If you have had occasion or reason to interact with the FDA, it may come as little surprise that the FDA maintains arguably one of the broadest regulatory schemes in the United States. The Food, Drug, and Cosmetic Act (FDCA) as well as other legislation such as the Food Safety and Modernization Act allocates the agency substantial authority to seek a wide range of penalties for those who violate laws related to the safety of food, drugs, dietary supplements, medical devices, cosmetics, and biologics. Criminal violations become the subject of formal agency investigations, and, if it is thereafter warranted, the Department of Justice initiates prosecution. Although guidance exists, there is no precise formula for the decision to prosecute one suspected party and not another. And that is just one of the difficulties – not knowing – for anyone who finds themselves under the lens of that very intimidating microscope. To many, the process through which the prosecution decision is finally made is obscure and confusing. Although I cannot predict for anyone how the FDA may ultimately view a set of facts and circumstances, I can at least explain how the process runs generally and where the FDA’s prosecutorial preferences may go in the future.
Formally started in 1992, the FDA’s Office of Criminal Investigations became responsible for conducting investigations into alleged criminal violations of federal statutes that concern the FDA. OCI investigates offenses not only arising out of the FDCA, but also various related Title 18 provisions, such as those involving False Statements, Mail and Wire Fraud, as well as Health Care Fraud. Investigations that yield what OCI considers to be sufficiently egregious violations are recommended for referral to the Department of Justice for prosecution.
Once a criminal investigation of a violation of the FDCA has reached the point where a referral to the U.S. Attorney’s Office has become viable, the FDA will give the suspected party a chance to present his or her case as a last means of avoiding that referral. That is accomplished through what is known as a “Section 305 Meeting,” which receives that title because it is described under Section 305 of the FDCA. Section 305, found at 21 U.S.C. § 335, actually mandates that such person “shall be given appropriate notice and opportunity to present his views.” In Chapter 5 of its Regulatory Procedures Manual, the FDA describes a Section 305 Meeting as “not a trial but rather an opportunity for the respondents to give their side of the story and discuss any mitigating circumstances, corrective actions taken or planned, etc., and that FDA will consider this information when deciding whether or not to forward the case to the Department of Justice for the institution of criminal proceedings.” Note that a Section 305 Notice or Meeting is not mandated for other offenses under other chapters, including those under Title 18. After a Section 305 Meeting, a decision is made whether to submit a referral for prosecution. The FDA will issue notices to subjects under investigation in those cases that are not referred to the DOJ. For those cases that are referred, subjects of the investigation or their counsel may inquire as to the status, but, absent certain approval from FDA’s Office of Chief Counsel, they may not receive a direct answer from the agency other than that the case is still under consideration. Once a particular district of the U.S. Attorney’s Office receives an FDA referral, the Department of Justice takes the reigns from there. The FDA no longer has the decision about how and whether the investigation should be further developed, if at all.
The DOJ undertakes prosecution of a multitude of offenses that concern the FDA. As with criminal prosecutions generally, many result in plea agreements rather than trial. Recently, there has been evidence of increased willingness to prosecute certain FDA-related categories of offenses, including misdemeanor prosecutions under the “Park Doctrine” implicating corporate executives.
In United States v. Park. 421 U.S. 658, 95 S.Ct. 1903 (1975), the Supreme Court considered whether a corporate executive, not just the corporation he or she oversees, could be held accountable for violations under the Food, Drug, and Cosmetic Act where the executive had a positive duty to take steps designed to prevent future violations. There, the government alleged that under 301(k) of the FDCA, the company had held product at its warehouse in Baltimore while the warehouse was exposed to rodent contamination. The company itself pleaded guilty, but its president did not. The defendant testified that although his employees were under his direction, that he had been informed that the warehouse situation was being taken care of. He also admitted however, that providing sanitary conditions was a duty that he was “responsible for in the entire operation of the company.” Id at 664, 95 S.Ct. at 1907. The Court observed that:
“[I]n providing sanctions which reach and touch the individuals who execute the corporate mission-and this is by no means necessarily confined to a single corporate agent or employee- the Act imposes 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. The requirements of foresight and vigilance imposed on responsible corporate agents are beyond question demanding, and perhaps onerous, but they are no more stringent than the public has a right to expect of those who voluntarily assume positions of authority in business enterprises whose services and products affect the health and well-being of the public that supports them.”
Id at 672, 658 S.Ct.at 1911. The court commented that, “The Act does not…make criminal liability turn on awareness of some wrongdoing or conscious fraud.” Id. at 672-73. It also noted that accused corporate officers may pursue an affirmative defense that they were “powerless” to prevent or correct the violation.” Id. at 673. The government is not required to prove that such a defendant committed a “wrongful action,” but a prima facie showing will be found where “the defendant had, by reason of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct the violations complained of, and that he failed to do so.” Id at 673-674, 658 S.Ct. at 1912.
Subsequent prosecutions of corporate officers under similar circumstances were thereafter made under what became known as “Park Doctrine.” Convictions in these cases have come by way of both trial, see e.g. U. S. v. Y. Hata & Co., Ltd., 535 F.2d 508 (9th Cir. 1976); and by plea agreement. See e.g. United States v. Marc S. Hermelin, No. 4:10-CR-85. The FDA describes such prosecutions as those where:
[A] responsible corporate official can be held liable for a first time misdemeanor (and possibly subsequent felony) under the Food, Drug, and Cosmetic Act without proof that the corporate official acted with intent or even negligence, and even if such corporate official did not have any actual knowledge of, or participation in, the specific offense. A Park Doctrine prosecution, for the purposes of this section, refers to a recommended prosecution of a responsible corporate official for a misdemeanor violation of the Act.
The FDA provides various factors for its investigators to consider before recommending a misdemeanor prosecution for a corporate official. Those include:
- The individual’s position in the company and relationship to the violation;
- Whether the official had the authority to correct or prevent the violation;
- Whether the violation involves actual or potential harm to the public;
- Whether the violation is obvious;
- Whether the violation reflects a pattern of illegal behavior and/or failure to heed prior warnings;
- Whether the violation is widespread;
- Whether the violation is serious;
- The quality of the legal and factual support for the proposed prosecution; and
- Whether the proposed prosecution is a prudent use of agency resources.
In Chapter 6 of its Regulatory Procedures Manual, the FDA overtly leaves itself “an out” by reminding that “these factors are intended solely for the guidance of FDA personnel, do not create or confer any rights or benefits for or on any person, and do not operate to bind FDA. Further, the absence of some factors does not mean that a referral is inappropriate where other factors are evident.”
The FDA has openly said that it intends to increase the number of defendants it refers for misdemeanor charges under the Park Doctrine. See Margaret A. Hamburg, Letter to Senator Charles E. Grassley. Departure from this litigious course is also less likely given the recent attitude shift generally towards increased accountability of corporate managers whose companies cause harm to the public. What must remain of even greater concern to those regulated by the FDA, however, is whether the agency and the DOJ may at some point seek to expand the prosecutorial reach under the Park Doctrine. Such a move would likely only add increased uncertainty to an already cryptic and unnerving process.