choosing which cases to pursue, we will be guided by the principles I discussed earlier.  Was anyone hurt or was there a clear threat of harm?  Was anyone defrauded?  Did anyone act knowingly or recklessly?


The second area I’d like to discuss is dietary supplements.  These supplements have a strong grasp on our imaginations. Who wouldn’t do anything to avoid a cold as the winter season begins?  Who wouldn’t want better memory?  Sharper vision?  Abs and a six-pack? Healthier, glossier hair?  Some dietary supplement manufacturers promise all of the above and a whole lot more.


But buying a dietary supplement is nothing like buying produce at the supermarket.  While you can look at a piece of fruit and usually tell whether it’s good or not, dietary supplements are a lot more opaque.  When consumers buy dietary supplements, they rely on the labeling to determine what is in the product.  They should be able to trust that those products contain the ingredients they say they contain.


The Consumer Protection Branch is focusing its enforcement on bad apples in a largely law-abiding industry.  Our targets are those who lie about what is in their product or lie about what the product will do for the user’s health, thereby depriving consumers of the products they expect to receive. Specifically, we are focusing our enforcement efforts on manufacturers of products that contain: 1) undisclosed drugs or unlisted ingredients; or 2) are unlawfully marketed as cures or palliatives for serious conditions.  We are also focused on the suppliers, both at home and abroad, who try to sneak unlawful ingredients into these products.


We have a pending criminal prosecution against a company that makes popular supplements.  In that case, the government alleges that the manufacturer misrepresented the ingredients in its labeling and marketing efforts.  The government alleges that although one of the supplements was associated with an outbreak of injuries and the company told the FDA that it would stop distributing the product, the company pressed forward in an effort to sell remaining product or ship it outside the United States.  Trial in that case is set for next year.  It is important for me to say that these are just the government’s allegations, nothing has been proven against the company or any of the individuals charged, and they should be presumed innocent unless and until proven guilty.


We are also pursuing foreign suppliers who use fraud and deception to smuggle illegal dietary ingredients into the United States.  In October, a grand jury in Dallas returned indictments against five Chinese citizens and four companies relating to alleged sales of stimulants intended to be included in dietary supplements.  Some of these alleged shipments involved ingredients that have been linked to severe adverse events like heart attacks and strokes.  We arrested some of the defendants when they chose to attend a dietary supplement trade show in Las Vegas, and they are currently in custody.  Again, these are merely the government’s allegations against these suspects, nothing has been proven against the individuals or the companies, and they should be presumed innocent unless and until they are found guilty.


In addition to our efforts on the criminal side, we use our civil authority to block companies from distributing their products in violation of the law.  We recently secured a permanent injunction in Colorado against the maker of a product called Deer Antler Velvet Extract.  The complaint alleged that the company, and others, marketed their dietary supplements as drugs that could prevent a host of serious conditions, ranging from heart disease to hypertension.  The complaint also alleged that the manufacturers were including unlisted ingredients in their products.  The court entered a consent decree that requires the companies to implement remedial measures to ensure compliance with the Food, Drug, and Cosmetic Act.


By emphasizing enforcement in these areas, our goal is to provide Americans with confidence in their purchases and in their health, and provide law-abiding companies with the assurance that they can compete on ground that is not skewed in favor of the unscrupulous or malevolent.


The third priority area I’d like to talk about today is compounding pharmacies.  In recent years, we have seen real safety problems associated with compounded pharmaceuticals.  FDA is our key partner in policing this area.  FDA has conducted many inspections, issued Warning Letters, and worked with us at the Department of Justice on civil injunctive actions and, where appropriate, criminal prosecutions.


The New England Compounding Center case is a prime example of the type of case that deserves our enforcement resources.  In 2012, more than seven hundred patients in twenty states were infected with fungal meningitis after receiving injections of a preservative-free injectable steroid called methylprednisolone acetate (MPA) manufactured by NECC.  As of 2013, the CDC reported that sixty-four of those patients in nine states died; since then, patients have continued to die, and the current death toll has crept into the 70s.  This outbreak was the largest public health crisis ever caused by a pharmaceutical product.


Earlier this year, federal juries in Massachusetts convicted both NECC’s owner and head pharmacist of racketeering, racketeering conspiracy, mail fraud, and introduction of misbranded drugs into interstate commerce with intent to defraud and mislead.  The owner had directed and authorized the shipping of the contaminated MPA to NECC customers nationwide, knowing his clean room was contaminated with fungi.  He authorized the shipping of numerous other drugs before test results confirming their sterility were returned, and never notified customers of nonsterile results.  He also took steps to shield NECC’s operations from FDA’s regulatory oversight by claiming to be a pharmacy dispensing drugs under valid, patient-specific prescriptions.  NECC even used fictional and celebrity names on fake prescriptions to dispense drugs such as “Michael Jackson,”  “Filet O’Fish” and “Diana Ross.”  A federal judge sentenced the owner to nine years in prison.  The pharmacist is scheduled for sentencing in January.


Another example is Pharmakon Pharmaceuticals of Noblesville, Indiana, an outsourcing facility that compounded drugs for customers in Indiana and many other states.  The indictment alleged that Pharmakon distributed compounded morphine sulfate that was nearly twenty-five times the strength indicated on its label.  As alleged in the indictment, three infants at a hospital in Indiana received the over-potent morphine sulfate, and one infant was taken by emergency helicopter to a nearby children’s hospital.


In June 2017, two individuals — Pharmakon’s president and its director of compliance — were charged in connection with the distribution of over- and under-potent drugs, and defrauding the United States.  According to the indictment, from July 2013 through mid-February 2016, the compliance director received approximately 70 potency test failure notices indicating that drugs such as morphine sulfate and fentanyl either were under- or over-potent.  The indictment alleged that the compliance director discussed the out-of-specification test results with the company’s president.  According to the indictment, until Pharmakon compounded over-potent morphine sulfate in February 2016, the president determined that Pharmakon should not contact any individuals or hospitals who received the drugs, nor conduct any product recalls before FDA intervention.  The indictment also alleged that the compliance director lied to FDA during inspections about the company never having received any out-of-specification drug potency test results.      


The compliance director pled guilty last month.  As for the president of Pharmakon, the indictment is not evidence of guilt, and the defendant should be presumed innocent unless and until proven guilty.


In addition to criminal prosecutions, we also seek civil injunctions against compounding pharmacies to prevent the distribution of adulterated, misbranded, and unapproved new drugs.  In August, we obtained a consent decree permanently enjoining a company called Isomeric Pharmacy Solutions and three of its executives.  According to the civil complaint, Isomeric manufactures, labels, and distributes sterile drugs, including injectable hormones, injectable corticosteroids, and ophthalmic drops.  The complaint alleges that when FDA inspected Isomeric in 2017, it documented a number of insanitary conditions, including that the pharmacy repeatedly recovered several types of microorganisms in the air and on surfaces used for sterile processing.  Also, according to the complaint, FDA inspectors found deviations of current good manufacturing practice requirements in the pharmacy’s sterile drug manufacturing operations.  In addition, as alleged in the complaint, Isomeric failed to conduct an adequate investigation of black particles observed in vials of product that had “passed” visual inspection.  As part of the consent decree, Isomeric agreed not to resume manufacturing, holding or distributing drugs until it complies with specific remedial measures set forth in the order entered by the Court.


At the Department of Justice, one of the factors we take into consideration in deciding how to focus our resources is on the distribution of compounded drugs that result in or pose a potential, unacceptable risk of harm to patients.  We take particular notice when we see a continuing pattern of insanitary practices, particularly where a compounding pharmacy has been warned and nevertheless failed to change its practices.  When adulterated medicines cause outbreaks of illness, the harms come not only from the tragedies of sickness, economic disruption, or even lives lost, but also erode confidence in our health care system and in the public health measures necessary to secure the safety of American consumers.  By punishing culpable defendants in criminal cases, we also hope to deter and prevent future harms to patients.


     IV.  The Park Doctrine

I want to say a few words on the responsible corporate officer doctrine, also called the Park doctrine.  In the case from which the doctrine gets its name, the president of a company was charged with distributing adulterated food.  The adulteration was due to a rodent infestation at one warehouse in a company with 36,000 employees, 874 retail outlets, and 16 warehouses.  Although the president had no personal knowledge of the adulteration, the Supreme Court upheld his conviction.


The Court interpreted the Food, Drug and Cosmetic Act to “impose not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.”  So a corporate official who “‘had a responsible relation to the situation,’ and ‘by virtue of his position . . . had . . . authority and responsibility’ to deal with the situation” could be found guilty of a misdemeanor.


With Park, Congress has given a powerful tool to the government.  We can secure a criminal conviction, and a judge can send someone to jail, without having to show intent of the accused. 


The Department has long been committed to using this tool judiciously.  Our Park prosecutions are not like Antoine Saint-Exupery’s airline executive in the TV series Night Flight, penalizing pilots for a thunderstorm on the theory that “If you only punish men enough, the weather will improve.”  Instead, as prosecutors, we understand that law-abiding business partners in the life sciences industries must make careful judgments about the best ways to protect the health and safety of their customers. 


So in evaluating Park prosecutions, we consider whether the unlawful conduct implicates public safety or has resulted in physical harm to individuals.  We also look for actual knowledge or willful blindness as to the unlawful conduct on the part of each individual we are considering charging.  And we generally avoid getting involved in good faith scientific disputes, because we do not want to stifle scientific exploration and debate, nor do we wish to put those researching creative or innovative means of medical care in fear of criminal liability.


     V.  Conclusion

In conclusion, promoting the rule of law is our most important job of the Department of Justice.  As I have mentioned, the Administration is committed to regulatory reform.  As part of that project, the Department of Justice and this Administration are hard at work finding ways to reduce regulatory burdens on lawful businesses like yours.


But this job is not ours alone.  Protecting the rule of law takes more than words on paper or unilateral actions by the government.  It requires an active and healthy partnership between the government and the private sector.


One hundred years ago, President Calvin Coolidge said that “the measure of success is not merchandise, but character… that the man who builds a factory builds a temple,” and that those who run their businesses well are “due . . . reverence and praise.”


In the government, we are confident in your character and that we can collaborate in our shared responsibility to ensure the rule of law in the drug, medical device, and food industries.  The government can’t do it alone.  As Coolidge said, “the government has not at its disposal a supply of ability, honesty and character, necessary for the solution of all . . . problems, or an executive capacity great enough for . . .  perfect administration. Nor is it in the possession of a wisdom which enables it to take great enterprises and manage them.”  The government cannot and should not micromanage the food and drug industries.  This is why leaders from George Washington to Coolidge to Eisenhower to Reagan have understood that government – good government – and private business must be mutually reinforcing.  


As a self-described “neutral convenor” of industry participants and regulators, the Food and Drug Law Institute, through this conference and other events, brings us together to promote these goals.  I hope that you will use this forum and other opportunities to engage with me and my colleagues in the Executive Branch, so that we can best provide you and all Americans with the benefits of a society governed by the rule of law.


Thank you.

Updated December 13, 2017