Enforcement of the FD&C Act

The FDA inspects facilities to ensure compliance with the Food, Drug and Cosmetic Act (FD&C Act) and can seek criminal or civil penalties against both companies and individuals when its regulations are violated. Intentionally defrauding or misleading the FDA or violating the act may be a felony, but the concept of strict liability means that even those who unintentionally violate the act can be prosecuted for misdemeanors because intent is not required to violate the law. Misdemeanor violations may result in fines of up to $1,000 and up to 1 year in prison.

But criminal prosecutions are relatively rare because the various remedies at FDA's disposal, such as recalls and seizures, and the bad publicity that violations of the Act can generate and the desire of most companies to comply with FDA regulations are sufficient to ensure, if not complete compliance with FDA requirements, at least an honest effort by the vast majority of companies and individuals working in FDA-regulated industries.

• FDA-regulated facilities must comply with regulations requiring accurate regulatory submissions, such as clinical trial data and adverse event reporting, and with good manufacturing practice/quality systems regulations (GMP/QS) that ensure drug and biologic products and medical devices are manufactured, packaged, stored, and processed in a safe manner.
  
  
• Products not produced in compliance with FDA drug approval or good manufacturing practice or labeling regulations are considered misbranded or adulterated (section 501-502 FD&C Act). Distribution of adulterated or misbranded products is prohibited under section 301 of the Act. These products may be seized and the companies or individuals that produce and distribute them subject to civil and criminal action.
  
  
• In order to comply with GMP/QS requirements, companies must perform a number of steps to ensure the quality of their final products including implementing laboratory controls, writing standard operating procedures, conducting internal audits, investigating adverse events, hiring qualified employees and training employees, validating manufacturing processes, and maintaining records.
  
  
• In August 2002, the FDA announced plans to overhaul the GMP requirements for biologic and pharmaceutical products, including animal drug products. According to FDA documents concerning the initiative, revising the GMPs will allow the agency to “focus more squarely on potential risks to public health, by providing additional regulatory attention and agency resources on those aspects of manufacturing that pose the greatest potential risk,” conserve FDA’s “limited resources,” ensure “consistency and predictability” in the FDA’s inspection and enforcement efforts, and promote “innovation and the introduction of new manufacturing technologies in the pharmaceutical industry” (FDA, FDA Unveils New Initiative, 2002).
  
  
• Before a biologics or drug product is approved, the agency will conduct a preapproval inspection, examining the companies' manufacturing processes and ability to comply with GMPs.
  
  
• The FDA conducts inspections of facilities subject to FDA jurisdiction, including drug manufacturers, clinical trial sites and clinical laboratories. Imports also are subject to FDA inspection (increased resources). Biologic, Drug and Device manufacturers should be inspected at least once every 2 years, but the FDA acknowledges in its fiscal year 2003 Performance Plan that "only 22 percent of human drug, and 13 percent of medical device statutory establishments were inspected in [fiscal year] 2000."
  
  
• According to the FDA Enforcement Story, the FDA carried out 18,649 inspections in 2002.
  
  
• During an inspection or through other means the FDA may identify adulterated or misbranded products. Products are considered adulterated if contaminated in some way (such as filth in food) or improperly manufactured or packaged. Products are misbranded if labeled in a false or misleading way, are dangerous if used as labeled, contain inadequate instructions for use, or are promoted and advertised without a statement of the risks.
  
  
• If the FDA finds violations of the Food, Drug and Cosmetic Act through inspections or other means, the agency has several means available to enforce its authority under the FD&C Act including seizures; recalls; injunctions/consent decrees; rejection of regulatory submissions or withdrawal of approval for a product; Warning Letters; and, in severe cases, criminal prosecution.
  
  
• If violations are found during inspections, the FDA may issue a list of inspectional observations (FDA form 483), citing what the inspectors believe are deviations at the facilities inspected. Observations from the 483 will eventually be incorporated into an establishment inspection report (EIR), completed by FDA investigators after the inspection. The EIR may form the basis of subsequent regulatory action by the FDA.
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• According to the FDA Enforcement Story, the FDA issued 7,683 Form 483s in fiscal year 2001 [Editor's note: The FDA Enforcement Story is an internal FDA publication that can be requested by members of the press and public through the Freedom of Information Act.] The FDA fiscal year begins September 30 and ends October 1 in the next calendar year.
  
  
• The EIR is reviewed by FDA District Office officials and may form the basis of subsequent FDA action, such as Warning Letters. A Warning Letter formally notifies the company that it has failed to comply with the FD&C Act; these letters tend to be issued when inspectors observe repeated or serious deviations.
  
  
• Warning Letters are posted by the FDA. In 2001, the FDA issued 1,306 Warning Letters, according to a database maintained by warningletters.com.
  
  
• If a product is determined to be in violation of the Act, the manufacturer may voluntarily recall the product or the FDA may order a recall if the product is a medical device, biologics product, or infant formula. A recall should be distinguished from a correction (in which the product is repaired without being moved), a stock recovery (where a firm destroys a product that has not left its facilities), and a market withdrawal (where the company withdraws a product that may not violate the Act or at most deviates in a minor way). Recalls are announced on the FDA's web page.
  
  
• Recalls are classified based on the risk to patient health: A class I recall indicates the possibility of serious injury; a class II recall indicates that moderate or temporary injury may occur, and a class III recall means the product is unlikely to cause illness. Companies and the FDA perform a health hazard evaluation to determine how to classify a recall. In some cases, products will be withdrawn from store shelves or wholesalers, but in other cases consumers also may be asked to return unused product.
  
  
• According to the FDA Enforcement Story, in fiscal year 2001 there were 4,563 recalls of FDA-regulated products. Two-hundred forty four of these recalls were class I recalls, and of these 214 were recalls of food products. Three-thousand, three hundred twenty six recalls in 2001 were class II recalls, of which 1,513 were recalls of biologic products, 960 of medical devices, 396 of animal drug or animal food products, 289 of food products or supplements, and 168 of human drug products. Information about recalls, seizures, injunctions, and other enforcement action may be found in the FDA Enforcement Report.
  
  
• Seizures of drug and biologic products are conducted under Section 304 of the FD&C Act and allow the FDA to take custody of the product after obtaining a court order or under section 304(g), which allows devices to be seized without a court order. The owner of the products can contest the seizure in court, agree to destroy the seized products, or take no action. The FDA received approval for 27 seizures in fiscal year 2001, according to the Enforcement Story.
  
  
• Some of the powers just stated can be used by the FDA based on its delegated power under the FD&C Act. Other remedies, however, such as seizures or criminal prosecution will require the agency to go to court. The FDA's Office of the Chief Counsel helps ensure that the FDA complies with the law and reviews cases for prosecution (Warning Letter Review policy). If a matter must be prosecuted in court, the Department of Justice's Office of Consumer Litigation and U.S. Attorneys in the relevant location will represent the agency. The DOJ and FDA may obtain an injunction from the court ordering the company to perform or cease performing certain conduct.
  
  
• The FDA and company or individual also may sign a consent decree of permanent injunction in which the court will approve an agreement between the company and agency that will bring the case to a close in return for the company paying a fine or taking other steps to satisfy the FDA. Both the company and any high-ranking officials that sign the decree may be held in contempt and subject to civil and criminal penalties, such as fines or product seizures, if the company fails to comply with the terms of a decree.
  
  
• In fiscal year 2001, 12 consent decrees of injunction were filed by the agency. Companies signing consent decrees in recent months include Schering-Plough (alleged good manufacturing practice violations); Watson Laboratories (relating to alleged good manufacturing practice violations); E'Ola International (marketing of ephedrine containing dietary supplements); and ElanHoldings, a subsidiary of Ireland's Elan Corp. (alleged good manufacturing practice violations). Another company, an Ohio-based medical device company, pleaded guilty to 6 misdemeanor violations and agreed to pay $1.2 million in fines to settle charges that the company failed to report adverse events and submitted "false and misleading" data about a clinical study in 1999 and 2000.
  
  
• In 2002, the FDA also has sought a court order to hold the American Red Cross in contempt of a 1993 consent decree based on inspections of Red Cross facilities that allegedly "revealed persistent and serious violations of blood safety rules." The American Red Cross collects and processes donated blood.
  
  
• Companies that repeatedly violate drug approval regulations may be placed on the application integrity policy list, under which the agency will defer review of drug applications from certain facilities or the entire company until corrective actions are taken. Companies and individuals also may be debarred if they have been convicted of violations of FDA regulations, effectively meaning that they can no longer submit materials to the FDA or work for organizations that are regulated by the FDA.
  
  
• The FDA may also disseminate adverse publicity about a company or product, and even if the agency does not publicize a matter, trade and business publications may report a company's violation of FDA regulations. But because of the great interest surrounding FDA-regulated products on the part of both consumers and investors, in many cases the national or local TV, radio, and newspapers have already broken a story even before the FDA has issued a press release. Adverse publicity can affect the company's stock price and undermine the trust of its customers, both lay and professional. To cite a recent example, when Schering-Plough recently agreed to pay $500 million to the FDA for alleged violations of good manufacturing practice regulations, major newspapers covered the story (FDA, Schering-Plough Signs Consent Decree, 2002). Because the consent decree was expected to, and ultimately did, result in large fines, stories concerning the company's alleged violations and the ongoing consent decree negotiations between the FDA and Schering-Plough attorneys was the subject of many news reports even before the decree was finally signed. Since May 2002, the company has been forced to comment on the consent decree in conferences with shareholders.
  
  
• Companies also may have approvals withdrawn or review of pending applications suspended until violations are corrected.
  
  
• Like manufacturers of any other consumer products, cosmetic, medical device, food and biologic companies also may be sued by consumers injured by defective products. For instance, when a certain type of heart valve was found to be defective, the company and its corporate parent paid more than $20 million to compensate patients' families, provide for monitoring of patients with the defective valves, and assist patients in dealing with complications from the devices.
  
  
• Despite these options, in some cases violations of the law by companies or actions taken by others, such as tampering, may require criminal investigation. The FDA's Office of Criminal Investigation was formed in 1992 following the generic drug scandal and helps the agency investigate possible criminal violations of the FD&C Act such as submission of false or misleading information to the FDA and product tampering. Roughly 170 agents work for OCI, an OCI agent said at a conference. The OCI official said that most OCI agents have extensive experience with other law enforcement agencies such as the Secret Service or U.S. Customs Service before they are hired and work to maintain their contacts with these agencies.
  
  
• The Enforcement Story reports that in fiscal year 2001, the OCI was responsible for 422 arrests, 360 convictions, and $100 million in fines and forfeitures.
  
  
• Case law has established that under the legal principle of strict liability company officials may face criminal charges for violations of the law by their companies even if they are not aware of the violations or violations result from the actions of lower level employees.
  
  
• For more information, see the list of laws enforced by the FDA and information about inspections and good manufacturing practice regulations.