Edwards Wildman Client Advisory: Government Addressing Pharmaceutical and Medical Device Manufacturing Practices


    Over-shadowed by record-breaking resolutions relating to off-label marketing has been the government turning to address pharmaceutical and medical device companies’ improper manufacturing practices through criminal investigations. In October 2010, an important criminal investigation was resolved relating to a large pharmaceutical company’s manufacturing processes. This resolution portends a likely trend towards criminal investigations when a pharmaceutical or medical device company’s manufacturing processes are violating the Food, Drug, and Cosmetic Act and/or FDA’s implementing regulations.

    FDA regulates drug and medical device manufacturing through its current good manufacturing process regulations, or cGMP. These regulations are designed to ensure that drugs and medical devices entering the marketplace are safe and effective for their intended uses. CGMPs are enforced through FDA inspections. If FDA inspectors find that a manufacturer is operating outside of the cGMP regulations, FDA issues the company a form 483, which enumerates and describes the violative practices.

    If FDA determines that escalated regulatory action is necessary, often when a company has repeated violations, FDA may issue a warning letter and/or refer the matter to the Department of Justice. When cases are referred, DOJ traditionally has brought civil enforcement actions to address violations of the cGMPs. Under the Food, Drug and Cosmetic Act, drugs manufactured in a manner inconsistent with the cGMPs are by definition adulterated. In the civil cases, the government seeks an injunction barring the defendant from manufacturing or distribution of drugs until FDA is satisfied that the defendant is in compliance with cGMPs. Almost all of these cases settle.

    The criminal case against the large pharmaceutical company, GlaxoSmithKline (GSK), broke new ground in cGMP enforcement. In October 2010, a GSk subsidiary pled guilty to adulteration charges relating to the manufacturing processes of its former production facility in Puerto Rico. This facility was operating over a several-year period in violation of cGMP. Among other things, the facility manufactured bilayer drug tablets that were splitting frequently, and its maufacturing process produced a different drug that at times did not have the correct proportions of ingredients. Eventually, the government seized over a billion dollars worth of drug products. Settlement of the seizure action resulted in a consent decree.

    In the meantime, a former manager of GSK brought a qui tam action against GSK relating to the manufacturing problems at the Puerto Rico facility. The government eventually intervened and conducted a parallel criminal investigation. This occurred despite the fact that the company already had entered into a consent decree to resolve the seizure action.

    The several-year investigation resulted in a subsidiary of GSK pleading guilty to a felony adulteration charge, and GSK entering into a civil settlement of the qui tam action. As part of this resolution, GSK and its subsidiary agreed to pay a criminal fine of $150 million and a civil fine of $600.

    Pharmaceutical and medical device companies should expect a trend towards criminal investigations of cGMP, particularly where there is a parallel civil qui tam action. Criminal charges are more likely in situations where cGMP problems are repeatedly cited by FDA and result in potential safety risks. The best way to avoid these investigations is to get out in front of any cGMP problems before they escalate to the point where the Department of Justice is involved. If FDA inspectors cite a firm for cGMP issues following an inspection, work expeditiously with FDA to address the problems. Hire consultants to ensure that the problems are adequately addressed. If FDA believes that a firm is doing everything possible to address cGMP problems, the chance of escalation is minimal.

    If you would like further information, please contact the Edwards Wildman lawyer responsible for your matters or the author linked above.

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