Thank you, Sheila [Hemeon-Heyer, President, Heyer Regulatory Solutions LLC and Chair, FDLI Board] for that kind introduction. And thank you to the conference organizers for inviting me here this morning.
I’m excited to be here to talk about the work and priorities for the Department of Justice’s Consumer Protection Branch (CPB).
For those who are not familiar with CPB, we are the only office in the Department of Justice focused solely on consumer protection. That said, we work closely with the U.S. Food and Drug Administration (FDA), other consumer protection agencies and law enforcement and we frequently partner with U.S. Attorney offices across the country, in pursuit of our mission: To protect the health, safety, and economic security of consumers.
But that is not a mission we in the government can accomplish alone. We need you: attorneys, compliance specialists, health care executives and other industry professionals.
And that’s why I’m so excited to be here today to kick off this conference: Because while we often sit across from each other in the courtroom or at the negotiating table, we cannot view each other solely as adversaries, but we must also act as partners in a joint effort to make sure that the medicines we rely on heal sickness and that the food we eat is healthy and safe.
The web page for this conference says that you should attend and I quote, to “Explore the trends behind increased enforcement actions,” and “Get tips and best practices for responding to enforcement action by FDA or another agency.”
So I pretty much know what you want me to talk about today.
And I’m happy to oblige, because the government cannot accomplish its goals and you can’t help us to achieve those goals, if you don’t understand what we are doing and why we are doing it.
So this morning, in an effort to improve our collaboration, I want to share three trends and three tips.
I have two young boys at home and they love baseball and they tell jokes and they eat a lot of peanut butter. And eggs. And cantaloupe. And they take the medicine we give them, even when the shot hurts or the pill is bitter.
Sometimes it is hard to do what I do and look at them and wonder if what I am giving them could make them very sick…or worse.
And I know you all have families and must on occasion have these same scary thoughts.
So our mission is both urgent and personal. And while we all know that the vast majority of America’s food is safe and that most of our drugs and medical devices are safe and effective for their intended use, each of us knows that, when it comes to our own health, or our children’s health, percentages go out the window. The odds – they don’t matter.
And with that in mind, the first trend is this: In this era of limited government resources, we are, with tremendous aggression, focusing our attention on identifying enforcement matters that pose the greatest threat to the health and safety of American consumers.
As some of you may know, the Consumer Protection Branch has relied traditionally on two primary sources for its civil and criminal enforcement docket: whistleblower complaints filed under the False Claims Act and referrals from other agencies.
Every year, whistleblowers file hundreds of health-care related cases under the qui tam provisions of the False Claims Act. For years, these civil whistleblower suits alleging fraud against the government have been shared with our criminal prosecutors and they often form the basis for criminal investigations. Indeed, many of the headline-grabbing cases over the past few years have combined civil resolutions under the False Claims Act with criminal pleas under the Food, Drug and Cosmetic Act (FDCA).
We also initiate cases based on referrals from FDA and other agencies.
For example, the vast majority of our civil injunctions under the FDCA are referred to us when FDA has observed a number of deficiencies and issued a warning letter but the violator has refused to comply and a court order is needed to stop the unlawful conduct. And of course, agents in FDA’s Office of Criminal Investigations refer us criminal cases as well.
But these two sources are not the only ways we initiate cases.
We are increasingly identifying areas of priority and, in collaboration with FDA and other partners, pursuing the most significant matters in those areas. Put simply, we cannot and will not wait around assuming the most important cases will walk through the door. Most significant matters are brought to our attention from whistleblowers or other agencies, of course, but we have begun, increasingly, to identify the areas on which we think we must be focused and, where appropriate, initiate investigations on our own.
There are three areas in particular that are worth highlighting.
The first is illegal conduct in the compounding pharmacy industry.
In 2012, we all learned, through the increasingly horrifying news reports regarding a devastating outbreak of fungal meningitis, about the potential harm that could be caused by unsafe compounding products.
Working closely with public health officials, a team of prosecutors and agents from Boston and Washington, D.C. immediately opened an investigation. The individuals alleged to be responsible for that outbreak have now been indicted and trial is expected next year. But as we seek to hold accountable those responsible for that tragedy, FDA and the Department of Justice are committed to protecting the public from future harm caused by unsafe compounded drugs.
The second area of increased focus is food safety. Americans should be able to trust that the food we buy for our families is safe to eat. And of course, the overwhelming majority of it is.
But practically every week another case comes across my desk detailing shoddy practices by a food manufacturing or processing company.
And consider these statistics, from the Centers for Disease Control and Prevention (CDC): Every year foodborne illnesses cause one out of six people to get sick; Put 128,000 people into the hospital, and kill – this is every year – around 3,000 people.
So that is why, working closely with our partners at the FDA, we will bring civil cases seeking to stop unsafe practices and to require appropriate compliance procedures.
And, depending on the facts of each case, we have and will continue to bring criminal prosecutions. Earlier this year, for example, a subsidiary of ConAgra, one of the largest food corporations in the country, pleaded guilty to an FDCA misdemeanor charge in connection with a salmonella outbreak traced to contaminated peanut butter and agreed to pay $11.2 million in fines and forfeiture – the largest criminal amount ever in a food safety case.
And where the conduct we uncover goes beyond insanitary conditions or other FDCA violations to outright fraud, we will not hesitate to use every available tool to hold accountable those who put their own profits over the safety of the American consumer.
That is what we did, for example, when we prosecuted officials associated with the Peanut Corporation of America (PCA) for their role in a salmonella outbreak linked to more than 700 reported infections and nine deaths. According to the evidence introduced at trial, PCA officials lied to their customers, fabricated certificates of analysis and ignored test results indicating that their peanut products might be contaminated. The former CEO received a 28 year sentence, the longest ever in a food safety case.
The third area of focus that I want to mention is illegal activity in the dietary supplement industry.
Consumers should be able to rely on supplements to improve their overall well-being. But all too often we have seen dietary supplement companies lie about what their product can do, or what’s in it, or both. At best, the consumer has purchased a worthless product. That’s the best case scenario. The worst case scenario is every consumer’s worst nightmare.
And this is why we at the department, along with colleagues across the government, are focusing our attention on the bad actors in this industry.
A few weeks ago, officials from the Department of Justice, FDA, the Federal Trade Commission (FTC), the U.S. Postal Inspection Service (USPIS), the Department of Defense (DoD) and the U.S. Anti-Doping Agency (USADA) announced a sweep involving more than 100 civil and criminal actions targeting unlawful dietary supplement makers and marketers, as well as the launching of educational tools for consumers.
Among the cases we announced that day was a criminal case involving USPlabs, which was known for its popular workout and weight loss supplements Jack3d and OxyElite Pro.
The indictment alleges that USPlabs and several of its officials engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling and then lied about the source and nature of those ingredients. According to the indictment, the defendants told retailers and wholesalers that their products contained natural plant extracts, when in reality they contained a synthetic stimulant made in a Chinese chemical factory.
The indictment further alleges that defendants knew of studies that linked their products to liver toxicity and that, after OxyElite Pro had been implicated in an outbreak of liver injuries, they promised FDA that they would stop distribution – but instead engaged in a surreptitious, all-hands-on-deck effort to sell as much OxyElite Pro as quickly as they could. A trial date has not yet been set in that case.
Of note, much of our interest in dietary supplements came as a result of information we received from my former colleague, U.S. Army Colonel Frank King, who at the time was serving a one-year fellowship with the department as part of the Army War College. He made it a point to make us aware of reports of servicemembers who seemed to be harmed by their use of dietary supplements.
So that’s trend number one – we are relying on new avenues to identify the cases that have the greatest impact on protecting the health and safety of consumers.
The second and third trends arise out of our commitment to ensure that corporations and their executives have appropriate incentives to comply with the law – and that means that our enforcement efforts must be viewed as more than simply the cost of doing business.
This Administration has had an unparalleled commitment to improving the nation’s health care system and combatting health care fraud.
Since 2009, judgments and settlements under the False Claims Act and the Food, Drug and Cosmetic Act in health care fraud matters have totaled well over $20 billion. Those numbers blow out of the water any prior period in history.
But our record-breaking monetary results tell only part of the story. Indeed, we know that even the largest penalties can become a line item on an income statement and that more is needed.
Which leads me to the second trend: Because each case and each company is different, there will not be a one-size-fits-all solution.
So, for example, we may insist that company executives and the board of directors certify that they are in compliance with the law, as in our global settlement with Abbott in 2012.
We may provide a more fulsome disclosure of facts through public documents, such as criminal charging instruments, an agreed statement of facts, or civil complaints.
And we will, in certain cases, insist on requiring appropriate compliance measures aimed at encouraging a culture of compliance and ensuring that unlawful conduct does not repeat itself.
And similarly, because each case is unique, the approach we take – whether a case is civil or criminal and if criminal, what charges we will bring – will differ case by case.
I know, for example, that some have noted the varying approaches we have taken in food safety cases, but the simple explanation is this: We look at each case individually and then we follow the facts and the law where they lead us.
In some cases, the most appropriate remedy will be a civil injunction to shut down the illegal conduct, but in other cases, a criminal prosecution will be appropriate. And where we decide on a criminal prosecution, we give great care to considering which charges to bring.
Guided, as we always are, by the evidence and the law, in recent health care and food safety cases we have brought not only FDCA charges, but also mail and wire fraud charges, obstruction, money laundering, securities fraud and RICO.
So that’s trend number two: one size does not fit all.
The third trend should come as no surprise to those of you who have been following the news coming out of the department. We are focusing more on holding individuals accountable for unlawful conduct. Under a new policy announced a few months ago by Deputy Attorney General Sally Quillian Yates, individual accountability is at the heart of our corporate enforcement strategy.
We long have known that one of the most effective ways to ensure corporate accountability and deter future misconduct is by pursuing the individuals through which corporations act.
Indeed, we have just in the past few years brought a number of criminal prosecutions in health care and food safety cases to hold individuals accountable for their own unlawful actions.
Cases such as the criminal prosecution of the former CEO of a medical device company, who was told by FDA that his surgical guides could not be sold in commerce without further approval and then immediately shipped out those that he had in stock.
Or our prosecution of two egg industry executives, arising out of the sale of adulterated eggs.
And, of course, the prosecutions of the individuals who ran PCA.
The new policy reinforces the importance of individual prosecutions and has caused us and others across the department to look more critically at every corporate case and ensure that those responsible for the wrongdoing are identified early and pursued.
So those are the trends…what about the tips? I have three of those too and they all relate to the trends I just mentioned.
First, a successful resolution of a corporate criminal proceeding will be about more than money. We bristle at the notion that our prosecutions represent nothing more than the cost of doing business and so a financial penalty, no matter how big, is unlikely to be enough. You should be prepared at an early stage to discuss individuals, to discuss compliance and to discuss a fulsome accounting of the specific facts uncovered by our investigation.
Second, because we look at each case on its own facts, we are not persuaded by a chart comparing your case to other cases. We seemingly see the same chart again and again – it is, quote, the “cost of doing business” chart. A chart like this is ineffective because it is based on public information and so it only tells us things we already know. And worse, it conveys to us that you or your clients view our case as a regulatory tax and do not understand the strength of the evidence we have developed, or that we view each case on its own merits.
And finally: it helps to cooperate early. We recognize that most companies try to play by the rules. And that’s why when a violation does occur and is disclosed in a timely manner, we give serious weight to that disclosure. And, similarly, we give credit for actions taken – including, as I mentioned, identifying culpable individuals – after our investigation has started.
Disclosure and cooperation demonstrate that the company is focused on doing the right thing, is serious about compliance and is committed to not being a repeat violator.
My old boss Tony West, the former head of the Civil Division and Associate Attorney General, once pointed out to me that there is a quote inscribed on the wall just outside the Attorney General’s office, that says, and I’m paraphrasing a little: “The government wins its case when justice is done.” And he would talk about what that phrase meant to him when he was a prosecutor – that his job wasn’t to win as many cases as he could, but to achieve justice.
And that is my favorite part about being a lawyer for the government. Our job isn’t to scorch the earth in pursuit of a win at all costs or the largest penalty we can possibly achieve, but to figure out the right answer and let the right answer be our guide.
This is what the career lawyers in the Consumer Protection Branch do every day. They center their focus on keeping Americans healthy, safe and financially secure, they seek the right answers, and they strive towards justice. I’m privileged to work with them, and to speak to you today as their representative.
Thank you for listening.