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Company Officials Personally Liable

As part of what appears to be an increasingly aggressive enforcement stance, there have recently been a number of statements coming from FDA in several settings suggesting that an increase in the number of prosecutions of senior corporate individuals is imminent. In the past, FDA and the Department of Justice have initiated a fair number of prosecutions, but the prohibitive majority of these were against the legal “person” of the corporation involved. Since you can’t put a corporation in jail, a business on the losing end of one of these prosecutions just ended up paying money, sometimes quite a bit, but usually no one ended up spending time in prison.

The predicted new wave of prosecutions would involve prosecution of high ranking individual employees of pharmaceutical companies. Moreover, these prosecutions would be strict liability prosecutions under what is informally referred to as the “Park Doctrine” aka, the “Responsible Corporate Officer doctrine”. This theory of strict liability arises out of a U.S. Supreme Court decision, United States v. Park, (421 U.S. 658 (1975). The important (and a bit overly simplified) point of the Park Doctrine is that company officials can be prosecuted for violation of the federal Food Drug and Cosmetic Act even if the corporate official was unaware of the violation. So much for “plausible deniability”.

Some have speculated that FDA believes that companies view the fines which have been levied against them for violations over the last few decades as just another cost of doing business in a highly competitive industry, and that a revival and rigorous application of the Park Doctrine is needed to force pharmaceutical executives to be fully aware of what is going on in their companies and to take all necessary steps to detect, correct, and prevent violations of FDA laws and regulations.

Will FDA be targeting specific types of violations? At a recent Food and Drug Law Institute conference, Eric Blumberg, FDA Deputy Chief Counsel for Litigation, highlighted three areas expected to prompt criminal investigations:

  • Distribution of unapproved new drugs (DESI, etc.)
  • Failure to properly report adverse events
  • “Flagrant” off label promotion

Eugene Thirolf, head of the Office of Consumer Litigation (DOJ) separately added that safety issues, such as distribution of defective products, or fraudulent behavior connected with data or manufacturing documentation would generate more criminal investigations, and, prosecutions where warranted.

So, it may be time for a lot of executives to take a close look at their product list and all their quality systems, so that they can be sure that their next vacation is one they decide to take.

William (Bill) Stoltman, J.D.,  Camargo’s Senior Director of Quality Assurance and Compliance prepared this posting.