Thank you, Laura, for the kind introduction, and thank you to the Food and Drug Law Institute for hosting me here today. This is an exciting time in the food and drug space and it’s wonderful to have the chance to come speak with you all.
About six months ago, I became the Deputy Assistant Attorney General for the Consumer Protection Branch. The Consumer Protection Branch is one of six branches within the Civil Division of the Department of Justice.
My responsibility is to oversee the Consumer Protection Branch’s efforts to enforce statutes designed to protect the health, safety, and economic security of American consumers. The Branch has about 100 attorneys, investigators, and other staff. And although we are located in the Civil Division, we bring both civil and criminal cases. In fact, the bulk of our work is criminal.
Most relevant here and as many of you know, we investigate and litigate civil and criminal violations of the Federal Food, Drug, and Cosmetic Act. We pursue drug, device, and food manufacturers, and their executives, who break the law and threaten health and safety.
We don’t work alone. Perhaps our closest partner is the FDA, and I know you all heard from Commissioner Gottlieb yesterday, as well as from their Chief Counsel, my good friend Stacy Amin. We work closely with FDA on many of our criminal and civil matters. We also work jointly with the Civil Frauds Section of the Commercial Litigation Branch of the Civil Division. This is a natural partnership, because the Civil Frauds Section is responsible for investigating and litigating violations of the False Claims Act. Many of the investigations that implicate the Food, Drug, and Cosmetic Act also give rise to potential causes of action under the False Claims Act. We coordinate with U.S. Attorney’s Offices all over the country and a number of law enforcement agencies, including FDA’s Office of Criminal Investigations, the FBI, the U.S. Postal Inspection Service, and DEA.
Before I get started, I thought I would share with you all a parable that I read not too long ago in a speech given by our Deputy Attorney General Rod Rosenstein. It’s a story about a child who watches her mother prepare a roast beef. The mother cuts the ends off the roast before she puts it in the oven. The child asks why. The mother says that she learned it from her mother. So the child asks her grandmother why they cut the ends off the roast beef. The grandmother explains, “When your mother was a child, I cut the ends off because my pan was too small to fit the whole roast beef.”
The moral is that the solutions of the past are not necessarily the right solutions today. Circumstances change. We should be willing to reconsider our assumptions. And that is precisely what we in the Consumer Protection Branch are doing. We are working to adapt our enforcement priorities and our enforcement tools to the challenges of today. Let me start with some big-picture points and then I will turn to specifics.
Big-picture, let me start with what we don’t do. We don’t try to win at all costs. We represent the United States and our job is to do justice. Sometimes that means we play hard to win, but sometimes that means we exercise discretion and hold back.
That message is particularly relevant to us in the Consumer Protection Branch, because the consumer protection laws we enforce provide for both civil and criminal remedies. Which path to take is always a judgment call. And when we make that call—as criminal prosecutors or as civil enforcement attorneys—we have special responsibilities beyond those of an advocate. In particular, we have an obligation to make sure our legal arguments are correct, not merely colorable. “Can we persuade a court of this” is the wrong question; the right question and the one we ask ourselves is “is this what the law provides.” As one of the greatest lawyers to ever serve as Attorney General—Supreme Court Justice Robert Jackson—explained in his celebrated speech on the role of the prosecutor: “Law enforcement is not automatic. It isn’t blind . . . . What every prosecutor is practically required to do is to select the cases for prosecution and to select those in which the offense is the most flagrant, the public harm the greatest, and the proof the most certain.”
That is surely correct and it follows from this bedrock principle that it is unfair for people or private companies to be subjected to arbitrary, unpredictable enforcement decisions. And that’s what it can feel like when facing a government investigation that is pushing the envelope.
But governing according to the rule of law is not just about fairness. When companies and their employees understand in advance how the law will be applied, they can spend their time innovating instead of trying to predict what conduct will trigger an expensive, intrusive, and stressful government investigation.
That’s particularly critical to the healthcare industry. Your industry manufactures and sells life-changing drugs and devices that benefit millions of people every day. The work you do is essential to promoting the health and welfare of Americans, and people all over the world. And we do not want to stand in the way. Our goal is to ensure that private people and private companies do the innovating. That’s what the private sector does best. And we want to get the government out of the way—unless there’s a reason we need to be in the way.
So let me tell you what kind of conduct will get the Consumer Protection Branch’s attention. We focus on practices that hurt people—practices like marketing a product for a potentially dangerous or untested purpose. Even if no one has been hurt, we look for activity that poses an unacceptable risk of harm if it continues, like maintaining insanitary conditions. We also target fraud, like lying to the public about what diseases a product is effective in treating.
In all these areas, we start with the facts. Only after we identify harm, or a risk of harm, or a fraud, we decide whether those facts amount to a legal violation, and one that warrants investing the Department’s limited resources. We do not begin with a legal theory and then search for facts that would support it. In other words, we presume that people obey the law, not that people are violating it.
I’d like to tell you now where that principle has led the Consumer Protection Branch over the past twelve months in the food and healthcare space. And where it will lead the Branch in the future.
I will speak first today about the Branch’s priorities in the traditional FDCA space. Then I will discuss its new enforcement efforts related to the opioid epidemic.
Traditional FDCA Enforcement.
The Consumer Protection Branch is charged under the Department’s regulations with litigating civil and criminal Food Drug and Cosmetic Act matters. And the Branch has a long and successful history of doing so. To be clear, though, not every violation of the Food, Drug and Cosmetic Act should be remedied through civil or criminal action by the Department. Frequently, FDA can more appropriately and expeditiously resolve such matters on its own, such as by issuing a warning letter. But if those efforts fail and bad conduct continues, then that’s when we get involved to file civil or criminal charges.
First, I will discuss compounding pharmacies, which are an increasing focus of enforcement efforts. Ensuring compliance by compounding pharmacies has been—and will continue to be—a major enforcement priority for both the Branch and FDA. Several years ago, Congress clarified and strengthened the FDCA’s applicability to compounding pharmacies in the wake of the tragedy at the New England Compounding Center. The FDCA recognizes two types of drug compounders: 503A pharmacies (so-called traditional compounders), which compound drugs on a per-prescription basis, and 503B outsourcing facilities, who may compound large quantities of drugs. FDA has made it a priority to develop the regulatory framework under the FDCA for drug compounding and to strengthen its oversight of drug compounders.
The Branch has buttressed FDA’s regulatory efforts in this area by taking enforcement actions when appropriate to protect the public health. For example, in April 2018, the Branch secured a permanent injunction against the Cantrell Drug Company, a 503B outsourcing facility, and its owner. Cantrell had twice previously recalled its sterile injectable drugs. When the evidence showed that Cantrell was still preparing drugs under insanitary conditions and not in compliance with current good manufacturing practices—or cGMPs in food and drug parlance—we took action.
As another example, in June 2018, the Branch secured a permanent injunction against Delta Pharma., Inc., another 503B outsourcing facility, and two of its executives. Similar to Cantrell, Delta also prepared drugs under insanitary conditions and not in compliance with cGMP.
There are several takeaways from these two examples. The cases highlight our enforcement principle that we will act when conduct poses an unacceptable risk to human health. We believe that the clear and repeated failure to prepare drugs in sanitary conditions certainly meets that threshold. The cases also reflect the Department’s deliberate approach to filing cases and willingness to provide space, where appropriate, for the regulator and regulated entities to reach an agreement about compliance. Given the ongoing implementation of the regulatory framework and the high stakes for patient safety with drug compounding, we anticipate this will continue to be an active area going forward.
One more point on compounders. As many of you know, the rules governing traditional 503A compounders are less comprehensive than those that govern larger drug manufacturers and 503B compounders. That doesn’t mean 503A compounders get a pass. People operating in this space need to understand that the lack of specific regulation does not mean 503A compounders will be held to a lower standard of safety. To the contrary, we will take aggressive action against compounders who we believe pose a danger to the public—no matter how small the compounder—and I can assure you that enforcement will be swift and it will be fierce against any compounder who actually does harm members of the public through poor manufacturing practices or safety lapses. When there is less day-to-day regulatory oversight, it puts a premium on good judgment. I encourage everyone operating in this space to be as punctilious as possible when it comes to safe and sterile compounding. You should always measure twice and cut once, as the old adage goes.
The Consumer Protection Branch’s efforts to ensure compliance with cGMPs are not limited to drug compounding. Rather, the Branch’s efforts are coextensive with the applicability of cGMPs across the spectrum of FDA-regulated entities.
FDA has promulgated cGMP regulations governing the manufacture of food, drugs and biologics, with similar regulations for devices. These regulations are designed to ensure that the products we all use every day are safe and effective. FDA’s work in this space is incredibly important. Noncompliance with cGMPs can undermine the integrity of food and medical products, and as consumers, we often cannot detect the resulting defects.
Products manufactured in violation of cGMPs are “adulterated” under the Food, Drug, and Cosmetic Act, which means their distribution in interstate commerce is unlawful. For example, last October, the Consumer Protection Branch filed a civil complaint for permanent injunction against Philips North America for cGMP violations. A federal court ultimately enjoined Philips from distributing certain medical devices, including life-saving defibrillator machines, until the company took remedial steps to move into cGMP compliance.
Where appropriate, the Consumer Protection Branch may also pursue cGMP cases in parallel with Civil Fraud lawyers enforcing the False Claims Act. For example, last year, Baxter Healthcare Corporation paid over $18 million to resolve civil and criminal liability for failure to comply with cGMP regulations. Despite receiving reports from an employee about mold in a clean room, Baxter continued to manufacture sterile IV solution in that production area. Although there was no evidence that the mold had impacted the IV solution, Baxter’s conduct put patients at risk. Baxter also entered into a deferred prosecution agreement to resolve the charges. In addition, Baxter resolved liability under the False Claims Act for selling the IV solution to the Department of Veterans Affairs. While not every cGMP violation is actionable under the False Claims Act, the Baxter Healthcare case demonstrates the effective coordination between the Consumer Protection, the FDA, and the Civil Fraud Section when federal health care programs have also been injured by the conduct at issue.
Now, let’s talk about how the Department’s enforcement principles apply to off-label promotion. I sometimes see news articles discussing whether the Department of Justice plans to pursue off-label promotion cases. That is not the right way to think about how we exercise our enforcement discretion. We don’t spend our time rooting out off-label promotion. Rather, we look for conduct that actually threatens patient health or safety. We look at whether a company paid improper kickbacks to doctors, and we determine whether a company’s marketing was truthful or was instead false or misleading. Those questions are just as relevant to on-label marketing as they are to off-label marketing.
When we talk about off-label promotion, it is helpful to recall the new drug and medical device approval process. During pre-market review of a new drug or medical device, FDA reviews labeling and specifics about the drug’s or device’s risks and benefits as well as indications and claims that the manufacturer can make based on a rigorous series of pre-clinical or clinical trials. FDA’s approval process is vital to protecting the public by ensuring that drugs and devices are both safe and effective for all proposed claims.
Our approach recognizes the right of doctors to prescribe drugs and use devices off-label for patients’ benefit. It acknowledges that off-label uses are sometimes the standard of care. It recognizes that truthful, non-misleading information can help doctors treat their patients more effectively. And it accounts for the reality that there are potential First Amendment problems with using truthful, non-misleading speech as a basis for prosecuting people and companies, as the Second Circuit held in United States v. Caronia. The provision of truthful information is not our focus and is not our priority. But off-label promotion that is false or misleading can pose a threat to patient health and safety. And that is the sort of promotion we will continue to look at.
As you may know, FDA has been examining the intersection between FDA’s regulatory regime and the First Amendment. In March, FDA published a final rule delaying the effective date of regulations originally published in January 2017 that described how FDA would determine a product’s “intended use.” This delay will afford FDA more time to clarify and develop its thinking along these lines, and the Consumer Protection Branch will continue to assist the FDA in this effort.
Enforcement Related to Opioid Epidemic
Now let me turn to the opioid epidemic, which has rightly become a focus of enforcement across the entire Executive Branch—from President Trump himself to all of the relevant agencies. Opioid abuse is killing people at an extraordinary and alarming rate. In 2017, approximately 72,000 Americans died from drug overdoses, making overdoses the leading cause of death for Americans under the age of 50. Opioids are driving this crisis — prescription painkillers that are abused and diverted, as well as illegal heroin and synthetic drugs like fentanyl. Opioid overdoses killed 49,000 Americans in 2017 — more than five times more in 2017 than in 1999. These are extraordinary numbers of fatalities in an epidemic that has spread all over the country.
Now, as I mentioned, CPB is one of the few offices in Main Justice where attorneys handle both civil and criminal matters. We are now deploying that experience to do everything we can to battle this epidemic and are proud to be at the forefront of the Department of Justice’s enforcement efforts. The opioid epidemic is the deadliest drug crisis in our nation’s history and combatting it is, quite simply, our #1 priority.
As former Attorney General Sessions said earlier this year, “this administration will not stand back as addiction shatters our families and devastates our communities. We will take action and we will make a difference.” In August of last year, the Attorney General announced a new data analytics program called the Opioid Fraud and Abuse Detection Unit, which identifies and prosecutes individuals who are contributing to the opioid epidemic. In November 2017, the Attorney General directed each U.S. Attorney’s Office to designate an Assistant United States Attorney as an opioid coordinator. And in August, the Attorney General announced an important new initiative where we will ask courts to revoke the prescribing power of doctors who have been abusing that authority to operate pill mills and flood the marketplace with dangerous narcotics.
Earlier this year, the Department announced the formation of the Prescription Interdiction & Litigation Task Force—the PIL Task Force. I am one of the Co-Chairs of that Task Force and we are hard at work ensuring that entities at all levels of the opioid distribution chain—from manufacturers to distributors to pharmacies to physicians—are held accountable when they break the law.
The roots of the opioid crisis are many, but there is no denying that much of it originated with lawfully manufactured drugs that were then horribly abused. And in case it isn’t clear already, allow me to make clear now that every participant at every stage of the opioid business is coming under the microscope. If your company or a company you represent engaged in misconduct that contributed to this crisis, we will uncover that misconduct and we will take action. I thus strongly encourage everyone in the manufacturing and supply chain to get ahead of our enforcement efforts and work with us to correct past mistakes and stem the future death toll.
The Civil Division is using every tool at its disposal in this effort. Let me talk first about a few existing tools that we have used. Then, I want to mention some new tools that Congress provided in the recently enacted SUPPORT for Patients and Communities Act.
One avenue involves Risk Evaluation and Mitigation Strategies, or REMS. As a condition of approving certain drugs with safety concerns, FDA requires pharmaceutical manufacturers to adhere to the terms of a REMS. A REMS imposes various physician education and reporting requirements, and the goal is to ensure that the benefits of a drug or biological product outweigh its risks. When a manufacturer fails to comply with the requirements of an applicable REMS, the drugs governed by that REMS can become misbranded under the Food, Drug, and Cosmetic Act—meaning that their sale and distribution is illegal. All opioids are subject to a REMS.
We’ve pursued this theory before. A year ago, the Consumer Protection Branch announced two settlements with pharmaceutical manufacturers relating to REMS violations. Novo Nordisk resolved civil allegations that the company had failed to communicate accurate risk information about the potential risk of patients developing a rare cancer called medullary thyroid carcinoma. In particular, certain company sales representatives allegedly gave information to physicians that created the false or misleading impression that the REMS-required risk messaging was erroneous, irrelevant, or unimportant.
In January this year, Aegerion Pharmaceuticals pled guilty to two misdemeanor violations of the Food, Drug, and Cosmetic Act. As set forth in the criminal information, Aegerion failed to give healthcare providers complete and accurate information about how to diagnose a rare cardiac disease, referred to by the shorthand HoFH. The company also filed a misleading REMS report with FDA, by not disclosing that Aegerion was promoting the drug at issue by reference to a broad definition of HoFH that lacked any support in the relevant medical literature.
CSA Civil Enforcement
The Controlled Substances Act, called the CSA, is another law that is useful in combatting the opioid crisis and one that the Consumer Protection Branch is increasingly enforcing. The Drug Enforcement Administration is the lead federal law enforcement agency responsible for enforcing the CSA, which governs controlled substances, including opioids. The CSA requires various entities that handle controlled substances (such as drug manufacturers, distributors, pharmacies, and doctors) to register with the DEA and adhere to certain requirements. Among these obligations is the requirement to report suspicious orders of any controlled substance. Within the past 18 months, the DEA and the Department of Justice have jointly negotiated settlements with one opioid manufacturer and two wholesale distributors for failing to report suspicious orders of opioids.
The CSA and its implementing regulations also require that all prescriptions for controlled substances “be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” The DEA and U.S. Attorney’s offices have filed a number of criminal cases against “pill mill” doctors for prescribing opioids beyond the bounds of medically accepted practices.
In August, then-Attorney General Sessions personally announced the news of the Department’s first-ever civil injunction actions under the CSA against prescribers. The cases announced by the Attorney General were filed jointly by the Consumer Protection Branch and the U.S. Attorney’s Office for the Northern District of Ohio. Because these cases were groundbreaking, let me speak about them for a minute.
Dr. Gregory Gerber is a solo practitioner who specialized in pain management. Our evidence showed that he prescribed prodigious quantities of opioids and controlled substances without any legitimate medical purpose. An undercover agent who did not complain of pain during the agent’s visits to Dr. Gerber’s office walked out with prescriptions for oxycodone and other controlled substances. Other former patients offered affidavits about how they received opioids from Dr. Gerber without any meaningful medical examination.
Dr. Michael Tricaso repeatedly illegally sold drugs and prescriptions to confidential sources. For example, on one occasion, Dr. Tricaso offered to provide a source with the opioid Percocet without a prescription because he did not like writing prescriptions. Why? Because “it gets traced,” explained Tricaso. Another time Dr. Tricaso told a source he would lie in the patient chart to justify writing a prescription for other controlled substances—that time, anabolic steroids.
As the U.S. Attorney for the Northern District of Ohio put it, “These doctors were simply drug dealers in white lab coats.” Faced with such violations of the CSA—not to mention their Hippocratic oath—we took swift action to stop the conduct. Two judges in the Northern District of Ohio issued temporary restraining orders and preliminary injunctions that, among other provisions, prohibited Drs. Gerber and Tricaso from distributing or prescribing any controlled substances.
The government has already resolved the case against Dr. Tricaso, who consented to a permanent injunction. Dr. Tricaso is permanently enjoined from prescribing or distributing any controlled substances. The case against Dr. Gerber is now in discovery.
The CSA’s civil enforcement authority, providing for injunctive relief and civil monetary penalties, is an important mechanism that we believe can save lives by stopping problematic prescribers who are writing medically unnecessary prescriptions. And we’re starting to see more and more cases across the country where this tool could be effective—not only against prescribers but against pharmacies, distributors, and others who deal in controlled substances. As I said a moment ago, we are looking hard at everyone in the opioid supply chain.
It is also worth mentioning that the tools we have employed so far are not mutually exclusive. Often the same conduct can violate multiple statutes. When a company lies to doctors about the risks of an opioid, for example, both the Food, Drug, and Cosmetic Act and the False Claims Act are squarely implicated. When a doctor prescribes opioids to someone without a legitimate medical purpose, that conduct can be both a criminal and civil violation of the Controlled Substances Act, as well as a potential basis for a False Claims Act case.
When those situations arise, we will look to coordinate our enforcement efforts with other federal, state, and local authorities. That is consistent with the new Department policy, announced by the Deputy Attorney General, encouraging coordination among components when imposing multiple penalties for the same misconduct. The purpose is to avoid duplicative penalties that exceed what is necessary to remediate past harms and deter future violations. But let me be clear, the Department remains committed to using all tools at its disposal to help bring an end to this devastating crisis.
The Department and other federal agencies also recently gained new authorities to combat the opioid crisis. In October, President Trump signed into law the SUPPORT for Patients and Communities Act—the SUPPORT Act for short. The bipartisan SUPPORT Act is the culmination of months of work by the Administration and Congress to respond to opioid crisis.
The SUPPORT Act seeks to alleviate the opioid crisis and the underlying conditions fueling that crisis through a wide variety of means. A few of these are particularly relevant to the work of the Justice Department and we are studying them now. You might want to as well.
In multiple provisions, the SUPPORT Act recognizes the fundamental and essential need to share information across stakeholders and then to take appropriate action. First, those registered under the CSA must design and operate a system to identify suspicious orders, and then report suspicious orders to DEA. This provision amplifies the pre-existing requirements in DEA regulations. CSA registrants need to take note.
Second, DEA must now generate and disseminate quarterly reports to drug manufacturers and distributors, showing the total number of distributor registrants that distribute controlled substances to a pharmacy or healthcare practitioner, as well as the total quantity and type of opioids distributed to those pharmacies and practitioners. And drug manufacturers and distributors must actually review these DEA reports. If they don’t, they risk violating the CSA.
Although not in the SUPPORT Act, I want to briefly mention a related enhancement DEA made earlier this year to its ARCOS Online Reporting System. Now, drug manufacturers and distributors can view the number of competitors who sold a particular controlled substance to a prospective customer over the previous six months. This will help manufacturers and distributors identify prospective customers that trigger a “red flag” for purchasing excessive quantities of controlled substances.
Returning to the SUPPORT Act, a third way in which Congress bolstered information-sharing was by requiring HHS to support state efforts to develop and modernize their prescription drug monitoring programs (or PDMPs). PDMPs play a critical role in helping prescribers and pharmacists identify and prevent diversion of controlled substances, including opioids. .
Fourth, as we have seen, some prescribers are unfortunately willing to abuse their authority and write prescriptions without a legitimate medical purpose. Once a patient has a prescription in hand for unnecessary opioids or other controlled substances, pharmacists are the next and final line of defense to stopping the dispensation of those pills.
Faced with a prescription signed by a doctor, some pharmacists may feel pressure to dispense the medication. But pharmacies and pharmacists have a corresponding responsibility under the CSA to not knowingly fill a prescription without a legitimate medical purpose. Indeed, the CSA does not require them to fill prescriptions, especially when the prescription raises red flags. Pursuant to the SUPPORT Act, FDA and DEA will be issuing guidance and other materials to ensure pharmacists understand when and how to decline to a fill a prescription consistent with the statutory and regulatory requirements.
Finally, I want to mention two additional enforcement tools included in the SUPPORT Act. Congress gave FDA the authority to recall a controlled substance if the agency determines that there is a “reasonable probability” the controlled substance “would cause serious adverse health consequences or death.” The failure to comply with a recall order would render adulterated those drugs subject to recall. We will work closely with FDA to ensure industry complies promptly with its recall orders.
Congress also declared, under the Federal Trade Commission Act, that it is unlawful to engage in an unfair or deceptive practice related to any substance use disorder treatment service or product. Those who engage in such practices are now subject to the general remedies in the FTC Act, including consumer redress and injunctive relief. Americans suffering from substance abuse must be able to find safe and effective treatments. We will work closely with the FTC—another of the Branch’s agency partners—to stop anyone who seeks to profit from vulnerable Americans by illegally peddling substance abuse treatments.
I have been honored to work over the past year with the dedicated lawyers in the Civil Division and the Justice Department more generally. Our team is committed to exercising the Department’s enforcement discretion consistent with the rule of law. I hope that my remarks today have given you a better understanding of how we do our work, so that you can feel more confident that you know the rules of the road and the priorities of the Justice Department.
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