Good afternoon and thank you, Nikki, for the introduction. I’m pleased to join so many life sciences leaders today at the FDAnews conference on off-label promotion. Thank you for inviting me.
Last year, I joined the Justice Department’s Civil Division as the Deputy Assistant Attorney General for the Consumer Protection Branch. 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. The exceptional team of public servants that I lead is hardworking, conscientious, and dedicated to protecting all of us.
Although we are in the Civil Division, the majority of our work is criminal prosecutions. Most relevant for today’s conversation, we collaborate closely with FDA to investigate and litigate both civil and criminal violations of the Food, Drug, and Cosmetic Act. That includes bringing misbranding and adulteration charges against pharmaceutical companies and medical device companies.
We do not work in isolation. In addition to our agency partners, we work with many other Justice Department components, including Civil Frauds and the U.S. Attorney’s Offices.
Our portfolio covers 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. In addition to representing FDA, we also defend regulatory determinations and enforcement decisions by the Federal Trade Commission and the Consumer Product Safety Commission.
Today’s conference is about off-label promotion. I’ll tell you about how the Consumer Protection Branch in the new Administration has been thinking about these issues. I’ll also connect some common threads between our approach to off-label promotion and the Justice Department’s other enforcement priorities relating to the safety of drugs and devices.
First, I’ll set the stage. The Department does not approach its enforcement responsibilities with a belief that the pharmaceutical industry is full of bad actors. To the contrary, we recognize that the work you do is critical to improving the health and welfare of all Americans – and people around the world.
We also recognize that off-label uses and treatment may be important therapeutic choices. In some medical specialties, such as oncology, off-label treatment may even constitute the accepted standard of care. The Department takes seriously the right of doctors to prescribe drugs for off-label uses for their patients’ benefit. And we do not want to stand in the way of doctors providing the most appropriate medicine and best medical care to patients.
So today, when we decide where our enforcement resources are best directed, we start by identifying practices that threaten patient health or safety. We figure out who is responsible for that conduct, whether the company lied or misled doctors and patients, whether the conduct involved improper inducements or kickbacks, and whether that conduct hurt people.
In other words, we ask questions like: Was the speech at issue false or misleading, or was it truthful? Did the off-label use injure patients, or did it help patients? This approach is based in the first principles that guide the Department of Justice’s enforcement priorities.
In that spirit, we will vigorously investigate and prosecute firms that make false or misleading statements to prescribers or patients.
Recent off-label promotion settlements are consistent with this focus. In June 2016, Genentech and OSI Pharmaceuticals LLC paid $67 million to resolve allegations that they made misleading statements about the effectiveness of the drug Tarceva to treat cancer. Last year, Celgene Corporation paid $280 million to resolve similar allegations that the company made false and misleading statements about two of its cancer drugs.
Our very recent plea agreement with Aegerion Pharmaceuticals underscores our focus on ensuring that companies speak truthfully to physicians about off-label uses and to ensuring that victims are fairly compensated for harm. Aegerion makes a drug called Juxtapid designed to treat high cholesterol in people with a rare genetic disease. The company pled guilty to violating the FDCA by, among other fraudulent actions, promoting the drug as a treatment for high cholesterol generally. Aegerion misled healthcare providers about the clinical profiles of patients who were appropriate candidates for the drug.
The company also failed to comply with the drug’s Risk Evaluation and Mitigation Strategy, called its REMS. Sometimes, FDA decides that a drug needs additional post-approval oversight, in order to ensure that the drug’s benefits continue to outweigh the risks after the product hits the market. As part of Juxtapid’s approval, the FDA required Aegerion to implement a REMS program. The REMS required Aegerion to educate prescribers about the drug’s risk of liver toxicity and to restrict access to the drug to clinically appropriate patients. Aegerion’s promotional activities violated the REMS’ requirements.
The government and Aegerion initially presented a binding C plea to the court. The original deal would have required Aegerion to pay $7.2 million in criminal fines and forfeitures and $28.8 million to pay back government healthcare payors under the False Claims Act. Because of concerns about the ability of patients and private payors to establish that they were proximately harmed by Aegerion’s conduct, the plea deal did not originally contain an administrative avenue to claim restitution.
But our judge has serious doubts about C pleas, and he rejected ours. He began his discussion with the following: “Oh, Aegerion amended ‘C’ plea --- How do I dislike thee? Let me count the ways.” He ended his opinion with a quote from Margo Price singing plaintively: “at the end of the day, it feels like a game . . . one I was born to lose.” At that point, as you can imagine, there were some nervous attorneys.
One of the judge’s concerns was that the plea deal omitted a pathway to restitution for patient victims of Aegerion’s conduct who might have a valid claim to financial loss proximately caused by that conduct. In response to those concerns, we negotiated with the defendants and proposed a non-binding B plea that incorporated a recommended vehicle for providing possible restitution to patient victims with valid financial loss claims. This recommendation was consistent with the Consumer Protection Branch’s longstanding commitment to ensuring that any victim with a valid claim is offered a pathway to possible restitution. And we will hold fast to that commitment in any negotiated resolution moving forward.
The Consumer Protection Branch’s approach to investigating and prosecuting cases that threaten the health or safety of patients reflects the Administration’s broader emphasis on the rule of law. As our Deputy Attorney General has said, our Constitution establishes a government based on the principle that the law must be enforced fairly, and applied evenly to all persons. Only when we exercise our enforcement discretion in a principled manner can the private sector predict what conduct will trigger a government investigation.
In this respect, we view life sciences companies like yours as partners, not adversaries. We want to create space for you to innovate, so you can make the life-saving products that benefit millions of Americans every day without fear of government overreach.
To achieve that goal, Attorney General Sessions and Department leadership have taken steps to promote and protect the rule of law. In November, the Attorney General announced that the Justice Department would no longer issue guidance documents that effectively impose new regulatory requirements or obligations on private parties.
Last month, the Associate Attorney General announced that civil litigating components may not use their enforcement authority to effectively convert agency guidance documents into binding rules. That means that Department components may not treat noncompliance with guidance documents as a violation of the law.
These steps are consistent with the fundamental principles of our justice system. In our system, law is made by statute, and regulations are made by notice and comment rulemaking. Neither should be made by guidance documents.
Our renewed commitment to the rule of law is intended to generate consistency and predictability. It helps healthcare companies like yours—which have helped America contribute so much to the health and wellbeing of people all over the world—manufacture and promote products confident in the knowledge that you know the rules of the road.
So how does the rule of law apply to off-label promotion? We exercise our enforcement discretion in the off-label promotion context under the same basic principles that we apply everywhere else. Was the company’s speech truthful, or was it false or misleading? Did the company’s actions materially mislead the FDA? If not, our limited resources are better spent elsewhere. But if the answer to those questions is yes, we will take vigorous action to protect patients and the public.
Our focus on cases involving patient harm makes our enforcement decisions more predictable. Using departmental resources to pursue technical regulatory violations with narrow implications produces inefficiencies not only for the Justice Department, but also for healthcare companies. This is because you are forced expend resources policing every potential regulatory infraction, which detracts from your efforts to invent new products and improve lives. Pursuing violations that pose no real public health concerns chills innovation, because companies cannot predict whether a course of conduct will trigger a government enforcement action.
So if our focus is on practices with serious public health implications, our top enforcement priorities are probably obvious. The first is the opioid crisis.
In 2013, 7.9 out of every 100,000 Americans died of an opioid overdose. This reflects a 7% increase over the prior year’s death rate. The rate increased by another 14% in 2014, 16% in 2015, and 28% in 2016. In 2017, approximately 66,000 Americans died from drug overdoses. That’s about 180 deaths every day. The crisis contributed to a decline in American life expectancy in 2015 and 2016 — the first time in decades that has happened. Today, drug overdose is the leading cause of death for Americans under age 50.
Death is just one aspect of the opioid crisis. Substance abuse relating to opioids has had devastating consequences on American families. In parallel with the rise in opioid addiction, almost three-quarters of U.S. states saw a spike in children entering foster care. Parental substance abuse was the leading cause. The Centers for Disease Control has reported a record increase in the number of babies born with Neonatal Abstinence Syndrome, a drug-withdrawal syndrome caused by exposure to opioids while in the womb.
Acting at the Attorney General’s direction, the Justice Department has taken an all-hands-on-deck approach. Less than 24 hours ago, the Department announced a new Prescription Interdiction and Litigation Task Force, which will coordinate the Department’s ongoing efforts to fight the opioid crisis.
In this effort, the Consumer Protection Branch is playing a key role. One of the tools at our disposal is enforcing compliance with FDA’s REMS requirements for opioids. If manufacturers do not comply with an opioid’s REMS, then the drug is misbranded, just like a drug promoted off-label with false or misleading statements.
Another area is insanity conditions and noncompliance with current Good Manufacturing Practices regulations, called cGMPs. As you know, drugs, devices, and biologics must be manufactured, stored, and packed in compliance with an intricate system of regulatory requirements—known as cGMPs—designed to ensure that the products reaching the market are safe and effective. FDA routinely inspects manufacturing facilities to confirm compliance with cGMPs. Noncompliance can result in FDA issuing Form 483 observations, warning letters, or product recalls. If a manufacturer processes a product in violation of cGMP requirements, then that product is adulterated.
A manufacturer’s noncompliance with cGMPs can undermine the safeguards incorporated into the FDA approval process. Adhering to cGMPs is important because millions of Americans depend on manufacturers to ensure that the medical products they use will improve their health, not risk making it worse.
The Consumer Protection Branch has therefore increasingly focused on policing significant compliance with cGMPs. For example, in 2016, drug and medical device company B. Braun Medical Inc. agreed to pay $4.8 million in penalties and forfeiture and up to $3 million in restitution to resolve its criminal liability for selling contaminated pre-filled saline flush syringes. These contaminated syringes infected patients in California, Texas, New York, and Nebraska.
The resolution with B. Braun included a non-prosecution agreement in which B. Braun admitted that it distributed syringes that were adulterated under the FDCA. Under the terms of the agreement, B. Braun agreed to increase oversight of its product suppliers by conducting on-site audits of companies that design and make finished products that bear the B. Braun name on the label and testing such products for sterility, identity and purity.
Many of you have no doubt heard about the contamination issues and other quality issues identified by FDA across multiple compounding pharmacies over the past few years. Some can be resolved after discussing 483 observations with the firm or issuing a warning letter. But where the problems are serious and protracted, the Consumer Protection Branch has also engaged with FDA to halt production. The Consumer Protection Branch has filed several complaints for permanent injunction on behalf of FDA to resolve ongoing noncompliance with cGMP requirements, insanitary conditions, and other issues.
Where appropriate, we will seek to hold accountable those individuals who are responsible for the wrongful conduct. For example, last year an indictment was returned against the President and Chief Compliance Officer of Pharmakon Pharmaceuticals Inc., a compounding pharmacy. 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. One individual pled guilty, and the other is set to go to trial later this year. The indictment is not evidence of guilt, and the defendant should be presumed innocent unless and until proven guilty.
Last year, the Consumer Protection Branch also entered into two major settlements to resolve allegations of adulterated drugs. Baxter Healthcare Corporation entered into a deferred prosecution agreement, in which the company admitted that it had distributed adulterated products. During a certain period of time, Baxter manufactured sterile IV solution in a so-called “clean room” that contained moldy HEPA filters. The company continued to manufacture IV solutions in that clean room for months even after an employee raised concerns and the filters that had been identified as moldy remained in place. In addition to entering into the deferred prosecution agreement, Baxter paid a $16 million criminal fine and forfeiture and is required to implement enhanced compliance measures.
AmerisourceBergen Specialty Group (“ABSG”), one of the nation’s largest drug distributors, pled guilty last year to distributing adulterated drugs that were tainted by cGMP noncompliance. Two of Amerisource’s subsidiaries prepared oncology supportive care drugs in unregistered facilities and unsterile environments that were not inspected by FDA. Amerisource paid a $260 million criminal fine and forfeiture.
As these recent settlements demonstrate, the Consumer Protection Branch will continue to police cGMP compliance consistent with the basic principles that we use to govern our enforcement discretion: whether noncompliance poses a risk of patient harm.
I mentioned the rule of law a lot today, but it is not merely just a slogan. Under this Administration, the Justice Department is committed to executing each division’s mission with an eye towards upholding the rule of law.
I am proud that the Justice Department is renewing its commitment to the rule of law. This month, sixty years ago, President Dwight D. Eisenhower proclaimed May 1 to be “Law Day,” which was to be an annual celebration of “the principle of government under laws.” As President Eisenhower emphasized in a speech three months later, on the first Law Day, the goal of the rule of law is to “creat[e] a framework of fair play within which conscientious, hard-working men and women can freely obtain a just return for their efforts.”
We at the Consumer Protection Branch want to create an enforcement environment premised on the rule of law, so that you as regulated entities do not feel subjected to arbitrary and unpredictable enforcement actions. I hope that you will take advantage of opportunities like this to engage with me and my colleagues in the Executive Branch, so that we can work together to provide you and all Americans with the benefits of a society governed by the rule of law.